SFO Ordered to Pay Multi-million Legal Costs After Failed Celtic Energy Investigation

CARDIFF, Wales, February 12, 2015 /PRNewswire/ --

The Serious Fraud Office (SFO) has today been ordered to pay a multi-million costs bill, in the region of £6 million, following "improper and unreasonable" attempts to prosecute two coal magnates, three respected commercial solicitors and an eminent QC.

The SFO tried to prosecute a retired consultant solicitor, Eric Evans, his professional partner, Alan Whiteley, and assistant solicitor Frances Bodman. They had, between them, set up a complex commercial transaction concerning £170 million restoration obligations at opencast mining sites for Richard Walters and Leighton Humphreys, directors of the Welsh mining company Celtic Energy. The SFO also tried to prosecute Stephen Davies QC, a leading insolvency QC and deputy High Court Judge, who advised that the scheme was lawful.

After the case was dismissed by the High Court in February 2014, the SFO applied to the High Court for permission to prefer a voluntary bill of indictment which would have reopened the case. In November 2014 Lord Justice Fulford threw out the case for the second time.

After a complicated costs hearing, in two jurisdictions, the SFO has been ordered to pay the legal bills of the six accused.

The SFO had accused the six of conspiracy to defraud in terms not known to law.

All parties always vehemently denied having done anything wrong.

In this final hearing, Mr Justice Hickinbottom observed that there was 'a failure legally to analyse the case against [Evans & Others]' describing 'cataclysmic alterations' to the case against the defendants as 'attempts to save a fatally-holed ship'. The High Court Judge further commented that the SFO's actions amounted to 'an exceptional case, not simply an error of judgement.'

Philip Williams, a serious fraud case specialist at law firm Blackfords Solicitors, who represented defendant Eric Evans, said: "This has been a complex case from start to finish, culminating in highly complicated costs proceedings. There were systematic flaws in the way that the SFO investigation was initiated and carried through. It is not the first time that the SFO have found themselves having to make amends for flawed investigations and undoubtedly questions will be raised over whether the SFO is fit for purpose.

"We are pleased to have a positive conclusion on this case for our client Eric Evans, who was wrongly alleged to be the architect of a fraud. In fact he was the progenitor of a clever, technical commercial agreement characteristic of a dynamic solicitor responsible for the development of many landmark commercial sites along the M4 corridor over many years."

Eric Evans added: "The SFO never understood the planning law underpinning the agreement I designed. Their conduct has been wholly flawed. In attempting to prosecute me with an offence not known to law, they have repeatedly changed their case. They instructed a QC who had personally advised prosecution witnesses.

"They have buried caselaw unhelpful to their position. They have failed to give my legal team material they held which undermined their case.

"This is a further case of a catalogue of cases where the SFO have impugned their reputation and authority. The Government continues to pump money into misconceived SFO blockbuster cases. I wouldn't be surprised if there were more calls for it to be disbanded as a result of this case."

This is the latest embarrassment for the SFO. It follows the collapse of the trial of Victor Dahdaleh, the aluminium magnate, where the SFO had conducted inquiries through a non-independent intermediary in the Middle East. It also follows the SFO paying out substantial costs and damages following the collapse of the investigation into property developer Vincent Tchenguiz and his brother last year.

Eric Evans was represented by Philip Williams and Emma Harris of Blackfords Solicitors, one of the UK's leading fraud specialists, who instructed a team of top criminal and planning barristers.