Private prosecutions: An alternative approach to combatting overseas crime
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The annual cost of global economic crime is estimated to be over £2.5 trillion. According to the Financial Cost of Fraud Report 2019, economic crime costs UK businesses and individuals more than £130 billion a year alone.
Businesses risk becoming victims of economic crime on a daily basis, including complex commercial frauds perpetrated by employees, competitors or business partners as well as being vulnerable to bribery and corruption.
Since the Covid-19 outbreak, there has been a marked an increase in economic crime resulting from procurement fraud, phishing, scams and other corrupt practices.
Government cuts have made it more difficult for enforcement agencies to combat economic crime, resulting in fewer detections and prosecutions, and a dramatic rise in criminal activity.
In these circumstances, businesses are taking action themselves, instigating legal proceedings to seek justice through private prosecutions.
Private prosecutions
Private prosecutions are becoming increasingly popular among victims of financial crime. Under the Prosecution of Offences Act 1985, any person or company can bring a private prosecution in the UK.
The UK's criminal confiscation laws also provide victims with means of recovering the proceeds of crime and seeking compensation.
Private prosecutions proceed in a similar way as a public prosecution but are usually quicker, more focused and more efficient.
They are also often more cost-effective than civil proceedings and there are many tools available to private prosecutors to recover funds lost as a result of criminal wrongdoing, which are often more stringent than civil powers of recovery.
Private prosecutions frequently result in criminal convictions and recovery of funds, both of which are significant deterrents against potential offending.
Another advantage of private prosecutions is that defendants who fail to pay back monies obtained from criminal activity within a set period could face a sentence in default of up to 14 years. This is in addition to any sentence given for the criminal offence itself.
Extra-jurisdictional reach
While private prosecutions are not available in every jurisdiction, in the UK private prosecutions can be issued against overseas individuals and companies.
If there is a sufficient UK connection, a private prosecution can be brought. It may be that a suspect is a British citizen, or they entered the UK at some point during the commission of the offence, or they conspired with someone in the UK. Alternatively, it may be that the suspect is a director, employee or person of significant interest in a company registered in the UK.
Below is a summary of some of the offences that can be prosecuted in the UK where offenders or victims may be overseas:
Extra-territorial jurisdiction offences (theft, fraud and bribery)
Specific statutes enable the UK to exercise extra-territorial jurisdiction for criminal activity, including fraud. Many of these can be prosecuted if a “relevant event” took place in England or Wales.
It does not matter if the suspect is a British citizen or whether they were in the UK at a particular time. It may be that an important communication or a relevant transaction took place in the UK.
Under the Bribery Act 2010, the offences of bribing another, being bribed and bribing a public official all have extra-territorial application. If a person’s acts or omissions outside the UK would form part of the offence if they had occurred in the UK and that person has a "close connection with the UK", they will be guilty of an offence.
The offence of failure of a commercial organisation to prevent bribery also has extra-jurisdictional reach. This offence is committed by a "relevant commercial organisation" (which includes companies or partnerships (wherever incorporated) that carry on any part of their business in the UK) if a person associated with the organisation bribes another person intending to obtain or retain business, or an advantage in the conduct of business, for the organisation.
In those circumstances, the organisation’s only defence to the strict liability offence is to show it had "adequate procedures" in place designed to prevent bribery on its behalf.
Money laundering offences
The offence of money laundering may be committed in the UK where the proceeds of a crime are laundered through the UK.
It does not matter where the predicate crimes were committed, as long as it would also constitute an offence in the UK.
Additionally, a person/company can be prosecuted for committing a money laundering offence even if their conduct occurred outside of the UK, as long as a significant part of the underlying scheme took place in the UK and had harmful consequences in the UK – for example, if the victims are based in the UK.
Computer misuse offences
The Computer Misuse Act 1990 (CMA) is the main UK law relating to offences or attacks against computer systems, for example hacking.
For certain offences, the CMA requires evidence of at least one significant link with the UK. This could be if the offence was committed in a country other than the UK or the accused was a UK national at the time (British citizen, a British overseas citizen, a person who is a British subject or a British protected person).
It may also be that the accused was in the UK at the time of the act or if any computer containing the program or data is based in the UK.
Conspiracy offences
An individual or business may be guilty of a conspiracy criminal offence (for example, conspiracy to commit fraud) if they became party to the conspiracy in the UK, or with someone in the UK, or if the criminal act occurred in the UK.
Even if the criminal offence takes place overseas, an individual or company can be charged with a conspiracy offence where a party to the agreement did something in the UK in relation to the agreement either before its formation, or in pursuance of it.
Tax evasion
The Criminal Finances Act 2017 created a new offence of failure to prevent the facilitation of foreign tax evasion, whereby a company or partnership may be guilty of an offence if at any time a person commits a foreign tax evasion facilitation offence when acting in the capacity of a person associated with that company or partnership.
This offence will be committed if the company is incorporated or formed in the UK, the company carries on business or part of a business in the UK, or if any conduct constituting part of the foreign tax evasion facilitation offence took place in the UK.
Parallel civil/criminal proceedings
Parallel criminal and civil proceedings are common, especially in cases involving economic crime.
Frequently, the decision to prosecute is reached as a result of information obtained after civil proceedings have been commenced.
Parallel proceedings must be carefully planned, particularly in relation to timing and service of the proceedings. For example, a party subject to the criminal investigation may seek to stay the civil proceedings (i.e., halt the legal process) pending the outcome of the criminal investigation.
Obtaining a stay is not automatic and requires approval of the allocated judge (who may want the proceedings to continue without further delay), but it is nevertheless a possibility and often a useful tactic to employ. There are also strict rules governing the collateral use of documents relied on in parallel proceedings.
Parallel prosecutions are entirely permissible as long as the decision to do so is fair and proportionate, and is not vexatious or improper.
How Fieldfisher can help
The Fraud, Financial Crime and Investigations (FCCI) team at Fieldfisher comprises leading experts in private prosecutions who can guide clients through each stage of the process, from gathering evidence, to preparation and presentation of the case at court.
As well as representing victims, we are experienced in defending businesses and individuals who are the subject of a criminal investigation, whether public or private.
We are frequently instructed to represent clients in complex cross-border cases and we work alongside our network of experts worldwide to provide clients with strategic expert advice and assistance to achieve justice and compensation.
For more information on our private prosecutions service, please contact a member of the FCCI team.