Key Strategies for Successful Recoveries

Transcription

1 Key Strategies for Successful Recoveries Presentation by Monica Bond BA, LLB, FCIS, ACA, CFE, MAE, MCSI Principal, Bond Solicitors 1

2 Good Afternoon. Brief Introduction I have been the Expert Witness in many multi-jurisdictional fraud cases, primarily for Claimants, for over 25 years. Practising Solicitor, Certified Fraud Examiner, FCIS, a Chartered Accountant and Forensic Accountant. I qualified as an accountant with Deloittes; was Head of Forensic - West Region KPMG (City); Forensic Services Partner, with Grant Thornton. I wrote the first Technical paper for the ICAEW on AML in 1994 & have previously served on its ML Working Party and Fraud Advisory Panel. We established our own practice over 10 years ago and have the two firms, Bond Associates Limited and Bond Solicitors. We undertake Civil fraud recovery and litigation, commercial litigation and dispute resolution, anti-financial crime compliance assignments and investigations within Europe/UK and internationally. 2

3 Overview Why Civil Fraud actions are often the key - sometimes only - routes to justice. The Golden Rules for Success. Some of the Rules explored in more detail: Remedies you should utilise The importance of Equitable Remedies Constructive Trusts Urgency/Timing issues Legal Privilege Evidence Quantum - how to maximise recovery for your company or client 3

4 Why is a Civil Fraud Case Vital? (Reminder) Recovers your company's (or client s) losses. Gets your money back together with all your costs, legal and investigative costs, plus interest. Per Excel/4Eng case: plus your time costs Also illustrated in Nationwide Building Society v Dunlop Haywards Ltd & Another [2008], including time costs of liaising with the West Midlands Police. Control - Your company is the Client. You retain control. Subject, of course, to Civil Procedure Rules ( CPR ) & other legal issues Success - i.e. measured in cost-effectiveness & assuming handled properly Balance of Standard of Proof. Issues of money, not loss of liberty. Also, fraud frequently involves abuse of trust. All these matters taken into account by the courts. Private - most Civil cases settle. No adverse publicity. Quick and efficient. Does not rule out Criminal Case. 4

5 Introductory Comments Successful fraud investigations start with The Fraud Theory - constantly under review and evolving: as more pieces of the evidential Jigsaw emerge and as you keep an open mind throughout one of the main characteristics of the true professional is Independence and Objectivity Will also depend on the particular type of fraud being investigated: Specific techniques/caats/approaches, range of defendants, types of claim(s), manner of legal and investigative approach etc. - will all depend on the particular circumstances, including your Fraud Theory 5

6 Golden Rules of Civil Fraud Recovery: Secrecy Specialism Speed Privilege Professionalism - including full compliance Preservation of (i) Assets and (ii) Evidence Proportionality - including cost-effectiveness for your client Preparation - including all aspects relating to Evidence 6

7 Specialism Small, senior, multi-disciplinary team is best Always consider using your ACFE Network of fellow professionals these are specialists in their particular field of fraud investigation & will help to provide you with cost-effective solutions on an ad hoc basis. As an instructing lawyer, you are likely to need to instruct an Expert Witness at some point e.g. Forensic Accountancy. Choose one who has given oral expert evidence in court. Whilst may well not need to give oral evidence in your civil case, this baptism of fire always good experience. 7

8 The NUCLEAR WEAPONS OF LITIGATION Next Session 8

9 Introductory Comments Our remedies are probably the strongest in the world for fighting fraud and securing assets Much founded on Equity, Actions in Tort and Common Law We have injunctions which are very wide ranging in effect. Some examples Norwich Pharmacal where an innocent party through no fault of his own becomes involved in the Tortious acts of the intended Defendant so as to facilitate his wrongdoing, he comes under an obligation to assist the person wronged by giving full information and disclosing the identity of the wrongdoers. Application made inter partes (but if evidence a 3 rd party will destroy/conceal such information, an exparte application for a Search order can be made) 9

