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Time for change? Public-private collaboration against financial crime

Posted on 4 July 2022

On 16 June 2022, we were delighted to host an evening of discussion, 'Time for Change? Public-Private Collaboration Against Financial Crime', at our London offices. The discussion drew on the titular report by Professor Jason Sharman, the Sir Patrick Sheehy Professor of International Relations at Cambridge University. The report is available to read here

The event opened with Mishcon de Reya's Catherine Rogerson interviewing Professor Sharman about his findings and recommendations.

This was followed by a panel discussion debating various aspects of public-private collaboration in tackling financial crime. Professor Sharman was joined by Lord Agnew of Oulton DL, former Minister of State at the Cabinet Office and Her Majesty's Treasury and current member of the House of Lords; Helena Wood, Senior Research Fellow at RUSI; and James Mather, Barrister at Serle Court Chambers. The panel was moderated by Mishcon de Reya's Gareth Minty.

Following audience polling showing 100% of attendees agreeing that change was needed, Professor Sharman began by describing an unsatisfactory status quo where a high volume of financial crime has enabled many criminals to keep their ill-gotten gains. He emphasised the need to establish an effective deterrent in order to make significant reductions in financial crime and the value of civil law remedies and private criminal prosecutions. Citing the increased availability of litigation funding and the changing attitudes to the involvement of for-profit entities in fighting financial crime, Professor Sharman viewed the current environment as an opportunity to be seized when it comes to facilitating greater public-private collaboration in the future.

The panellists discussed the importance of a solutions-orientated approach, providing best value for the taxpayer and explored several key ideas to delivering gains in revenue recovery. These included an accessible, open-source HMRC register of trusts, the creation of an economic crime-fighting fund and a new office for the protection of whistleblowers.

Potential benefits of adding private sector expertise to public sector economic crime investigations were identified, such as applying a commercial mindset to the process of case selection and review and a more effectively directing resources to genuinely viable investigations.

Panellists also explored the potential policy and practical challenges of public-private collaboration. This included potential conflicts of interest that could arise for law firms providing such advice and how those could be addressed, together with the implications of such an approach when it comes to the level of compensation available to victims.

Whilst the discussion focussed on how best to balance these political, practical and perceived risks against potential benefits, including the ongoing question of future public sector resourcing, the panel recognised that it may ultimately come down to a stark choice between leaving assets with criminals or adopting a collaborative model with some inherent limitations.

Exploring the topic of litigation funding, the panel identified its suitability in asset recovery. In respect of public sector litigation, no prohibitive reason was raised as to why the terms of funding agreements could not be tailored to the public sector's particular requirements or, indeed, why the Government itself should not create its own asset recovery fund. Discussion envisioned the public and private sectors working in tandem with a funding model that would encourage the pursuit of viable cases of fraud and international corruption with recoveries from one case being used to fund work on the next one.

As the event drew to a close, audience member Anthony Peto QC of Blackstone Chambers provided his thoughts on a potential pathway forward, describing a model in which state agencies, which are empowered to bring actions for the civil recovery of proceeds of crime such as the National Crime Agency , could refer to a panel of expert law firms with experience of recovering assets in High Court civil litigation . Lawyers would then consider a selection of cases with identifiable assets that might be suitable for litigation funding and the use of civil remedies. With the Proceeds of Crime Act 2002 given as an example, Mr.  Peto QC highlighted that it’s provisions for civil recovery had been underused but that its considerable powers could be deployed effectively against criminals to deprive them of their ill-gotten gains with the specialist expertise available from within the private sector. Mr. Peto QC said that there were plenty of public-spirited lawyers in the private sector who were willing to help the government recover the proceeds of crime. The key driver, as Mr Peto QC put it, in developing public-private collaboration against financial crime is simply the question of having the will.

Hugo Plowman, Head of the Fraud Group at Mishcon de Reya, agreed, stating: "if we can garner sufficient political will to make this happen, the private sector is standing by to deploy its resource, expertise and funding to help combat financial crime."

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Mishcon de Reya
It’s business.  But it’s personal.
Time for Change
Public-Private Collaboration Against Financial Crime
Catherine Rogerson, Associate, Mishcon de Reya

Tonight we hosted a panel debate where we asked the question, is it time to change and we were looking at private and public collaboration to tackle cross border economic crime.  So I first met Professor Jason Sharman, one of our panellists this evening at a lecture back in 2020 where he was discussing his research on financial corruption and at the same time Mishcon de Reya were embarking on a new thought leadership piece asking the question, how can we find new ways of tackling what is an ancient vice which is financial corruption and so we decided to get together and to put together a panel and have competing voices and different voices and to discuss this issue.

Hugo Plowman, Partner, Head of Fraud & Misconduct, Mishcon de Reya

What we are trying to do is affect change.  Do what we think is right.  We have the skill set, the room was packed full of what we call our ecosystem for combating fraud so it was full of private practice lawyers, like myself but also investigative journalists, forensic accountants, investigators, we had policy makers there, we had media, we had the whole ecosystem is required to combat fraud effectively.

Diogo Gouveia, Harbour Litigation

It’s absolutely the case that Harbour or a Funder generally speaking will not fund a case where it isn’t effectively commercially viable and there is always a cost benefit analysis to be done in that case.  It should be the case that where on the recovery of assets position you have assets which out strip the cost of recovering them and that is effectively a return for everyone the conflicts of interest shouldn’t effectively arise.

Jason Sharman, Professor of Politics, University of Cambridge

I am cautiously optimistic about the future of fighting financial crime because I think the stars are aligning in terms of there’s more room for joint action between the private sector, the public sector and NGO’s than there has been before but at the same time it is only a cautious optimism because I think the problem we have to tackle tackling financial crime is so difficult and the results of the last 30 years have been so modest.

Lyn McDonald OBE, Executive Director of the Cabinet Office

We have very limited resources in the public sector, particularly around prosecution of the high end crimes, financial crimes corruption and the idea was is that we, where we could still prosecute these cases, where we could still put the criminal away or at least get our money back using private resources that are there and well-honed and well skilled and how could we do that and what would the barriers be to doing that, so it was very interesting.

Lord Theodore Agnew, Former Minister of State at the Cabinet Office & Her Majesty’s Treasury

I think there are just a lot of complacency and I think there is a lack of understanding of how important this is and also lack of understanding of how big the wins could be if we did focus on it.

Gareth Minty, Partner, Mishcon de Reya

This needs to be resolved.  It is not being dealt with, it is growing, it is not shrinking.  I think what the panel event tonight has revealed is that there is no real meaningful barrier stopping it from working.  It’s in the public, you know, domain at the moment because we are talking about fraud in the context of Covid and I think that’s important, that makes it immediate, that gives it an energy at the moment and an impetus which we need to seize upon.  There is legislation going through Parliament as we speak and if we can make that part of the efforts to fix this problem then you know, why wouldn’t we try.  So if we don’t seize this opportunity now then, yeah I fear that we won’t ever have another chance like it again.

Mishcon de Reya
It’s business.  But it’s personal.

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