DAC produces 'charter' for victims of City fraud

Stronger powers for judges to compensate victims in serious fraud cases are among recommendations made by City firm Davies Arnold Cooper in a report to the Lord Chancellor, Lord Mackay.

DAC’s report on regulating City deceit is aimed at forcing the Lord Chancellor to change the legal procedures for bringing fraudsters to justice.

Effectively a ’victims’ charter’, it recommends civil court trials in which the balance of probabilities decides a case, rather than the criminal standard of proof of beyond all reasonable doubt.

It proposes to alleviate the problems of lay juries trying to grapple with the technicalities of City finance and courtroom advocacy.

The report states that most actions are brought by the victims who simply wanted their money back and costs paid for. If the victims’ allegations of fraud or deceit are fair then the judge – who should be an experienced commercial expert – would order the fraudster to pay up. The judge may also award punitive damages similar to a criminal fine, but without the stigma.

DAC says that judges should be given power to order investigations of missing funds – allowing the judge to sequestrate monies that have been transferred abroad, passed to members of the fraudster’s family or sunk into subsidiary companies. The court will be empowered to require payment to victims of the fraud.

The victim’s chances of recovering losses are almost non-existent and are frustrated by delays in criminal proceedings and the “sheer incompetence” of the Serious Fraud Office, says DAC.

DAC senior consultant Clive Boxer says the firm’s main objective is for victims to recover their money as soon as possible. “It will ensure that those acquitted of fraud get their costs back as well as preventing the SFO’s expertise from being wasted on prolonged criminal trials in which there are few winners.”