ANNUAL REPORT FOR 2004
andRESOURCE MATERIALSERIES No. 66

UNAFEI
Fuchu, Tokyo, Japan

September 2005

Masahiro Tauchi
Director
United Nations
Asia and Far East Institutefor the Prevention of Crime andthe Treatment of Offenders(UNAFEI)
1-26 Harumi-cho, Fuchu, Tokyo 183-0057, Japan
http://www.unafei.or.jp
unafei@moj.go.jp

CONTENTS
INTRODUCTORY NOTEv

PART ONEANNUAL REPORT FOR 2004
Main Activities of UNAFEI
UNAFEI Work Programme for 2005
Appendix3
16
18

PART TWOWORK PRODUCT OF THE 126TH
INTERNATIONAL SENIOR SEMINAR“Economic Crime in a Globalizing Society ~Its Impact on the Sound Development of the State”
Visiting Experts’ Papers
•
•

•
•

•
•
•

•

Economic Crime: Emerging Threats and Responses - Singapore’s Experienceby Mr. Parmajit Singh (Singapore)45

Economic Crime in a Globalizing Society: Its Impact on the Sound Developmentof the State - An Indian Perspective
by Dr. Deepa Mehta (India)

71

Tackling Corruption: An Indian Perspective
by Dr. Deepa Mehta (India)

85

The Role and Responsibilities of the Serious Fraud Office in Fighting Fraud
within the United Kingdom
by Mr. Peter Kiernan (United Kingdom)

91

Fraud Investigation and Prosecution in the United Kingdom
by Mr. Peter Kiernan (United Kingdom)

99

Learning from the Past: Practical Lessons from United Kingdom Cases
by Mr. Peter Kiernan (United Kingdom)

109

The United Nations Convention against Corruption: Overview of its Contents
and Future Action
by Mr. Dimitri Vlassis (UNODC)

118

The United Nations Convention against Corruption: Origins and Negotiation Process
by Mr. Dimitri Vlassis (UNODC)
126

Participants’ Papers•

Economic Crime in Cameroon: Its Impact on the Sound Development of the Stateby Ms. Prudence Tangham Dohgansin (Cameroon)

132

iii

•
•
•

•

Country Report - Ghana
by Mr. Bright Oduro (Ghana)

142

Third Party Responsibility for Crime Control - Telecoms and Financial Policing
by Mr. Keiji Uchimura (Japan)

153

Department of Special Investigation (DSI): A Newly Established Agency
for Fighting Economic Crimes and other Special Crimes in Thailand
by Mr. Sutthi Sookying (Thailand)

171

Country Reportby Mr. Samson Mangoma (Zimbabwe)

179

Reports of the Seminar•

Economic Crime in a Globalizing Society ~ Its Impact on the Sound Developmentof the State
by Group 1
189•

Economic Crime in a Globalizing Society ~ Its Impact on the Sound Developmentof the State
by Group 2
197•

Economic Crime in a Globalizing Society ~ Its Impact on the Sound Developmentof the State
by Group 3
210

APPENDIX

iv

219

INTRODUCTORY NOTE
It is with pride that the United Nations Asia and Far East Institute for the Prevention of
Crime and the Treatment of Offenders (UNAFEI) offers to the international community the
Resource Material Series No. 66.
This volume contains the Annual Report for 2004 and the work produced in the 126th
International Senior Seminar that was conducted from 13 January to 12 February 2004. The
main theme of this Seminar was, “Economic Crime in a Globalizing Society ~ Its Impact on
the Sound Development of the State”.
Rapid economic globalisation has brought with it an increase in global economic crime. In
addition to conventional types of economic crime, such as corruption and embezzlement, newtypes have emerged facilitated by the rapid spread of new technologies, such as the internet.
These new types of crimes, and new methods of perpetrating conventional crimes, havebecome more complicated and in turn more difficult to combat. Economic crime distorts
market forces and can thus have a very detrimental effect on a country’s economy; due to its
transnational nature it is important for the international community as a whole to act together
to combat this menace.
The United Nations recognizes that the prevention of crime is a crucial factor for theestablishment of international order and has recently placed priority on tackling economic
crime. The U.N. 11th Congress on Crime Prevention and Criminal Justice, held in Thailand in
April this year, included the agenda item “Economic and Financial Crimes: Challenges to
Sustainable Development”. UNAFEI, as a United Nations regional institute, and the Swedish
National Economic Crimes Bureau organized a workshop at the 11th Congress on “Measures
to Combat Economic Crime, Including Money Laundering”. In view of the importance of thisissue, and our involvement in the above mentioned workshop, UNAFEI decided to focus on
economic crime for this 126th International Senior Seminar.
In this issue, papers contributed by visiting experts, selected individual presentation papers
from among the Seminar participants, and the Group Workshop Reports are published. I regretthat not all the papers submitted by the Seminar participants could be published.
I would like to pay tribute to the contributions of the Government of Japan, particularly the
Minister of Justice and the Japan International Cooperation Agency, and the Asia Crime
Prevention Foundation for providing indispensable and unwavering support to UNAFEI’sinternational training programmes.
Finally I would like to express my heartfelt gratitude to all who so unselfishly assisted in the
publication of this series; in particular, the editor of Resource Material Series No. 66, Mr.
Simon Cornell (Linguistic Adviser).
September 2005

Masahiro Tauchi
Director of UNAFEIv

PART ONEANNUAL REPORTFOR 2004• Main Activities of UNAFEI• UNAFEI Work Programme for 2005
• Appendix

UNAFEI

MAIN ACTIVITIES OF UNAFEI(1 January 2004 - 31 December 2004)
I. ROLE AND MANDATEThe United Nations Asia and Far East Institute for the Prevention of Crime and the Treatment of
Offenders (UNAFEI) was established in Tokyo, Japan in 1961 pursuant to an agreement between the United
Nations and the Government of Japan. Its goal is to contribute to sound social development in Asia and thePacific region by promoting regional cooperation in the field of crime prevention and criminal justice,through training and research.
UNAFEI has paid utmost attention to the priority themes identified by the Commission on Crime
Prevention and Criminal Justice. Moreover, UNAFEI has been taking up urgent, contemporary problems in
the administration of criminal justice in the region, especially problems generated by rapid socio-economicchange (e.g., transnational organized crime, corruption, economic and computer crime and the re-integrationof prisoners into society) as the main themes and topics for its training courses, seminars and research
projects.

II. TRAINING
Training is the principal area and priority of the Institute’s work programmes. In the international
training courses and seminars, participants from different areas of criminal justice discuss and studypressing problems of criminal justice administration from various perspectives. They deepen theirunderstanding, with the help of lectures and advice by the UNAFEI faculty, visiting experts and ad hoc
lecturers. This so-called “problem-solving through an integrated approach” is one of the chief characteristics
of UNAFEI programmes.
Training courses and seminars are attended by both overseas and Japanese participants. Overseas
participants come not only from the Asia-Pacific region but also from the Middle and Near East, Latin
America and Africa. These participants are experienced practitioners and administrators holding relatively
senior positions in criminal justice fields.
During its 43 years of existence, UNAFEI has conducted a total of 128 international training courses andseminars, in which approximately 3122 criminal justice personnel have participated, representing 107
different countries. UNAFEI has also conducted a number of other specialized courses, both country andsubject focused, in which hundreds of other participants from many countries have been involved in. In theirrespective countries, UNAFEI alumni have been playing leading roles and holding important posts in thefields of crime prevention and the treatment of offenders, and in related organizations.

A. The 126th International Seminar
1. Introduction
From 13 January to 12 February 2004, 21 participants from 16 countries attended the 126th International
Seminar to examine the main theme of “Economic Crime in a Globalizing Society ~ Its Impact on the Sound
Development of the State”.
2. Methodology
Firstly, the Seminar participants respectively introduced the current position regarding the role andfunction of criminal justice agencies in their country in regard to the main theme. The participants werethen divided into three group workshops. Each group was given the same topics to be discussed as below.
All the groups, representing six countries in each, were requested to summarize the current situation andthe problems of serious economic crime in their countries (I), and select at least one topic from the following(II, III and IV) to be discussed in its group workshop.
I.

The Current Situation and the Problems of Serious Economic Crime in Participating Countries

II.

Problems and Countermeasures in Regard to the Investigation and Trial of Economic Crime

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ANNUAL REPORT FOR 2004

A. The Investigative Apparatus
B. Collection of Information in Order to Initiate the Investigations
C. Collection of Evidence and Securing an Appropriate Adjudication
III. Prevention of Economic Crime
A. Regulations of Economic Activities
B. Corporate Governance
C. Establishment and Implementation of a Corporate “Compliance Programme”
D. Establishment of a System to Monitor Economic Activities
E. Public Awareness and Others
IV. Strengthening the Legal Framework and Countermeasures of Economic Crime
A. Criminalization of New Types of Harmful Economic Activities
B. Ratification and Utilization of International Standards such as UN Conventions
C. Corporate Sanctions
D. Review of the Criminal Procedure and/or Evidential Law
E. Recovery of Damage
Each group elected a chairperson, co-chairperson, rapporteur and co-rapporteur in order to facilitate thediscussions. During Group Discussion the group members studied the designated topics and exchanged
their views based on information obtained through personal experience, the Individual Presentations,lectures and so forth. Later, Plenary Meetings were held to discuss the interim outline of the Group
Workshop reports and to offer suggestions and comments. During the final Plenary Meetings, drafts of theGroup Workshop reports were examined and critiqued by all the participants and the UNAFEI faculty. Basedon these discussions, the Groups further refined their reports and presented them in the Report-Back
Sessions, where they were endorsed as the reports of the Course.
3. Outcome Summary
Economic crimes in this globalizing society have expanded from the conventional types such as
embezzlement, fraud, corruption and breach of trust to include more modern crimes such as collusive
bidding cartels, insider trading, market manipulation, financial crimes and computer crimes. They are rapidly
becoming more diversified, complicated and sophisticated. This new wave of crimes has the characteristics
such that the perpetrators and or the damage done cannot be easily identified or measured. However, this is
not to say that the losses are not significant. In fact, it is quite the opposite, in that they erode investors’
confidence and threaten the country’s ability to compete.
Corruption is not only a crime in itself, but it also acts as a catalyst in promoting other types of criminal
activities and often aids in concealing them. In some instances there are large variations between eachparticipant country’s legal framework, preventive measures, sanctions, recovery of assets, international
cooperation and so on because of the differences of each country’s culture, politics and economic situation,etc. At the same time however, all participant countries have common problems and need common
countermeasures for tackling serious economic crimes; such as a need for cultivating a strong political will,securing independence of the investigative authorities and adequate resources, development of personal
skills and capacity building of the investigators.
It is therefore imperative that we put in place the necessary infrastructure, such as an efficientinvestigative apparatus, equipped with sound preventive measures, regulations/legislation and monitoring
systems. Each country should move towards the establishment of a separate, independent, new criminal
justice system to fight serious economic crimes in this globalizing society. Such as the establishment of a 3rdeye (an independent body to monitor the public affairs handled by government officials) These measures will
ensure the principles of good governance are observed so that an atmosphere of integrity, transparency,
accountability and equity can prevail.
In addition, consideration should be given to alternative administrative sanctions and regulatory
measures, because it is accepted that criminal punishment alone has only a limited effect on the offenders or
offending corporations, where corporate crimes are concerned. We must therefore, ‘hit them where it hurts in their pockets’, by putting in place a framework for confiscation and forfeiture of illegal proceeds and4

MAIN ACTIVITIES

ensure that it is thoroughly enforced. This will lead to asset recovery and sharing, which can in turn befactored back into the fight against economic crimes.
Victims of economic crime were naturally most concerned with whether they would be able to recover
their lost assets. It is therefore necessary to strengthen the legal framework for the recovery of damage.
Subject to the individual State’s circumstances, to encourage reconciliation, settlements should be recordedin court; evidence and findings of criminal courts should be adopted in civil courts; law enforcement
personnel should be encouraged to concentrate on the seizure of property; and a legal aid system should be
introduced.
In light of the foregoing observations there should be a review of existing legal procedures as follows:
(i)

(ii)
(iii)
(iv)

(v)

Empower criminal courts to make compensation orders as is appropriate and equitable based on
the evidence adduced. In addition, for a time and cost effective approach, the criminal courts
should encourage negotiations or settlement between the parties, especially where the defendant
pleads guilty. However, the court should take due cognizance of the interest of other victims who
may not be listed in the indictments.
Keep civil and criminal actions as independent and separate processes, particularly where civil
action by a victim precedes the criminal litigation. Where the existing criminal procedures arefavourable, a consolidation of the criminal and civil action should be encouraged.
Institute a legal support system for victims who have limited financial means to procure theservices of counsel in a civil action.
Countries should further facilitate access to international legal assistance in civil matters forvictims of massive economic crimes who are compelled to take civil action against perpetrators
who may have crossed borders. To overcome the complex procedure involved in executing civil
judgments and pursuing illegal proceeds abroad, States should be encouraged to ratify theexisting international instruments relevant to recovery of damages, e.g. the United Nations
Convention against Corruption and the United Nations Convention against Transnational
Organized Crime.
To overcome delays in the recovery of damage process arising out of appeals by defendants, thecourts should be empowered to make provisional execution orders as it deems appropriate forrecovery.

Appropriate legal measures and resources (physical, financial, human and others), should be allocated tothose involved in investigating, prosecuting and bringing to justice the perpetrators. Because influential
politicians, high ranking public officials, financiers and powerful businessmen are often involved in economic
crimes the independence of the investigative agencies should be secured, so as not to be influenced by them.
Law enforcement officials should also take advantage of the new technological capabilities to enhance theirinvestigative techniques. Moreover, the whistle-blowing system, which has proved to be very effective inother parts of the world, can be implemented and or the granting of immunity for persons cooperating ininvestigations relating to economic crimes.
Cooperation and the timely exchange of information by all stakeholders are vital elements for success. It
is also important that this be done in a well-coordinated manner, at the national, regional and international
levels. This can be achieved by networking and sharing the tremendous benefits from the experiences of ourcounterparts and implementing the required international standards, such as UN Conventions.
However stringent the laws of a country are, if they are confined only to the paper on which it is printed,
the economy and the public cannot be protected from the evil of economic crime. In order to achieve thepurpose of implementation of countermeasures to prevent economic crime, it is essential to create andarouse the public awareness. When the public are aware of their vulnerability to victimisation they will
willingly involve themselves in the crime prevention mechanism and will give effect to the countermeasuresin a more meaningful manner. Furthermore, this awareness of the public also perhaps would result in
applying pressure on the government or on the policy makers to introduce effective countermeasures tocombat economic crime.

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ANNUAL REPORT FOR 2004

B. The 127th International Training Course
1. Introduction
UNAFEI conducted the 127th International Training Course from 17 May to 25 June 2004 with the main
theme, “Implementing Effective Measures for the Treatment of Offenders after Fifty Years of United
Nations Standard Setting in Crime Prevention and Criminal Justice”. This Course consisted of 27
participants and 2 observers from 15 countries. It was hoped that the participants of this Course would comeup with solutions that would enable their countries to implement U.N. Standards and Norms more
effectively.
2. Methodology
The objectives of the Course were primarily realized through the Individual Presentations and Group
Workshop sessions. In the former, each participant presented the actual situation, problems and future
prospects of their country with respect to the main theme of the Course. The Group Workshops further
examined the subtopics of the main theme. To facilitate discussion, the participants were divided into threegroups to discuss the following topics under the guidance of faculty advisers:
Group 1: Promotion of Alternatives to Imprisonment
Group 2: Administration of Penal Institutions
Group 3: Promotion of Effective Treatment Programmes for Offenders
The three groups elected a chairperson, co-chairperson, rapporteur and co-rapporteur to organize thediscussions. The group members studied the designated subtopics and exchanged their views based on
information obtained through personal experience, the Individual Presentations, lectures and so forth.
During the course, Plenary Meetings were held to discuss the interim outline of the Group Workshop
reports and to offer suggestions and comments. During the final Plenary Meetings the drafts of the Group
Workshop reports were examined and critiqued by all the participants and the UNAFEI faculty. Based onthese discussions, the Groups further refined their reports and presented them in the Report-Back
Sessions, where they were endorsed as the reports of the Course.
3. Outcome Summary(i)6Promotion of Alternatives to Imprisonment(a)
All criminal justice systems should incorporate a clear mission in their sentencing
policies that advocates the extensive use of non-custodial measures. This has to beachieved by adopting a holistic approach involving the offender, the victim and society.
In doing so, countries should pay heed to their social, cultural and criminal policy
situation.
(b)Real change can only come about by public acceptance of the rationale for the wider useof effective non-custodial measures. Re-socialization of offenders requires publicawareness of the need to rehabilitate and reintegrate offenders. Policy makers andpoliticians, who have better access to the mass media, should be the agents for standard
setting in the better treatment of offenders.
(c)
Non-custodial treatment like rehabilitation programmes can only flourish within an
effective framework that streamlines such treatment. Criminal justice systems must
pay attention to the detailed management of the release and rehabilitation of offenders
in society. Some areas that should be looked at are:• Comparative availability of alternatives at each stage of the criminal justice system.
• Maximum utilization of community services.
• An integrated and cooperative network between voluntary sectors and public
community-based services.
• Periodic review of domestic laws to ensure non-custodial alternatives are viable.
• Transparency/accountability in the non-custodial process at all levels.
(d)Countries must be committed to set a time frame for the implementation andassessment of non-custodial measures. The model of non-custodial alternatives in othercountries can be modified/ adapted to the domestic situation. The role of all agencies
involved in implementing non-custodial alternatives should be clearly defined. Victim
redress and alternative offence resolution mechanisms, offender classification,

MAIN ACTIVITIES

(e)

(f)

(ii)

categorized treatment and broad-based community participation should be developed assome of the key components of alternative treatment.
Research and study are essential to ensure that non-custodial measures work andcontinue to remain relevant. Systematic evaluation of alternative treatment
programmes on evidence-based practice provides vital information as to the efficacy ofthese programmes. An evidence-based practice approach enables the use of alternatives
to withstand public scrutiny.
All countries should use the benchmark of The Tokyo Rules as the standard for thepromotion of alternatives. An easy strategy would be to infuse small incremental
changes in the social/ justice system to eventually blend in non-custodial alternatives.
Socio-economic inequalities should be addressed to strengthen community-based
programmes. Effective alternatives can complement the ultimate aim of criminal justicepolicies i.e. the reduction of crime in society. Consequently, obvious and lasting
improvements will be seen in the persistent problem of prison overcrowding.

Administration of Penal Institutions
Prison administrations are confronted with issues and problems that hinder the full and effective
implementation of the rules laid down by the UN Standard Minimum Rules for the Treatment of
Prisoners, the following recommendations are made in order that they may be fully implemented.
(a)
The full utilization of existing facilities by transferring prisoners can alleviate
overcrowding of some institutions. However, in order to fully counter the problem ofovercrowding, increased use of alternatives to imprisonment is inevitable.
(b)More recreational activities should be considered to reduce the stress level of theinmates due to overcrowding.
(c)
Separation of inmates is important in any situation and when separate facilities could
not be provided, separate sections should, at least, be considered.
(d)Dialogues must be conducted with the health department or private medicalorganizations/associations to improve prison medical services. Every country mustensure that the health care of the prison population is at least equal to the medical
health service provided to the general population.
(e)
Audio-visual aids should be used in imparting information to prisoners. Prison
administrations should consider the use of audio-visual aids in informing the prisonersof their rights, privileges, responsibilities, application of prison rules and regulations
and the conditions of their imprisonment.
(f)
Maintaining contact with family and friends play an important role in the rehabilitation
process of prisoners. There is a need, therefore, to incorporate the latest
communications technology such as e-mail and a video visit system. However, these
forms of communication must be strictly monitored when necessary.
(g)
Certain basic features of natural justice, as in criminal trial proceedings, should beobserved in disciplinary proceedings to ensure transparency and fairness. Human rights
issues should also be taken into consideration in procedures pertaining to prison
disciplinary punishment.
(h)Mediation could have a role in reducing prison tension and building social and conflict
resolution skills for inmates.
(i)Effective prison and inmate management must be employed to reduce prison incidents.
Suicide and other prison incidents such as escape, conflicts and disturbances areserious. Inmates having a particular high risk of suicide, escaping and causing a
disturbance must be given greater attention.
(j)
Establishment of independent bodies to inspect prisons may be considered. Prisons,being closed institutions, need an independent body or person from outside who willconduct an independent inspection of all the aspects of prison administration and makenecessary recommendations for the improvement of the treatment of prisoners and theeffective administration of penal institutions.
(k)
Active community involvement in certain prison affairs must be encouraged to ensuretransparency and accountability. The prison administration should disclose as muchinformation as possible in order to gain the confidence of the community.
(l)
Outsourcing of certain functions of prison administration to the private sector may beconsidered under certain suitable conditions in order to effectively utilize available

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ANNUAL REPORT FOR 2004

resources. However, it must be ensured that the rules and regulations for prison
management are determined by the government, including disciplinary action.
There is no single or easy solution to the problems confronting the prison administrations. Prison
management must continue to explore and consider measures, both short-term and long-term, in resolving
their problems. In this connection, it is important for prison management to initiate and use forward
planning; this means that management must not be reactive, its plans and programmes must be based on
clearly developed objectives and be able to anticipate issues and problems.
To fully realize the objectives of the penal system, changes in the attitude of the people from within andoutside the prison must simultaneously take place. Efforts must be directed not only towards improving theattitude of the prison officers/staff and prisoners but also the attitude of policy and decision makers,
members of the business sector, academia, media and the individual members of the community. Prison
reforms in the administration of penal institutions and the improvement of the treatment of prisoners canonly be achieved through the concerted efforts of all sectors of society.

(iii)

Promotion of Effective Treatment Programmes for Offenders(a)Archaic prison facilities should be improved or replaced to improve prisoners’ living
conditions.
(b)
Additional facilities should be acquired and additional personnel such as experts in
psychology and psychiatry should be recruited for therapeutic programmes.
(c)
A review and improvement of the existing classification system should be made toreflect the actual rehabilitation programmes existing in the prisons.
(d)There should be a review of the existing system and the introduction of a more practicalprogressive stage system in all prisons.
(e)There should be a review of stage gratuity (stage earnings) to increase the amount ofmoney paid so it is equivalent to the value of the prisoner’s actual work.
(f)
Industries with real work potential in outside industries should be introduced in prisons
for the benefit of prisoners on release.
(g)Suitable work should be available in all prisons to prevent the prisoner’s deterioration.
(h)Prison legislation should be reviewed to incorporate provisions for prisoners’ education.
(i)
All prisons should be fully fledged with integrated rehabilitation programmes, including
education.
(j)
The frequency and duration of visits should be increased to a desirable standard subject
to provision of adequate visiting facilities and staffing.
(k)
A mechanism should be in place between the prison department and probation
department to co-ordinate after care programmes.
(l)
An evaluation mechanism should be implemented in all prisons to evaluate the successor otherwise of their rehabilitation programmes.

The Government in various countries should take the lead in committing resources to improve theconditions of prison facilities and introduce rehabilitation programmes that are holistic which would ensure
the promotion of effective treatment programmes for offenders so that the rate of recidivism is reduced.

C. The 128th International Training Course
1. Introduction
From 30 August to 7 October 2004, UNAFEI conducted the 128th International Training Course with themain theme, “Measures to Combat Economic Crime, including Money Laundering”. This Course consistedof 24 participants from 15 countries. The purpose of this Course was to offer participants an opportunity toshare information on the current situation of economic crime, and the challenges faced by each country. At
the same time the course offered participants the opportunity to explore more effective measures andstrategies to meet these challenges.
2. Methodology
The 128th Course endeavoured to explore the best means to effectively combat Economic Crime,
including Money Laundering. The participants comprehensively examined measures to prevent Economic
Crime, and studied ways in which Money Laundering could be detected and prevented. This was

8MAIN ACTIVITIES

accomplished primarily through a comparative analysis of the current situation and the problems
encountered in tackling these issues. The participants’ in-depth discussions enabled them to put fortheffective and practical solutions.
The objectives were primarily realized through the Individual Presentations and the Group Workshop
sessions. In the former, each participant presented the actual situation, problems and future prospects of
their country with respect to the main theme of the Course. To facilitate discussions, the participants weredivided into three groups and given a hypothetical case to base their discussions around.
Each group elected a chairperson, co-chairperson, rapporteur and co-rapporteur to organize thediscussions. The group members studied the situation in each of their countries and the hypothetical caseand exchanged their views based on information obtained through personal experience, the Individual
Presentations, lectures and so forth.
Plenary Meetings were later held to discuss the interim outline of the Group Workshop reports and tooffer suggestions and comments. During the Plenary Meetings, drafts of the Group Workshop reports were
examined and critiqued by all the participants and the UNAFEI faculty. Based on these discussions, theGroups further refined their reports and presented them in the Report-Back Sessions, where they wereendorsed as the reports of the Course.
3. Outcome Summary
Economic crimes are mostly committed by organized criminal groups. Moreover, these crimes are often
committed beyond national borders and therefore pose difficulties to national investigative authorities. Theinternational standards prescribed in the 2000 UN TOC Convention are a firm foundation on which to
explore effective measures to combat economic crime including money laundering. All countries should bestrongly encouraged to ratify or accede to this Convention. In order to do so, they should enact or amend
their domestic laws and regulations in accordance with the articles of the TOC Convention. In addition the
40 Recommendations adopted by the FATF in June 2003 should be respected by all governments.
Given the fact that the TOC Convention gives due consideration to diversities of the legal and financial
system of member states and allows each state party to exercise discretionary power to a certain degree, it
is feared that economic crimes, including money laundering, may target countries with lenient legal
provisions and international criminal organizations may end up setting a strong foothold in these countries,
even if every state accedes to the Convention. In order to dispel such concerns states parties should be
encouraged to apply article 34 paragraph 3 of the TOC Convention which stipulates “each state party may
adopt more strict or severe measures than those provided for by this Convention for preventing andcombating transnational organized crime”.

(i)

Criminalization of the Laundering of Proceeds of Crime
Countries must have anti-money laundering laws in place. In criminalizing money laundering,countries should seek to apply such laws to the widest range of predicate offences and should
include as predicate offences all serious crimes as in conformity with the TOC Convention Article
6 and Article 2(b).

(ii)

Regulatory and Supervisory Regime
Each state should enact laws to institute a comprehensive domestic regulatory and supervisory
regime for financial institutions, including banks, in accordance with Article 7 of the TOC
Convention. The financial institutions, telephone carriers and internet service providers shouldtake responsibility for preventing their services from being misused as criminal tools, specifically:(a)Personal identification requirements should be rigorously enforced in financial
institutions through know your customer identification norms and sanctions imposed on
financial institutions for breach. The selling, purchasing and transferring of bankaccounts should be criminalized.
(b)Regulations should be introduced to prevent the use of cell phones for criminal acts andsanctions imposed on cell phone companies when the regulations are violated.
(c)Regulations should be introduced to prevent usage of the Internet for criminal acts andsanctions imposed on Internet service providers when the regulations are violated.

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ANNUAL REPORT FOR 2004

(iii)

Investigation, Prosecution, Adjudication and Sanctions
We need to explore ways to improve laws and practices in investigation, prosecution, adjudicationand sanctions in order to combat economic crime including money laundering more effectively.
Each state should take the necessary measures to allow for the appropriate use of special
investigative techniques such as electronic surveillance and undercover operations in accordancewith Article 20 of the TOC Convention.
Records of all known economic criminals should be kept; this will assist in sentencing them once
they are arrested for repeatedly committing these economic crimes. Each individual country
should be able to maintain data on statistics for and trends in economic crime, in line with Article
28 of the TOC Convention in order to assist in designing and implementing policing strategies.
Investigative agencies and prosecutors must make every effort so that the courts impose stiffer
sentences on criminals who have committed serious economic crime including money laundering(see the TOC Convention Article 11).
Law enforcement authorities within the country should closely cooperate with each other. Any
sense of turfdom embedded in the criminal justice system of each country should be removed.
Information sharing among investigative authorities is central to the successful and effective
investigation of complex economic crimes, including money laundering.

(iv)

International Cooperation
Paragraph 14 of Article 16 of the TOC Convention provides the safeguard against the extraditionof a person for the purpose of prosecuting or punishing the person on account of his/her “politicalopinions”. However, such safeguard should be applicable only when the requested State has“substantial grounds” for believing that that is the case.
Each country should afford one another the widest measure of mutual legal assistance ininvestigations, prosecutions and judicial proceedings in relation to economic crime including
money laundering in accordance with Paragraph 1 of Article 18 of the TOC Convention. Eachstate also should consider the possibility of concluding bilateral or multilateral agreements or
arrangements on this matter as provided in Paragraph 30 of this Article. In case where a country
does not have such agreements or arrangements, the law enforcement authorities of that country
should endeavour to explore all possible measures, including using diplomatic channels to request
and obtain assistance from a foreign country.
In accordance with Article 27 of the TOC Convention, each country should cooperate closely with
one another to enhance the effectiveness of law enforcement action to combat economic crime
including money laundering and should, in particular, adopt effective measures to enhance andestablish channels of communication between law enforcement authorities. Since official
procedures often take time informal channels can also used to obtain necessary information andevidence, simultaneously or before the use of diplomatic channels. In this connection,
investigators should always bear in mind the issue of admissibility of evidence in criminal courts.
Novel modus operandi of or trends in economic crime would be worth sharing internationally.

(v)

Other Measures
As provided in Article 29 of the TOC Convention, each country should initiate, develop or
improve specific training programmes for its law enforcement personnel in order to keep them
updated on the rapid evolution of economic crime including money laundering.
In accordance with Article 40 of the TOC Convention, all countries should make concrete efforts
in coordination with each other and with international and regional organizations to enhance theircooperation with developing countries, with a view to strengthening their capacity to prevent andcombat economic crime. Enhancing financial, material and technical assistance to support theefforts of developing countries to implement the TOC Convention is also essential.
With regard to measures against corruption, in line with Article 7 of the United Nations
Convention against Corruption, each country should endeavour to adopt, maintain and strengthen
systems for the recruitment, hiring, retention, promotion and retirement of civil servants that
promote adequate remuneration and pay scales, in order to ensure that they are not corrupted.

10MAIN ACTIVITIESIt is important to educate employees of financial institutions, non-financial institutions andindependent professions in order to strengthen their cooperation with law enforcement agencies(See Paragraph 2 of Article 31 of the TOC Convention). To promote public awareness on themodus operandi of economic crime is also essential in order to warn people who are vulnerable.
Economic crime including money laundering is an international menace and all countries should work
together and establish laws that conform to the 2000 UN TOC Convention and respect the FATF 40
recommendations. The few countries that have not yet criminalized money laundering must ensure thatthey have because all the proceeds of economic crime are laundered at the end of the day. Developed
countries should support developing countries in their training programmes and allocation of resources,
because without expertise and without resources, these developing countries cannot tackle modern forms ofsophisticated economic crime, including money laundering. Joint efforts made by each country in developinga reliable strategy of vigorous domestic enforcement of law, as well as international cooperation, is the mosteffective means to cope with problems related to economic crime, including money laundering.

D. Special Seminars and Courses
1. Ninth Special Seminar for Senior Criminal Justice Officials of the People’s Republic of China
The Ninth Special Seminar for Senior Officials of Criminal Justice of the People’s Republic of China,
entitled “Effective Criminal Justice Administration in Accordance with UN Standards and Norms: The
Proper Way for the Protection of Rights and Punishment of Crimes”, was held from 23 February to 11 March
2004. Thirteen senior criminal justice officials and the UNAFEI faculty comparatively discussed
contemporary problems faced by China and Japan in relation to the above theme.
2. Third Seminar on the Judicial System for Tajikistan
The Third Seminar for officials involved in criminal justice from Tajikistan was held from 1 March to 18
March 2004 at UNAFEI. The Seminar was entitled “The Juvenile Justice System and the Treatment ofJuvenile Offenders”. Fifteen criminal justice officials and the UNAFEI faculty comparatively discussed
contemporary problems faced by Tajikistan and Japan in relation to the above theme.
3. The Second and Third Seminar on the Revitalization of the Volunteer Probation Aid System for thePhilippines
The Second seminar exposed the Parole and Probation Officers from the Philippines to the administrationof the Japanese Volunteer Probation officer System, to help them improve their own volunteer programme.
This seminar was conducted from 22 to 29 March, 2004 at UNAFEI for six Parole and Probation officers.
The Third Seminar was held on 6 to 14 December 2004 which was attended by ten participants from thePhilippines, including the Administrator of the PPA, PPOs and two VPAs.
4. Special Course for Indonesia
A special course for Indonesia entitled “Comparative Study on the Judiciary System (Efficient Legal and
Judiciary Systems for Civil Dispute Settlement) Legal and Judicial Systems for their Reform” was held from
31 May to 2 July 2004 by the International Cooperation Department, Research and Training Institute,
Ministry of Justice of Japan in collaboration with UNAFEI.
5. First Training Course on Support for Anti-Corruption Management for Thailand
UNAFEI held the First Training Course on Support for Anti-Corruption Management for Thailand fortwenty officials from the Office of the National Counter Corruption Commission (ONCC), Thailand. Throughthe Training programme, participants discussed various problems relating to corruption control, expanding
their technical and juridical knowledge of the suppression of corruption and asset investigation. The Course
was held from 28 June to 22 July 2004.
6. Fifth Training Course on the Juvenile Delinquent Treatment System for Kenyan Criminal Justice Officials
UNAFEI conducted the Fifth Training Course for Kenyan criminal justice officials who are working forthe prevention of delinquency and the treatment of juvenile delinquents in their country. The Course washeld from 12 October to 4 November 2004. The Course exposed Kenyan officials to the workings of theJapanese juvenile justice and treatment system through lectures and observation visits to relevant agencies.

11

ANNUAL REPORT FOR 2004

As a result of this comparative study, the officials successfully developed action plans for the implementationand development of institutional and community-based treatment systems for juvenile delinquents in Kenya.
They also developed a plan for the establishment of a network between the Police, the Courts, Departmentof Corrections, Probation Services and the Children’s Department.
7. Seventh International Training Course on Corruption Control in Criminal Justice
UNAFEI conducted the Seventh International Training Course on Corruption Control in Criminal Justiceentitled “Corruption Control in Criminal Justice” from 18 October to 11 November 2004. In this course
thirteen foreign and three Japanese officials engaged in corruption control comparatively analyzed thecurrent situation of corruption, methods of corruption prevention and suppression, and measures to enhanceinternational cooperation in this regard.
8. Third JICA-NET Seminar on the Revitalization of the Volunteer Probation Aid System for the Philippines.
A video teleconference was held from 30 November to 2 December 2004 to facilitate the development of
the Philippine VPA system. Fifty participants from the Parole and Probation Administration of thePhilippines took part and interacted with Japanese VPOs and PPOs.

III. TECHNICAL COOPERATION
A. Regional Training Programmes
1. Short-Term Experts in Kenya
From 26 July to 18 August 2004, three UNAFEI Professors were dispatched to Kenya to assist theChildren’s Department of the Vice-President of the Ministry of Home Affairs and National Heritage of
Kenya in a project to develop nationwide standards for the treatment of juvenile offenders.
2. Research on Criminal Justice System Reform in Latin American Countries
In August 2004, two UNAFEI Professors travelled to Argentina, El Salvador and Costa Rica to carry out
research for the seminar to be held from 2005 to 2007 with ILANUD on Criminal Justice System Reform in
Latin American Countries.

B. Preparation for the 11th Congress
UNAFEI and the Swedish National Economic Crimes Bureau have undertaken to organize a workshop on“Measures to Combat Economic Crime, Including Money Laundering” for the 11th Congress to be held in
Bangkok, Thailand in 2005. From 16 to 18 September 2004 UNAFEI held a preparatory meeting for theWorkshop inviting experts from various countries and international organizations, including UNODC. The
Australian Institute of Criminology will also participate in the Workshop.
C. First In-Country Training Course on Support for Anti-Corruption Management for Thailand
UNAFEI in cooperation with the National Counter Corruption Commission (NCCC) of Thailand held an
In-Country Training Course in Bangkok, Thailand from 22 to 25 November 2004. Sixty participants fromThailand attended the Course. The purpose of the Course was to develop and enhance the capacity andefficiency of the ONCC (which supports the activities of the NCCC) in the field of suppression, inspection
and prevention of corruption.
IV. COMPARATIVE RESEARCH PROJECT
Reflecting its emphasis on the systematic relevance of training activities and priority themes identified
by the UN Commission, the research activities of the Institute are designed to meet practical needs,
including those for training materials for criminal justice personnel. In June of 2003 UNAFEI sent
questionnaires on the treatment of drug abusers to 8 Asian countries, by the end of the year 6 countries had
replied. In 2004 UNAFEI analyzed the results and conducted a comparative study which will be published asa report in 2005.

V. INFORMATION AND DOCUMENTATION SERVICES
The Institute continues to collect data and other resource materials on crime trends, crime prevention
strategies and the treatment of offenders from Asia, the Pacific, Africa, Europe and the Americas, and makes

12

MAIN ACTIVITIES

use of this information in its training courses and seminars. The Information and Library Service of theInstitute has been providing, upon request, materials and information to United Nations agencies,
governmental organizations, research institutes and researchers, both domestic and foreign.

VI. PUBLICATIONS
Reports on training courses and seminars are published regularly by the Institute. Since 1971, theInstitute has issued the Resource Material Series, which contains contributions by the faculty members,
visiting experts and participants of UNAFEI courses and seminars. In 2004, the 62nd, 63rd and 64th editionof the Resource Material Series were published. Additionally, issues 113 to 115 (from the 126th to the 128th
respectively) of the UNAFEI Newsletter were published, which included a brief report on each course andseminar and other timely information. These publications are also available on UNAFEI’s web site
http://www.unafei.or.jp/english.

