Serious Fraud Office: Bryan Evans

Steve Baker Excerpts

Wednesday 3rd February 2016 Westminster Hall

[Byron Davies (Gower) (Con)]

I beg to move,

That this House has considered Bryan Evans and the Serious Fraud Office.

It is a pleasure to serve under your stewardship, Sir Roger. I bring this matter to the House so that Mr Bryan Evans, my constituent, may have his account of events put on the parliamentary record. It is a complex matter that involves many actors, which I hope to make clear. I know that this matter has affected other people, which is made evident by the number of colleagues here today and those who have co-signed a letter to the Select Committee on Business, Innovation and Skills that asked it to examine the ongoing allegations of fraudulent misrepresentation and collusion involving banks and the receivers used by those banks.

I pay tribute to the hon. Members for Cardiff Central (Jo Stevens) and for Ogmore (Huw Irranca-Davies), who have previously brought forward cases from their constituencies for debate and worked hard and with great diligence on the issue. I hope we will continue to make progress on a cross-party basis.

I have known Mr Evans for several years—I first met him when I was his Welsh Assembly Member—so I am well aware of his case. I have been directly involved for some time, so I am aware of the devastating effect that it has had on him and members of his family. Mr Evans is firmly of the belief that he is the victim of fraud, and that he has evidence to substantiate that. Indeed, before he took his evidence to the South Wales police economic crime unit some four years ago, it had been reviewed by two retired senior fraud officers who both confirmed that, in their opinion, a fraud investigation was warranted. However, to this day Mr Evans is adamant that his case has not received the attention it warrants. An investigation into the conduct of Mr Evans’s case by the aforementioned crime unit is currently being undertaken by the professional standards department of South Wales police, which endorses Mr Evans’s beliefs.

Mr Evans tells me that he, along with his former MP, Martin Caton, and I, as his Assembly Member, had been misled from the highest level. Furthermore, he forwarded his evidence to the Serious Fraud Office two years ago, and here again he says that no proper action was taken.

Mr Evans was the managing director and 50% shareholder in EP Leisure, with the other 50% being owned by Mr Robert Sullivan. The company was a vehicle to develop a prestigious piece of land that it owned on the seafront in Mumbles. The site was, and still is, being run as a car park, grossing approximately £180,000 a year. The land was adjoined by council-owned land and it had been agreed to unify the sites for a comprehensive development.

In 2003 EP Leisure engaged Poolman and Harlow, a firm of valuers. The firm was owned by Roger Poolman and Bob Harlow and the latter worked closely with Mr Evans on all aspects of the proposed development. EP Leisure was funded by Barclays bank. In April 2006 Poolman and Harlow were bought out by a national firm, Lambert Smith Hampton. It is believed that Messrs Poolman and Harlow received a substantial amount of money for their property portfolio, part of which was EP Leisure’s land. Mr Harlow continued to work with Mr Evans under the Lambert Smith Hampton banner.

In 2007 Mr Harlow placed a valuation on EP Leisure’s land of between £4 million and £6 million, and that value would increase if certain criteria were achieved. The valuation was so buoyant that Barclays was happy to return equity to Mr Sullivan that had been supporting a loan, so the loan of some £2.2 million became free-standing. In 2008 Barclays introduced a manager, Mr David Little, into the frame. It was at that time that Mr Evans tells me Mr Harlow started liaising more frequently with Mr Little, which led to Mr Evans asking Mr Harlow if he was now in a conflict-of-interest situation. Mr Harlow assured Mr Evans that he was not.

In November 2008 Mr Evans was informed by Mr Little that Bob Harlow had now devalued EP Leisure’s land to £1 million, leaving Barclays “significantly under water”. Oddly enough, 18 months later, Mr Evans attended a meeting with his solicitor and his accountant where he met Mr Jonathan Hoey of TLT Solicitors and Mr Sainsbury, the head of recovery for Barclays bank. Mr Sainsbury told him that that valuation did not exist, and it is that valuation report that is at the heart of the case.

