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Fraud Updates
PCB News
Fraud Updates 2008
26 February
In the last couple of days, there have been reports that both the British and German authorities had paid an informant within Lichtenstein to disclose details of suspected tax evaders. The tax authorities in a number of other countries have now expressed an interest in sharing this information to enable them to recover unpaid taxes, said to run into hundreds of millions of euros.
The payment of monies to obtain this information shows the value of confidential information and could be seen as an unusual step in rewarding a person who has acted in breach of his duties in disclosing it. A claim for recovery of taxes under English law is likely to be met with a defence that the evidence had been obtained unlawfully and should therefore not be admissible.
However, such a defence is unlikely to succeed. There can be little doubt that the interests of justice demand that such evidence should be admissible as the interests of protecting the Revenue outweigh any public interest in protecting personal information. The sharing of information may also put authorities onto a train of enquiry that leads to the discovery of undeclared assets in other countries. It is yet further evidence of the growing determination to use a variety of the available processes to ensure that fraudsters cannot escape liability for their actions by living in one country whilst seeking to hide their assets behind a cloak of anonymity in another country.
15 February
Two recent legal developments have increased the need for caution and awareness within business.
The first involves an extension of the protection offered to whistleblowers under the Sarbanes-Oxley Act, which until now has only safeguarded those within the US.
The Act imposes large fines and potentially lengthy prison sentences for those who breach it. A New York judge has now ruled that the protection offered by the Act even applies to employees of US listed companies who are based outside the US.
The second development involves the granting of additional powers to UK Inland Revenue tax officials in an attempt to reduce tax fraud. From 15 February 2008, they will have powers to intercept phone calls, emails and letters and to bug residential properties and private vehicles, powers previously enjoyed by Customs officials. Opposition has been voiced as to whether this extension of powers is necessary.
The developments highlight the need for companies and their directors to maintain vigilance and ensure rigorous protocols are in place to minimise the risk of falling foul of the ever increasing drive for accountability.
| March 2008 | January 2008 |