Fraud Intelligence

Edward de la Billiere is Head of Financial Investigations and Criminal Fraud, Hill Dickinson LLP: direct line (London): +44 (0) 20 7280 9200, direct Line (Manchester): +44 (0) 161 235 7530; email: Edward.DeLaBilliere@hilldickinson.com

China has rapidly achieved economic superpower status through its reputation for high productivity and low manufacturing costs. The undoubted benefits must though be set against a pronounced risk of fraud and corruption, says Mark Godfrey in this report from Beijing.

In an important judgment in May 2008, the High Court in London rejected a challenge to an application by the US Securities & Exchange Commission for the freezing of assets in pursuit of a civil action in the US courts, which the defendant asserted was penal in nature. The SEC was also exempted from giving a cross-undertaking in damages under the ‘dispensation rule’. Jonathan Lennon, who appeared as junior counsel for the defence, examines the decision.

In the first article in his series on Missing Trader Intra-Community (MTIC) fraud, Carl Watson of Chantrey Vellacott DFK examined the mechanics of this highly organised fraud. In the second part, he looks at how the fraudsters have taken full advantage of favourable circumstances to turn the activity into the large-scale, profitable criminal endeavour that weakens EU member states’ exchequers today.

The climate of cartel enforcement is heating up in the UK – businesses and their advisers need to be aware of the Office of Fair Trading’s powers to investigate and punish offenders. Antony Corsi and Kevin Smith of Fulbright & Jaworski consider the OFT’s current and future approach to cartel enforcement and examine the English law governing cartel activity; they also look at the tools available to the OFT to investigate cartels and the penalties that participants face.

Companies working to build or sustain an ethical culture are discovering that the process requires not only that they look inside their operations but also a fair degree of external comparison. Benchmarking, long applied to business processes and functions, is now offering valuable insight into industry best practices around ethics and compliance programmes and the tools that underpin them, writes Ralston McCracken of EthicsLine. A recent report by The Network, The Chief Security Officer (CSO) Executive Council and the Association of Certified Fraud Examiners (ACFE) takes a comprehensive look at whistleblower hotline activity, analyzing 250,000 incident reports from 500 organisations over a five-year period. The findings offer important information to companies as they seek to measure the performance and business value of their programme against others in the industry, assess their overall cultural health and drive future enhancements.

An increasing number of financial institutions are starting to address fraud risk management at an enterprise level. Tom Salmond of Ernst & Young examines the drivers, benefits and implications.

An Italian government amnesty allowing VAT cheats to escape criminal charges and administrative penalties for under or not-declared returns from 1998 to 2001 by paying a lump sum to national tax authorities has been declared illegal. The sum..

The Alpine principality of Liechtenstein says it is close to sealing an agreement with the European Union (EU) on the exchange of information regarding tax offences. A deal would be welcomed in many EU capitals, which suspect that the tiny..

Executive agencies of the European Union (EU) have weak accounting controls, says the EU Court of Auditors. After an inquiry into auditing and bookkeeping methods followed by eight unnamed agencies of the 20 operating in 2006, the court concluded:..

The European Parliament’s administrative bureau has tightened up rules on the employment of MEPs’ assistants after a probe revealed a series of misdemeanours. The investigations led to the resignation of MEP Giles Chichester as leader..

The European Commission has suspended payments of European Union (EU) funds for infrastructure projects in new member state Bulgaria because its government has failed to combat graft. Citing “irregularities”, the Commission has formally..

Severn Trent Water Ltd (STW) has been fined UK£2m for providing false leakage data to the industry regulator Ofwat. The company, which admitted two offences under the Water Industry Act 1991, would have paid UK£4 million, said the judge..

Fraud cases, where the charges brought in the Crown Court exceeded UK£100,000, reached a total of UK£630m in the first half of 2008, a 50% rise on the previous six months, according to KPMG Forensic. The KPMG Fraud Barometer registered..

The European Union’s (EU) anti-fraud agency OLAF says in its latest annual report that its caseload is still growing – it received 886 allegations of wrongdoing to probe in 2007, the highest ever, and up from 529 in 2002. Furthermore,..

Timon Molloy, Editor