Ian David Selby is prisoner LG8356. A 58-year-old co-founder of a £25 million plc, he is now an inmate of HMP Springhill, an open prison run from a Victorian country manor in Buckinghamshire. The institution looks out over miles of open fields, but there's nothing restful about the place. Selby is 23 months into a five-and-a-half-year sentence for conspiring to steal £2.9 million from a company pension fund, and his daily grind as a guest of Her Majesty could not be further from the lifestyle he was once used to.
When once he drove a Bentley, holidayed in the Caribbean and appeared in the glossy pages of Hello!, Selby - who bears an uncanny resemblance to TV's Del Boy - now volunteers as a debt adviser at Oxford's Citizens Advice Bureau, follows a 10pm curfew, and rubs shoulders with rehabilitating murderers, thieves and arsonists. It's a long way to fall.
Selby's life changed irrevocably on 7 May 2004. It was the day that the Serious Fraud Office successfully prosecuted him for his role in the multi-million pound fraud. As the jury delivered its guilty verdict, Selby went into shock. He had pleaded not guilty. 'Sitting in court, I was thinking that I should be acquitted,' he remembers. 'I thought that I should be going home that night. Next thing, I'm downstairs in the cells, completely numb - and hand-cuffed. That's the first feeling you have of loss of liberty.'
He shakes his head. 'I don't think it had really sunk in. It was like I was looking in from outside and it was happening to someone else. About 20 minutes later, I was off to the sweat box - the van they use to transport you from court to prison. I'm in there with a load of crackheads and smackheads, all singing and shouting and screaming, locked in this little cubicle with a little black window, off to Winson Green prison.'
On arrival, he was 'processed' in reception before undergoing a medical check; his possessions were confiscated. 'The thing that really pissed me off was they wouldn't let me keep my electric toothbrush or my shoes, but luckily I managed to persuade them to let me keep my Hush Puppies. Eventually,' he continues, 'they strip you and give you prison clothes. You get a tatty old pair of trousers and a sweatshirt.'
HMP Birmingham (Winson Green's proper name) was Selby's worst experience behind bars. 'It's very violent, very dirty,' he whispers. 'It's awful, a stinking filth. But the worst thing is the cockroaches. If you get up in the middle of the night to use the loo, you look down and the whole floor is a sea of them. I coped with all of it, but it was not nice. Not nice at all.'
After two months in HMP Birmingham, Selby was taken to high-security prisons at Wandsworth and Elmley, then to open prison HMP Standford Hill before ending up in Springhill in March 2005, where he'll be staying until his parole in January 2007.
Selby, a trained accountant, had spent his life managing various businesses, eventually co-founding an IT company that floated on the London stock market as Spectrum Group in 1987. With a turnover of £25 million, the company employed 350 people in nine offices. It was eventually sold, and by the mid-90s, Selby was helping to finance a broad portfolio of businesses.
At his peak, he says he was worth between £6 million and £10 million on paper.
His troubles began when he was asked to act as an accountant for a short-term loan from locksmiths CW Cheney's pension fund. According to Selby, this money would be used to invest in property development, the profits of which would repay a loan he was owed. The pension fund money would in turn be repaid by another, bigger loan. 'That all made sense to me. I'd been involved in raising lots of money for property deals from pension funds. It's not an uncommon way of funding such deals.'
In fact, the supposed bigger loan never existed. Said the senior case lawyer for the SFO's prosecution: 'This was a callous and ruthlessly executed fraud designed from the start to steal the Cheney pension fund.'
Selby denies he had any part in the conspiracy, and says the first he knew of any problem was when he was alerted to a Birmingham News article reporting that the police had been called into the locksmiths. He offered to help them with their inquiries. 'I didn't believe I had actually done anything wrong. I didn't feel in danger that I might end up in prison. If anything, I thought I'd end up being a witness for the prosecution.'
Several interviews with the Birmingham Fraud Squad later, Selby was brought to Steelhouse Lane police station in Birmingham to be charged with his co-defendants. He was prepared for the worst. 'I felt a bit numb,' he says quietly, 'but it didn't come as a shock. I was already mentally conditioned for the worst, I could see how things were going. I still didn't believe that I could ever be convicted, though - until the day the jury gave a majority verdict and found me guilty.'
Selby was bailed. He resigned from two company directorships and started preparing for the case. 'I'm adaptable,' he says. 'A lot of people go to pieces, quite rightly and understandably so, but I'm a particularly strong character. Life was OK, but at the back of my mind I was always thinking: "Am I going to be here this time next year?" I prepared for the worst and hoped for the best.'
Selby's trial was set to begin on 6 January 2004. 'That was my last Christmas at home. I still didn't believe I was going to be convicted,' he recalls.
