Fraud Bill [HL]

My Lords, my noble and learned friend the Attorney-General can be confident of the support of his own Benches for the passage of this Bill. The lawyers here present might be excited by its detail, but at Second Reading it seems to me more important for us to consider some of the policy implications of this important legislation. First and foremost, it is an important exemplar of the way in which Parliament, by the use of the Law Commission, can step by step reform the criminal law of our country. That is an important task; indeed one that is vital to the proper functioning of our society. By proper legislation that encodes the criminal law we hope to—and I expect usually will—produce clarity of offence and the reasonable certainty of those involved as to how the matter will progress in the course of a criminal investigation and trial. I hope that this is one step and that my noble and learned friend will bring forward more legislation in the   life of this Parliament implementing the Law Commission’s proposals to change the criminal law, and that he will do so with the same admirable economy with which this Bill addresses the law of fraud. Whatever 100   or 200 pages it might occupy in a textbook now, to encompass it in five pages and 12 principal sections is to be described as a success, subject to its passage through Committee. As a piece of law reform, it was and is a model. Now to the policy considerations. The previous director of the Serious Fraud Office, now the chairwoman of the Fraud Advisory Panel, Ros White, said the following:"““Fraud is costing the country billions each year and inflicting enormous harm on individuals and communities””." This Bill is no lawyers’ piece of art; it is a practical protection of the public billions, affecting many, many   people. It therefore requires two important considerations of policy. First, it should be efficiently implemented at three stages. At the beginning, by ensuring that the investigating police officers in this country who will be tasked with applying the law will be trained to understand it; able to relate its content to the multifarious ways of modern technological crime that they all encounter; and that they will then be assisted by lawyers from the Crown Prosecution Service or the SFO as to the appropriate charges that might arise from an inquiry. Good law becomes best law when it is effective in practice. The second step of efficient implementation is to   ensure that this Bill becomes psychologically connected in the mind of every lawyer, police officer and court with the legislation on the proceeds of crime. We prosecute crime and fraud not just to convict and punish but to recover stolen assets. I said billions, using the quotation from Ros White. The public will expect, as time goes by, a recovery that can reasonably be made from the activities of major fraudsters. The last point is that any Bill of this kind—momentous as it is in the life of our criminal law—will be met by legal analysis and appeals. I invite my noble and learned friend to invite the Lord Chief Justice and the Court of Appeal Criminal Division to ensure that appeals arising under the Act, when it becomes an Act, are dealt with promptly in groups according to topic or whatever, and certainly within a period of three or four months. The last thing that we want is several years of uncertainty about its proper interpretation by the courts. So, efficient interpretation is the first policy point. The second general policy point is that the Bill should take its place as an effective part of the framework of combating financial crime. Its terms generally deal with fraud and dishonesty, but two clauses deserve emphasis in the context of major financial crime—Clause 4, which is on the dishonest abuse of position, and Clause 12, which is about the liability of corporate officers for their company should it be found to have committed one of the crimes. Taking the two together in the realm of high finance, what is an abuse of position? The legal concept—technical, sound, fiduciary—is easy to understand, in that one person should show loyalty to another if it is his responsibility to protect the other’s interests. In Committee, Clause 4 deserves especial attention in the context of major financial crime. That is because it goes beyond technical financial offences and the specific offence of insider trading, and produces an area of concern to the public of which the financial world should be astute—and so, I suspect, should we lawyers in applying the Bill. The Bill should form part of the framework of combating fraud, as I said. We have reached the stage where we have a Financial Services Authority and a Serious Fraud Office with experts assisting them, and an efficient procedure in court in the sense of trial, appeal, recovery of the proceeds of crime and so on. That framework should be used as a composite system of control. We are not talking about disparate and unrelated parts of combating fraud. When the Bill comes into force, I expect that those involved in chasing convictions for fraud and recovering assets will look at the framework in the following way. The Financial Services Authority will attack through fines or regulation and control the level of financial defalcation appropriate to that kind of penalty. If the Serious Fraud Office recommends that there be criminal proceedings the next stage should be, as I understand the law to be applied in future, a plea-bargaining system in which fraudsters are punished and relieved. They will be punished be being made to pay up, and relieved with the consequence of perhaps getting a lesser sentence or no sentence of imprisonment, if that fits the justice of the case. After that, if the plea bargain did not work and there was a trial and conviction, there would be long sentences. Ten years is the maximum. I am not recommending draconian reactions, but is that the right level at which to   pitch public sentiment about very serious financial crime? The crime may involve hundreds of millions, or be a major pension fraud that damages the lives of many. In America, the test for sentence is, ““How much, and how many people were affected?””. Then you fix a sentence. The framework is the product of existing legislation plus the Bill, and it is one that we should start applying. I close by rehearsing the opening remark. The Bill is good, and will benefit from scrutiny in Committee. However, I hope that it comes into force quickly and will be followed by other similar Bills.