The former CEO of the German payment processing firm Wirecard, billionaire Markus Braun, has been arrested for fraud on charges of false accounting and market manipulation. Read more
One of the many consequences of the Lockdown is that Virtual or Online Court hearings have become the norm in civil litigation. Recent experience suggests that they can, at their best, work very efficiently but there is no doubt that they will never be an entirely satisfactory replacement for the giving and hearing of oral evidence in person.
One of the greatest challenges of online video conferencing platforms is that they make it difficult to create a sense of empathy. That is hard enough in cases in which large sums of money are at stake but it was sobering to hear the recent reflections of a judge following a hearing at which he had been asked to determine a child custody case. In essence he had to decide whether a baby should remain in foster care and be put up for adoption or returned to its birth mother. The judge commented on how difficult it was to ensure that the birth mother was made to feel that she had been given a fair hearing notwithstanding the fact that she was giving her evidence, sitting alone in her Council flat and having to battle with an intermittent weak broadband signal.
It is easy to understand why the judge was questioning how justice could be achieved in such circumstances but, equally, it is clear that it would not be in the interests of justice to suspend court hearings for months on end.
As it is, we hear reports that the Courts are struggling under the strain of having to list cases online and deal with the administration of justice in a completely new way.
For those of us who give evidence as expert witnesses, we are in the privileged position of simply having to turn up on time and to ensure we have prepared sufficiently to give our evidence. That said, preparation is key and experts now have an opportunity to receive and review trial bundles which would not typically have been provided to them had the hearings not been online. This can be a significant advantage insofar as it allows the expert to get an impression of the issues at stake which are often not made apparent to those acting on a jointly instructed “SJE” basis.
Milsted Langdon’s forensic partner, Roger Isaacs commented “having given evidence online several times over the past few weeks, I have been impressed by how quickly the judiciary, counsel and instructing solicitors have adapted to new ways of working. It clearly presents new challenges for all concerned but it also appears to have resulted in a collaborative approach that is to be welcomed and which one hopes will continue over the months to come. Like the oft-quoted “Blitz Spirit” there is a sense that litigators on all sides are “in it together” and need to cooperate with one another to present evidence fairly notwithstanding the intrinsically adversarial nature of an English trial”
Tatiana Akhmedova is fighting to obtain the divorce settlement she is owed by her Russian billionaire ex-husband following the UK’s biggest ever divorce settlement. Read more
The Government has launched a review into the failings of the Fujitsu Horizon IT system that caused Post Office Branch Managers to be falsely accused of fraud.
More than 550 Post Office Branch Managers, known as Sub-Postmasters, brought legal action against the Post Office after being wrongly accused of fraud and other offences.
The Horizon system, which has been in operation since 1999, records transactions across Post Office branches. However, mistakes within the system caused Sub-Postmasters to be wrongly accused and many were told to pay back supposedly missing funds or face prosecution.
In some cases, the Sub-Postmasters involved went bankrupt, while others were prosecuted and jailed for charges such as false accounting and fraud.
In 2011, 85 Sub-Postmasters took the Post Office to court and in December 2019, by which time the number of claimants had risen to 550, the Post Office agreed to pay almost £58 million as part of a settlement.
However, this could have been averted, as an independent audit in 2011 ‘identified weaknesses’ in the Horizon system and warned that some IT staff had ‘unrestricted access’ to postmasters’ Horizon accounts, which may have led to the ‘processing of unauthorised or erroneous transactions’.
Roger Isaacs, Forensic Partner at Milsted Langdon, said: “Having personally reviewed cases related to Horizon it will be interesting to see what this new review reveals once it is completed.
“It is clear that something went terribly wrong with this system, ruining the lives of many individuals across the UK. It is clear that warnings from several reputable sources about the flaws in the system were ignored for too long.
“One has to hope that lessons will be learned by not just the Post Office but other financial institutions about putting too much faith in software which should never be considered as being infallible.”
A retired accounts worker has been jailed for stealing more than £400,000 over nine years from the brewery where she was employed.
Lesley Freestone had worked for the family-owned St Austell Brewery for more than 40 years, rising to the position of Purchase Ledger Supervisor by the time she retired.
It is believed that the fraud perpetrated by Freestone may not have been uncovered if the brewery had not bought Bath Ales after she had retired.
During this transaction, it conducted a review of its accounting systems and auditors identified hundreds of fraudulent payments diverted to accounts belonging to her.
It has been reported that over a nine-year period Freestone used a range of methods, including duplicating genuine invoices and processing identical payments into her accounts, to embezzle thousands of pounds.
An impact statement from the brewery’s Financial Director said that her actions meant profits were affected, leading to shareholders receiving lower dividends and employees enjoying smaller bonuses. However, they went on to say that the biggest impact was on the ethos of the company.
As he sentenced her to five years in jail, the Judge at Truro Crown Court said that the fraud had a “degree of sophistication” and explained that “as all Cornwall knows” the St Austell Brewery has positioned itself in the community as a family business.
Roger Isaacs, Forensic Partner at Milsted Langdon, said: “Sadly, cases in which the police prosecute fraudsters are relatively rare. All too often the complexities of fraud trials and the focus of policing on violent crime, means that the perpetrators of fraud the corporate world often escape without punishment.