Mr Evans told me that Mr Little’s attitude became extremely aggressive. He tried to pressurise Mr Evans into acquiring the adjacent council land and putting it under EP Leisure’s ownership. Mr Evans refused to do that and wrote the first of many letters to the then chief executive of Barclays, Mr John Varley. Mr Evans later wrote to two subsequent chief executives and the chairman of Barclays. Subsequently, Mr Little was removed from EP Leisure’s account.

In July 2009, at the behest of Mr Varley’s office, Mr Evans, along with his co-director, Mr Derek Morgan, met Mr Steve Thomas and Mr Wynne Walters of Barclays to resolve all issues. However, at that meeting Mr Evans was told that his file had already been sent to London by Mr Little for recovery. Mr Evans said that that was later proven to be untrue in writing from Martin Sainsbury. In September 2009 Mr Evans was written to by Martin Sainsbury, asking him either to sell the land or to refinance the debt. Mr Evans agreed to the latter. Mr Sainsbury also requested that Lambert Smith Hampton take the lead in all future negotiations. Mr Evans explained that that was not possible and Mr Sainsbury accepted that.

Mr Evans had become extremely suspicious of Mr Harlow’s actions. He believes his suspicions were borne out when, out of the blue, he received a letter from Mr Sainsbury that stated that he was disappointed that he was not co-operating with Mr Harlow, and that he was placing Lambert Smith Hampton as Law of Property Act receivers over his land. Mr Evans contacted Mr Sainsbury to explain that Mr Harlow was at all times fully informed of all matters and the threat of receivership was withdrawn.

In November 2009, after receiving another report from Mr Bob Harlow, which was to be later referred to as a pre-receivership report, Mr Sainsbury placed Mr Andrew Hughes and Roger Poolman of Lambert Smith Hampton as LPA receivers over EP Leisure’s land. That report is at the heart of Mr Evans’s allegation of fraud and of Mr Evans losing his land and Lambert Smith Hampton’s gain.

[Mr Steve Baker (Wycombe) (Con)]

In a similar case, a constituent of mine has alleged that NatWest committed a fraud by persuading him to surrender a 25-year buy-to-let mortgage in exchange for a 12-month loan in anticipation that he would subsequently receive a 25-year mortgage, but that was not forthcoming. Written agreements are missing and my constituent has suffered material disadvantage. The ombudsman has ruled against my constituent, so I want to ask the Minister what is to be done in such cases.

[Byron Davies]

I am grateful for that intervention, which goes to prove that there are many ongoing cases.

Mr Evans believes that Mr Harlow was determined to prevent him from refinancing with another bank as Lambert Smith Hampton would lose the contract for the development, which could in turn lead to Poolman and Harlow having to reimburse Lambert Smith Hampton for that loss, which is commonly referred to as a clawback.

Mr Evans engaged Geldards solicitors in Cardiff. Over a period of time, Mr Karl Baranski of Geldards discovered that Barclays had no legal charge over EPL’s land and therefore its actions to date could be challenged. Mr Baranksi also pointed out to Barclays that Lambert Smith Hampton was in a conflict-of-interest situation.

--- Later in debate ---

[The Solicitor General (Robert Buckland)]

It is a great pleasure to serve under your chairmanship, Sir Roger. I pay warm tribute to my hon. Friend the Member for Gower (Byron Davies), who brings his case to the House with passion as not only a constituency Member of Parliament but a former senior police officer, with a degree of insight into the matters we are discussing. I think he would agree that the thrust of his speech, which I listened to carefully, dealt with issues relating to the police, their involvement in this case and—I will put this neutrally—the lack of positive progress made for his constituent, Mr Evans.

My hon. Friend asked some specific questions, in particular why the police refused to seek a production order from the bank. Of course, I am aware that Mr Evans complained to South Wales police about the outcome of the original investigation, and that its professional standards department is currently investigating that complaint, which I very much hope will be concluded. It would be inappropriate for me to comment on the merits of that, or indeed the merits or otherwise of the case. From what I have heard, however, it must be a deeply troubling and huge problem for Mr Evans. Stepping into his shoes for a moment, I can understand why he feels as he does.

