It’s time to properly fund our vital economic crime agencies
We must give our organisations the money they need to investigate financial fraud and other crimes to the fullest extent of the law, writes Kevin Hollinrake
Crime devastates lives; it often leaves victims physically, financially or emotionally devastated. The rule of law is one of our fundamental principles and gives each of us the expectation that justice will be sought by prosecuting offenders and providing recompense to victims. It is not unreasonable to expect that crime will be investigated, witnesses will be interviewed and the individual or, indeed, an organisation responsible will be held to account for their actions.
During my time as co-Chair of the All Party Parliamentary Group on Fair Business Banking, however, I have seen that when the victim is a business, and the crime is committed within the walls of a financial institution, this is not the case. On the contrary, victims of fraud and alleged fraud are sent from pillar to post, and most often told it is a civil, contractual matter.
White collar crime is costly to prosecute. Agencies responsible for fighting economic crime simply do not have the resources necessary to tackle complex, mid-tier cases of business banking fraud. The Serious Fraud Office (SFO) only takes on a small number of very large cases and has a budget of just £53m, while the National Crime Agency Economic Crime Command has a budget of £10m and the newly established National Economic Crime Centre just £6m. Compared with the sheer scale of fraud in the UK, which is estimated at over £190bn a year, and the potential for consequential losses, it pales into insignificance.
Take the case of the HBOS Reading fraud, which cost the bank and its business victims close to £1bn and eventually saw six people jailed for a total of 47 years. Even though the scale of the fraud was extensive, and the losses to both individuals and the bank were substantial, it was not the Financial Services Authority, as it was at the time, that investigated and brought charges. Nor was is the SFO. Indeed, even the bank – technically a victim itself – did not bring a case forward.
Instead, it was left to two individuals, Paul and Nikki Turner, whose music production company had been defrauded, to campaign tirelessly for justice. During this time the bank aggressively pursued the Turners, and despite the bank attempting on 22 different occasions to repossess their home, the Turners maintained that they were the victims of a large fraud which infected the heart of a major British bank. They were even forced to sell their possessions to finance their own investigations.
The case was eventually taken on by Thames Valley Police (TVP). It took 151 officers and staff seven years to complete and cost £7m; only £2m was eventually recovered from the Home Office. TVP have stated that it could have done it in half the time and with half the money, if only the bank had cooperated fully. Unfortunately, the scale and difficulty of this fraud only serves as a warning for other cash-strapped forces.
But how is it that justice was only served by the dedication of two music producers from Cambridge? We need to have a radical re-think of the way we finance and investigate financial fraud and white-collar crime. The Thames Valley Police and Crime Commissioner, Anthony Stansfeld, believes that we should have regional fraud squads, akin to our Counter Terrorism squads, funded by the Treasury via Financial Conduct Authority fines and funds recovered from criminal gangs.
There are wider questions that need answering about who within Lloyds and HBOS knew what about the fraud and when. Scandals at RBS/GRG and others have also revealed evidence of fraud rather than ‘just’ mistreatment and malpractice. These allegations demand thorough investigation; no-one should be above the law.
Justice must not only be done but be seen to be done. In order to do that, we need our economic crime agencies to be resourced properly, so they can investigate financial fraud and other crimes to the fullest extent of the law.
Kevin Hollinrake is Conservative MP for Thirsk and Malton. MPs will debate business banking fraud in Westminster Hall on Tuesday 9 October