10 Other Key Remedies Freeze Order (previously known as Mareva Injunction). CPR Part 25 Search order (previously known as Anton Piller Order). CPR Part 25 Disclosure Order CPR Part 31 Writ Ne Exeat Regno Prevents Defendant ( D )s from disposing of assets. May apply to D s worldwide assets. Can be ordered in aid of foreign proceedings Requires D to admit a Claimant ( C ) to search premises and inspect, remove or preserve evidence relating to the C s cause of action. Can be ordered in aid of foreign proceedings. Where D is ordered to give orally and/or on sworn Statement answers to written questions relating to the whereabouts of missing assets or documents The Court may issue a writ Ne Exeat Regno to prevent D leaving England & Wales 10

11 Reminder of the Main Advantages: Fast the Orders can be obtained extremely quickly 24/7; 345 Secret ex parte: without notice to the fraudster. Preserves the assets so Judgement for the victim Claimant is not a Pyrrhic Victory Commercial i.e. the courts are highly specialised in international financial matters Claimant is in Control. None of the drawbacks of a criminal action Examples next 11

12 Bond Associates Lord G case (1) Lord G had invested his family fortune, of which he was a trustee; victim of an Advance Fee Fraud. 10m invested with F; F transferred to off-shore jurisdictions/ various accounts; companies etc. F bought some time by giving excuses to Lord G. Then Lord G brought matter to us... 12

13 Bond Associates Lord G case (2) We recovered the 10m + interest + all Lord G s costs within 6 weeks. How? As follows: Clear from the outset we would need both kinds of Orders; so our actions as follows... We worked urgently/all hours gathering all the leads & evidence as quickly as possible. I was the Expert Witness/Forensic Accountant, so my focus was on analysing the documentation & following up the leads they showed... 13

14 Bond Associates Lord G case (3)... starting with Lord G s own bank statements & transfers made. We used private investigators & a mix of techniques: surveillance & other methods. We used our own banking connections & other useful contacts. Clear evidence of unequivocal fraud But nevertheless great care, meticulous attention to detail & ensuring all matters put to the court were correct (or duly qualified). 14

15 Bond Associates Lord G case (4) I prepared an Expert Witness Report, with all the evidence, and we put the prima facie case to the judge in chambers, ex parte i.e. entirely secret, as an emergency application, without notice to the defendant. We obtained both Freezing Orders & a Search Order. The Freezing Orders were served on the relevant bank branches around the world obviously simultaneously by local lawyers we had instructed by phone. 15

16 Bond Associates Lord G case (5) From surveillance, we knew F would be at Heathrow at a certain time; we served the Search Order on him and seized his laptop (= his office). We also served a Writ Ne Exeat Regno - this order enabled us, through the Court officer, to seize his passport and ensure he did not leave the UK. As we will note shortly, there are many protective measures built into these procedures to ensure the defendant(s) rights are not prejudiced. e.g. The presence of an independent solicitor as we forensically imaged the hard drive of his laptop. 16

17 Bond Associates Lord G case (6) From a working copy of the hard drive, and the evidence I could obtain thereby, we had enough to turn the prima facie evidence of fraud into a case which was unchallengeable in this respect. F could not refute it. F put up no defence and paid our client, Lord G, all of his investment, plus interest, plus all his costs. 10m+ in 6 weeks, all done privately, no adverse publicity, no trial necessary & no cost & no stress to client. Turning to the actual orders... 17

18 Injunctive and Interim Relief Injunctive because it is an Injunction (Court Order); Interim because normally only for a short period (but can be renewed) You can obtain the other Orders at the same time as your Freezing Order. Search Order will usually provide you with more and stronger evidence making your case against the fraudster conclusive Either/both of the 2 Orders will require the defendant to provide details of his assets This may reveal additional assets etc. you were previously unaware of. 18

19 Are There Any Disadvantages? NO not if you apply for these Orders properly (that is, conduct the matter with the care you would with any case). Factors to be aware of: Cross-Undertaking in Damages Claimant may need to provide evidence he could meet any liability to pay that undertaking (N/A to a major organisation). Main costs will be at the outset (but these will normally be fully recovered from the defendant). 19