Consequently an increasing number of organisations are resorting to private prosecutions which can sometimes also be used alongside civil recovery processes to claw back funds that have been stolen if they have not been spent, as is commonly the case, on a luxury lifestyle or to feed drug or gambling addictions.
An alternative option for companies that have been defrauded by their employees is to instruct a forensic accountant to prepare an investigation that can be given to the police and which effectively constitutes all the evidence required for a successful conviction. If the case is handed to the Crown Prosecution Service on a plate, it is harder for it to refuse to take action.”
A recent case in Yorkshire shows the importance of cash as a clue in forensic investigations. People with large amounts of cash who cannot give a realistic reason for its source may be suspected of having criminal intent. In a recent case, a driver was stopped by police on the M1 and, when the vehicle was checked, the officers found a carrier bag containing £75,000 in cash. Read more
The Evening Standard has recently won a case allowing it to view previously undisclosed documents in the ‘Azerbaijani Laundromat’ case but is not allowed to name the couple at the centre of the allegations.
The National Crime Agency (NCA) had submitted confidential papers to the court detailing the alleged activities of a husband and wife team who are accused of bringing at least £14 million of ‘dirty money’ from Azerbaijan into London to be ‘laundered’.
According to the NCA papers, the frozen bank accounts held by the couple contain funds derived from international corruption that was laundered “through a myriad of limited companies”, in countries that include Belize, the Marshall Islands and the Seychelles.
The papers also apparently contain allegations that the pair “received £13,897,280.00 from 21 corporate entities” which, it is argued, constitutes “grounds for suspicion” in the case in which “a number of the entities have been directly linked to the reporting of the Azerbaijan Laundromat”.
This criminal scheme was allegedly used to launder a staggering sum of £2.2 billion said to have been plundered from Azerbaijan and channelled through four UK registered companies and the Estonian branch of a Danish bank between 2012 and 2014.
Various estimates of the total amount of ‘dirty money’ coming into the UK puts the total at an even more extraordinary sum of between £100 billion and £325 billion per annum.
These funds will include ill-gotten gains from rigged procurement schemes, bribery, embezzlement and the unlawful acquisition of state assets, according to the National Economic Crime Centre.
Being charged with money laundering is very serious, given that it carries a prison sentence of up to 14 years.
Roger Isaacs, Forensic Partner at Milsted Langdon, said: “Figures of hundreds of billions of pounds a year for the black economy are so huge that they may even eclipse the total borrowing by the UK Government following the Covid-19 pandemic which the Government’s independent forecaster, the Office for Budget Responsibility (OBR), has predicted could reach £298 billion.
“In the wake of the 2008 financial crash, the United Nations’ drugs and crime tsar, Antonio Maria Costa, reported that he had seen evidence that the proceeds of organised crime were “the only liquid investment capital” available to some banks and that without these funds it would not have been possible to have kept the financial system afloat.
“During the current economic crisis, it is very unlikely that there will be any correspondingly positive effects. On the contrary, the number of online attacks have vastly increased during the pandemic, leaving an ever-increasing number of businesses and individuals to become the victims of financial fraud, which is often perpetrated by criminals operating in foreign jurisdictions who, ironically, tend to return the funds that they have stolen to the UK so that it can be laundered.”
The Holy See has announced that ‘individual measures’ have been taken against officials in a financial investigation that has been ongoing in its secretariat for months. Read more
Even if the country, if not the world, appears to be in stasis, life goes on as before at a granular level; babies are born, birthdays are celebrated and couples split up.
As many of us know from personal experience, the pandemic has cut across many activities – people have had to amend or shelve major life plans, such as getting married, and conversely, getting divorced.
Is there any reason though not to examine and apportion assets in a divorce settlement while we’re in lockdown and businesses are effectively mothballed?
Roger Isaacs, Forensic Partner at Milsted Langdon explains that most people would prefer not to be left in limbo and want to finalise their financial separation and, if the assets include a business, want to know how much it is worth.
Of course, views differ on getting a valuation depending on who owns the asset.
For example, if the business is owned by a spouse who wants to pay out as small a sum as possible, he or she will be keen to value it now, while it appears to be worth very little.
Others would prefer to delay and wait until things get ‘back to normal’ but that could take years, which presumably wouldn’t suit either party if they want to move on with their lives.
To assess the situation fairly, the first thing a divorcing couple with a family business at stake should do is appoint a forensic accountant, who can give a professional and independent view on whether it is going to be possible to arrive at a meaningful valuation.
It should be fairly straightforward to value a business from how it stood before the pandemic began, which is where a forensic accountant is likely to start. They must then consider how it may fare if it has been ‘mothballed’ due to the current crisis and what its prospects for recovery are post-lockdown.
While delaying an assessment of value may seem like a good idea to some parties, it brings huge uncertainty and may unfairly drag out an already acrimonious process.
Roger said: “With divorce rates likely to spike as a result of the requirements to ‘stay at home’ and the financial impact of the pandemic, it is important that separating parties seek help to value assets that may form part of a financial settlement after a divorce or dissolution of a civil partnership.
“If anyone is thinking of valuing their business to finalise a financial settlement, they should get in touch with us.”
Motor sales group Lookers, which has been undertaking financial investigations since March, has now revealed that alleged fraud in the company could cost it £4 million. Read more