New Embarrassment for British Regulator

New Embarrassment for British Regulator

LONDON – Britain’s Serious Fraud Office faced renewed embarrassment on Thursday after it admitted it had lost thousands of documents linked to an investigation into the British aerospace giant BAE Systems.

The agency has been trying to rejuvenate its reputation under its new leader, David Green, after widespread criticism of a botched investigation into the role of the property tycoon Vincent Tchenguiz in the collapse of the Icelandic bank Kaupthing.

The fraud office, which is currently investigating several cases related to manipulation of the London interbank offered rate, or Libor, said on Thursday that it had lost around 3 percent of the material connected to a case against BAE Systems – or 32,000 documents, 81 audiotapes and other electronic media. The case involved BAE’s payments to a Tanzanian employee. As part of a settlement with the office in 2010, BAE paid £30 million (more than $ 46 million) to educational projects in Tanzania.

The agency said Thursday that it had discovered the loss in May after it accidentally sent unauthorized material to individuals connected to the case. But it said it had since recovered 98 percent of the material.

“Any loss of data is a serious matter, and the S.F.O. has taken action to ensure no further material can be wrongly sent out,” a spokesman for the regulator said in a statement.

The office said in the statement that it had carried out an independent investigation into the data loss, which has led it to increase its data protection processes.

The loss comes just as the Serious Fraud Office is flexing its muscles after years of underinvestment and failure to catch fraud in Britain’s corporate sector.

Last year, the regulator was ordered to pay most of the legal costs of Mr. Tchenguiz, who is also suing the office for about $ 350 million, claiming it mishandled the three-year investigation. The regulator denies the charges.

Supported by an increased annual budget, the office has so far charged three people, including a former Citigroup trader and two brokers, with fraud related to the manipulation of Libor. The three will face criminal trials later this year.



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