VII. OTHER ACTIVITIES
A. Public Lecture Programme
On 30 January 2004, the Public Lecture Programme was conducted in the Grand Conference Hall of the
Ministry of Justice. In attendance were many distinguished guests, UNAFEI alumni and the 126th
International Seminar participants. This Programme was jointly sponsored by the Asia Crime Prevention
Foundation (ACPF), the Japan Criminal Policy Society (JCPS) and UNAFEI.
Public Lecture Programmes increase the public’s awareness of criminal justice issues, throughcomparative international study, by inviting distinguished speakers from abroad. This year, Mr. Peter
Kiernan (Assistant Director, Serious Fraud Office, London) and Dr. Deepa Mehta (Inspector General of
Police, Delhi Metro Rail Corporation) were invited as speakers to the programme. They presented papers on“The Role and Responsibilities of the Serious Fraud Office in Fighting Fraud within the United Kingdom”
and “Tackling Corruption: An Indian Perspective”, respectively.
B. Assisting UNAFEI Alumni Activities
Various UNAFEI alumni associations in several countries have commenced, or are about to commence,research activities in their respective criminal justice fields. It is, therefore, one of the important tasks of
UNAFEI to support these contributions to improve the crime situation internationally.
C. Overseas Missions
Ms. Tamaki Yokochi (Professor) and Ms. Shinobu Nagaoka (Staff) visited the Philippines with 9 Volunteer
Probation Officers from 21 to 27 January 2004 to conduct interaction meetings with Filipino Volunteer
Probation Aids at Cabuyao, Laguna and Cebu.
Mr. Keisuke Senta (Professor) and Mr. Horoyuki Shinkai (Professor) visited Bangkok, Thailand from 21
to 28 January 2004 for a consultation with the National Counter Corruption Commission of Thailand
concerning a technical cooperation project with UNAFEI.
Mr. Takafumi Sato (Professor) visited Yangon, Myanmar to attend the FATF Seminar as an expert in thefield of mutual legal assistance from 9 May to 13 May 2004.
Mr. Kunihiko Sakai (Director) and Mr. Keisuke Senta (Professor) visited Bangkok, Thailand to attend theRegional Preparatory Meeting for the 11th U.N. Congress on Crime Prevention and Criminal Justice from 28
March to 1 April 2004.
Mr. Kunihiko Sakai (Director) and Mr. Keisuke Senta (Professor) visited Vienna, Austria to attend the13th Session of the U.N. Commission on Crime Prevention and Criminal Justice from 10 May and 21 May
2004.
Mr. Kunihiko Sakai (Director) and Mr. Keisuke Senta (Professor) visited Stockholm, Sweden to attend
the preparatory meeting for the 11th U.N. Congress Workshop on Measures to Combat Economic Crime,
including Money Laundering from 22 May and 26 May 2004.
Ms. Tamaki Yokochi (Professor) visited Cagayan de Ora, the Philippines to attend and give a lecture at13

ANNUAL REPORT FOR 2004

the 9th National Convention and 7th National Training Institute of the Probation and Parole Officers Leagueof the Philippines Inc. from 5 to 12 June 2004.
Ms. Tomoko Akane (Deputy Director), Mr. Masato Uchida (Professor) and Ms. Tamaki Yokochi(Professor) visited Kenya to assist them in enhancing the services of the Children’s Department of the
Ministry of Home Affairs and National Heritage from 26 July to 18 August 2004.
Mr. Takafumi Sato (Professor), Mr. Kei Someda (Professor), Mr. Yoshihiro Miyake (Chief of General and
Financial Affairs) and Ms. Tsuburu Miyagawa (staff) visited China to carry out research on the Chinese
Criminal Justice System and meet with Chinese officials from 1 to 8 August 2004.
Mr. Keisuke Senta (Professor) visited Canberra, Australia to attend and speak at the Bali Regional
Ministerial Meeting on Counter Terrorism and Legal Issues Working Group from 1 to 6 August 2004.
Mr. Motoo Noguchi (Professor) and Mr. Iichiro Sakata (Professor) visited Argentina, El Salvador andCosta Rica to carry out research for the seminar to be held in 2005 with ILANUD on Criminal JusticeReforms in Latin America from 8 to 28 August 2004.
Mr. Motoo Noguchi (Professor) visited Korea to speak at the Congress on Asian Prosecution from 5 to 11
September 2004.
Mr. Hiroyuki Shinkai (Professor) visited the United Kingdom to carry out research on Drug Treatment in
Criminal Justice from 12 to 26 September 2004.
Mr. Kei Someda (Professor) visited Australia to carry out research on Drug Treatment in Criminal
Justice, from 21 September to 7 October 2004.
Mr. Masato Uchida (Professor) visited Singapore to attend the 24th Asian and Pacific Conference ofCorrectional Administrators, from 2 to 9 October 2004.
Mr. Hiroyuki Shinkai (Professor) visited Myanmar, to meet with officials from the Ministry of Foreign
Affairs and speak at their human rights seminar, from 5 to 8 October 2004.
Mr. Keisuke Senta (Professor) and Mr. Masaki Iida (Deputy Chief of Secretariat) visited Kuala Lumpur,
Malaysia from 10 to 14 October, 2004 to attend the Second Anti-Corruption Agency Forum.
Mr. Keisuke Senta (Professor) and Mr. Masaki Iida (Deputy Chief of Secretariat) visited Bangkok,
Thailand from 15 to 19 October 2004 to prepare for the In-Country Training Course under the three-year
project on “Strengthening of Anti-Corruption Capacity in Thailand”.
Mr. Hiroyuki Shinkai (Professor) visited Beijing, China from 24 to 29 October 2004 to participate in the
6th Annual General Meeting and Conference of the International Corrections and Prisons Association.
Ms. Tomoko Akane (Deputy Director), Mr. Keisuke Senta (Professor), Mr. Takafumi Sato (Professor) and
Mr. Tatsufumi Koyama (International Training Course Specialist) visited Bangkok, Thailand from 18 to 27
November 2004 to coordinate and attend the In-Country Training Course under the three-year project on“Strengthening of Anti-Corruption Capacity in Thailand”. This project is organized by UNAFEI, JICA andthe NCCC (National Counter Corruption Commission of Thailand). Mr. Kunihiko Sakai (Director) joined
them from 18 to 24 November 2004.
Mr. Motoo Noguchi (Professor) visited Hong Kong from 25 to 28 November to attend the International
Association of Prosecutors, Second Asia and Pacific Regional Conference - “Dealing with Drug Offenders”
and gave a presentation on “The Situation of Drug Abuse in Japan”.

D. Assisting ACPF Activities
UNAFEI cooperates and corroborates with the ACPF to improve crime prevention and criminal justiceadministration in the region. Since UNAFEI and the ACPF have many similar goals, and a large part of14

MAIN ACTIVITIESACPF’s membership consists of UNAFEI alumni, the relationship between the two is very strong. As an
example of this cooperation the Director of UNAFEI Mr. Kunihiko Sakai visited Macau from 24 to 26
November to attend the ACPF World Conference and gave a presentation on the “Specific Objectives to beachieved at the Eleventh United Nations Congress in Bangkok”.

VIII. HUMAN RESOURCES
A. Staff
In 1970, the Government of Japan assumed full financial and administrative responsibility for running theInstitute. The Director, Deputy Director and eleven professors are selected from among public prosecutors,
the judiciary, corrections, probation and the police. UNAFEI also has approximately 20 administrative staff
members, who are appointed from among officials of the Government of Japan, and a linguistic adviser.
Moreover, the Ministry of Justice invites visiting experts from abroad to each training course and seminar.
The Institute has also received valuable assistance from various experts, volunteers and related agencies in
conducting its training programmes.
B. Faculty Changes
Mr. Toru Muira, formerly Professor of UNAFEI, was transferred to the Tokyo District Court on 1 April
2004.
Mr. Kenji Teramura, formerly Professor of UNAFEI, was transferred to the Yokohama Juvenile
Classification Home on 1 April 2004.
Mr. Yasuhiro Tanabe, formerly Professor of UNAFEI, was transferred to the Tokyo District Publicprosecutors Office on 1 April 2004.
Ms. Sue Takasu, formerly Professor of UNAFEI, was transferred to the Tokyo District Public
Prosecutors Office on 1 April 2004.
Mr. Masato Uchida, formerly a Professor of the Training Institute for Correctional Personnel, joined
UNAFEI as a Professor on 1 April 2004.
Mr. Takafumi Sato, formerly a Prosecutor at the Tokyo District Public Prosecutors Office, joined
UNAFEI as a Professor on 1 April 2004.
Ms. Megumi Uryu, formerly a Prosecutor at the Tokyo District Public Prosecutors Office, joined
UNAFEI as a Professor on 1 April 2004.
Mr. Iichiro Sakata, formerly a Judge with the Gifu District/Family Court, joined UNAFEI as a Professoron 1 April 2004.

IX. FINANCESThe Ministry of Justice primarily provides the Institute’s budget. The total amount of the UNAFEI
budget is approximately ¥314 million per year. Additionally, JICA and the ACPF provide assistance for theInstitute’s international training courses and seminars.

15

UNAFEI WORK PROGRAMMME FOR 2005
I. TRAINING
A. 129th International Seminar
The 129th International Senior Seminar, “Crime Prevention in the 21st Century - Effective Prevention of
Crime associated with Urbanization based upon Community Involvement and Prevention of Youth Crime andJuvenile Delinquency” will be held from 11 January to 10 February 2005. The Seminar will examine thecurrent situation and problems of urbanization, effective measures for the prevention of urban crime,
effective measures for youth at risk, and the role of the community in a holistic approach and the effective
establishment of multi-disciplinary collaboration.
B. 130th International Training Course
The 130th International Training Course, “Integrated Strategies to Confront Domestic Violence andChild Abuse” will be held from 16 May to 23 June 2005. The Course will comprehensively examine thecurrent situation of domestic violence and child abuse and seek to find practical solutions through integrated
strategies.
C. 131st International Training Course
The 131st International Training Course, “The Use and Application of the United Nations Declaration of
Basic Principles of Justice for Victims of Crime and Abuse of Power - Twenty Years after of Its Adoption”,
will be held from 29 August to 6 October 2005. The Course will explore the various issues that relate to
victims of crime and abuse of power, mainly in accordance with the Declaration.
D. Tenth Special Seminar for Senior Criminal Justice Officials of the People’s Republic of China
The Tenth Special Seminar for Senior Criminal Justice Officials of the People’s Republic of China,“Protection of Human Rights for Suspects and Defendants in Criminal Proceedings and Utilization of Noncustodial Measures in the Criminal Justice System” is scheduled to be held at UNAFEI from 23 February to
11 March 2005. Sixteen senior criminal justice officials and members of the UNAFEI faculty will discuss
contemporary problems faced by China and Japan in relation to the above theme.
E. The First Seminar on Criminal Justice for Central Asia
UNAFEI will hold the first Seminar on Criminal Justice for Central Asia on “a Comparative Study on the
Criminal Justice Systems of Central Asia and Japan - for the Establishment of a Fair and Efficient Criminal
Justice System”, will be held from 28 February until 17 March 2005. Sixteen criminal justice officials andmembers of the UNAFEI faculty will discuss contemporary problems faced by Central Asia and Japan inrelation to the above theme.
F. Second Training Course on Support for Anti-Corruption Management for Thailand
UNAFEI will hold the Second Training Course on Support for Anti-Corruption Management for Thailand
for twenty officials from the Office of the National Counter Corruption Commission (ONCC), Thailand.
Through the Training programme, participants will discuss various problems relating to corruption control,
expanding their technical and juridical knowledge of the suppression of corruption and asset investigation.
The Course will be held from 27 June to 21 July 2005.
G. Sixth Training Course on the Juvenile Delinquent Treatment System for Kenyan Criminal Justice
Officials
UNAFEI will hold the Sixth Training Course for Kenyan criminal justice officials who are working for theprevention of delinquency and the treatment of juvenile delinquents in their country. The Course will beheld from 17 October to 10 November 2005. The Course will expose Kenyan officials to the workings of theJapanese juvenile justice and treatment systems through lectures and observation visits to relevant
agencies.
H. Eighth International Training Course on Corruption Control in Criminal Justice
UNAFEI will conduct the Eighth International Training Course entitled “Corruption Control in Criminal
Justice” from 24 October to 17 November 2005. In this course, foreign and Japanese officials engaged incorruption control will comparatively analyze the current situation of corruption, methods of corruption
prevention and measures to enhance international cooperation in this regard.
16

APPENDIX

I. Fourth JICA-NET Seminar on the Revitalization of the Volunteer Probation Aid System for thePhilippines.
A video teleconference will be held on the Revitalization of the Volunteer Probation Aid System for thePhilippines. The date has not been decided yet.
II. TECHNICAL COOPERATION
A. Costa Rica
In 2005, UNAFEI will be represented by two professors at a new training programme held in cooperation
with JICA and ILANUD entitled “International Training Course on the Criminal Justice System Reforms in
Latin America”, in San Jose, Costa Rica. The participants of the training programme will be judges,
prosecutors and attorneys (public and private, engaged in defence). The training programme will be heldfrom 26 July to 3 August 2005.
B. Thailand
UNAFEI in cooperation with the National Counter Corruption Commission (NCCC) of Thailand will holdthe Second In-Country Training Course on Support for Anti-Corruption Management for Thailand in
Bangkok, Thailand from 28 November to 2 December 2005. The theme of the Course will be “A More
Practical Approach towards Corruption Investigation and Asset Inspection”. Sixty participants from Thailand
are expected to attend.
C. Pakistan
UNAFEI will hold a Joint Seminar with Pakistan (National Police Bureau) in December 2005. The themeof the Joint Seminar has yet to be decided.
D. Others
In 2005, UNAFEI may embark on a research project concerning measures to combat high-tech crime,
including identity theft.

17

ANNUAL REPORT FOR 2004

APPENDIX
MAIN STAFF OF UNAFEI
Mr. Kunihiko Sakai
Ms. Tomoko Akane

Director
Deputy Director

Faculty
Mr. Keisuke Senta
Mr. Masato Uchida
Mr. Kei Someda
Mr. Motoo Noguchi
Mr. Takafumi SatoMs. Megumi Uryu
Mr. Iichiro Sakata
Ms. Tamaki Yokochi
Mr. Hiroyuki Shinkai
Mr. Simon Cornell

Chief of Training Division, Professor
Chief of Research Division, Professor
Chief of Information & Library Service Division,
Professor
Professor
Professor
Professor
Professor
Professor
Professor
Linguistic Adviser

Secretariat
Mr. Kiyoshi Ezura
Mr. Masaki Iida
Mr. Yoshihiro Miyake
Mr. Ryousei Tada
Mr. Seiji Yamagami

Chief of Secretariat
Deputy Chief of Secretariat
Chief of General and Financial Affairs Section
Chief of Training and Hostel Management
Affairs Section
Chief of International Research Affairs Section

AS OF DECEMBER 2004

18

APPENDIX

2004 VISITING EXPERTS
THE 126TH INTERNATIONAL SEMINAR
Mr. Parmajit Singh

Assistant Director
Commercial Affairs Department,
Singapore Police Force,
Singapore

Dr. Deepa Mehta

Inspector General of Police,
Chief Vigilance Officer,
Delhi Metro Rail Corporation,
India

Mr. Peter Kiernan

Assistant Director
Serious Fraud Office,London,United Kingdom

Mr. Dimitri Vlassis

Officer-in-Charge
Crime Conventions Section,
United Nations Office on Drugs andCrime,
ViennaTHE 127TH INTERNATIONAL TRAINING COURSE
Prof. Nils Christie

Professor
Institute of Criminology,
Faculty of Law,
University of Oslo,
NorwayMs. Cristina Rojas Rodriguez

Experta Asociada del ILANUDSan José,
Costa Rica

Mr. Michael Spurr

Director of Operations
H.M. Prison Service,
United Kingdom

Ms. Chomil Kamal

Deputy Director/Chief Probation Officer
Probation Services Branch for Permanent
Secretary (Community Development and Sports),
Ministry of Community Development and Sports,
Singapore19

ANNUAL REPORT FOR 2004

THE 128TH INTERNATIONAL TRAINING COURSE
Mr. Hans G Nilsson

Head of DivisionInternational Cooperation,Council of the European Union,
European Union

Pol. Maj. Gen. Peeraphan Prempooti

Secretary-General
International Affairs,
Anti-Money Laundering Office,ThailandSir David Calvert Smith QC

BarristerFormer Director of Public Prosecutions
For England and Wales,
United Kingdom

Mr. Henry N. Pontell

Professor
Department of Criminology, Law and Society,
School of Social Ecology,
University of California,
U.S.A

20

APPENDIX

2004 AD HOC LECTURERS
THE 126TH INTERNATIONAL SEMINAR
Mr. Katsuhiko Hama

Attorney
Civil Affairs Bureau,
Ministry of Justice,Japan

Mr. Katsutaka Tomioka

Deputy Director
Consumer and Environmental Protection
Division,
Community Safety Bureau, National Police
Agency,Japan

Mr. Kensaku Iuchi

Director
Special Investigations Department,
Tokyo District Public Prosecutors Office,Japan

Mr. Nobuo Gohara

Deputy Director
Tokyo District Public Prosecutors Office,Hachioji Branch,Japan

Mr. Toshihide Endo

Director
Enforcement Division,
Securities and Exchange SurveillanceCommission,Japan

THE 127TH INTERNATIONAL TRAINING COURSE
Mr. Satoshi Tomiyama

Special Assistant to the Director of theGeneral Affairs Division Correction Bureau,
Ministry of JusticeProf. Nisuke Ando

Professor,
Doshisha University

21

ANNUAL REPORT FOR 2004

2004 UNAFEI PARTICIPANTS
THE 126TH INTERNATIONAL SEMINAR
Overseas Participants
Ms. Prudence Tangham Dohgansin

Deputy Attorney General
Legal Department of the Court of Appeal
for the Centre Province,
Ministry of Justice,
Cameroon

Mr. Hesham Mostafa Abd El kader Abo Salem

Judge
Primary Court of Mansoura,
Ministry of Justice,
Egypt

Mr. Bright Oduro

Accra Regional Crime Officer
Criminal Investigations Department,
Ghana Police Service,
Ghana

Mr. Suharto

Chief of Planning and Administration
BureauCID Police Headquarters,
Indonesia

Mr. Kongchi Yangchue

Judge, Head of Criminal Chamber
The People’s Supreme Court,
Laos

Mr. Amarsaikhan Delegchoimbol

Section Chief
Criminal Police Division For Combating
Corruption and Economic Crime,
National Police Agency,
Mongolia

Mr. Dilli Raman Acharya

Joint-Attorney
Office of the Attorney General,
Nepal

Mr. Simon Kauba

Metropolitan Superintendent
Lae Metropolitan Police Command,
Papua New Guinea

Mr. Isidro Castillo Perez Jr.

Deputy Chief/Director
Inspectorate and Legal Office,Philippine Public Safety College,
Philippines

Mr. Ian Montclair Queeley

Inspector of Police
Police Headquarters,
Saint Christopher and Nevis

22

APPENDIX

Ms. Ayesha Jinasena

State Counsel
Attorney General’s Department,
Sri Lanka

Mr. Sutthi Sookying

Acting Director of Financial andBanking Crime
Department of Special Investigation
Ministry of Justice,
ThailandMr. Hasan Dursun

Planning Expert
Prime Ministry State Planning
Organisation,
TurkeyMr. Luis Celestino García Figueroa

Chief Inspector
Chief of the Detector Dog Section,
Metropolitan Police,
Venezuela

Mr. Samson Mangoma

Deputy Officer Commanding
C.I.D. Serious Fraud Squad,
Department of Zimbabwe Republic Police,
Zimbabwe

Japanese Participants
Mr. Keiji Uchimura

Professor of Applied Technology
Police Info-Communications Academy,
National Police Agency,Japan

Mr. Yutaka Oya

Chief of General Affairs DivisionTokyo Probation Office,Japan

Mr. Yuji Saito

Deputy Superintendent
Aiko Juvenile Training School for Girls,
Japan

Mr. Tsutomu Sunada

Deputy Director
Info-Communications Planning Division,
Info-Communications Bureau,
National Police Agency,Japan

Mr. Tomoyuki Mizuno

Judge/Professor
Legal Training and Research Institute,Japan

Mr. Daisuke Moriyama

Public Prosecutor
Special Investigation Department,
Tokyo District Public Prosecutors Office,
Japan

23

ANNUAL REPORT FOR 2004

THE 127TH INTERNATIONAL TRAINING COURSE
Overseas Participants
Mr. Hany Mohamad Nasseh Gabr

Deputy Chief
Investigations Section,
Alexandria Police Department,
Egypt

Mr. Orisi Vuki Katonibau

Staff Officer Administration
Fiji Prison Service,Fiji

Mr. Maju Ambarita

Head Section
Finance Internal Controlling,
Jakarta Prosecutor Office,Jakarta, Indonesia

Mr. Bin Mohamad Abdul Aziz

Head of Unit
Internal Audit Unit,
Prison Department Malaysia,
Ministry of Internal Security,
Malaysia

Mr. Rungit Singh a/l Jaswant Singh

Senior Federal Counsel
Attorney General’s Chambers,
Prime Minister’s Department,
Malaysia

Mr. Julio Ometei Ringang

Chief
Division of Correction,
Bureau of Public Safety,
Ministry of Justice,
Palau

Mr. Mark Mengepe Mewerimbe

Chief Inspector
Officer In-Charge-Prosecution,
Department of Police,
Boroko Police Station,
Port Moresby, Papua New Guinea

Mr. Hernan Gallo Grande

Chief Inspectorate
Bureau of Jail Management andPenology,
Philippines

Mr. Saidamir Badriddinovich Saidov

Head of Operative
Ministry of Internal Affairs,
Tajikistan

Mr. Pongtorn Janoudom

Principal Research Judge
Court of Appeal Region IV,
Thailand

Mr. Somphop Rujjanavet

Penologist 7
Chief of Information andInternational Conference Section,
Department of Corrections,
Ministry of Justice,
Thailand24

APPENDIX

Mr. Patelisio Leniti Pale

Assistant Probation Officer
Probation Services,
Ministry of Justice,
Tonga

Mr. Hamish Garae

Station Sergeant
Vanuatu Police Force,
VanuatuMr. Jonah Muzambi

Officer Commanding District
Zimbabwe Republic Police,
Ministry of Home Affairs,
Zimbabwe

Ms. Mildred Bernadette BaquilodState Counsel V
Office of the Chief State Counsel,
Department of Justice,
Philippines

Mr. Eric Wai-fung Law

Superintendent
Tai Lam Centre for Women,
Hong Kong Correctional Services
Department,
Hong Kong

Ms. Soo-Hee Kim

Correctional Supervisor
Su-Won Detention Centre,
Korea

Japanese Participants
Mr. Osamu Aoki

Senior Chief Programme Supervisor
Matsumoto Juvenile Prison

Mr. Toshihiro Fukugaki

Probation Officer
Kobe Probation Office

Mr. Keiichi Ichinose

Superintendent
Second Investigation Division,
National Police Agency

Ms. Hatsue Matsubayashi

Probation Officer
Yamaguchi Probation Office

Ms. Mikako Matsushita

Family Court Probation Officer
Asahikawa Family Court

Mr. Koichi Nakamura

Assistant Judge
Tokyo District Court

Mr. Yuichiro Okuno

Public Prosecutor
Hiroshima District Public Prosecutors Office

Ms. Noriko Shibata

Public Prosecutor
Kochi District Public Prosecutors Office

Mr. Yasuaki Sugawara

Section Chief
Enforcement Division,
Immigration Bureau,
Ministry of Justice25

ANNUAL REPORT FOR 2004

Mr. Akira Takano

Assistant Judge
Tokyo District Court

Ms. Sachiko Tokuda

Chief Specialist
Katano Juvenile Training School for GirlsMr. Masahiro Tomoi

Superintendent
Community Safety Planning Division,
National Police Agency

THE 128TH INTERNATIONAL TRAINING COURSE
Overseas Participants
Mr. Mohammad Farid Mollakhel

C.S.I. Manager
Crime Scene Investigation Team,
Ministry of Interior,
Afghanistan

Mr. Fatos Lazimi

State AdvocateState Advocate Office,Council of Ministers,
Albania

Mr. Abul Kashem

Additional District Magistrate
Office of the Deputy Commissioner,
Chandpur, Bangladesh

Mr. Alfred Kofi Asiama-Sampong

Senior State Attorney
Ministry of Justice (Attorney-General’s Dept.),
Ghana

Mr. Animesh Bharti

Deputy Secretary (Crime Monitoring)
Ministry of Home Affairs,
India

Mr. I Ketut Suwetra

Senior Investigator
Criminal Investigation Directorate,
Bali Regional Police,
Indonesia

Mr. Khampheth Ounheune

Head of Civil Enforcement Division
Enforcement Department,
Ministry of Justice,
Laos

Mr. Bounma Phonsanith

Investigator and Vice of the Chief
CabinetSupreme Public Prosecutor of Lao POR,
Laos

Mr. Khin Maung Win

Staff Officer
Financial Intelligent Unit,
Committee for Drug Abuse Control,
Ministry of Home Affairs,
Myanmar26

APPENDIX

Mr. Ngwe Htun

Director
Bureau of Special Investigation,
MyanmarMr. Surya Nath Prakash Adhikari

District Government Attorney
District Government Attorney Office,Kathmandu,
Nepal

Mr. Shahid Hussain Khan

Deputy Director
Federal Investigation Agency,
Islamabad,
Pakistan

Mr. Ronald Bei Talasasa

Deputy Director
Public Prosecutor’s Office,Solomon Islands

Mr. Titawat Udornpim

Judge of the Rayong Provincial Court
Thai Judiciary,
Thailand

Mr. Toara Thomas

Senior Sergeant Fraud Section
Vanuatu Police Force,
Vanuatu

Mr. Erasmus Makodza

Superintendent Special Investigation
Criminal Investigation Department,
Headquarters,
Zimbabwe Republic Police,
Zimbabwe

Japanese Participants
Mr. Takuro Himeda

Chief Programme Supervisor
Fuchu Prison,Tokyo

Mr. Masataka Ishijima

Public Prosecutor
Tokyo District Public Prosecutors Office,Tokyo

Mr. Yasuharu Kawase

Narcotics Law Enforcement Officer
Yokohama Branch, Narcotics Control
Department Kanto-Shinetsu Regional
Bureau of Health and Welfare,
Kanagawa

Mr. Atsuo Kobayashi

Probation Officer
Sapporo Probation Office,Hokkaido

Mr. Satoshi Shibayama

Judge
Osaka District Court,
Osaka

Mr. Kiyohiro Tanaka

Judge
Tokyo District Court,
Tokyo

27

ANNUAL REPORT FOR 2004

Mr. Kazuya Tonoike

Public Prosecutor
Nagoya District Public Prosecutors
Office,Aichi

Mr. Yoshikatsu Yamato

Deputy Chief of Security Division
Guard and Rescue Department,
2nd Regional Coast Guard Headquarters,
Japan Coast Guard,
Miyagi28

APPENDIXNINTH SPECIAL SEMINAR FOR SENIOR CRIMINAL JUSTICEOFFICIALS OF THE PEOPLE’S REPUBLIC OF CHINA
Mr. Zhang, Yi

Director
International Division,
Department of Judicial Assistance andForeign Affairs,
Ministry of Justice

Ms. Xu, Xia

Counsellor
Penal Law Division,
Criminal Law Department,
Legislative Affairs Commission
Standing Committee of NPC

Ms. Du, BingCounsellor
Law and Regulation Division,
Department of Legislative Affairs,
Ministry of Justice

Mr. Meng, Xian Jun

Director
Division of Research,
Bureau of Prison Administration,
Ministry of Justice

Mr. Dong, Shi Hong

Senior Judge
Criminal Adjudication Chamber No.2

Ms. Li, Hui

Senior Judge
Chamber for Adjudication,
Supervision

Mr. Wang, Jun

Deputy Director General
Public Prosecution Department,
Supreme People’s Procuratorate

Mr. Wang, Shu Qing

Deputy Director
Procurator-General’s Office of General Office,Supreme People’s Procuratorate

Mr. Chen, Ru Hai

Vice Director
People’s Reception Office,General Office,Ministry of Public Security

Mr. Zhao, Bin

Deputy Director
Division for Legal Enforcement,
Supervision,
Legal Department,
Ministry of Public Security

Ms. Zhao, Shu Huan

Officer
Department of Judicial Assistance and Foreign Affairs,
Ministry of Justice29

ANNUAL REPORT FOR 2004

Mr. Huang, Huan Guang

Deputy Director
General Bureau of Re-education throughLabour,Guangxi Autonomous Region

Ms. He, Chun Yun

Officer
Legal Aid Centre of China

30

APPENDIX

THIRD SEMINAR FOR TAJIKISTAN OFFICIALS ON
CRIMINAL JUSTICE SYSTEMSMr. Yusufkhon Akhmadovich
RakhmonovChief Military Prosecutor
General Prosecutor’s Office

Mr. Sirojidin Kutbidinovich Nurov

Deputy Director
Prison No. 6,
Department of Punishment,
Ministry of Justice

Mr. Akbar Partovovich
Mirzosharifov

Head of the Group
Prison No.7,
Department of Punishment,
Ministry of Justice

Mr. Rajab Yuldashev

Prosecutor
Davlatmandovich,
Prosecutor’s Office of Firdavsi District,Dushanbe City

Mr. Habibullo Tabarovich Ashurov

Deputy Chairman
Court of the Sino District,Dushanbe City

Mr. Navruz Dostonovich Turaev

District Inspector of Police (Juvenile Inspector)
Department of Internal Affairs ofJeleznodorojniy District,Dushanbe City

Mr. Azam Mirzohotamovich
Kholmirzoev

Executive Secretary
Commission of Juvenile Affairs,
Administration of Sogd Region

Mr. Ulugbek Solievich Normatov

Deputy Chief
Department of Justice,
Administration of Sogd Region

Mr. Abdujabor Salomovich Sattorov

Judge
Supreme Court of Tazhikistan

Mr. Isroil Nazaralievich Shoev

Chief
Department of Law Support for
Citizens,
Ministry of Justice

Mr. Suhrob Holmurodovich Raufov

Executive Secretary
Commission of Juvenile Affairs,
Administration of Khatlon Region

Mr. Abduvasit Gafarovich Kayumov

Tutor of Juvenile Prisoners
Correctional Facility No. 9/7,
Department of Punishment,
Ministry of Justice

Mr. Navruz Abdulkhamidovich
Samadov

Head of Sector
Law Department,
President Administration

31

ANNUAL REPORT FOR 2004

Mr. Mirzoakhmad Saidovich Mirzoev

Deputy Director
National Centre of the Out-of-School
Educational Works,
Ministry of Education

Mr. Dilshod Emomnazarovich
Mahmadov

Chief Field Officer
Department of Criminal Investigation,
Ministry of Internal Affairs

32

APPENDIXSECOND SEMINAR ON THE REVITALIZATION OF THE VOLUNTEERPROBATION AID SYSTEM FOR THE PHILIPPINES
Mr. Manuel Co

Assistant Regional Director
Parole and Probation Administration,
Region III,Department of Justice

Ms. Cecilia G. Dela Cruz

Chief
Research and Development Section
Training Division,
Parole and Probation Administration,
Department of Justice

Ms. Dennah E. VivaresSupervising Probation and Parole Officer
Parole and Probation Administration,
Region X,
Department of Justice

Mr. Warme P. Araneta

Probation and Parole Officer
Parole and Probation Administration,
Region IV,
Department of Justice

Mr. Elmer B. Gumapos

Senior Probation and Parole Officer
Community Service Division,
Parole and Probation Administration,
Department of Justice

Mr. Robert August C. Camarillo

Probation and Parole Officer
Training Division,
Parole and Probation Administration,
Department of Justic

33

ANNUAL REPORT FOR 2004

THIRD SEMINAR ON THE REVITALIZATION OF THE VOLUNTEERPROBATION AID SYSTEM FOR THE PHILIPPINES
Mr. Ismael J. Herradura

Director II(Officer-in-charge/Administrator)
Parole and Probation Administration,
Department of Justice

Ms. Vilma V. Carmona

Chief(Human Resource Management Officer V)
Training Division,
Parole and Probation Administration,
Department of Justice

Mr. Richard L. Salaya

Probation and Parole Officer I
Bataan Parole and Probation Office,Region III,Department of JusticeMs. Genoveva R. Relado

Probation and Parole Officer II
Pilot Project – Holistic Approach to the
Rehabilitation and Treatment of
Offenders,
Parole and Probation Administration,
Department of Justice

Mr. Pol Vincent Q. Perocho

Probation and Parole Officer I
Pilot Project – Holistic Approach to the
Rehabilitation and Treatment of
Offenders,
Parole and Probation Administration,
Department of Justice

Mr. Pedro T. Teodoro

Human Resource Management Assistant
Pilot Project – Holistic Approach to the
Rehabilitation and Treatment of
Offenders,
Parole and Probation Administration,
Department of Justice

Ms. Rosana V. Solite

Senior Probation and Parole officer
Biliran Parole and Probation Office
Region VIII,
Department of Justice

Ms. Ma. Emelita T. Valenzona

Psychologist II
Regional Office,Region XI,
Department of Justice

Mr. Norvic D. Solidum

Volunteer Probation Aide
LagunaMr. Cesar L. Villamaria

Volunteer Probation Aide
Laguna34

APPENDIXFIRST TRAINING COURSE FOR THE SUPPORT OF ANTI-CORRUPTIONMANAGEMENT FOR THAILAND
Ms. Nontiya Suthipong

Senior Legal Officer
Corruption Prevention Bureau 1

Ms. Yaovamal Joyjuree

Corruption Prevention Officer
Corruption Prevention Bureau 2

Mr. Chirdsak Arunsit

Corruption Prevention Officer
Corruption Prevention Bureau 2

Mr. Surin Petchupong

Senior Investigator
Corruption Suppression Bureau 1

Mr. Prachuab Katlangka

Senior Investigator
Corruption Suppression Bureau 1

Mr. Prateep Jutasorn

Junior Investigator
Corruption Suppression Bureau 1

Mr. Payup Kotchaplayook

Junior Investigator
Corruption Suppression Bureau 1

Mr. Pichet Pumpan

Senior Investigator
Corruption Suppression Bureau 2

Mr. Nuttvud Khomprasert

Junior Investigator
Corruption Suppression Bureau 2

Ms. Phurisuda Nilvan

Junior Inspector
Assets Inspection Bureau 1

Ms. Supatra Petchwichit

Senior Inspector
Assets Inspection Bureau 3

Ms. Suwanee Kammadasidit

Senior Inspector
Assets Inspection Bureau 3

Ms. Sasawan Cheepsatayakorn

Senior Inspector
Assets Inspection Bureau 4

Ms. Wannee Phumarun

Junior Financial Officer
Financial Division

Ms. Chintana Ploypatarapinyo

Senior Researcher
Policy and Planning Bureau

Mr. Thanachot Pairoh

Head of Foreign Affairs Section
Policy and Planning Bureau

Ms. Supporn Chantawangso

Junior Administrative Officer
Policy and Planning Bureau

Mr. Suttie Boonmee

Junior Intelligence Officer
Intelligence Unit

35

ANNUAL REPORT FOR 2004

Ms. Wanna Khaiprapai

Junior Administrative Officer
Administrative Unit

Mr. Sompol Kanchanasobhana

Senior Investigator
Report Division

36

APPENDIX

FIFTH TRAINING COURSE FOR KENYAN OFFICIALSON JUVENILE DELINQUENT TREATMENT SYSTEMS
Ms. Josephine Kemunto Oguye

Provincial Children’s Officer
Rift Valley Province

Ms. Alice Katila Barasa

District Children’s Officer
Kisumu District,Nyanza Province

Mr. Jemin Otieno Onyango

District Children’s Officer
Nyamira District,Nyanza Province

Mr. P.N. Yahuma Okoko

Volunteer Children’s Officer
Siaya District,Nyanza Province

Mr. Christopher Ndegwa Kago

Senior Superintendent
Bungoma Police

Ms. Margaret Agutu Mlanga

Senior Resident Magistrate
Nairobi Children’s Court

Ms. Hellen Akinyi Ajwalah

Divisional Probation Officer/
Probation Officer I
Ukwala Divisional Office

Mr. Bison Khadiagala Madegwa

Chief Officer I/Officer in Charge
Youth Corrective Training Centre

Ms. Kellen Thumuni Karanu

Assistant Director
Children’s Department,
Ministry of Home Affairs

Mr. Mwasiwa Juma BogaManager/Children’s Officer I
Likoni Rehabilitation School

Mr. Daniel Nzei Musembi

Manager
Getathuru Children Reception Centre

Mr. Livingstone A. Oruuko

Education CoordinatorChildren’s Department,
Ministry of Home Affairs

Ms. Zipporah Gatiria Mboroki

Inspector
Kenya Police College,
Kiganjo

Ms. Winfridah Boyani Mokayah

Senior Resident Magistrate
Kisumu Law Court

Mr. George Njuguna Njane

Manager
Nairobi Probation Hostel

Mr. Andrew Okoth Ojal

Senior Superintendent of Prisons/
Officer in Charge
Shikusa Borstal Institution

37

ANNUAL REPORT FOR 2004

SEVENTH INTERNATIONAL TRAINING COURSE ON
CORRUPTION CONTROL IN CRIMINAL JUSTICE
Overseas Participants
Mr. Georgi Antonov Rupchev

Head of International Legal Coorperation
Department
Ministry of Justice,
Bulgaria

