Fraud Bill [HL]

Clause 4 makes it an offence dishonestly to abuse one’s position to commit fraud. The noble Lord’s amendment seeks to restore the Law Commission’s proposal that for an abuse of position to qualify as fraud it needs to be not only dishonest but also secret. We accept that crimes of fraud committed through abuse of position will normally involve an element of secrecy, but we do not believe that it is necessary or desirable to make that a necessary ingredient of the offence. As the noble Lord indicated, it was the subject matter of the consultation last year. I hope that Members of the Committee will find it helpful if I set out the Government’s reasons for departing from the recommendations. Paragraph 28 of their response states that:"““some were concerned that, while secrecy would almost invariably be part of the offending behaviour in practice, it was difficult to define and represented an unnecessary complication, which could lead to technical arguments in court. There could be arguments about whether there had been an intention to disclose in the future, and about whether the employer knew what was going on, if a surveillance operation was in place. It was argued that the mischief lay in the dishonest abuse and that the value-laden concepts of ‘dishonesty’ and ‘abuse’ were sufficient in themselves to set the parameters for the offence””." I accept that secrecy is part of the modus operandi of fraudsters and many other criminals, but it does not seem to us that the issue of whether an action was done secretly is a proper index of its criminality. There will be questions as to what ““secretly”” means. Is a person abusing his position secretly only if the person on whose behalf he is acting knows nothing about what he is doing or is it sufficient that they do not know certain aspects of what he is doing? For example, let us assume that the amendment is passed and ask whether the person who abuses his position is to act against the financial interests of another person. Might he escape liability by arguing that his conduct was not done secretly because he took no positive steps to conceal his behaviour? That might be the case—sadly, it might be a common case—if he held a position in which he was responsible for the care of an elderly person who did not understand how he was abusing that position. He perhaps might not have understood if more disclosure had been made. There could also be difficult cases where someone within a company abuses his position to make secret profits. Is he doing it secretly within the meaning of the amendment if his immediate boss knows what is happening but the company directors or someone in between does not? The amendment would open up such a line of defence, which we believe would be undesirable. The Law Commission states that if the conduct is disclosed to the victim, it cannot properly be described as fraud. We agree that in the vast majority of fraud cases there will be an element of secrecy. But in our view, the question of whether there has been an abuse and whether the defendant has been dishonest will give the court a better mechanism for ensuring justice than requiring it to be satisfied that the abuse of position was undertaken secretly. I would ask: what better answer could there be to a charge of having acted dishonestly if the defendant is able to show that he made a full disclosure to the person whose position he is alleged to abuse? I use the word ““position”” in a sense different from that in Clause 4. The dishonest requirement, the abuse of position, should be sufficient elements to constitute a crime of fraud without, in the Government’s view, adding this additional requirement of secrecy which could cause difficulty in certain cases. In conclusion, we are sure that in many cases the fact of secrecy will be an element in the case. It does not need to be stated in order to make it so. If it is fully disclosed, this will not be dishonest, but one can imagine circumstances where without being able to satisfy the requirement of secrecy an abuse of position has taken place. I invite the noble Lord in particular to have regard to the position of the elderly person in care who may well not fully understand what is going on, even if it is disclosed. I invite him to consider that and not to press the amendment.