BusinessCompany NewsOn the money with Gavin Hinks

On the money with Gavin Hinks

Richard Alderman, the new chief at the Serious Fraud Office, has gone on the offensive

gavin hinks, accountancy age editor

Last week it emerged he had used expert accountants to determine that hedge
funds must be targeted.

And, for the first-time ever, the SFO used paid-for advertising to tell
accountants, and other professionals, they should report their suspicions or
face tricky conversations with investigators about why they haven’t come
forward.

Alderman has therefore gone full-tilt at switching the SFO’s stance from
being reactive to proactive. This must be a cultural shock at the SFO. But
Alderman clearly wants to scare up a reaction and see what he gets. As a former
SFO staffer explained to me last week, what the SFO wants is to get hold of
cases early, not when they are already one or two years old, with the trail
already turning distinctly chilly.

The hedge fund industry unfortunately finds itself bearing the early brunt of
this change in tack, but a quick look across the Atlantic should be enough to
demonstrate why.

Just remember the criticism heaped on the authorities there for not acting on
reports about Bernie Madoff’s vast fraudulent investment scheme and you can see
why UK counterparts would want to avoid coming a cropper like that.

Moreover, Madoff has also given a steer on the industry sector to be
suspicious of ­ hedge funds. Of course they are not all fraudulent, but by their
very nature (to put it another way, their almost complete lack of transparency)
they can be a fraudster’s dream come true.

But they need experts to do the deed and there are no skills better than an
accountant’s. And that’s why Alderman has set his sights on hedge funds and
accountants.

As the recession goes on, I think we can expect to hear much more of Mr
Alderman.

Gavin Hinks is the editor of Accountancy Age

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