Bargaining power

The government has recently released its fraud review report for
consultation. Of particular interest is the call for stiffer sentences for those
convicted of fraud offences. The review suggests the maximum sentence should be
14 years.

But, the threat of stiffer sentences may be reduced by another suggestion
made in the review. A proposal to introduce ‘plea bargaining’ is recommended and
this is made on the basis that current fraud investigations and trials are
extremely time-consuming. While there are obvious advantages to plea bargaining
(justice is served quickly and victims can be compensated), it seems somewhat
contradictory to propose stiffer sentences but then introduce a mechanism which
allows defendants to enter a guilty plea and then bargain on the sentence they

A further ‘bargaining’ point arises. Fraudsters, once caught, will be subject
to confiscation of their assets. It seems unclear whether this confiscation will
also be negotiated under the plea bargain. A fraudster may seek to enter a plea
bargain with a view to retaining some of their ill-gotten gains for use at a
later time.

The review is also silent on the subject of confidentiality. While it seeks
to improve reporting systems for those who have suffered a fraud, it ignores the
commercial view of organisations who may not wish to publicise their losses.

In our experience the client who has suffered a fraud values confidentiality
above the recovery of assets and criminal prosecution of the perpetrator. If a
business suffers loss through fraud and this becomes public knowledge then that
business could face severe difficulties.

Finally, the review hardly recognises the lack of police fraud investigators
throughout the country. On a number of occasions we have liaised with local
police forces after investigating a fraud. Unfortunately the police have
indicated they simply don’t have the resources to pursue a prosecution.

Fraud should not be thought of as a victimless crime. Past frauds both in the
UK and US have caused financial misery for thousands of hard working and honest

If the government is serious about tackling fraud then it must place adequate
resources at the disposal of the police and introduce initiatives so that the
public and private sector can all play a part in investigating fraud and help
those who suffer at the hands of fraudsters.

Simon Bevan is a partner, fraud services group, at BDO Stoy Hayward

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