Judge attacks 'scandalous' CPS blunders in fraud case

A fraud and corruption prosecution which has run up about £10m in legal costs collapsed yesterday because of "wilful" prosecution failures branded "quite scandalous" by a crown court judge.

Judge David Higgins pronounced not guilty verdicts on five defendants charged with conspiracy to defraud the Prudential in a prosecution dating back to 2001 which had still not reached trial.

The debacle comes less than a month after a £60m fraud prosecution over contracts for the Jubilee tube line collapsed after 21 months in court.

Judge Higgins, sitting at Southwark crown court in south London, said the five Prudential defendants could not receive a fair trial because the prosecution had persistently failed to disclose vital documents to the defence and had neglected to take action to prevent the Prudential from destroying large numbers of documents crucial to the case.

Instead of carrying out their own investigation, police and prosecutors had abdicated their responsibility by leaving it to the Prudential to decide what documents to hand over.

"Such a state of affairs is - and my public duty requires that I do not shrink from saying it - quite scandalous," said the judge.

He said the background to the case was a matter of "public notoriety" - the scandal in which the Prudential and other financial institutions were found to have missold many thousands of personal pensions between 1988 and 1994.

Under extreme pressure from financial services regulators to identify and compensate the victims of misselling, the company set up a unit headed by Susan Melton.

The work was too much for the Prudential to handle itself and had to be outsourced.

The prosecution alleged that Colin Glossop, head of a company to whom the work was contracted, gave Mrs Melton gifts, which she accepted, to get the work.

Mrs Melton, her husband Michael, and two other defendants, Hugh Caswell and David Gilbert, were alleged to have set up two other companies to do the work for less than the Prudential was charged and to have pocketed the extra funds.

The judge said the conduct, giving gifts and granting contracts, were not unlawful in themselves. To show unlawfulness, the prosecution had to prove an improper motive.

Judge Higgins said it was only in 2004 that the prosecution accepted that it had a duty to disclose material in the hands of the Prudential.

The prosecution's "inertia" and dependence on the Prudential was "astounding" in the light of the Prudential's conduct in May 2002.

The Prudential had brought a civil action against Mrs Melton and three of the other defendants. In May 2002 the company settled the action, with a modest payment from the defendants, and even agreed to supply Mrs Melton with a reference for future employers.

It withdrew all allegations of criminality, but the City of London Police and the Crown Prosecution Service continued with their case. At that stage, the prosecuting authorities, if they proceeded, had to recognise that the inquiry they should have begun in 2001 was ever more necessary.

It was "a matter of the gravest concern" that the prosecution did nothing more to try to preserve the documents.

The Prudential lost interest and started to destroy crucial documents, although it later said the destruction was due to a "misunderstanding."

The prosecution's conduct was "consistent, sustained, systematic and predictable", and the judge said he was "driven to the unpalatable conclusion that it was wilful."

A spokeswoman for the Crown Prosecution Service acknowledged that there were "shortcomings" in the prosecution's handling of the case and said the service would be studying the judgment.

One lawyer involved in the case said: "One would expect action to be taken within the CPS, or even at the attorney general's level."