INVESTIGATIONS AND ENFORCEMENT ISSUES
| Pages | 173-189 |
| Published date | 01 April 2000 |
| Date | 01 April 2000 |
| DOI | https://doi.org/10.1108/eb027272 |
| Subject Matter | Accounting & finance |
Journal of Money Laundering Control — Vol. 4 No. 2
Chapter Five
INVESTIGATIONS AND ENFORCEMENT ISSUES
78 Central Issues
78.1 The investigation and enforcement sub-group
felt that its contribution to this project was best made
by suggesting answers to this question:
'Within the existing legal and regulatory frame-
work, what can we, as practitioners involved in
investigations and enforcement, recommend to
improve the way in which banks and professional
advisers (as either the victims or potential victims
of corruption) might be better equipped to
pursue civil remedies in the courts in England
and Wales to recover the proceeds of corruption?
Alternatively, in courts outside England and
Wales. In addition, what measures can we suggest
(possibly outside the existing framework) which
might reduce the need for civil remedies to be
pursued?'
79 Introduction
79.1 Corruption takes many forms. As Denis
Osborne points out, 'corruption anywhere threatens
anybody everywhere: corruption has global conse-
quences.'213 But this begs the question: what is
corruption? The Concise Oxford Dictionary defines
it as 'moral deterioration, especially widespread'
and the 'use of corrupt practices, especially bribery
or
fraud'.214
That dictionary earlier defines 'corrupt'
as 'morally depraved' and 'influenced by or using
bribery or fraudulent
activity'.215
The criminal law
in the UK, and in most other countries for that
matter, has not managed to prevent or inhibit the
growth of either domestic or international corrup-
tion. The UK experience suggests that it is difficult
to obtain evidence on which to ground criminal
proceedings, and even more difficult to secure a
conviction for corrupt acts. This experience
would also appear to be an analogue of that in
many, if not most, other countries.
79.2 Many of the problems associated with investi-
gating corruption offences are based on the difficulty
of securing adequate and admissible evidence. The
perpetrators themselves are usually the only witnesses
to the corrupt act. The act itself is easy to conceal and
the intention behind it is difficult to establish to the
requisite standard of
proof.
Absent adequate and
admissible evidence, the successful prosecution of
civil and criminal actions is not possible.
79.3 Jurisdiction and territoriality is a significant
problem when combating corruption. Although
writing in a different context, the following passage
by the editors of 'Guide to Financial Services
Regulation' nonetheless emphasises the difficulties:
'[The] law relating to jurisdiction has not kept pace
with technology and in England, within those
jurisdictions that follow English common law,
the criminal law and most public law confines
itself within the strait-jacket of the "territorial
principle" ... In a world where transactions can
occur on an almost instantaneous basis in or
through a number of sovereign jurisdictions, the
limits of the criminal justice system become
immediately
apparent.'217
79.4 Where investigators do secure adequate and
admissible evidence of offences involving corruption,
or where they establish reasonable grounds for sus-
pecting corruption, it is essential that they then
quickly trace and freeze the monies and any other
assets involved. The speed with which monies are
today electronically transferred around the world,
from one jurisdiction to any number of jurisdictions,
makes it increasingly difficult to arrest corruption by
stopping the transfer of monies and other assets, and
confiscating the proceeds, a fortiori within the existing
commercial, legal and political framework. As
Osborne recently observed:
'The public, the media, politicians and officials
have decided that "something should be done
about corruption". Deciding what to do is a
more difficult task. Because the success of policies
and actions requires support from society, those
decisions may need to differ from place to place
and from time to time. Deciding how to fight
corruption after it has become systemic in an
organisation or nation is especially difficult.'218
Journal of Money Laundering Control
Vol. 4, No. 2, 2000, pp. 173-189
Henry Stewart Publications
ISSN 1368-5201
Page 173
Investigations and Enforcement Issues
79.5 This serves to emphasise the importance of
ensuring that immediate action is taken to redress
and restructure the existing commercial, legal and
political framework as it is being sorely tested at
present in ways which demonstrate its glaring inade-
quacies. The difficulties associated with investigation
of corruption domestically and internationally are
testament to those inadequacies. Moreover, facilities
need to be in place 'for the rapid and reliable com-
munication of information and in appropriate cases,
intelligence'.219
79.6 Where the monies misappropriated through
corrupt activities are substantial, the principal aim
of the investigator is likely to be to recover those
monies. There may also be secondary aims. For
example: (i) to secure convictions for those responsi-
ble;
(ii) to determine the control weakness(es) which
made the loss possible so as to ensure that the mis-
appropriation can not easily be repeated; and (iii) to
identify and root out any accomplices. Hence the
initial objectives in respect to investigating any
corruption, whether major or not, are to:
— establish the facts in order to determine whether a
claim should be brought;
— establish the evidence which supports those facts;
— develop a strategy designed to secure achievable
outcomes in keeping with those facts, the
evidence and the resources available;
— secure the assets by the use of freezing orders; and
— locate key individuals/companies involved
(whether as possible defendants, third parties or
witnesses).
79.7 It is generally very difficult to recover monies
that others have obtained through corrupt activities.
In the UK the difficulties faced by the prosecutors
of corruption will only increase, a fortiori in the
event that the Law Commission's proposals in its
recent report entitled Legislating the Criminal Code:
Corruption220 are implemented, as this will remove
the present reversal of the onus of proof where gifts
are made by contractors to government employees.
Were the traditional onus to be restored, it would
no longer be necessary for donors or donees to
prove that such gifts are not tainted with corruption.
From an investigative and prosecutorial perspective,
that would make an already difficult task that much
harder.
79.8 Investigations into corruption which occurs
either outside the UK or in two or more jurisdictions
are generally undertaken in the same manner as any
fraud or money-laundering inquiry. By their very
nature these are inevitably complex and resource
intensive. There are additional difficulties associated
with corruption, however, given that corrupt prac-
tices generally occur covertly and often the victim
is unaware of suffering any disadvantage. The inter-
national element also exacerbates the problems
faced by law enforcement agencies within, and out-
side,
the UK. For example, some jurisdictions do
not recognise private sector
corruption.221
79.9 Furthermore, when investigating corruption,
it is also necessary to consider the legislative frame-
work in those countries perceived as being the
original source of the monies obtained by corruption.
One must also contemplate the extent to which local
legal procedures support the effective investigation of
corruption, assist overseas authorities to trace the
origin of the funds in question and secure adequate
and admissible evidence of the corrupt act
itself.
Substantive anti-corruption law
80 United Kingdom
80.1 Corruption offences are currently dealt with in
the UK under the following three statutes:
— Public Bodies Corrupt Practices Act 1889 (UK);
— Prevention of Corruption Act 1906 (UK); and
— Prevention of Corruption Act 1916 (UK).
80.2 The 1906 Act introduced offences pertaining
to private sector corruption. The 1916 Act intro-
duced the reverse presumptions in public sector
cases.
These Acts were perceived to have had many
defects. The Salmon Commission and the Com-
mittee on Standards in Public Life called for a
review of the law. As a result, the Law Commission
examined the current position and proposed radical
changes.
80.3 Many of the current problems in the UK stem
from the lack of an agreed definition of what 'cor-
ruptly' actually means. There are difficulties in both
definition and perception. Furthermore, the existing
legislation is dependent on a distinction between
public and non-public bodies. There is now great
uncertainty as to what constitutes a public body,
especially as many have now been privatised and it
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