UK fraud-busting agency head ran "sloppy" operation-MPs

LONDON, March 7 Thu Mar 7, 2013 2:52pm GMT

LONDON, March 7 (Reuters) - The former head of Britain's Serious Fraud Office (SFO) was on Thursday accused of running a "sloppy and slovenly" operation and agreeing exotic senior staff packages and payoffs with scant regard to the public purse or proper procedure.

In a public grilling into exit payments to three top executives, parliamentarians told Richard Alderman, who left the agency last April, it was unacceptable that his former CEO Phillippa Williamson ran up 27,600 pounds ($41,600) in one year in UK travel and hotel costs.

The Public Accounts Committee (PAC) parliamentary spending watchdog also voiced outrage at Alderman's reliance on informal notes and conversations before paying three top executives a total of around 1 million pounds in payoffs -- and questioned whether Williamson was an old friend.

The hearing heaped further embarrassment on the agency, which has struggled to restore faith in its fraud-fighting capabilities since a botched probe into property moguls Vincent and Robert Tchenguiz left it fighting a 300 million pound ($452 million) damages claim.

Alderman conceded he had worked with Williamson previously, prompting PAC Chairwoman Margaret Hodge to exclaim: "It is shocking. It is just shocking -- against every principle about how public services should be run."

"It looks like you took the decisions yourself, you decided the packages yourself, you decided you didn't need written agreement -- had a natter on the phone," she said.

"This is sloppy, this is slovenly and there is not one iota of contrition about you," said Conservative lawmaker Stewart Jackson.

Alderman also came to blows with current SFO boss David Green, who denied the existence of written evidence that government lawyers had recommended the departure of Williamson, former chief capability officer Chris Bailes and ex technology head Ian McCall so he could bring in his own team.

"Mr Alderman is most welcome to come to the SFO to have access to papers from his time in the office," said Green, who was also called as a witness into the hearing.

Green conceded he had overhauled the agency since he took over and that the positions of chief executive and chief capability officer no longer existed.

Alderman said he did not realise he should have sought permission before offering an extra 5,000 pound initial settlement.

He said he feared a lawsuit after being told by his Human Resources colleague that Williamson and Bailes had instructed an employment lawyer.

"If I should have gone to Treasury for approval of 5,000 pounds ... I'm very sorry," he said.

Despite no written evidence of any pending legal suit, that sum was raised to 15,000 pounds to settle further claims, including "malicious allegations", he said.

Williamson has already received that payment, while Bailes has yet to do so.

Green, who has been told the ex gratia payment for Bailes is enforceable, said the finance ministry had nevertheless blocked it and welcomed advice from the committee.

"Get the money out of Mr Alderman," Hodge said. ($1 = 0.6643 British pounds) (Editing by David Cowell)