Operation Cotton

I post here a guest blog from Tim Thomas, someone who knows first hand about Operation Cotton

Timothy Thomas is a direct access barrier specialising in Commercial Criminal Fraud at 1 Pump Court. Here he gives his views on how the government should respond to the dramatic disintegration of the Operation Cotton trial last week.
If the Government, in the form of MoJ officials, continue to blame the Criminal Bar for exercising its right in an (albeit rigged) market to reject unfavorable contract terms, it needs to wise up pretty quickly.
The prosecuting authority in Operation Cotton, the Financial Conduct Authority (FCA), bears responsibility (along with the Prudential Regulation Authority) for ensuring that companies, their directors and their employees behave appropriately towards investors when they raise capital. When they do not, the FCA have the power to impose civil sanctions or launch criminal prosecutions.
Such regulation must be at the heart of ensuring that London retains credibility as an international financial centre that, along with New York, is pre-eminent in the 21st century. Before the financial crisis of 2007/8 there remained a high degree of skepticism in US Financial Law Enforcement circles about the ability of the Financial Services Authority (FSA) and Serious Fraud Office (SFO) to ‘enforce the law on their side of the pond’.
The replacement of the FSA with FCA and Prudential Conduct Authority twelve months ago and the recent power given to the SFO to use Deferred Prosecution Agreements were welcome attempts to bridge that credibility deficit. However, rather than just fund the FCA handsomely, rewarding their prosecuting barristers appropriately, the Government has completely forgotten that for any western democracy to function properly, the rule of law is sacrosanct and that means ensuring that those accused of financial crime have representation.
The lack of trial counsel in Operation Cotton places defendants in positions more familiar to third-world criminal justice systems. I cannot believe that this is how the Government wishes the world to see its regulation of the City.
The total saving that arises from the 30% cut to ‘very high cost cases’ (VHCCs) is £19m (a fraction of the £220m overall savings the government says it wants). Any credibility that the Government had in maintaining that this was necessary because of austerity was demolished by the Oxford Economics report, which demonstrated that legal aid spending was falling and would continue to fall, the March 2014 budget which found £200m to repair pot holes, the Government’s refusal to formally oppose a future 11% pay rise for MPs and the continued cost of MPs expenses at around £90m, despite the scandals of the last 3 years.
No one at the Criminal Bar, me included, has rejected the notion of the need to look for savings, but all our ideas have been rejected out of hand. Arbitrarily slashing fees, which are not linked to inflation and were already cut by 11% in 2007, by a further 30% is dumb.
It’s dumb because the £19m it saves endangers a host of forthcoming trials including: The Operation Tabernula Trial (the largest insider dealing case ever brought by the FSA/FCA) in September 2014, the Operation Hornet Trial (£35m HBOS kickbacks) in January 2015, the Operation Bulkhead Trial (Film Tax Credit Fraud) in September 2014 and forthcoming trials for various defendants employed by iCapp, Barclays and RP Martin accused of manipulating LIBOR, which are due to commence in 2015.
The public is entitled to expect that alleged victims have their complaints heard and defendants are given the chance to clear their names, not to mention the legitimate expectation that a government, which has talked tough on ensuring the appalling behaviour of the financial sector is not repeated, delivers on its promises.
Not only does the Government need to abandon the 30% cut, but it also needs to repair relations with the Criminal Bar and that means a new Lord Chancellor. Much has been made of Chris Grayling’s lack of legal qualifications, but the Attorney General’s behaviour at a Bar Council meeting, in threatening Price Competitive Tendering if the Bar did not pipe down, suggests lawyers do not have much wisdom either.
What should be a recognised is that new blood is needed. Step forward the current Northern Ireland Secretary, Theresa Villiers. A barrister and legal academic she would be a terrific choice as the first Lady Chancellor. Her ability to understand the Criminal Bar’s concerns coupled with a reversal of the cuts by the MoJ might just prevent the Criminal Justice System from falling any deeper into the abyss this Government has so recklessly and thoughtlessly allowed it to.
Tim Thomas tweets as @TimothyThomas79