Fraud Bill [HL]

moved Amendment No. 3:"After Clause 5, insert the following new clause—" ““ABOLITION OF OFFENCE OF CONSPIRACY TO DEFRAUD    The common law offence of conspiracy to defraud is abolished.”” The noble Lord said: My Lords, this amendment introduces into the Bill the abolition of the offence of conspiracy to defraud. In moving the amendment, I wish to speak also to Amendments Nos. 5 to 16 inclusive. Of those, Amendments Nos. 7 to 16 are purely consequential and I shall not mention them further. Amendments Nos. 5 and 6 create a sunrise clause which, for reasons I shall explain later, would delay the implementation of the abolition of the offence of conspiracy to defraud for a period of not less than three years. The Bill creates a number of new offences and for the first time makes fraud a statutory offence and defines it. Whenever there is a statutory offence, conspiracy to commit that offence is itself an offence—and that is as true of the new offences in this Bill as it is of any other statutory offence. The amendment would not prevent the conviction of those charged with conspiracy to commit any of the statutory offences. It refers merely to the common law offence of conspiracy to defraud. It is said that, as regards conspiracy to commit a statutory offence, there are procedural problems, but these are being reviewed by the Law Commission in its current work on the laws relating to participation in crime, and it is to be hoped that we will have its recommendations quite soon. The offence of conspiracy to defraud is a common law offence, which means that it has been created by the decisions of judges and not by an Act of Parliament. It is an offence that is anomalous because defendants can be convicted of conspiracy to defraud even if what they have done would not be an offence at all if it was done by one person alone. The Law Commission, in its 1976 report, said emphatically:"““The object of a conspiracy should be limited to the commission of a substantive effect, and there should be no place in a criminal code for a law of conspiracy extending beyond this ambit. An agreement should not be criminal where that which it was agreed should be done would not amount to a criminal offence if committed by one person””." In its latest report from 2002, which led to this Bill, the Law Commission said:"““This Commission has repeated its adherence to this principle in subsequent reports and we believe it commands very wide support. Either conspiracy to defraud is too wide in its scope (in that it catches agreements to do things that are rightly not criminal), or the statutory offences are too narrow (in that they fail to catch certain conduct which should be criminal), or—which is our view—the problem is a combination of the two. On any view, the present position is anomalous and has no place in a coherent criminal law””." Later in the 2002 report, the Law Commission said:"““If it is thought that certain torts, breaches of contract or equitable wrongs should be criminal, legislation can be framed with reference to the particular kinds of conduct involved. To retain conspiracy to defraud on the grounds that it might occasionally prove useful in certain cases would, in our view, be an excess of caution. Since it is not practicable to identify all such cases in advance, it would mean that we could never be in a position to abolish conspiracy to defraud, unless we were willing to replace it with a general dishonesty offence, an option that we rejected in Part 5, above. The advantages of abolishing it, in our view, greatly outweigh any possible advantage that might accrue from retaining it alongside the new offences we recommend. We believe that those offences cover enough of the ground presently covered by conspiracy to defraud to make it unnecessary to retain that offence any longer””." The offence of conspiracy to defraud may indeed have unexpected and unwelcome consequences. Let us take price fixing—a business cartel—as an example. Price fixing was not, I believe, an offence in the United Kingdom until 1998. However, the Americans have successfully argued in an extradition case that a price fixing agreement entered into before 1998 was a conspiracy to defraud in English law and therefore met the test of dual criminality necessary for extradition. This was totally unforeseen and shows the enormous degree of uncertainty that makes conspiracy to defraud an unsatisfactory offence. From the point of view of the prosecution, it may be that this very uncertainty makes it attractive, but this contravenes a basic principle: that the law—in particular, the criminal law—should be certain. Until now there has been no statutory definition of fraud. We now have one in Clauses 1 to 4 of the Bill. That makes it plainly inappropriate to have an offence of conspiracy to defraud involving acts that do not amount to fraud under the statutory definition. It is possible that the courts might decide that it was no longer appropriate to charge people with common law conspiracy to defraud now that we have a statutory offence of fraud. I am well aware that the views of the Law Commission have not met with unanimous approval. I have noted, in particular, the views of the Rose committee, chaired by Lord Justice Rose. I understand that and see that it has an arguable case. I believe that the Law Commission has made a convincing case for the abolition of the offence, but I would not object to a trial period to see whether the new offences are effective and whether there is still a need to make use of the common law offence. The Government, indeed, have said that it is their aim to abolish the common law offence of conspiracy to defraud in the long term. The noble and learned Lord the Attorney-General said in Committee that,"““the Government commit to review the operation of the Act three years after its implementation””.—[Official Report, 19/7/05; col. 1447.]" I am certainly happy to accept the three years as being a reasonable trial period. Therefore, our Amendments Nos. 5 and 6 would put on the face of the Bill a prohibition on bringing into force provisions which would abolish the offence of conspiracy to defraud within that three-year period. That does not, of course, mean that the provision will come into force at the end of that period; further time will be needed for review, for example. However, the inclusion of these provisions on the face of the Bill would, I believe, put some pressure on the Government—which, by that time, may not be the present Government—to proceed with a review soon after the three-year trial period has ended. It would also mean that if the review showed that the common law offence was not needed, provisions to abolish it could be brought into force by a simple commencement order. It would not be necessary to wait for an appropriate Bill and to tag these provisions on to it, which might take considerable time. If the review showed that the common law offence was still needed, the Government could simply leave the provisions uncommenced and repeal them at a suitable moment. Enacting these provisions again is unlikely to be a priority and, if they are taken out of the Bill, I believe that there is a real risk that they will be ignored by future governments and we will be left for the foreseeable future with an anomalous and uncertain offence. I beg to move.