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CV fraud case highlights need for due diligence in recruitment

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A new ruling by the UK Supreme Court highlights the importance of conducting thorough due diligence in the recruitment process, an employment law expert has said.

Sue Gilchrist of Pinsent Masons was commenting after the court ordered (22-page / 344KB PDF) the confiscation of nearly £100,000 from a man who was imprisoned for ‘CV fraud’.

Jon Andrewes was prosecuted on charges of fraud and deception in 2017 and sentenced to serve two years in prison after claims he had made about his qualifications and experience in applying for a job and two other paid roles were exposed as untrue.

Andrewes was appointed chief executive at a hospice in Somerset, England, in 2004 after making false or dishonestly inflated and misleading statements about his educational qualifications and experience in his job application. During his period of employment with the hospice he successfully applied to other paid roles at two NHS trusts on the basis of the same falsehoods and also lied about having obtained a doctorate from Plymouth University. His employment and appointments ended in 2015 when the truth about his qualifications started to emerge.

Following sentencing, prosecutors applied for a confiscation order under Section 6(5) of the Proceeds of Crime Act (POCA) 2002. This provides that if the court has decided that the defendant benefited from the relevant wrongdoing or conduct, then it must make a confiscation order requiring the defendant to pay the recoverable amount of that benefit. The requirement to make a confiscation order applies "only if, or to the extent that, it would not be disproportionate to require the defendant to pay the recoverable amount”.

The High Court initially granted the confiscation order against Andrewes. Andrewes’ full net earnings over the relevant period of December 2004 to March 2015 had been calculated at £643,602.91, however the confiscation order was set for the amount of £96,737.24 – which was determined to be the amount which Andrewes had free to pay the order.

Andrewes successfully appealed that ruling before the Court of Appeal in London, which considered that the confiscation order for £96,737.24 was disproportionate because Andrewes had “given full value for the remuneration he had received” when performing the services he was paid for.

However, prosecutors raised a subsequent appeal to the Supreme Court, which had to determine the meaning of ‘disproportionate’ in the context of Section 6(5) of POCA.

Prosecutors argued before the Supreme Court that it would not have been disproportionate for the confiscation order against Andrewes to be for his full net earnings of £643,602.91 had that amount been available for confiscation. They argued that the value of the services Andrewes performed “should not be offset because they were equivalent to the costs of the criminal enterprise”.

However, the Supreme Court rejected that approach. It said: “If the confiscation order did not reflect a deduction for the value of the services rendered, while requiring the defendant to repay the net earnings, the order would constitute double recovery or what can most accurately be labelled ‘double disgorgement’. Double disgorgement goes beyond disgorgement and constitutes a penalty. That would be disproportionate.”

The court said, though, that confiscation of the full net earnings would not be disproportionate in cases “where the performance of the services constitutes a criminal offence”.

It said: “The fact that there was a legal bar to the appointment does not mean that the law cannot place a value on the services provided. In our view, the appropriate line to draw is marked by where the performance of the services would be a criminal offence and that is not the case in relation to the services performed by Mr Andrewes in his roles for the two health authority trusts.”

However, the Supreme Court also said that it would be unsatisfactory to make no confiscation order in Andrewes’ case, as his lawyers had argued for. It said that under that approach, where “full value” would be recognised as having been exchanged for the salary paid, “the fraudster would be profiting from his crime”.

The Supreme Court said that, for CV fraud cases, it would generally be proportionate to “take away the ‘profit’ made by the fraud”. In Andrewes’ case, it said that this would mean “the difference between the higher earnings … obtained and the lower earnings that he would have obtained had he not used fraud and hence had not been offered the particular job”.

The court said a “broad-brush” assessment of profit would be appropriate rather than a detailed assessment, and that in Andrewes’ case the relevant profit he had made from his fraud was £244,569. As the confiscation order against Andrewes was for the lower amount of £96,737.24, the Supreme Court ruled that it was not disproportionate.

The court left open the question of how to determine the proportionality of confiscation orders in cases where criminals involved in CV fraud have received lump sum payments.

It said: “It may be that the middle way we have adopted would not be appropriate (or would need modification) where, even though the performance of the services is lawful, there has been no equivalent to restoration because, for example, the defendant has been paid a large sum upfront (or has received a ‘golden handshake’) so that one cannot say that performance of the services by the fraudster constitutes the equivalent to restoration of what has been paid. But we prefer to leave that question open to be determined as and when it arises.”

Employment law expert Sue Gilchrist said, as well as this being an interesting case about the use of the Proceeds of Crime Act, the case highlights the importance of document checks in recruitment.

Gilchrist said: “Strong due diligence is needed in recruitment to avoid errors such as those highlighted, particularly checks relating to regulated roles, and to ensure compliance with immigration checks which must be undertaken. Failures with regard to the latter can result in criminal penalties. We also hear about forged degree certificates and similar being available to order online, so training for HR teams on what these documents should look like, and at least spot checks with the awarding academic institutions, will help to reduce the risks around a made-up CV.”

“Honesty is an integral and essential part of the employer-employee relationship. A breach of trust will often form grounds for dismissal. However, a fair process must still be followed, so employers should avoid knee-jerk reaction to allegations of dishonesty,” she said.

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