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HOUSE OF COMMONS (REFORM) BILL
To be read a Second time on Friday 1 March 1996.
Debate to be resumed on Friday 1 March.
Mr. Simon Hughes:
On a point of order, Madam Deputy Speaker. The hon. Member for Luton, North
Madam Deputy Speaker:
That is not a matter with which I can deal. If there are any complaints, I think that they should go to the commissioner.
Mr. John Carlisle:
Further to that point of order, Madam Deputy Speaker. I wonder whether it should be stated on the record that the hon. Member for Southwark and Bermondsey (Mr. Hughes), who has just made that objection, should be accurate in his assessment. It is,of course, for you to judge Madam Deputy Speaker whether he is out of order. Are you satisfied that the accusation that he has just made against me as an individual Member is entirely accurate in terms of my interests in this place?
Madam Deputy Speaker:
I made it perfectly clear that I did not regard it as a matter for me, but if an hon. Member felt that there was cause for complaint--about which I did not judge--there was a proper course of action to take. That should settle the matter.
Mr. Carlisle:
Further to that point of order, Madam Deputy Speaker. Entirely untrue and inaccurate aspersions have been cast which show that the hon. Member for Southwark and Bermondsey has not kept up to date with the Register of Members' Interests. He has a rather out-of-date copy. When such aspersions, which are without foundation, are cast on an hon. Member's name and character, has he any way, through you, of clearing his name, or does he have sit here accused and unable to say that he is not guilty?
Madam Deputy Speaker:
I presume that it will also be open to the hon. Member to make that point to the commissioner.
Madam Deputy Speaker:
Order. I have had enough.
Ordered,
Motion made, and Question proposed, That this House do now adjourn.--[Mr. Ottaway.]
Mr. John Marshall (Hendon, South):
I have raised the question of serious fraud on several occasions in the House. I realise that I cannot refer to individuals who may have been subject to previous prosecutions but who are also subject to current prosecutions.
There are several serious issues which must be considered. First, there is the competence of the Serious Fraud Office. There have been a large number of acquittals in high-profile cases. Secondly, there is the cost of cases to the public purse and the national scandal whereby a number of wide boys have been helped by the legal aid fund. Thirdly, there is a widespread feeling that serious fraud cases are too complicated for the average jury.
We must remember who the victims of serious fraud are. They are frequently the financially unsophisticated--the small man. I remember, at the time of the Dunsdale Securities case, meeting a constituent who told me that he had concentrated all his financial investment in one company, Dunsdale Securities. He had even been persuaded by Mr. Miller, who ran Dunsdale Securities,to increase the mortgage on his house so that he could invest even more money in Dunsdale. He did not realise that the return offered by Dunsdale Securities was far higher than that offered by the gilt-edged securities in which it allegedly invested--so high as to be suspicious.
Similarly, those of us who were in the House at the time of the Barlow Clowes disaster will remember meeting constituents who had put money aside for a rainy day. One constituent had put money into Barlow Clowes to save for school fees. They were the people who suffered because they were not wise enough in the ways of the world and invested in a duff company. More recently, there was the Belling pension fund, about which pensioners suffered worry and concern.
In Sussex, two partners in a firm of solicitors engaged in an £8 million fraud. The victims were the employees of the firm, whose jobs disappeared from under them because it went bankrupt, and honest solicitors throughout the country who had, through the solicitor's compensation fund, to pay out £8 million to the clients of that company. That was all paid for by honest, decent solicitors.
Although the victims may often obtain compensation, as they did eventually in the Barlow Clowes case, the uncertainty before getting it can be fatal. I knew an investor in Dunsdale Securities who got a 7.30 am telephone call to tell him that Dunsdale had gone bust. Within a few days, he had died of a heart attack, which was clearly not unrelated to the worry and concern that he had suffered. While those who suffered as a result of Barlow Clowes were eventually pleased to get compensation, they went through many months of agony about which the perpetrators of the fraud were not concerned.
The other case is one of which I have spoken to my right hon. and learned Friends the Law Officers from time to time. About £59 million was misappropriated, and it was all investors' money. Some of those who suffered were very small investors.
It is not just the fact that small people suffer.The reputation of this country for honest dealing in finance is put at risk when one of these individuals gets away with tens of millions of pounds. Vast sums of money are involved, and the greed and dishonesty that enables people to seek to get away with it beggars belief.
The public have a sense of intense frustration that large sums of money are lost by the victims of fraud. In some of the high-profile cases, many tens of millions of pounds are lost. Many millions are spent on the cases themselves. The Government not only pay the costs of the Serious Fraud Office, but normally help the defendants through legal aid. All that happens--the money has been lost and the costs are paid out--but all too often there is no conviction.
The Serious Fraud Office is nicknamed by some the "seriously flawed office". When Mr. Nadir decided to fly to Cyprus, many people thought that he could have chanced his arm and been prosecuted. He probably would have been at liberty in England now, rather than a prisoner in northern Cyprus.
