Below is the text of the statement made by Douglas Hurd, the then Home Secretary, in the House of Commons on 13 February 1986.
In the month since the publication of the Roskill report there has been much interest in the media concerning its recommendations, and this debate gives the Government an opportunity to hear the views of Parliament. I am glad it has been possible to arrange early debates, both here and in the other place, because it fits exactly the structure of our response to this report, which is to consider, consult and conclude with care and speed. I do not intend to make a long speech this evening because this is an opportunity for the Government to listen rather than to pronounce. The Government will take full account of the views of this House before we reach a firm decision on a report which is important.
A will to listen does not mean a will to delay. We intend, in the next Session of Parliament, to introduce a criminal justice Bill which will seek improvements in many aspect of the criminal justice system and the powers of the courts. The Bill will be wide and substantial and the proposals following the Roskill report will be a crucial part of the Bill. A White Paper will be published shortly which will set out the proposed measures in greater detail.
We intend to create and seize every opportunity for stern action against fraud. We think this is crucial for the City and for the country so that private enterprise can flourish in a clean environment. It is crucial for public confidence, and our competitive position in international markets that the probity of our financial institutions, especially in the City, should be beyond doubt. Those who save and invest, whether grand or small, should be well protected by our law from dishonest practices, however complicated the transaction. We are determined that the pursuit and the bringing to justice of fraudsters should be carried out with commitment and skill. If our present instruments for cutting our fraud are blunt we must manufacture a new carefully directed scalpel.
The report is radical. Some of its recommendations have been criticised but no one has criticised the skill and thoroughness with which the Committee completed its task. On behalf of the Government and the House, I would like to thank the Committee for its work and record our immense admiration and sincere thanks to Lord Roskill and his colleagues for the major contribution which the report makes to the fight against fraud.
When one studies the subject in a wider prospective it is fair to say that the strategy adopted in 1983 is beginning to show results. The fraud investigation group has been established on a permanent basis for more than a year. This has been a successful attempt to reduce the fragmentation in the investigation and prosecution of complex fraud cases. We have to go further down that path. The report vindicates the 1983 decision to appoint a committee to look at the way in which fraudsters are caught and brought to justice. The Financial Services Bill, now before the House, contains measures which should substantially improve the effectiveness of self regulation within the financial markets. Early detection of irregularities can often prevent serious fraud and as with all crime, prevention is our first aim. If prevention fails then the machinery for dealing with fraud must be effective.
The legal profession may have doubts about altering some time-honoured ways. I have already learnt the deep suspicion with which many hon. Members who are members of the legal profession regard the suggestions for change. Those whose professions put them in the centre of financial transactions are perhaps less hesitant. Certainly Lord Roskill’s committee was not hesitant.
The committee’s message to the House and to the Government is that one cannot send a policeman on a bicycle to catch a runaway car. We have to equip those who chase fraud with the same speed already possessed by the fraudster. I do not doubt that there are valuable conclusions to be drawn from an examination of the present investigation and prosecution arrangements. If fraud is not effectively uncovered and detected then no procedural reforms of the law and later conduct of criminal proceedings, will deter the big fraud operators. At present responsibility for investigation and prosecution is shared by the police, the Director of Public Prosecutions, the Department of Trade and Industry and other agencies. From April the prosecution functions of the police will move to the Crown prosecution services in certain areas and from October throughout England and Wales. The cooperation between these major agencies has greatly improved in recent years and permanent Fraud Investigation Group arrangements are now in place.
FIG brings together the police and other investigators —accountants, interested Government Departments, counsel and members of the DPP’s staff. One of the Director’s lawyers exercises day-to-day supervision —acting almost as one of the “case controllers” which the report recommends. The aim of FIG is to concentrate on major frauds, although the categories are not closed, and to complete investigations quickly and to bring to an end inquiries which turn out to be fruitless. That is the present position.
Lord Roskill suggests that other arrangements are still too fragmented and he recommends an urgent inquiry into the possibility of a new unified organisation responsible for all the functions of detection, investigation and prosecution of serious fraud cases. My right hon. Friend the Chief Secretary to the Treasury is studying this most closely with other Ministers. He is also considering much of what the report has to say about the deployment of resources to combat fraud—that is probably the most artistic job for a Chief Secretary to undertake.
The Department of Trade and Industry and the office of the Director of Public Prosecutions have a provision for extra staff—the DTI for nearly 200 posts, which is a big increase, and the Director of Public Prosecutions for nine extra lawyers who will be assigned, full time, to fraud cases. I know my right hon. Friend the Chief Secretary’s inquiry will be done briskly. I understand that he hopes to reach conclusions by early summer. If, as may well be, those conclusions require something extra in the criminal justice Bill, we shall see to that.
The inquiry will, of course, have a bearing on the role of the police. Lord Roskill has some practical recommendations of immediate relevance to the police. The House is aware that I am carrying out an urgent review to assess the specific need for further increases in the resources in the establishment of the Metropolitan police. The fraud squad is part of that review, and I hope to complete it very shortly now.