20 Keys to Success (1): Secrecy you must take great care that no information leaks out. Your team on this at your bank must be small ( on a need to know basis) and specialised. Swift move as quickly as possible, as directed by your legal team. Must work evenings and weekends. Specialists ensure your lawyers/forensic accountants etc. have conducted these previously. 20

21 Keys to Success (2): Protect the Integrity of the evidence computers, hard copies etc. Care Exercise great care in all aspects. Balance the need for speed with the need for accuracy. Do not sacrifice the latter for the former. NB also the applicant is under a duty to make full and frank disclosure to the court of all material facts and matters For example, your Expert Witness s report - far better to put less in but to be sure of that evidence. Or, if cannot be sure at this early stage, must state that within the report. State all reservations, assumptions, caveats and sources. 21

22 What happens next i.e. in executing these Orders? Has the precision of a military operation. Both Freezing and Search Orders must be executed simultaneously around the world, at the different, relevant locations e.g. for the Freezing Orders on bank accounts around the world, for the Search Orders at his home and office(s). The practical aspects must be carefully planned in advance e.g. A central control office at the law firm. Have plans in place in case Defendant tries to destroy evidence. 22

23 What Protection is there for the Defendant? A great deal. Largely reflected in case law (and therefore clear practical guidance) e.g. Presence of an Independent Lawyer Defendant has opportunity to consult his lawyer You (the Claimant), nor the Police, are allowed to be present Executed during normal business hours (no dawn raids ) Return Date fixed. Defendant can then present his evidence to try to refute your claim. NB. Where a clear fraud, these subsequent steps tend not happen. The defendant simply pays you what you are owed plus all your costs and interest. 23

24 Critical Issues of Timing Next Session 24

25 Time is of the Essence So many reasons for this e.g. Fraudster & Accomplices destroy evidence dissipate assets and/or attempt to make them judgement proof Muddy the Waters further/extensive money laundering Evidence damaged through lapse of time e.g. witnesses memories; company records, auditors working papers etc. etc. Equitable Remedies Delay Defeats Equity Expectations of the Court e.g. Costs Sanctions Requirements of the Civil Procedure Rules The Limitations Act

26 When must an action re: Civil Fraud be brought so as to avoid implications of The Limitations Act? Within 6 years of the date the cause of action accrued Section 2 Limitation Act 1980 Time does not begin to run until the fraud has, or with reasonable diligence would have been, discovered, if the defendant deliberately conceals any fact relevant to the cause of action Section 32 Limitation Act 1980 By contrast to contractual actions, in tort, no cause of action arises until all elements of duty, breach and damage are present 26

27 Protective Proceedings The commencement of proceedings i.e. when the court receives the claim form will stop time running for that cause of action. When parties are in settlement discussions and expiry of the limitation period is near, the claimant will often commence proceedings which are then put on hold whilst negotiations continue; this protects the claimant's right to sue. Whilst such "protective proceedings" can be amended later with the court's permission, such permission will not extend to allowing a fresh cause of action to be included in the proceedings. 27

28 Other Claims under The Limitation Act 1980 Be aware that there may be other claims within your investigation which might enable this time to be effectively extended e.g. Contract under seal (deeds) Within 12 years of the breach of contract or deed: S. 8 A claim for the recovery of land, proceeds of sale of Land or money secured by a mortgage or charge Within 12 years from the right accruing (after that time, the title of the person is extinguished): Ss. 15, 17 and 20 28

29 Maxims of Equity to be aware of Delay defeats equity (Laches) He who comes to equity must come with clean hands Equity will not suffer a wrong to be without a remedy Equity looks to the intent rather than the form Remember that equity is based on fairness and natural justice. Most importantly, remember that equitable remedies are discretionary 29

30 Madoff Securities International & Others v Stephen Ernest & Others [2011] Amongst other important matters, this case explores the key elements of Proprietary Injunctions v Non- Proprietary Freezing Orders Unlike a freezing injunction, it is not necessary to show: any risk of dissipation of assets no delay in seeking the Injunction A proprietary injunction may be granted i.e. where an application for a freezing injunction would fail e.g. because of delay 30

