Confronting the “fraud bottleneck”: private sanctions for fraud and their implications for justice

Date21 September 2015
DOIhttps://doi.org/10.1108/JCRPP-04-2015-0006
Pages159-174
Publication Date21 September 2015
AuthorMark Button,Alison Wakefield,Graham Brooks,Chris Lewis,David Shepherd
SubjectHealth & social care,Criminology & forensic psychology
Confronting the fraud bottleneck:
private sanctions for fraud and their
implications for justice
Mark Button, Alison Wakefield, Graham Brooks, Chris Lewis and David Shepherd
Professor Mark Button is based
at the Institute of Criminal
Justice Studies, University of
Portsmouth, Portsmouth,
Hampshire, UK.
Dr Alison Wakefield is Senior
Lecturer in Security Risk
Management at the Institute of
Criminal Justice Studies,
University of Portsmouth,
Portsmouth, Hampshire, UK.
Professor Graham Brooks is
based at the Faculty of Social
Sciences, University of
Wolverhampton,
Wolverhampton, UK.
Professor Chris Lewis and
David Shepherd both are
based at the Institute of
Criminal Justice Studies,
University of Portsmouth,
Portsmouth, Hampshire, UK.
Abstract
Purpose The purpose of this paper is to illustrate the ways in which contemporary organisations are
imposing their own private sanctions on fraudsters.
Design/methodology/approach The research draws on primary data from interviews with counter fraud
practitioners in the UK, secondary sources and case examples.
Findings Such developments have been stimulated, at least in part, by the broader limitations of the
criminal justice system and in particular a fraud bottleneck. Alongside criminal sanctions, many examples
are provided of organisations employing private prosecutions innovative forms of civil sanction and pseudo
statesanctions, most commonly civil penalties comparable to fines.
Research limitations/implications Such changes could mark the beginning of the rebirth of private
prosecutionand the further expansion of private punishment. Growing private involvement in state sanctions
and the development of private sanctions represents a risk to traditional guarantees of justice. There are
differences in which comparable frauds are dealt with by corporate bodies and thus considerable
inconsistency in sanctions imposed. In contrast with criminal justice measures, there is no rehabilitative
element to private sanctions. More research is needed to assess the extent of such measures, and establish
what is happening, the wider social implications, and whether greater state regulation is needed.
Practical implications Private sanctions for fraud are likely to continue to grow, as organisationspursue
their own measures rather than relying on increasingly over-stretched criminal justice systems. Their
emergence, extent and implications are not fully understood by researchers and therefore need much more
research, consideration and debate. These private measures need to be more actively recognised by criminal
justice policy-makers and analysts alongside the already substantial formal involvement of the private sector
in punishment through prisons, electronic tagging and probation, for example. Such measures lack the
checks and balances, and greater degree of consistency as laid out in sentencing guidelines, of the criminal
justice system. In light of this, consideration needs to be given to greater state regulation of private sanctions
for fraud. More also needs to be done to help fraudsters suffering problems such as debt or addiction to
rebuild their lives. There is a strong case for measures beyond the criminal justice system to support such
fraudsters to be created and publicly promoted.
Originality/value The findings are of relevance to criminal justice policy-makers, academics and counter
fraud practitioners in the public and private sectors.
Keywords Private sector, Punishment, Prosecution, Fraud, Victims, Sentencing
Paper type Research paper
Introduction
The emergence of private policinghas becomea subject of great interestamongst policy-makers,
researchers and academics. A variety of issues have been explored, including the agents and
bodies involved, their culture, their legal powers, their regulation and the social implications
of their expansion (Shearing and Stenning, 1981, 1983, 1987; South, 1988; Johnston, 1992;
Received 13 April 2015
Revised 9 June 2015
Accepted 10 June 2015
DOI 10.1108/JCRPP-04-2015-0006 VOL. 1 NO. 3 2015, pp.159-174, © Emerald Group Publishing Limited, ISSN 2056-3841
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JOURNAL OF CRIMINOLOGICAL RESEARCH, POLICY AND PRACTICE
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PAGE159
Jones and Newburn, 1998; Loader and Walker, 2001, 2007; Rigakos, 2002; Johnston and
Shearing, 2003; Wakefield, 2003; Crawford et al., 2005; Button, 2007, 2011a, b; Sarre
and Prenzler, 2009; White, 2010). Empirical studies have shown the substantial contribution that
the private sector makes to policing internationally in terms of numbers and roles (Shearing et al.,
1980; Jones and Newburn, 1998; Prenzler et al., 2008; Confederation of European Security
Services, 2011; Nalla and Wakefield, 2014).
