ON MARCH 15 Bernie Ebbers, the former boss of WorldCom, was found guilty in a trial by jury of all nine counts against him after the $11 billion accounting scandal. Four months later in New York the Federal Judge Barbara Jones rejected Ebbers’s defence attorney’s plea for leniency and imposed a combined sentence of 25 years, with a recommendation that he serve his time in a low-security prison.

This means that the 63-year-old Ebbers is likely to spend the rest of his life behind bars. He has also agreed to hand over his personal wealth, estimated at $45 million, to compensate aggrieved investors and had his request for a new trial denied the day before his sentencing.

If someone were to commit the same offences in the UK, initial investigations would be undertaken by the Financial Services Authority which, because of the serious and complex nature of the alleged fraud, would refer the matter to the Serious Fraud Office (SFO). However, as the Jubilee Line case fiasco proved, not all complex and serious fraud cases make it to the SFO.

Six men who were accused of corruption over construction of the Jubilee Line extension were acquitted in March when the case, which was prosecuted by the Crown Prosecution Service (CPS), collapsed at an estimated cost of £60 million.

No sensible reasoning has been advanced to explain why the CPS retained control of this case, but what it showed was how vital it is that the Government provides enough resources to allow the SFO to undertake the role for which it was created.

A disappointment to some observers was that the jury’s role in the collapse of the Jubilee Line case was used by the Government to push its vision of fraud trials without jury. In the US, Ebbers at least had the right to give evidence before a jury. That right is no longer guaranteed in the UK in serious and complex fraud trials where applications can be made to have the trial without a jury.

It seems that we have much to learn from the Americans. The Ebbers case was one of the most significant fraud cases in history but was managed in such a way that the trial lasted for only six weeks before a jury. In the UK one can list a good number of cases that have exceeded six months at trial.

If Ebbers had been prosecuted in Britain, it is likely that the SFO would have brought charges for offences of common law conspiracy to defraud, together with substantive offences under the Financial Services and Markets Act 2000.

Conviction on these offences would culminate in a combined sentence of about ten years’ jail in the UK, coupled with orders for compensation to victims of his crimes and confiscation of his assets.

In the UK there is no statutory offence of fraud, although the Government is trying to change this with a Fraud Bill, with a maximum sentence of ten years’ jail for fraud.

One thing is certain, the Bernie Ebbers sentence shows that the US regulators and courts take white-collar crime seriously and that they are not frightened of taking on those who commit criminal offences or fail to observe regulatory requirements.

The author is head of fraud and financial crime at Eversheds.

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