Confronting the “fraud bottleneck”: private sanctions for fraud and their implications for justice

Abstract

Purpose\ud \ud – The purpose of this paper is to illustrate the ways in which contemporary organisations are imposing their own private sanctions on fraudsters. \ud \ud \ud \ud \ud Design/methodology/approach\ud \ud – The research draws on primary data from interviews with counter fraud practitioners in the UK, secondary sources and case examples. \ud \ud \ud \ud \ud Findings\ud \ud – Such developments have been stimulated, at least in part, by the broader limitations of the criminal justice system and in particular a “fraud bottleneck”. Alongside criminal sanctions, many examples are provided of organisations employing private prosecutions innovative forms of civil sanction and “pseudo state” sanctions, most commonly civil penalties comparable to fines. \ud \ud \ud \ud \ud Research limitations/implications\ud \ud – Such changes could mark the beginning of the “rebirth of private prosecution” and the further expansion of private punishment. Growing private involvement in state sanctions and the development of private sanctions represents a risk to traditional guarantees of justice. There are differences in which comparable frauds are dealt with by corporate bodies and thus considerable inconsistency in sanctions imposed. In contrast with criminal justice measures, there is no rehabilitative element to private sanctions. More research is needed to assess the extent of such measures, and establish what is happening, the wider social implications, and whether greater state regulation is needed. \ud \ud \ud \ud \ud Practical implications\ud \ud – Private sanctions for fraud are likely to continue to grow, as organisations pursue their own measures rather than relying on increasingly over-stretched criminal justice systems. Their emergence, extent and implications are not fully understood by researchers and therefore need much more research, consideration and debate. These private measures need to be more actively recognised by criminal justice policy-makers and analysts alongside the already substantial formal involvement of the private sector in punishment through prisons, electronic tagging and probation, for example. Such measures lack the checks and balances, and greater degree of consistency as laid out in sentencing guidelines, of the criminal justice system. In light of this, consideration needs to be given to greater state regulation of private sanctions for fraud. More also needs to be done to help fraudsters suffering problems such as debt or addiction to rebuild their lives. There is a strong case for measures beyond the criminal justice system to support such fraudsters to be created and publicly promoted. \ud \ud \ud \ud \ud Originality/value\ud \ud – The findings are of relevance to criminal justice policy-makers, academics and counter fraud practitioners in the public and private sectors

Preventing occupational corruption: utilising situational crime prevention techniques and theory to enhance organisational resilience

“…Without reshaping its purpose, external audit can be virtually dismissed as a prevention measure. The weak implementation of formal sanctions can be explained by the difficulties and costs in accessing justice and possibly by reference to reputational concerns (Button, Wakefield, Brooks, Lewis and Shepherd, 2015).…”

“…When corrupt employees are detected, 52% of respondents try to use the criminal prosecution system and 44% seek compensation through the criminal courts; 40% seek regulatory sanctions; 30% litigate through the civil process; and just 24% register offending employees on corruption databases. This paper does not explore why organisations are ineffective in pursuing formal sanctions, whether it is due, for example, to the difficulties in accessing justice, an inadequate cost benefit calculus, or the desire to protect corporate reputations (Braithwaite and Fisse, 1987;Levi and Sherwin, 1989;Button, Wakefield, Brooks, Lewis and Shepherd, 2015). Reputational concerns is reflected in the fact that only 38% of participants actively publicise formal sanctions.…”

Financial crime investigation: an evaluation of an online training program for police

“…Pre-training they had lower perceptions of value compared to their general duties colleagues. As discussed in previous research, financial crime often competes, particularly in serious organised crime squads where detectives are located, with what is considered to be more high-profile crime types (Button et al , 2012; Skidmore et al , 2020). Through this training, the police agency appears to have been able to effectively communicate their message that financial crime is valued by the agency.…”

“…Investigations into fraud are typically co-located within serious and organised crime units and/or commands. This means they compete for resources and are generally overshadowed by other high-profile crimes such as homicide, drugs and child exploitation (Button et al , 2012; Skidmore et al , 2020). Exacerbated by a lack of appropriately trained police which will be discussed next, the increased volume of financial crime that now exists is threatening, if not already overwhelming, police agencies.…”

“…A further identified barrier to engagement is the perceived complexity and assumed protracted nature of financial crime investigations. Research has found that fraud investigations take an average of 400 days (four times longer than burglary), and some are so complex that they need specialist investigators rather than general police (Button et al , 2014a; Button et al , 2012). However, examining financial crime statistics from a range of sources, it is likely that many financial crimes are much less complex than such commonly held perceptions would suggest (Skidmore et al , 2020).…”