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SFO 'does not have resources' to pursue recovery of assets lost to fraud, says expert

UK law enforcement bodies "simply do not have the resources" to recover assets lost to fraud, making the civil courts the best avenue for victims to recoup their losses, an expert has said.22 Oct 2015

The Serious Fraud Office (SFO) returned just over £1.2 million in compensation to victims in financial year 2013/14, according to figures obtained by Pinsent Masons, the law firm behind Out-Law.com. Civil recovery expert Alan Sheeley of Pinsent Masons said that this figure was "disappointing", given that KPMG's annual 'fraud barometer' estimated total UK fraud losses of £717 million in 2014.

"These figures simply serve to reinforce what our experience tells us - that law enforcement agencies do not have the resources to make the recovery of assets on behalf of victims of fraud their top priority, and that victims of fraud must turn to the civil courts if they wish to recover their losses," he said.

"Disclosure orders, freezing injunctions, search and seize orders and passport delivery up orders in the civil courts are all incredibly useful tools to prevent fraudsters and their ill-gotten gains from disappearing. In future, victims should be informed by government agencies at the outset of their asset recovery rates and that if they want to recover their losses that they should pursue civil proceedings, enabling them to make an informed decision as to their objectives and, ultimately, maximising their chances or recovery," he said.

The SFO, which investigates and prosecutes the most serious cases of fraud, corruption and corporate crime, obtained 15 'restraint' orders in the criminal courts between 2011 and 2014, according to figures obtained by Pinsent Masons. Restraint orders 'freeze' property that may later be found liable for confiscation, preventing individuals who are suspected of having benefitted from a criminal offence from disposing of assets before the investigation concludes.

However, none of the 15 restraint orders obtained by the SFO over this period were secured within two months of an investigation being opened, the SFO told Pinsent Masons. Sheeley said that without "decisive action" within the first few weeks of discovering a fraud, victims were less likely to recover their losses.

"It will be interesting to see how the UK's approach to tackling fraud and corruption will develop over the course of the next few years," Sheeley said. "With the recent decision by the Ministry of Justice not to carry out further work on the proposed new offence of failing to prevent economic crime and the rules of establishing corporate criminal liability more widely, it appears the law enforcement agencies have their work cut out for them."

Last month, UK justice minister Andrew Selous said that the Ministry of Justice had "decided not to carry out further work" on the case for a new corporate criminal offence of failure to prevent economic crime, after finding "little evidence of corporate wrongdoing going unpunished" under the current rules. The new offence, which was included in the Conservative party's 2015 pre-election manifesto, would have been based on the 'failure to prevent bribery' offence included in the 2010 Bribery Act.

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