New Clause 3

Fraud Bill [Lords] – in a Public Bill Committee at 9:15 am on 22nd June 2006.

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‘(1) Any act done by a person in a country or territory outside the United Kingdom which—

(a) constituted an offence under the law in force in that country or territory, and

(b) would constitute an offence under this Act if it had been done in England and Wales or in Northern Ireland,

constitutes that offence under the law of that part of the United Kingdom.

(2) Any act punishable under the law in force in any country or territory constitutes an offence under that law for the purposes of this section, however it is described in that law.

(3) Subject to subsection (4), the condition in subsection (1)(a) is to be taken to be met unless, not later than rules of court may provide, the defendant serves on the prosecution a notice—

(a) stating that, on the facts as alleged with respect to the act in question, the condition is not in his opinion met,

(b) showing his grounds for that opinion, and

(c) requiring the prosecution to prove that it is met.

(4) The court, if it thinks fit, may permit the defendant to require the prosecution to prove that the condition is met without service of a notice under subsection (3).

(5) In the Crown Court the question whether the condition is met is to be decided by the judge alone.'. —[Mr. Heath.]

Brought up, and read the First time.

Photo of David Heath David Heath Shadow Leader of the House of Commons, Shadow Spokesperson (Cabinet Office)

I beg to move, That the clause be read a Second time.

Again, I do not intend to press the new clause to a Division, but it is important that the Committee at least consider whether we should have jurisdiction for fraud beyond our national jurisdiction. The issue was discussed in the gestation of the Bill and there are conflicting views on it. I do not advocate international jurisdiction other than in clearly defined cases. When we debated the previous amendment, we discussed US jurisdictions, some of which claim extraordinary extraterritorial scope, way beyond what is reasonable in either law or common sense, particularly in commercial law.

With fraud, there is great cause for concern in some areas, as it can easily be perpetrated on British citizens from outside our national jurisdiction. It is not like knocking someone on the head; one is unlikely to be standing in another jurisdiction—except, perhaps, Gretna Green—and knocking on the head someone within the confines of England and Wales. Fraud is an offence of a different sort, which can easily be perpetrated from abroad.

I know that there is much collaboration and co-operation between law enforcement and prosecuting authorities in other countries to deal with this worldwide phenomenon, and I certainly do not propose that the English and Welsh prosecuting authorities should seek to investigate and prosecute fraud wherever it happens in the world, which would be absurd, but there are occasions on which fraud has an international dimension, which might obstruct the successful prosecution of a fraud perpetrated on someone in this country—possibly by a British national who is in another jurisdiction. There might be difficulties because of the clear territorial limits on the offences as they stand in securing a successful prosecution.

Let me give a few brief examples. The first is obvious: multinational corporations. We live in an increasingly multinational, global, commercial world, which means that bodies corporate often work in many countries and jurisdictions and have subsidiaries that might not trade in this country. A company with an office in the great state of Delaware, or, worse, in Liberia, might perpetrate fraud against an individual or company in the United Kingdom. I want it to be clear that there will not be a defence that allows a company operating in this country that has committed an offence to avoid successful prosecution by arranging its business so that the fraud is effectively perpetrated by a subsidiary company that is not registered or trading from this country, but is nevertheless under the control of that British company. I hope that that is covered by the Bill, but I am not confident that it is.

My second example is unsolicited mail. We and our constituents receive torrents of unsolicited mail, some of which I believe constitutes fraud. A few years ago, I brought to Parliament’s attention a case in which a clairvoyant was threatening vulnerable people with consequences through her enhanced psychic awareness. She said that major events would occur if the targeted  person did not secure her protection by virtue of an amulet or other device, which would protect her from the inevitable consequences of not paying over money to an address abroad so as to secure that protection.

That abhorrent correspondence was carried through the Royal Mail from a business address in the Netherlands, and was of great concern to the people who were vulnerable to that sort of material. I think that that fraud would not be prosecutable under the Bill. Perhaps the Minister will say that it would be, but I do not think that he can. I think that other measures need to be taken.

Frankly, it appals me that despite the fact that these matters are drawn to the attention of Royal Mail, it, as a carrier, is still prepared to take bulk mailings of extremely questionable material, but that is by the by. I want to ensure that when fraudulent materials that are sent through the post are involved, the matter can be prosecuted if it is possible to secure an extradition and an arrest.

Some unsolicited mail is sent electronically. We are all familiar with the famous west African scam, which seems to have gone global—it is no longer just relatives of President Abacha who will have untold amounts of money available if they can persuade people to part with a small amount to establish a new bank account. Relatives of President Marcos in the Philippines, or any recently deposed despots who appear to have many relatives with access to large amounts of money, say that all they need is a British bank account so as to secure untold riches for the unsuspecting recipient of their communication.

Most people are aware that this is a scam, but there must be some who are not or it would not continue. Some unfortunates must lose a lot of money as a result, and it is important for us to provide as much legal protection as possible for those people.

