Decline in United Kingdom Prosecutions Bodes Poorly for Fraud Enforcement

On February 21, the United Kingdom Ministry of Justice published its Criminal Justice Statistics quarterly report for England and Wales for the year ending September 2018.  The report stated that while the conviction ration for court prosecutions increased to 87 percent – the highest such ratio in a decade — the total number of defendants prosecuted fell 4 percent to 1.37 million.

The report also observed that the 4 percent decline in overall prosecutions (compared to the preceding year ending September 2017)

is primarily driven by a 12% decrease in defendants prosecuted for indictable offences, continuing the downward trend seen since 2011. Compared to the previous year, there have been decreases in prosecutions for all indictable offence groups except possession of weapons, where there was a 2% increase.

It also reported that 1.19 million offenders were convicted during the 2017-2018 reporting period, reflecting a 3 percent fall from the previous year.  It noted that “[a]s with prosecutions, this decrease is driven by a fall in convictions for indictable and summary motoring offences (down 12% and 2% respectively) and there have been decreases in convictions for all indictable offences apart from possession of weapons, which continue to show an increasing trend.”

What this report does not clearly state is that, as The Times reported, “the number of suspects dealt with [via prosecution] fell to its lowest since records began almost 50 years ago,” while “recorded crime in England and Wales rose by more than 8 per cent to 5 million offences in the same period.”  It also does not make clear the practical consequences of rigid and sustained dedication to austerity.

Last October, the then-outgoing head of the Crown Prosecution Service (CPS), Alison Saunders, said that “the CPS and police were failing to investigate thousands of cases efficiently – from rape to fraud to modern slavery – and were critically short of the skills and resources required to combat crime.”  In particular, she noted that she “had to lose a third of her workforce as a result of funding cuts of more than 25%.”

Such drastic and sustained reductions in force cannot help but diminish the quantity and complexity of fraud cases that prosecutors can bring.  According to data that the auditing and consulting firm BDO gathered, in 2018 only 525 reported cases for fraud exceeding £50,000 were brought in the United Kingdom – a decrease from 577 in 2017.  A BDO executive characterized that 2018 total as “the tip of the iceberg . . . Cases are rarely being brought against individuals for fraud.  Given the amount of frauds we see out there, the amount of prosecutions at a corporate and individual level is tiny.”

In 2018, the United Kingdom Parliament’s Home Affairs Committee issued a report declaring the proportion of fraud cases investigated “shockingly low,” in comparison to the calculated total of 1.7 million offenses a year, adding: “It appears highly unlikely that more than one in 200 victims ever sees their perpetrator convicted.”  The likely effects of this continuing drain of prosecutive capacity include not only a general decline in public confidence about the criminal justice system, but a risk of high-value complex fraud, as the BDO executive opined, “increasingly being dealt with [‘]outside the judicial system’ as companies attempted to avoid reputational damage.”

At a time when large-scale external or internal fraud schemes can involve a billion pounds or more,  regulators, as important as their work is, should not be expected to be the sole public authority to protect the public as well as the public fisc.  Criminal prosecutors and regulatory enforcers can work effectively and in close coordination to meet those critical needs – but only if they are adequately resourced to do so.

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