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The UK Legal 500 2016

FRAUD, LARGE ORGANISATIONS AND THE INDIVIDUAL

August 2015 - Crime. Legal Developments by Rahman Ravelli Solicitors.

More articles by this firm.

With a town council now officially facing a fraud investigation, we examine what individuals in such a large body should do if they come under suspicion.

Police have confirmed that a town council is at the centre of a major fraud investigation in relation to the use of its funds.

Keighley Town Council is being investigated by West Yorkshire Police’s economic crime unit, which has so far spent more than six months looking into the workings of the council. This is the latest development in a saga that began years ago, amid grumbling over the use of council finances and a damning audit report into the council’s 2012-13 accounts. That criticism now seems to have gone up a level, with fraud clearly on the police’s agenda.

This raises the question of what individuals knew about what went on. Which could well mean that some council people will soon need to know what to do if they come under investigation.

It is often the case that when an organisation is investigated for fraud, some people find that they need expert legal representation as individuals. In many such cases, the argument is made that those at the top are in the ideal position to perpetrate fraud. The logic used is that the senior people have the overview that is often needed to see how to carry out fraud and no one is above them to scrutinise their activities.

Sometimes the argument is extended so that they are guilty not because they physically carried out the fraud but because it was done on their watch, under their noses, and so they must have been complicit in it.

Defence case

In such cases, legal expertise is most certainly required to build a strong defence case using all available evidence to show that everything possible was done to prevent and identify fraud. The important part of such a case is how it is put together.

If you are such an individual, any accusations of fraud made against you – or even the slightest suspicions involving you - have to be tackled quickly and forcefully. The person being accused must act immediately if they are to give themselves the strongest opportunity to successfully challenge any accusations. Appointing the right legal representative can not only give a person the best chance of influencing how the early stages of the investigations proceed, it can also help reduce the potential cost in terms of lost time, money and reputation.

Minimising the effect

Fraud investigations are rarely short. But the right legal expertise can help minimise their effect. This is done by ensuring that investigators do not exceed their powers when it comes to matters such as the extent of a search warrant, seizure of potential evidence, handling of legally privileged material and prosecution disclosure of material. Investigators will – if given the chance – take anything and everything they may or may not need on the grounds that it could possibly be evidence. They may even take materials simply to prevent a person under investigation being able to use them in their defence. For these reasons, any individual potentially facing a fraud investigation must prepare for the worst and act accordingly. Hoping for the best is way too costly an option.

Whether it is a corporation or an individual being investigated, doing nothing makes it easier for the authorities to do what they want. It may also mean that a valuable opportunity for the defence is lost. For example, the authorities will find it simpler to obtain a restraint order against a company, an individual or their family if no legal challenge to it is mounted. Not knowing your legal rights at the earliest possible stage can prove damaging.

Experience

At Rahman Ravelli, we make it our job to use our experience and expertise to anticipate and advise our clients accordingly. Whether representing a corporation or an individual, we contact the authorities and immediately negotiate the immediate difficulties. Then we mount the strongest defence case possible. The earlier legal advice is sought, the quicker your rights and your assets can be protected by challenging the assumptions and activities of investigators and prosecutors in areas such as search warrants, raids and restraint orders.

Fraud potential

At some point, senior elected and non-elected figures in Keighley Council should have been examining the potential for fraud within the organisation. Fraud only occurs when the conditions are right for it. Only a genuine, well thought-out and well-publicised fraud policy will combat it. The policy must detail everyone’s responsibilities to report suspicions of fraud and has to create clear whistleblowing procedures.

It sounds straightforward but it appears that lots of large organisations are failing to either introduce or enforce such policies. And that may mean that many individuals in organisations such as Keighley Council may have to account for their actions to investigators.

Policy

Nobody has to create a fraud policy from scratch with little or no knowledge. Legal specialists can review the workings of an organisation, identify the areas where fraud could occur and help devise a policy to design away that potential for fraud. Similarly, business crime legal specialists will make themselves available to organisations that realise they may be dealing with fraud under their roof.

Such experts will be familiar with the lines of enquiry likely to be followed and methods used by external investigating bodies that may be called in, such as the police or Serious Fraud Office (SFO). Such legal advice will not be free. But, if it helps minimise a company’s losses by helping it implement an anti-fraud policy - or if it can help reduce disruption by overseeing an internal fraud investigation - then it has been a shrewd investment.

But if that has not happened, it will be the individuals in need of the legal expertise to challenge any accusations of fraud.