Ms. Ana Maria Rosero Rivas

Consulting Attorney
Procuraduria General Del Estado,
EcuadorMs. Mariana Lara Palacios

State Attorney (Civil Area)
Procuraduria General de la Nacion,
GuatemalaMs. Soraya Lizette Morales Romero

Fiscal Especial Contra la Corruption
Ministerio Publico,
Honduras

Mr. Souphy Norintha

Deputy Director
Criminal Enforcement Division,
Ministry of Justice,
Enforcement Department,
Laos

Mr. Kaspars Dreimanis

Investigator
Corruption Prevention and Combating
Bureau,LatviaMr. Jacques Randrianasolo

Director
Inspection of Justice,
Ministry of Justice,
Madagascar
Deputy Attorney
Commission for the Investigation of
Abuse of Authority,
Nepal

Mr. Ganesh Babu Aryal

Mr. Zahoor Ahmad Rana

Deputy Secretary (Administration)
Ministry of Law, Justice and Human
Rights,Pakistan

Mr. Raymundo Julio Abad Olaguer

Director
Prosecution Bureau I,
Office of the Special Prosecutor/ Ombudsman,Philippines

Mr. Fred Saeni

Officer Commanding
Corruption Squad,
Criminal Investigation Department,
Royal Solomon Islands Police,
Solomon Islands

38

APPENDIX

Mr. Sukit Chua-Intra

Judge
Dusit District Court,
Thailand

Mr. Thammarat Limkulpong

Divisional Public Prosecutor
Office of the Attorney General,
ThailandJapanese Participants
Mr. Masato Saito

JudgeOsaka District Court,
Osaka

Mr. Masahiro Tashiro

Prosecutor
Yokohama District Public Prosecutors
Office,Odawara Branch,
Kanagawa

Mr. Kan Tomita

Prosecutor
Saga District Public Prosecutors Office,
Saga

39

ANNUAL REPORT FOR 2004

DISTRIBUTION OF PARTICIPANTS BY
PROFESSIONAL BACKGROUNDS AND COUNTRIES(1st International Training Course/Seminar - 128th International Training Course/Seminar)
Professional
Background
Country
Afghanistan
Bangladesh
BhutanBrunei
Myanmar
China
Hong Kong
India
Indonesia
Iran
Iraq
JordanCambodia
Oman
Korea
KyrgyzLaos
Malaysia
Maldives
Mongolia
Nepal
Pakistan
Palestine
Philippines
Saudi Arabia
Singapore
Sri Lanka
TaiwanTajikistan
ThailandTurkeyUnited Arab Emirates
Uzbekistan
Viet namA S I A
Algeria
Botswana
Cameroon
Cote d'Ivoire
Egypt
Ethiopia
GambiaGhana
GuineaKenya
LesothoLiberia
Madagascar
Mauritius
MoroccoMozambique
NigeriaSouth Africa
Seychelles
Sudan
Swaziland
Tanzania
Tunisia
ZambiaUgandaZimbabwe
AFRICA40

Judicial and
Other
Administration
7
21

Judge

8
12

PublicProsecutors

PoliceOfficials

5

4
12
6

Correctional
Officials(Adult)Correctional
Officials(Juvenile)

5

4
5
13
14
15
21
5
5

10
22
11
3

24
8
3

1

2

1

12
1
8
20
1
1
28
19
1
17
4
10
21
12
1
23
2
1

3

53

6
2
1

7
7
1

13
10

11
2

9
18
20
4

23
6
5
13
2

12
20
2

35
1

37
1

16
2

17

5
198
3

2
210
2

7
372

1
188

Probation Family
Parole
Court
Officers Investigation
Officers

Child
WelfareOfficers

4

Social
WelfareOfficers

Training&
Research
Officers

5

Total

Others

2

2
3

5

2
10
11
51
25
8
5
4
5
3
6
1
10
42
1
2
31
33
34

25
7
14
6
5

3
1

9
1
3

1

3
2
6

7
1
6

5

2
2

22

4

3

33

8

3

8

1

2

9
3
10
19
1

3

11

3
1

10
11

8

11

4
1
1

1

1

3

5

1

7

1

3
2

3

1

2

3
1

4
1
1

6
1
1
1

1
1

1

8

5
1

4

4
46

1
39

25

3

1

1
10
303

4

1
2
2

1
6

66

2

1
3
1
3

37

4

1
1
1

1
3
1
2
5
2
12
1

1
7

6
2

2
1

1
1
1
1
1

1

2
4

3

4

1
1
1
24

16

13

4
1
5
2
3
13
2
6
1
6
5
5
83

1
5
3

1
1

1

1
1

2

1

19

0

9

0

0

1

9

3

24
61
6
6
7
38
67
97
116
41
28
4
10
3
103
2
31
125
4
3
86
78
4
127
15
73
109
21
1
162
8
1
1
30
1,492
5
3
4
3
10
4
2
8
3
38
3
1
1
1
5
3
12
7
4
19
2
18
1
7
7
6
177

APPENDIX

Professional
Background
Country
Australia
VanuatuFiji
Kiribati
Marshall Island
Micronesia
Nauru
New Zealand
Palau
Papua New Guinea
Solomon Islands
Tonga
Western Samoa
THE PACIFIC
Argentina
Barbados
BelizeBolivia
BrazilChile
Colombia
Costa Rica
EcuadorEl Salvador
GrenadaGuatemalaHaiti
Honduras
Jamaica
MexicoNicaragua
PanamaParaguay
Peru

Judicial and
Other
Administration

PublicProsecutors

Judge

Correctional
Officials(Adult)Correctional
Officials(Juvenile)

1
6
1
1

1

9

3
20

Probation Family
Parole
Court
Officers Investigation
Officers
1

Child
WelfareOfficers

Social
WelfareOfficers

Training&
Research
Officers

Total

Others

1
1

15

3
1
1
1

1
10
3
2
1
25
2

1

4
1

1
3
2

15

1

14
2
6
1
51
2
1

1
10

1

2

3
3
29

1

1
1
0

7

0

0

3

1

1

1

1
3

1

1
1

2
1
3
3

1
4

1

1

1
3
2
4
1

15
4
3

2
1
1

4
2
1

1
2

1

1
1

1
3

3

1

1
1
1
4

10

Saint Christopher and Nevis

Saint Lucia
Saint Vincent
Trinidad and Tobago
Venezuela
U.S.A.(Hawaii)

1

NORTH & SOUTH AMERICA

24
1

Albania
Bulgaria
Estonia
Hungary
Macedonia
PolandLithuania
EUROPEJAPAN
TOTAL

PoliceOfficials

4
1

2
9
2
1

1
1
1

1

2

1
2
1

1
1

1
20

18

10
63

1
7

2

1

1
1

0
86
329

0
77
116

0
181
264

0
60
65

2

1

3

7

0
38
44

0
2
53

0
48
100

0
67
105

1
1
1
1

3
110
489

0
153
390

1
244
501

1
1
3
94
666

3
3
52
1
4
1
1
2
1
45
6
14
4
137
6
2
2
2
22
7
11
14
6
4
1
1
1
4
4
1
1
4
10
24
2
2
2
2
13
1
149
1
1
1
1
1
1
1
7
1,160
3,122

41

PART TWORESOURCE MATERIAL SERIES
NO. 63Work Product of the 126th International Senior Seminar“ECONOMIC CRIME IN A GLOBALIZING SOCIETY ~ ITS IMPACT ON
THE SOUND DEVELOPMENT OF THE STATE”

UNAFEIVISITING EXPERTS’ PAPERSECONOMIC CRIME: EMERGING THREATS AND RESPONSES SINGAPORE’S EXPERIENCE
Paramjit Singh*1

I. INTRODUCTION
The trepidation over economic crime lingers as a significant threat to businesses across all countries andindustries. According to the PriceWaterhouseCoopers Global Economic Crime Survey 2003, at least 37
percent of the top 1000 businesses in 50 countries said they suffered from one or more serious frauds during
the previous two years. The reasons to be concerned about economic crime however transcend threats tobusinesses alone. Peter Grabosky of the Australian Institute of Criminology surmised:‘The essence of fraud is a breach of trust. Trust is the very foundation of commerce, and the verybasis of civil society. Economic crime thus jeopardises basic interpersonal relations, economic
development, and in some cases, even the stability of government. The collapse of the Albanian regime
following massive losses sustained by thousands of citizens in an investment fraud constitutes anotherexample.’The President of the World Economic Forum, Klause Schwab also alluded to the recent financial
scandals and the matching negative ramifications on the world’s economy:“Revelations of dishonesty in some of what were once the world’s most venerated firms abound;failed CEOs departing with severance packages worth millions, top managers cooking the books,
shareholder and employee welfare subjugated to the greed of the few. Even if these cases turn out to be
spectacular exceptions, the image of global business has already been tarnished, and along with it, that of
the globalised economy. In this context, it is not surprising that stock prices around the world have fallen
to such low, barely fighting to come back.”
The PriceWaterhouseCoopers Global Economic Crime Survey 2003 underscores the imminent insidiouseffects of economic crime on the financial markets. At least 47 percent of the more than 3600 corporate
leaders at the top 1000 companies in 50 countries surveyed believed that economic crime has long-term
effects on their share price. This perhaps indicates that the financial markets no longer view economic
crimes as a historical offence with limited future relevance.
The trepidation over economic crime assumes an even greater ominous dimension when one computes
the devastating impact of money laundering on the basic structure of the society. Money laundering has been
described as the world’s third largest business right behind foreign exchange and oil.2 Around 2-5 percent(US$800 billion to US$2 trillion) of the world’s GDP are laundered each year. Macro economic policy makers
now have to include money laundering activities in their evaluation of the economy to avoid misdiagnosis.3
Money laundering makes criminal activities more difficult to detect and can lead to the criminal infiltration oflegitimate businesses. Gil Galvao, President of the Financial Action Task Force, cautioned:* Assistant Director, Commercial Affairs Department, Singapore Police Force. The views expressed in this paper are entirely
the author’s personal views and they do not necessarily reflect the views of his office.
1 The views expressed in this paper are entirely the author’s personal views and they do not necessarily reflect the views of
his office.
2 See Jeffrey Robinson’s “The Laundrymen”(1996).
3 Speech delivered by Mr Tan Siong Thye, Director of the Commercial Affairs Department and Senior State Counsel in
Singapore at the 7th Annual Conference and General Meeting of the International Association of Prosecutors in London in
Sept. 2002 pg 2.

45

RESOURCE MATERIAL SERIES No.66‘Money laundering, organized crime, and economic crime are often integrally linked, and criminalorganizations will use their profits to infiltrate or acquire control of legitimate businesses, and to put legal
competitors out of business. They can also use those profits to bribe individuals and even governments.
Over time, this can seriously weaken the moral and ethical standards of society and even damage theprinciples underlying democracy’.
The intimate but menacing link between terrorist financing and money laundering exacerbates theinsidious impact of economic crime. Mr Tan Siong Thye, the Director of the Commercial Affairs Departmentof the Singapore Police Force had at the 7th Annual Conference and General Meeting of the International
Association of Prosecutors in London in September 2002, beckoned the call for vigilance. He cautioned:‘As with criminals, money is oxygen to terrorist. Money laundered represents the fruits of drugtrafficking, arms dealing, prostitution, people smuggling, kidnapping, extortion and terrorism. Ignoringmoney laundering and terrorist financing will result in global mayhem. Besides the apparent social
implications, such as the massive loss and destruction following the September 11 attack, money
laundering and terrorist financing can also create economic chaos. Allowing the flow of terrorist funds tocontinue leads to further terrorist attacks and heightened security concerns. That translates into higher
costs for airline transport, lower tourism revenue and higher prices and transportation cost formerchandise.’
No one really knows the exact cost of white-collar crime. The US Chamber of Commerce puts the annual
financial tab at a massive US$40 billion, the world over.4 However it is commonly held that unlike mostproperty crimes, victims may not even have detected the more complex of economic crimes. There may also
be instances wherein the victims are reluctant to report such crimes. This is attributed to a multiplicity ofmotivations that range from pure embarrassment to the negative impact reporting may have on business
relationships or staff morale, in the case of corporations. Indeed, according to the 2003
PriceWaterhouseCoopers economic crime survey,5 only 48 percent of companies in the Asia-Pacific region
said they had a requirement to report fraud to an external body. It is against this backdrop, that Mr Wong
Kan Seng, the Singapore Minister for Home Affairs, had at the opening of 2001 International Economic
Crime Conference in Singapore, cautioned that “globally, economic crime of all sorts must cost governments
and businesses billions of dollars every year.”
Given its perilous potential, there is clearly a public interest and protection element in economic crimethat requires an earnest action against such crimes. For some, economic crime is not perceived as a serious
crime because unlike violent crime with its noticeable impact on its victim, economic crime is seen as nonviolent in nature. Experts, academics and practitioners alike, have however alluded to the pernicious anddevastating impact of economic crime. It has at one extreme, the potential to cause social and economic
chaos; and at the other, to cause colossal losses to individuals or corporations. There should therefore be no
scepticism that economic crime can beget far more grave and momentous ramifications. So, while academics
often debate on the definition of commercial crime, white-collar crime, business crime or economic crime,
the primary problem lies not in defining it. The challenge lies in developing appropriate strategies to deal
with it effectively.
The Singapore experience has shown that for a determined nation, the problem of serious economic
crime is not insoluble or insurmountable. Given that Singapore’s economic well-being depends in large
measure on the success and integrity of the financial institutions, economic crimes are looked upon with agreat degree of severity in Singapore. The policy in Singapore has always been to ensure the highest qualityof integrity in the financial system. Corporate and national governance is taken very seriously. Indeed, in the
PERC Business Environment Report 2003,6 which ranks the socio-political and economic variables invarious countries, including the United States, Australia and Hong Kong, Singapore was ranked as having
the best average scores for the quality, accountability and standards of its institutions. These institutions
4 Singapore Law Gazette ( Sep 2001), “White-collar Crime - Wide Border Crimes” pg 1.
5 The PriceWaterhouseCoopers Global Economic Crime Survey 2003 involved interviews with more than 3600 CEOs, CFOs
or those responsible for detecting or preventing economic crime at the top 1000 companies in 50 countries.
6 The Political & Economic Risk Consultancy Ltd’s Business Environment Report 2003 comprised a survey of over 1000
senior expatriates living in Asia.

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include the legal, judiciary, police, stock market regulatory, monetary authorities and the quality of corporate
governance.
As one of the key institutions and bastions for the prevention, detection and investigation of economic
crimes in Singapore, the Commercial Affairs Department (“CAD”) of the Singapore Police Force is no lessresolute in its mission to safeguard Singapore’s integrity as a world class financial and commercial centre
through the vigilant and professional enforcement of the laws. “The mission of CAD is to make sure no one
unlawfully enriches himself/herself at the expense of others...CAD believes it serves the public interest best
if it is able to do its job properly and professionally...and how well CAD does its job has a bearing on foreign
investor confidence in Singapore,”7 Mr Tan Siong Thye, the Director of CAD told The Business Times in awide ranging media interview in July 2003.
The focus, direction and strategies of the Singapore police towards this direction have not goneunnoticed. The World Global Competitiveness Report 2002-2003,8 ranked Singapore’s police services as oneof the most reliable (among 80 countries the world over) in protecting businesses from criminals.
This paper will first dwell on the more common serious economic crimes from Singapore’s perspective
before dealing with the credit card fraud situation in the Asia Pacific region. It is also critical to allude to thechallenges that transpire from the new operating environment. Finally, the paper will discuss Singapore’s
experience in the successful battle against economic crime.

II. SERIOUS ECONOMIC CRIMES
It would not be possible in a paper to deal with the myriad spectrum of the economic crimes that confront
us in the 21st century. As serious and complex economic crimes currently occupy a central position as an
economic evil in the world, the paper will provide an overview of the serious economic crimes in Singapore.
The objective is not to provide an exhaustive and in-depth analysis but to focus on the nature, challenges andsuggested responses to these categories of serious and complex economic crimes. The aim in canvassingthese trends is to identify areas where fraud prevention efforts can be mobilised in advance, so that nations
may enjoy the maximum benefits of social and economic change, while minimising the downsideconsequence.
The crime situation in Singapore in 2002 was the second lowest in 15 years after 2001. The crime rate
per 100,000 total population was 768 cases in 2002. There were 2,669 cases of cheating and related offencessuch as criminal breach of trust, forgery and counterfeiting. More than 36 percent of these 2,669 cases
comprised cases that involved confidence tricksters who used various ruses to deceive victims into partingwith their money, such as supplying or making false claims/purchases, deceiving victims into buying fake
items or obtaining loans from victims under various pretexts.9
Whilst it is clear that the majority of economic crimes in Singapore comprise confidence tricksters, thispaper will focus on 4 categories of serious economic crimes where fraud prevention benefits had beenproactively mobilised by the Singapore authorities to keep the problem in check.

A. Securities Fraud
A safe and sound financial sector will provide investors with the confidence to participate in the activitiesof the capital markets. Market misconduct is the very antithesis of efforts to safeguard the financial integrityof the market. Such misconduct offends basic notions of fairness and jeopardizes the integrity of the open
markets. Various forms of prohibitive market conduct in relation to securities and futures in Singapore arecaptured in the Securities and Futures Act. The misconduct range from false trading, market rigging andmanipulation, disseminating false or misleading information statements to bucketing and insider trading.
7 The Business Times 14 July 2003.
8 The Global Competitiveness Report is a publication of the World Economic Forum and is widely recognised as the world’s
leading cross-country comparison of data and information relating to economic competitiveness and growth.The Reportcomprises, inter alia, an exhaustive survey of senior business executives and rankings of 80 industrialized and emerging
economies the world over.
9 http://www.spf.gov.sg/.

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1. Alternative and Borderless Trading Platforms
The digital age has fundamentally transformed the manner in which the capital markets operate. The
Internet provides investors with an alternative trading platform that is convenient, cheap and provides easy
access to the capital markets.10 The flip side however, is that these revolutionary trading platforms alsopresent new modes of perpetuating fraud, including those relating to the trading of securities.
Market manipulators who disseminate false or fraudulent information to the public find the Internet aconvenient apparatus to reach a wide scope of users within a short span of time. False or misleading
information, intended to inflate or deflate the prices of securities, is posted on online message boards orcirculated in Internet chat rooms. Likewise, perpetuators of boiler room operations have jumped onto theInternet bandwagon.11 Instead of employing groups of telemarketers to laboriously reach out to investors topromote worthless or bogus securities, the Internet can now be used to market their wares to moreunsuspecting investors worldwide.
The US has already seen the negative ramifications of these alternative trading platforms. In 2001, theUS Securities and Exchange Commission filed charges against 19 individuals involved in an insider trading
scheme.12 It was the first case involving the use of the Internet to pass insider information. The originatorsof the scheme met each other when they began communicating via the Internet and hatched the scheme inan Internet chat room. They used private internet chat rooms and instant messaging capabilities of theInternet to pass material non public information.
Singapore also experienced its first and fortunately, only case involving the use of the Internet todisseminate false information for the purpose of share market manipulation. In 2001, a rogue dealer
representative posted a false take-over bid posting of a public listed company on the website of a financial
portal for stocks and shares. The false website posting induced the purchase of securities of the company
and triggered a knee-jerk buying of its shares, thus resulting in a rise of the share price. Fortunately, swift
forensic-led investigation by the CAD led to the identification of the dealer within a span of several hours. In
meting out the jail term to the dealer, the District Judge recognised that the Internet can be used as a
powerful mechanism to reach a wide and vulnerable class of persons.
National boundaries are also becoming meaningless in the global securities market.13 There is a growing
assimilation of the global capital markets as a result of the emergence of a global economy. Global
competitiveness has led various capital markets to reach out to each other and to overseas clients andinvestors. The merger of the London Stock Exchange with the German Deutsche Borse is a case in point.
Other exchanges around the world are linking up with each other in an effort to stay competitive. Morecountries are also trading shares of foreign companies on their Exchanges. Online Internet trading has
facilitated foreign investors to link directly to various capital markets. These developments have blurred thenational boundaries in the global securities market.
2. Insider Trading
Integrity of the markets is the cornerstone of maintaining investor confidence. This very integrity can beeroded by insider trading - the buying and selling of securities based on some piece of confidential
information which is not generally available and which is “price sensitive”, i.e. likely, if generally available,materially to affect the price of a security.14 Some academics claim that insider trading is actually thequickest way for information about the companies to reach the market, and so produces share prices that
better reflect a firms’ true value. Others retort that “the possibility of being outfoxed by better-informed
insiders makes shares riskier for outsiders, who are therefore not willing to pay as much or may not buy atall”15. A study by the Indiana University in the US has however confirmed what many already know - that
insider trading inflates the cost of raising funds in the stock market, since investors will pay less for shares
10 Speech delivered by Mr. Tan Siong Thye at the Cambridge Symposium 2000.
11 Richard Walker, “A Bull Market in Securities Fraud?” (April 1999), in a speech by Director CAD at Cambridge International
Symposium 2000.
12 US Securities and Exchange Commission Litigation Release No 16469 (14 March 2000).
13 Speech delivered by Mr Tan Siong Thye at the Cambridge Symposium 2000.
14 Council for Securities Industry, ‘Statement on Insider Dealing’ (1981) CSI No 5, pg 3.
15 www.economist.com/editorial/justforyou/current/fn5060.html,’Insider Trading’.

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floated in markets they think are rigged. The study also revealed that those countries which enforced theirinsider-trading laws had a lower cost of equity”.16
The Singapore Government, like most regulatory bodies in the world, is unambiguous on its position on
insider trading. The MAS encapsulated its undesirable impact: “Insider dealing is a particularly damaging
activity as it destroys the trust between investors and issuers. Insider trading erodes the confidence ofinvestors and is antithetical to market fairness and efficiency.17 This fairness notion rests on the belief that
insiders should not have an undue advantage over other investors in the market. The rationale to regulate
the potential abuse of advantageous information is that there is public interest in protecting the free market.
In cases where there is information asymmetry due to the use and abuse of confidential, price-sensitive
information, then market failure is said to occur.18
To bring its securities and futures legislation in pace with advancement in capital markets, be consistent
with international best practices and introduce greater market discipline, the Singapore government relooked at the jurisprudential approach to Singapore’s insider trading laws. The laws on insider trading wereredefined in 2001 by removing the need to prove the defendant’s connection with the corporation, andshifting the focus to the possession of inside information by the accused. This means that liability now
directly depends on whether the defendant traded whilst in knowing possession of undisclosed market
sensitive information (“the information-connected approach”), and is not dependent on how he wasconnected with the company concerned (“the person-connected approach”).
The new information-connected approach creates a more level-playing field among market participants.
In the traditional person-connected approach, the burden was on the Prosecution to show the defendant hadreceived the information from the insider, had an arrangement or association with him and was aware thatthe insider was precluded from dealing. This meant that it was more difficult for the defendant to beconvicted as the balance was tilted too much in his favour, to the detriment of other market players. It wasalso arduous for others down the information chain, i.e. those who received price-sensitive information fromsome other persons and traded in securities, to be caught. The information-connected approach shifts thecore of the offence, i.e., trading while in possession of undisclosed price-sensitive information by the
defendant. The new provisions also tightened the mens rea test for directors or connected persons. A
refutable presumption was created that connected persons with possession of inside information are deemedto know that the information is undisclosed and price sensitive.
The new standard aims to introduce a greater degree of market discipline for those in fiduciary positions.
The regulations curbing the misuse of privileged information also help to create a “level playing field”
among market participants. The shift in approach will send a clear message to investors and market
participants that use of material non-public information to one’s advantage will not be tolerated.
3. ‘Bucket Shops’‘Bucket shops’ commonly refers to commodities trading companies that lure victims to trade in securities
by masquerading as legitimate trading companies offering lucrative ‘jobs’ with minimal requirements. These‘jobs’ include clerical and administrative positions that require no experience, qualification or age limits.
Once lured, instead of the promised jobs, jobs seekers are presented with a sales pitch to entice them into
trading in commodities. They end up investing with these companies which may “bucket” (claiming to effecttransactions for the clients when they did not) or “churn” (make repeated transactions) to earn commissions
from clients. The victims usually show initial profits but soon start losing money and are asked by thecompanies to top up their trading accounts. To cut or recover their losses or retrieve their principal sum, thevictims end up investing more money and eventually losing their entire investment.
Singapore effectively dealt with the ‘bucket-shops’ through a multi-pronged approach. Various
government agencies work within a multi-dimensional approach. A new legislation, the amended
Commodities Trading Act criminalised inter alia, false trading, bucketing and fraudulently inducing trading in
futures contracts and employment of other fraudulent practices in relation to bucket shops. It also broadened
16 Ibid.
17 Monetary Authority of Singapore, ‘Consultation Document on Insider Trading’ (27 Jauuary 2001) pg 1.
18 Yang Ing Loong, Andy Yeo and Sharon Lee, ‘Insider Trading’ reported in www.lawgazette.com.sg.

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the definition of commodities to include intangible commodities such as band-width and indices. Under theamended Act, harsher penalties also await those who trade without a license.
The legislative effort is complemented by the strenuous enforcement efforts of the CAD. Following
reports that bucket-shop operators had “cheated unsuspecting job-seekers of some S$1 million in the first
four months of 2001,”19 CAD successfully launched a major calibrated enforcement blitz. More than 8
corporations and 38 individuals were charged under the amended legislation, effectively curtailing thebucket-shop problem in Singapore.

B. Corporate Fraud
1. Sound Corporate Governance
A good corporate governance regime is central to the sound development of the state. A sound corporate
governance regime, comprising a well functioning legal, regulatory and institutional environment helps tomaintain overall market confidence, renew industrial bases, attract long term investment capital, sustain
economic growth and ultimately enhance the nations’ overall wealth and welfare. The integrity ofcorporations, financial institutions and markets is particularly central to the health of economies and theirstability. The corollary of poor corporate governance practices is well expressed by Arthur Levitt, former
chairman of the Securities and Exchange Commission in a speech in 2001:“If a country does not have a reputation for strong corporate governance practice, capital will flow
elsewhere. If investors are not confident with the level of disclosure, capital will flow elsewhere. If a
country opts for lax accounting and reporting standards, capital will flow elsewhere. All enterprises inthat country, regardless of how steadfast a particular company’s practices, may suffer the consequences.
It serves us well to remember that no market has a divine right to investor’s capital”.
Corporate governance has gained global significance in recent years. The President of the World Bank,
submitted that, “the proper governance of companies will become as crucial to the world economy as theproper governing of countries”.20 This view is particularly momentous when one takes account of theconsensus view that poor corporate governance often causes corporate carnage and failure. The recent spateof corporate calamities, the likes of Enron and WorldCom, prompted the President of the Institute ofChartered Accountants in England and Wales to remark, “behind every headline case is a failure of corporate
governance”.21
Corporate governance of companies may be defined as the processes and structures in which thebusiness and affairs of the individual companies are governed by their board of directors and senior
management. The OECD issued a set of corporate governance standards and guidelines to help corporations
and other parties that have a role in the process of developing good corporate governance. The OECD paper
defines corporate governance as a “set of relationships between a company’s management, its board, its
shareholders, and other stakeholders.”
Corporate fraud and scandals are the very antithesis of good corporate governance. Corporate
misconduct generally refers to punishable acts that are committed by directors, agents or those incontrolling positions within corporations, using the resources and power derived from the corporate form as
a vehicle to achieve ends. These acts may either benefit the individual personally or the corporation. The
acts are distinguished from other punishable acts against the interest of the corporation that are committed
for personal gain by agents or persons who are not in controlling positions, such as misappropriation of
corporate properties.
2. Collapse of Barings
The infamous 1995 collapse of Britain’s oldest merchant bank, Barings, offers an unfortunate but succinct
illustration of the nexus between lax corporate governance and corporate failure. Much of the circumstances
surrounding the collapse revolved around,
19 The Straits Times April 18, 2001.
20 Wolfensohn, J.D (1998), ‘A Battle for Corporate Honesty, The World in 1999’ in The Economist Newspaper.
21 Wyman, P.(2002), Speech given at ICAEW Council on Enron, Feb 2002, reported in http://www.icaew.co.uk.

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Nick Leeson, the then managing director of Barings Futures (Singapore) Pte Ltd (“BFS”), Barings
Singapore office. Leeson had concealed the spiralling debts which he had chalked up as a derivatives traderin Singapore, causing the 240 year old bank to collapse, under losses of US$1.4 billion. Leeson was
sentenced to six and half years in a Singapore prison for charges of deceiving the auditors of Barings and theSingapore International Monetary Exchange Ltd (“SIMEX”).
There are several lessons in corporate governance that arose from the collapse of Barings. The main
thrust of this section is to underscore some facets of corporate governance drawn from the investigation
report on the affairs of BFS by the Inspectors appointed by the Minister of Finance, under the Companies
Act (“the Report”). The report was directed to the specific circumstances surrounding BFS and not the
Barings Group. The succinct report is reproduced, in part, in this section to assist in the analysis.
Barings set up BFS in 1987 and was granted membership by the Singapore International Monetary
Exchange Ltd (“SIMEX”). Leeson was employed by Barings Securities Limited (“BSL”) in 1989. In 1992, heapplied for registration as a dealer with the Securities and Futures Authority (“SFA”) in England. When the
SFA queried BSL on a false statement that Leeson had made in the application, BSL eventually withdrew
the application to the SFA.
Notwithstanding his failure to register with the SFA, it was decided from the outset that Leeson would
also trade at BFS, as its floor manager at SIMEX. In Leeson’s application to register with SIMEX, theExchange was never made aware of the false statement that Leeson had made to the SFA. SIMEX later said
that Barings “contributed to the deception by supporting his application which contained false information”.
Although required to do so, Leeson also did not disclose the outstanding county court judgement against him
in the UK.
By 1993, Leeson was trading on behalf of the Barings Group (referred to herein as “proprietary trading”).
By the end of 1994, Leeson was thought to be one of the major contributors to the profits of the Barings
Group. As a proprietary trader, Leeson’s primary activity was to arbitrage or to take advantage of price andinterest differences between those quoted for identical contracts on SIMEX on the one hand and on theTokyo Stock Exchange or the Osaka Securities Exchange on the other.
Almost immediately after BFS began trading on SIMEX as a clearing member, Leeson opened a trading
account which he named account 88888. This was the account Leeson subsequently used to conceal errors
and to carry out unauthorised trading activities using the banks money up to Feb 1995. The transactions
booked in account 88888 by Leeson were “distinguished by three features:(i) the size of the positions was large from the outset and grew quickly;(ii) the transactions were not hedged by matching positions. As a result, the Barings Group was exposed
to enormous potential losses from even small market movements; and(iii) the transactions consistently reflected losses from the time the account was opened. In fact the
cumulative losses on account 88888 amounted to \135.5 billion (S$2.2 billion) after the collapse of theBarings Group.22 Leeson required funds to finance the losses and margin deposits. The funds camefrom other Barings Group companies. Despite this, the Report found that “Barings management
consistently contended that account 88888 was an unauthorised account that they had no knowledgeof”.
The Report found that there were shortcomings in the way in which the persons to whom Leeson
reported implemented the matrix management structure. In theory, the Barings Group functioned on amatrix management structure, with Leeson reporting both to his local managers in BFS and his productmanagers in London. In practice however, Leeson’s local managers considered BFS as Leeson’s own
responsibility and thus did not check Leeson’s activities. The local managers also never remedied the
problem highlighted in a 1994 internal audit report which identified Leeson’s control of both the front andthe back offices of BFS as a problem.
The Report also concluded that the vast sums of money remitted to BFS, which exceeded the total valueof the Barings Group’s assets, failed to attract close scrutiny by the Barings Group. The Barings Group’s
22 See Michael Lim and Nicky Tan’s, “Barings Futures (Singapore) Pte Ltd. The Report of the Inspectors appointed by the
Minister for Finance” (1995).

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risk positions, trading limits and trading performance and the allocation of funding were monitored each day
by a high-level Asset & Liability Committee (“ALCO”). It established that at some stage, ALCO did decidethat Leeson should be asked to reduce his positions, but this decision was never effectively implemented.
The Barings Group’s Financial Controls Department also apparently did not discover the existence ofaccount 88888 although it might have been expected to do so. The Report attributed this partly to thelimited view that the Barings Group Finance Director, took of the role of Financial Controls. It establishedthat Financial Controls never had an accurate idea of the true profits and losses of the Barings Group nor
properly monitored the cost of funding of the Barings Group’s trades executed by Leeson.
The Report found that there was insufficient action taken by the Barings Group to reconcile Leeson’sfunding request. Leeson kept cabling Barings London office to send him more money, ostensibly to fundclient positions or meet demands by SIMEX for margin calls (payment deposited with the exchange as
security against loss). In actual fact, the money was to finance the losses booked in account 88888. The
Report found that Credit Control made no attempt to verify the identities and creditworthiness of the“clients” receiving these loans. Any such attempt would have revealed that there were no such “clients”.
The Report concluded that the Barings Group’s management either knew or should have known about
the existence of account 88888 and of the losses incurred from transactions booked in this account. This wasdue to several facts, including the fact “that very large sums of money were remitted to BFS without
requiring BFS to justify its requests for funds. Furthermore, the 1994 internal auditors had identified as one
key issue to be examined further in Singapore, the fact that Leeson occupied a very powerful position
controlling both the front and the back offices of BFS. He was both chief trader and head of settlements andwas thus in a position to record the trades that he himself had executed in any way he wished. Nothing wasdone to remedy this”.
The Report also alluded to the inability of Barings Group Treasury and BSL to understand BFS’s margin
calls. In January 1995, given the magnitude of the Barings Group’s positions on the Exchange, SIMEX
queried BFS on the adequacy of its financial resources to deal with potential losses and margin calls. A reply
by BFS, drafted by the Group Treasurer and approved by ALCO, assured SIMEX of the adequacy of funds tosupport the positions maintained with SIMEX. ALCO had however made no effort to understand fully the
position and the basis for the assurances it gave to SIMEX. The Report found that “had ALCO taken any
such step, it might well have curtailed the flow of funds to BFS. This would have deprived Leeson of thefunds he needed to place as margins with SIMEX, prevented him from continuing to trade in the way he did,and possibly averted the collapse of the Barings Group”.
In addition, the Report concluded that action had not been taken to fully investigate and resolve a
discrepancy detected during an audit at BFS. In January 1995, while performing the annual audit of BFS’s
financial statements for the year ended 31 December 1994, BFS’s external auditors discovered a
discrepancy of \7.7 billion (S$115 million) between the SIMEX Yen settlement variation account in thegeneral ledger and the balance for the same account as shown on the SIMEX statements. To cover up thisdiscrepancy, Leeson concocted a fictitious deal, a supposed ‘over-the-counter’ deal that was supposedly
brokered by BFS for BFL and Spear, Leeds & Kellogg (“SLK”). He told the auditors that this discrepancy
represented a receivable due to BFS from SLK. When further queried, Leeson gave a different explanation,that the balance had in fact arisen from a transaction that he had brokered between SLK and BanqueNationale de Paris (“BNP”) without any authorisation from his superiors and that BFS had paid BNP a sumof about \7.7 billion (S$115 million) two months earlier. The Report found that in fact, there was noreceivable due from SLK at all. The discrepancy represented part of the funds remitted by the other Barings
Group companies to BFS that Leeson had used to finance the losses and margin calls in respect oftransactions booked in account 88888.23

23 Leeson was subsequently prosecuted and convicted in Singapore for cheating Coopers & Lybrand, BFS’s auditors, into
giving an unqualified audit clearance. He deceived them into believing that US securities house Spear Leeds and Kellogg(SLK) had paid BFS a sum of 7.78 billion yen through Citibank in Singapore for an Over-the-Counter trade Leeson had
brokered. To do this, Leeson concocted an option to deal to balance his company’s books. To cover his tracks, he hadcomputer entries faked, confirmation letters as “evidence” for the trade and also falsified bank statements.

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In summary, the Report found that:(i) Almost immediately after BFS began trading on SIMEX in 1992, Leeson opened a trading accountwhich he named account 88888 and booked a large volume of transactions in this account. He thencontrived a series of measures to conceal the true nature of the account from the external auditorsand supposedly from his superiors. The net effect of these transactions was to artificially inflate theBarings Group’s reported profits which was attributed to his performance; and(ii) Information pertaining to account 88888 and the margin calls on the account was available in London
at all times. In spite of the growing discrepancy between the funds remitted to BFS and thetransactions in respect of which the funds had been requested, other Barings Group companies
continued to remit funds to BFS, and by the date of the collapse, had remitted about S$1.7 billion”.
According to the Report, the collapse of Barings “could have been averted if:(i) the growing difficulty in reconciling Leeson’s funding requests had been thoroughly and promptly
investigated; or steps had been taken to overcome the inability of Group Treasury and BSL
Settlements since, at least, June 1994, to understand BFS’s margin calls; or(ii) the significant risk (i.e. those highlighted by the internal auditors in October 1994, that Leeson could
override internal controls by virtue of his command of the front and back offices) had beenaddressed; or initiatives such as the “middle office” person had been effectively implemented when
they were proposed in the last quarter of 1994; or(iii) Barings high level Asset & Liability Committee had taken Leeson to task for increasing his
positions, despite instructions in 1995 that he should reduce his positions; or the discrepancy
highlighted in the 1995 audit (the SLK Receivable) had been fully investigated and resolved at theend of January 1995; or(iv) ALCO had understood and effectively addressed the concerns expressed by SIMEX in its letters to
BFS, particularly as to the large positions maintained by BFS, and its ability to fund these positions;or the reasons underlying the requests for very large amounts of funds by Leeson in January andFebruary 1995 had been analysed and understood”.
3. Implications for Corporate GovernanceThe collapse of Barings had therefore much to do with the endemic ineffective corporate management. At
its core was the failure of internal controls. A well-informed board did not seem to have been present in thiscase. W. P. Hogan alluded to the failure of the management in its monitoring and analysis of trading activities
as well as the risk associated with them.
Accountability was suspect. The Inspectors Report alluded to the endemic repeated failures by the
management to deal with the problems highlighted earlier in this section. W. P. Hogan also observed that the“inefficiencies of Barings accounting, recording and settlement systems meant that data supplied to theleading supervisor was defective and not revealing the true condition of the Group.”24 These views were
echoed in 2000 by a three-judge High Court panel in turning down the appeal against debarment by aBarings director. They alluded to the “serious abdication of responsibility” that contributed to the Barings
crisis. Likewise in June 2003, the British High Court judge hearing a litigation brought by the liquidators of
BFS against BLS, blamed Baring’s management, citing “a very high level of fault by BFS, and those to whom
the board of BFS delegated their functions”.
Leeson himself, in an interview on his side of the story given to the London’s Sunday Morning Post after
his release from prison, was reported to have said:“There are many people who have to look at themselves daily in the mirror and know too that they,
too, were not performing properly. I was feeding them complete rubbish to get cash from London to hide
the losses: at the end, as much as 40 million pounds or so a day”... I was supposed to report to four
people. ...My direct supervisor wasn’t interested in the futures and options side of the business. Anotherboss was in Tokyo and I was having less and less to do with him - only speaking to him occasionally on
the phone. Lastly there were my bosses in London. In due course he (Barings Head of Finance ProductsGroup) began to be excited by the size of the profits I was reporting, and he took direct responsibility forme.”2524 See W.P Hogan, “Corporate Governance: Lessons from Barings”.
25 The Sunday Morning Post, July 18,1999.