I want to draw the Committee’s attention to something that was brought to my attention in my constituency surgery last week, and it is a new one on me. A gentleman came in outraged because he had applied for death certificates on the internet and had been charged in euros. His original outrage related to the fact that a Department—part of the British Government—was charging in euros rather than pounds sterling, which is the sort of complaint that we get in my part of the world. He thought that an extraordinary state of affairs.

I investigated the matter because I thought it sounded odd and I uncovered the fact that a website purporting to be a British Government website—it even has the appellation .gov—is selling Government certificates to people who do not know better. It appears in the search engines above the Government’s own websites and sells certificates at a higher cost than they do. The person concerned buys forms for £7 from the Government and sells them for £21 as a private enterprise while purporting to be a Department.

The view of the registrar’s department was that there is no illegality in such transactions, although it obviously deplores and would like to deal with them. I hope that they will be illegal under the new measure, because it would be a misrepresentation if a person purported to be connected with the Government when they were not. Even so, I am not convinced that such a  thing could successfully be prosecuted under the Bill because the person involved in the case that I cited is based in France, in spite of the fact that he has a .gov.UK website.

There are strong arguments for international jurisdiction. The Under-Secretary’s argument at the conclusion of the debate on Second Reading drew a distinction between corruption and fraud. I would like the Bill to have included corruption, but my amendments were out of order in that respect, which is right. He said:

“The resource implications for ‘policing’ UK nationals worldwide for fraud are therefore much larger. The cost would need to be carefully examined before any party committed itself to it.”—[Official Report, 12 June 2006; Vol. 447, c. 580.]

Yes, of course. The same applies to sexual offences in respect of international jurisdiction, but we cannot police every transaction and investigate every allegation.

However, the capacity to indict and successfully prosecute is an important part of the armoury of our national jurisdiction on the offence because it can so easily be perpetrated by someone outside our territorial boundaries. I invite the Solicitor-General to comment on my remarks, explain the reasoning that has led the Government to believe that we should seek no form of international jurisdiction in the Bill, and say whether they will keep that position under review or whether they will return to it.

Photo of Mike O'Brien Mike O'Brien Solicitor General, Law Officers' Department 9:30 am, 22nd June 2006

The hon. Gentleman raises a number of issues, some of which touch on points made earlier, particularly the question of where we draw the line between what is and ought to be a crime of fraud, and what is a commercial relationship that we decide should not be criminal, in which the buyer needs to beware, but where there are various safeguards through advertising regulations and other means, and where there are civil rights. The hon. Gentleman also asked what we should be prepared to prosecute in our courts, where actions are committed by persons abroad.

The UK does not have jurisdiction over foreign companies, wherever their ownership is, for acts carried out overseas that have no impact in the UK. However, if the fraud results in a loss of property in the UK, we have some jurisdiction. Part I of the Criminal Justice Act 1993 confers jurisdiction over certain crimes of dishonesty if a “relevant event” occurs in England and Wales, which is defined as:

“any act or omission or other event (including any result of one or more acts or omissions) proof of which is required for conviction of the offence.”

Paragraph 24 of schedule 1 to the Bill amends definitions of offences for the purposes of the jurisdictional provisions of the 1993 Act, deleting references to offences that are repealed and adding references to new offences. Those changes ensure that the wide jurisdictional provisions of the 1993 Act apply to the new fraud offences so that, in a phishing case, for example, where a false representation is made in the UK, it does not matter whether the offender is operating from abroad, because he may be caught by the offence in clause 2.

In addition, paragraph 25 of schedule 1 amends section 2 of the 1993 Act to ensure that the offence of  fraud in clause 1 can be prosecuted if the only event that takes place in this jurisdiction is the gain or loss of property. That provision covers cases where fraud committed entirely overseas leads to the removal of funds from a bank in the UK. I hope that with those reassurances, such as they are, the hon. Gentleman will feel able to withdraw the motion.

The ambition of the new clause is extraordinary. It seeks to broaden our courts’ jurisdiction over fraud offences committed by anyone located anywhere in the world where fraud is a crime. The new clause is so extraordinarily wide that I dare say that it would collapse under the weight of its own ambition, as it would require anybody—not just UK nationals who live in jurisdictions where fraud is a crime—to behave in accordance with UK fraud law. A citizen of the USA or France, or anyone else for that matter, who commits acts while in their home country or anywhere where fraud is a crime, would face prosecution by UK prosecutors, even if the crime had no impact in the UK. The hon. Gentleman indicated that that is not his intention, but it would be the effect of the new clause as drafted.

We want to ensure that fraudsters, where they can be properly dealt with in our courts, are so dealt with. They can be located in any number of places all over the world. We have all heard about the number of sinister scams over the years involving Spanish lottery frauds or African advanced fee frauds. Such cases already have some coverage under the 1993 Act. If it is the case that proof of any act or omission if is required for conviction—for example, if the deception or gain takes place in the UK—our jurisdiction will cover it.

