THE ATTORNEY GENERAL

On 23rd June 1994, the matter was raised with the Attorney General who was asked to investigate the involvement of accountants in money laundering and the AGIP affair in particular. In response, he confirmed that the authorities had known about the AGIP affair in 1985 and added,

The contents of the Director of Public Prosecutions' files are not known. The civil case brought in the High Court was not informed that the Police had previously investigated the matters. Therefore, neither the plaintiff nor the defendants were able to summon this evidence. The reasons for the Attorney General's silence either before or after the High Court judgement are not known.

THE INSTITUTE OF CHARTERED ACCOUNTANTS FOR ENGLAND & WALES

Correspondence with the ICAEW began during October 1991. The ICAEW replied by noting that it was considering the matter (letters dated 16 October 1991; 29 January 1992). Following an extended period of silence, a request for information about progress on this matter drew the response that

The silence from the regulators, including the ICAEW, continued during 1993 and into 1994. Correspondence was re-opened with the DTI and the SFO on 4th March 1994. The SFO Director replied on 17th March 1994 and said:

Seemingly, the SFO were happy for the ICAEW to decide whether evidence of `serious or complex fraud' existed, regardless of the court judgement. We are not aware of any legislation which authorised the ICAEW to investigate `serious or complex fraud' involving accountants or non-accountants. The claim that the ICAEW has `concluded' was not accompanied by any press release by the ICAEW, bearing in mind that the involvement of accountants in money laundering was the subject of a High Court judgement.

On 15th April 1994, the Minister for Corporate Affairs wrote, "My officials are discussing the AGIP case with the Institute of Chartered Accountants in England and Wales, and I shall write to you again when these enquiries are complete". He added, "I understand that the ICAEW are writing to let you know about the outcome of their investigation" (letter dated 9 May 1994). Coincidentally, the ICAEW wrote on the same day:

In our view, it seems, that the ICAEW considered itself better placed to evaluate the evidence than the High Court judge who concluded that accountants were `professional men' who `obviously knew that they were laundering money... '. It would also be recalled that the AGIP case was a `civil case' yet the ICAEW was purporting to apply a `criminal case' criteria.

The existence of the alleged ICAEW report enabled the Prime Minister to parry all questions²⁵ relating to the possible involvement of accountancy firms and a former Cabinet Minister in money laundering

A similar line was taken by the Minister for Corporate Affairs.

With a change of Ministers at the DTI, another attempt was made to persuade the Minister for Corporate Affairs not only to address the matter, but to make a public statement about it, especially as neither the ICAEW, nor any other regulatory body had published any report of its investigation of the case. In response (14 January 1995), the Minister of Corporate Affairs confirmed that he and his officials had seen a report by the ICAEW which, as we have already noted, claimed that there was insufficient evidence.

Without issuing a press release or a public report of any kind, the ICAEW claimed to have concluded the matter. Neither Jackson nor Griffin had been given sight of the alleged ICAEW report or invited to submit any evidence. Both had volunteered some 20,000 pages of evidence but this offer was neither taken up by the ICAEW, the SFO or anyone else (also see, Mansell, 1995). Investigative journalists Stuart Mansell and Sue Stuart had reported the affair, but were not invited to submit any evidence or shown any report prepared by the ICAEW. We had also urged the DTI and the ICAEW to investigate the affair and submitted evidence, but were not given any sight of the alleged report. Was our evidence even considered? If so, was it accepted, or rejected, and for what reasons? Why should the ICAEW's decision on matters which also involved non-accountants (e.g. Roger Humphrey, Ian Griffin) be final? Does the ICAEW really apply `criminal case' test to disciplinary evidence? If so, how is it able to take disciplinary action against practitioners for matters such as `failure to answer correspondence'? What was in the alleged ICAEW report which no outsider was allowed to see? Who exactly did the ICAEW consult in weighing up the evidence sent to it? No one was willing to answer any questions. Besides, how could the ICAEW investigate allegations over the involvement of a former Cabinet Minister, or the possible involvement of non-accountants which were highlighted in the High Court judgement? Having scoured a number of statutes, we could not find anything which authorised the ICAEW to investigate `criminal' cases. Eventually, the ICAEW stated (letter dated 31 March 1995) that:

So what was the point of claiming that the evidence submitted to the ICAEW had to meet the `criminal cases' test? Despite requests (19th June 1995; 4th August 1995), the Prime Minister and the Minister of Corporate Affairs were either unable, or unwilling (letters dated 28th July 1995; 7th September 1995) to refer us to any statutory basis which empowers the ICAEW to interview (accountants and non-accountants) witnesses, demand evidence and investigate cases of money laundering.