As his possible fate began to sink in, Selby, a divorced father of two and grandfather to five, confronted his partner of five years. 'If I go to prison,' he told her, 'and we're together, I'm going to rely on you, and once I rely on you, I need you to be there. So if you think that there is any chance that you can't go the distance, walk away now.'
She stayed with him - although Selby let slip that she wasn't currently speaking to him. 'I'm sure that will blow over by the end of the day,' he mutters.
Ironically, Selby had twice served as a juror before attending his own trial, an experience he found pretty boring. 'It was surreal,' he recalls.
'It went on for five months and I can hardly remember a single day.'
Like the other three white-collar criminals MT met (none of whom agreed to be interviewed on the record), Selby protests his innocence. 'If I'd had the slightest inclination that the plan was to steal the money, I would never have been involved.'
It took the judge a week to sum up the case, such was its complexity.
The jurors deliberated for 10 days, finally delivering a majority verdict after finding Selby to have been 'reckless'. He despaired at them. 'They never had a clue. How could they possibly understand the details that were being explained to them? What chance did I have?'
Selby is one of thousands of white-collar criminals who pass through Britain's justice system, perpetrators of what criminologist EH Sutherland defined in 1949 as 'crime committed by a person of respectability and high social status in the course of his occupation'. They are fraudsters, embezzlers, insider dealers, money launderers, rogue traders, pension-fund plunderers and insurance scammers.
For every Nick Leeson or Joyti De-Laurey (the Goldman Sachs PA who defrauded her bosses of £4.3 million), there are hundreds of fraudsters or rogue traders whom we don't get to hear about. For UK plc, white-collar crime is a serious problem, yet no comprehensive figure for the size of the damage exists. 'Fraud' is an umbrella term for more than 20 criminal offences, including theft, obtaining by deception and false accounting - making it impossible to measure, even if every case were reported. The Government's Fraud Bill, now in consultation in the House of Lords, aims to consolidate these laws, eliminate loopholes and give fraud the legal definition it needs.
Officially, the Home Office says fraud costs the UK economy £14 billion a year (in expenditure on investigations, court proceedings and money defrauded), but admits this figure has been surpassed since it was drawn up six years ago. KPMG's latest annual 'Fraud Barometer' revealed that reported fraud reached £942 million in 2005, and accountants BDO Stoy Hayward offers a similar figure.
But says Robert Wardle, director of the Serious Fraud Office: 'It isn't really an issue of how many noughts you put on the end, it's actually the impact of the fraud. What's the damage to the UK as a safe place to do business?'
What, also, is the wider cost? Fraud, money-laundering and corruption are never victimless crimes, yet society regards white-collar criminals with some leniency. Educated, middle-class people cannot tarred with the same brush as common thieves, and surely the only loser is the faceless corporation?
'Most people are not scared of white-collar criminals,' says Adrian Furnham, professor of psychology at UCL. 'But they should be.' Fraud on small investors can be devastating: people can lose their homes, their jobs and their pensions. Annually, it costs every man, woman and child in this country at least £230.
'Very often, there are real victims,' says the SFO's Wardle, who has 300 permanent staff at his disposal. 'The classic case is if you lose your pension. That's pretty serious, but even if there are no direct victims, the cost is enormous' - as the many victims of Robert Maxwell's theft of the Mirror Group pension fund discovered.
Why do educated, well-paid professionals cross the line into criminality?
Is it just a question of greed? Will Kenyon, a partner at PricewaterhouseCoopers, cut his forensic teeth on the Maxwell case and has interviewed scores of fraudsters. He believes there are opportunity takers and opportunity makers. 'We see a lot of opportunity takers. These are the people who exploit gaps in the system. They are not criminal masterminds but may be tempted into fraud by an open opportunity or pushed into it by some sort of incentive or pressure, whether that's to be seen to be performing at work or whether it's home pressure.
'Opportunity makers are your professional fraudsters whose primary purpose is to defraud. They're often incapable of being honest. They can be charming and plausible, but have no compunction about the harm they cause. They will lie very plausibly to get out of one corner but simply get themselves into another. Even when you have irrefutable documents in front of them, they'll just change the subject or invent another lie.' Selby is no such psychopath, but an opportunist he probably is.
Furnham theorises that white-collar criminals are frequently 'individuals who are deeply angry, demotivated and frustrated with their organisation. They've had their psychological and ideological contracts torn up. They have found that their promises aren't being fulfilled, that the company does things that are dishonest. They're doing it for revenge.'
There are other factors as well. 'They might be a very vain person who wants money to buy a lifestyle and charm people - Joyti De-Laurey, for example,' Furnham explains. 'There's opportunity, vanity, excitement. It's like being on a rollercoaster.'
