Out-Law News | 12 May 2014 | 12:43 pm | 2 min. read
Corporate crime expert Barry Vitou of Pinsent Masons said that the mis-match was at odds with the government's stated commitment to help businesses by tackling fraud. It also indicated an urgent need to review the funding arrangements of the Serious Fraud Office (SFO), City of London Police and other taskforces responsible for the investigation and prosecution of white collar criminals, he said.
"The decline in prosecutions sadly doesn't mean that there are fewer criminals," he said. "Criminals are using complex ways to defraud businesses and individuals, reports have doubles and too few are getting prosecuted. The more sophisticated white collar criminals become, the more resources the police and investigators require - what has happened is the opposite."
"It is essential that the government gives more financial support to the SFO and other police units, so that they can take on the fraudulent activity that is a significant drain on the profits of British businesses. The rise in cyber crime makes this doubly important. It is unlikely that the police and SFO will be able to take on highly-skilled gangs of criminal hackers on the cheap," he said.
According to the figures, those facing prosecution for fraud, money laundering, bribery and other corporate crimes fell by 14% from 11,261 in 2011 to 9,700 in 2013. At the same time, the number of fraud cases alone reported to the police nearly doubled from 122,240 to 230,845 over the last financial year, Vitou said.
The budget of the SFO, the agency responsible for investigating and prosecuting the most serious of these cases, has fallen by 40% since the financial crisis from £52 million to £32m. Earlier this year, the SFO was forced to apply for £19m in additional 'supplementary' funding to cover the costs of its LIBOR investigations and other high-profile cases over the remainder of the 2013/14 financial year.
The Ministry of Justice is also cutting £220m from the criminal legal aid budget, which has had knock-on effects on barristers' fees in so-called very high cost cases (VHCCs), including lengthy and complex fraud trials. Recently, a major trial had to be abandoned after the defence successfully argued that these cuts had meant that they were unable to obtain adequate legal representation.
Vitou said that the money saved as a result of these initiatives was a "false economy" given the huge cost of fraud to the UK economy, which is estimated at £85 billion a year.
"Clearly the government has a commitment to finding savings and efficiencies, but how savings have impacted the fight against fraud needs to be kept under review," he said. "The government must avoid being excessively 'penny wise'."
The figures did show an increase in prosecutions for so-called 'cybercrimes', such as those involving 'unauthorised access to computer material' and 'unauthorised access with intent to commit or facilitate commission of further offences'. The figures showed that these offences were increasingly becoming the "crime of choice", with seven out of 10 frauds now involving a technology element, Vitou said. These prosecutions had trebled over the last three years, with a 200% increase in the number charged with such offences from 15 in 2011 to 45 in 2013.
However, Vitou said that even in these cases, the number of cases being brought to trial was "still a drop in the ocean compared to the scale of the problem".