Photo of David Heath David Heath Shadow Leader of the House of Commons, Shadow Spokesperson (Cabinet Office)

I am extremely grateful to the Solicitor-General for his helpful comments. He admonished me a little on the drafting of my new clause. The provision is analogous to that set out in the Sexual OffencesAct 2003 and uses almost exactly the same terms. It is not such an extraordinary provision, as the British Government already have the jurisdiction or ability to prosecute for any sexual offence carried out by any person anywhere in the world on the exact same basis. That is the section that I have lifted, effectively en bloc. Of course, the limiting factor is the decision to investigate and prosecute. It is completely impractical to investigate and prosecute every offence that occurs anywhere, and we would not wish to. The new clause would allow there to be no blockage to procedures against any person.

I share some of the misgivings about extra-territorial jurisdiction. Indeed, I often criticise the ambitions of the United States in that respect and the fact that that its jurisdiction applies to British citizens as a result of the extraordinary asymmetric extradition arrangements we have with it, but that is another matter.

Photo of Dominic Grieve Dominic Grieve Shadow Attorney General

I was not going to intervene, but I have to say that, as drafted, the new clause is even more ambitious than the wildest dreams of a district attorney in Texas.

Photo of David Heath David Heath Shadow Leader of the House of Commons, Shadow Spokesperson (Cabinet Office)

Possibly the great state of New York already has such a provision in place. Texas tends to be  rather introvert rather than extrovert with its legal system—it is about the only thing that it is not extrovert in.

I am grateful to the Solicitor-General. He has covered some of the ground that I wanted to cover. We have to be a lot more astute in protecting our citizens against the predations of those operating from outside the country, particularly on the internet, which makes it too easy for people to be defrauded. It occurred to me in the example that I gave that we might need provision for misrepresentation of a position under the Crown or something of that sort. If people honestly believe that someone is a Government official, they are far more open to being defrauded than when someone is purporting to be carrying out a commercial transaction. We might like to consider that. I was very surprised to hear that the scam that I described—I think it is a scam—was not an offence, as his legal advice seems to suggest. Having said that, I have no difficulty in begging to ask leave to withdraw the motion.

Motion and clause, by leave, withdrawn.

Schedules 1 to 3 agreed to.

Question proposed, That the Chairman do report the Bill to the House.

Photo of Mike O'Brien Mike O'Brien Solicitor General, Law Officers' Department

Mr. Jones, I thank you and your colleague for your sterling chairmanship of this Bill, which is very important, given the impact that it will have on many of our constituents and in ensuring that fraud will be dealt with. The Bill was potentially legally quite complex, but it has benefited from proper scrutiny, provided by Opposition colleagues with care and diligence in a way that I hope means that the public have been well served. You have not had to intervene to quieten us down too much. We got on with the business, answered the questions, dealt with the issues, raised the difficulties that might be presented by the wording of various clauses, and got through the Bill. We did the business of Parliament, assessing the legislation in a proper way that does credit to this Committee and the chairmanship of you and your colleague. Hopefully, in due course, that will lead to good law.

Photo of Dominic Grieve Dominic Grieve Shadow Attorney General

May I join the Solicitor-General in thanking you, Mr. Jones? Please pass on our thanks to Mr. Amess for his chairing of Committee on Tuesday. It has been a very pleasant and short Committee. In the nine years that I have been in the House, this is the first time that I been on a Bill Committee in which we completely scrutinised everything that we wanted to consider. In the past, I am afraid, the guillotine and the programme motion have usually left some things—albeit small things, sometimes—not considered, so this is a first. It bodes well for the future passage of the Bill through the House.

I thank the Solicitor-General for his response to our points, and I thank other members of the Committee. It has been an enjoyable experience, as I thought it would be when I first came into the Room.

Photo of David Heath David Heath Shadow Leader of the House of Commons, Shadow Spokesperson (Cabinet Office)

I concur with those sentiments, and thank you, Mr. Jones, and your colleague Mr. Amess, for your chairmanship of proceedings. I also thank hon. Members for their contributions. I particularly thank the Solicitor-General, who was at pains to give  us the fullest replies possible, ably assisted by his officials, and that is not always the case.

I share the view that we have done justice to a Bill that has its complexities. It is not a particularly simple Bill, but it is largely good, and we have had the opportunity to raise the issues of concern to us. I hope that the brevity of our proceedings will not be confused with lack of diligence. I would say, never mind the width, feel the quality. We have had some substantial debates in a brief time. Overall, I commend the Bill to the House.

Photo of Mike O'Brien Mike O'Brien Solicitor General, Law Officers' Department

It was remiss of me not to thank the officials who helped to prepare the Bill. I am grateful to them for the way in which they have advised me, and my colleague the Attorney-General in another  place, throughout. I also thank my colleagues on the Labour Benches, who have done their duty here, too, when need be.

The Bill has been dealt with expeditiously, and no doubt those who deal with such issues will need to consider whether a full day might not be necessary for the Bill on Report. That matter will, no doubt, be dealt with through the usual channels, but I just want to put my view on the record.

Photo of Martyn Jones Martyn Jones Labour, Clwyd South

I thank hon. Members for their general good behaviour and co-operation. This Bill has been a pleasure to chair.

Question put and agreed to.

Bill to be reported, without amendment.

Committee rose at sixteen minutes to Ten o'clock.