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Serious Fraud Office Must Pay Millions for Botched Prosecution

In an embarrassing case for the Serious Fraud Office (SFO), it has been ordered to pay up to £7 million in legal costs following a botched prosecution. The High Court found that the SFO’s handling of the case against two businessmen and their legal advisers was ‘improper’ and ‘simply not acceptable’.

The businessmen, three solicitors and a leading barrister were accused of conspiring to defraud three councils and the Coal Authority. At the heart of the SFO’s case were accusations that the councils’ ability effectively to enforce obligations to restore four open cast mines to open countryside or agricultural use had been deliberately and dishonestly prejudiced by transferring the sites to companies registered in the British Virgin Islands.

The defendants denied any wrongdoing and, following two lengthy hearings, the prosecution collapsed before they were arraigned. In ordering the SFO to pay their legal costs, the Court found that the prosecution case had ‘blown with the wind’ and had throughout been based on inadequate legal analysis.

Describing the case as ‘quite exceptional’, the Court noted that the mishandling of the matter could not simply be put down to an error of judgment. The SFO’s case had been built on shifting sands and it had ‘acted improperly’ in continuing to pursue the prosecution after it became clear that it was ‘fraught with difficulties’. The defendants estimated their legal bills at around £7 million, although the precise sums payable by the SFO had yet to be assessed.