Fraud Bill [HL]

My Lords, I join all noble Lords who have complimented the Law Commission on its remarkable report and, particularly, on the proposed Bill that they published at the end of it. We, as my noble friend Lady Anelay has said, support this Bill and congratulate the Government on bringing it forward. However, it contains one major flaw; that is, the continuation of the offence of conspiracy to defraud. The noble and learned Lord the Attorney-General said, in his opening speech, that if he got something wrong, he knew that I would put it right. Fortunately, I rarely have to utilise that corrective mechanism; and it may be that on this occasion I shall be in error in attempting to do so. However, the noble and learned Lord did indicate that a majority of those who were consulted supported the continuation of the offence of conspiracy to defraud. But that conflicts with the information that I received from his department. I may have misread or misunderstood the information, but my belief is that Liberty, the Criminal Law Solicitors’ Association, the Institute of Counter Fraud Specialists, the International Underwriting Association, the London Criminal Court Solicitors Association, HM Customs and Excise, the Audit Commission and the Institute of Legal Executives all supported the abolition of the offence of conspiracy to defraud. The two main supporters of its continuation were, not surprisingly, the CPS and the Serious Fraud Office. One would expect those organisations to want the continuation of that offence. It makes writing indictments much easier. But it is astonishing that the Government have given in so easily to these pressure groups. One of the main themes of the Government’s support for the Bill is that they produced a new comprehensive definition of fraud. At no stage during the opening speech of the noble and learned Lord the Attorney-General did he indicate any chink in the armour of that new definition. Nor is there any indication of such a gap in the Law Commission’s report. Indeed, were there to be such a gap, I am sure that the noble and learned Lord would have sent both the Bill and the report back to the Law Commission and asked it to redefine the general offence. It is sad, after all the work done by the Law Commission, that the Government have not had sufficient confidence in the intellectual quality of its work to back its conclusions. The result will be exactly what the noble and learned Lord, Lord Mayhew, said recently in a different context. The disease of overloaded indictments that confuse both juries and defendants—and sometimes the prosecution, too, to say nothing of the judge—will continue due to this unnecessary and confusing retention. It is important that the case that the Law Commission make for abolishing the conspiracy to   defraud offence is well understood. The Law Commission describes conspiracy to defraud as one of the two principle defects of the current law. The concept of fraud, encapsulated in the definition of conspiracy to defraud, is wider than the range of conduct caught by any of the individual statutory offences involving dishonest behaviour. This means that it can be criminal for two people to agree to do something which it would not be unlawful for one person to do. The Law Commission concluded that conspiracy to defraud was far too wide in its scope,"““in that it catches agreements to do things which are rightly not criminal””." Its report states that the cases on the meaning of ““to defraud”” have given it an extensive meaning, so that any dishonest agreement to make a gain at another person’s expense could form the basis of a conspiracy to defraud. The Law Commission states,"““we take the view that this definition is too broad””." That is because we live in a capitalist society which, by its nature, revolves around the pursuit of gain at the expense of competitors. Such behaviour is perfectly legitimate; it is only the element of dishonesty that renders it a criminal fraud. In other words, dishonesty, as the noble Lord, Lord Thomas of Gresford, reminded us, does all the work in assessing whether particular facts fall within the definition of the crime. Moreover, there is no statutory definition of dishonesty. The case of Ghosh, in which the noble and learned Lord, Lord Lloyd, participated so memorably, provides that the jury must be satisfied both that the defendant’s conduct was dishonest according to the ordinary standards of reasonable and honest people; and that the defendant must have realised that it was dishonest according to those standards. Therefore, activities that might otherwise be legitimate can become fraudulent if a jury is prepared to characterise them as dishonest. That delegates to the jury the responsibility for defining what conduct is to be regarded as fraudulent; and it leaves prosecutors with an excessively broad discretion when they are deciding whether to pursue a conspiracy to defraud case. The Government’s consultation document stated that the common law crime of conspiracy to defraud was defined ““very broadly”” and that as the,"““element of dishonesty is left to do all the work””," this left,"““the range of the offence  . . . unfairly uncertain and wide enough potentially to encompass sharp business practice””." In their consultation document, the Government propose to repeal that law and replace it with a general offence of fraud, which would,"““benefit juries by making fraud law easier to understand””." But as a result of the objections of the CPS and the Serious Fraud Office, the Government have simply caved in and agreed to keep the offence of conspiracy. In paragraph 5.28 of the Law Commission’s report we have, in my submission, the complete answer to the Government. The Law Commission states:"““We continue to believe that a general dishonesty offence, by not requiring as an element some identifiable morally dubious conduct to which the test of dishonesty may be applied, would fail to provide any meaningful guidance on the scope of the criminal law and the conduct which may be lawfully pursued. We do not accept the argument that inherent uncertainty is satisfactorily cured by the promise of prosecutorial discretion. This cannot make a vague offence clear and, while it might ameliorate some of the risks, it does not excuse a law reform agency from formulating a justifiable and properly defined offence. We do not believe it is for the police and prosecutors to decide the ambit of the criminal law. As the Supreme Court of the United States has said: ‘A statute which either forbids or requires the doing of an act in terms so vague that men of common intelligence must necessarily guess at its meaning and differ as to its application, violates the first essential of due process of law’.””." I believe that that paragraph is unanswerable. I invite the Government to think again about their decision to include conspiracy to defraud on the face of the Bill. If they continue to persist in doing so, they can be certain to meet amendments from the Opposition in the course of the passage of the Bill.