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U.K. Fraud Office Payoff Hurt Staff Morale, Lawmakers Say

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July 17 (Bloomberg) -- The U.K. Serious Fraud Office’s morale and reputation was hurt because of severance payments its former director made to outgoing executives of more than 437,000 pounds ($660,000), lawmakers said.

The agency’s former director, Richard Alderman, gave the former chief executive officer, Phillippa Williamson, a 422,000 pound pay-off last year, and Chris Bailes, its former chief operating officer, 15,000 pounds in severance pay, a U.K. parliamentary committee said in a report published today. Alderman didn’t seek approval from the Treasury for any of the payments.

“The reputation of the Serious Fraud Office has been undermined by a catalog of errors and poor judgment and the morale of its staff has suffered,” Richard Bacon, a member of the Committee of Public Accounts, said in a statement.

Alderman, who stepped down in April last year, didn’t immediately respond to an e-mail seeking comment on the committee’s report. The SFO is considering the report and its recommendations, Susan Givens, a spokeswoman for the agency, said in an e-mail.

The agency tried 20 people last year, with a 70 percent conviction rate, the SFO said in its annual report. That’s down from the previous year when the agency tried 54 people and convicted 72 percent. The average cost of each case increased from 669,000 pounds in the year that ended March 31, 2012, to 839,000 pounds in the last year.

Complex Cases

The SFO’s current director, David Green, has said the agency would take on fewer, more complex cases under his watch. He has opened investigations into manipulation of the London interbank offered rate, fees paid by Barclays Plc to Qatar’s sovereign wealth fund as the bank sought to raise money, and the collapse of the hedge fund Weavering Capital (UK) Ltd.

“The new director will not like the news that their caseload is costing more per case and conviction rates have fallen during his tenure,” Neill Blundell, a fraud lawyer at Eversheds LLP in London, said in an e-mail. “He may well point to the change of direction in the types of cases they want to take on but, ultimately, he will be judged on its successes.”

While Williamson worked at the SFO, she was also paid about 100,000 pounds between 2008 and 2012 to cover the expense of traveling to London from her home in England’s Lake District and staying in a hotel for three days a week.

Williamson was previously the subject of an internal whistle-blower investigation at the agency over allegations made by staff members of improper conduct within the SFO relating to her pay, two people familiar with the complaint said at the time. The probe found no evidence of wrongdoing, according to the Attorney General’s office.

Green should “explore all possibilities to minimize the cost to the taxpayer, including requesting that the recipients of special severance payments repay the money,” Bacon said.

To contact the reporter on this story: Nicole Mortimer in London at nmortimer1@bloomberg.net

To contact the editor responsible for this story: Anthony Aarons at aaarons@bloomberg.net

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