For once, justice is done

13 April 2012

THE Serious Fraud Office has had an incredibly difficult time over the years convincing juries and judges that white-collar crime is theft by another name. So there will be huge satisfaction at the conviction and sentencing of Versailles boss Carl Cushnie and his finance director Fred Clough.

The unfortunate aspect of this affair is that it is black role model Cushnie who has received a six-ear sentence, while so many other convicted and alleged fraudsters have walked away free or with light community service penalties.

Even Nick Leeson, who brought down the distinguished Barings Bank, received just six years, albeit in a nasty Singapore prison.

Judge Rupert Jackson did not mince his words on Cushnie. He described the collapse of Versailles as 'the worst example of fraud ever likely to be encountered'.

The judge and jury in the case may have done a big favour to everyone who wants to see the financial world cleaned up. They have shown that if a case is presented in the right way the courts are capable of sorting complex facts and delivering a tough verdict.

This gives the lie to the idea that all a defendant in a white-collar case has to do to be acquitted is to turn up in a suit every day, speak like a gent and be photographed with his loving family (before the divorce papers come through).

The truth is that Cushnie and Clough were corporate burglars on a grand scale, swindling investors and friends out of £2m and destroying a public company which at one stage was valued at £630m.

One can only hope that the SFO's success in the Cushnie case persuades City regulators and prosecutors to be much more robust in pursuing wrongdoers and to ensure that the punishment fits the crime.

In the recent past this has too rarely been the case.

Brown boost

FOR several years Gordon Brown has presided over a tale of two economies. Manufacturing has languished in the doldrums whereas services, credit and housing have been booming.

At last a rebalancing is taking place. The normally pessimistic Engineering Employers Federation reports a healthy upturn.

Order books are the highest in seven years. Output grew in the second quarter at the fastest rate since 1996 and manufacturing is no longer cutting jobs.

The EEF forecasts that manufacturing will grow by 1% this year and 2.7% in 2005, engineering by 1.85% in 2004 and 4.4% next year.

This is a terrific turnaround especially when one considers the strength of the pound which has not made exporting any easier.

But there is a dark cloud on the horizon. Just at the point when industry needs all the assistance it can find to maintain improved conditions, the Bank of England is having to raise interest rates.

The latest retail sales figures and house price inflation - running away at a 20% annual rate in June according to the Halifax - increase the odds of a further rise in base rates either tomorrow or in July.

Certainly, the trend across the world is towards higher interest rates. Alan Greenspan, chairman of the Federal Reserve, has told a London conference that the American central bank is 'prepared to do what is required to fight inflation'.

That is as strong a hint as is possible of a rise in US rates from the exceptionally low level of 1%, perhaps as soon as this month.

Yet the authorities need to be careful in raising interest rates. In Britain it has taken many years for engineering and manufacturing to fight back and only now is confidence returning.

What we do not need at this juncture is a cycle of higher energy costs and higher interest rates that forces the pound higher and makes UK goods less competitive.

Green shoots

THE Philip Green roadshow goes on with the relaxed and still confident billionaire doing his rounds of television interviews and big London entrepreneurial conferences as he plots his next move in the battle for M&S.

Some might view the warnings about dropping out, if there were a competition review, as the first stages of an orderly retreat.

Shareholders had better hope not. The Green bid and any possible rival offers that pop up - with WalMart still the most likely counterbidder - are the best hope that M&S holders have of receiving a good price for their shares in the medium term.

It is worth remembering that before Green's appearance M&S was worth just over £6bn. Now there is an offer valued at up to £8.3bn on the table. Some M&S veterans believe that £10bn would be a knockout price.

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