The accounting advice which Lord Roskill thinks the police need is available through the fraud investigation group, and steps are being taken to recruit three additional accountants. On the initiative, which is welcome, of the accounting profession, a panel of experienced accountants in private practice has been set up in London to help the police and the director on a case-to-case basis as necessary.
The committee recommends also a career structure for officers in the fraud squad. Being a practical committee, it recognises the difficulties in implementing the recommendation within a generalised service such as the police. The joint Metropolitan and City fraud squad is realistically the only squad of sufficient size —its strength is about 190 officers — to offer a practical opportunity to introduce a career structure. Both commissioners have now agreed to my request that they should examine the feasibility of a career structure for officers in the joint squad. Outside London, the Association of Chief Police Officers will consider the scope for second or subsequent periods of service in the fraud squad to build up the experience which officers accumulate. The association will report back to me.
Lord Roskill recommends better training for the police in fraud investigation and the Association of Chief Police Officers has agreed to review the training provision for fraud squad officers.
Sir Eldon Griffiths (Bury St. Edmunds)
My right hon. Friend will be aware that in a complicated City fraud as many as 25,000 man hours of detective time will be expended. If some of the best detectives are brought into the fraud squad, as I believe they must be, that will have the consequence of removing experienced officers from other areas of detective work.
That is right. That is one of the matters that will be in the two commissioners’ minds as they undertake the exercise of considering a career structure.
I turn to the substantive law on which the committee makes recommendations, especially the use of the common law charge of conspiracy to defraud, where there is clearly something amiss. With the agreement of the Chairman of the Criminal Law Revision Committee, Lord Justice Lawton, I have asked the committee to produce a report with the following terms of reference:
“To review the restrictions on the use of a charge of conspiracy to defraud in the light of the decision in Ayres  AC 447 and subsequent cases and to consider whether these restrictions could be removed without causing injustice to defendants.”
I have asked for urgent advice. In the relative excitement generated by proposals to reform the enforcement of the law, we must not neglect the need to ensure that the law itself is sensible and enforceable.
I shall not say much this evening on the committee’s proposal for a fraud commission. It would be a body within the existing machinery of Government with an independent chairman and it would monitor the pursuit of fraud, inquire into major breakdowns, look into delays and publish an annual report.
At this rather early stage I have much sympathy with the idea of a watchdog body of that sort but I shall be interested in any ideas that right hon. and hon. Members have about the proposal. Before reaching a conclusion, we shall set up a model of how such a commission would operate and then come to our conclusions upon it.
Our approach to the recommendations that touch on the jury system is still open and I shall listen with close attention to the views of the House. I have noted the views which were expressed in an excellent debate in another place. When we publish our White Paper on the Criminal Justice Bill, there will be a wider forum for consultation.
I shall put one or two considerations before the House that might focus the debate. The main recommendation is that a judge and two assessors should replace a jury in especially complex fraud trials. Naturally many questions arise. The right hon. Member for Manchester, Gorton (Mr. Kaufman) began to raise these questions on 14 January and expressed the belief that we cannot define complexity. I accept that that is a major issue. I do not think that the guidelines in the report could be translated easily into statute, but there might be no need for a rigid approach of that sort. One criterion which could have an honourable place if the idea of a tribunal took root is as follows
“the complexity lies in the fact that the markets or areas of business operate according to concepts which bear no obvious similarity to anything in the general experience of most members of the public”.
What are the arguments for placing such cases beyond the jury system?
Mr. Robert Maclennan (Caithness and Sutherland)
Does the Home Secretary agree that many complex crimes are quite beyond the comprehension and experience of the general public apart from fraud?
Indeed. I understand that argument. I wish to make it clear that there is no feeling in the Government’s mind that we should go beyond the Roskill report. I think that Lord Roskill advanced an argument for ring fencing in this area, but I would not want the element of truth in what the right hon. Member for Caithness and Sutherland (Mr. Maclennan) has said to lead us into considering doing away with jury trials for other types of offence, even though they might also he complex. It is the comprehension of the issues that is basic to the Roskill recommendation.
Mr. John. Morris (Aberavon) rose—
I shall make a little progress and then I shall be happy to allow the right hon. and learned Gentleman to intervene.
In a complex transaction, the final question may be whether the accused was a party to an illegal arrangement, but perhaps that cannot be decided fairly until the nature of the transaction is fully established and analysed. I think that juries can have serious difficulties in understanding the evidence in complex fraud cases, and understanding the relevant evidence is important to the doing of justice both to the innocent and the guilty.
The argument does not seem to hinge on the precise rate of acquittal in fraud trials. Instead, it is directed to whether the complexities of the proceedings may be leading to arbitrary rather than just verdicts. The committee received anecdotal evidence to the effect that the difficulties of presenting the facts in complex cases may lead to decisions to proceed with lesser charges than might be justifiable in some cases. I think that the House would regard that as unacceptable.