31 3 Key Elements for a Proprietary Injunction The Claimant has to demonstrate: (i) a serious issue to be tried on the merits; (ii) that the balance of convenience is in favour of granting an injunction & (iii) that it is just & convenient to grant the injunction Does not, for the purpose of obtaining proprietary injunction, have to show: No delay Risk of dissipation of assets The next slide summarises the flow of funds from the US Madoff company through the UK Madoff company to Austria 31

32 Flow of Funds. Bernard L. Madoff Investment Securities ( BLMIS ); Madoff Securities International Limited ( MSIL ); Sonia Kohn & her corporate entities ( K ) US BLMIS Austria MSIL K UK 32

33 Madoff Securities International & Others v Stephen Ernest & Others [2011] Madoff Securities International Limited ( MSIL ) advanced constructive trust and tracing claims which are proprietary claims and sought proprietary relief in relation to them. Held: there was a sufficiently arguable case for a proprietary remedy. There had been conduct of low commercial morality & also no voluntary disclosure on the part of K. The Court therefore then turned to deciding the balance of convenience, the Court stated: given a sufficiently arguable case that the Kohn defendants have had MSIL s money, arguments by Mrs Kohn along the lines of: It would be frightfully inconvenient to tell you what I ve done with your money or to be prevented from continuing to use it when she should not have had the money in the first place, do not cut much ice (Flaux J.) Next case deals with interplay between Criminal & Civil cases one of the Lexi cases 33

34 SFO v Lexi Holdings PLC and M [2008] (i) Deals with Restraint Orders. One Q before the court was treatment of Unsecured vs. Secured Creditors Much easier to get a Restraint Order varied to permit the payment of a secured creditor as opposed to an unsecured creditor. A 'secured' creditor in this context means a creditor who has an 'interest' in the restrained assets. 'Interest' is widely defined & includes legal & equitable interests. E.gs. The interest held by the spouse of the defendant in the marital home. Where the defendant steals money which is then used to buy other property which is later subject to a restraint order, it may be possible to rely on equitable principles of tracing to show that the victim has an interest in the restrained property. 34

35 SFO v Lexi Holdings PLC and M [2008] (ii) An unsecured creditor is any creditor who does not have an 'interest' in the restrained assets. The courts should vary restraint orders to permit payments to secured creditors, but what is the position in relation to unsecured creditors? Court of Appeal held that under the Proceeds of Crime Act 2002 ( PoCA ) restraint orders should ordinarily not be varied to permit payments to unsecured creditors. 35

36 Other Key Cases & Matters I have covered in your Notes Sinclair Investments (UK) Ltd v The Versailles Trade Finance Ltd (in administrative receivership) and Othrs [2011] EWCA Civ 347 NB. Proprietary rights are good against everyone other than a bona fide purchaser for value without notice Nationwide Building Society v (1) Dunlop Haywards (DHL) Ltd (2) Cobbetts (A Firm) [2009] EWHC 254 (Comm). Unlike claims based on fraud, actions for professional negligence restricted in various ways e.g. here an Action in Deceit against Dunlop Haywards & professional negligence against solicitors - the latter could claim a reduction for Contributory Negligence. Please note: Cobbetts settled: it was never proven against them. Civil Liability (Contribution) Act 1978 Ex Turpi Causa - this defence discussed in Lexi Holdings v DTZ Debenham Tie Leugn Ltd and Another [2010] EWHC 2290 (Ch) Ex Turpi Causa Non Oritur Actio = No action may be founded on illegal or immoral conduct The maxim expresses policy rather than principle & exists to preserve the integrity of the legal system. 36

37 The Importance of Privilege in investigations Next Session 37

38 Legal Professional Privilege 2 forms: Advice and Litigation Privilege. It is proper for a lawyer to advise a client on how to stay within the law such advice will be protected by privilege Naturally, Privilege does not exist to further a crime (PoCA 2002 S.330 (11); this is reflected in legislation globally). 38