On 15th May 1996, the Speaker of the House of Commons granted an adjournment debate (lasting thirty minutes) to allow Austin Mitchell MP to raise the AGIP affair on the floor of the House. The Minister continued to defend the status quo by arguing that the ICAEW had investigated the matter (Hansard, 15 May 1996, cols. 908-915). However, the Minister was unwilling to publish the alleged ICAEW report and/or offer any public evidence to show that the affair had been investigated.

CHAPTER 6
THE ACCOUNTANTS' SPIN

After the May 1997 general election, Labour formed the government. We once again urged the Department of Trade and Industry to examine the issues. In April 1998, the Minister for Corporate Affairs, Ian McCartney, arranged for the ICAEW to send us a copy of its report (hereafter the ICAEW Report).

The ICAEW Report is dated 1st March 1994 and is 27 pages long. Its contents are as follows:

The copy of the report sent to us is incomplete. For example, the report contains a letter (dated 20 July 1993) from the Jersey branch of Coopers & Lybrand, but only the first page is included. However, the ICAEW Report does present an opportunity to examine the effectiveness of regulatory practices and deal with the involvement of accountants in anti-social activities.

The AGIP affair also presented an opportunity for examining the effectiveness of the standard auditing procedures and possibly developing more effective ones. Unfortunately, the ICAEW Report does not contain any evidence to show that matters relating to the AGIP audits have been investigated. The report does not contain a list of any questions for auditors, far less any answers. So we still do not know how the AGIP creditors got paid, when the original payments made to them were fraudulently diverted.

Much of the report prepared by the investigation `Team' and the commentary by the `Director of Professional Conduct Department' consists of summaries of newspaper reports and the publicly available transcripts of the court judgement and speculation thereupon. No reference could be found to any of the evidence that we had submitted to the ICAEW. In the case of AGIP, the fraudulent payments passed through Tunisia, England and France, with shell-companies often obscuring the origins and destination of illicit funds. There is nothing in the ICAEW report to show that any steps were taken to secure information, evidence and files from other jurisdictions. No attempt has made to request to secure any files from any accountant, accountancy firm or its associates. No attempt has even been made to look at the bank statements of the shell companies allegedly used to launder money.

We had always argued that the ICAEW did not have the capacity to investigate matters relating to allegations of money laundering. It had no independence from the auditing industry. The ICAEW certainly could not subpoena accountants, or non-accountants (e.g. Ian Griffin, Roger Humphrey), interview them and/or any witnesses. It had no capacity to examine their files and other relevant documents. Yet it became a willing party to the investigation even though the Secretary of the ICAEW Investigation Committee stated that:

So why did the ICAEW, the DTI, the SFO, the Prime Minister and others continue to argue that allegations of `money laundering' were being investigated or even could be investigated by the ICAEW? The ICAEW's own admission does not lend any credence to its claims that it has investigated the matter. By its admission, its disciplinary procedures were not competent to even begin an investigation.

Matters relating to AGIP had been reported in the newspapers since 1985. The High Court case was concluded in 1990/91. We had been pressing various regulators to act since early 1991. Given the High Court revelations, one might have expected the ICAEW to move with some urgency, but its Report shows little concern. The Secretary of the Investigations Committee wrote:

What was more pressing than the views expressed by a High Court judge and the involvement of accountants in money laundering is not clear. Does the ICAEW admission mean that faced with "intractable problems", it does nothing? Certainly, there is nothing in the report to explain the delays. The correspondence with external parties is minimal and there is no indication that any face-to-face meetings took place with any of the parties. No evidence had been invited from Griffin and Humphrey. No correspondence had been sent to any of the journalists who investigated the AGIP affair. There appears to be absolutely no operational reason for the delay.

The ICAEW Report is not based upon any sworn affidavits from any of the parties concerned. There is no list of any questions which any individual accountant or accountancy firm had been asked to answer. The ICAEW Report speculates on three possible interpretations of the events. These are framed from the transcript of the publicly available High Court judgement and press reports rather than from any original investigation by the ICAEW. The Committee's favoured belief is "the possibility that the funds were intended as bribes to Tunisian officials or ministers" (page 2). Yet the report does not contain any evidence to show why the Committee believes this version of the events rather than any other interpretation. There is certainly no indication of any weights that might have been attached to any of the evidence to enable the Committee to reach its favoured conclusion. The ICAEW does not appear to have asked for the sight of any of the allegedly forged bank drafts. The report does not contain names of the directors, or the bank signatories of the companies through whom the money was laundered.

Our conclusion is that the ICAEW investigation is totally inadequate. The ICAEW Report does not meet the minimal standards expected for an investigation. Yet it had enabled the DTI, the Prime Minister and others to parry all questions. What were they all covering up?

CHAPTER 7
REFLECTIONS ON FIGHTING MONEY LAUNDERING

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