Sentencing Guidelines: Fraud (statutory offences) - Justice Committee Contents

Examination of Witness (Questions 20-35)


5 MAY 2009

  Q20  Mr Hogg: I would like to go back to the point you were making about traumatisation in terms of reputation. My own view is that, when somebody has suffered really serious traumatisation in terms of reputation, that is undoubtedly a mitigating factor because that is after all part of punishment and serves as a deterrent. I thought that you were agreeing with that proposition, subject to one important proviso, namely whether or not the person has in truth had his reputation seriously damaged. That is correct, is it not?

  Professor Levi: That is correct.

  Q21  Mr Hogg: You accept the proposition that if it is seriously damaged that is a mitigating factor, but you would make the proviso that in many cases the proposition is advanced and is not true?

  Professor Levi: Yes. It is a very hard thing to do. Judges in most cases tend to think of middle class people before them as people rather like themselves. They know how they would feel in a situation like that but frankly some of them have hides of leather.

  Q22  Mr Hogg: Do you accept that sometimes, where there is genuine damage of reputation, a professional person will not go to prison in circumstances where a person who has not, as it were, had his reputation damaged, although on the face of it the offence is much of a muchness, will go to prison?

  Professor Levi: Yes. In a way, it is a libel/damages type argument. If you have no reputation, you do not get much.

  Q23  Mr Heath: You were talking about consistency being introduced between benefit fraud and revenue fraud, but there is a difference in terms of the threshold for prosecution and the practice of the different agencies, which is markedly different. We have had revenue prosecutors before us and they have told us that they will try and recover money via a non-prosecutorial route and that, it seems to me, builds in a difference in terms of sentencing when equal culpability is not necessarily sentenced the same way, partly because of the approach of the prosecution. Is there anything about that in the sentencing guidelines or is it a prosecutions issue, or what?

  Professor Levi: That is part of the role and fairness of the prosecution system argument. I am not sure that it is part of the sentencing guidelines issue. The pre-empted decision has already been made through workload and departmental culture. To some extent, now that tax credits are part of Revenue and Customs, that has altered the shape of Revenue and Customs work. They are prosecuting more of those sorts of cases but in general, yes, almost everybody prosecuted by the Department of Work and Pensions would not have been prosecuted by Revenue and Customs.

  Q24  Mr Heath: You were also talking earlier about potential disqualification of professional bodies etc. Part of the decision-making process laid out in the guidelines includes considering ancillary orders. Do you think it should be more explicit that under certain circumstances the court should normally make ancillary orders as part of its sentencing procedure?

  Professor Levi: Yes. I think there is a case if the reduction of future harm is an appropriate principle of sentencing. Those are left a bit implicit in the guidelines for very good reasons. People spend time endlessly arguing about what appropriate principle should be applied. I certainly think that ancillary orders should be made as a matter of routine, unless there is a good case for not doing so. If you are disqualified as a company director, you just create a new identity or get front men to act for you. I am not sure any work has been done on the level of enforcement of director disqualification and how many people are prosecuted for violation of those, but you are pretty much under the radar unless you have to be a vetted person in the financial services sector. Otherwise, the level of surveillance over people's future business activities is pretty low, not just in this country but abroad.

  Q25  Mr Tyrie: What is the reoffending rate? How does it compare to more conventional forms of larger theft?

  Professor Levi: I do not know, I am afraid. You would need to differentiate between the different sectors. One of the reasons why it is difficult is because the general level of identification of fraud is quite modest. We would not necessarily know whether somebody was reoffending or not. It is higher amongst the credit card fraudster population. In a way, credit card fraudsters are more similar to the general profile of offenders, but if we are talking about false accounting types the cases that we know about are the people who come back and are exposed. The possibilities of concealing the fact that a crime has taken place are much greater in fraud than in any other offence.

  Q26  Mr Tyrie: Do you think we need to know that if we are going to tailor punishment to offences effectively?