39 Legal Privilege very important Only exists between lawyer and client. Not available to non-legally qualified auditors. For example, no Legal Privilege exists to protect you/your organisation if your statutory auditors are asked to give advice to you e.g. in relation to, say, weaknesses in your company/client s internal controls and related non compliance with anti financial crime legislation/breaches. Nor in relation to the documents passed to them for the purpose of their audit (standard audit procedure to request the file of legal correspondence). 39

40 Legal Privilege very important In civil case, weaknesses in your systems may e.g. Provide a defence to the defendant (e.g. the rules on expense claims were unclear ) or show contributory negligence in a Negligence context. Therefore, you do not want such information - which has been passed in confidence to your company s lawyers - to be handed ( on a plate, as it were) to the other side, as part of the formal Discovery/Disclosure process. You must protect Privilege and ensure it applies to these documents, s etc. 40

41 Legal Privilege - Other Implications: If you think your company/client might be in breach of AML or other regulatory or legal requirements (e.g. training): urgently: Consult lawyers, not accountants/external auditors Undertake corrective action urgently, as advised Start making the appropriate reports you must make to the authorities & take urgent legal advice on this as well e.g. in the context of Bribery Act breaches and offences, self-reporting to the SFO In any case, your external auditors may be conflicted: you may have a claim against them. 41

42 Evidence Completeness, Weight, Integrity etc. Next Session 42

43 What is Evidence? Takes many forms: oral, documentary, verbal, numerical, observations, records in different media e.g. film, recorded telephone calls, CCTV, microfiches, data on mobile phones, notes thrown into the office bins, formal witness statements, accounting records, s, third party evidence... The list is endless! You need to be aware of all of these sources of information some may simply give you helpful leads but One may be the silver bullet which is pivotal Forensic accountancy & forensic legal work involves meticulously working through all possible sources (within reason questions of Proportionality) AND you cannot always identify at the outset which pieces of evidence will be vital, useful, carry great weight with the judge (or otherwise) etc. So the initial priority is always to preserve the evidence hence the need for search orders, strict rules etc. We are now going to look at Qs of Evidence 43

44 Admissibility of Evidence Depends largely on discretion of the trial judge. Most important guideline for him is relevance. But relevant evidence may still be excluded if: Unfairly prejudicial Subject to privilege and In criminal cases If it threatens to confuse/mislead the jury If probative value is outweighed by danger of prejudice to defendant NB. The Jury determines the weight to be attached 44

45 Obtaining Documentary Evidence Auditors conduct seven types of tests and Forensic Accountants often use these, or some of them: (1) Tests of mechanical accuracy (recalculations) (2) Analytical tests (tests of reasonableness) NB. Analytical Review & use of ACL or IDEA (3) Documentation (4) Confirmations (5) Observations e.g. of stock takes (6) Physical examinations e.g. of tangible assets (7) Inquiries & Interviews Now turning to assessing Weight of Evidence.. 45

46 Weight of Evidence (1): Helpful to think of the Principles of Audit Evidence: can use this as an analogy. The Professional Standards set out clear guidance on weight. Virtually everything we need to discuss in the context of fraud investigations is set out therein. Google: ICAEW So, what do those professional standards, (in themselves, tested in court), tell us about what weight we should attach to different forms of evidence? This will be one of our most important clues as to the likelihood of success in our case... 46

47 Weight of Evidence (2): Auditors should obtain Sufficient Appropriate [audit] evidence to be able to draw Reasonable Conclusions on which to base the [audit/expert] opinion 47

48 Weight of Evidence (3): use a variety of means of obtaining evidence, including sampling [data mining etc.] In assessing reliability* of evidence; [audit] evidence from external sources is more reliable than that obtained from the entity * NB also The Practice Advice on Analysis produced on behalf of ACPO by National Policing Improvement Agency, including evaluation of information & Source Evaluation Checklist 48