My interest in this issue was aroused by the Levitt case. I thought that the prosecution by Mr. David Cocks was bungled. He ended up blaming the judge, complaining unsuccessfully about defence counsel and misleading the director of the SFO, the Attorney-General and, indirectly,the House.
Many of us have complaints about the SFO. It has had three directors in its short life. Many question whether its budget is adequate. The Sunday Times recently pointed out that the SFO's responsibilities have been increased, in that it is now responsible for cases in which the fraud is more than £1 million, whereas previously the threshold was £5 million.
A lawyer called Bob Goldspink--one could not have invented that name--who is a partner at Denton Hall and specialises in major fraud cases, says:
Another lawyer said that the SFO is already woefully under-resourced.
The SFO has had a mixed record. I wish to thank the Lord Chancellor's Office for answering a question of mine today. In the year 1992-93, there were 21 trials, but in only 12 were all the defendants convicted. In 1993-94, there were 26 trials, but in only 14 were all the defendants convicted. In 1994-95, there were 12 trials, in five of which all the defendants were convicted. In 1995 and to date, there have been nine, in six of which all the defendants were convicted.
The scale of convictions is not always the best guide, however. Mr. Levitt was convicted after plea bargaining, but he did 185 hours of community service--scarcely an adequate penalty in view of the scale of the fraud that he had committed.
Apart from the cost of serious fraud to the individuals concerned, there is a huge cost to the legal aid fund.The wide boys who practise serious fraud are smart enough to transfer their assets before they are charged.In the Levitt case, for example, he was given the legal aid appropriate to a pauper, but he lived in a house worth £750,000 and celebrated the end of the case with champagne and going to the plush boxes of White Hart
lane. Since then, he has moved up market in his housing rather than down. The victims suffered twice over--they lost because they were unsuccessful investors, and they lost again as taxpayers.
It sticks in the gullet of most decent people that villains who have been party to very large frauds can then live the life of Riley, having been helped with legal aid. When they apply for legal aid, they are allegedly penniless, but if they escape conviction they suddenly seem able to live the good life.
One of the most amazing cases was that of Mr. Ernest Saunders, who was always able to get legal aid when fighting his case in the United Kingdom courts. I saw recently that he was taking a case to the European Court' for which, I assume, he is having to pay solicitors but where he is not eligible for legal aid. One wonders whether this man, who at one stage suffered from Alzheimer's disease but discovered that Guinness was a good cure for it, may not occasionally suffer from amnesia when filling out his legal aid application forms.
In 1994, there were 1 million applications for legalaid and 600,000 for criminal legal aid, but only15 prosecutions for fraudulent claims. Are we being told that the criminal fraternity is honest when claiming legal aid? I cannot believe that. I believe that all too often those who practise serious fraud have salted away their assets, so that, when they are brought to trial they can get legal aid paid for by the taxpayer. I welcome the Lord Chancellor's commitment to ensuring that those who are apparently rich and living in big houses will no longer be eligible for legal aid.
The House may like to know about the growth in expensive legal aid. I have today been given the answer to a question that I tabled to the Lord Chancellor's Department. It shows that, in 1993-94, there were 172 cases in which the cost of legal aid exceeded £100,000.In 1994-95, there were 237 such cases, and so far this year there have been 178. In other words, the cost to the taxpayer is considerable.
Finally, we must consider whether juries are suitable for trying serious fraud cases. The Roskill committee in 1986 recommended that serious fraud cases should be tried not by juries but by a judge and lay assessors. We have to ask whether juries are able to understand very complicated serious fraud cases. One recent case was so complicated that the court heard evidence only in the mornings because the judge thought that it would be too much for the jury to take in evidence in both the morning and the afternoon. The burden on the judge is magnified by the need to explain inherently complicated issues to a jury which may include some more simple people.
I have been told by Law Officers and others that the judges themselves are almost exhausted by the end of some serious fraud trials, because the judge has to understand issues that are foreign to him in his daily life. If complicated fraud trials are sometimes too much for the judges, they are certainly going to be too much for the jurors. Complicated fraud trials frequently last for many months, and I do not believe that the juries in such cases are representative of society as a whole.
In a recent case--the one that I am not allowed to mention in case it prejudges another trial--the potential jurors were asked whether they had any views on X.
For people not to have a view on X meant that they could not have been frequent readers of newspapers. If they are not frequent readers of newspapers, I suggest that they are not typical of the average person.
Order for Second Reading read.
Order read for resuming adjourned debate on Question [26 January], That the Bill be read a Second time.
That, at the sitting on Tuesday 20th February, notwithstanding the provisions of Standing Order No. 14B (Proceedings under an Act or on European Community Documents), the Speaker shall put the Questions on the Motions in the name of Mr. Secretary Lilley relating to Social Security, Family Law and Pensions not later than Ten o'clock.--[Mr. Ottaway.]
Serious Fraud
2.35 pm
"To be the dynamic, fraud-fighting body the country desperately needs, the SFO must be given the resources to hire and train the very best lawyers."
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