Fraud has different burdens of proof and then different penalties in civil and criminal proceedings. Fraud is difficult to PROVE, you have to PROVE intent.
There is no criminal proceedings in this matter it is only civil, there are no 'gaol sentence' in civil proceedings only the disqualifications of the offenders.
The best we can hope for in this instance is them be inconvenienced by a disqualification.
Disqualification is meaningless to Adams. He is retired. The two disqualifications are the easiest ones as they are both the most seniors officers in charge of the finances. Notwithstanding they are symbols of retribution for those parties.
This is a goliath of a case, never seen before. It is easy to criticise the process and results thus far, but it is beyond all of our comprehensions the extent of the issues managed by the Official Receiver from the extensive un-combined accounting and reporting systems of Carillion, political intervention, the parliamentary enquiry outcome and pressure, IP's and advisors opinions and each parties motives impacting, whilst having to curtail to the FCA and others. The extent of the conflict of professional firms is unseen before and must have been debilitating in establishing trustworthy advisors.
So to have even achieved a disqualification in this situation is a feat.
However the law is inadequate. Disqualification is there to protect us, the public from the offender. I liken it to an individual getting a disqualification from driving, it stops the offender from crashing into us on the road for a period of time. Drivers are insured, where we are hurt by them, we claim on their insurance policy or against them. Sometime drivers go to prison when they injure or kill someone. However, Director Disqualification results are not backed up by an insurance policy which pays out for their offences. The CDDA or the OR in prosecution rarely causes imprisonment, a business has died at the directors hands and peoples/other organisations futures have changed beyond recognition as a result. It is a long road for a liquidator to make a financial recovery from a director; the director may spend his money defending himself, potentially leaving little or nothing for the creditors of the failed business. Someone has to fund a litigation. There is no similar legislation, like proceeds of crime which applies to the gain made by the Directors of Carillion. Currently the states purse suffers to conduct the investigation. The CDDA doesn't hold hands with the financial recovery made by liquidators.
The law is disjointed and protracted in disqualification - prosecution - financial penalty and needs overhauling.
Yes it is the tip of the iceberg, but there needs to be a blanket zero tolerance by CPS, BIS, HMRC investigators, IP's of the lies told when the self certification on the application was made. Because that is where the fraud starts, in their self cert, that they have turnover or anticipated turnover and other points which are supposed to be facts. It is not for the banks to be policemen for the government, they have to satisfy their own criteria and meet the FCA requirements first, which, in this crisis funding, was a pretty low bar for most of the funders. The government made it too easy to get £50k, we are going to see just how many greedy people there are out there. I am an IP, I am pleased to see by this decision and want to see what BIS/CPS will do next, but as a practitioner I will be pursing every wrongful illegal BBL's/CBL's I identify and have evidence of wrongfulness which is recoverable, because that is my obligation, I cannot rely on the HMRC/CPS/BIS to do the right thing by the creditors. However, having has a few cases already there are numerous reasons that will prevent recovery which will appear unfair to creditors. This then holds had with fraudulent furlough claims.... It is going to get technically challenging/interesting.
Disqualification is a civil court process and the process and application is about punishment or protecting the public from the scoundrels. One of three things could happen now, 1. the CPS take prosecution proceedings on the back of the disqualification for the fraudulent action and they get a sentence and recover under proceeds of crime and get order for financial recompense. 2. The IP issues proceedings to recover or 3. The Crown's 'task force' who are supposedly being gathered to investigate furlough an BBLS/CBLS et al will act (this has been mentioned in at least 2 budgets now). They could also be made bankrupt over their actions if the financial recovery is not made. I would be surprised if there are no further actions as it is what the IP will see as a 99.9% possibility of wining, it certainly needs a journo to monitor and report as it is an interesting chain of events and is one of the first reported cases. Let the flood gates open on all these cases, it is costing us all a fortune in taxation for the next 20 years.
The fine is a drop in the ocean of the fees levied in the liquidation and as a result are unlikely to make more than a small ripple in the ocean of income generated by the Big 6 in these large cases. Proportionally it is evident that Deloitte s and their ex partners have got off pretty lightly for what is a fundamental basic principle of compliance with the regulations and delivery on a case.
Large firms are a necessity because they have the resource to manage these large cases, but it does not justify the extortionate hourly rates being levied. Resource does not mean best delivery, as is proven here.
Whilst a landmark fine and reprimand, it remains to be seen that it changes attitudes in the big 6 and larger firms.