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Another significant focus in corporate governance relates to the role of shareholders in monitoring andrendering accountable the directors and management of any company. This aspect was not scrutinised at
length in the Singapore Inspectors report, which primarily concentrated on the assessment of what
happened at BFS. It is noteworthy however, that W. P. Hogan had alluded to the absence of questioning byoutside shareholders as another likely circumstance that may have “bred a complacency towards effective
management in the Barings case”.
Ultimately, the lesson to be drawn from the Barings fiasco is that ‘corporate governance’ is not merely alist of procedures or safeguards. It is also a state of mind.

C. Money Laundering - Singapore’s Experience in Underground Systems and Non-Financial
Institutions
Money laundering refers in general to the process intended to mask ill-gotten gains so that they appear
to have originated from a legitimate source. The ‘washing’ process to ‘clean’ these ill-gotten gains involves acomplicated cycle of transformation, commonly referred to as the ‘placement’, ‘layering’ and ‘integration’stages.
The concentration of the world’s anti-money laundering efforts has shifted over the years. Proceeds fromdrug trafficking were the focal point of the world’s anti-money laundering measures in the 1980s. In the
1990s, different forms of crimes such as corruption and financial crimes engendered the incentives formoney to be laundered. Today, terrorist financing has gained prominence in the world’s anti-money
laundering campaign. Whilst the methods are closely intertwined to traditional money laundering, thepurpose of terrorist financing may differ. Additionally, in terrorist financing, a predicate offence may not be
occasioned and the money laundered is meant to be used to commit crimes in the future. In both however,
the integrity of the financial system is struck at its core.
Singapore is strategically located at the crossroads between Europe and East Asia and is a well reputedand established international financial and commercial hub. It has institutionalised a robust and, as alluded by
the Director of CAD, “disciplined, collaborative and holistic approach” to combat the twin evils of money
laundering and terrorist financing. In formulating the right strategies, Singapore is mindful of the challenges
that we face. These challenges are aptly encapsulated by the Director of CAD at a speech to the 7th Annual
Conference and General Meeting of International Association of Prosecutors in London in September 2002:“The problem is compounded by the complex nature of money laundering and terrorist financing,which according to the IMF, “cut across several quite separate dimensions (e.g. law enforcement,
financial supervision, corporate vehicles, etc);
Moreover, money launders are free to transfer their proceeds of crime internationally but law
enforcement is hindered by jurisdictional boundaries and legal technicalities. It means that investigations
into international money laundering is hindered and delayed in the process of trying to satisfy thenational legislation in different countries;
In addition, the new knowledge based economy with the increasing use of ever changing technology
pose new challenges. The Internet and E-Commerce and online financial services provide businessconveniences, but financial institutions now find it difficult to implement “Know Your Customers”
practices, thereby reducing the quality of information supplied to law enforcers. Modern communication
technology offers instantaneous transaction capability but it heightens time constraints on theinvestigator because criminal funds must be traced and seized quickly before launders can move them.”
This paper will focus on Singapore’s proactive, collaborative and disciplined approach in ensuring the
problem of money laundering through non-financial institutions and underground systems is kept in goodstead and check.26

26 Speech delivered by Ms Yeo Pia Jee, Assistant Director of the Financial Investigation Division, CAD, at the 20 thInternational Symposium on Economic Crime in September 2002, at Jesus College, UK.

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1. Non-Financial Institutions - Proactive Enforcement Efforts
There are about 413 money-changers and 123 remittance houses in Singapore. In 2001, the remittancehouses transacted close to S$10 billion. This figure has progressively escalated by at least 35% over the last
three years. The sheer volume of public funds passing through remittance houses, make it incumbent on theauthorities in Singapore to exercise continued vigilance to ensure that the operators are properly licensed
and regulated. The legislative and regulatory safeguards and measures will be alluded to in a later section of
the paper.
The complex nature of money laundering and terrorist financing underscores the possibility of remittancehouses being used as conduits for transferring illegal proceeds or even for financing terrorist activities. The
regulator of financial institutions in Singapore, the Monetary Authority of Singapore (“MAS”) has proactively
and religiously conducted focused inspections in addition to the regular on-site inspections. A case in point
was the MAS move in 2002, to revoke the licenses of two medium-sized remittance houses in Singapore thatwere transacting several hundred thousand dollars a day. The businesses had failed to comply withaccounting and reporting requirements. Whilst there was no suspicion of fraud, the move was a prudent one
since any lapse in practices could give rise to opportunities for mal-practices to be committed.
The regulatory effort of MAS is complemented by the strenuous investigative efforts of the CAD. Since
1999, the CAD has successfully investigated 49 complaints against money-changers and remittance houses.
Of these investigations, the CAD has successfully prosecuted 20 cases. Convictions were secured for avariety of offences like carrying out business without a license and failure to segregate clients’ monies.
The comprehensive regulatory and enforcement efforts have yielded successes in uncovering fraudulent
activities. At the 2002 International Symposium on Economic Crime in London, the CAD shared a recent
case in which the prosecution of a bank cheat was successful because the money-changer was diligent inadhering to the requirement of maintaining proper records of the customer’s particulars and of thetransaction details. In the case, two officers from a local bank conspired with others to transfer S$600,000
from the bank customers’ account to an accomplice’s account. The CAD’s investigation revealed that one of
the bank officers left Singapore with 26 S$10,000 notes to a neighbouring country, to convert the money into
foreign currency so as to avoid detection and convert the S$10,000 notes into smaller denominations. On his
return to Singapore, he patronised a local money-changer and changed the foreign currency into smaller
denominations in Singapore currency notes. Because the transaction exceeded S$5,000, the money-changer
complied with MAS guidelines and he maintained proper records on the identity of the customer and thetransaction amount. This information was crucial for the investigation. It would have been difficult otherwise
to establish the chain of evidence that the cash held by the accused originated from the proceeds of his
crime. The duo was convicted for cheating the bank as well as for money laundering under the Corruption,
Drug Trafficking and other Serious Crimes (Confiscation of Benefits) Act.
2. Underground Systems
Recent events have drawn attention to the possibilities of the underground systems being used to move
“dirty” money. The ease in which money can be moved makes the infamous Hawala or Hundi systems anattractive and popular avenue for laundering money.27 In 2001, the CAD carried out an intelligence probe ona group of unlicensed remitters who routinely offered remittance services to foreign workers employed in
Singapore. As they were unlicensed, their activities were deemed illegal.
The probe resulted in the arrest of one of the bigger unlicensed operators. The investigators went on to
uncover evidence that reinforced our understanding that these Hawala operators exist to cater the needs ofthe foreign workers in Singapore. Unlicensed operators thrive because they charge low or no commissions
and they have the necessary network to ensure that remittances reach the beneficiaries, even in remoteparts of the world. They also provide value-added services to their customers by delivering letters with theremittance to beneficiaries at no extra cost. Their flexible operating hours and mobile services also provides
convenience to their customers.

27 Speech by Mr Tan Siong Thye, “Money Laundering and E-Commerce” delivered at Cambridge Symposium 2001 reported
at pg 278 of the February 2002 issue of the Journal of Financial Crime.

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There is a possibility that non-financial institutions can be used by money launders to transfer ill-gotten
gains. Singapore’s multi-faceted approach of licensing, regulation and enforcement, coupled with its world
benchmarked practices and legislation are however designed to detect and counter the use of the financial
system for money laundering. This approach has in our view, achieved optimal impact.28

D. Credit Card Fraud
1. Susceptibilities in Credit Card Fraud
Credit card vulnerabilities are manifested in various forms. They include:(i) Susceptibility inherent within credit cards
Credit cards have inherent vulnerabilities. Even when credit cards first appeared in the financial
payment systems in the 1950s, there were attempts to use them to obtain funds, goods or services
fraudulently. The illegally used credit cards are either completely counterfeit, altered (by reembossing and re-encoding), or genuine credit cards that were lost or stolen.
Legitimate or valid credit card details are highly sought after by fraudsters. The legitimate details
are used to either counterfeit a credit card or perpetrate fraud. Legitimate credit cards details may
usually be compromised at three main locations, viz.,
(a)

(b)

(c)

at a merchant location or as the credit card data is passed from one organisation to anotherduring the authorisation process via telecommunication lines. The information from a valid
credit card’s magnetic strip can be obtained through “card skimming.” This is the process of
replicating the full data encoded in the magnetic stripe of a genuine credit card, andtransferring this copied data on the magnetic stripe of a counterfeit card. To complete theprocess, the blank, white credit cards are then embossed with stolen numbers, and thesignature panel on the card installed. Identifying logos, holograms and colour printing areadded to imitate a real or valid card. The challenge is that skimming takes place without theknowledge of the legitimate card holder until much later, when he receives a statement ofpurchase he did not make; orwhere the data is stored. Computer hackers can for example, steal credit card data fromservers that store credit card details by using brute attacks or compromised passwords. In
February 2003, the United States Secret Service (USSS) and the Federal Bureau of
Investigation (FBI) conducted a probe to track down the computer hacker who breached the
security system of an entity that processed credit card transactions on behalf of merchants. It
was estimated that the hacker may have gotten access to information on as many as 8 million
credit card accounts overall. Often, when credit card accounts are hacked, account numbers
and other information obtained may be sold to others who turn, may use that information to
make unauthorized purchases or counterfeits.29
Other sources of obtaining legitimate credit card data include sources such as cloned websites, faked merchant web sites or web based computer programmes that use mathematical
Luhn algorithm to generate credit card details. In 2002 for example, a Pakistani based offenderstole credit card numbers by setting up fake online auction sites at Yahoo! and eBay. Thesestolen credit card details may be sold to others, who can make use of the information to makeunauthorised purchases.

(ii) Susceptibility in the application process
It has often been said that the most vulnerable link in the security chain of credit cards relates to themanner in which the cards are issued. Frauds relating to the issue of credit cards may sometimes be
perpetuated when an offender obtains the personal details of a real person and uses them to acquirecredit cards in that name. The liability of goods purchased with the use of such cards is then passed
to the legitimate cardholder. The crime may also be effected with the use of false identification
details to overcome the pre-approval identification process. The information is then used to secure avalid credit card in a false name by offenders who later dodge on payment and abscond. The industry
is however experiencing a decline in credit card application fraud as credit card issuers have beenquite successful in taking preventive measures.

28 Speech by Ms Yeo Pia Jee, at the 20th International Symposium on Economic Crime at Jesus College, UK.
29 CNN Money 27 Feb 2003, “Hacker hits up to 8M credit cards”.

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Fraud is most commonly facilitated if the cards are lost or stolen. At least 48 percent of credit cardfraud in the world is perpetuated through lost or stolen cards.30 Some of these cards were also newly
issued cards, stolen from the postal service, before they reached the legitimate cardholder. Thisremains the easiest way to perpetuate fraud with little or no investment in technology.
Secondly, an increasing number of altered or counterfeit cards have also been used to facilitate credit
card fraud. As the magnetic stripe of the counterfeit credit card has been replicated with the tracked
data encoded on the genuine card, issuers’ authorization processes can be easily compromised andthe CVV/CVC value is verified and the fraudulent transaction is approved on the skimmed card.
Merchants manning frontline credit card point of sales terminals are also easily deceived into
believing that the counterfeit credit card that is presented for payment, is a genuine card because ofincreasingly high quality of counterfeits and simulated security features, including fake holograms,
ultraviolet features and micro printing. Merchant fraud, in which the merchant may collude with thepresenter of the counterfeit card to generate fictitious sales transactions and share the proceeds of
payment, may also be perpetuated.
Thirdly, electronic commerce and online credit card transactions mean that there is no longer a needfor the credit card merchant and card holder to be in the same location. Online fraud poses complex
challenges as more credit card merchants embark into the global e-commerce arena, a market that
Forrester Research expects to soar to US$8 trillion by 2004. Card fraud is increasingly carried out
via faceless mediums such as the Internet and other ‘card not present’ transactions like telephoneorders. At present, most commercial transactions which take place on the Internet are undertaken bycustomers purchasing goods and services by merely disclosing their credit card details. Therein lies
the vulnerabilities. Credit card details obtained illegally have been used to incur millions of dollars inlosses. A Pakistani based offender for example, had over a three year period obtained more than
US$3 million in stolen merchandise from US online retailers by using stolen credit card details he
had obtained after setting up a fake web-site. As the magnitude of global online commerce increases,
so too will online credit card fraud, if undeterred.
2. Organised Card Counterfeiting Syndicates in the Asia Pacific Region
The Asia-Pacific region is among the fastest growing credit card market in the world. According to someestimates there are currently about 140 million to 150 million credit cards and between 6 million to 7 million
credit card terminals across the Asia Pacific region. According to MasterCard, the average growth rate forthe region will be in double digits in the next five years. Developments in electronic commerce will also
result in a higher proportion of transactions that are carried out remotely. MasterCard International
estimated that by 2005, 52 percent of its transactions will be carried out through remote services, rather
than physical point of sale terminals.31
Unfortunately, the losses sustained through credit card fraud is also an equally fast growing development
around the world. In Europe, the proportion of fraud on United Kingdom issued plastic cards committed
outside the United Kingdom doubled during the 1990s and will soon amount to one third of all losses.32
Organised credit card counterfeiting has been touted as one of the most common and potentially insidiousforms of transnational credit card fraud in the Asia Pacific region. The card industry estimates that over 60
percent of fraud losses in the Asia Pacific markets are attributable to losses sustained through card
counterfeiting activities. The Australian Crime Commission warned credit card skimming is a booming
crime, with banks reporting a 400 per cent increase in losses in 2002 and costing Australian consumers,
business and banks a whopping A$300 million a year.33

30 Tej Paul Bhatla, Vikram Prabhu and Amit Dua, “Understanding Credit Card Fraud” (June 2003).
31 Russell G. Smith, “Plastic Card Fraud” delivered at the International Association of Financial Crimes Investigators 10th
Annual Conference in Sydney 20 May 2002.
32 Ibid.
33 The Age, “Counterfeit Credit Card gangs in the Rise” (17 Aug 2003).

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According to Russell G. Smith of the Australian Institute of Criminology, offenders most involved incounterfeiting seem to belong to organised groups which emanate from the region bounded by Malaysia,
Indonesia, Hong Kong and Thailand.34 A United States report on Asian organised crime noted that Chinesecriminal groups based in Hong Kong were responsible for 40 per cent of the world’s counterfeit credit card
losses, which are estimated to cost business between A$41 billion and A$2 billion per annum.35
The challenges posed in combating organised card counterfeiting syndicates in the region areexacerbated as such organised transnational crime syndicates usually have the influence of:(i) Capital, which enables the syndicates to operate and establish bases across different jurisdictions,
recruit a network of criminal operatives from various jurisdictions and acquire the capability to
produce the counterfeit instruments to perpetuate the fraud;(ii) Organization, which enables the syndicates to effectively command, control and coordinate theirillegal operations across more than one territorial jurisdiction; and(iii) Muscle, which enables the syndicates to effectively discipline lower level syndicate operatives anddeter them from absconding with the proceeds of the crime.
Most credit card fraud syndicates in the Asia Pacific are largely involved in organised credit card
counterfeiting activities. The ‘capital-organisation-muscle’ elements of their illegal operations have been
apparent in several cases that were crippled by law enforcement agencies in the region. They include:(i) A syndicate that had established bases across Malaysia, Hong Kong and Korea. In April 2001, aninternational syndicate involved in the manufacture and use of counterfeit credit cards was crippled
in coordinated operations by the Hong Kong ICAC, Korean and Malaysian police. The suspected
mastermind had obtained bona fide credit card data through fraudulent means from hotels in
Malaysia and retail outlets in Hong Kong, which he transmitted from his base in Hong Kong torecruited operatives in Korea for the manufacture and use of the bogus cards. Close liaison between
the 3 police forces resulted in arrest in various jurisdictions.
(ii) A syndicate that operated between Japan and Hong Kong. Close cooperation between the Hong
Kong ICAC and the Tokyo Metropolitan Police (“TMP”) uncovered a transnational counterfeit card
syndicate based in Tokyo in 2001. The syndicate had operatives straddled in Hong Kong as suppliersof credit card data. As a result of coordinated efforts, TMP raided a counterfeit card factory in Tokyoand arrested five people, including a Hong Kong citizen believed to be the syndicate head. During
the raid, the TMP recovered more than 1,000 sets of genuine credit card data, over 300 blank plastic
cards used for making false credit cards, computer equipment and other tools for manufacturing false
cards. A Hong Kong man was subsequently sentenced in Japan. Inquiries in Hong Kong establishedthat the man’s accomplices had been using skimmers to collect genuine credit card data from a Hong
Kong restaurant for use in manufacturing false credit cards which were subsequently used in retail
outlets in Japan. Card issuing banks in Hong Kong had reported losses of over $185,500 due to thecriminal use of these counterfeit cards overseas.
(iii) Syndicates that had links in China, Philippines and Japan. Between 1999 and 2001, Hong Kong police
uncovered at least four syndicates that recruited employees working at Hong Kong restaurants,
cafes, hotels, nightclubs or petrol pumps, as operatives in transnational counterfeit credit card
operations. These operatives were paid commissions to use mobile pocket size skimmers to steal
credit card data from legitimate cards of their patrons. The counterfeit cards manufactured from thestolen data were subsequently used at retail outlets in Philippines, China, Hong Kong, Japan andEurope to incur more than HK$1 million in charges.
(iv) A syndicate that operated within the Indonesia, Singapore and Malaysia geographical triangle. In
2000, close cooperation between the three regional enforcement agencies resulted in the crippling ofa well organised seven-member syndicate that spanned Indonesia, Malaysia and Singapore. The
Indonesian masterminds allegedly learned the tricks from their accomplices in Malaysia andrecruited operatives from the hospitality services industry in Indonesia. The operatives were paid tosecretly copy data from genuine credit cards used in Indonesia and hundreds of cloned cards were
made. Several well groomed operatives were recruited as ‘tourists’ to proceed to Singapore andmake fraudulent purchases with the cloned cards. The syndicate’s Singapore link trained and guided
34 Russell G. Smith and Peter Grabosky, “Plastic Card Fraud” delivered at the conference on Crime Against Business in
Melbourne in June 1998.
35 Ibid.

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the ‘tourists’ as they made hundreds of dollars worth of fraudulent purchases in Singapore. The
operatives disposed of the goods through fencers locally and abroad and duly paid the proceeds to thesyndicate masterminds.
3. Singapore’s Experience
Singapore has a high number of credit card transactions, but a minimum credit card fraud rate. Between
January and November 2003 alone, total credit card billings in Singapore amounted to more than S$11.1
billion. Fortunately, in the past 5 years, there was an average of only 235 cases of credit card fraud eachyear.36 Industry sources believe Singapore has one of the lowest credit card to ‘sales to fraud’ ratio in the
Asia Pacific region - as low as 0.08 basis points. Of these, the majority comprises losses that were incurred
through credit cards that were reported lost or stolen by the card holders.
Credit card skimming activities are also relatively unknown in Singapore. The last known skimming
related fraud in Singapore occurred more than two years ago. The case involved an employee of a petrol
kiosk who was recruited to run credit cards through a traditional hand held skimming device on behalf of aforeign based syndicate. Much of the low rate of skimming activities or credit card fraud in Singapore, hasbeen attributed to the effective five-pronged countermeasures adopted by the Singapore authorities.
Online credit card fraud poses a complex challenge. There were reports that credit card merchants
located in the United States and United Kingdom were duped into accepting fraudulent online credit card
purchases, purportedly made by Singapore based fraudsters. The fraudsters had masqueraded as Singapore
based individuals and placed online orders with stolen credit card details. The crooks gave instructions to
the merchants to deliver the purchases to addresses purportedly within Singapore. A careful examination of
the consignee’s given name, address, IDD code and telephone number, would however have easily traced
the delivery address to a neighbouring country. The Singapore authorities promptly initiated various
measures, including working with the credit card industry to avert Singapore’s crime free reputation frombeing soiled by such online criminals. This approach has in our view, achieved optimal impact.
4. Metamorphosis and Shift in Strategies
Developments in the Asia Pacific region suggests that credit card ‘skimming’ syndicates have switched tosafer strategies. The syndicates now rely less on operatives with hand held miniature skimmers to steal datafrom the magnetic strips of credit cards. They have transgressed to more sophisticated ‘chip skimming’.
Chip skimming, in which memory chips are implanted directly into the credit card point of sales terminals
offer the syndicates a less conspicuous means of stealing credit card data. In 2002, the Hong Kong ICAC
discovered an electronic skimmer secretly implanted in a credit card point of sales terminal in a Hong Kong
restaurant. In the same year, the Malaysian Police discovered two integrated circuit chips implanted in credit
card terminals of two well-established hotels in Malaysia. Whilst the discoveries had prevented losses that
could have amounted to millions, the developments suggest the credit card data can be stolen moreinconspicuously with the help of a single rogue employee with some basic technical knowledge. This may be
the sign of things to come.
Syndicates have also leveraged on modern technology to perpetuate more insidious skimming activities
in the hope of frustrating detection. Recent experience in the region shows that skimming activities haveprogressed to compromising telecommunication networks through wire-tapping at host terminals. In April
2002, the Malaysian police uncovered a Pulau Langkawi based syndicate that had allegedly stolen encoded
credit card information by tapping into telephone line junction boxes. The syndicate targeted shopping
complexes which used multiple credit authorisation terminals. It is believed the syndicate enlisted
telecommunication technicians to help identify telephone lines and secretly steal credit card data. The
Malaysian police made another arrest in January 2003 in Johor Bahru, Malaysia when a suspect was caught
intercepting a telecommunication line that was illegally connected to a credit card service centre.
Apart from wire-tapping at host terminals, industry sources have also alluded to the possibilities ofskimming by running parallel lines from telecommunication networks. The stolen data may then betransmitted wirelessly using GSM technology to remote stations. Commercially available products such as
36 Based on reports made with the Singapore Police Force.

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digital voice recorders or MP3 players can store the data required to produce counterfeit cards. Merchants
and card issuers may not discover the compromise until months later when the Common Purchase Point
also known as Point of Compromise is identified. By then, evidence of the skimming would have been
removed.
The syndicates also tend to shift their activities across different jurisdictions, preferring softer targets, assoon as authorities begin to clamp down on them. Fraudsters who think rationally about the consequence ofoffending could target countries that have the lowest maximum penalties for relevant offences or those inwhich sentencing practices result in comparatively low terms of imprisonment. Russell Smith had noted thatin the case of credit card fraud, this is likely to be the case, at least with respect to large scale, organised
activities. Offenders in China, for example, where the death penalty exists for serious fraud offences, would
be well advised to target victims in Australia where in some states they would receive a few year’s
imprisonment, or less, for offending.37 In Singapore, anyone caught illegally skimming credit card data may
be prosecuted under the Computer Misuse Act, which carries a maximum punishment of ten years. Japanand Taiwan have also passed stricter fraud legislation in 2002.
5. Industry Safeguards
As much of the vulnerabilities in credit card fraud are inherent in the credit card, or lie in the application
or transaction process involving the cards, the role of the industry in safeguarding the integrity of the cardand the transaction process is paramount. Fortunately, the industry has also leverage on technologicaladvancements in its effort to prevent card fraud. Banks and merchants have deployed fraud prevention
technology in their overall risk management strategies.
The “chink in the armour” of most online credit card transactions has been ascertaining that thepurchase is indeed made by the cardholder. A combination of tools and technologies has been deployed by
the industry. These include the CVM, a 3 or 4 digit code printed but not embossed on the card nor available
in the magnetic strip, to help ensure that the person submitting an Internet credit card transaction is inpossession of the card. Payer authentication based on (PIN), associated with the card, similar to those usedwith ATM cards is also being deployed to authorise online credit card transactions. To prevent identity theftrelated fraud arising from the use of information in sales receipts, a global initiative requiring merchants totruncate account numbers on sales receipts is also being undertaken. Instead of seeing the full 16-digit
credit card number on the sales receipt, as is the case currently, the potential fraud perpetrator will only see
the last four numbers, while the first 12 numbers have been masked out. The expiry date of the card, now
openly displayed, will also be blocked out. The initiative will take full effect by 2006 and is expected toreduce online fraud significantly.
The industry has also proactively leveraged on security technology to authenticate the accountinformation and make it more difficult to copy electronic credit card data. The industry solutions include:(i) The use of ‘magnetic fingerprints’ in credit cards. The solution aims to use intrinsic physicalproperties of a credit card’s magnetic stripe to differentiate between an original and cloned card. The
combination of unique magnetic stripe characteristics, together with the account number and otherencoded data on the stripe will give each credit card a unique fingerprint. The derived algorithmicvalue or fingerprint is stored in the banks authorisation system so that it will make it difficult foranyone to present a cloned card as the magnetic fingerprint will not match those stored in theissuing bank’s authorisation’s systems. These are believed to be stopgap measures pending ultimate
migration to more secure systems;(ii) Smart credit cards, embedded with an integrated circuit chip (ICC) are also increasingly being touted
as the solution to skimming. Smart chip credit cards can contain between 16 KB and 32 KB
microprocessors, which are capable of generating 72 quadrillion or more possible encryption keys,
thus making it practically impossible to fraudulently decode information in the chip.38 Several
countries in the region have already began the migration towards the use of ICC in credit cards
instead of magnetic strips to provide a much higher platform for secured card transactions; and(iii) Biometrics have been increasingly used in international travel documents and other forms of
37 Russell G. Smith and Peter Grabosky, “Plastic Card Fraud”.
38 Tej Paul Bhatla, Vikram Prabhu and Amit Dua, “Understanding Credit Card Fraud”.

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documents, requiring high security platforms. The issue of whether biometrics will be used as astandard security feature in the credit card of this millennium will be carefully reviewed by the key
industry players, taking into consideration a host of interdependent factors, including the costs
associated with credit card security systems vis-a-vis the level of fraud.
Law enforcement and industry players in the Asia Pacific will continue to monitor trends andcountermeasures in credit card fraud. Whilst detailed statistics are not available as credit-card companies
have a policy of not revealing detailed fraud statistics, industry sources have alluded to credit card fraud tosales ratio in Asia Pacific being “less than half of the global average.”39 This notwithstanding, history has
shown that criminal syndicates prescribe to the belief that it is usually possible to triumph over the system.
As long as this belief exists, law enforcement and related parties in the fight against credit card fraud areconscious of the dangers of letting their guard down.

III. IMPEDIMENTS TO PREVENTION, ENFORCEMENT AND DETERRENCE
Effective prevention, enforcement and deterrent action in respect to serious economic crimes today arecomplicated by several challenges. They include:(i) Economic crime is more dynamic than ever. New fraud patterns emerge swiftly and can quickly
transform and migrate. As soon as businesses institute preventive security measures against one
type of fraud, it is not uncommon for criminals to move on to a less risky approach soon after. This
dynamism, fuelled by today’s fast changing technological landscape has not only led to theemergence of new forms of criminality, but also repetition of familiar economic crimes in “electronic
clothes”.
(ii) The ‘boundary-free’ nature of transnational economic crimes complicates the difficulties in locating
offenders across boundaries and mounting a prosecution. Enlisting law enforcement assistance may
be complicated as resources are finite and priorities may differ across jurisdictions. Sometimes thecost of sending law enforcement officers abroad or securing witnesses from abroad to testify inproceedings may be considered exorbitant.
(iii) Advancement in technology has complicated this further - today fewer or no accomplices are needed
to stage the fraud schemes that can reach out to a greater scope of potential victims. Some crimes
may slip detection or be discovered only much later. With more electronic commerce and little or noface to face interaction with the victim, those who masquerade their identity behind computer
networks, anonymous e-mailers and encryption devices are able to shield themselves from most but
the most determined and technologically sophisticated enforcement agencies.
(iv) The ‘faceless’ nature of serious economic crime today complicates the evidentiary limitations of
traditional enforcement and investigation. The traditional “smoking gun”, paper trial, “eyewitness”
testimony and evidential aspects are less applicable in today’s context. Modern communication
technology offers bountiful benefits but also heightens the constraints on the investigator as
evidence can disappear quickly.
(v) To compound matters, there is the complex interplay of legal problems in different jurisdictions. The
diminution of national borders in an increasingly global business community complicates thejurisdictionally limited law reform which is largely unsuited to the demands of a rapidly advancing
technological environment.
Notwithstanding the enormous difficulties, law enforcement must find ways of overcoming these
problems. To do nothing would be, as CAD’s Director Mr Tan Siong Thye cautioned, “akin to standing still in
the face of an oncoming tidal wave.” Economic crimes in the digital age will only become more severe as thenature, scope and magnitude of electronic commercial transactions multiply and increases exponentially.

IV. SUCCESSFUL RESPONSES - FIVE KEY STRATEGIC FRONTS
Crime has never been a big problem in Singapore. Singapore has grown in many ways in the past decades
to become a city-state that has sustained levels of high economic growth, political stability and a sense ofsafety and security. Indeed, in 2002 the World Competitiveness Report, one of the most authoritative
sources on the international competitiveness of nations, ranked Singapore the third safest city in the worldin terms of the level of personal security and private property. Singapore has been ranked in the top three
39 Edmond Chan, Vice President, Mastercard (Asia Pacific), The New Straits Times dated 24 March 2002: “Stricter controls,
enforcement pay off”.

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positions in this category for the last four years. In 2003, the PERC Business Environment Report 2003,
once again ranked Singapore as having the highest level of public security and safety among countries in theregion, including Australia, the United States and Hong Kong.
Singapore’s experience has shown that to successfully combat economic crime, there are five key
strategic fronts that must be simultaneously engaged. The very diverse nature of economic crime
necessitates a combination of counter-measures to effectively plug the problem. Singapore’s success against
the menace has been achieved by a sum total of three elementary but bedrock principles of deterrence,
effective enforcement and prevention under a responsive criminal justice system. These principles are
crystallized in the tough and relevant laws enacted by a responsive legislature and pushed by a strong andeffective executive; in the strong enforcement by incorruptible officers; in the robust and efficient worldclass court system, and a police force aspiring to be world class in its total policing capabilities.

A. The Legislative Measures
In tandem with a maturing society, Singapore has over the years, enthused from a purely merit based
regime towards a disclosure based regime. Along with this, Singapore has pushed for higher standards ofcorporate governance, greater market discipline and caveat emptor. This climate naturally means that there
are in existence, a number of relevant and effective statutes in place to combat economic crimes.
The perpetration of economic crimes today, especially those that are ‘boundary-free’ and ‘faceless,’
involves demeanour, notions, methods and expressions that may not yet be defined in existing legislation insome countries. Singapore, like many other countries, has responded by outlawing the new forms of fraudwith suitable and appropriate legislation to enable appropriate enforcement to counter the appearance ofsuch economic crimes. Whilst the prospects of criminal prosecutions and punishment may have somedeterrent effect, Singapore has also regulated business and commerce in such a way as to prevent andcontrol economic crime without unnecessarily stifling the wheels of commerce and industry. This
comprehensive framework of control is achieved in part through relevant legislation and statutes. The barebones of some laws that have been enacted to keep serious economic crime in check are discussed in thissection.
1. Money Laundering
Singapore’s legislative framework gives legitimacy and empowers law enforcers to combat global money
laundering effectively. For example, the Corruption, Drug Trafficking and Serious Offence (Confiscation ofBenefits) Act (“CDSA”) was introduced in Singapore in 1999 to provide serious penalties for persons
involved in the laundering of proceeds of crime. The Act is significant as it, inter alia:(i) makes the laundering of the proceeds of at least 182 predicate serious crimes, regardless of whether
they were committed locally or not, an offence in Singapore. While there is no mention of the word‘money laundering’ in the Act, it is an offence when any person conceals, disguises, converts ortransfers any property that represents that person’s benefit from criminal conduct;(ii) amended the men rea requirement for a money laundering offence to the accused person ‘knowing
or having reasonable grounds to believe’ that the proceeds were derived from serious crimes;(iii) makes it mandatory for all persons to report suspicious transactions to the authorities. Nondisclosure would attract a maximum fine of S$10,000; and(iv) the amendments to the CDSA in 2000 facilitates the sharing of information obtained under
mandatory Suspicious Transaction Reporting, with our foreign agency counterparts.
The Money-changing and Remittance Business Act (MCRB) is Singapore’s protection against money
laundering through non-financial institutions. The robust licensing requirement under the MCRB restricts
persons of dubious reputation or poor financial standing from entering the money laundering and remittancebusiness. In addition, the obligation to report suspicious money laundering activity under the CDSA is a
general one and extends to non-financial institutions such as money changers and remitters.
As alluded to earlier, it is widely believed that many terrorist activities are funded through a series ofmoney laundering operations.40 Terrorist organisations can thus adversely affect the integrity of the financial
40 Speech delivered at the 7th Annual Conference and General Meeting of the International Association of Prosecutors in
London.

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systems. Various legislation such as the United Nations Act 2001, United Nations (Anti-Terrorism
Measures) Regulations and the Terrorism (Suppression of Financing) Act (“TSFA”), are significant in
Singapore’s war against terrorists financing. These laws also give effect to the international conventions
signed by Singapore, as with the proper statutory framework in place, Singapore is now in a position tonegotiate with foreign countries.
2. Securities and Capital Markets Laws
The Securities and Futures Act 2001 (“SFA”) is Singapore’s legislative framework to regulate activities
and institutions in the securities and futures industry. The SFA was the result of a fundamental reexamination of Singapore’s approach to the supervision and development of the financial sector in 1997,
including the shift in emphasis from a merit to a disclosure based regime.
The SFA embodies the new regulatory approach. It provides for a module licensing regime and aligns theregulatory requirements and business conduct standards across a similar class of activity. MAS officers are
given wide powers to conduct supervision and investigations to carry out their regulatory role. The civil
penalty regime that was previously applicable only to cases of insider trading was also extended to otherforms of market misconduct.
The legislation has several significant implications, inter alia:(i) It will make it easier to prove instances of market misconduct, such as insider trading and othermarket misconduct offences in court. This is because a civil lawsuit, which is won on the “balance of
probabilities”, can now be waged against the alleged offenders. In the past, only criminal action could
be brought by the public prosecutors based on the more difficult process of proving the case “beyond
reasonable doubt”. This is an important change as the higher standard of proof in a criminal case ofsuspected market misconduct offences will not be brought to light;(ii) Perhaps a more significant difference is the law now enables the securities regulator, the Monetary
Authority of Singapore to complement the criminal penalty regime enforced by the Commercial
Affairs Department. The Monetary Authority of Singapore can now take civil action against alleged
market conduct offences instead of criminal action. It is expected that in time to come, this is where
the legislative amendments in the SFA will pack a punch since it is the MAS, backed by theCommercial Affairs Department and the Attorney-General’s Chambers which can readily marshal
the resources and the know-how to take legal action; and(iii) The new securities trading platforms brought about by globalisation and technological developments
are brought into the fold of the regulation. The SFA for example, provides for a wide gamut of lawsthat include the provision of extra-territorial reach in the security and futures legislation. In thisregard, the SFA provides that if the act is partly committed in Singapore and partly committed
outside Singapore, or if the act committed outside Singapore, has a substantial and reasonably
foreseeable effect in Singapore and if the act is an offence if it is committed in Singapore, the person
who committed the act would be guilty of an offence.
The juxtaposition of these developments will enable Singapore to provide an effective yet nuanced
approach to punish wrongdoers and further ensure that Singapore’s securities markets operate fairly,
efficiently and cater to the new challenges in the regulation of the capital markets.
3. Corporate Fraud
The comprehensive framework of control against corporate fraud is achieved in part through relevant
legislation and as well as statutes. The offences described in the Companies Act for example, include all acts
and omissions of directors and other officers of a company which are contrary to the law.
4. Reviews and Fresh Sentencing Norms
The gamut of laws in the legislative arsenal against economic crimes is periodically reviewed from time
to time to ensure laws remain relevant. These include periodic reviews of the Penal Code, which adequately
covers general scams and frauds. Where applicable, fresh sentencing standards are set to deter criminal
misconduct. The Chief Justice of Singapore Yong Pang How for example, remarked in a criminal caseinvolving credit card skimming, that new sentencing norms for computer crimes must be set to protect the
public interest. The accused in that case, procured two others to swipe customers’ credit cards through adevice that captured data stored on the magnetic strips, and subsequently provided the information to a

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counterfeit credit card syndicate. The accused could have been charged for cheating under the Penal Code,with a maximum imprisonment of 7 years. Instead, he was charged under the Computer Misuse Act for
using the card-reading device. The offence carried a maximum sentence of 10 years imprisonment and a$50,000 fine.

