Serious Fraud Office Serious Fraud Office Catching the Villains Helen Garlick Assistant Director 3 rd ICAC SYMPOSIUM 9 th - 11 th May 2006.

SeriousFraud Office

Serious Fraud Office

Catching the Villains

Helen GarlickAssistant Director

3rd ICAC SYMPOSIUM

9th - 11th May 2006

SeriousFraud Office

• The Core Obstacles to Freedom- Poverty, Corruption, Banality. Karl Marx

• “If the money sometimes ended up in an orphanage, then I am very happy- but let’s say it didn’t always end up in an orphanage…”

Loik Le Floch Prigent Chief Executive Elf Aquitaine

1999

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• “Corruption charges… corruption? Corruption is government intrusion into market efficiencies in the form of regulation. That’s Milton Friedman. He got a goddam Nobel Prize. We have laws against it precisely so we can get away with it…….Corruption is why we win.”

From the film “Syriana” 2006

SeriousFraud Office

The Serious Fraud Office

• Set up in 1988

• 5 Operational Divisions each with approximately 8 lawyers and 30 investigators.

• Multi Disciplinary team approach to investigation

• Compulsory powers to compel production of documents and answers to questions

SeriousFraud Office

• Investigates and Prosecutes cases of “serious or complex fraud”

• Over £1 million

• Approximately 80 domestic cases, approx 270 permanent staff

• Assistance to overseas prosecutors. Last year 31 countries assisted, total sums at risk £34 bn

• Receives and vets all reports of overseas corruption

The Serious Fraud Office

SeriousFraud Office

1. IRAQ“ Corruption doesn’t just line the pockets of political and business elites, it leaves ordinary people without essential services and deprives them of access to sanitation and housing”

Transparency Int.

Why does it matter so much?

SeriousFraud Office

OIL FOR FOOD 1996, largest UN humanitarian effort. US Treasury reported $10bn illicit gains including:

a) Benon Sevan, UN official heading the programme accused of misusing office in return for oil vouchers

b) Australian Wheat Board, the largest supplier of aid, accused of paying Saddam $220m to secure contracts


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COALITION PROVISIONAL AUTHORITYApril 2003 – June 2004

• $8.8bn unaccounted for, according to US Inspector General for Reconstruction

b) Includes bid rigging for contracts for cell phone networks worth $500m p.a


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3. POST WAR RECONSTRUCTION

“ The reconstruction of post war Iraq is set to become the biggest corruption scandal in history”

Transparency International

Iraq has been reduced from an oil exporting to an oil importing state, 20% oil products are disappearing. The Inspector General to the Oil Ministry concedes this is impossible without senior government complicity

(World Service 25.4.06)


SeriousFraud Office

2. CORRUPTION IN THE ARMS TRADE

“The affair has been a disaster for the sub continent , with all the juicy allegations of larceny and intrigue to savour, it is easy to forget that the Bofurs guns added to the ever growing armouries of India and Pakistan, which now face each other in an unstable nuclear “balance of power”.

N Cohen New Statesman

15.11.99Commenting on the Bribery scandal involving

payments of £30m to the Indian PM Rajiv Ghandi


SeriousFraud Office

1. Secrecy

2. Contractual Complexity

3. Use of agents and consultancy commissions

4. Offsets

Difficulties in Investigating

SeriousFraud Office

1. LOBBYING

• Abramoff/ Scanlon scandal in the US

• Lobbyists use “Political Consultants” and “think tanks” to disguise fees and avoid disclosure.

“ to expand the parameters of international discourse in an effort to leverage the combined power of world intellect.”

• Exploitation of clients, in this case Indian tribes

• Corruption of political process , gifts and corporate entertainment. “Fact Finding trips”

Political Corruption

SeriousFraud Office

2. UK Cash for Peerages investigation

• Funding of Political parties

• “soft loans” to avoid limits on donations

• “The system was set up in secret without my knowing about it, or the elected national executive knowing about it”

Labour Party Treasurer

April 2006

Political Corruption

SeriousFraud Office

A. Harmonising National Corruption Laws

1. Compatible Definitions of the Offence a) Should the offence be limited to public officials? (UK law applies to both private and public sectors, to any “agent” acting for a “principal”)

How can we strengthen the global fight against corruption?

SeriousFraud Office

“An act is corruptly done if done voluntarily and intentionally and with a bad purpose of accomplishing either an unlawful end or result or a lawful end and result by some unlawful method or means.”

US v Liebo

“corruptly” is a simple English adverb and I am not going to explain it to you except to say that it does not mean dishonestly. It is a different word and it means purposely doing an act which the law forbids as tending to corrupt.”

Wellburn (1979)

“When the intention is to influence an agent (including anyone exercising a public function) in the exercise of his duty.”