There has alsobeen interest in the privatisationof policing (South, 1988;Johnston, 1992; Prenzler,
2004; Wakefieldand Button, 2014) and punishment (James et al.,1997; Sarre, 2001; Mehigan and
Rowe, 2007; Shefer and Liebling, 2008 ; Genders, 2013; Fitzgibbon and Lea , 2014;
Ludlow, 2014, 2015). However, interest in the privatisation of punishment has tended to focus
upon those areas of the state in which direct government policy has led to a transfer of function
from the public to the private or voluntary sector, most commonly in relation to prisons, prisoner
escort, custody suites and probation. Johnston (1992) associated such developments in UK
public policy, many of which have been mirrored internationally, with a privatisation mentality
that began under Margaret Thatchers Conservative government in the 1980s. These amount to
what Johnston (1992) would have described as direct load sheddingand contracting out,
whereby the state has deliberately shed roles to the private sector and moved other traditionally
state services to private contractors. Such initiatives can also be linked to the concept within the
governmentality literature of responsibilization, a process in which the state has passed back
governance roles that it had previously absorbed to the private and voluntary sectors, including
policing and crime prevention functions (OMalley, 1992, 2009; Garland, 1996).
In The Rebirth of Private Policing, Johnston (1992) also describes a process of indirect load
shedding, whereby the state, unable to meet public or corporate expectations, is gradually
replaced by the private sector filling the gap. Such initiatives have been well documented with
regard to areasof policing, such as the patrolof public streets, where thestate has not supplied the
presence expected.A number of UK studies have exemplified how the privatesector (with varying
degrees of support from state bodies) has been able to offer this service in residential areas,
with the local communities willing to pay for that gap to be filled (McManus, 1995; Noaks, 2000;
Sharp and Wilson, 2000; Crawford et al., 2005). Discussion of such trends is developed from an
Australian perspective by Prenzler (2004) and a North American viewpoint by Brodeur (2010).
An area in which there has been less academic interest is the indirect load sheddingof
punishment, although a number of studies have recognised this as occurring with respect to fraud
and started to consider its implications. Some three decades ago, Levi (1987, p. 183) described
prosecution as the controlmethod of the last resortinrelation to fraud cas esin the UK, due to their
complexity and expense. He went on to observe that cuts to police resources for the investigation of
serious fraud, which was already being de-prioritised at that time in relation to other crimes, shifted
the economic burden of crime investigation onto victims, especially corporate victims []andhas
thus transferred public law back into the sphere of private law(p. 282). Levi, and later Doig and
Macaulay (2008), detailed some of the ways in which UK public sector agencies address fraud
without involving the police, with the active encouragementof the Parliamentary Committeeof Public
Accounts and the National Audit Office, by means of their own investigations and criminal
prosecutions as well as other forms of sanction. Sarre (2001) considered the implications of using
civil and administrativesanctions, as opposedto the criminal law, inrelation to a number of areasof
criminality, but particularly corporate crime and fraud. The advantages that he noted included
efficiency and cost effectiveness, while he also highlighted disadvantages associated with fewer
rights for defendants, greater inconsistency in their application, lower visibility and lack of deterrence.
This paper contributes to this small but important body of literature by looking more closely at
corporate responses to the punishment of fraud across the private, public and voluntary sectors,
and building on Sarres work to consider the social implications of these responses. Drawing on
recent empirical research and legal cases, it will show how the inability of the state to provide for
effective criminal sanctions, combined with the desire of many private organisations for a different
approach to punishment, is fuelling a growing private involvement in the pursuit and delivery of
sanctions. Its extent is such that the corporate sector could be said to be developing a private
sanctions framework beyond the state infrastructure. The state has been largely agnostic to such
initiatives so far in relation to the private sector, and as such they cannot be viewed as a form of
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