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Operation Hornet: Statement from Police and Crime Commissioner

Thames Valley Police, together with the Crown Prosecution Service, has just completed the investigation and prosecution of one of the largest fraud cases it has ever undertaken.

The sum of money lost by HBoS as a result of the actions of a corrupt senior employee and others was at the very least £250M. He and his fellow conspirators embarked on a spending spree involving yachts in the Mediterranean, villas in Barbados and Majorca, prostitutes, overseas bank accounts, and a general high life. This has been at the expense of the shareholders of the bank, and many medium and small companies which have been bankrupted and ruined. Little will be recovered.

There are three aspects that I find particularly shocking about this case: firstly the length and cost of the investigation, has resulted in the case taking over 6 years to bring to court, 151 police officers and staff tied up in the investigation, and at a cost of more than £7M which has been borne by the householders of Thames Valley.  However, it is important to remember that this was not a victimless crime, the shareholders are largely pension funds, which most of us have a stake in, and companies which have been bankrupted, along with the livelihoods of their owners and employees.

Secondly that a fraud of this size could have taken place either displays complicity or incompetence, a lack of corporate governance, complacency, and an absence of proper safeguards. 

An honest and efficient banking system is essential to the well-being of the country. It does not require more legislation and red tape, but it does require people do their jobs properly and honestly. Banking is damaged when corruption occurs within it. Lastly, and almost the most disturbing,  if Thames Valley Police had not taken on this case no one else would have, and the crime would not have been investigated. The principal perpetrators would have escaped with their reputations intact and with enormous wealth.

The cost in time and money for a police force to take on a major fraud investigation is considerable and a judgement has to be made whether the £7m spent on this case, and police officer time, could have been better spent in pursuing other crimes, such as child sexual abuse, and the multitude of lower scale frauds perpetrated against smaller companies and the elderly.

If Thames Valley Police take on further cases of a similar nature it will again tie up a large number of police officers and staff. Yet if it is not prosecuted no one will be brought to justice. I have an uncomfortable feeling that other police forces are in similar positions. If a bank is physically raided then a huge police effort will go into bringing the bank robbers to justice. If it is raided by its own staff it may well be ignored.

There needs to be an agreed policy that if a major fraud is committed, and the Serious Fraud Office does not have the capacity to take it on, then the police force that investigates it is reimbursed by central government, or through a fine or costs imposed on the auditors, the bank and the offenders involved.  In this case there does not appear to be a way to recompense Thames Valley Police and the Council Tax payers who part pay for their police force. The government should ensure that full restitution for the cost of prosecuting this case is made, and that every major fraud should be investigated.

The entire budget of the Serious Fraud Office is only £44M a year, whilst for the City of London Police, who also investigate fraud, it is considerably less. When compared to a fraud of this size, then it is clear that far greater resources need to be made available to tackle the scale of the problem. The overall annual fraud and cyber-crime loss is put at nearly £200BN.  It affects everyone, from the elderly and the vulnerable, to small businesses and to the largest. Combatting fraud should be financed properly, and it should not be necessary for local police forces to take on cases of this size and complexity. Until this is done properly at a national level fraud will continue to be the largest financial crime in the UK, and the crime of choice for intelligent criminals. If ever there was a possible spend to save measure, financing the fight against fraud would be the most productive.

I wish to congratulate the Thames Valley Police officers and staff who have pursued this case to a successful conclusion over the last 6 years. It has been an uphill struggle at times, and their persistence has been rewarded.

Anthony Stansfeld

Police and Crime Commissioner for Thames Valley