* Inspection to focus on how cases selected and pursued
* Attorney General's office says not about possible break-up
* Inspection comes after high-profile cases dropped
By Laurence Fletcher
LONDON, Feb 15 Britain launched an
unexpected investigation into its Serious Fraud Office on
Wednesday, reviving questions over the future of an agency
criticised for dropping several high-profile cases.
The review will focus on how Britain's main agency for
hunting down major financial crimes and corruption goes about
selecting and pursuing cases, a spokeswoman for the government's
legal advisor said.
The spokeswoman for the office of the Attorney General said
the inspection was "not in any way, shape or form" about whether
the agency should be broken up.
But Britain has been looking into ways to shake up its
financial regulatory system in the wake of the credit crisis and
British media reported last year that a plan to break up the
Serious Fraud Office was shelved at the last minute.
Some staff feared the investigation by the Crown Prosecution
Service would discredit the agency and fold its lawyers and
investigators into separate state bodies.
"People inside the organisation are not happy about it,"
said one employee, adding that the investigation undermined
assurances that the agency's position was secure.
The SFO made no official comment.
The inspection of an agency once dubbed "The Seriously
Flawed Office" by detractors, comes after it dropped a number of
high-profile probes into credit crisis collapses, including U.S.
fraudster Bernard Madoff's UK operations, hedge fund Weavering
Capital and fund manager Dynamic Decisions.
In December, it was forced to concede that there were errors
in a search warrant obtained against property tycoon Vincent
It is currently investigating a cover-up of investment
losses at Japanese camera and medical equipment firm Olympus
Adding to speculation over the agency's future is the
coalition government's decision to scrap the Financial Services
Authority industry regulator next year as part of its post
Dividing lines between different agencies are not always
clear and cases are sometimes passed between bodies.
The spokeswoman for the Attorney General's office said the
review of the Serious Fraud Office had not been prompted by
specific cases or the criticism of the agency, adding that it
had been under discussion for a while.
She said the agency's director, Richard Alderman, had agreed
that it made sense two months before he hands over to lawyer
David Green. Green said in December "the SFO is here to stay".
The inspectors were due to visit the SFO on Wednesday.
Since 2008-2009 the SFO's annual budget has been cut by 34
percent to 34 million pounds ($22 million), although Alderman
has said the agency is nevertheless doing more now than it was a
few years ago.
There was surprise in London legal circles in September
after the SFO dropped a two-and-a-half year probe into failed
hedge fund Weavering Capital just days after a Cayman Islands
civil court awarded damages of $111 million against two fund
directors and said the manager had committed "fraud".