Finally, I must have regard to the interests of all involved in the criminal justice system, not least the accused, in adopting mechanisms which reduce congestion and delay and dispose of cases with reasonable speed.
All these considerations are in favour of the committee’s conclusion on juries, but there are arguments against it, some of which appear in the powerful minority report of Mr. Merricks. No one doubts that major fraudsters deserve substantial periods of imprisonment, but in our system of open justice is it right that those who risk substantial terms of imprisonment should forfeit the right to be tried by a jury, not because their crime was more serious but because it was more intricate than the next man’s? Would a tribunal remove some of the disciplines from counsel to present the case in a comprehensible manner? Might individuals lose their liberty for reasons which few of us could understand? If the real issue is dishonesty, are not ordinary people as good or better judges of the facts than experts in high finance? If the other reforms will simplify matters, is there a case for trying them out first?
The House might wish to pause to reflect on a point which I have not heard put before. If a tribunal were judged to be the fitting answer, as it might be, is it right that majority verdicts should prevail so that the judge might differ from the eventual verdict, having been outvoted by the two assessors?
Mr. John Morris
Will the Home Secretary address himself to the issue which was raised by the hon. Member for Caithness and Sutherland (Mr. Maclennan)? What is the argument for ring fencing fraud cases, which might include experiences outside the normal for a jury, as opposed to other complex cases which might also involve experiences outside the normal for a jury?
I think that Lord Roskill would argue that there are a substantial number of complex fraud cases and sufficient for special provision to be reasonably argued. I believe that he would argue also that there would not be a sufficient number to justify special provision on other indictments, although occasionally such cases may occur. Nonetheless, they would not be of sufficient number to make necessary the introduction of special arrangements.
There are obviously strong and different views about this which cut across party lines. It seems to me that the legal profession is divided on the recommendation, and the financial professions are overwhelmingly in favour. I expect that this is the last occasion I shall be able or, indeed, shall want to tread a path down the middle.
I should like to end the analysis on this point. It would be wrong and unjust to the committee if we saw this as an attack by it on every person’s right to a fair trial in our courts. The committee has made a careful and sensitive attempt to tackle the fundamental question of how to secure a sound verdict. I think that a sound verdict must be our objective. It is as much in the interest of the innocent defendant as it is in the interest of society to bring fraudsters to book. I hope therefore that we will have, as I am sure we shall, a reasonable and balanced debate on this point.
Dealing still with juries, the committee put forward views on the defence right of peremptory challenge and the prosecution right of standby. The distinction between this and the last point about complex fraud tribunals is that with the tribunal case, for the reasons which we have been discussing, discussion is confined to the relatively few cases of major fraud. When one is discussing what Lord Roskill had to say about peremptory challenge, it must be right to look at that more widely.
There has been a lot of discussion, quite independent of fraud, on the merits of change both here and elsewhere. I do not need this evening to go over that discussion. I am quite sure that it cannot sensibly be dealt with for fraud cases alone. In the criminal justice White Paper, we will set out options for change. We shall not seek to abolish ancient rights lightly, but nor shall we hesitate to act if the preservation of the integrity of the jury system is in question.
These two jury matters have aroused high feelings, and that is quite right, but in my view they do not lie at the heart of the report. At the heart of the report are the radical proposals to reform the rules of evidence, including the easing of the gathering of evidence from abroad and the easing of the rules about documentary evidence. We have also here major procedural suggestions to formalise hearings preparatory to Crown court trial, and an associated obligation on the part of the defence to outline the nature of its case.
We find these recommendations immensely constructive and timely. We believe that their potential effect on most cases arising from fraud should not be lost sight of in hot argument over the mode of trial for a minority of particularly complex cases. Few people now believe in my experience that our rules of evidence have kept pace with the 20th century, and the reforms begun in the Police and Criminal Evidence Act 1984 to allow more documents to speak for themselves found favour with the Roskill committee. Let us now see whether we can go further, as he suggested. Let us also hope that some formalisation of the pre-trial reviews already operating in many Crown courts can clarify the issues to be put at the trial, and that a spirit of co-operation can prevail so that both parties are saved the laborious ritual of arguing matters of no consequence before patient jurors. Let us look particularly hard at the scope for participation in mutual assistance treaties with other countries to facilitate the tracing and conviction of those who perpetrate international fraud.
I have skimmed through these important proposals quite quickly, but I should like to make it clear that we welcome this batch of proposals warmly. We shall take account of views expressed today and of those which may yet be offered by the judiciary, practitioners and others with relevant experience. But we start from a position of willingness to legislate on the basis of these highly significant proposals at the earliest opportunity.
That is the spirit in which we approach the report. I hope that I have clarified some of the central themes. I hope that I have re-emphasised our stern approach to this subject and our willingness to think and act radically about it. The touchstones of our response are justice, efficiency and effectiveness in bringing to account the perpetrators of fraud. We shall carry through all the proposals in the report which pass those tests.