B. An Effective Regulatory Regime
Much of the battle against economic crimes takes place at the frontline (e.g. financial institutions). An
effective regulatory regime is thus as crucial. The Monetary Authority of Singapore (MAS), the regulator ofbanks and financial institutions plays a significant role to develop a regulatory environment that upholds
soundness and safety while encouraging enterprise and innovation.
1. Money laundering
The MAS requires financial institutions to institute rigorous anti-money laundering procedures, such as
the ‘Know Your Customer” principle.41 The MAS also issues directives and conducts regular on-site
inspections to ensure that financial institutions have adequate control systems, processes and procedures tocombat money laundering, terrorist financing and for the reporting of suspicious transactions.
An equally strong regulatory regime to monitor the alternative remittance systems, such as the moneychanging and remittance business is also necessary. The MAS regulates these businesses through the
MCBA. Those who operate such businesses without licences face vigorous enforcement action by the CAD.
There are also requirements for annual audits and record keeping to facilitate regulatory inspections andcriminal investigations. This is reinforced by Guidelines on Prevention of Money Laundering issued by the
MAS to money changing and remittance licensees.
Self-regulatory bodies like that of the law and accounting professions in Singapore, have also promulgatedguidelines to report money laundering activities to prevent them from being targeted as intermediaries bymoney launders. The Law Society of Singapore for example, is currently reviewing its guidelines on antimoney laundering measures. The auditors role and responsibilities in relation to the prevention, detection
and reporting of money laundering are also laid out in the Institute of Certified Public Accountants ofSingapore’s Statement of Auditing Practice. These proactive measures play a part in addressing thevulnerabilities that professionals, such as those in the legal and financial services, face in being implicated inmoney laundering activities.
2. Building Strong Pillars for Good Corporate Governance
The Singapore Government recognizes that high standards of corporate governance are needed in thefinancial sector to foster a strong risk management culture, better internal controls, and greatertransparency. Good progress is being made towards this direction. The Government implemented several
key initiatives in 2002 to improve corporate governance practices. They include:(i) Formation of the Council on Corporate Disclosure and Governance (CCDG) to review accounting
standards, corporate governance and disclosure issues. Established in August 2002, the CCDG
comprises members from businesses, professional organisations, academic institutions and thegovernment whose role is to catalyse and advance governance standards in Singapore. The Council
prescribes accounting standards in Singapore in consultation with the Institute of Certified Public
Accountants of Singapore. It also aims to strengthen the framework of disclosure practices, reporting
standards and corporate governance, taking into account trends in corporate regulatory issues andinternational best practices.
One of the Council’s recommendations was quarterly reporting, which is now required of listedcompanies with market capitalisation of S$75 million or more. Smaller companies have been
exempted until 2005 when a review will be conducted. The International Accounting Standards werereviewed to make sure they were applicable in Singapore. Most were adopted as the Financial
Reporting Standards (Singapore), and Singapore-incorporated companies had to comply with thesestarting 1 January 2003.

41 The MAS Notice 626 (Guidelines on Prevention of Money Laundering) to banks for example, takes account, inter alia, of
the provisions of the CDSA and the FATF 40 Recommendations.

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VISITING EXPERTS’ PAPERS(ii) The Code of Corporate Governance (“the Code”) for all listed companies to comply from financial
years beginning on or after 1 January 2003 was put into effect on 1 January 2003. The Code is a
critical milestone in strengthening Singapore’s disclosure-based and corporate governance regime.
The Code sets out principles and almost 70 best practices spanning four main areas of governance,
namely, board matters, remuneration, accountability and audit, and communication withshareholders. The Singapore Exchange (SGX) Listing Manual requires all listed companies todisclose in their annual reports, their corporate governance practices with reference to the Code.
The provisions of the Code are not mandatory and the emphasis is on self-regulation. Deviations
from the Code have to be disclosed by companies. The emphasis is on compliance with the spirit
rather than the form of the Code.
(iii) Proposed enhanced corporate governance standards for MAS-regulated financial institutions. In
February 2003, MAS obtained feedback on corporate governance guidelines for Singaporeincorporated banks and direct insurers. The guidelines to be issued aim to further strengthen the
independence of boards and set out the roles to be played by directors and chief executive officers in
relation to their duties towards shareholders, depositors and policyholders.
(iv) More recently, in January 2003, an educational institution had set up a centre to contribute to theresearch and promotion of best practices in corporate governance and financial reporting. The
National University of Singapore Business School set up the Corporate Governance and Financial
Reporting Centre to further entrench high standards among corporations in Singapore.
(v) Companies in Singapore are regulated by the common law. In addition, listed companies are subject
to such pronouncement of the Singapore Exchange as are found in the Listing Manual. Whilst the
Manual does not have legislative force, the Securities and Futures Act makes it obligatory for listedcompanies to comply with provisions and other exchange rules. Compliance is enforced by means ofan appropriate injunction applied for by the MAS or Singapore Exchange. The legal and regulatory
regimes are very much in line with those of developed countries.
Singapore’s efforts have not gone unrecognised. Singapore was ranked top in Asia for transparency in theWorld Competitiveness Yearbook 2002. Credit Lyonnais Securities Asia and PERC, both of whom regularly
monitor the corporate governance climate, have accorded Singapore the highest ratings in Asia. An Ernst &Young survey of annual reports of 30 large locally listed companies in August 2003 found that all had
generally complied with the principles set out in the Code of Corporate Governance. For instance, all 30
companies surveyed have a monitoring committee and had appointed an independent director to be the
Chairman of the audit committee as recommended by the Code.42
To battle online credit card fraud and e-payment system related fraud, the MAS has developed guidelines
to assist financial institutions in recognising and understanding the dynamism of web application andcomputer and Internet vulnerabilities. The guidelines are designed to promote sound processes in managing
technology risk and the implementation of security practices in line with international best practices. The
provisions in the MAS Internet Banking Technology Risk Management Guidelines for example, require thatcredit card validation numbers specified on the credit card should be used for online credit card transactions.
Other related regulatory initiatives by the MAS include the Security Guidelines for Mobile Banking and the
Payments and Technology Risk Management Guidelines for Financial Institutions.
3. Private Industry Regulation.
Private industry regulation is an equally effective and complementary regulatory platform thatcomplements the efforts of the government. In the battle against credit card fraud for example, Visa
International, has set 10 new security directives for online credit card transactions by its member financial
institutions and merchant partners to combat online fraud and boost consumer confidence in e-commerce.
The rules include keeping security systems up-to-date, encrypting stored data accessible from the Internet
and using and regularly updating anti-virus software. Errant Visa merchant members may be liable to fines,
restriction of their credit limit through the Visa network or termination of their Visa membership.
An effective regulatory regime requires the amalgamated efforts of relevant government and private
agencies to work together within a structured platform. A case in point is the Singapore Police Force’s
membership in the Alliance for Cyber-crime Experts (ACE), a network of agencies that comprise
42 Speech by Mr. Tharman Shanmugaratnam, Acting Minister for Education, at the Best Managed Boards Award, on
Wednesday, 19 November 2003, at the Regent Hotel, Singapore.

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government bodies like the Info-Communication Development Authority and various interested private
regulatory parties such as the Internet Service Providers. The ACE members are in constant deliberations
on ways to prevent economic crimes perpetuated via cyber space, including Internet credit card fraud andrelated epayment and e-banking networks. The ACE is a significant player in the promulgation of rules andregulations concerning the ‘faceless’ nature of the e-revolution. Quarterly meetings are held to ensure thatthe law enforcement agencies are constantly updated with the latest state-of-the-art technology in themarket and possible countermeasures to circumvent its shortcomings in law enforcement.

C. Vibrant and Proactive Institutional and Enforcement Capability
The rationale for an effective, vibrant and proactive institutional capability and policing to combat
economic crimes in Singapore was encapsulated by the Singapore Minister of Home Affairs, Mr Wong Kan
Seng at the opening of the International Economic Crime Conference in Singapore in 2001:“As Singapore develops as a major financial hub, the development of our capital market, banking andfinancial sectors and electronic commerce is likely to bring about increasingly sophisticated commercial
crime. An effective enforcement system is crucial to protect the integrity of our financial market andbusiness environment.”
To proactively surmount the imminent challenges posed by the rising sophistication of economic crime,
the Singapore Government created a single premier economic crime investigative authority in 2000. The
Commercial Affairs Department, then under the Ministry of Finance, was merged with the Commercial
Crime Division of the Police. This pooled the scarce resources and the enforcement and intelligencecapabilities of the two crime fighting agencies. It positioned the new Commercial Affairs Department(“CAD”) under the Singapore Police Force as the de facto specialised serious economic crime investigative
authority in Singapore and the “premier investigative authority on white-collar crimes in Singapore.”43
The reconstitution of CAD was complemented with a revamp of the Attorney-General’s Chambers in2000 to further enhance institutional capacities to combat economic crime in Singapore. Specialised units
within the Attorney-General’s Chambers were set up to handle the prosecution of complex crimes, including
economic crimes and money laundering. The Financial and Securities Directorate was one of the several
units set up. The Deputy Public Prosecutors in the Directorate are specialist prosecutors in dealing withserious commercial offences. The state prosecutors involved also play a more hands-on role advising police
officers from the start of the investigations until the cases reach the courts. The relationship hassignificantly enhanced the police’s capabilities to unravel the layers of corporate web usually spun by whitecollar crooks to cover their tracks.
The reconstituted CAD has become an even more effective economic crime fighting unit. It has
introduced several features to proactively ensure its operational effectiveness in dealing with economic
crimes and up-keeping the integrity of Singapore’s financial markets and business environment. Some ofthem include:(i) Structurally, a streamlined organisation structure was created. Dedicated divisions, comprisinghighly specialised units to investigate corporate fraud, security fraud, money laundering, credit cardfraud and other serious economic crimes were created. The streamlined organisational structure alsomeant that a central agency for the receipt and analysis of Suspicious Transaction Reports (STRs),
investigating of money laundering and identifying and seizing proceeds and assets of crime wascreated. The quantity and quality of STR information has since increased.44 The last three years
have also seen the successful conviction of several money laundering and securities fraud offences.
The new structure has also effectively tackled other serious economic crimes, such as credit cardfraud.
(ii) The CAD embarked on a highly specialized training programme for its investigators, resulting inhighly trained specialist in various corporate and financial fields. Joint training programmes withworld-renowned economic crime enforcement agencies and industry leaders have become an
43 The Business Times 18 September 1999.
44 Speech delivered by Mr Tan Siong Thye at the 7th Annual Conference and General Meeting of the International Associationof Prosecutors in London.

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integral part of the training diet. Training via video-conferencing with specialist agencies around theworld has also become a regular feature in the Department’s module. A case in point was a training
session with AUSTRAC in August 2003. The calibrated training programme has produced a core ofhighly trained and desired anti-economic crime specialists - in the past three years, CAD officers
have increasingly become regular invitees to share their experiences at world renowned economic
crime forums.
(iii) The Department has introduced investigation turnaround times as one of its key measurements ofeffectiveness. In a wide-ranging media interview in July 2003, Mr Tan Siong Thye, the Director of
the CAD publicly heralded the 3 to 9 months investigation turnaround times.45 Eighty-five percent of
the cases investigated by the Department already meet the timelines and many of them arecompleted well within the prescribed turnaround time. A rogue securities dealer who had posted
false information on the webpage of a financial portal to manipulate the share market was forexample, prosecuted within 10 days after the offence was reported. The Department plans to reduce
the turnaround time-line even further to improve its enforcement prowess and professionalism
against economic crimes.
(iv) The Department embarked on a programme to proactively leverage on the progress of information
technology to enhance the operational capabilities of the police in combating economic crimes. Thereis an active use of technology, such as computerised investigation, case management and intelligencesystems. At the operational level, technology is deployed extensively to aid complex economic crime
investigation. A case in point is the introduction of an IT based system to automatically scan trades
to help investigators pick up unusual patterns in securities fraud investigation. The system has beeneffective in overcoming the difficulties and time in analyzing hundreds and thousands of stock trades
in investigations.
The Department has also spearheaded processes to effectively integrate info-communication
technology into key business processes. A case in point is the deployment of info-communication
solutions for business processes like ex parte applications to the Subordinates Courts andconsultation with the Attorney General’s Chambers. These processes have contributed effectively to
improving investigation turnaround times.

D. A Sharing of Responsibilities and Partnership
Swift law enforcement action, effective government measures and legal provisions cannot be the only
solution to triumph in the battle against economic crime decisively. Collaboration and partnership,particularly with the business and commercial fraternity is a crucial bedrock. The Singapore Minister ofHome Affairs aptly reiterated this at the opening speech at the International Economic Crime Conference inSingapore. He advised “... as with all crime, Singapore’s commercial and financial integrity cannot besafeguarded by dependence only on appropriate laws and effective enforcement. It must be a joint effort withthe community. The Singapore Police Force will build and leverage existing community links to combat
economic criminals.”
The main thrust of Singapore’s police-community partnership in the battle against economic crime isbased on the concept of mutual help. The public and business community is persuaded and encouraged totake personal responsibility, both individually and in partnership with others in safeguarding themselves ortheir business with the advice and assistance of the police. It is based on the principle that prevention is ashared responsibility and crime prevention measures taken by the community and business entities can limit
and reduce opportunities for the commission of crime. This philosophy drives the key message that crime isprevented if the opportunity is denied or delayed. The message is put into operation through a robust
institutional structure. This includes:(i) The National Crime Prevention Council (NCPC), set up to act as a catalyst, advisor and partner tomobilise the support of groups, organisations and individuals from the community to work closelywith the Police to prevent crime. It is committed to promoting public awareness of and concern
about crime and to propagate the concept of self-help in crime prevention. The Council comprises
influential representatives from the commercial and industrial sectors, as well as from the public
sector and the Singapore Police Force. Working closely with the police, the council holds regular
45 Business Times dated 14 July 2003 “It’s all about timing, says CAD chief”.

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crime prevention campaigns, as well as regular exhibitions, seminars, workshops and talks on crime
prevention.
(ii) At the organisational level, various departmental and divisional structures within the Singapore
Police Force have been formed with the primary task to raise awareness of the community to thesignificant role it plays in crime prevention and safeguarding itself. These units embark on an
extensive programme of community oriented and crime prevention activities, including crime
prevention talks and exhibitions.
(iii) There has also been a shift in mental models of the police. Apart from its enforcement
responsibilities for example, the officers in CAD also place greater emphasis on their roles as
facilitators in the pre-emptive and problem solving approach to countering economic crimes.
Through this community engagement approach, CAD serves as partners of the people and thebusiness community instead of solely being a white-collar crime investigative agency.
1. Partnership with the Business Community
Given the complexities involved, a partnership with the business and financial community is extremely
imperative in the area of prevention, education, exchange of information and policy development. With thecommunity focus concept and structures firmly in place, and strategic networks established with public andprivate bodies, it becomes possible to leverage on their cooperation and expertise in economic crime
prevention. Against this backdrop, the Singapore Police Force and the CAD initiated various initiatives toengage and mobilise the business and economic community on several fronts. These include:(i) Industry-wide symposiums and conferences to exchange ideas, promote a culture of awareness about
serious economic crimes and propagate the concept of self-help amongst the business and corporate
community. The Singapore Police Force and the CAD regularly organize symposiums on economic
crimes. Participants from the government and private industries such as the legal, banking, financial,economic, service and retail fraternities come together to learn and share their experience. The
industry experts dissect a myriad of issues including, lessons on corporate governance, internal
controls, accounting and auditing at these forums.
The CAD has organised at least 4 major industry-wide symposiums on corporate governance, ecommerce fraud and economic crimes, as well as money laundering since 2001. An international
economic crime conference was also organized in which more than 500 public and private sector
participants from more than 33 countries the world over, came together to focus on economic crime
trends and prevention initiatives. These initiatives underscore the importance of good corporate
governance that Singapore places in its holistic approach in controlling economic crime. They form
part of the larger broad based efforts by public and private sector institutions in Singapore to raiseawareness among the corporate sector of the value of good corporate governance.
(ii) Regular dialogue sessions and open lines of communication with the industry serve an effective
institutionalised platform to promote industry education and exchange of information. CAD’s
Suspicious Transaction Reporting Office (STRO) conducts regular outreach programmes withmembers of the business community as part of its strong anti-money laundering regime initiatives.46
The dialogue sessions help engage and dispel misconceptions that the business community might
have on suspicious transactions reporting. Workshops with members of the community on money
laundering and terrorist financing are also conducted. STRO has also set up a dedicated hotline andemail address to assist members of the business community who may encounter difficulties orproblems dealing with suspicious transactions. These programmes have created better awarenessamong the members of the business community on detecting, reporting and preventing money
laundering.
(iii) Leveraging on the cooperation and expertise of the industry via formal arrangements is equallyimperative. For instance, the CAD is a member of the Credit Card Security Group, a task force
comprising a consortium of representatives of various banks and credit card issuers in Singapore.
The Group meets on a monthly basis to discuss development of strategies, programmes andcounter-measures against credit card fraud in Singapore. The Group also supports the CAD in the
joint education programmes for credit card merchants, businesses and customers to robustly
46 The business community includes all financial institutions under the purview of the MAS. Banks, insurers, fund managers,
accountants, lawyers, money-changers are also involved in the business process and are part of the business community
targeted by the CAD.

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promote credit card fraud prevention measures. The close and symbiotic task force arrangement has
been a crucial pillar in keeping a tight lid on the credit card fraud situation in Singapore.
Investigation and prosecution of economic crimes involving an element of market or businesspractices, such as insider trading, sometimes require the use of expert testimony in prosecutions. In
marking the official appointment of CAD’s Panel of Experts in 2002, the Director of the CAD, Mr TanSiong Thye said, “it is imperative that in the collaboration with the business community in this area,
an official panel of experts be formed to enhance the stature of the expert’s role”. The CAD Panel ofExperts comprises a cohort of 25 carefully selected private sector business individuals and captains
of industry who are readily available to assist the police in investigation and prosecution of serious
economic crimes such as insider trading or corporate fraud.
To meet the challenges of economic crimes in the 21st century, the Singapore Police continue to involvethe community and fine-tune the system of community engagement. The existing community engagement
infrastructures will be periodically reviewed and enhanced to better meet the increasing intricacies of
economic crime in the years to come. The CAD will also continuously expand the network of strategic
alliances and partnerships with private organisations, trade associations, etc. to control economic crime.
This commitment is aptly embodied in the Singapore Police Force’s crime prevention slogans, ‘crime
prevention, a shared responsibility’ and ‘low crime does not mean no crime’.

E. International Cooperation
Needless to say, international cooperation is a necessary tool in the holistic approach to deal with serious
economic crime. The importance of cross border co-operation was succinctly encapsulated by the Singapore
Minister for Home Affairs Mr. Wong Kan Seng during his opening remarks at the International Economic
Crime Conference in Singapore in 2001. Mr. Wong said, “To fight crime effectively on the local, regional andglobal level, we need the co-operation of all our partners from foreign enforcement agencies...As criminals
leverage on the new economy initiatives to perpetrate their criminal acts, so must we be ahead of the mostsophisticated of them. And to do so, it is vital that we share and learn from one another, unleashing thesynergies of our collective intellectual resources and experience”.
The Mutual Assistance in Criminal Matters Act was passed in 2000. The Act empowers the Singapore
authorities to request foreign agencies to perform a variety of investigative tasks to combat serious crime.
These include gathering crucial evidence, recovering the proceeds of crime and carrying out searches andraids in foreign countries. It would also make it easier for Singapore to provide similar help to foreignauthorities.47
The Act positions Singapore as a global player in the battle against economic crime that has taken aninternational dimension. The Singapore Minister of Law heralded the Act as “Singapore’s commitment to bepart of the wider network of cooperation in combating crime on a global scale”.48 Such cooperation will focus
on combating serious crimes such as money laundering, securities fraud and serious commercial fraud. The
Act is essentially an enabling legislation. It also does not affect the close ties that the Singapore Police havealready with its foreign counterparts and Interpol in tackling cross-border crimes.
Mutual assistance with foreign counterparts is a necessary and important component in Singapore’s fightagainst economic crimes. Singapore is an active participant in international bodies which have been set up to
fight money laundering worldwide. Besides being an active member of the Financial Action Task Force(FATF), Singapore is also a member of the Asia-Pacific Group on Money Laundering, which promotes the
adoption and implementation of internationally accepted anti-money laundering standards. Singapore’s
financial intelligence unit, STRO develops close working relationships and establishes formalised
frameworks for the sharing of information and intelligence. STRO is actively involved in the negotiations ofMemorandum of Understanding (“MOU”) with several foreign countries. Singapore’s membership in the
Egmont Group in particular, highlights its willingness to work in tandem with its foreign counterparts in
exchanging information and intelligence with regard to money laundering and terrorist financing matters. In
the area of securities fraud, the provisions relating to mutual assistance to foreign regulatory authorities in
47 The Act however does not provide for foreign investigations that are inter alia, not considered a crime under Singapore’slaws or when the investigation is aimed at prosecuting someone based on his race, religion, sex or nationality.
48 Straits Times dated 23 February 2000.

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the Securities and Futures Act as well as MOUs, that the MAS has entered into with regulators from major
financial centres, would also facilitate the enforcement process against securities fraud.

IV. CONCLUSION - STRIKING A BALANCE
The results of the Singapore’s proactive strategies to put a lid on crime have not gone unnoticed. The
crime rates in Singapore have consistently been relatively low and perhaps more telling, is the negligible
impact crime has had on the business environment in Singapore. Indeed, the World Global Competitiveness
Report 2002-2003 ranked Singapore and Finland as the top two of 80 countries around the world, wherecommon crime had the least impact on business cost.
We cannot pretend that solutions and countermeasures against economic crime are meant to be apanacea. There is no ultimate weapon against fraud and the war against fraud is one that has no armistice.
Criminal activity of any kind usually stems from the belief that it is possible to beat the system. What we cando is to have the systems, the structures, the processes and the will and determination to protect theinterests of the honest law abiding citizens or economic community, and to make it difficult for criminals whoturn to crime.
In the final analysis however, policies and strategies vis-a-vis control of economic crimes recognise theneed to balance enterprise and accountability - that energy against economic crimes should not be at theexpense of imposing impractical burdens on commerce and industry. It is a matter of “fine tuning andstriking a balance,” which the Director of the CAD aptly espoused in his speech at the International
Symposium on Economic Crime in Cambridge:“The challenges before us today are probably greater than ever before. The public perceives whitecollar crime to be of growing concern; consumers demand greater protection from fraudsters whilst at
the same time want to maintain their privacy online; law enforcement asks for stronger legislation tofight increasingly sophisticated criminals; the international community is actively seeking mutual
assistance in criminal investigations; the private sector asks not to be disadvantaged by burdensome newlaws that might leave them behind in the global market place. There is a need to fine tune and strike abalance between the demands of various groups in our efforts to seek solutions to the new criminal
trends and threats that we face”.

70126TH INTERNATIONAL SENIOR SEMINAR
VISITING EXPERTS’ PAPERSECONOMIC CRIME IN A GLOBALIZING SOCIETY:ITS IMPACT ON THE SOUND DEVELOPMENT OF THE STATE AN INDIAN PERSPECTIVE
Deepa Mehta*

I. INDIA: THE LAND AND THE PEOPLE
India is a vast sub-continent covering an area of 3, 287,590 sq. km. It extends from the snow covered
Himalayas in the north to the tropical rain forests in the south. It is the seventh largest country in the world.
It is surrounded by water on three sides: the Arabian Sea on the west, the Bay of Bengal on its east and theIndian Ocean on the south. Neighbouring countries are Pakistan on the northwest, China, Nepal and Bhutanon the north and Bangladesh and Myanmar on the east. India is a federal republic with its national capital in
New Delhi. Administratively, it is divided into 28 states and 7 union territories. It is very densely populatedwith over 1050 million or 1.05 billion people. The national language is Hindi but there are 14 other official
languages. Likewise, about 80% of the population is composed of Hindus and others are Muslims,
Christians, Sikhs, Buddhists, Jains, Parsis, etc.
On the economic front, India has traditional village farming as well as modern agriculture, handicrafts aswell as a wide range of modern industries and a multitude of support services.
In recent years, government controls have been reduced on imports and foreign investment and thegrowth rate since 1990 has been 6%. Although, poverty has been reduced considerably, overpopulation isstill a major handicap and about a quarter of the population is still too poor to be able to afford an adequate
diet. Despite that, India has a large number of well-educated people skilled in the English language and is amajor exporter of software services and software workers. In fact, the information technology sector leads
the strong growth pattern.
India is a Union of States and is governed by a written Constitution, which came into force on 26th
November 1949. As I mentioned earlier, India consists of 28 states and 7 union territories. According to theConstitution Parliament can make laws on certain subjects for the whole or any part of India and this is
known as the Union List. Similarly, the Legislature of a State can make laws for the State and this is known
as the State list. There is also a third list known as the Concurrent list where both the Parliament and thestates can legislate. The ‘Police’ and ‘Public Order’ are both in the State List but ‘Criminal laws’ and‘Criminal procedure’ are in the Concurrent List. As a result, the Indian Parliament has enacted the basic
criminal statutes, namely, the Indian Penal Code, Criminal Procedure Code and Indian Evidence Act but‘Police’, being a State subject, is raised and maintained by the State government. Each State or Union
Territory has a separate police force. In addition to the state police, the Central government has set up
certain central investigating agencies, including the Central Bureau of Investigation. Established on 1 April
1963, and evolved from the Special Police Establishment established in 1941, it is a premier investigative
agency of the state government and can take up cases falling within the jurisdiction of the States with theirconsent. Other investigative agencies are the Narcotics Control Bureau, the Enforcement Directorate, theCentral Board of Direct Taxes and the Central Board of Customs and Excise, etc. These agencies investigate
criminal cases falling in the ambit of special statutes being administered by them and are empowered tolaunch prosecutions.
Against such a background, the New Year has heralded an even greater increase in the GDP of thecountry. The headlines in the Hindustan Times on 1st January, 2004 were ‘All sectors on fire, GDP grows
8.4%’. The Times of India stated ‘Economy breaks 8% barrier’. Agriculture has grown at 4.1%,
manufacturing has clocked 7.3% and services have grown at 9.6% according to data released by the Central* Inspector General of Police, Chief Vigilance Officer, Delhi Metro Rail Corporation, India.

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Statistical Organization. Economic liberalization in India, which commenced in 1991 "has come to stay" as
benefits of an open economy have started percolating. Economic liberalization and globalization have opened
up the prospects of regional economic integration with the extended neighbourhood and the opening up of
markets. However, it has also brought in its fold opportunities for white-collar criminals to manipulate andbenefit from business expansion, particularly in the field of financial and capital markets. Lack ofunderstanding and expertise in these new spheres of crime has made it more difficult for government andcriminal justice agencies to control and suppress such economic crime.

II. CHARACTERISTICS OF ECONOMIC CRIME
It is important in the first instance to understand the nature of economic crime. Economic or white-collar
crime, as it is generally referred to, is a crime committed by a person of a certain social status in the courseof his occupation. The economic crime occurs as a deviation from the violator’s occupational role. Also, mostof the laws involved or violated are not part of the traditional criminal code. Such crimes are corruption,
corporate fraud, public fraud, tax evasion, goods smuggling, stock manipulation, currencies forgery, credit
card fraud, environmental crime, intellectual property infringement and the more recent phenomenon of
cyber crime.
These crimes are different from traditional crimes in the characteristics of their objective and modus
operandi. The traditional criminal steals small sums of money and often uses brute force and conventional
tools to achieve his aim. On the contrary, a criminal committing an economic crime steals large sums ofmoney and employs technology and communications to carry out unlawful commercial transactions, disturb
databases or orchestrate massive frauds. His victims are ignorant and naïve and often remain unaware of thefact that they have been cheated.
Another characteristic of economic, commercial, corporate or white-collar crimes is that they are often
perceived as ‘good business’: and good business often requires ‘cutting corners’. Legal violations bycorporations are often viewed as part of the business system, much like industrial spying or psychologicallysuggestive marketing techniques. These activities are considered as an extension of the capitalist system
based on profit and a technical adherence to the letter rather than the spirit of the law.
Such crimes are, however, very costly for our society. In contrast to conventional crimes, which affectspecific individuals, economic crimes affect society as a whole. For instance, false advertising induces the
public to invest in products that do not have the desired effect. Unsafe drugs, pesticides and food additives
affect the health of thousands. Exposure to industrial hazards such as unsafe equipment and poisonous
materials and emissions have an adverse effect on workers’ longevity. That is because many forms of
economic crime are relatively invisible, compared with violent crime, for example. The effects on society of
economic crime are hidden as public fear and concern are heightened in cases that affect personal security
more directly.
A significant proportion of transnational organized crimes assume the nature of global economic crime.
Proceeds of transnational crimes such as drug trafficking, extortion, corruption, tax evasion, arms
smuggling, terrorism, and fraud have to be laundered. The international economic threat, posed by Global
Organized Crime, in an increasingly global economy is among the major "new" threats to national security.
Global Economic Crime does not just affect a select group of financial institutions or regional areas; it affects
international financial networks and economies at a national level. Laundering billions of dollars in organizedcrime money worsens national debt problems because the large sums of money are then lost as tax revenue
to that country's government. Global Organized Crime can have a damaging effect on political structures,
especially fragile democracies and developing economies. As people feel that the government is powerlessto stop organized crime, they turn to crime leaders for protection and political institutions begin to
deteriorate.
Economic crimes have mushroomed in many countries, especially those that are in the process of
economic, social or political development. A number of difficulties arise in the investigation of such offences.
The first is that of definition: for instance the characteristics or constituents of ‘illegal monopolies’ or‘manufacture of unsafe products’. The second is the determination of responsibility: whether it is that of thecorporation or the individuals within it. Thirdly, it is often very difficult to prove the intent to commit acrime. Lastly, and perhaps, most importantly, the public, although it is becoming increasingly aware of the72

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nature of such crimes, is largely apathetic, and even if in some cases it is concerned, is unable to put
pressure on the government leaving the issue to a few consumer protection groups.
Cooperation among Global Organized Crime groups has increased as restrictions have lessened between
international borders. These foreign havens for criminals and their assets have made it increasingly difficultfor Law Enforcement to trace illegal profits; gather evidence on the criminal leaders; and identify andcontain criminal groups. These global networks allow organized crime groups to greatly increase the profits
of their operations and their methods of evading local governments as they share information, skills, costs,
market access and relative strengths.
Financial transactions, while being perfectly legitimate, are extremely complex and involve the financial
systems of many countries. Financial markets operate with speed due to modern communications andelectronic data processing and create an impression of impropriety. Caution has to be exercised in regulating
financial and economic activities in such a way that they foster free competition and do not stifle it throughover regulation. In other words, a balance has to be struck between the regulatory and legislative systems.

III. STATE OF ECONOMIC CRIME IN INDIA
Against this backdrop, let us now focus on the state of economic crime in India and its effect on the sounddevelopment of the State. I have classified economic crime in India into three groups viz.:(i) Traditional economic crime such as corruption, smuggling, invoice manipulation, bogus imports;(ii) Emerging technological economic crime such as credit card frauds, counterfeiting, cyber crime;(iii) Money laundering and hawala through which proceeds of transnational organized crime aretransmitted abroad.

A. Group - I
1. Corruption
Corruption is an economic crime that is a primary reason for low achievement in the poverty alleviation
efforts of the nation. Greed and poverty are the two basic reasons for corruption. It occurs in many countries
but it has increased substantially in India in recent years. Corruption has a very upsetting impact as itincreases injustice and violates human rights. Corruption arises due to monopoly, power and discretion
without accountability. Too many laws, rules and formalities perpetuate corruption and provide opportunities
for corrupt practices among government officials. The demoralizing fact is that many in high places remain
untouched. In 2001, 2990 cases were registered by anti-corruption departments in India and property
recovered or seized was of the value of 84000 million rupees.
Mr. N. Vittal, former Central Vigilance Commissioner of India has stated that corruption in India is antinational involving the transfer of money through ‘Hawala’ or underground banking and money laundering;corruption is anti-poor; and corruption is anti-economic development. Measures for combating corruption
are simplification of rules and procedures, transparency and creation of public awareness, and an effective
prosecution and punishment system.
2. Smuggling
Smuggling, which consists of clandestine operations leading to unrecorded trade, is one of the major
economic offences affecting India. Though it is not possible to quantify the value of the contraband goods
smuggled into this country, it is possible to have some idea of the extent of smuggling from the value ofcontraband seized which is indicated in the table given below:
Year
1988
1989
1990
1991
1992
1993
1994
1995

Value of the Goods Seized
443 Crores
555 Crores
760 Crores
775 Crores
535 Crores
388 Crores
535 Crores
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The high point of smuggling was in 1991 when contrabands worth Rs. 775 crores were seized.
Introduction of various liberalization measures such as the gold and silver import policies in 1992-93 have
had their impact on customs seizures in that the total value of seizures came down by 30% in 1992.
A look at the seizures of important commodities seized from 1991 to 1996 indicates that gold and silver
which accounted for 44% of the total seizures prior to liberalized import policies came down to 21% after
liberalization and have been falling further. On the other hand, the seizure of commodities like electronic
goods, narcotics, synthetic fabrics, and foreign currency has been rising. In 1990, gold occupied the top
position amongst smuggled items followed by silver, electronic items and narcotics. In 1995, however,narcotics occupied the number one position followed by gold, foreign currency, electronics and synthetic
fabrics.
Year

1995-96

1994-95

1991-92

1990-91

Gold

198.8

188.5

55.4

50.8

Silver

146.6

147.7

3.6

0.54

Narcotics

25.1

21.8

54.3

77.94

Electronic items

55.5

23.1

51.2

38.0

Foreign currency

7.7

10.8

27.4

40.2

Indian currency

6.5

5.6

6.6

5.6

Synthetic fabrics

4.8

2.0

2.4

12.9

Watches

3.2

6.2

3.3

3.9

Smuggling, in its broader connotation also includes drug trafficking, smuggling of migrants and trafficking
in persons.
3. Invoice Manipulation
This is another variety of economic crime affecting India. In fact all developing countries are victims of
invoice manipulations. The term means invoicing of goods at a price less or more than the price for which
they were actually sold or purchased. Such transactions are collusive between the trade partners. Both are
guilty of fabrication of false documents and records and violate national laws with a view to cheating customs
and tax authorities.
By under-invoicing, the value of the goods is lowered which would mean lesser payment of import duties.
By over-invoicing the value of goods is shown higher which would mean higher out-flow of foreign exchange
from the country. By these methods, the country is depleted of its revenues and foreign exchange earnings.
The practice of invoice manipulation has international ramification and adversely affects the economy ofthe victim country. A number of difficulties are experienced in the investigations of invoice manipulations
particularly in retrieving information such as documents like “Bills of Entry, “Shipping Bills,” “Bills of
Lading,” “Invoices,” “Letters of Credit,” departure schedules of sailing vessels, etc. despite their being
public documents. International cooperation is therefore needed to curb this menace.
4. Bogus Imports
Several cases have come to notice in the recent past, which indicate that there is leakage of foreignexchange through the device of bogus imports. The modus operandi is quite simple. The operator opens acurrent account in India in a bank authorized to deal in foreign exchange. He usually poses as a small-scaleindustrialist and produces forged certificates/ documents to establish his credentials. His partners abroad
prepare a set of export documents such as an invoice, bill of lading, and bill of exchange and send themthrough their foreign bank branches to Indian banks for collection. On receipt of these documents, generally
on collection basis, the importer’s agent deposits the amount in Indian rupees in his bank’s current accountand the bank remits the foreign exchange. No goods, of course, are ever imported and the country loses
valuable foreign exchange.

