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(Adds quotes from David Green, Emily Thornberry, details)
By Kirstin Ridley
LONDON, Oct 23 (Reuters) - Britain's Serious Fraud Office(SFO) has asked the government for an extra 26.5 million pounds($42.4 million) to help fund complex inquiries such as financialbenchmark manipulation and top corruption cases.
The request announced on Thursday tops the extra 24 millionpounds sought last financial year and is one of the biggest cashinjections asked for by the agency, which investigates andprosecutes high-profile cases with a meagre annual budget setthis year at 35.2 million pounds.
Its biggest and costliest cases remain the investigationinto the manipulation of Libor (London interbank offered rate)interest rates, an inquiry into circumstances surroundingBarclays' 8 billion pound recapitalisation in 2008 andbribery allegations linked to Rolls Royce divisions.
The funding request for the financial year to March 2015also includes a 4.5 million pound payment to the property baronbrothers Robert and Vincent Tchenguiz to settle a 300 millionpound damages claim over a botched investigation, a SFOspokesman confirmed. Extra legal costs have yet to be announced.
The SFO, which can request "blockbuster funding" if the costof cases exceeds a percentage of its budget, had been expectedto seek extra cash this year to meet the demands of what itshead, David Green, calls its most demanding case load ever.
Green, who has often pointed to the size of London's vibrantwhite collar crime legal sector as a sign of how much work theagency faces, highlighted the recent successes of the SFO, whichhas had a chequered history in nailing top fraudsters.
These include its first conviction for fraud-relatedoffences linked to Libor, a benchmark against which about $450trillion of financial contracts are pegged.
"This is an important, if not a pivotal time for the SFO,"he told a London conference on Thursday.
News of the guilty plea coincided with speculation that thegovernment was reviving plans to roll the SFO into the country'sbroader crime-busting force, the National Crime Agency.
Green said he was not surprised the government was againreviewing coordination and the effectiveness of law enforcementagencies in tackling bribery and corruption.
But he stressed such a move would thwart the agency'sability to tackle high-level fraud as a demonstrably independentagency -- particularly when dealing with iconic Britishcompanies -- undermine staff morale and encourage lesscooperative suspects "just as the SFO is making real headway".
Emily Thornberry, the opposition Labour party's spokeswomanon judicial affairs, urged the government to examine the SFO'sfunding or risk curbing its capacity to take on new cases.
"This government will not convince people that it is seriousabout clamping down on City (of London) crime for as long as theSerious Fraud Office is in a state of perpetual bankruptcy," shesaid in an emailed statement.
(1 US dollar = 0.6246 British pound) (Editing by David Clarke)