  Professor Levi: I do.

  Mr Tyrie: Is this not an area where research is—

  Mr Heath: You are asking an academic to agree with the need for research.

  Q27  Mr Hogg: At the end of the day it is an unknowable fact for the reasons you have just mentioned. The identification factor is necessarily very low.

  Professor Levi: To quote my hero, Donald Rumsfeld, there are the known knowns, the known unknowns and the unknown unknowns. More work on the knowable knowns would be an advantage but we would have to break it up. You would need to break up the fraudster population into sub-types to make sense of that process.

  Q28  Mr Michael: There should be adequate market segmentation then?

  Professor Levi: Very good. Thank you.

  Q29  Mr Michael: We have touched on the fact, on a number of occasions, that there are different policies in different departments that are dealing with different aspects of fraud, whether it is benefit agencies, Customs and Revenue, the police and so on. Obviously, the difference of policies there results in a different population coming before the courts. Is there a need for greater consistency, do you think, across those investigative and prosecuting departments in order to make sense of the sentencing guidelines or do we just have to accept that we are dealing with a series of different segments in those consumer terms?

  Professor Levi: The Royal Commission on Criminal Procedure, the Phillips Commission, dismissed this area: "This is a good case of different agencies having different policies." I do not think that is acceptable in the present era. The Revenue and Customs prosecution office is about to be abolished and merged with the CPS, so that could be an opportunity for some sort of rethink, but that would involve the reallocation of a lot more resource into the prosecution process than has been the case in the past. That is something the Committee might want to look at in the future. DWP will still remain separate. It is worth having that debate with them to try and discuss what is fair and consistent and what is not. That would be an important argument and policy issue to get them into. It is the pre-prosecution phase that is important. I think it would be worth having a discussion with them next time that comes up.

  Q30  Mr Michael: You did mention the aspect of international crime in the sense of criminals coming to this country in order to pursue fraudulent activity, but an awful lot of fraud now overlaps with internet related criminal activity as the Fraud Strategic Authority has already identified. Do you have any views about what is needed to deal with that?

  Professor Levi: One of the issues is to bring people before the courts in whatever country. We have been exporting our fraud sentencing problems to the US, getting the US to pay for the imprisonment costs in some cases.

  Q31  Mr Hogg: They can come back under whatever provision it is.

  Professor Levi: They tend to serve sentences. The Canadians do the same with the US as well. The big issue to me is getting them before a court in whatever country. It may not matter much which one, except to the defendants. That is an area where we need to boost our international presence and the role of mutual legal assistance within the Home Office and justice area is very important in facilitating that.

  Q32  Mr Michael: International cooperation is the key?

  Professor Levi: International cooperation is the key. SOCA and the SFO have been fairly active in a limited number of cases. There are some schemes that are working quite well, for example with Nigeria, but we need to really boost that globally. The number of signatories and ratifications to the cyber crime conversation is still pretty low.

  Q33  Mr Hogg: I understand entirely why you say the importance is getting people before the court. Conrad Black is rather a good example of this; so indeed were the Nat West Three. You can get sentences imposed—e.g., in the United States courts—which greatly exceed the sentences that would be imposed in a UK court. That ought perhaps to make us a bit chary about the proposition that we should be very quick to send people off to the United States if we think that the sentence that will be there imposed is too great. How do you put that into your equation about try someone, almost anyone?

  Professor Levi: If our sentencing is too low—

  Q34  Mr Hogg: Do you think it is?

  Professor Levi: I think it has been, yes. For those sorts of offenders, the success rate has not been that great in the UK. I do agree with you that that is a factor we might, politics apart, take into account. We get assurances in death penalty cases of course but not elsewhere. Elsewhere we are rather reluctant to intervene, except in the Russian examples.

  Q35  Mr Michael: Professor Levi, thank you very much indeed for your evidence. It has been a very useful session.

  Professor Levi: Thank you for your excellent questions.

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