It's a worrying fact that risk-taking, recklessness, ambitiousness, drive, egocentricity and a hunger for power are personality traits shared by successful business people and white-collar criminals. Certainly, some of these are recognisable in Selby. And you don't have to be particularly clever, either - knowledge of how to manipulate the system is all that is needed.
When a company's system fails and an embarrassing weakness is exposed, it's common for that company to try to deal with the problem internally, usually with the help of a forensic accountant or lawyer, rather than report the crime to the police. 'There are all sorts of considerations for a company,' explains PwC's Kenyon. 'Those that are regulated may have no choice but to report fraud. Assuming that there isn't such a requirement, companies may be concerned about the potential publicity that involving the police might generate, or about losing control over the pace and direction of the investigation.
'The police are not generally focused on recovering monies,' he adds, 'so they may not be able to assist much if that is the primary objective. Police forces would also be the first to admit that they are generally chronically short of resource for fraud investigations.'
Lack of police resources and the low priority that forces give to fraud investigations are frequent complaints. Says Dr James Hart, commissioner of the City of London Police: 'I've continually striven to get fraud higher up the policing agenda, but many chief constables would say fraud is just not a priority for them. It's not in the national policing plan as a priority, it's not something we get inspected against.
'If companies have any suspicions that they are falling victim to organised fraud,' he counsels, 'the very best thing they can do is to share that suspicion with the police, and in particular, our fraud desk. We are as discreet as we ever can be; we won't come along and seize all your computers and raid your filing cabinets.'
Hart's hopes for the current government Fraud Review are twofold. 'I would like to see significantly more resources directed towards the investigation of fraud and economic crime, and I would like to see the City of London Police taking the lead for the investigation of that type of crime across the country.'
Another hurdle facing a company, if it actually succeeds in getting a complex fraud case to court, is its reliance on the ability of a 12-strong jury to last the distance, to fully understand the case and to deliver a fair verdict. High-profile cases like Maxwell, Blue Arrow and the Jubilee Line Extension have shaken the public's confidence.
'A case that runs for a year or more - what sort of jury are you going to get to be able to do that?' demands the SFO's Wardle, a campaigner for non-jury trials in complex fraud cases. 'It's too disruptive of people's lives, and it is probably one of the most compelling reasons why we shouldn't have juries in these very long cases.'
Presenting evidence in the wrong way or failing to find the right evidence are other reasons for the collapse of cases. As for every good detective, finding the best evidence is a perennial concern for Hart, whose Economic Crime Unit is the largest fraud squad in the country.
'You can assume the cops will go where the best evidence is, and that's what we'll run with,' he says. Pursuing an audit trail, as accountants are likely to do, is not the police approach to a crime. Accountants will reconcile the debits on an account with the vouchers for those debits.
If a voucher for a debit is missing, and if the explanation given is unconvincing, they will query it.
'We wouldn't go there,' says Hart. 'Police officers would go where the best evidence was going to be obtained - which might be to have a look at who looks after the book of debit vouchers. There's a whole raft of cunningness and deceit that accompanies criminality - and police officers know this.'
Back at Springhill, Selby finds the conditions a dream compared with some of his previous experiences. In this D-category prison, he and his fellow inmates are deemed low risk. A substantial minority are middle-class, white-collar criminals, but most are more 'traditional' criminals, nearing the end of their sentences and preparing for resettlement. There are no bars, no security fences. If offenders choose to escape, there is no need for tunnels or laundry bags. Freedom is just a short stroll down the drive.
Their prison walls are the unobtrusive yellow 'Out of bounds' signs dotted across the front lawn. Almost unnoticeable to visitors, for prisoners, they scream out at every turn.
A trusted inmate, Selby was chosen to participate in a pioneering programme, set up jointly by the prison and Oxford Careers Advice Bureau, where he volunteers as a debt adviser one day a week. He is now allowed to spend four days a week doing the kind of work he did before he landed in jail, and plans to continue with this arrangement on release.
Most offenders don't have it so easy. Says Geoff Dobson, deputy director of the Prison Reform Trust, a charity: 'Most employers will not even look at an ex-offender if they know they have a record.' Anyone who has been given a sentence of more than two and a half years must declare their conviction when applying for work for the rest of their lives. When he has served his time, Selby also faces confiscation proceedings for £750,000.
Selby's extra responsibility earns him privileges available to few other prisoners. 'I go out for 12 hours a day, from eight in the morning to eight at night. I have my own car' - an immaculate Jeep Cherokee. 'I go home on Sundays, and on Mondays I stay in Springhill for the day, which is very useful because I can get my washing and ironing done, get my room cleaned and my bed changed. The whole thing seems surreal. When I go home on a Sunday, I don't feel I've been away. It's almost like I'm living two lives and one of them is like a dream.'