As one of the Ministers with a superintendary role over the independent Serious Fraud Office, it is important, in the context of the debate, that I outline as succinctly as I can the principles and guidelines that the SFO applies in determining whether to embark upon an investigation and a prosecution. As I said, having an independent agency is vital, bearing in mind the constitutional importance of having an independent prosecutorial authority, but I remind hon. Members that the SFO was created under an Act of Parliament—the Criminal Justice Act 1987—to deal with the top tier of serious and complex fraud cases. We know the sort of cases that the director, David Green, has taken on—cases such as Rolls-Royce, GlaxoSmithKline and Tesco, to name but a few. They are high-profile and high-risk, involving huge sums of money, great numbers of victims or species of fraud. That is not to understate the seriousness of the loss that my hon. Friend’s constituent has suffered.

[Mr Baker]

Is it not the case that there might be in aggregate a very large sum of money involved in similar cases?

[The Solicitor General]

I am grateful to my hon. Friend for that intervention, and I listened with interest to his earlier intervention and that of the hon. Member for Ogmore (Huw Irranca-Davies). I know the point he is making, and the straight answer is that the SFO keeps the matter very much under review. If there is indeed a cumulative effect and a clear modus operandi that suggests widespread and similar frauds of this nature, the circumstances will clearly change.

To answer directly the question that the hon. Member for Ogmore asked, I do not quite think we are there yet, but let me explain further—I know he is very familiar with this issue, because he has asked written questions, to which he will get very swift answers, I promise. However, he gives me the opportunity to outline the statement of principle.

The decision by the director of the SFO on whether to launch an investigation has to be made on the facts and circumstances of each case. Being overly prescriptive would not be appropriate, bearing in mind the unique circumstances of every case. Many factors are taken into account, but for guidance, the statement of principle sets out that when considering cases for investigation, the director will consider the following: first, whether the apparent criminality undermines UK plc commercial or financial interests in general and in the City of London in particular, causing reputational damage to the country; secondly, whether the actual or potential financial loss involved is high; thirdly, whether actual or potential economic harm is significant; fourthly, whether there is a significant public interest element; and finally, whether there is a new species of fraud.

“That is not a tick-box exercise where, if every one of a set of measures is met then the SFO will open an investigation. That would inevitably lead to cases being taken on by the SFO which did not require its unique model of investigators, prosecutors and other professionals working together in one organisation or its set of powers.”

I will quote from the “Protocol between the Attorney General and the Prosecuting Departments”, which sets out that the decision for the SFO to investigate and prosecute is

“a quasi-judicial function which requires the evaluation of the strength of the evidence and also a judgment about whether an investigation and/or prosecution is needed in the public interest.”

That will not always be an easy decision, but for the vast majority of financial crimes, the traditional model of a police investigation and a Crown Prosecution Service prosecution is the best model. That is because the police, as my hon. Friend the Member for Gower knows, rightly have primary responsibility for investigating crime in this country, and Action Fraud has been established as the national reporting centre to which reports of alleged fraud should be referred in the first instance.

I repeat that the SFO’s role is limited to investigating and prosecuting cases of serious or complex fraud, so it cannot and should not take on every case referred to it. To give that some context, the SFO takes on between 10 and 20 cases each year. It receives nearly 3,000 reports of fraud directly from the public each and every year, so the vast majority of referrals are not about matters that it can properly investigate. Complainants are then advised that the complaints will be referred on to Action Fraud for dissemination to the relevant police force where appropriate.

The SFO retains the material and uses it for intelligence purposes, and that is the point that hon. Members have made. That intelligence material is part of the SFO’s work in building an intelligence picture, and through that information and material it can properly identify the top-tier cases that are appropriate for it to investigate. In other words, debates such as this are invaluable in bringing into the public arena information that can then be collated and properly reviewed. I said that to the hon. Member for Ogmore in September and I repeat that assurance today.