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B. Group – II
1. Cyber Crime
The use of computers has grown exponentially during the last few years. Financial networks,
communication systems, power stations, modern automobiles and appliances all depend on computers, andthese computers can record withdrawals, deposits, purchases, telephone calls, usage of electricity, medical
treatments, driving patterns and a lot more. It is therefore not surprising that computer technology is
involved in a growing number of crimes. These are generally taken to include theft of computer services,
unauthorized access to protected computers, software piracy and the alteration and theft of electronicallystored information, extortion committed with the assistance of computers, obtaining unauthorized access torecords from banks, credit card issuers or customer reporting agencies, traffic in stolen passwords andtransmission of destructive viruses or commands. With the physical growth of the Internet over the past few
years, a number of new generation crimes affecting the LAN, WAN and Internet such as theft ofcommunication services, information piracy, forgery and counterfeiting, dissemination of offensive materials,
stalking, extortion, electronic vandalism and terrorism, sales and investment fraud, etc. Hacking, computer
network breaches, copyright piracy, software piracy, child pornography, password sniffers, credit card frauds,
cyber squatting are some of the new terms in the average criminal investigator’s dictionary. Highly
intelligent persons commit these new generation crimes leaving hardly any trace and making investigation
highly difficult and complicated.
Computer crimes are now a matter of growing concern. Traditional barriers to crime faced by criminals
are being obliterated by digital technologies. In a digital world, there are no state or international borders;customs agents do not exist. Bits of information flow effortlessly around the globe, rendering the traditional
concept of distance meaningless. In the past, the culprit had to be physically present to commit a crime. Now
cyber crimes can be committed from anywhere in the world as bits are transmitted over wires, by radio
waves or over satellite. Similarly, in the past, companies protected their secrets and bank funds in locked filecabinets and vaults in buildings surrounded by electronic fences and armed guards. Now this information is
located in one computer service that is connected to thousands of other computers round the world. Anyoneof these networks or even a phone line into a company’s main computer is a transnational invitation tocrime. Crime in the digital world has another advantage for crooks over “atom-based” crime: electrons andbits have no effective mass or weight. Robbing a bank or an armoured vehicle of cash would pose problemsof transportation and storage whereas transfer of money poses no such problems in the digital world.
Information technology is redefining the ways of conducting business and communication, and is shaping
the interaction between business and consumers for sale and purchase of goods and services. Traditionalcommerce has become electronic commerce. It involves selling and purchasing of information, products andservices over communication networks. It encompasses a wide array of commercial activities carried out
through the use of computers, including online trading of goods and services, electronic fund transfers,
online trading of financial instruments and electronic data transfers within and among companies. For
purchasing goods or services, a customer is required to pay. While in a traditional business it is done throughcash or cheque, in E-business, it is done through digital cash. However, the growth of the electronic mode of
conducting business hinges on assuring the consumers and the business that their use of communication
network services is secure and reliable, that their transactions are safe, and that they will be able to verify
important information about the transacting parties. Security is indispensable to E-commerce.
Authentication, integrity and confidentiality are the three issues associated with electronic communications.
Cyber crimes have become a reality in India too. Cyber hackers have broken into and maliciously altered
the content of several computer websites, including that of the Ministry of Information Technology and of
Parliament. Indian Airlines was subjected to fraud of several millions of rupees by tampering with thecomputerized booking records. Computer hackers also got into the Bhaba Atomic Research Centre
Computer and extracted some data. Some computer professionals, who prepared the software for the
M.B.B.S. examination, altered the data and gave an upward revision to some students in return for a heftyfee. A big loss was caused to a bank where the computer records were manipulated to create false debts andcredits and in another bank false bank accounts were created. A telephones official manipulated computer
terminals by reversing the electronic telephone meter systems, thereby allowing some companies to makeoverseas calls without charges. In a case of software piracy some of the employees stole a copy of the sourcecode and in another educational software was stolen.

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Law enforcement agencies today face a number of challenges in the investigation of such cases. Thesecan be categorized as technical, legal and operational challenges.

Technical challenges:
When a hacker disrupts air traffic control at a local airport or a child pornographer sends computer files
over the Internet, or when credit card numbers are stolen from a company engaged in e-commerce,
investigators must locate the source of the communication. They have to trace the ‘electronic trail’ leadingfrom the victim to the perpetrator in almost every case. To succeed in identifying and tracing global
communications investigators have to work across borders, not only with one’s counterparts but also withindustry to preserve critical evidence such as log files, e-mails, etc. before it is altered or deleted. Besides,
while less sophisticated cyber criminals may leave electronic ‘fingerprints’ more experienced criminals
know how to conceal their tracks in cyber space. Internet telephony, strong encryption, and wireless andsatellite communication and other technological advances have made it possible for international criminals
and terrorists to target victims in unprecedented ways.
(i) Legal challenges:
Deterring and punishing computer criminals requires a legal structure that will support detection
and prosecution of offenders yet the laws defining computer offences, and the legal tools needed toinvestigate criminals using the Internet, often lag behind social and technological changes, creating
legal challenges to law enforcement agencies. In India, however, the Information Technology Act,
2000 has been enacted in pursuance to the General Assembly of United Nations resolution
A/RES/51/162, dated the 30th January 1997.
The Information Technology Act elaborates upon digital signature; electronic governance;
attribution, acknowledgement and dispatch of electronic records; secure electronic records andsecure digital signatures; regulation of certifying authorities; digital signature certificates; duties ofsubscribers, penalties and adjudication; the cyber regulations appellate tribunal; offences; and nonliability of network service providers in certain cases, etc. It specifies that Electronic Signatures will
be valid and legally enforceable only if the e-transaction is done through “public key cryptography”.
The Act delineates two separate types of penal provisions: contraventions and information
technology offences. While contravention results in monetary penalty, the IT offences may result inthe offender being imprisoned or paying a fine or both. Tampering with computer source codes,
obscenity, hacking, unauthorized access to a protected system, misrepresentation before authorities,
breach of confidentiality and privacy, publication of false particulars in digital signature certificates,etc. have been listed as criminal offences under this Act. Amendments have also been made to theIndian Penal code, Indian Evidence Act, the Bankers’ Book Evidence Act and Reserve Bank of India
Act to facilitate investigation and prosecution of cyber crime.
(ii) Operational challenges:
There is a need to have high tech crime units that respond to quick investigation and assist law
enforcement agencies faced with computer crimes. The police have to be made cyber sensitive
through adequate training and supported by an expert group with specialized knowledge of computer
forensics.
Just as investigators followed the trails and physical signs of robbers, modern investigators have tounderstand and follow a criminal’s paper trail, or cyber trail, in the form of invoices, communications, andother records that leave behind evidence of the criminal’s passing. A cyber trail is both an extension of crime
scenes in the real world, and a digital crime scene in itself. If a crime occurs in the physical world and there
is a computer with network access at the crime scene, investigators have to search the computer andnetwork for related digital evidence. Similarly, if a crime is first witnessed or recorded on a network,
investigators have to collect all relevant digital evidence on the network and, if possible, determine thephysical locations of the primary computers involved and treat those locations as crime scenes.
The investigation of computer crime requires a team effort of police, forensic scientists, lawyers andprogrammers or system administrators. Police are generally expected to know how to oversee aninvestigation, but may not know much about computers and computing and thus not know what evidence tolook for. Programmers and system administrators may know a great deal about computers, networks, andhow they work, but nothing about legal procedural requirements regarding the preservation of evidence.
Forensic scientists may know how to deal with evidence but, like the police, may not know what to look for

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when dealing with digital evidence or how to apply real-world forensic science methods to it. Lawyers may
know about the law of evidence but not much else. But today, when cyber crimes are fast increasing, thepolice have to learn how to handle digital evidence, use it to generate investigative leads, and to know whento call in an expert for assistance. Programmers and system administrators, who handle digital evidence,need to use it to generate investigative leads, and to know when to call in police for assistance. Forensic
scientists have to become intimately familiar with every aspect of digital evidence so that they can process it
to support an investigation. Finally, lawyers of both prosecution and defence, have to learn to dig up digital
evidence, defend it against common arguments, and determine whether it is admissible. Together, this teamwill then be able to conduct an investigation of a computer crime, look for evidence, find it, and treat it so as
to preserve its admissibility once it is found.
The Central Bureau of Investigation has recently created a Cyber Crime Research & Development Unit
which maintains close liaison with international agencies like the FBI, Interpol and other foreign police
agencies to share skills and techniques in investigating cyber crimes. The officers of the CBI associated inthis exercise share their expertise with the State police forces through regional training programmes held
periodically.
2. Counterfeiting
Currency counterfeiting is an organized white-collar crime, which has assumed serious proportions
globally. It not only causes serious setbacks to the world’s economy but also jeopardizes genuine business
transactions. These days, counterfeiting of currency notes is done with the help of modern equipment suchas colour scanners, colour laser photocopiers and printers, as well as by computer graphics software. Mostof the security features such as the use of complex designs, special paper, watermarks, optical fibre, security
thread, micro-printing, currency-printing, colour shift, and holography in genuine notes are copied with thehelp of advanced computer technology, which provides them with sophistication and perfection.
There has been an upsurge in the incidence of supply of counterfeit Indian currency notes from acrossIndia’s borders. During the year 1999, counterfeit Indian currency notes valued at Rs. 18.4 million wereseized as compared to Rs. 6.5 million during 1998 indicating a threefold increase. Almost half of the total
seizures are made from the three states of Uttar Pradesh, Bihar and West Bengal. Counterfeiting of currency
is resorted to to gain quick profit, acquire funds for drug trafficking or subversive activities, or mobilize
funds for smuggling. Sometimes, external agents in the form of travellers and cross border smugglers are
involved. Counterfeit currency can be used for destabilizing economies, provide financial assistance toterrorists and militants for buying arms and ammunition and sponsor religious fundamentalism, etc.
India, as a signatory to the Geneva Convention, 1929, is committed to extend full cooperation to all othercountries for eliminating or containing to the furthest extent possible, the counterfeiting of domestic as well
as foreign currencies. Indian laws and enforcement measures are in full conformity with the principles laid
down in the Convention. The Indian Penal code provides for punishment of varying degrees and up to life
imprisonment for counterfeiting any currency or making or possessing instruments or materials for forging
or counterfeiting currency notes or for possession of forged or counterfeit currency notes or bank notes.
Counterfeiting, however, goes beyond the production of bogus currency to the counterfeiting of all kindsof manufactured products such as clothing, audio and video equipment, compact discs, watches, liquor,
perfumes, etc. In such cases, losses are suffered by the manufacturers of the products, their employees, theeconomies of the concerned states and the concerned governments that would have received tax revenues.
3. Credit Card Frauds
A major form of economic crime is credit card fraud. Here also, the fraudster is one step ahead of law
enforcement agencies as technology has facilitated the manufacture of false cards. As financial institutions
introduce innovations against counterfeiting and fraud, increasingly sophisticated ways of profiting from or
beating those systems are devised. Most of the credit card fraud is committed by using counterfeited cards,
which are re-embossed or re-encoded. Nowadays, counterfeiters have reproduced holograms and encoded
magnetic stripes on credit cards. New security measures can only be introduced gradually and if measures
are taken against fraudulent card users in one part of the world, they quickly move to another part wheredetection measures are less sophisticated. Thus, problems associated with these kinds of frauds take a longtime to overcome and cause losses around the world. In India, credit card frauds also occur by stealing the77

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cards and the accompanying information at the time of application or delivery and forging signatures.
Sometimes merchants or employees of hotels, restaurants or shops take genuine numbers of cards fromsales slips and pass them on to syndicates.

C. Group – III
Before we discuss the strategies that have been adopted by money launderers, let us pause to consider
the specific kinds of transnational crimes where proceeds are transmitted out of a country’s national borders.
1. Transnational Organized Gangs
In the sixties and seventies India had Haji Mastaan (gold smuggling), Yusuf Patel (gold smuggling) and
Karim Lala (drug smuggling). In the eighties and nineties other gangs emerged. Dawood Ibrahim, Tiger
Memon and Mohammad Dosa are reportedly operating from abroad (Dubai) and are involved in extortion ofmoney from builders and film producers, mediating in monetary disputes, and undertaking contract killings.
The other major gangs of Mumbai indulging in organized crime are those of Chota Rajan (Drug Trafficking
and Contract Killings), Arun Gawli (Contract Killings and Protection Money), Late Amar Naik (Protection
Money), Chota Shakeel and Om Prakash (Babloo) Shrivastava (Kidnappings for ransom and Killings). In thefield of terrorism certain transnational organizations such as Lashkar-e-Toiba, Jaish-e-Mohammad, Hizbul
Mujahiddin, etc. have been operating. The most essential characteristic of organized crime is making moneyor “maximisation of profits”.
2. Drug Trafficking
Flanked by the Golden Crescent, (South-west Asia) and the Golden Triangle (South-east Asia), India has,due to its geographic location, become the corridor for movement of heroin and hashish to various
destinations in Europe, America and Africa. Substances of abuse include alcohol, tobacco and natural andmanufactured drugs. A kilogram of heroin, which costs approximately a thousand dollars on the Indo-Pak
border, is reportedly sold for 250,000 dollars in Europe or USA.
The global drug trade has grown phenomenally. It is said to fund terrorism and other forms oftransnational crime. Legislative measures against drug trafficking include The Narcotic Drug andPsychotropic Substances Act and Rules, 1985 and The Prevention of Illicit Traffic in Narcotic Drugs andPsychotropic Substances Act, 1988. The Narcotics Control Bureau functions as a coordinator between
various departments and arranges interagency coordination meetings
International drug trafficking poses a threat to the social fabric of all countries. The increase in the scaleof these operations has led to an increase in drug use, addiction, and the general crime level. Drug profits
are transferred electronically to dozens of banks around the world in less than 24 hours by using falsified
export documents and invoices for goods in order to disguise drug trafficking transactions.
3. Smuggling of Migrants
There have recently been many reports of smuggling migrants from India and an industry has emerged
which involves Indian agents recruiting migrants, transporting them to Europe or North America, collecting
fees from them and sometimes providing them with jobs in the destination areas. India is both a source and a
destination country for migrant workers. Skilled workers from India migrate to the U.S.A., Europe, theMiddle East and East Asian countries. Similarly, migration into India takes place from neighbouring
countries. Sometimes smuggling and trafficking activities are carried out by criminal networks, which arealso involved in trafficking of narcotics, document fraud, money laundering, arms smuggling and othertransnational crimes
4. Trafficking in Persons
Trafficking in human beings is a transnational organized crime that involves the illegal trade of humanbeings, through abduction, threat of force, deception, fraud or “sale” for the purposes of sexual exploitationor forced labour. A major reason is the search for work abroad due to economic disparity, high unemployment
and disruption of traditional livelihoods. Traffickers face few risks and earn huge profits by taking advantageof large numbers of potential immigrants. In many cases, drug traffickers have switched to trafficking humanbeings because it is more lucrative and relatively risk free.
In cross border trafficking, India is a sending, receiving and transit nation. Receiving women and children
from neighbouring countries and sending women and children to Middle Eastern nations is a common

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occurrence. The long and porous border between India and its neighbouring countries facilitates trafficking
in women and girls.
5. Terrorism
Terrorism has been there for quite a while in India. It is characterized by hijacking and killing of wellknown individuals, shoot-outs or bomb attacks in public and religious places and more recently, an attemptedattack on the Indian Parliament. There are a number of terrorist outfits operating in India such as Lashkar-eToiba, Hizbul Mujahidin, Jaish-e-Mohammad and so on.
There are many causes of terrorism ranging from ideology, religion, fundamentalism, fanaticism, politics
to corruption and money-laundering and mercenary ones. Different and varied methods have been adopted
to create panic – from the hijack of the Indian Airlines aircraft in Afghanistan in December 1999 to suicide
strikes evident in the assassinations of former Prime Minister Rajiv Gandhi in 1991 and Chief Minister
Beant Singh in 1995 to ‘Fidayeen’ strikes in Jammu and Kashmir to terrorist attacks such as the attack on
the Indian Parliament in 2001, an attack on the American Centre, Kolkata in 2002 and attacks on
Akshardham temple and Raghunath temple, also in 2002. . Firm links have also been established between
militant outfits in India and the underworld – drug traffickers, border crossers, currency counterfeiters,
travel racketeers, mafia syndicates, etc. – which are used not merely as a support mechanism but also to
execute actual actions.
6. Trafficking in Arms
The Purulia Arms Drop case is the most glaring example of transnational arms smuggling. In December
1996, an Anotov 26 aircraft dropped over 300 AK 47/56 rifles, ammunition, sniper weapons, rocket launchers
and night vision devices in Purulia in West Bengal. The aircraft was bought from Latvia, chartered by acompany, Carol Airlines, registered in Hong Kong, moved to Bulgaria to pick up the consignment of arms
and finally apprehended in Bombay after it had dropped its consignment. There is evidence of smuggling ofarms in Jammu and Kashmir, Punjab and the North East where caches of arms have been seized.
7. Money Laundering
Crime pays and criminals naturally want to be able to enjoy their profits without worrying about thepolice or the courts. This is not something new. However, globalization has brought about an increase in theinternational movement of money. The rapid expansion of international financial activity has gone hand inhand with the development of transnational crime, which takes advantage of political borders and exploits
the differences between legal systems in order to maximize profits.
Money laundering cannot be disassociated from other forms of crime. It is a fact that it thrives on
corruption. Corrupt people use financial techniques to hide their fraudulently obtained assets and thecontinued successful application of these techniques depends on the involvement of influential accomplices.
Money laundering is therefore at the centre of all criminal activity, because it is the common denominator of
all other criminal acts, whether the aim is to make profits or hide them.
Laundering operations are, in fact, intended more to conceal the origin of the money than its criminal
nature, in other words to hide the traffic from which it is derived rather than the general criminal activity
which actually generated it. It is therefore essential to move the money in order to scramble the route it
takes. The operation is wholly successful when the nature of the money is also concealed and it is
impossible to establish a link with any criminal activity because the different circuits taken give it theappearance of legitimate income.
8. Hawala
The Indian Hawala or Hundi system is the transfer of money through unofficial channels, normallyoutside the banking channels used by businessmen. The money so transferred often includes the money
derived from criminal activities or in violation of the country’s legislation. Underground banking, whichconveys a sense of a system, may not strictly cover the misuse of a banking channel. It may refer to, in a
restricted manner, a system of rendering services, the most important in this context being the transmissionof money. Hawala represents such services. It operates in the following manner.
Someone in the U.S.A., for example, deposits $1,000 to an underground banker for payment to be madeto an Indian in India. The U.S.A. underground banker contacts his counterpart in India immediately on the79

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phone or by wire and sends some coded message for payment of money to the Indian recipient. As in a bank,there is no physical transfer of money from one country to another; the accounts are settled by a reverse
process when an Indian sends $1000 to someone in the U.S.A. The Indian operator contacts his counterpart
in U.S.A. and money is paid in U.S.A. without any physical transfer of money. These operators work in avery organized manner and have a well-knit network. They undertake their business under cover of absolute
secrecy and no paper trail for audit is kept. The system operates on an ethnic network. The network may
include more than three or four countries. The principal operators engage agents and sub-agents in various
countries for collection and disbursement of money. Hawala is widespread in India from metropolitan cities
to smaller towns. Members of Indian families earning a living abroad are the clients of the system.
Money laundering and Hawala transactions, threaten developing economies and contribute to illicit drugtrafficking and terrorist and subversive activities. As mentioned earier, India, for instance, is a transit point
for drug traffickers and other criminals from the Golden Crescent and the Golden Triangle. It has become aconduit for the South East, Middle East, and Far East and Latin American countries. Both non-resident
Indians and resident Indians use the Indian Hawala system or underground banking extensively for drugtrafficking and remittances of money. In the mid-nineties Bombay was attracting huge amounts of Narcotics
money from drug cartels in Columbia (London Times, May, 1993). The private sector is also involved inquick transfer of cash across continents. Travel agents and courier companies target Indians living abroad
who want to repatriate money. The time taken to transfer money is much less. Money launderers also use
such private companies for money transfers.
There are many reasons for the use of underground banking channels instead of the normal banking
system. The high tax rate and the Exchange Control Regulations (though now considerably liberalized) havebeen the major reasons for Hawala and other economic crimes in India. Underground banking is extensively
used for drug trafficking and remittances of money. It is here that the economic offenders and the launderers
meet. Economic offenders want to remit money and money launderers help in doing so. Another reason formoney laundering is due to evasion of taxes by some corporate houses.
Money laundering techniques include smurfing (a large number of small transactions, each transaction
being less than the mandatory transaction reporting threshold), establishment of front companies,
remittances through Hawala (non-banking channels), over-invoicing and double invoicing legitimate
business (ordering goods at inflated prices and depositing the difference between the real and inflated values
in an offshore account) and foreign remittances. Non-resident Indians have been given some special banking
facilities. These facilities are misused to bring back the money as white money. For example, a portfolio
account is opened in a foreign country and the money is laundered back to be invested in the stock markets.
Another modus operandi is to launder the money through bogus exports. The conversion of black money isdone by over-invoicing the products. Some shell companies are set up to issue bills or invoices accompanied
by bogus transport receipts in order to obtain funds against these documents from bank/financial institutions
and then divert major parts of such proceeds by issuing cheques in the names of non-existent front
companies of cheque discounters. The cheque discounters then hand over cash immediately to the party
after deduction of their commission. They file income tax returns in which the commission is shown astaxable income and also issue fake Letters of Credit and false bills. The cheque discounters are generally
associated with commodities markets where fake transactions in commodities can largely go unnoticed.
Money laundering has so far been dealt with mainly under the Foreign Exchange Regulation Act, 1973,
but with effect from 1999, FERA has been replaced by the Foreign Exchange Maintenance Act. A bill named
as ‘The Prevention of Money Laundering Bill’ has been introduced in Parliament by the Government of Indiaand is to be enacted as law. Money laundering has been proposed as a cognizable crime punishable withrigorous imprisonment of 3-7 years which could be extended to 10 years and a fine of up to Rs. 0.5 million.
The acquisition, possession or owning of money, movable and immovable assets from crime, especially fromdrug and narcotic crimes, would be tantamount to money laundering. Concealment of information on
proceeds or gains from crime committed within India or abroad is proposed to be an offence. An adjudicating
authority is proposed which would have powers to confiscate properties of money launderers. An
administrator may be appointed to manage the confiscated assets. An appellate tribunal is proposed to be set
up to hear appeals. Financial institutions are expected to maintain transaction records and furnish these to
the adjudicating authority. Failure to do so would be punishable too.

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D. Indian Legislation to deal with Money Launderers
Presently, legislation to deal with such offenders is specifically intended to deprive offenders of theproceeds and benefits derived from the commission of offences against the laws of the country. It provides
for the confiscation or forfeiture of the proceeds or assets used in connection with the commission of certain
crimes. The concerned Acts in Indian legislation are:(i) Criminal Law (Amendment) Ordinance, 1944;(ii) Customs Act, 1962 (Secs. 119 to 122);(iii) Code of Criminal Procedure, 1973 (Sec. 452);(iv) Smugglers & Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976;(v) Narcotic Drugs & Psychotropic Substances Act, 1985 (Sections 68-A to 68-Y);(vi) In addition, Indian statutes also contain provisions for preventive detention of foreign exchange
racketeers under the Conservation of foreign Exchange and Prevention of Smuggling Activities(COFEPOSA) Act, 1974, and of the drug traffickers under the Prevention of Illicit Traffic in Narcotic
Drugs and Psychotropic substances (PITNDPS) Act, 1988.
For this purpose, the Government of India has set up the following Investigating Agencies that function
under the Department of Revenue in union with the Ministry of Finance.

E. The Central Economic Intelligence Bureau
An apex intelligence and coordinating body, the Central Economic Intelligence Bureau was set up with
the intention of coordinating and strengthening intelligence gathering and investigative efforts of allagencies enforcing economic laws. Accordingly, the Bureau collects intelligence regarding aspects of theblack economy that require close watch and investigation as well as the emergence of new types of suchoffences and evolves counter-measures required for effectively dealing with existing and new types of
economic offences. It acts as the nodal agency for cooperation and coordination at the international levelwith other customs, drugs, law enforcement and other agencies in the area of economic offences. It
implements the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1971.
F. The Directorate of Revenue Intelligence
The Directorate of Revenue intelligence is concerned with Customs related offences and collects
intelligence about smuggling of contraband goods, narcotics, under-invoicing, over-invoicing, etc. throughsources. It analyses and disseminates such intelligence to its field formations for action and keeps a watch
over important seizures and investigations. It also functions as the liaison authority for exchange of
information among ESCAP countries for combating international smuggling and customs frauds and liaisonswith foreign countries, Indian Missions and enforcement agencies abroad as well as with the CBI and
INTERPOL on anti-smuggling matters. Cases are referred for action to the Income Tax Department.
G. Enforcement Directorate
The Directorate of Enforcement is mainly concerned with the enforcement of the provisions of theForeign Exchange Management Act 1999 to prevent leakage of foreign exchange which generally occurs
through remittances of Indians abroad otherwise than through normal banking channels; illegal acquisition offoreign currency; non-repatriation of the proceeds of exported goods; unauthorized maintenance of accounts
in foreign countries; under-invoicing and over-invoicing of exports and imports and other types of invoice
manipulation; siphoning off of foreign exchange against fictitious and bogus imports; illegal acquisition offoreign exchange through Hawala and obtaining secret commissions abroad.
The main functions of the Directorate are to collect intelligence relating to violation of the provisions of
the Foreign Exchange Regulation Act; conduct searches of suspected persons, conveyances and premises
and investigate such cases. The Directorate also adjudicates cases of violations for levying penalties andconfiscates amounts involved in contraventions.

H. The Directorate General of Anti-Evasion (Central Excise)Due to the growth of the Central Excise revenue and its coverage to almost all manufactured products a
specialized intelligence agency, the Directorate of Anti Evasion, was created to target prevention of Central
Excise duty evasion. The Directorate collects intelligence relating to evasion of central excise duties,
studies their modus operandi and alerts Collectorates. It also studies the price structures, marketing
patterns and classification of commodities in respect of which possibilities of evasion are likely in order to81

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advise Collectorates for plugging loopholes and co-ordinates with Enforcement agencies like Income tax,
Sales tax, etc.

I. The Directorate General(s) of Income Tax (Investigation)
The Directorate Generals of Income Tax Investigation deal with all matters connected withinvestigations under the Income Tax Act of the Central Government. They collect intelligence pertaining toevasion of Direct Taxes and organize searches to unearth black money. They take steps to ensure that
persons having information about tax evaders come forward with the same to the Department and disburse
rewards.
J. The Narcotics Control Bureau
The national policy on Narcotic Drugs and Psychotropic Substances is based on the Directive Principles
contained in the Indian Constitution (Article 47), which directs that the State shall endeavour to bring aboutprohibition of the consumption, except for medicinal purposes, of intoxicating drugs injurious to health.
Besides, India is also a signatory to:•••Single Convention on Narcotic Drugs 1961 as amended by the 1972 Protocol.
Conventions on Psychotropic Substances 1971.
United Nations Convention against Illicit Traffic in Narcotic Drugs and Psychotropic Substances,
1988.

The broad legislative policy in the matter is contained in the three Central Acts, viz. Drugs andCosmetics Act, 1940, The Narcotic Drugs and Psychotropic Substances Act, 1985, and The Prevention of
Illicit Traffic in Narcotic Drugs and Psychotropic Substances Act, 1988. The Department of Revenue has thenodal co-ordination role as administrator of the Narcotic Drugs and Psychotropic Substances Act, 1985 andthe Prevention of Illicit Traffic in Narcotic Drugs and Psychotropic Substances Act, 1988.
The Narcotics Control Bureau was constituted in 1986 to exercise the powers and functions of theCentral Government for coordination of action by various authorities under the N.D.P.S. Act, Customs Act,
Drugs and Cosmetics Act, etc. and for countermeasures against illicit traffic under various international
conventions and protocols presently in force. It is the apex-coordinating agency and collects and analyses
data related to seizures of narcotic drugs and psychotropic substances, studies trends, modus operandi,collects and disseminates intelligence and works in close cooperation with the Customs, State Police andother law enforcement agencies.

K. Special Investigative Tools
In addition to traditional investigative methods to combat global economic crime, law enforcement
agencies utilize special investigative tools such as controlled delivery, undercover operations and electronic
surveillance (wiretapping, communications interception, etc.) to effectively fight global economic crime.
However, their use is controversial because they may infringe on human rights to privacy or may bemisused.
L. Controlled Delivery
Controlled delivery techniques have proven an important enforcement tool in identifying the principles
involved in drug trafficking and other major smuggling offences especially those who, by the use of couriers,
creation of false documents and other deceptive practices, carefully disassociate themselves and try to be
remote from the drug trafficking operations. It is the technique of allowing illicit or suspect consignments…
to pass out of, through or into the territory of one or more countries, with the knowledge and under thesupervision of their competent authorities, with a view to identifying persons involved in the commission of
offences (The United Nations Conference for the Adoption of a Convention against Illicit Traffic in Narcotic
Drugs and Psychotropic Substances). Further, according to Article 11 of the Convention, controlled delivery
is to be allowed on the basis of mutual agreements or arrangements between nations.
Section 4 of the Indian Narcotic Drugs and Psychotropic Substances Act, 1985 endorses theseinternational obligations. However, before adopting this technique, the originating country and the recipient
country should discuss in detail the entire operation, maintain surveillance simultaneously in both thecountries, keep close surveillance on the movement of drugs either through cargo or through couriers, andtime the final strike operation simultaneously in both the countries to achieve maximum results. In India,

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the Narcotics control Bureau, the nodal agency for enforcement of laws concerning narcotic drugs andpsychotropic substances, has undertaken controlled delivery operations with a number of countries fromtime to time.

M. Electronic SurveillanceElectronic surveillance covers wiretapping, communications interception, etc. Telephone interception
and the monitoring of all electronic communications are controversial aspects of electronic surveillance, yet
are useful in assisting law agencies to combat global economic crime. In India, interception of messages iscovered under subsection 2 of section 5 of the Indian Telegraphic Act, 1885, when it is necessary or
expedient to do so in the public interest. Also, a legal provision has been made in the licensing conditions ofcellular companies to provide parallel monitoring facilities for all communications being received andemanating from mobile sets.
N. Survey on Economic Crime in India
PriceWaterhouseCoopers Corporation carried out a survey across a sample drawn from the top 1000
Indian companies in the manufacturing, services and financial services sector in 2003. According to thesurvey, there has been a significant increase in economic crime over the past two years but there has been areluctance to report it. Corruption and bribery are perceived as the most prevalent economic crimes in India.
Reluctance to admit them may be due to fear of adverse implications or acceptance of corruption as aneveryday cost of doing business. Other economic crimes having high prevalence include financial
misrepresentation, product piracy and counterfeiting. The incidence of low reporting of financial
misrepresentation may be attributed to low transparency and poor accountability. Companies appear to be
unaware of the extent to which product piracy and counterfeiting are rampant and tend to avoid publicity forfear of adverse implications, particularly their effect on brand image. Perceived prevalence of asset
misappropriation and cyber crime in India is also relatively low and suggests the need for tighter internal
controls and other deterrents. The reported absence of money laundering is somewhat surprising and seems
indicative of poor detection.
Most Indian respondents were unable to quantify their loss arising from economic crime as the financial
impact of less tangible economic crimes such as corruption and bribery or product piracy and counterfeiting
is difficult to quantify. They are, however, conscious of the collateral cost of economic crime on theirbusiness which, apart from financial loss results in undermining of staff morale and impacting business
relationships, reputation and brand image.
Audits (external and internal), tip-offs and accident or chance are reported to be the main factors in thedetection of economic crime in India. Most organizations are aware that they are required to report frauds
but the reporting is low because of a reluctance to initiate recovery proceedings, scepticism about recovery,
desire to avoid publicity, concerns regarding implications of disclosure, drawn out litigation process and apropensity to accept certain crimes as a customary business risk. Development of controls in theirorganization such as organization ethics or a code of conduct will form an effective deterrent in combination
with pre-employment screening and fraud detection training. Looking ahead, respondents believe that
despite improved controls, vulnerability to corruption and bribery, asset misappropriation and financial
misrepresentation continue to be high, despite an expected decline in corruption. However, an increased
threat is expected from economic crimes like product piracy and counterfeiting, cyber crime and industrial
espionage.

IV. CONCLUSION
National strategies are inherently inadequate for responding to challenges that cross multiple borders andinvolve multiple jurisdictions and a multiplicity of laws. The rapid growth in global economic crime and thecomplexity of its investigation requires a global response. At present, the measures adopted to counter thesecrimes are not only predominantly national, but these measures differ from one country to another. It isabsolutely imperative to increase cooperation between the world’s law enforcement agencies and tocontinue to develop the tools, which will help them effectively counter global economic crime.
Tracing the money trail, including the origin of funds, combating money laundering through reduction ofbank secrecy and seizure of assets are issues of paramount importance. Putting in place legislation on
forfeiture and confiscation of properties acquired through criminal activities and sharing of available

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technology on the subject would be a step in the right direction. Extradition is one of the most important
tools used for bringing transnational fugitives to justice and extraditable crimes include unlawful seizure ofaircraft; unlawful acts against the safety of civil aviation; crimes against internationally protected persons;common law offences like murder, kidnapping, hostage taking; and offences relating to firearms, weapons,
explosives and dangerous substances, etc. when used as a means to perpetrate indiscriminate violence
involving death or serious injury, or serious damage to property. However, it is also an area that poses thegreatest problems. A large number of countries have not entered into extradition treaties and even wheresuch treaties exist, they are mostly embroiled in complicated procedures leading to undue delay inextradition. There is a need for simplifying procedures and expediting the process.
In India, the Extradition Act, 1962 deals with extradition of fugitive criminals. India has extradition
treaties with a number of countries. It has also entered into Mutual Legal Assistance Agreements/Treatiesin criminal matters such as the investigation and prosecution of crime and the tracing, restraint andconfiscation of the proceeds and instruments of crime, including currency transfer and terrorist funds with anumber of countries. India is a signatory to the United Nations Convention against Transnational Organized
Crime and to the South Asia Association for Regional Cooperation (SAARC) Convention for Suppression ofTerrorism. Pursuant to the SAARC Convention, India enacted the SAARC Convention (Suppression ofTerrorism) Act.

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126TH INTERNATIONAL SENIOR SEMINAR
VISITING EXPERTS’ PAPERSTACKLING CORRUPTION: AN INDIAN PERSPECTIVE
Deepa Mehta*
Corruption has prevailed in society since time immemorial. In the modern world, however, corruption isassociated with public office. To a common man, corruption is associated with giving or accepting some kindof compensation in the form of money, office or position for a service rendered in an illegal form, or byoverstepping one’s legal authority. It is a kind of reward promised or taken, or gratification expected for aservice that is rendered in the course of fulfilment of one’s normal administrative or other lawful duties. It
may be construed as, “offering, giving, soliciting or acceptance of an inducement or reward which may
influence the action of any person” as also “the use of office for private profit”. It may manifest itself in a
simple form such as the purchase of a railway ticket by paying an extra amount to the ticket collector or
procuring a license for the establishment of an industrial unit or a contract for the construction of a building
project. Sometimes, it may take more subtle forms such as in the distribution of election tickets or in thechange of political affiliations of the members of the political parties.
Section 7 of the Prevention of Corruption Act, 1988 defines corruption as:“Whoever being or expecting to be a public servant, accepts or obtains, or agrees to accept, or attempts
to obtain gratification whatever, other than legal remuneration as a motive or a reward or for bearing to do
any official act or for showing or for bearing to show, in the exercise of his official functions favour or
disfavour to any person with the Central or State Government or Parliament or Legislature of any State orwith any public servant as such.”
The World Bank defines corruption as the abuse of public office for private gain. Corruption as dealt withby the Council of Europe’s Multidisciplinary Group of Ministers is bribery and can be said to constitute the
combined effect of monopoly of power plus discretion in decision-making in the absence of accountability.
Amongst the major causes of corruption, the important ones are, greed, circumstances, opportunities,
and other temptations that include party funds, money for patronage, apprehension of loss of office, need forextra money to maintain standards, etc. In an expanding economy on account of rapid industrialization andgrowth of an acquisitive society, a conflict of values inevitably occurs. The age-old concept of values of
judging people by what they are rather than what they have crumbles and people easily succumb tocorruption. This apart, the rising cost of living and the wide gap between real wages and the opportunities tomake quick money encourages corrupt practices among public servants and businessmen. Besides, Indiansociety tolerates amassing of wealth and it is seen as a symbol of competence. Other reasons are
consumerism and desire for an ostentatious lifestyle and evil social practices like dowry and pressure ofpayment for education.
The Santhanam Committee constituted by the Central government has identified certain procedural
causes of corruption. These are: red tape and administrative delay; unnecessary regulations; scope of
personal discretion; cumbersome procedures; scarcity of goods and services and lack of transparency. Thus,
we have a situation where on the one hand enterprising businessmen are ready to pay “speed money” andon the other civil servants agree to exercise discretion, not infrequently, for ulterior motives. Other reasonsfor corruption are where officers on behalf of the State engage private companies to perform specific tasksor public works or provide services and these companies, in collusion with officials, indulge in corrupt
practices such as overcharging, providing low quality work, etc. Secondly, wide discretionary powers
conferred to people with specialized skills and knowledge as in the field of defence projects can lead tocorrupt practices. Of late, a number of such scams have unfolded such as Bofors, HDW Submarines, defence
purchases, etc. Thirdly, lack of transparency, unclear, ambiguous and technically complicated regulations leadto corruption, as the public is unable to exercise effective control.
Corruption breeds a distrust of public institutions; it undermines ethical principles by rewarding those
who are willing and able to pay bribes, and hence perpetuates inequality. Money laundering becomes* Inspector General of Police, Chief Vigilance Officer, Delhi Metro Rail Corporation, India.

