Morning:
8°c
Six major City firms facing fraud probe
Nicholas Cecil11 Feb 2009
Fraud investigators have started inquiries into major financial institutions, the Evening Standard can reveal today.
The Serious Fraud Office has launched probes, linked to the credit crunch, into six institutions including banks, and is due to begin another shortly.
The Evening Standard understands some of the companies being investigated are national or international institutions.
They include firms with very complex structures.
Investigators will seek to establish if there has been any fraud, or management incompetence in the firms, or if the companies were instead just victims of the financial meltdown.
More people are contacting the SFO on a daily basis with claims of irregularities, and the number of inquiries could therefore rise significantly.
The news of the SFO action will send fear spreading through the City.
The investigations are at a preliminary stage, and have been carried out by small teams before full-scale inquiries are ordered, if required.
However, several politicians believe criminal charges will eventually be brought against some financiers involved in the economic crisis.
Liberal Democrat Treasury spokesman Vince Cable said: "It seems fairly clear that some of the activities in the banking system have strayed the wrong side of criminal law.
"I sincerely hope the SFO is pursuing these inquiries with the energy that is needed."
The SFO is also in talks with the City regulator and the Scottish Crown Office after the leader of the Liberal Democrats in Scotland Tavish Scott MSP called for the Royal Bank of Scotland to be investigated to find out if shareholders were misled over last year's £12 billion rights issue.
Sources say discussions at present are over jurisdiction rather than launching any inquiry.
There is no evidence that RBS or any other bank has committed any offence.
The SFO has already announced it has started a full investigation into the UK activities of Bernard Madoff, the American fund manager accused of a £33billion financial fraud.
