Anger as court backs extradition of Scots banker

Mr Mulgrew, 43, whose mother is Trish Godman, the Labour MSP and deputy speaker of the Scottish Parliament, faces allegations of serious fraud in America which surfaced after the Enron collapse. If extradited, he could spend two years in a Texas maximum security jail awaiting trial. If convicted, the single parent with a 10-year-old son could be sentenced to 22 years.

He, David Bermingham, and Giles Darby, former senior executives with Greenwich NatWest, a subsidiary of the UK-based bank, will seek to have the ruling overturned with an appeal to the House of Lords, and could still take the case to the European Court of Human Rights.

The charges against the trio, who were among hundreds of British bankers who did business with the US energy giant, Enron, allege they devised a plot to defraud NatWest of [dollars]7.3m ([GBP]4.2m). It is claimed they persuaded the bank to sell its stake in a Cayman Islands firm for about [GBP]600,000. It was then sold to Enron for about [GBP]11.5m and that some [GBP]7m went to two Enron executives.

The three Britons deny they acted fraudulently and have pointed out that, when Enron collapsed in 2001, they contacted the UK's Financial Services Authority to alert them to the dealings.

The Institute of Directors said the ruling set a worrying precedent. The civil rights group, Liberty, said that it was a misuse of the act. Ms Godman pledged her support for all three accused, and her son said he was shocked and bewildered.

The three claimed the Serious Fraud Office should investigate the case, and that any trial should take place in the UK. They also argued that the offences are not extradition offences and forcing them to stand trial in the US would be unjust and incompatible with European and UK human rights law.

Lord Justice Laws and Mr Justice Ouseley dismissed both challenges. Lord Justice Laws ruled the case of the so-called "Enron Three" had "very substantial connections with the United States and is perfectly properly triable there". It would, he ruled, "be unduly simplistic to treat the case as a domestic English affair".

Mr Mulgrew, who grew up in Pollok area of Glasgow but now lives in Essex, said: "It is a historic verdict, but maybe historic for the wrong reasons. I think this is a worrying verdict for many people. It seems to be irrelevant that the UK authorities do not believe that there is a crime committed against NatWest."

In a statement, Ms Godman, pledging her support, said: "If they have to face court proceedings concerning an alleged offence that took place in the UK against a British bank, then I believe any such trial should take place within the UK."

The Institute of Directors said the ruling set a worrying precedent for transatlantic business. "The problem that arises out of this and the extradition treaty is that UK executives may be deterred from investing or operating in the US. It threatens transatlantic agreements if you can be extradited without prima facie evidence."

The CBI also raised the issue of fairness. Sir Digby Jones, director general, argued that the government needed to look again at how this treaty was working in practice.

He said: "Business is very supportive of white-collar crime being punished effectively, but the treaty must be implemented fairly."

Shami Chakrabarti, a spokeswoman for the civil rights group, Liberty, said the case highlighted the misuse of the act, which drastically reduced the evidence required from US officials seeking to extradite suspected felons.

"This is a sovereign government trading away the rights and freedoms of its people as another supine step in this socalled special relationship, " she said. "It smacks of politics rather than justice."

Human rights lawyers said the legislation had been rushed through and would ride roughshod over due process.

Martin Rackstraw, of Bindman and Partners, said: "It is a fast-track tick-box regime which presents a risk to human rights. It is a draconian regime and it is flawed in many respects."