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lucrative and links are established between corruption and organized crime. Illicit activities invariably rely atsome point in time on the support of corrupt public officials. Sometimes, organized criminals acquire suchgreat power that they are in a position to undermine and destroy institutions, with dire consequences for
democracy and the rule of law. Moreover, globalization and the changing structure of trade, finance,
communications and information has generated an environment in which corruption is no more confined tonational boundaries. It is operating increasingly across borders and, in many cases, is transnational andinternational in character. Criminal organizations have adapted corporate-like structures to criminal
activities, employing highly skilled manpower and mechanisms to assist in tax evasion, money launderingand concealing income.
Corruption may be seen at various levels. It may be present at political levels, in the corporate sector andamongst the bureaucracy, and may also be responsible for the criminalization of politics. For most politicalparties, winning the elections becomes a sole obsession and increasing election expenses are often stated asa major cause for political corruption. In addition, an expensive and lavish lifestyle is the product of aconsumerist culture and politicians also form part of the same culture. In the last few years, the press has
been replete with reports of scams and scandals. Certain Chief Ministers of States and Union Ministers have
had to resign on account of being legally charged with corrupt practices. The Bofors scam, Bihar’s Fodder
scam, purchases by the Department of Telecommunications, Jain Hawala Case, Lakhubhai Pathak Case,
various land grab cases, HDW Submarine case and certain defence purchases have been widely reported in
the press and are now the subject matter of judicious scrutiny. There is a widespread perception that
corruption in contracts, commodity imports, international financial transactions and violations of the Foreign
Exchange Regulation and Income Tax Acts has also increased.
Political corruption has very high visibility, and it makes sensational news. Corruption in the corporate
sector is no less: only it makes less news. According to a report of the International Monetary Fund, a lot of
capital has been deposited in foreign banks. Basically, concealment of income, evasion of taxes and duties,
black-marketing, rigging of share prices, manipulating the stock market and other such practices have led tosmuggling and money laundering. In India, a number of scams have recently been reported in the press,
notably the Harshad Mehta case (rigging of share prices), ITC case (prosecution for foreign exchange
regulations), Reliance Industries (official patronage and manipulation of customs duties), MS Shoes scam(manipulation of the stock exchange) CRB scam (securities scam), etc. Such trends have been associatedwith the generation of a parallel black economy and loss of a huge amount of revenue to the government.
The business-politics nexus is found to be implicit in the very nature of things, as it works to the mutualadvantage of both parties.
Whereas mega corruption in high places makes big news, it is the lower level graft that really hurts thecommon man. And that is where bureaucratic corruption comes into focus. At the countryside level,
corruption may exist in departments maintaining land records or those disbursing agricultural loans or inbribing the police to settle petty brawls and disputes. In towns and cities, corruption in the form of evasionof income and other taxes is more high profile as it concerns a higher income strata and the clout of theofficials lies in the tremendous discretionary powers vested in them. Corruption in the excise and customs
department means a great loss to the central revenues. Smuggling of gold, drug trafficking, undervaluationand evasion of excise duties are the common modes of corruption in this sphere.
In many countries, a sizeable proportion of higher-level civil servants are believed to be either corrupt on
their own or act as accomplices, conduits or agents for corrupt Ministers. At lower levels of bureaucracy,
corruption mostly takes the form of speed money for expediting approvals and for providing (or notwithholding) legitimate services (e.g., in utilities such as telephones, electricity boards and civic services).
An interlocking of corruption exists at various levels of the government hierarchy – elected politicians,
higher bureaucracy and lower bureaucracy. Criminalization of politics begins with politicians seeking theassistance of criminals, in particular to fight elections. This means the use of ‘money power’ and ‘muscle
power’ by politicians on the one hand and aiding and abetting crimes and sheltering of criminals on the other,which in turn leads to politicization of the administration, particularly of the police and election of persons
with criminal records and their consequent occupation of places of honour and status.
Amongst Indian legislation, The Prevention of Corruption Act, 1988 has been enacted to consolidate thelaw relating to the prevention of corruption. Various governmental institutions have been established to deal
with corruption. The Administrative Vigilance Division in the Ministry of Home Affairs was established in86126TH INTERNATIONAL SENIOR SEMINAR
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1965. The Delhi Police Establishment Act came into force in 1946. The Special Police Establishment has
become a part of a bigger organization, the Central Bureau of Investigation. The Central VigilanceCommission has been set up in the Centre. Similar bodies have been set up in the States. The main idea wasto have an external independent and impartial body to look into the allegations against government officials
and thus inspire public confidence.
The Central Vigilance Commission set up in 1964 acts as the apex body for exercising generalsuperintendence and control over vigilance matters in administration and probity in public life. It is governedby the Central Vigilance Commission Act, recently enacted on 11th September 2003. It is an Act to provide
for the constitution of a Central Vigilance Commission to inquire or cause inquiries to be conducted into
offences alleged to have been committed under the Prevention of Corruption Act, 1988 by certain categories
of public servants of the Central Government, corporations established by or under any Central Act,
Government companies, societies and local authorities owned or controlled by the Central Government andfor matters connected therewith or incidental thereto. The Commission consists of a Central VigilanceCommissioner and two Vigilance Commissioners. The Commission can undertake an inquiry into anytransaction in which a public servant is suspected or alleged to have acted for an improper or corrupt
purpose; or cause such an inquiry or investigation to be made into any complaint of corruption, grossnegligence, misconduct, recklessness, lack of integrity or other kinds of mal-practices or misdemeanours on
the part of a public servant. The Commission tenders appropriate advice to the concerned disciplinary
authorities in all such matters. It also exercises superintendence over the vigilance administration overvarious Ministries and corporations of the Central government. Proceedings before the Commission are
deemed to be judicial proceedings.
The Central Vigilance Commission has two Chief Technical Examiners to advise the Commission in alltechnical and contractual matters. The Chief Technical Examiners conduct intensive examination of all types
of works and contracts under their purview. During the course of such examinations, a number ofirregularities and lapses in the award and execution of works are observed such as lapses/irregularities inawarding contracts, defective contract conditions and clauses, overpayment made to the contractor,
execution and acceptance of sub-standard work, infructuous and avoidable expenditure, etc. These arebrought to the notice of the Chief Vigilance Officers for suitable corrective action. The role of the Chief
Technical Examiners is not limited to detection of malpractice. They may also suggest preventive measuresin certain areas as a safeguard against malpractice or corrupt practices in order to plug loopholes inprocedure/rules, regulations and to improve the systems in organizations so as to prevent a recurrence ofsuch lapses. In cases where serious irregularities or negligence are observed, they are referred to the Chief
Vigilance Officer for detailed investigation.
The Chief Vigilance Officers in Central government Ministries and corporations decide upon theexistence of a vigilance angle in a particular case, at the time of registration of the complaint. Generally avigilance angle is characterized by:(i) Commission of criminal offences like demand and acceptance of illegal gratification, possession ofdisproportionate assets, forgery, cheating, abuse of official position with a view to obtaining
pecuniary advantage for self or for any other person; or(ii) Irregularities reflecting adversely on the integrity of the public servant; or(iii) Lapses involving any of the following:(a)Gross negligence;(b)
Recklessness;(c)
Failure to report to competent authorities, exercise of discretion/powers without or in excess
of powers/jurisdiction(d)Cause of undue loss or a concomitant gain to an individual or a set of individuals/ party or
parties; and(e)
Flagrant violation of systems and procedures.
Today the Public Sector Undertakings in the country play a significant role in the economic as well associal development of the country. Further, the spectrum of the public sector ranges from a monopolistic
nature like internal air traffic, life insurance, etc. to highly competitive fields like textiles and banking. These
undertakings are not regarded merely as large commercial concerns but have, in varying degrees, wider
objectives than commercial concerns in the private sector. They deal with taxpayers’ money and are

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therefore accountable to Parliament. They are subject to public criticisms and criticisms in the press. Unlike
the private commercial organization where individuals count more, in these public undertakings, systems
have to work more than individuals. Under such circumstances, there is a need for a strong vigilance
organization in the PSUs with a set of rules to regulate the conduct of the employees of these undertakings.
Vigilance has to be looked upon as one of the essential components of management. The objective of
vigilance is to ensure that the management gets the maximum out of its various transactions. In the field ofpurchases, it should get quality products at competitive rates. In the field of sales, it should get the
maximum realization for its products at the minimal selling cost. In the field of personnel, it recruits the besttalented people and keeps the morale of the people high. Likewise, in any one of its transactions,management should endeavour to get the best.
Vigilance and Anti-corruption Bureaus are established in all State governments. The State Vigilance
Bureau is the main agency of the State to deal with cases involving corruption. The Bureau conducts
investigation/enquiries into the following types of allegations involving public officials, including thoseworking in the public sector undertakings of the State government:(i) Criminal misconduct of public servants as defined in the Prevention of Corruption Act 1988.
(ii) Dishonest or improper conduct or abuse of power by public servants.
(iii) Gross dereliction of duty or negligence.
(iv) Misappropriation of public funds.
(v) Amassing of wealth disproportionate to known sources of income.
(vi) Misuse of public money or property.
Besides conducting investigations into vigilance cases, the Bureau also conducts vigilance enquiries,
confidential verifications and surprise checks. The Bureau also collects intelligence about corrupt officials
and maintains dossiers on them. Generally, the Bureau is headed by a Director who is of the rank of Director
General of Police. The Director is assisted by Inspectors General of Police and other police officers. The
field formations are at division level and district level. Besides executive staff, the Bureau has legal andtechnical staff to assist them in the investigation of cases.
There are also a number of special laws regulating customs, excise, taxes, foreign exchange, narcotics,
drugs, banking, insurance, trade and commerce and export and import. Some of the existing legislation
provides for confiscation of the proceeds of crime. The Directorate of Revenue Intelligence compiles yearly
information regarding the number of seizures made by the Customs officials, the total value of the seizures
and the nature of commodities seized. For instance, 38,998 seizures valuing about 10,197 million rupees
were made in 2001. The nature of the commodities seized by customs included gold, silver, electronic goods,
narcotic drugs, machines, fabrics/yarns/silks and others. Similarly, the Enforcement Directorate conducted
295 raids and searches in 2001 and seized and confiscated currency as well as imposed fines after registeringcases under the Foreign Exchange Regulation Act. The Central Board of Direct Taxes also conducted 5,321
searches in 2001 and recovered about 5,123 million rupees. The Directorate General of Foreign Trade has,similarly, registered cases for offences under the Export and Import Act. The Central Bureau of
Investigation and State Vigilance Bureaus of various state governments register cases and arrest persons
under the Prevention of Corruption Act. During 2001, the CBI registered 858 cases and arrested 197
persons whereas the State Vigilance Bureaus registered 2,990 cases and arrested 3,223 persons under thisAct.
Corruption adversely affects economic performance, undermines employment opportunities, and clouds
prospects for poverty reduction. Petty corruption raises the cost of engaging in productive activities. Itsburden falls disproportionately on poor people. For those without money or connections, petty corruption in
public health or police services can have serious consequences. Corruption affects the lives of poor people
through many other channels as well. It diverts public resources away from socially valuable goods, such as
education and infrastructure investments that could benefit poor people like health clinics, roads, etc.
Instead, it tends to increase public spending on capital–intensive investments that offer more opportunities
for kickbacks, such as defence contracts. It lowers the quality of infrastructure, since kickbacks, are morelucrative on equipment purchases. Corruption also undermines public service delivery. Where corruption
involves the transfer of funds outside the country, it seriously undermines economic development. The way
funds are allocated gets distorted, foreign aid gets reduced and productive capacity gets further weakened.

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Corruption is often tolerated because issues like prices of food grains, drinking water, and employmentrank higher in the voter’s priority. The voter considers all parties to be equally corrupt, the only difference
being that some have been found out and exposed while others have not yet been exposed. Secondly, acomplicated system together with red-tape leading to delays in many public offices makes the common man
consider that paying a bribe as speed money is the easy way out. Voters are not bothered much about
corruption at higher levels but they are more directly and visibly affected by the corruption at the cuttingedge level of administration which they experience everyday.
The Central Vigilance Commission has brought out ‘The Citizens Guide to Fighting Corruption,’ which,according to the Central Vigilance Commissioner, “contains the distilled essence of the strategies evolved so
far to fight corruption and the principles that can be adopted (by) every patriotic citizen of India who wants
to fight corruption”. Corruption cannot be fought only by individuals or by specialized agencies like theCentral Vigilance Commission, the CBI or by Government Anti-Corruption Bureaus. It has to be a fight at alllevels of society. Corruption is a major challenge confronting India, it is affecting social and economic
growth, it is anti-poor and affects the growth of an equitable and just society and that people at large, and notjust agencies, have to be sensitized to its evil effects.
The World Bank Report of 1997 says, “Incentive for corrupt behaviour arises when public officials havewide discretion and little accountability”. The World Development Report on Poverty 2000-2001 states thatthe state will deliver more effectively to all its citizens, but to poor people in particular, if public
administrations implement policies efficiently and are accountable and responsive to users, corruption andharassment are curbed, and the power of the state is used to redistribute resources for actions benefiting
poor people. Streamlining bureaucratic procedures, simplifying tax systems, eliminating excessive
regulations, privatizing state-owned enterprises and motivating public servants can help reduce theopportunities and scope of corruption. Another important measure is disseminating information on budget
allocations and spending which enables people to hold civil servants accountable, reducing inefficiency andcorruption. And community participation and monitoring can keep it in check.
Accountability is necessary for good governance. This is possible through transparency in operations.
Hence transparency in public life demands greater access to information, rules and regulations.
Transparency in government is possible if there is freedom of information and the citizens have access to
information. Recently several States have adopted the ‘Right to Information Act’ which empowers any
person desiring information to make an application to the competent authority asking for relevant
information. The competent authority is bound to provide the information within the time frame specified
unless the same is refused on valid grounds. The Delhi Government for instance has enacted the Delhi
Right to Information Act, 2001. It makes provision for securing information as a matter of right, barringsome exemptions. The citizens can file an application with the competent authority of the concerned
Department along with a fee and get information within 30 days. In case the information cannot be given,
then a rejection letter with cogent reason has to be issued.
With the advancement of and use of information technology in day-to-day life and even in governmental
operations, speedy processing of information not only reduces the scope of corruption but also improves thequality of service to the citizens. The CVC has recommended that in addition to publicity of tenders throughnewspapers, trade journals and providing tender documents manually or through the post, etc., the complete
bid documents along with application forms shall be published on the web site of the organization. In thestate of Andhra Pradesh, in the registration department, the use of IT has reduced the processing of papers
for the transfer of property from a couple of weeks to about half an hour. Corruption can be reduced throughincreased communication between civil servants and their clients. In Bangalore a “report card” which
provides citizen’s views on public services in the city shows how a public feedback mechanism can makepublic agencies more accountable to their clients.
Corruption flourishes because there are people in power who benefit from the present system. In India,
the number of persons who actually benefit may not be more than 50 million out of over 1000 million.
Unfortunately those who benefit from power are also those who have to initiate changes to check corruption.
It is, therefore, important for people to play an active role in this regard. The public interest litigation is aroute that can be used to approach the courts and thereby make the administration change policies or initiate
action to check corruption. Citizens may approach agencies such as the Central Vigilance Commission and

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Lok Ayuktas. The electronic and print media can be effectively used in shaping public opinion. NGOs canplay an active role in taking up individual cases for fighting corruption or bringing about systemic changes.
Members of the public can also report about the activities of public servants who are found to be living
beyond their means. In Maharashtra, vigilance cells have been formed in many towns by bringing together
interested groups to comply with the requirements of law and take up the problem with the officers
concerned. Around 45 organizations and departments of the Government of India have also publishedcitizens’ charters, which explain what services these departments are going to provide for the citizens.
The ‘Guide’ suggests that NGOs can undertake documentation and ranking of the corruption perception
index of government organizations as one of their activities. Transparency International has adopted amethodology for bringing out the Corruption Perception Index (CPI). The advantages of publishing the CPI
are many. First, they provide an informed basis for a debate on corruption. Secondly, they encourage honesty
by publicly naming and hence shaming dishonest officers. In fact this activity has commenced in some states.
Ethics should form part of the education system and children in the schools should be mobilized to createa social climate for making corruption unacceptable. Schools can reach large numbers of children, andthrough them, their parents and the community at large. The use of media for mobilizing the people against
corruption can also be part of this effort. Praja, an NGO of Mumbai, has devised a unique system for citizens
to ensure redress of citizens’ grievances through an online complaint registration system. The complaint issent to the authority concerned and to Praja. Both Praja and the municipal authorities hold meetings
regularly regarding these complaints.
According to Transparency International, a non-government organization in Berlin, which publishes the
Corruption Perception Index of countries annually, India is ranked at 72 out of 91 countries in 2001 in theorder from the least corrupt to the most corrupt. In this perspective, our fight against corruption is an on
going one. It has been estimated that “if the corruption level in India comes down by 15% the GDP growth
will improve by 1.3% and investment will go up by 2.9% of the GDP”.
Although corruption has become deeply entrenched, yet it is not impossible to get out of the corruption
trap. A strong political will and commitment to a clear anti-corruption agenda is required. Efforts have to bemade in different directions to reduce corruption. Certain changes are required in the legal framework suchas suitable modification of Indian Official Secrets Act in order to develop greater transparency in public
dealing. The promulgation of Corrupt Public Servants (Forfeiture of Property Act), 1999 will ensure real
punishment of corrupt public servants by way of confiscation of property. Similarly, the appointment of
independent ombudsmen by major public utilities for redress of grievances and development of Codes ofconduct on the basis of the International Code of Conduct for Public Officials can be considered. In our fightagainst corruption, good practices need to be adopted and encouraged. Strengthening of accounting
standards and practices, establishing of accountability in administration and fostering responsibility at lower
levels through decentralization, deregulation and elimination of unnecessary controls and developing
transparency in the adoption of discretionary practices, tendering and procurement are certain suchmeasures. Finally, and most importantly, healthy social values encouraging honesty in word and deed need to
be inculcated through an active involvement of the family, the school and the community.
The United Nations has done appreciable work in this direction. In its resolution 51/59 the General
Assembly has adopted the International Code of Conduct for Public Officials and recommended it to Member
States as a tool to guide their efforts against corruption. In its resolution 51/191, the Assembly has adopted
the United Nations Declaration against Corruption and Bribery in International Commercial Transactions.
The Convention on Combating Bribery of Foreign Public Officials in International Business Transactions
was adopted within the framework of the Organization for Economic Co-operation and Development(OECD) in 1997 and the Eighth International Anti-Corruption Conference also adopted the Lima Declaration
against Corruption that year. These instruments provide a comprehensive framework for combating
corruption by evolving strategies consonant with indigenous conditions.
If we want our countries to become economies in which all citizens will be able to enjoy their rights and agood quality of life, fighting corruption is the most important need. It is the responsibility of both thegovernment and the citizens together to respond to this need.

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THE ROLE AND RESPONSIBILITIES OF THE SERIOUS FRAUD OFFICE IN
FIGHTING FRAUD WITHIN THE UNITED KINGDOMPeter Kiernan*

The Serious Fraud Office and the office of Director were created by the enactment of the Criminal Justice
Act 1987. The Serious Fraud Office is a non-Ministerial Government Department whose activities are
subject to the superintendence of the Attorney General. This means that we are not subject to politicalinterference in the conduct of our duties. The role of the Attorney General is somewhat difficult to define.
He is responsible to Parliament for the work of the Serious Fraud Office and he is able to require the
Director to explain and justify his decisions and, quite correctly, frequently does so. However, he may notaffect those decisions directly or indirectly. Indeed, even in cases of great political sensitivity, no Attorney
General has ever sought to do so. The independence of the Director is a central feature of his role.
As a Government Department created by statute, the remit of the Serious Fraud Office is very strictly
constrained and is limited to those matters provided for in our founding statute.
By Section 1(3) of the Criminal Justice Act 1987,“the Director may investigate any suspected offence which appears to him on reasonable grounds toinvolve serious or complex fraud”.
Perhaps surprisingly there is no definition of what constitutes ‘serious or complex fraud,’ this has meantthat the Serious Fraud Office has had to develop its own view of this phrase and what it means. I shall returnto this issue later.
The Act goes on in Section 1(5) to provide that“the Director may –(a) institute and have the conduct of any criminal proceedings which appear to him to relate to such
fraud; and(b) take over the conduct of any such proceedings at any stage”.
Thus the Director is empowered to investigate and prosecute. Perhaps not a startling statement but interms of the United Kingdom, and specifically England, Wales and Northern Ireland, this was a dramatic
departure from previous practice.
Indeed, the Serious Fraud Office is a wholly unique organisation in terms of Law Enforcement Agencies
within England, Wales and Northern Ireland. I specifically exclude Scotland from these discussions because
the Scottish legal system is radically different from that in the remainder of the United Kingdom.
It may be helpful to explain the context in which the Serious Fraud Office was created, the generalsituation as far as Law Enforcement in the UK is concerned and the development of the Serious Fraud Officethrough its life.
On the 8th November 1983, the then Lord Chancellor and Home Secretary announced the establishmentof an independent Committee of Enquiry whose terms of reference were:“To consider in what ways the conduct of criminal proceedings in England and Wales arising from fraud
can be improved and to consider what changes in existing law and procedure would be desirable to secure
the just, expeditious and economical disposal of such proceedings”.

* Assistant Director, Serious Fraud Office, London, United Kingdom.

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The report of the Fraud Trials Committee makes reference to the widespread public concern at theeffectiveness of the methods of combating serious commercial fraud that led to the establishment of theCommittee.
Concerns over the delays involved in conducting investigations were also highlighted in the report. It
may help if I outline the prevailing system of the time, which should explain why this concern existed.
Often, following the collapse of a major company, the Department of Trade and Industry would appoint
Inspectors under the Companies Act. These Inspectors were usually a highly respected Barrister of many
years experience and an expert Accountant from one of the major Accountancy practices. They would be
appointed to enquire into the circumstances of the collapse of the company and to publish a report of theirfindings.
If, in conducting their enquiries, the Inspectors decided that fraud was suspected, then the report would
not be published immediately and the matter would be referred to the Police for investigation. Often thisreferral to the Police would commence some two years after the events in question due to the painstaking
nature of the Inspectors’ enquiries.
The Police would then commence a criminal enquiry which would often cover much of the same groundthat the Inspectors had previously been over and would often take two to three years of itself. Once the
Police had completed their enquiries, the matter would be referred to Prosecutors who would consider theevidence that the Police had brought forward and would decide whether any charges were appropriate.
Commonly the evidence and the charges that the Police had put forward were changed and additional
enquiries were required before a prosecution was allowed to take place. Thus it could often be the case thata criminal prosecution would not commence until six or seven years after the events in question had
occurred. This often meant that trials were extremely difficult because the evidence wasn’t entirely
consistent and witnesses’ memories of events had faded. Often these cases resulted in acquittals, either by
the jury or on the instruction of the judge, which would occur because the evidence failed to reach therequired standard.
Just to explain this, in English cases, there are two standards that must be reached during a trial. The
first is that the judge must satisfied that there is sufficient evidence upon which a jury properly directed
could safely convict, if this point is reached at the close of the prosecution case then the case proceeds, we
say it ‘passes half time’, and the defence then calls any evidence they wish. After all the evidence has been
heard the second standard is that the jury must be satisfied so that they are sure that the defendant has
committed the crime he is being tried for.
So, in the event of convictions, because of the passage of time from the events in question to the casebeing concluded, often wholly inadequate sentences were handed down against the fraudsters.
It was only after the criminal investigation or trial that the Inspectors’ report would be published. These
often made specific findings of fraudulent conduct on the part of those involved, many of whom were neversatisfactorily prosecuted. Not surprisingly, this system led to widespread unhappiness with the ability ofinvestigators and prosecutors to deal with such cases.
It was in the light of these problems and concerns that the Fraud Trials Committee were asked to makerecommendations. The Committee, headed by a very senior judge, a Law Lord, Lord Roskill, reported on
the 9th December 1985, over two years after its inception and after the most extensive of enquiries.
The opening sentences of the Summary at the commencement of the report were highly damming of theexisting regime and are worth quoting:“The public no longer believes that the legal system in England and Wales is capable of bringing theperpetrators of serious frauds expeditiously and effectively to book. The overwhelming weight of theevidence laid before us suggests that the public is right.”
The report goes on to make a number of recommendations which advocated fundamental change to theexisting system and which caused a great deal of furore at the time.

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Interestingly, some of the most radical changes proposed by the Committee were accepted by theGovernment and the legal professions with very little difficulty. Others met with very considerable
opposition.
The very first recommendation of the First Trials Committee was that there should be a new unified
organisation, which later became the Serious Fraud Office, which should be responsible for “all the functionsof detection, investigation and prosecuting of serious fraud...”In the event, the Serious Fraud Office was not given powers to detect serious fraud, merely toinvestigate and prosecute. Whether that was a wise course is impossible to say but it has been a recurring
theme during the life of the Serious Fraud Office that it is an organisation which is purely reactive to eventsand is not able to properly take part in proactive activity which might prevent fraudulent conduct. Unlike thefight against organised crime which is predominantly intelligence led, seeking to disrupt or prevent
organised crime groups from functioning, the fight against serious and complex fraud is an ex post facto, anafter the fact, review of events.
There are several reasons for this, not least of which is that fraudulent activity tends to be lesssusceptible to being anticipated. Many major frauds are not premeditated in the same way as is muchorganised crime activity. This is not to diminish the consequences and the harm that can flow from major
fraud. In the United Kingdom, it has been an almost inevitable feature of major fraud that personal tragedies
occur.
The second major proposal of the Fraud Trials Committee was that the new organisation should have“Case Controllers”; these were to be lawyers who would have responsibility for directing the investigation
process from the outset, and who would also be responsible for the subsequent prosecution up to the verdict
being handed down. This was a radical departure to previous practice and not universally approved of, eventoday. Let me explain why.
In 1985 when the Fraud Trials Committee reported, the Prosecution of Offences Act 1985 had only justset up the Crown Prosecution Service, which was a new national organisation whose responsibility it was toprosecute all criminal cases coming from the Police Service but who were to play no part at all in theinvestigation process and were required to be completely independent of the investigating agencies. The
creation of the CPS followed on from a previous Royal Commission which looked into concerns that the ‘old’
County Prosecuting Solicitors Offices, which were linked directly to each of the local Police Forces, wereinsufficiently ‘independent’ of the police in carrying out their functions. This principle, of prosecutorial
independence from the investigators, has become known as the Phillips principle after the judge who first
proposed it and it remains a bedrock principle underpinning English criminal practice today. Except that is,where the Serious Fraud Office operates. Indeed several very senior judges have undertaken reviews ofvarious events or organisations since the Serious Fraud Office was created; they have all fully endorsed thePhillips principle. At the same time they have all supported the ‘SFO Model’ for fraud as being the only
sensible approach to the issue. As might be appreciated a certain tension exists between the various
agencies as a result.
I would now like to turn to the most controversial recommendation of the Roskill Committee and the one
which caused the most argument. It was that juries, regarded as a fundamental principle of English law since
the Magna Carta, should be abolished for serious fraud cases and should be replaced by a panel of specialists,
who would more easily be able to understand the complexities of the transactions that are involved inserious fraud cases. This recommendation was strongly opposed by many in the judiciary and the legal
profession of the time and, as a direct result, was not implemented by the Government.
Interestingly, the current Government has recognised the weaknesses of jury trial in serious andcomplex fraud cases and in the Criminal Justice Act 2003 it has enacted provisions which would do awaywith juries in some serious fraud cases in England and Wales to be replaced by trial by Judge alone. Those
provisions were equally fiercely opposed during the passage of the Bill and it has been agreed that they will
not be brought into force until both Houses of Parliament pass a motion agreeing to this. Such is theattachment to the principle of trial by jury that it is considered very unlikely that these provisions will everbe brought into force.

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The issue of juries and their ability to understand serious fraud cases has been a running theme
throughout the life of the Serious Fraud Office. It is an issue which will not go away but which seems
incapable of being resolved. Part of the reason for this is the absolute secrecy of jury deliberations, which
prevents any assessment of the effectiveness of the jury process.
Following the creation of the Serious Fraud Office in 1988, there was widespread concern in theprofessions about the powers that had been allocated to the Serious Fraud Office to enable them to
expeditiously undertake their enquiries.
These powers, afforded to the Director by Section 2 of the 1987 Act, are again a departure from the norm
in relation to Law Enforcement powers generally in England and Wales.
In fact, while they have often been described as draconian, they are in fact less severe than powers
allocated to Companies Act Inspectors under the Companies Acts, although the purpose is virtually identical.
That purpose is to allow those undertaking the enquiry to quickly gather information to enable them toascertain what occurred. It should be noted that the operative word is ‘information’ as opposed to ‘evidence’.
The distinction is significant even though many fail to appreciate that a distinction even exists. But that is a
discussion for another day.
Nevertheless these powers have been the subject of frequent challenge and have been gradually modified
by case law, both domestic and under the European Convention of Human Rights.
So what are these powers? The powers afforded to the Director permit him to require anyone who mightreasonably be expected to have information to provide documentation or information for the purposes of his
investigation. Thus, individuals, businesses and institutions can be compelled to provide information either
in the form of documents or to answer questions and there are sanctions for failing to answer thosequestions or provide the information or for providing false information in answer to questions. However,mindful of the “right against self incrimination”, answers given to such enquiries are not admissible against
the maker in any subsequent proceedings, except for the purposes of establishing that he had lied in answer
to questioning.
The Act provided that answers given in interview by an accused could be used to establish whether theaccused had said something inconsistent with their statement in interview, if he/she later gave evidence on
their own behalf which was inconsistent with it. This power, though still a part of the Act, has beensuperseded by subsequent decisions of the European Court of Human Rights and undertakings given by the
Attorney General in response thereto.
I hope that this sets the scene and provides some useful background information to the Serious Fraud
Office, how it came into existence and the issues surrounding its creation. I would now like to turn to ourrole in the fight against fraud.
Given that the Serious Fraud Office’s statutory remit is the investigation and prosecution of serious orcomplex fraud cases, we have had to establish our own aims and objectives to fulfil that requirement. Thus,
whilst our function is to investigate and prosecute serious or complex fraud, our aim is to achieve a broader
result, which is twofold:‘to deter fraud and to maintain confidence in the United Kingdom’s financial systems (by the appropriate
and effective investigation and prosecution of serious and complex fraud in England, Wales and Northern
Ireland).’
The decision to have the maintenance of confidence in the financial systems of the UK as our aim comes
directly from the Fraud Trials Committee report which makes reference to the concern that fraud was not
being effectively investigated and prosecuted,‘with potentially harmful consequences not only for the unfortunate victims of fraud, but also for the
reputation of the nation, and in particular the City of London, as one of the world’s great financial centres’.

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As will be appreciated, this aim has had an impact on the cases that are selected for investigation. It has
also had an influence on the criteria that we apply in selecting cases. I mentioned previously that theabsence of a definition of the phrase ‘serious or complex fraud’ within the Act meant that we were obliged tointerpret it ourselves. We did this by framing the criteria for accepting cases to incorporate those factors that
we considered would be relevant to an investigation of serious or complex fraud cases. They are listed
below:‘The key criterion should be that the suspected fraud was such that the direction of the investigation
should be in the hands of those who will be responsible for the prosecution.’‘The factors which would need to be taken into account include:
1. Cases of the order of at least £1 million. (This is simply an objective and recognisable signpost ofseriousness and likely public concern, rather than the main indicator of suitability ;)2. Cases likely to give rise to national publicity and widespread public concern. These include those
involving Government departments, public bodies, the Governments of other countries andcommercial cases of public interest;
3. Cases requiring highly specialised knowledge of, for example, Stock Exchange practices or regulated
markets;
4. Cases in which there is a significant international dimension;
5. Cases where legal, accountancy, and investigative skills need to be brought together;
6. Cases which appear to be complex, and in which the use of Section 2 powers might be appropriate.
None of these factors, taken individually, should necessarily be regarded as conclusive.’
As will be appreciated, these criteria are fairly broadly drawn and allow for a considerable amount oflatitude and discretion on the part of the Director in deciding whether to accept a case for investigation ornot.
For example, the case may be regarded as being of high public concern where the losses to theindividuals are small in real terms, but where the category of victims is such that the impact of that loss on
the victim is significant. Thus, where there has been fraud perpetrated against vulnerable groups in society,for example the elderly, for whom even a small loss can have a very considerable impact on their health andwellbeing, cases have been accepted for investigation by the Serious Fraud Office.
Historically, the Serious Fraud Office has sought to interpret its criteria in as positive and inclusive a way
as possible, especially as the environment in which we are working has changed over the years.
The history of the Serious Fraud Office is one that commentators have described as chequered. I would
not accept that criticism as it proceeds from a fundamental misunderstanding of the context in which we
work. For example, the Press will often report that the Serious Fraud Office does not have a very goodrecord in prosecuting very high public interest cases such as Maxwell, Guinness and Blue Arrow. This isslightly unfair as the Serious Fraud Office secured convictions in both the Guinness and the Blue Arrowcases, albeit that we suffered reverses on appeal, in the European Court of Human Rights in the Guinnesscase and in the Court of Appeal in England in the Blue Arrow case. The Press ignore our successes, such as
in the BCCI cases which resulted in convictions in every case.
The record of the Serious Fraud Office generally is good, with a long run conviction rate across the entire
history of the Office of 70% (with the 5 year rolling average currently running at a slightly higher rate).
It is fair to say that the Serious Fraud Office occupies a very important position in the fight against fraudin the United Kingdom. In the 16 years of our existence, the Serious Fraud Office has developed an enviable
reputation within the professions and the Judiciary, both for the quality of our investigations andprosecutions and also in respect of the innovative way in which we undertake our duties.
Indeed the Serious Fraud Office has always been keen to push the boundaries of investigation andprosecution techniques and has a number of ‘firsts’ in the use of technology in the presentation and deliveryof cases.

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In addition the Serious Fraud Office has always maintained a very self-critical attitude toward the conductof investigations and prosecutions and has undergone a number of self-imposed reorganisations to ensurethat we continue to improve our performance across every Division of the office.
The Serious Fraud Office is currently organised into four Operational Divisions, headed by Assistant
Directors who are very experienced prosecutors and staffed by Case Controllers, Investigating Lawyers,
Investigators and support staff. We find this multi-disciplinary approach is the most effective way of working.
Individual case teams will incorporate a range of disciplines dependant upon the requirements of thecase. Each case is headed by a Case Controller, as envisaged by the Roskill Committee, who is responsible
for the case from acceptance right through to the verdict and any appeal. We strive wherever possible to
avoid changing the Case Controller as this continuity is a very important factor in making our cases a
success.
As regards the investigators we employ, we are committed to having as diverse a group of specialists as
possible; to this end we employ stockbrokers, insolvency specialists, insurance specialists and a variety ofaccountants and investigators from a wide range of backgrounds, including many former police officers.
As regards our caseload, all Operational Divisions share responsibility for cases arising in the London
area but each of them has specific responsibility for a different part of England, Wales and Northern Ireland.
This allows us to develop very close relations with those police forces we work with. In achieving this it hasbrought benefits to both the Serious Fraud Office and the police forces concerned in terms of improved
familiarity with our ways of working and a greater understanding of the issues affecting each of us and awillingness to work together to overcome problems.
This has been especially important in the last few years when police forces have been under increasingpressure to reduce the resources available for investigating fraud due to other policing commitments, suchas street robberies, domestic burglaries and car crime. Having developed these close relations, we havebeen able to anticipate problems and minimise the impact of reducing resources from the Police, albeit this is
now becoming quite a serious issue.
I am pleased to say that this has been recognised by the Government and a new initiative has beenbrought forward whereby the City of London Police will act as a ‘lead Force’ for cases arising in London and
the South-East. This will mean that in the 14 police force areas that comprise ‘London and the South-East’
the City of London Police will provide additional police resources over and above that provided by the ‘home’force to enable us to undertake these investigations more effectively. In addition, the Serious Fraud Officehas been granted additional resources by the Government to increase our staff numbers to approximately
300 permanent staff to further help in this regard.
It will be appreciated that the Serious Fraud Office, with a limited budget and a relatively small staff ofapproximately 240 permanent members, can only ever undertake the very top echelon of fraud cases thatarise in England, Wales and Northern Ireland. Indeed, at any one time, the Serious Fraud Office will only
have approximately 80-90 cases under investigation and prosecution.
Our approach to investigating cases is simple. We assess what we consider to be the essential criminalityof those involved and focus our enquiries on only those areas that are likely to result in securing theevidence required to prove the case. We commonly exclude potential lines of enquiry that would divert us
from our primary focus, either from the outset or those that are discovered as we proceed with theinvestigation. Nevertheless we always seek to keep an open mind on the investigation and will change ourapproach where this is appropriate.
We maintain tight control over the course of the investigation by preparing outline investigation plans andas the investigation proceeds making these increasingly more detailed to ensure the work being done
follows the plan. We use other standard tools for following the progress of letters of request and notices
issued using our investigation powers to ensure that delays in gathering evidence are kept to a minimum.

