Financial Crime: Could launching a Serious Fraud Office shift gears for Gibraltar?
19 Sep 2017

What lessons can be learnt for the prosecution team in a little jurisdiction such as Gibraltar when it is landed with a complex multi-million dollar fraud case? How does it handle the resourcing factor and could plans to launch a London-styled Serious Fraud Office shake-up the landscape?

Irene Madongo caught up with Mr Reginald Rhoda QC, Master of the Bench of the Inner Temple and Senior Counsel to the Government of Gibraltar. Mr Rhoda is also the former Attorney General for Gibraltar.

Irene Madongo (IM): Gibraltar has recently-concluded a complex $50 million fraud case. We understand that you had to outsource or import some talent from London to come in and work on it. What was the outcome of the case and the follow-up like?
Reginald Rhoda (RR): We managed to get a successful prosecution, the criminals were convicted and jailed, but there are still civil matters going on, and liquidators have been brought in. What I think we learnt from this case is that the resources that we put into it finally, if we had put those into the case from the beginning, it would have made life easier. But of course it is very difficult in a small jurisdiction to be able to provide the mechanism that something like the United Kingdom’s Serious Fraud Office (SFO) has.

IM: You have mentioned that on the regulatory front, Gibraltar is fairly adequately staffed. But there remain issues with resources to actually fight financial crime?
RR: Yes, the regulatory aspect is well staffed, because it is a separate entity from government. They have the ability to have more control of the salaries there and they are a well-resourced organisation. Also, we have a good suspicious activity reports system, and I must say, the banks and financial institutions have been very good.

But there isn’t a lot of point in having good regulation unless you are also able to enforce it, and of course, small jurisdictions, by definition, don’t have the sort of resources like the SFO, where you have people who do nothing else but specialise in specific areas.

Within the chambers I am in, you have a small group of lawyers, a small group of people, who do everything for government, from crime assessment to advisory and general work, so you don’t have this cadre of specialists and I think things nowadays are moving into a world where that enforcement specialism is needed.

IM: What do you think can be done for small jurisdictions to attract top talent that specialises in tacking white collar crime?
RR: [That’s] quite difficult. What I would like to see, what I think is one solution to dealing with a jurisdiction like mine, is to have a standing body, a sort of mini-SFO where you have an integrated group of a police officer, lawyer and forensic accountant, who are really able to specialise solely in fraud. I think in the future this will be our line of travel.

IM: And in terms of attracting talent, do you think you are likely to get some solid player, from London perhaps, or even yourself, to head such a SFO?
RR: Well, I haven’t thought yet of recruitment. What I would like to get through first is the idea of the entity existing, and then we will look at personnel.

IM: Offshore financial centres are at times viewed suspiciously, i.e. as being ‘soft’ on tackling financial crime, and indeed have been used for financial crime, do you think having a SFO in Gibraltar might change such perceptions?
RR: Oh yes, we are very compliant at present, and we have had several inspections which have found that we are compliant, and we do tick all the boxes. But yes, something like this would be useful to say we do take financial crime very seriously, and we have a unit that does nothing else.

IM: It has been said that it’s not the predicate crimes that take place in Gibraltar, but it is the cash from those crimes that is stashed there that is the issue. What’s your take?
RR: I don’t want to overdo the aspect about the cash being stashed there because all financial centres and banking sectors do have money coming in, some of which is less than clean. In fact, I think that the biggest such centre in the world is London. However, yes, by and large, the predicate offence will not be committed in Gibraltar. And really, as the prosecution, we have to prove the predicate offence, which sometimes can be quite difficult.

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