49 Weight of Evidence (4): [audit] evidence from external sources is more reliable than that obtained from the entity if you can obtain corroborative evidence, so much the better An unqualified audit opinion (e.g.) would be a good example of this Evidence obtained directly by [the investigators] is more reliable than that obtained directly from the entity 49

50 Weight of Evidence (5): Evidence in the form of documents and written representations is more reliable than oral representations Why are written representations different (i.e. have more weight)? Because they are more considered, reflected on, maybe sworn on Oath (Affidavits) - directly for court purposes (and thus risk of Perjury if untrue) etc. and original documents are more reliable than photocopies, faxes etc. Wherever possible, inspect the originals. 50

51 Weight of Evidence (6): Evidence is more persuasive when items of evidence from: different sources or of a different nature are consistent 51

52 Weight of Evidence (7): Very important do not rely on one element of evidence always look for many sources and from a wide range. This part of the work should not be constrained by budget it is essential, reasonably cheap, always cost-effective. The more you invest in this early stage, the greater the likelihood of your success. [can] consider the relationship between cost and usefulness but. difficulty or expense is not in itself a valid basis for omitting a necessary procedure 52

53 Weight of Evidence (8): Procedures for obtaining evidence: Inspection [various] including documentary evidence listed in descending degree of reliability as evidence: (i) created and provided to [auditors] by third parties (ii) created by third parties and held by the entity (iii) created and held by the entity Observations 53

54 Weight of Evidence (9): Enquiry and Confirmation: Informal and formal, inside and outside the entity, may provide leads or corroboration. Computation: E.g. performing independent calculations Analytical procedures: The analysis of relationships 54

55 Weight of Evidence (10):Expert Evidence Expert Evidence Has great weight, normally. His/her duty is to assist the court. Dependent on: Expert s perceived independence and objectivity Competence, professionalism and authority Evidence is within his/her area of expertise Factual Witness: Will provide evidence on what he saw/observed/ etc. i.e. the facts relating to the case Above principles have similar application. But a different role. May also be a Claimant. 55

56 Evidence may be rendered inadmissible Evidence obtained improperly whether or not it is admitted is up to discretion of the court and will depend on the severity of the infringement & on the evidence of fraud. May lead to a Costs Order against you, even if you win. Jones v University of Warwick [2003] 3 All ER 760 (re: Article 8 of the Human Rights Act 1998 & right to privacy). Always be guided by your lawyers. As we also know & carefully avoid, good evidence can be destroyed by ineptness: examples range from the ticking of an accounting record to accessing a computer These may be entirely innocent & may not affect the legibility etc. of the record but the action could well render that evidence inadmissible (which might have been otherwise very useful to you). At the discretion of the court. 56

57 How to keep Testimony from being excluded by the Court (i): The American Bar cites* 4 elements that experts should include in their report: 1. Identify key variables. 2. Describe methodology, reasons for its use and consistency of its application. 3. Cite published materials that support the methodology used. 4. Indicate causative factors of Lost Profits when appropriate. *In its publication: Expert Witnesses: Selecting, Retaining, Deposing and Examining Reports. Same points are made by the UK & HK s Academy of Experts please refer to their website for more background and cases on expert evidence. 57

58 How to keep Testimony from being excluded by the Court (ii) Professional Guidelines (i): Know the relevant professional standards Apply the relevant professional standards Know the relevant professional literature Use generally accepted analytical methods Disclose any departure from these methods and the reasons Use multiple analytical methods Synthesize the conclusions of those methods 58

59 How to keep Testimony from being excluded by the Court (ii) Professional Guidelines (ii): Disclose all significant assumptions and variables Subject the analysis to peer review Test the analysis and conclusions for reasonableness Disclose any limitations to the scope of your work, all reservations and/or supportable alternative views, if any such exist Support every conclusion/opinion you state 59

