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Fraud Updates
PCB News
Fraud Updates 2004
30 March
The Home Office has released a White Paper proposing the strategic use of asset recovery powers to disrupt organised crime even where prosecution is not possible. The White Paper uses the recovery of the Brinks Mat gold bullion by insurance companies as an example of how asset recovery can be used to combat organised crime.
The motivation behind financial crime and fraud is often monetary gain. Therefore, by confiscating assets, it removes the motivation to commit crimes and deters potential criminals.
Civil proceedings should always be considered as a method of recovering stolen assets. It is possible to use the civil courts to freeze a fraudster's worldwide assets and require them to disclose details of their assets. Such orders often include provisions requiring fraudsters to deliver up their passports to prevent them from leaving the jurisdiction and can therefore increase the chances of victims recovering their losses.
9 March
The report of Lord Penrose into the circumstances of the near-collapse of Equitable Life was released yesterday. The report has found that the difficulties faced by Equitable Life were brought about by incompetent management and non-executive directors who knew nothing about the company. The life insurer hit financial trouble 3 years ago when it was forced to pay high guaranteed annuity rates set in the 1970s and 1980s. The Penrose report primarily blames the management of Equitable Life for the problems aided by the failure of regulators to understand the company's perilous financial position.
The current management of Equitable Life are reportedly suing 15 former directors of the company in a £3.2bn negligence claim. They are also pursuing Ernst & Young, the company's former auditors, for failing to advise the life insurer about the financial state of the company. It is also reported that the board are considering whether to issue proceedings against the firm's regulator, the FSA. This approach has recently been seen in the ongoing BCCI litigation.
When considering litigation, it is important to look at all possible targets. Directors may be liable for failing to carry out their duties with sufficient diligence. Auditors may be liable for failing to check the accounts properly. It may also be possible to recover from regulators if they commit a misfeasance in public office.
| April 2004 | January 2004 |