Wednesday, November 18th, 2009 at 8:46 pm
I heard on the news today about a number of T Mobile employees who were selling customers’ details to competitors. Apparently this activity is rife amongst businesses that deal in such sensitive but valuable data as mobile users’ names and contact details – and when dates of their current contract is up! This is theft, but is apparently being dealt with under the Data Protection Act. The Act provides for shows lenient penalties – a maximum fine up to £5,000 from the Magistrates Court and unlimited fines from the higher courts. The Information Commissioner announced that the £5,000 limit is unlikely to be reached, and that harsher penalties should be available to deter this activity.
Why do we not simply prosecute – as I noted above – it is theft after all!
If an employee steals from an organisation he or she is working for there are a number of ways in which this can be dealt with. The decision will no doubt be based on the organisation’s fraud policy and what it wants to achieve. Does it want its money back, to sack the fraudster or to make a public example of the issue? The alternatives include:
- Reporting the employee to the police – the police may or may not be interested. If they are – they may investigate. If they do, this can be disruptive to the business. Often however, given the shortage of police fraud investigation resources the response to a fraud report may well be a request to provide comprehensive details of the occurrence i.e. effectively to go and investigate the fraud yourselves!
- Commencing some form of disciplinary action in order to safely remove the fraudster from the business. This has to be done with care because inappropriate treatment of staff can lead to claims for unfair dismissal or constructive dismissal – even by the guilty fraudster!
- To investigate the fraud using internal or external resources with the view to instigating some form of civil litigation for recovery of the losses due to fraud.
Very often, however, an organisation will do none of the above! They will let the perpetrator go with a reference on the understanding that this is the end of the matter. Incredible though it seems, this is exactly what some major financial institutions or publicly listed companies will do. Not wanting any publicity to impact share prices perhaps, they prefer to hush the matter up!
In the T Mobile case the company chose to inform the Information Commissioner. Let us see if the public interest can steer this affair towards a proper criminal prosecution.
Tuesday, October 27th, 2009 at 10:44 am
It is possible to divide asset recovery into a number of different camps depending on the circumstances giving rise to the need for claiming back money or goods that rightfully belong elsewhere.
The first of these areas include criminal asset recovery or confiscation, from fraudsters and other criminals who benefit from their crime such as drug dealers or those that deal in human trafficking. Such asset recovery is carried out through the criminal justice system but can also involve civil asset recovery using both the civil and the criminal courts depending on the circumstances.
The next area is the asset tracing and recovery from fraudsters or persons or organisations involved in sharp business practice through the civil courts. This involves civil litigation through the civil courts.
Last but not least is the recovery of assets from insolvent individuals and organisations. This is recovery of assets after the fact, attempting to trace assets that should be available to creditors of the insolvent entity. A fraud investigator investigating such losses must need to be aware of both criminal and civil considerations when dealing with bankruptcies, receiverships and liquidations. An insolvency will normally be investigated under the provisions contained within the Insolvency Act 1986 which details of numerous criminal offences.
Whatever powers and provisions used to investigate and recover assets, there can be no better outcome to asset recovery than when negotiated settlemement and recovery is achieved. This means that costly litigation is avoided and a fraudster may well avoid the most serious sanctions if he pays the money back.
When deciding to investigate a loss due to fraudulent activity with a view to recovering assets an understanding of the likelihood of recovery must be obtained before substantial resources are expended on protracted analysis, interviews and other research. This is to reduce the risk of the gamble taken as to whether or not an asset recovery action will be successeful. It is quite easy for legal fees to reach six figures and more when asset freezing injunctions, search orders, financial investigations and legal counsel are employed by lawyers progressing a case. This is why it is always a good idea to have a fraud response plan in place within any organisation (in addition to a fraud policy) which sets out how to act if a fraud or loss is suspected. Provisions can be made for an immediate and totally confidential appraisal by a fraud expert in order that the correct decisions can be made at the start and costly mistakes avoided.