60 A few closing words on Quantum Next Session 60

61 Quantum of Damages Will depend on the specific heads of the claim Civil cases involving alleged fraud will often be actions in Tort the injured party should be placed in the position he would have been in if the injury had not occurred, so far as this can be accomplished with a monetary award. Key principles to achieving maximum recovery are to: Carefully identify each & every head of claim then Quantify each separate head of claim: Fully Correctly and according to standard accounting principles Demonstrably conservatively Supported by appropriate evidence 61

62 Assessment of Damages The law takes a different approach to determining the measure of damages in cases of fraud. The application of the principles results in damages for deceit being higher than those for negligence, which is also a tort. Differences re: damages in contract v. the tort of deceit inc: In contract, Foreseeability is relevant: the damage is assessed by what the parties would have seen as the damage being caused by a breach at the time the contract was formed: the date of the contract. In actions for the tort of deceit, damage is assessed by reference to the date the tort was committed; The measures of damages in tort is the sum that would place the claimant in the position they would have been in if the fraudulent representation had not taken place; this contrasts with the position in contract, where the award is the sum that would place the claimant in the position they would have been in of the warranty or condition were true; and In Tortious claims, compound interest may be awarded as opposed to the standard of simple interest. In addition, may be issues of breaches of fiduciary duty. 62

63 Fraud Management Dynamics: Illustration of actual Returns expected by one global bank. Return On Investment in Fraud Management: Recover $3 million Demand 5:1 Spend $100,000 Reduce costs by $500,000 30:1 achievable on Major Investigations Spend $100,000 Recover $3 million 63 Spend $100,000 Save $500,000

64 Fraud Management Dynamics: Illustration of actual reported Returns achieved for our 4Eng clients a major corruption case Our clients had invested: 500k They recovered: Damages for loss of a chance (or Opportunity Cost) Costs of their Management Time Original investment, other losses, their legal costs plus interest TOTAL AWARDED = 3.5M 500k 4.5M 8.5M 64

65 The 4Eng Investigation produced a number of leading cases clarifying criminal and civil fraud law, as follows(ii) 4Eng Ltd v Harper and Another [2008]: Held (i) Damages for loss of a chance are recoverable in an action for deceit Our clients successfully recovered damages - 3.5m - for loss of an opportunity to purchase and profit from another company, Tarvil Ltd. We showed that, had they decided to purchase that company, instead of Excel, they would have been considerably more wealthy, as a result of dividends/capital growth, as Tarvil, an entirely legitimate company, had done exceptionally well since they had bought Excel. Always consider not just your loss of the money - that is, the basic theft/fraud/bribe - but what the Opportunity Cost of that loss was. Plus any/all Consequential Losses. 65

66 Remedies which may be available to your client where bribery established Claimant may bring an action in restitution for money had and received by its agent Arab Monetary Fund v Hashim [1993] 1 Lloyd s Rep 543 In tort for fraud, deceit or conspiracy to injury by unlawful means Daraydan Holdings Ltd v Solland International Ltd [2005] Ch119 at paragraph 54 In equity for breach of fiduciary duty Attorney General for Hong Kong v Reid [1994] 1AC 324 This remedy will extend to any benefit obtained in he course of the fiduciary relationship Boardman v Phipps [1967] 2 AC 46 66

67 What your company may be able to claim for: Usually: amount of the bribe, recovered as money had & received plus the amount of damage or loss in tort to be proved in the ordinary way. Cases which illustrate this: Hovenden v Milhoff (1900) 83 LT 41 Court of Appeal Mahesan v Malaysia Housing Society [1974] AC 374 Arab Monetary Fund v Hashim [1993] 1 Lloyd s Rep 543 Including, where appropriate, opportunity costs: 4Eng Ltd v Harper and Another (Chancery Division published The Times June 23, 2008) 67

68 It has been a pleasure being with you. Thank you for your attention Contact details: Monica.bond@bondsolicitors.com Tel: +44 (0)

69 Association of Certified Fraud Examiners, Certified Fraud Examiner, CFE, ACFE, and the ACFE Logo are trademarks owned by the Association of Certified Fraud Examiners, Inc. The contents of this paper may not be transmitted, re-published, modified, reproduced, distributed, copied, or sold without the prior consent of the author.