Post by nickd on Feb 7, 2012 9:28:51 GMT 1
'Defend the children of the poor & punish the wrongdoer'
Or are we rewarding the wrongdoers and punishing the poor?
The more I see of the reforms to the welfare state and the radical overhaul of our legal system, the more I shudder at how justice seems to be rapidly getting thrown out of window. With so much accent on harsh austerity measures dished out by our current government, we could perhaps be forgiven for taking our eye off what's going on elsewhere in somewhat more hushed reform.
"Defend the children of the poor & punish the wrongdoer" are the words you will see cast in stone above the Old Bailey in London, it's the central criminal court which hears the most serious cases such as murder, rape, robbery, terrorism and fraud cases. I can't help but wonder how corporate fraud cases may dwindle as moves are quietly a foot to bring in more 'cost effective' remedies.
At a time when we seem to be going all out to condemn anyone accused of benefit fraud, we should perhaps turn our attention to what may be ahead with regards to the prosecution of high value fraud cases involving financial institutions and corporate concerns.
George Osborne tells us that benefit fraudsters can be likened to muggers who come up and knock you down in the street. In reality, benefit fraud accounts for a relatively insignificant percentage of the benefit bill; less than 1% can be attributed to actual fraud. The vast majority of offences can no doubt be attributed to relatively minor infringements of failing to report change in circumstances to the authorities under section 112 of the Social Security Administration Act, many of which will be dealt with by formal cautions dished out by local authorities and the DWP. Local authorities are often over zealous because they are rewarded with subsidy payments for everyone they catch in the act. By and large, the cases you get to hear about are more likely to be say where a disabled claimant daftly auditions for X Factor and prances around the stage to the delight of the fraud detectives; - it all makes for good evidence and headlines too.
Heaven forbid anyone for defending the benefit cheat; but to be fair, those who do cheat the system often do so out of some kind of desperation. Many can't afford to claim as a couple; so they declare they are living apart, others fail to declare a change in their tax credits because they think the authorities speak to one another. thus the claimant wrongly assumes the HMRC will tell the local council. By and large it isn't vast sums we're talking about and undoubtedly as poverty levels increase we will see more and more get caught out. Not least, because Government is going to town on benefit cheats by calling in armies of private eyes to catch you out, they'll end up spending billions in detection; - in truth the financial savings won't recover much more than the current £1.3 billion figure attributed to fraud. Arguably, the ones who really suffer when it comes to benefit fraud are the children of the perpetrators; so much for protecting the children of the poor then.
Amazingly, we seem to be less concerned about the real cost of fraud which reportedly costs the UK around £38 billion. A fair amount of fraud will go on in the financial sector and large corporates. It's immensely difficult to prove because it's so well hidden; - it's also hugely difficult to fund the cost of bringing serious fraud cases to court in these times of austerity.
In the UK we make no secret over how we want to attract more high finance and corporates to our cities;- the more we attract the higher the risk of fraud will become. Make no mistake over this, it costs us all a small fortune, higher insurance premiums, banking charges and interest plus retail prices will all swallow the cost. The problem is that in attracting business to the UK, we won't want to be seen by potential investors to be too harsh on those who break the rules.
And that's why Government is leaning towards softer treatment of those who commit this sort of crime. Most us will see it as a criminal wrong; - yet it may well create a new wave of breaches in civil law. I can't help but feel our corporate friends will view it as something of a game, not unlike picking up the community chest card in a game of Monopoly and realising you have to pay a fine - they'll sigh with relief at not being sent to jail. Let's be clear about this, it will be those who should be acting with the utmost responsibility and those who have the money to pay who will escape jail; - for the rest of you, I'm afraid you'll be in the dock facing clink for all your wrong-doings just as you are now. I rather suspect this move towards a decrease in serious fraud prosecutions on 'cost grounds' will get government's approval; - making the UK a much less risky place to commit a corporate wrong. Corporates will be rewarded for 'self-reporting' fraud; - government sees fit to reward those that do so with little more than a hefty fine. Surely crime is crime - regardless of whether it is corporately committed?
Mind you it seems like the judiciary aren't so keen on the idea...
When the Serious Fraud Office issued guidelines on self-reporting in 2009 and stated that it would use civil penalties ‘wherever possible’ instead of criminal sanction, it looked like there would be a welcome sea change in the approach to corporate corruption cases. The guidelines seemed to be offering a pragmatic and effective way of dealing with corporate crime.
R v Innospec Ltd [2010] has created a wave of concern among those companies already in the plea negotiation process and those considering whether to self-report to the SFO. The sentencing judge Thomas LJ stated strongly that it would be:
‘Inconsistent with basic principles of justice for the criminality of corporations to be glossed over by a civil as opposed to a criminal sanction.’
Further, Thomas LJ questioned the ability of the SFO to enforce criminal plea agreements in respect of such matters.
This causes a big problem for corporate Britain. The consequences of a criminal conviction can be severe, including an increased risk of being excluded from Export Credit Agency and World Bank or multilateral development bank funding, and a perpetual ban from bidding for EU government contracts.
Read more
www.inhouselawyer.co.uk/index.php/fraud-and-corporate-crime/8083-procurement-bans-and-the-threat-to-self-reporting