My answers
Fraud has different burdens of proof and then different penalties in civil and criminal proceedings. Fraud is difficult to PROVE, you have to PROVE intent.
There is no criminal proceedings in this matter it is only civil, there are no 'gaol sentence' in civil proceedings only the disqualifications of the offenders.
The best we can hope for in this instance is them be inconvenienced by a disqualification.
Disqualification is meaningless to Adams. He is retired. The two disqualifications are the easiest ones as they are both the most seniors officers in charge of the finances. Notwithstanding they are symbols of retribution for those parties.
This is a goliath of a case, never seen before. It is easy to criticise the process and results thus far, but it is beyond all of our comprehensions the extent of the issues managed by the Official Receiver from the extensive un-combined accounting and reporting systems of Carillion, political intervention, the parliamentary enquiry outcome and pressure, IP's and advisors opinions and each parties motives impacting, whilst having to curtail to the FCA and others. The extent of the conflict of professional firms is unseen before and must have been debilitating in establishing trustworthy advisors.
So to have even achieved a disqualification in this situation is a feat.
However the law is inadequate. Disqualification is there to protect us, the public from the offender. I liken it to an individual getting a disqualification from driving, it stops the offender from crashing into us on the road for a period of time. Drivers are insured, where we are hurt by them, we claim on their insurance policy or against them. Sometime drivers go to prison when they injure or kill someone. However, Director Disqualification results are not backed up by an insurance policy which pays out for their offences. The CDDA or the OR in prosecution rarely causes imprisonment, a business has died at the directors hands and peoples/other organisations futures have changed beyond recognition as a result. It is a long road for a liquidator to make a financial recovery from a director; the director may spend his money defending himself, potentially leaving little or nothing for the creditors of the failed business. Someone has to fund a litigation. There is no similar legislation, like proceeds of crime which applies to the gain made by the Directors of Carillion. Currently the states purse suffers to conduct the investigation. The CDDA doesn't hold hands with the financial recovery made by liquidators.
The law is disjointed and protracted in disqualification - prosecution - financial penalty and needs overhauling.
Yes it is the tip of the iceberg, but there needs to be a blanket zero tolerance by CPS, BIS, HMRC investigators, IP's of the lies told when the self certification on the application was made. Because that is where the fraud starts, in their self cert, that they have turnover or anticipated turnover and other points which are supposed to be facts. It is not for the banks to be policemen for the government, they have to satisfy their own criteria and meet the FCA requirements first, which, in this crisis funding, was a pretty low bar for most of the funders. The government made it too easy to get £50k, we are going to see just how many greedy people there are out there. I am an IP, I am pleased to see by this decision and want to see what BIS/CPS will do next, but as a practitioner I will be pursing every wrongful illegal BBL's/CBL's I identify and have evidence of wrongfulness which is recoverable, because that is my obligation, I cannot rely on the HMRC/CPS/BIS to do the right thing by the creditors. However, having has a few cases already there are numerous reasons that will prevent recovery which will appear unfair to creditors. This then holds had with fraudulent furlough claims.... It is going to get technically challenging/interesting.
Disqualification is a civil court process and the process and application is about punishment or protecting the public from the scoundrels. One of three things could happen now, 1. the CPS take prosecution proceedings on the back of the disqualification for the fraudulent action and they get a sentence and recover under proceeds of crime and get order for financial recompense. 2. The IP issues proceedings to recover or 3. The Crown's 'task force' who are supposedly being gathered to investigate furlough an BBLS/CBLS et al will act (this has been mentioned in at least 2 budgets now). They could also be made bankrupt over their actions if the financial recovery is not made. I would be surprised if there are no further actions as it is what the IP will see as a 99.9% possibility of wining, it certainly needs a journo to monitor and report as it is an interesting chain of events and is one of the first reported cases. Let the flood gates open on all these cases, it is costing us all a fortune in taxation for the next 20 years.
The fine is a drop in the ocean of the fees levied in the liquidation and as a result are unlikely to make more than a small ripple in the ocean of income generated by the Big 6 in these large cases. Proportionally it is evident that Deloitte s and their ex partners have got off pretty lightly for what is a fundamental basic principle of compliance with the regulations and delivery on a case.
Large firms are a necessity because they have the resource to manage these large cases, but it does not justify the extortionate hourly rates being levied. Resource does not mean best delivery, as is proven here.
Whilst a landmark fine and reprimand, it remains to be seen that it changes attitudes in the big 6 and larger firms.