Musical Chairs?

Citation

Barry Rider, P. (2009), "Musical Chairs?", Journal of Financial Crime, Vol. 16 No. 1. https://doi.org/10.1108/jfc.2009.30916aaa.001

Musical Chairs?

Article Type: Editorial From: Journal of Financial Crime, Volume 16, Issue 1

It is perhaps ironic that fate has chosen a time for the announcement of the establishment of the National Fraud Strategic Authority – to address “the estimated cost of fraud – around £ 14 billion annually or nearly £ 265 for every person in England and Wales” (NFSA News Release, 1st October 2008) at a time when the financial markets according at least to the press and the IMF, are approaching a state of melt down and the Government’s own rescue package has been described in one leading newspaper as potentially putting every individual in the UK at a risk of losing £ 16,000. Of course, the establishment of the NFSA, a result of the previous Attorney General, Lord Goldsmith’s Fraud Review, was planned many months ago when the main preoccupation of the Government was Mr Brown’s popularity. Who, I am sure it would be said, could have predicted the tsunami that has hit the world markets! What occurred in the banking system was just as unpredictable as the collapse of communism, the invasion of the Falklands and the “melt down” in Afghanistan!

The NFSA launched at a reception in the Scottish Office on 1st October with a modest fanfare has an impressive list of strategic aims. Tackling the key threats of fraud that pose the greatest harm to the UK; the pursuit of fraudsters effectively, holding them to account and improving victim support; the reduction of the UK’s exposure to fraud – by building the nation’s capability to prevent it; targeting action against fraud more effectively by building, sharing and acting on knowledge and to secure the international collaboration necessary to protect the UK from fraud – a commendable list by anyone’s standard. The Government had set aside a three year budget to get this ambitious initiative on the road of £ 12.4 million. However, 30 per cent of the HFSA’s staff was planned to be seconded from the private sector and given the present economic position the Government has admitted to having to rethink this. Of course, the NFSA is not the only new girl on the block, as its Chief Executive – Sandra Quinn (ex-FSA) – is at pains to point out. The City of London Police, until a couple of years ago fearing for its future, has been made the National Lead Police Force in Fraud and has 40 new officers and specialist. Of course, this is at a time when there is a significant reduction in the number of officers involved in fraud cases outside London! Indeed, even the Serious Fraud Office has declared redundancies. The City’s thin blue line is not only to be a national resource, but also has to establish the new National Fraud Reporting Centre and the National Fraud Intelligence Bureau. Heady days for the sign writers! Of course, whether there will be any change in the occupants of the offices boasting new signs remains to be seen!

The announced intention of the NFSA to focus immediately on such issues as plastic card fraud and boiler rooms – lack the wow factor, although in fairness the Attorney General is also keen for them to look also at mortgage frauds. It remains to be seen whether the NFSA is going to have the imagination to focus on real issues in the control of fraud such as creating proper career structures for those in law enforcement that adequately encourage, recognise and retain expertise. Far too little attention is given to the institutional issues. Writing in 1988 in the context of the then new initiatives, I stated:

[…] the most serious criticism that can be made against the new system is the lack of attention that has been given to the institutional devices for supervision and enforcement […] the new system cannot be effective until proper attention is given to these practical issues […] the City, and for that matter society, deserves better from those into whose hands it has entrusted stewardship of a precious and precarious national interest (41 Current legal Problems 64).

While all this would have been good copy for the sceptical press, had not there been more dramatic news in abundance, the Government and in particular, the Attorney General, Baroness Scotland – who has taken charge of this initiative – deserve commendation and support. The present Government has done more than any other to address what it perceives are the real issues in controlling the harm caused by fraud. The criticisms of detail are much more fairly addressed to their advisers. The fact that the Attorney’s inaugural remarks were reminiscent of those of Sir Michael Havers the then Attorney General at the Commonwealth Law Ministers meeting in Barbados in May 1980 in launching a Commonwealth crusade against fraud, shows either the persistency of the problems or a disconnect with history. While the NFSA seeks to bring in a marvellous array of stakeholders into the debate and its work, if the start is anything to go by they appear to be the usual suspects.

One does really have to wonder how deep the interest is in government in addressing economically motivated crime and how long any initiative – no matter how well timed, funded and conceived – will retain political support. Everything today in government and sadly at the top of law enforcement is short-term. The fostering of real international co-operation requires a long-term commitment by individuals and government. The inability to create and maintain confidence, so sadly lacking in the financial world, is increasingly manifest in real law enforcement. Despite all the MOUs, MLATs, Schemes and conferences the reality especially from the perspective of the developing world is “forget it” or hire a City lawyer (if you can afford it). Of course it is not just an issue of resources – it goes to the very structure of agencies, careers and the personal commitment of those involved. For the last 26 years the Cambridge Symposium on Economic Crime has attracted thousands of officials to Cambridge to address these issues. This year well over 800 ministers, senior officials and diplomats attended. Over the last quarter of a century it is hard to think of more than a mere handful of British officials who have made it up the M11 (apart from to attend dinners). Perhaps the near collapse of the financial system – not as a result of fraud or even executive greed – but in regulation and supervision, will render at least some less parochial. As Gerald Baker writing in The Times rightly observes “international co-operation is not an optional extra” (The Times, 11th October 2008).

Professor Barry Rider3rd October 2008