Selby has his own key and can move around the 'camp' as he likes. Curfew is at 10pm. He is also allowed to have his own mobile phone during the day and use his own money for lunch and dinner. While inside, he has learnt Spanish and written a book. 'No, it's not bad, it's excellent. I think it's fantastic,' he insists, not unaware of how desperate this sounds.
What's the hardest thing to cope with in prison? 'Not seeing the people you love is the most difficult thing to get your mind round. I've got five grandchildren and I want to see them grow up. I've been very fortunate to see all of them apart from my eldest two grandchildren - my daughter didn't want them to know that I am in prison. They think I live in Spain.'
Selby's experience is a cautionary tale for all those in business. Does he think his years in prison are wasted?
'I like to think not. I used to like a drink, but I haven't had one for two years. I like to think that the two years and nine months that I've given up might put 10 years on my life at the other end,' he says. 'I'm not trying to make prison sound a good thing because it's not, and I would rather have not had the experience. But having had it, I feel as though I've made some good use of it.'
THE PRISONER - IAN SELBY, HMP SPRINGHILL
'I think if I had been in prison 20 years ago, I would have dealt with it in a very different way. Now, I think I'm old enough and wise enough to know how to deal with being inside. I've been useful to the system. Once they know you can be trusted, they don't bother you. It's no good trying to beat the system - those are the mugs that you see every day that are in trouble. You're here, there's nothing you can do about it, you've got to get on with it.'
HOW BIG IS THE PROBLEM?
- 55% of organisations surveyed in the UK reported having been the victim of economic crime over the past two years.
- About half of the companies surveyed found that the perpetrators of fraud were their own employees.
- The average UK fraudster is male, aged betweeen 31 and 40 and holds a position in middle management or below.
- 28% of fraud is detected by chance, 24% by internal audit and 11% by whistle-blowing.
- Reasons for committing fraud: 39% do it to maintain an expensive lifestyle, 42% because a lack of internal controls provide the opportunity, 54% because they are easily tempted.
- On discovery of a fraud, the most common response of UK organisations is to inform the board of directors (84%) and to perform an internal investigation (84%).
- 48% of companies recover at least part of their losses.
Source: PwC 2005 Economic Crime Survey
THE COPPER - DR JAMES HART, COMMISSIONER, CITY OF LONDON POLICE
'One of the difficulties with complex fraud cases is attracting a jury that is going to sit for an extended period of time. It is terribly difficult to find someone who can give up a year to sit on a jury. It's not always possible to find people who have the necessary capacity to hear these things, so it would actually make much more sense to have judge-only trials. The criminal justice purists jump up and down and say this is dreadful, but there is nothing that says that trial by jury is inviolate.'
HOW YOU CAN STOP FRAUD
ROBERT WARDLE director, SFO
'Establish a culture of no tolerance and make sure you have in place the proper controls for detecting it.'
ADRIAN FURNHAM professor of psychology, UCL
'If CEOs want their staff to behave honestly, bosses must be seen to be honest and fair in their dealings.'
WILL KENYON partner, forensic services, PwC
'Undertake regular and rigorous fraud risk assessment. Internal audits should make fraud risk in all its forms a priority. Specific fraud training for management and pre-employment screening make a real difference.'
DR JAMES HART commissioner, City of London Police
'Take on whistleblowers' helplines that are outside management control. If an employee has any suspicions that their identity will be revealed, they are unlikely to register a complaint.'
THE INVESTIGATOR - WILL KENYON, PARTNER, FORENSIC SERVICES, PRICEWATERHOUSECOOPERS
'Companies can lose phenomenal amounts of money through fraud - and do. The biggest fraud I investigated where we went all the way to court and recovered assets was about £50 million. Asset-recovery is developing. Even if you convict somebody, historically, the whole criminal system had been completely ineffective because, in fairness, it was never designed to do that. Although people are keen to see justice done, that hasn't helped them get their money back.'
THE PROSECUTOR - ROBERT WARDLE, DIRECTOR, SERIOUS FRAUD OFFICE
'I think there is a tendency not to recognise the damage done by white-collar crime, nor to realise that people committing it are just as culpable as the more traditional criminal. Certainly, they seem to recognise this in America - take Bernie Ebbers' 25 years. I'm not saying that we should necessarily go as far as that, but I think too often there is too little recognition of the sheer harm that fraud does. This is crime and it hurts other people, as least as much as if you coshed them on the head and mugged them.'