Home office Consultation paper 2005

b) How do we define “corruption” or “corruptly”?



1. Compatible Definitions of the Offence

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c) Should “facilitation payments” be excluded?

OECD excludes, as does FCPA. “payments to expedite or secure the performance of a routine governmental action”

UK law does not exclude but exercises prosecutorial discretion, for small payments made in countries where it is normal practice.




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d) Corporate Liability

OECD Convention 1999. each party shall establish liability of legal persons for the bribery of foreign public officials.”

UK law requires proof of guilt by directors or managers who represent “the directing mind or will” of the company




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e) Extending Jurisdiction

UK Law covers corrupt acts committed abroad by nationals and by UK companies but “we do not think it appropriate to take jurisdiction over a foreign company for actions which take place entirely in a foreign country”

http://uktradeinvest.gov.uk




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B. Encouraging And Protecting Sources

1. Whistleblower Protection

“Giving Information, Usually To The Authorities About Illegal Or Underhand Practices”

• The UK Experience

Public Interest Disclosure Act 1998

Public Concern At Work


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• people at work who raise genuine concerns in good faith

• disclosures made tomanagers/employers/government departments/police/regulators

• Protection against victimisation and unfair dismissal

• Protected disclosures are not regarded as contractual breach of confidence


B. Encouraging And Protecting Sources

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C. Cooperating Witnesses & Plea Bargains Serious and Organised Crime and Police Act 2005

a) Immunity From Prosecution. Formal agreement with conditions attached.

b) “Restricted Use undertakings”, to encourage accomplices to make statements with the assurance that they will not be used in evidence against them. Conditions can be attached.

c) Plea Bargains “Co operating Defendant Agreements”, negotiating a plea of guilty in return for a reduction in sentence.


SeriousFraud Office

Money Laundering

• Most serious laundering takes place of shore and in the developing world. A Misconception?

• The UK’s Financial Services Authority found that between 1996 and 2000 some $1.3bn was laundered through accounts held by the Abacha family and associates in UK bank accounts.

SeriousFraud Office

Some issues

1. Balancing legal professional privilege with money laundering laws

s328 Proceeds of Crime Act 2002, offence of being concerned in an arrangement which facilitates money launderingBut

The right to consult legal advisors without fear of the communication being revealed is fundamental to the administration of justice

Bowman v Fels (2005) EWCA

Money Laundering

SeriousFraud Office

2. Multi National Currencies

• “The Puzzle of the Missing Bin Ladens” The Guardian 20/4/06

• The 500 euro bill. Spain accounts for 26% of the total issued across 12 participating states. Concerns about money laundering and corruption

Some issues

Money Laundering

SeriousFraud Office

1. The Abacha case

• FGN request for prosecution of Abacha family & Swiss request for assistance in money laundering investigation

• Abacha family mount legal challenge to both, alleging

– that criminal MLA process pursued by FGN for improper ulterior motive- to force settlement of civil claims

– that material obtained by Swiss authorities would be used by the Nigerians for collateral civil actions.

Mutual Legal Assistance

SeriousFraud Office

• Collateral legal action in Nigeria to challenge the constitutional validity of the requests

• Request made in ‘04, satellite litigation concluded in ‘04. Not necessarily representative but;

• Principles• a) MLA must be swift. • Available at the outset of an investigation• Appeals must be limited and quick• b) MLA requests need to be treated in confidence


1. The Abacha case

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Zadari (1988)“Some of the suspects who are likely to be the subject of investigation and prosecution will be powerful, rich ruthless, sophisticated criminals… It is quite plain that the process (of MLA) is not a trial; it is the process of gathering evidence. The use to be made of the evidence so gathered is a matter for the requesting state… It seems to me entirely appropriate for the UK, requested to act by a foreign state, to pay regard to the wishes of that state when asked by someone in the position of the applicant for details of the case against him.”

Lord Bingham

SeriousFraud Office Mutual Legal Assistance

SeriousFraud Office

But

• MLA may engage human rights issues e.g invasion of privacy

and

• Persons affected must have sufficient information to take legal advice and consider whether they have grounds to challenge.

• (cf similar debate Re Extradition, European Arrest Warrant and Anglo/US Treaty)


SeriousFraud Office

Serious Fraud Office

Catching the Villains

Helen GarlickAssistant Director

3rd ICAC SYMPOSIUM

9th - 11th May 2006

Serious Fraud Office Serious Fraud Office Catching the Villains Helen Garlick Assistant Director 3 rd ICAC SYMPOSIUM 9 th - 11 th May 2006.

Documents

serious fraud office

serious fraud office

cases of serious

misusing office

complex fraud

iraq corruption doesnt

biggest corruption scandal

reports of overseas