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Taking care of business

Exchange Chambers’ John Jones QC and Ian Whitehurst, along with CCL Group’s Adam Irwin, consider private prosecutions in a digital age

Corporate crime in the United Kingdom takes many forms and the increasing dominance of the digital economy has only sought to heighten the problem. Sadly, this is happening against a backdrop of increasing neglect by law enforcement, owing to insufficient economic resources; a lack of suitably qualified individuals with the appropriate skills; and an apparent political unwillingness to properly address this aspect of criminality, which places such a heavy and hidden burden on our commercial sector. 

In August 2019, it was found that only 2% of criminal complaints involving fraud resulted in a criminal charge or summons being brought. Staggeringly, the losses to the business sector from corporate fraud alone is estimated at being in the region of £682m. 

Despite its obvious advantages to society, the internet has brought with it myriad opportunities for criminals to commit crime. At the more sophisticated end of the business crime spectrum, companies’ cyber defences are being increasingly targeted. Commonly the aim is to unlawfully acquire data as an enabling step in committing other acquisitive crimes or to otherwise sabotage business operations. Sometimes such crimes are also committed or assisted by malicious ‘insiders’. Importantly, however, presence, motive and association can often be revealed through the devices, systems and networks that offenders both wittingly and unwittingly interact with as they plan, coordinate and execute their crimes.

In much the same way as cases prosecuted by the Crown Prosecution Service (CPS) and other enforcement agencies have come to be as a result of a law enforcement investigation, businesses and their lawyers can and should engage professional and highly competent private investigators, including forensic analysts and accountants, to assist their efforts. 

For one, these professionals can exploit a victim company’s own digital media and other data holdings to help establish the facts. Their knowledge and experience of managing investigations, importantly including rigorous documentation of actions and decision-making rationale, and operating within strict regimes of disclosure and evidence, can also help to ensure an investigation can withstand the highest levels of scrutiny. Another powerful private investigation weapon is internet investigation: skilfully operating online to lawfully discover and develop intelligence and obtain vital evidence. 

Police intervention or commercial and protracted civil litigation are, therefore, no longer to be regarded as the sole options available for a company or indeed an individual to resolve or enforce such remedies. As an alternative, private prosecutions possess many advantages over the traditional commercial litigation approach, providing an effective means of redress if the state decides not to act. They can also provide a fast and effective remedy against the offending individual or entity, not least the sentencing powers of a criminal court; an effective deterrent given a conviction or prison sentence can have a far more devastating impact than any civil financial settlement. Importantly, the recoupment of funds via compensation and confiscation orders are also available.

While the disclosure requirements in criminal litigation are somewhat more onerous and take effect at an earlier stage than in civil proceedings, the burden upon a criminal defendant is substantial and becomes very much a ‘live issue’ at an earlier stage than in the civil arena.   

What’s more, a criminal court has the power to order costs to be recovered not only from the defendant but if the defendant cannot pay the costs or only a proportion of the costs, then a private prosecutor can recover his reasonable costs from the state itself via an order from central funds. If a case is unsuccessful against a criminal defendant, then that defendant can only recover his costs if he can show the private prosecutor acted in bad faith⁠ – an order rarely made. Thus the cost exposure of a private prosecutor is far more limited than a claimant in a civil case.

Whilst the private prosecutor has no obligation to inform the CPS of an intention prosecute, the CPS can takeover proceedings at any point and, if they wish, discontinue them. For these reasons alone, it is essential that the evidential case is strong and the highest standards of integrity are observed throughout.

Though there is undoubtedly a role for civil litigation, especially in relation to the securing and freezing of assets at an early stage of the investigation, we believe that in order to detect, deter and disrupt criminality, there is an urgent need for businesses to take a robust approach by considering the option of exercising their right to bring a private prosecution.  

If businesses or individuals are to respond to such activities, they will need to have in place the means to detect, investigate and prosecute criminality against them. The role of digital investigations and private prosecutions are at the forefront of the options available for them to protect their businesses, achieve justice, and to recoup their losses in a cost-effective and efficient way.