Izodia’s directors, Rory Macnamara, a City banker, and Christopher Mills, a fund manager, were brought in to recover the stolen money. Last week they won a crucial court victory in Jersey over Royal Bank of Scotland International (RBSI) for its role in the saga.

The bank, which is accused of transferring £24.5m from Izodia’s Reading account to the tax haven, may now have to pay more than £25m.

Fladgate is next in the firing line. “We certainly want to think very seriously about that,” said Macnamara this weekend.

Smith, a medical doctor turned financier turned fraudster, pleaded guilty earlier this year to several theft and false-accounting charges brought by the Serious Fraud Office. The SFO is not pursuing theft charges against Jarlath Vahey and Peter Catto, two of Smith’s colleagues, whom he put on the board of Izodia.

The court ruled that RBSI, whose accounts were the conduit for the fraud, is liable to pay Izodia most of the missing millions. The bank had not acted negligently, said the judge, but had acted without getting proper authority from Izodia.

Fladgate’s former partner Nicolas Greenstone was a long-standing adviser to Smith, who is due to be sentenced next month for stealing £27m of the missing cash in August 2002.

Fladgate was also acting as adviser to Izodia later in 2002 when a further £8m of Izodia’s money was allegedly stolen by Smith from a UK account.

Last week the Jersey court delivered a colourful account of the fraud. The scandal had it all: forgery, documents supposedly signed by a director who never joined the board, minutes of a board meeting that never took place. And when the former Lord Mayor of London Sir Anthony Jolliffe, then chairman of Izodia, finally became suspicious, the court heard of an attempt by Smith to bribe him.

The Jersey court savaged Smith and also shredded the reputations of Vahey and Catto. It was not complimentary about Greenstone either.

“How Mr Greenstone, an English solicitor, managed to certify as true a meeting which had never taken place ... is hard to understand,” said the judge. Fladgate declined to comment.

Smith’s offshore group Orb bought 29% of Izodia in 2002 and soon spirited away all of the company’s cash under RBSI’s nose.

The bank had what it called “one of its most profitable relationships” with Orb despite knowing that Smith had received a prison sentence for theft in the early 1990s.

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