London, June 3 2008 – Fraud office drops Bosnia corruption case

Richard Alderman, the new SFO head, agreed to withdraw his predecessor's request to the attorney general for consent to prosecute what would have been the office's first corruption case under new laws, said an SFO spokesman.

The SFO wanted to charge a Serb businessman, Vuk Hamovic, who was involved with two London-based energy finance companies. He denied allegations that he manipulated aid payments and electricity deals in Bosnia. He was the subject of stalled investigations by the Bosnian special prosecutor and a lengthy parallel inquiry across six countries by the SFO.

The SFO has yet to successfully prosecute a case since new anti-corruption laws were passed in 2001. The SFO said yesterday that Alderman, recently appointed by the attorney general, Lady Scotland, decided there was “no realistic prospect of conviction” in the case.

Although the relevant deals had been done before the passage of the 2001 act, Alderman's predecessor, Robert Wardle, took legal advice and believed it was possible to bring a case under the 1906 Prevention of Corruption Act.

But Scotland was able to block the prosecution until Wardle's departure, because cases under the 1906 act require her formal consent – a power the government itself is currently proposing to remove.

Sue Hawley, of the social justice campaign group the Corner House, said last night: “This is deeply disappointing news … Dropping the case sends totally the wrong message to corrupt companies, emerging democracies trying to fight corruption and the international community.”