Crime and the City | Progress | News and debate from the ...

In the wake of the summer?s Libor scandal, David Cameron?s recent law and order speech to the Centre for Social Justice was an ideal opportunity for him to emphasise his commitment to stamping out city fraud. So why did Cameron?s plans for a ?tough and intelligent? crime-fighting policy contain no new initiatives to crack down on the white collar fraudsters who cost the economy an estimated ?30bn a year?

Although the coalition agreement included a commitment to treat ?white collar fraud as seriously as other types of crime?, tackling criminal behaviour in the City was never likely to be a priority for this government. Their plans to create an Economic Crime Agency were shelved some time ago. In another series of U-turns, proposals for the new National Crime Agency (trumpeted as Britain?s FBI by Cameron), to coordinate the work of the many state agencies such as the SFO, FSA, OFT and local police forces that deal with this type of crime, have also been dropped.

In the absence of a coherent strategy, government cuts have hit these agencies hard. The SFO, for example, has seen its budget slashed?from ?50m in 2008-9 to ?39.5m in 2011 with another 25 per cent cut projected by 2014-5 to ?30.5m. This has caused massive damage to an organisation which was criticised by the High Court for its ?sheer incompetence? earlier this year. The High Court also warned of the damage to confidence in the financial markets if fraud investigations were not properly resourced in future. Consequently, not only is financial crime perceived to be on the rise but white collar criminals have good reason to believe they can act with impunity.

Against that background, last week?s decision to give the go ahead to deferred prosecution agreements gives rise to some concern. DPAs enable companies to self report wrongdoing to prosecuting agencies and to settle fraud investigations. Under a DPA, pending criminal charges may be deferred if agreed terms and conditions are met. These normally include payment of a multimillion pound fine and reparation to victims. They are a welcome addition to the prosecutor?s arsenal as they provide an alternative to expensive and protracted prosecutions where the outcome of a criminal trial may be uncertain. But companies cannot be allowed to buy their way out of criminal prosecution by owning up and paying restitution in cases where they should be indicted simply because state agencies lack the resources to investigate financial misconduct properly or take cases to trial.

The coalition?s complacency in tackling fraud and corporate offending creates an opportunity that Labour looks set to seize. At conference Yvette Cooper highlighted how there have been 800 serious fraud prosecutions in the US in 2011 and only 20 in the UK, despite the fact that London and New York have financial markets of broadly equal strength. She announced plans for a new Economic Crime Act, including legislation making it a criminal offence to manipulate interest rates to generate profit to remedy the present uncertainty as to whether any criminal sanction applies to LIBOR rate fixing allegations. Cooper also promised to look at changing our disjointed multi-agency approach to tackling white collar crime.

There are other options that Labour must consider. These include imposing liability on corporations for the illegal behaviour of employees, providing prosecutors with greater scope to strike plea bargains and allowing for earlier judicial intervention in this process, guaranteeing immunity for whistleblowers and exploring ways of making the fight against fraud self funding. In this time of austerity, prosecuting authorities must also be asked to think of innovative ways they can work more efficiently.

For too long we have taken for granted an assumption that the British, unlike their American counterparts, are just not very good at policing fraud. A future Labour administration must have the resolve to stamp down on City crime if it is to be taken seriously as the party of responsible capitalism.

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Roger Sahota is a Progress member and solicitor advocate specialising in complex fraud, regulatory and criminal defence. He writes here in a personal capacity.

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Photo: Echoplex7

City of London, financial crisis, FSA, regulation, white collar crime

Source: http://www.progressonline.org.uk/2012/11/12/crime-and-the-city/

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