As a full time forensic accountant and expert accounting witness I feel that my business is ticking over nicely with the fraud and financial crime cases that I see. I undertake a fluctuating mixture of cases from criminal defence lawyers, police forces and private prosecutions and cover cases ranging from criminal frauds and proceeds of crime to asset tracing and valuation in matrimonial disputes.
Normally, with financial crime, the value that an expert accountant adds is to provide a level of moderation to a very adversarial playing field. As an independent expert accounting witness, there is nothing to be gained from the outcome to the case other than the satisfaction that a fair result has been achieved.
However, the outcome in a case might not always be seen as fair, and in such cases I am not sure that an expert witness always adds value that is proportionate to the cost of employing them. There are a number of issues worth considering in this debate:
The Need For Dispute Resolution Is A Sad Fact Of Life
Human beings will argue. They will often argue pointlessly. The higher the global population, the greater the sophistication of the communications network, the more reliance on financial products and services – the more arguments we will have. Financial arguments can be civil (a contradiction perhaps?) between companies disputing a contract value – or criminal between the regulators and the fraudsters.
I read in the Times recently that the Bank of England has been in hot water with the issue of its new plastic £5 notes, and also with its plans for the new £20 that are coming soon. It seems that the inclusion of a small amount of animal fat (tallow) in the manufacturing process has had the Vegans up in arms. Subsequent proposals to change this to palm oil have incurred the wrath of the environmental lobby. This argument might not be a matter for a forensic accountant, but it demonstrates that humans can find something to dispute everywhere.
What is The Cost of Real Expertise?
I work as a forensic accountant. Most of my cases involve preparing an expert accounting report that is presented to the court in a matter involving financial crime, money laundering or some other form of financial dispute. There are many other areas where expertise is sought to inform the court. In particular medical experts are often utilized, especially in personal injury cases. All other professions may also be called upon to provide expertise, within engineering, manufacturing and other areas.
I note the coverage by the press of the Libor rate fixing scandal that has been running for some years. It appears that all defendants have been acquitted with the exception of Mr Hayes where the common consensus is that his conviction is either unsafe or disproportionate. The prosecution case utilized expert witnesses, and one of these was Mr Saul Rowe, co-finder of an expert witness firm called Turing Capital/Turing Experts (according to the Times).
I note that complaints have been made by several of the acquitted defendants to the Metropolitan Police that Mr Rowe misled the Serious Fraud Office, committing perjury in Court. It appears from press reports that Mr Rowe has already admitted breaching court rules by contacting others during breaks to check that he understood the terms about which he was giving expert evidence and to ask questions about subjects he was being questioned on.
Out of interest I carried out a very quick Internet search for the expert witness firm that Mr Rowe was part of, Turing Capital. I was interested to understand the type of business that encouraged the SFO to pay £400,000 for expert testimony, testimony that might be investigated and, if overturned, result in the one persecution success, Mr Hayes, walking free. I was unable to find a web site!
I would be very interested to know how many hours Mr Rowe provided, and his hourly charge, to merit a fee of £400,000. Unlike forensic accountancy, where copious accounting records and bank statements might need to be painstakingly analyzed, I imagine that a trading expert would be required to carry out some reading but mostly be required to apply expertise to a set of circumstances or explain to the Court how things worked. I have worked for the SFO, and for a fraction of this amount led a team of qualified accountants for a number of months rigorously analyzing the records for a large company suspected of committing fraud.
I remain to be otherwise informed but will continue to keep an interested eye on this matter, which seems to have some time left yet to run!
Proportionate Forensic Accounting and Expert Services Add Value to a Matter
The intention of my expert accounting services is to add value to a case. If the difference between receiving £500,000 or £250,000 in a contract dispute is £10,000 spent on a forensic accountant, the choice to employ one can be easily made. Charging the SFO £ half a million (say) for services in a case that collapses is another matter. It has long been my argument that independent financial experts should be utilized by the serious fraud regulators much earlier, effectively upfront, as this might save substantial costs later on.
It is important that bodies like the SFO do investigate contentious and complex matters, but too often we hear in the press of weak cases collapsing after years of investigation and months of trial. I am aware that there is concern shown by senior police officers that some investigations can involve “barking up the wrong tree” and should be open to independent scrutiny at an early stage. I have carried out this sort of scrutiny in the past, but imagine there are a lot of cases that charge blindly ahead without expert appraisal in this way. I believe that this scrutiny ought to be done on a more regular basis, and need not be a significant cost (even if this cost pales into insignificance compared to the waste when a doomed case progresses needlessly).
I continue to offer my services to the regulators in matters of fraud and financial crime, and to make my case for using them as early as possible to prevent additional costs later on. As a point of interest, I am currently working on a substantial matter, for the defence on this occasion. I was asked by the police to assist them, but too late, as I had already been appointed by the defence. Unfortunately it seems that this case should never have arisen, and now the police might be placing undue emphasis on their investigations in the wrong areas. I just wish that the police had contacted me earlier!