Peter Binning , partner, Corker Binning, comments in the Daily Mail on the Conservative party’s proposal for a single Economic Crime Agency
George Osborne: I’ll nail robbers in pinstripes and prosecute rogue banks
Banks which rip off their customers face multi-million-pound fines under dramatic plans for a ‘robbers in pinstripes’ law unveiled today by the Conservatives.
Shadow Chancellor George Osborne said white-collar fraudsters were costing the economy an estimated £30billion a year but getting off ‘scot-free’ because of Labour’s lax regime.
In an interview with the Daily Mail, he revealed that if the Tories win the election he will reform corporate liability laws to make companies – rather than just individual employees – legally responsible for their actions.
Existing legislation, which dates back to the 19th century, means companies can rarely be held criminally responsible when their staff step out of line.
Mr Osborne revealed that a new Economic Crime Agency will take over the work of investigating and prosecuting fraud, bribery, mis-selling of mortgages and pensions and pyramid schemes like that run by disgraced financier Bernie Madoff.
He went on to attack his Liberal Democrat counterpart Vince Cable, saying his sums did not add up.
The issue of financial crime has exploded on to the political agenda in recent weeks after Goldman Sachs was charged with fraud in the U.S.
The bank is accused of ripping off British taxpayers to the tune of millions of pounds by pushing up the cost of Lloyds Banking Group’s bailout.
The Financial Services Authority has announced its own investigation after U.S. regulators alleged that Goldman defrauded investors during the subprime housing crisis.
Mr Osborne said it was clear that many of those responsible for helping to trigger the credit crunch who should have been prosecuted have escaped justice.
Greedy bankers have been accused of putting their own interests before those of clients, taking massive gambles on investments to boost their profits.
‘Stealing someone’s pension or their mortgage through some complicated financial fraud is just as serious as mugging an old lady or burgling someone’s house,’ he said.
‘Unfortunately, because the people committing these financial crimes are wearing suits and ties and sitting in offices, they think they can get away with it scot-free. That has to end.
‘We must make it clear that there is not one law for rich fraudsters and another law for common criminals.’
Currently, economic crime is policed and prosecuted by a bewildering number of agencies and government departments – including the Serious Fraud Office, Financial Services Authority, Fraud Prosecution Service, Revenue & Customs, Office of Fair Trading, Tradneeding Standards Department, Serious Organised Crime Agency, Home Office, Ministry of Justice, Treasury and Business Department.
A single Economic Crime Agency, Mr Osborne said, would take over all of their work, saving the taxpayer large sums of money in the process.
‘There is no coherent approach to tackling fraud, misselling of pensions and mortgages in our banking system, bribery and corruption – a whole range of economic crimes which are not properly borne down upon,’ he added.
‘They are not properly prosecuted because of the very confusing overlap of powers and responsibility. The result is people are getting away scot-free.
‘We need a single, powerful agency that gets rid of some of these other organisations and goes after fraud, bribery and corruption in the system. It will inspire respect and yes, when it’s necessary, fear.
‘There have been far too few prosecutions as a result of the credit crunch and misselling of mortgages.’
Peter Binning, partner at specialist London fraud solicitors Corker Binning, said: ‘I welcome these proposals.
‘The last decade has seen an ineffective multi-agency approach to tackling economic crime, which means it has been open season for fraudsters, particularly in the last three years.
‘The plan to create a unified agency and look at strengthening criminal liability will help to address this. There has also been a serious inconsistency in the approach to corporate and individual criminal liability particularly in respect of cartels and fraud. Reform in these areas is well overdue.’
The former Director of Public Prosecutions Sir Ken Macdonald has also called for a new financial regulatory and law enforcement authority.
Discussing Vince Cable, who would be after his job in a Lib-Con coalition, Mr Osborne said: ‘The trouble is he put himself on a pedestal and said he was somehow more honest than other politicians.
‘Vince elevated himself above everyone else. But then people look at his numbers and they have massive holes.
‘He said he was going to save £ 4.5billion from tax avoidance. Well, we all want to crack down on tax avoidance. But the person who ran the tax avoidance division wrote to me and said, “I’m afraid what Vince is proposing is not very credible”.
‘The same is true of his public-sector pay policy, where he was double counting the numbers.’
Mr Cable’s flagship tax plan – a hugely expensive £17billion proposal to raise the income tax allowance to £10,000 – has come in for particular scrutiny. Both Labour and the Tories have dismissed Mr Cable’s explanation of how he would pay for the tax cut at a time of national belt-tightening as ‘fantasy’ economics.
He has also flip-flopped on major issues, despite his reputation as an economic sage. In 2008 he rejected the idea of an unfunded fiscal stimulus, but changed his mind last year.
And after welcoming the merger of Lloyds and HBOS, he said it was a murky deal that would lead to nationalisation.