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The Investigation Plan and the progress of the investigation generally is discussed on a monthly basis at
a Case Conference, which brings the whole team together, both the Serious Fraud Office and Police staff, todeal with developments and make any necessary decisions relating to issues that may have arisen. We findthese conferences have two benefits; it improves team work by ensuring that everyone understands the role
they have within the team and how their work is contributing to the overall goal and it also gives the teamthe opportunity to raise issues of concern and discuss them as a group.
The issue of international co-operation is one that arises in the vast majority of our cases. Given thatthese enquiries are often the cause of delay in conducting our investigations, we pursue only those overseas
enquiries that are essential to our case and we seek to initiate those enquiries at the earliest opportunity.
For many years now we have seen the immense value of close international co-operation and seek todevelop ever-closer links with our colleagues overseas to bring this about. We regularly play host tointernational colleagues and, subject to budgetary constraints, are enthusiastic advocates of the International
Association of Prosecutors, which promotes and fosters such better relations.
Despite the fact that we are a small department and only deal with the most serious of cases, the Serious
Fraud Office is looked to, to provide a lead and to set the standard. This is a challenge we accept and strive
to meet.
The focal role the Serious Fraud Office has in leading the fight against fraud has both disadvantages andcompensations. In consequence of the fact that we are a small department, resources are necessarily
stretched to cover all the areas where we are asked to contribute to government policy, at the same time thefact that we are involved so often means we have the opportunity to influence decisions out of all proportion
to our relative size.
In consequence of our central position in the fight against fraud, throughout the life of the Serious Fraud
Office, senior members of the office have undertaken public speaking engagements. There have been two
reasons for this, to explain how we work and our commitment to ensuring that fraud is being effectively
tackled and also to raise awareness of fraud and fraud issues in the minds of the public, the establishment
and the financial services industry. In this way we are able to make a small contribution to promoting fraud
prevention and awareness issues and techniques.
In addition, the Serious Fraud Office is determined to play a full part on the international stage. We havedeveloped our own Mutual Legal Assistance Unit, which handles incoming requests from countries
throughout the world in relation to inquiries to be made in the United Kingdom. If the Director accedes tothe request then we are able to use our powers to gather information, which can be produced in evidence if
required. This unit has only been operating for a short while, but has already undertaken many dozens ofrequests on behalf of many Foreign Governments and provided very valuable assistance in the fight against
fraud worldwide. The Serious Fraud Office is committed to providing this service to our colleagues acrossthe world as it is one of our central beliefs that greater co-operation between international colleagues is the
only way in which international fraud can be effectively handled. Further we contribute to improving
knowledge of fraud investigation and prosecution techniques by taking part in training courses such as theseand in the process improve our own knowledge.
At the same time the Serious Fraud Office is very keen to develop our own working tools and practices toensure that we keep at the very cutting edge of investigation and prosecution techniques. That is not to saythat we consider ourselves to be leaders in this highly specialist field because there are always things that
we can learn from our colleagues both at home and around the world. Our approach is simple, we are always
prepared to learn new techniques and to take advantage of others experience to improve ourselves so that
we can undertake our duties and fulfil our responsibilities to the very best of our ability.
The Serious Fraud Office has embraced the use of technology in the way we investigate and prosecute. In
the United Kingdom, the Serious Fraud Office was the first prosecutor to use satellite links to bringevidence from a witness outside the jurisdiction before a UK Court. We have pioneered the use ofpresentational systems (images of documents rather than the documents themselves) and tools (such as
PowerPoint and other graphics packages) as a means of streamlining the proceedings in court and conveying

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highly complex information in a readily digestible form, and we have been quick to pick up on the excellent
work of our colleagues around the world who routinely use these techniques in presenting their cases toimprove our own.
Perhaps our most significant development is our most recent one. We have devised an entirely newcomputer system which, together with refined and improved working practices, will allow us to proceedfrom the commencement of our investigation through to the verdict of the trial (or perhaps the close of any
appeal) using one set of IT tools. There is nothing intrinsically new in what we have done, which is to use
images of documents rather than the documents themselves, but we have, we believe, developed the firstend-to-end system which complies with the legal requirements that apply to the investigation of cases inEngland and Wales, but also allows the investigator the maximum flexibility in how they can use the tools tofacilitate the investigation. We hope to reduce the length of our investigations by at least 25% using thissystem.
Another major responsibility of the Serious Fraud Office is to develop and maintain good working
relations with regulators. We see it as a major part of our duties to co-ordinate with regulators to ensurecomplimentary working practices to better undertake our respective duties. To achieve this we meet
regularly with the many regulators that operate in the UK to discuss areas of interest or concern and to seek
ways of improving our relationship. In addition we participate in information sharing arrangements withthem to try and make sure that we are each able to work from the best available information.
Whilst we would not boast of our achievements, our record is one I believe we can be proud of, not that
we measure ourselves by reference to this. Rather we have worked hard to acquire a reputation forprosecuting with integrity, fairness and to a high standard. Nevertheless our conviction rates are good,convicting 70% of all defendants since our inception, and averaging 76% over the last five years. In respectof prosecutions, which usually involve multiple defendants, we have secured convictions against at least one
defendant (usually the main suspect) in 83% of cases. But we are not content. Statistics are a poor judge of
quality. It is our aim to continue to improve, both in terms of the quality of our casework and the speed withwhich we bring cases before the courts.
The Roskill Committee, at the start of their report, quote from Magna Carta. The quote is as valid today
as it was nearly 800 years ago. I finish by quoting it to you;
‘Nulli vendemus, nulli negabimus, aut differemus, rectum aut justiciam’‘To no one will we sell, to no one will we deny or delay, right or justice’
Magna Carta Chapter 40.

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126TH INTERNATIONAL SENIOR SEMINAR
VISITING EXPERTS’ PAPERSFRAUD INVESTIGATION AND PROSECUTION
IN THE UNITED KINGDOMPeter Kiernan*
I. BACKGROUND TO THE UK REGIME
One of the things that most attracted me to working for the Serious Fraud Office when I joined it in 1992
was the fact that it was a wholly unique organisation within the United Kingdom’s Law Enforcement
Agencies.
It is unique in a number of ways and I will elaborate on these in due course but the most obvious, is that
it is a single function organisation.
The Serious Fraud Office investigates and prosecutes fraud, nothing else. As is the case in many
countries, the United Kingdom has a number of organisations that investigate or prosecute criminal conduct.
Indeed, there are many organisations in the United Kingdom that investigate or prosecute fraud. However,for the vast majority of these organisations, the investigation or prosecution of fraud is a secondary function
sitting alongside other primary responsibilities. It may help if I give you some examples. I shall confine
myself to the main agencies that are involved in these kinds of cases but the truth is there are dozens ofothers who have some responsibility for the investigation or prosecution of fraud in their particular areas ofoperation.
Clearly, the primary responsibility for investigating criminal conduct lies with the 35 Police Forces ofEngland and Wales. The cases brought by these Police Forces, are prosecuted by the Crown Prosecution
Service, a national organisation created in 1985 to ensure national standards of service in relation to theprosecution of crime in England and Wales.
The remit of both these organisations is very broad. It covers a very broad spectrum, but not all, of thecriminal offences that exist in England and Wales. As a consequence, the resources each of them is able todevote to fraud is, in real terms, very small. Central government initiatives for dealing with crime tend toconcentrate on criminal conduct that has a high local impact and this is where Police Forces and the Crown
Prosecution Service are, quite properly, directing the vast majority of their efforts. This is putting increasingpressure on the resources available to conduct fraud investigations, which tend to have a low local impact as
the impact of most frauds are spread across the country and, more often than not these days, internationally
too.
The Serious Fraud Office has jurisdiction over all serious or complex fraud committed in England, Walesand Northern Ireland but is a relatively small organisation of approximately 250 permanent staff who are able
to conduct approximately 80 investigations and prosecutions at any one time. It will be readily appreciatedthat this means that only a very small percentage of fraud is dealt with by the Serious Fraud Office, albeit
these are the most serious and complex of cases.
The Department of Trade and Industry has responsibility for the “regulation” of limited companies andundertakes criminal investigations in relation to the operation of those companies, including instances offraudulent conduct on the part of the Directors. The DTI is a very large department and has wide-ranging
responsibilities, the regulation of companies and the investigation of suspected crime being a very small partof that remit. As a general rule, there is a strong tendency for the DTI to prosecute so-called ‘regulatory’offences, such as failure to keep accounting records. In addition, they will often prosecute instances of
misconduct by Directors in companies that are failing. For example, it is not uncommon for Directors ofcompanies to seek to strip assets from companies when they realise that things are going badly. Equally, it isquite common that in failing companies, Directors will seek to cheat their creditors or continue trading after
the point where the company is insolvent and they should cease trading. The DTI will routinely investigate
and prosecute less serious instances of these offences.
* Assistant Director, Serious Fraud Office, London, United Kingdom.

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Both Her Majesty’s Commissioners of Inland Revenue and Her Majesty’s Commissioners of Customs
and Excise (Customs and Excise) investigate and prosecute the evasion of taxes or excise duties. Onceagain, both organisations have a primary function, which is the collection of revenue and it is seen as anecessary function to encourage the payment of due taxes or excise duties that they also be able toinvestigate and prosecute where there is deliberate evasion.
What might be regarded as a potentially small area of the duties of Customs and Excise, prosecuting tax
evaders to encourage compliance, has in fact become a very significant part of their functions. Customs andExcise investigate a very considerable amount of organised crime within the UK. Organised crime activity
directed at evading customs or excise duties in relation to tobacco, alcohol and hydro-carbon fuel oils is now
very big business. In recent years these areas have been subject to concerted attack by organised crime
gangs in an attempt to take advantage of loopholes and avoid the payment of duties, which in the case ofalcohol can be 75% of the price of the goods in question. It has been a very low risk option for these gangs
and returns profits not so far behind that for drugs and at a much lower risk of either detection orprosecution.
Following a number of unfortunate results in recent trials where Customs and Excise cases collapsed, theGovernment announced that an enquiry would be conducted by a senior judge. I was fortunate to be asked toassist the judge, Mr Justice Butterfield. As a result of his report, the government has decided that theprosecution of Customs and Excise cases would be conducted by a new body to be called the Customs andExcise Prosecution Office which is due to be set up in the next year.
Just to illustrate the importance of these cases, the sums involved can be extraordinary. The value ofthese frauds can often reach tens of millions of pounds for an individual case and the sum regarded as lost to
the Treasury in any year is counted in terms of a billion pounds or more. The importance of these cases
cannot be over-stressed and the need to ensure that they are successfully investigated and prosecuted is areal priority for the UK.
Lastly, of the major organisations, I would mention the Financial Services Authority. The FSA is theregulator for most of the regulated markets and organisations within the UK Financial Services Sector and,much as with the Inland Revenue and Customs and Excise, the ability to investigate and prosecute forcriminal conduct is considered a necessary power to enable them to conduct their primary responsibilities ofregulating the markets effectively.
I have, very briefly indeed, outlined the major organisations involved in investigating and prosecuting
fraud and it may not be readily apparent but there is a considerable amount of overlap between many ofthese organisations in the areas that they cover and the cases that they take.
Many of the cases that the DTI might investigate, could easily be investigated by either the Police or, if itfits our criteria, the Serious Fraud Office. Cases that the Financial Services Authority might choose toinvestigate could equally be investigated by the Police or the DTI or the SFO. Many frauds will involve thefraudulent evasion of tax, after all if you are stealing from your creditors why would you bother paying taxes?
Indeed if you company is in trouble your least urgent creditor is the government, everyone else comes first.
The option of not paying your taxes is usually the first step for many on the road to wholesale fraud.
As I am sure you will appreciate this can lead to a certain amount of confusion and discussion as to whichis the most appropriate agency to investigate a particular case. To enable us to deal with these matters, wehave devised a number of mechanisms to allow us to do this with the minimum of fuss and difficulty.
The primary method of deciding where a case should be investigated is an informal group called the Joint
Vetting Committee. The JVC has a membership of the Serious Fraud Office, the Crown Prosecution Service,
the Police Service and the Assets Recovery Agency.
The purpose of the JVC is to allow consideration of cases which might be investigated by more than one
organisation to decide which is the most appropriate of them to investigate, according to the circumstancesof each case. In SFO terms, these are usually the cases that are on the borderline of our acceptance criteria.
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should be taken forward. The Committee discuss the best possible options for dealing with a particular case,including where it is not considered that a criminal prosecution is likely to be possible, and whether it would
be suitable for action under the auspices of the Proceeds of Crime Act and intervention by the Assets
Recovery Agency.
I should explain that the UK has recently created the Assets Recovery Agency with a view to depriving
criminals of the proceeds of their criminal conduct. This agency has a variety of powers which are notlimited to bringing criminal proceedings, but also include recovery through the Civil Courts and eventaxation powers where this is considered appropriate. In appropriate cases, even though it may not be
possible to proceed with a criminal investigation, it may well be possible to establish that the monies in thepossession of the individual are the proceeds of criminal conduct to the civil standard, and may besusceptible to recovery, or where the individual is in possession of monies which do not tally with his
reported income, then they are able to ‘tax’ him on these funds, often applying interest and penalties for
failure to report this ‘income’.
In addition to the JVC, the SFO has bilateral meetings with the Financial Services Authority and the DTI,
and occasional meetings with the Customs and Excise on an “at need basis”.
In addition, we have regular meetings of a network of organisations involved in fighting fraud whichallows us to share intelligence, identify trends in frauds within the UK and address issues of mutual interest.
In this way, whilst our approach is fragmented and, frankly, a little confusing to the casual observer, it hasdeveloped into a highly sophisticated and mutually supportive system. It is not regarded by any of thevarious participants as such but we each play an important role in ensuring that the various organisations
involved maintain an appropriate approach to the work they undertake.
Let me explain this further. As a result of the interlocking and overlapping functions of the various
departments, it is inevitable that any changes in approach or direction by any of the organisations involved,
quickly become known within the law enforcement community. For example, in respect of the reduction ofpolice resources I mentioned in my other paper, this was very quickly identified by a number of theorganisations within the law enforcement community. As a result it was impossible for the issue to beignored. The police have been forced to acknowledge the fact of the significant reduction in resources they
are applying to fraud and, in fairness to those officers who are dedicated to the investigation of fraud, they
have done so readily because of their dedication to pursuing this type of crime.
The response of the government has been to approve a proposal that the City of London Police fraudsquad should be expanded and assume the position of ‘lead force’ for all SFO cases in London and the SouthEast of England. Whilst this is very welcome, it is only a partial answer and does not begin to address thegrowing weakness in the investigation of smaller frauds that do not meet our criteria.
This proposal arose from a working party set up by the government called the ‘Improving the response to
fraud’ (IRF) group. This group included participants from all of the major stakeholders interested in theeffective investigation and prosecution of fraud; including the SFO, CPS, Treasury, Home Office, DTI and the
Police. It produced two reports, the recommendations of which have not yet been pursued. It did consider
the option of creating ‘lead forces’ from a few police forces to assist the SFO but this was not the favoured
option of the group.
As I have mentioned, these new arrangements do not provide a fully comprehensive regime for dealing
with fraud, however. The harsh reality is that the investigation of fraud across the UK is inconsistent andincomplete. The IRF Group was concerned not just with the most serious cases but with concerns about thenational response to fraud at all levels. There remains a considerable amount of fraud which is notsatisfactorily handled or investigated. That is assuming it is investigated at all. Let me explain.
The fraud squads of local police forces are at best getting smaller, at worst being disbanded. This isbecause, as I have already mentioned, central initiatives have required police forces to concentrate theirresources on crimes having a high local impact and police forces, like most government departments, arebeing required to be more responsive to local needs and issues. This is an entirely proper thing for them to

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do and no one would deny the need and importance for just such an approach. Local issues such as domestic
burglaries, car crime, street violence, street robberies and vandalism are issues that directly affect the
feelings of safety and security of the local community.
However, as a direct result of this downward pressure on fraud squad resources there is an equalpressure on the selection of cases they are willing or able to accept for investigation. Routinely fraud squads
now only accept more serious cases on which to devote the limited resources they have. Many forces will
not allow fraud squads to investigate frauds valued at less than £750,000, except in the most exceptional
circumstances. In consequence, smaller frauds must be handled on a local level by detective officers who are
unfamiliar with such cases. Sadly, it is often the case that when these frauds are reported the victim isturned away and advised to proceed through the civil courts as the matter is a ‘civil dispute’. This response
merely reflects the inability of local officers to handle these cases and their desire to avoid the need to do so.
Fortunately we are moving towards recording more effectively the frauds that are being reported andwhether or not any investigative action is taken, and this will allow us to get a much better idea of the scaleof the problem and push for the allocation of greater resources to this area of criminal activity. Currently wehave no proper measure of the level of fraud in the UK. The Home Office crime reporting statistics make nomention of fraud and there is no specific category of ‘fraud’ to capture this information. Equally, as there isno ‘offence’ of fraud, it is prosecuted using a variety of charging options, ‘frauds’ that are reported currently
get rolled into other categories of crime such as theft.

II. PRACTICALITIES OF FRAUD INVESTIGATION
Whilst these weaknesses in our system exist, let us concentrate on what we are able to achieve and how
we do this.
The approach used for the investigation of fraud in the UK is dependent upon which agency isundertaking the enquiry. Each agency has its own powers and approaches to fulfilling its functions in thisregard. As I mentioned previously in this paper, the various agencies have different purposes in mind whenpursuing fraud cases. Many are intent on seeking to reinforce their primary function, securing compliancewith regulatory practices or rules, or payment of taxes or duties. In such agencies, it may be possible forthose involved to avoid criminal proceedings by agreeing to submit themselves to suitable administrative
penalties. After all, if your main function is gathering taxes, if someone offers to pay the tax due, together
with interest and penalties, you may not consider that criminal action is ultimately necessary.
There are a wide range of powers available to some of the agencies working in this field and thesepowers are by no means consistent or equivalent with each other. You may imagine that this might causesome problems. You would be correct to think so. In inter-agency investigations, where two or moreagencies co-operate in a particular case, it is often very difficult to decide which agency should exercise theirpowers in situations that arise. Great care is necessary to avoid the suggestion that the power used wasselected only because it was a wider power than others available. An example may assist. In the UK thewidest powers available to investigators lie with HM Customs & Excise, in a joint investigation with thepolice it would be improper to use wider Customs powers where the police would usually exercise their own
more limited powers.
It may help if I were to outline some of the powers available to some of the various agencies concerned toshow you what I mean.
Let me start with the police, the main powers of the police are contained in the Police and Criminal
Evidence Act 1984. This Act provides the police with three main powers to search for evidence:
•
•
•

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Section 1 - Stop & Search – This type of power is available only to police officers, who may stop andsearch someone at any time when they suspect the person has in his or her possession stolen goods.
Section 17 - Search following arrest – Again this is a power available only to a police officer who may
search the premises where a person has been arrested, where he believes that further evidence may
be found there.
Section 8 - Search Warrant – This is a normal warrant to enter premises and is less extensive interms of material that can be seized than the search powers available to some other agencies. For
example, it does not entitle an officer to remove journalistic material.

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In addition the police may use their powers under Section 9 and Schedule 1 of the Police and Criminal
Evidence Act 1984 to secure the production of material to them, where they can satisfy a judge of the needfor the order. In using this power the police can gain access to material that they would be unable to seize
under a search warrant.
Contrast this with the powers available to an Inspector appointed under the Companies Act who may
require information to be provided to assist in the enquiry he or she is undertaking. However, the power has
no direct sanction for failure to comply, the most that can be done is to ask the Companies Court to have theperson who is refusing to comply with contempt of court. This is very much a last resort as the penalties canbe severe and often leads to extensive delays in the Inspectors gathering the necessary information for their
purposes.
Then consider the SFO’s powers. Under a search warrant granted in accordance with section 2(4) of the
Criminal Justice Act 1987, it is police officers who are empowered, in the presence of an appropriate SFO
officer, to search and seize material. Using this power the limitations of police search powers are overcome
and any material is capable of being seized, except for material which is subject to legal professional
privilege (otherwise known as Attorney-Client privilege).
I have deliberately not gone through any of these powers in any detail but I hope you have a flavour of theprevailing organisations, their powers and the overlap and complexities of the situation in the UK.
Having outlined the powers available to the investigators and prosecutors, I feel it is only proper to give
you an indication of the responsibilities and obligations of the prosecutor.
The primary obligation placed upon the prosecutor relates to the disclosure of unused material, that ismaterial in his possession which is not to be produced as evidence but which has been collected during thecourse of the investigation. The requirement to disclose information to the defence is contained in the
Criminal Procedure and Investigations Act 1996. The regime has been amended by the Criminal Justice Act
2003 but these provisions are not yet in force.
The requirement to disclose unused material comes in two parts; we must disclose material which
undermines the prosecution case and we must disclose material which might assist the defence. The firstpart is readily understood and fairly straightforward. The second is highly speculative and is currently thecause of most problems in fraud trials.
The problem arises from the fact that it is for the prosecutor to decide what is or is not relevant to anissue the defence are raising. This mainly happens because the defence are, understandably, reluctant todisclose what their defence will be at too early a stage. This in turn makes disclosure very difficult for theprosecutor who must interpret the information he receives in deciding whether disclosure is made or not.
As you might imagine, different prosecutors take different views as to whether to interpret matters in amore liberal manner or more strictly. This is what causes the problem. If the prosecutor takes a strict viewof the position then he will disclose very little information. As the requirement to disclosure is one that
continues throughout the life of the case, including the trial, the prosecutor will often have to make decisions
about what should be disclosed as the defence emerges during the trial and will be forced to disclosematerial as the trial progresses. This can lead to further disclosure as the defence review the material
provided. This in turn will often lead to allegations of bad faith against the prosecutor who can look as if hehas been ‘withholding’ the material in an attempt to disadvantage the defence. At least he is often portrayedthat way and, if it happens too often, it can be very hard to refute such an impression. That is why the SFO
takes a very open view of disclosure, permitting the defence access to any material which they ask for,provided they give a reason for wanting to do so.
Habitually in major cases, the defence will often concentrate on seeking to establish procedural defects
or failings in the process of the investigation and prosecution as a means of trying to have the case stopped.
Indeed it is now common, that if such attempts fail, the defendants will plead guilty because they cannot
dispute the evidence against them and have no defence to the charges brought.
I turn now to the methods by which we investigate serious fraud cases.

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III. THE SERIOUS FRAUD OFFICE APPROACH
I will outline the way we operate at the SFO. This should give you a fairly clear idea of the generalapproach to fraud investigations in the UK as most police forces now operate in broadly compatible ways. It
is perhaps an indicator of our success that the police feel they can follow our methods, albeit with inevitablechanges to suit local needs.
The SFO has four operational divisions, each of which is responsible for cases arising in London and theSouth-East and for separate parts of England, Wales and Northern Ireland. I also mentioned in general terms
our divisional structure and case teams. You can see below how our divisions are organised and the possible
make up of case teams.

Outline Divisional Structure
Assistant Director(Prosecutor)

Personal Secretary

Case Controller x 4

Support x 9(Law Clerks)

Investigating
Lawyer x 4

Principal Financial
Investigator x 5

Senior Financial
Investigator x 4

Financial
Investigator x 4

Assistant Financial
Investigator x 5

Possible Make Up of a Case Team
Experts

Investigating Lawyer

CounselSupport Staff

Case Controller

PoliceOutsideAccountants

SFO Financial
Investigators

Computer Forensic Staff

What each team will actually consist of will depend upon the needs of the specific case.
I would now like to move on to explain how we work. Crucial to success is an investigation plan agreed
by all parties. This will be formulated and will define the overall scale, scope and direction of the enquiry; itwill define the roles and responsibilities of each of the team members and the resources that will be

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employed in the investigation; it will set out where the investigators will work (this might be at our offices
or at a satellite office set up in the local police area, whichever is most appropriate) and whether or not they
are committed to other responsibilities or dedicated to that particular investigation; it will detail methods of
exhibit and property handling, storage and responsibilities for document control; it will also cover the use of
information technology; in addition it will specify what initial lines of enquiry will be pursued, the target
dates for achieving these, what tolerances there are within the plan and the performance indicators that will
be used.
Regular case conferences are held - usually each month - at which the direction of the enquiry will be
reviewed and new objectives set. All decisions are recorded in the minutes which become part of the Policy
file. For example, decisions such as who are suspects and who are witnesses will be recorded together withreasons for discontinuing lines of enquiries, decisions as to charge or to offer no evidence and acceptance ofguilty pleas and the media strategy for the investigation.
To try and keep things simple we use a fairly basic type of project management tool in the form of task
sheets.
We have also developed in-house expertise in computer forensic technology. Much of the material werely on is now kept in electronic format and to be able to access and interpret that material is vital. We havea small unit of about eight people which we are hoping to expand over the next year. Data recovery using
outside firms can be extremely expensive but is often unavoidable. For example we are getting everincreasing volumes of computer data in our cases, now sometimes reaching thousands of Gigabytes. In suchcircumstances, the use of external support is essential if we are to process and review this volume ofmaterial in an efficient manner.
We work closely with similar specialist computer forensic units in the Customs and Excise, the Inland
Revenue and in the police and when, for example, searches are taking place and there are numerous
premises to be visited we will try to help each other out by pooling resources - all of which is an additionalstrain but a good use of the resources available to us all.
Precise roles and responsibilities in any given investigation will depend upon the nature of the case and,to some extent the resources available. In every case the intention is to create a team which will make themost effective use of the abilities of police officers and SFO staff. Flexibility is vital. In our Memorandum ofUnderstanding with the Association of Chief Police Officers suggested roles and responsibilities might
include:Lawyers• Advise on legal issues.
• Liaise with lawyers representing the defence or any 3rd party interest.
• Conduct Section 2 interviews as needed.
• Assess evidence.
• Prepare letters of request.
• Prepare and serve Section 2 orders for production of documents as agreed.
• Recommend prosecution decision.
• Instruct counsel.
Financial Investigators• Advise on accountancy issues.
• Adduce accountancy evidence.
• Conduct enquiries of an accountancy nature.
• Conduct Section 2 interviews as agreed.
• Prepare and serve Section 2 orders for production of documents as agreed.
• Advise on operational issues and investigation management; such as the direction and scope of theinvestigation.
• Assimilate information to enable a prosecution decision to be made.
• Gather evidence to support a prosecution case.

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Police• Advise on operational issues and investigation management; such as the direction and scope of theinvestigation.
• Assimilate information to enable a prosecution decision to be made.
• Gather evidence to support a prosecution case.
• Exercise powers under PACE and other legislation as agreed.
These are only suggestions; no one has a monopoly of wisdom when it comes to investigating fraud. The
combination of a police officer and accountant working alongside each other has been shown, time and timeagain, to be a very potent weapon in the fight against fraud. The only people who benefit from an insularapproach are the criminals.
Since fraud is a document based offence and since both fraudsters, their victims, banks and others areoften unwilling to discuss what happened, we use the Director’s investigation powers under Section 2 of the
Criminal Justice Act 1987 whereby individuals can be required to furnish information and answer questions
and to produce documents and give explanations for them. This power can be exercised by any member of
the SFO authorised by the Director or by a competent investigator - often an outside accountant brought infor the case - on the Director’s behalf. These powers are not however exercisable by a constable; this is not
any reflection on their ability as investigators. On the contrary, it is a reflection of the constitutional
independence of chief officers and the responsibility they have for the police officers working for them andreflects their own wishes.
Although the problem of obtaining access to documents can be overcome by using the procedure laid
down in Schedule 1 of the Police and Criminal Evidence Act 1984, the advantage of a Notice under Section 2
is not only that the procedure is quicker but also a reluctant witness can be required to give an explanation,
furnish information and answer questions. In many fraud investigations people with information or evidence
don’t want to talk. They may have good reasons for not talking. They may be under obligations ofconfidentiality to their customers, as is a bank; they may simply be embarrassed and would prefer not to be
exposed in a trial as foolish or incompetent; they be frightened of civil action for negligence or worse; they
may be close to the accused or in some cases they may be the accused themselves. The ability to use our
Section 2 powers overcomes these problems.
It also provides a criminal sanction for failing to comply with the Notice either to produce documents or
answer questions; provides a sanction for giving false or misleading information; and a sanction for
destroying documents, etc. In the case of a defendant, the use which can be made of his answers to arequirement under Section 2 is limited. The Act provides that it can only be used for a prosecution for giving
false information. Since the case of Saunders in the European Court of Human Rights the Attorney Generalhas, as a matter of policy, decided that its use in cross-examination will not now be used for fear of offending
the Convention on Human Rights.
Whether used on willing, reluctant or frankly hostile recipients Section 2 has proved time and time againthat it is a swift and economical way of getting to the documents and to, if not the truth, at least to an
approximation of it.

A. Section 2 Powers
Section 2 (1) The powers of the Director shall be exercisable only for the purposes of aninvestigation under Section 1.
Section 2 (2) The Director may by Notice in writing require the person whose affairs are to beinvestigated or any other person whom he has reason to believe has relevant
information to answer questions or otherwise furnish information.
Section 2 (3) The Director may by Notice in writing require the person under investigation or any
other person to produce at such place as may be specified in the Notice and either
forthwith or at such time as may be so specified any specified documents which appear
to the Director to relate to any matter relevant to the investigation or any documents ofa specified description which appear to him to so relate and:(a) if any such documents are produced the Director may take copies or extracts from
them;

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if any such documents are not produced the Director may require the person who was
required to produce them to state to the best of his/her knowledge and belief where
they are.

B. Document Management
What distinguishes fraud from most other criminal investigations is the amount of material we have todeal with. Either in hard copy or electronic format it forms the basis of our investigations and ultimately
after being sifted is put together in an attempt to show how the crime has taken place. Fraud is a document
reliant crime. We are dealing with commercial activity - either real or imagined and before we can bring acase to prosecution with any degree of confidence we have to be sure that we have a grasp of the material;that there are no problems that would arise on disclosure to the defence; that we are absolutely certain about
being able to prove its provenance - by which I mean we can prove where it came from, when, whosebuilding, whose room, whose desk and exactly where it was found. And we have to be able to do that in avery short space of time.
We put a great deal of effort into controlling the material we acquire, whether it is under the search
provisions of Section 2, Criminal Justice Act; whether we have obtained it by issuing notices or whether wehave obtained it voluntarily. All material is logged in an ascending order of detail; first of all bags are logged,
usually following a search; that is then broken down into files and finally into individual documents or seriesof documents which are produced by witness statements. The process is laborious and requires a patient
assessment by the investigators as well as the in-putters. But it gives an opportunity of a review of the
documents at the earliest possible stage and ensures that control is there. It provides the basis for theschedules for disclosure that are needed later, during the trial process.
In order to improve our efficiency and effectiveness we have been developing a new computer based
document management system whereby all material is scanned into the system, DOCMAN. Not only will it
enable our investigators to access the material on screen rather than the laborious process of going to theexhibit store, drawing out originals and returning them but it gives us the great advantage of being able tosearch across the entirety of the case material using this system seeking particular names or words in amatter of seconds. It will also enable us to marshal the material in electronic form, both the witness
statements and the images of the documents and instead of serving reams and reams of paper copies of theevidence we serve it in electronic form both on the defence and the court.
It would be disingenuous of me to stand here today and suggest that using Information Technology isuniversally popular with judges. It is not. But I was recently at a JSB Seminar and was struck by theenthusiasm of today’s Judges for using information technology in the courtroom. I would like to outline thetechnology that is available in the UK today and the reasons why we are using these tools. The available
tools are:••••

Real Time Transcription
Video links
Use of images rather than paper
Use of graphics and animated graphics

1. Real Time Transcription
This is an online service which renders the speech of the persons in court into text as it happens. It has anumber of benefits, not least of which is that it avoids the need for the judge to make a handwritten note of
the evidence and can save considerable amount of time as a result. This results in the witnesses’ evidence
being given more naturally because they are not having to stop to wait for the judge to catch up. It alsomeans that the examination of the witnesses can proceed at a speed which the prosecution and defence
might wish.
2. Video Links
This is common enough that I need not describe it but the benefits of this tool are often overlooked.
Undoubtedly it allows the court to hear from witnesses who may be unable or are unwilling to attend in the107

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court itself. This is regularly used for business and professional witnesses who live outside the UK and who
would be most unwilling to spend several days away from their jobs to perhaps spend and hour or two giving
evidence. It may also give the jury a better view of the witness, who could easily be up to 10 metres awayfrom them in the court itself. We tend to use large screens which show the witness in close up. However,the disadvantage of this tool is that for overseas witnesses this can lead to the court sitting at unsocial timesof day or in the evening.
3. Use of Images Rather Than Paper
Again, using images is nothing particularly innovative but it saves a considerable amount of court time bygetting everyone in Court looking at the same document very much more quickly than is possible normally.
In addition jurors are forced to concentrate on what they are being shown not other documents in the jury
bundles. Further it can highlight areas or parts of documents that might be of interest and can be used toeasily compare two documents (e.g. signatures or handwriting).
In terms of certainty, using these systems also records what was shown and when to every witness so
there can be no confusion either at trial or at any later appeal. These systems also allow advocates to append
notes to individual Images (that only they can see) so that preparation for the examination of witnesses ismade easier. This is also possible by linking Images to the real time transcript of the evidence as it happens.
Another spin off is that it can reduce the size of the paper Jury Bundles needed. It should be noted thoughthat using these systems requires large screens, at least 21 inches, to avoid “screen fatigue”.
4. Use of Graphics/Animated Graphics
It may sound obvious but the effective use of graphics allows for much clearer and more easily
understood presentation of complex facts and events and accordingly saves court time as well improving thecase being presented. Animating those graphics can make very complex transactions more easily understoodby providing information in simple pieces that are built upon layer by layer and allow the jury to retain theirunderstanding of the whole transaction, which is often not possible with a step by step recitation of theevents. However, there is a risk that the graphics produced are too good and make the case too clear for thejury. In such cases the defence will look for reasons to object to their use.
I hope that this very brief and necessarily superficial outline of the situation in the United Kingdom andour approaches in tackling fraud gives you a flavour of the complexities we face. We do not claim to have aperfect system, indeed I have mentioned some of the critical weaknesses in this paper, but we do have asystem that provides much of what is required and given that competition for resources will always result inless being made available than would be ideal, it is as good a system as we are likely to get.

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VISITING EXPERTS’ PAPERSLEARNING FROM THE PAST:
PRACTICAL LESSONS FROM UK CASESPeter Kiernan*
I. INTRODUCTION
I propose going through a number of cases from the SFO’s history, which have been important to ourdevelopment. Some have been successful, some not. All have contributed to the office that I know today. In
addition to the cases, I propose mentioning a number of other issues or events that have brought us to thispoint in our history.
II. CASES

A. Guinness
The Guinness case was the first major enquiry launched by the SFO. It was also something of a
speculative case, as the area of take-overs had never before been prosecuted.
The facts are that from early 1986, Guinness plc had been engaged in a closely fought competition with
Argyll plc to take over The Distillers Company plc. Their respective offers for Distillers included a
substantial share exchange element and accordingly, their respective share prices were a critical factor forboth sides.
In November 1986, amid rumours of misconduct during the course of the bid, the Secretary of State forTrade and Industry appointed Inspectors under sections 432 and 442 of the Companies Act 1985 toinvestigate the affairs of Guinness. It should be noted that if a person is interviewed under the compulsory
power contained in section 434 of the Act, the answers obtained by the Inspectors may be used in evidence
against the maker.
During the course of the take-over bid, the quoted Guinness share price rose dramatically. It transpiredthat this was a result of an unlawful share support operation. This involved 'supporters' buying shares who
were paid substantial sums from Guinness's own funds but without board authority - in effect the supporters
were given secret indemnities against losses and, in some cases, equally secret and very large success fees.
The indemnities and success fees were paid under cover of false invoices.
Ernest Saunders, the chief executive of Guinness at the time of the bid, was the only defendant who gave
evidence at the trial. At trial and in his evidence to the DTI Inspectors, he denied all knowledge of, or
involvement in, the share support operation or the false invoices.
Gerald Ronson was one of the supporters. His companies purchased approximately £25 million worth of
Guinness shares against the promise, given by Saunders, of an indemnity and a success fee of £5 million.
False invoices, which bore no suggestion that they related to indemnities and success fees, were rendered toGuinness and paid. Ronson had told the DTI Inspectors that at the time, he did not think there was anything
wrong with what he was doing, and he had trusted Anthony Parnes who had elicited Ronson's support. Wheninterviewed by the Inspectors, Ronson was unable to explain why he thought Guinness should pay him £5
million to do something, which if it had been lawful, Guinness could have done itself.
Anthony Parnes recruited Ronson as a supporter. After the bid, Parnes received a success fee of £3.35
million, negotiated on his behalf by Jack Lyons, after he supplied a false invoice.
Two further false invoices were submitted to Guinness and paid in respect of support recruited by Parnes
from Ephraim Margulies, chairman of S & W Beresford plc. Parnes' defence at trial was that he had not acted
dishonestly.
Jack Lyons not only provided support himself but also recruited other supporters. He received from
Guinness, under cover of false invoices, indemnity and success fees. Lyons denied to the DTI Inspectors* Assistant Director, Serious Fraud Office, London, United Kingdom.

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that he had been involved in obtaining supporters or in drafting the false invoices. Lyons clearly knew thegiving of indemnities was wrong. He claimed that if he had been approached to do this, he would havewalked out.
All four defendants were convicted; Saunders received a sentence of 5 years imprisonment (reduced to
2.5 years on appeal), Parnes received a sentence of 18 months imprisonment plus costs, Ronson was fined£5 million plus costs and Lyons was fined £3 million plus costs.
After his conviction, Saunders was diagnosed, by his own doctors, with Parkinson’s disease and released
early from his sentence of imprisonment. Interestingly, he made a full recovery within weeks of his release. I
believe he is the only person ever to do so.
The first appeals against conviction by Saunders, Parnes and Ronson were dismissed by the Court ofAppeal on 16 May 1991, with the exception of one conspiracy count against Saunders.
On 22 December 1994, the Home Secretary referred the cases of all four appellants to the Court ofAppeal on the grounds that disclosure of material, which was not made available at the time of the trial,
might have aided the defence and possibly influenced the outcome of the trial.
The papers related to another take-over matter called TWH. The TWH matter was referred to the SFO
by the Department of Trade and Industry in early 1988. The events in question took place about the time of
the Guinness bid which had been in 1986. Henry Ansbachers Co Ltd, a merchant bank of which Lord Spens
was a director, had given a number of indemnities to TWH, a firm of licensed dealers, in connection withvarious share purchases by TWH. Following an investigation, the SFO decided not to institute any
proceedings as the fact of the indemnities was made known to the other parties to the take-over.
The TWH material was disclosed to the defendants in the second trial arising from the Guinness case,the trial of Lord Spens and Roger Seelig. It was disclosed to them because Lord Spens’ defence was that his
actions in the Guinness take-over were no different to that in the TWH case, where there had been nosuggestion his actions were criminal. In fact there were material differences, not least of which was the factthat the TWH indemnities were known to all parties but the detail is not important here. The TWH material
was not disclosed to the defendants in the first Guinness trial because the material was not considered
relevant to any of the issues that they were raising by way of their defences and was, therefore, notdisclosable.
The appeal was heard between 16 and 26 October 1995 before Lord Chief Justice Taylor, Mr Justice
MacPherson and Mr Justice Potter. On 27 November 1995, the appeals were dismissed, except for Lyons'appeal in respect of one count.
The appellants had alleged an abuse of process on two grounds: the use of the transcripts of thecompulsory DTI Inspectors interviews and the failure to disclose the TWH material. The Court of Appeal
was wholly satisfied that there was nothing in the circumstances of this case which rendered the admissionof the transcripts of evidence from the DTI inadmissible; it was expressly permitted by statute. It found that
the TWH and other material should have been disclosed but that the appellants, in fact, suffered no
prejudice. The court deciding that the undisclosed material could not have produced ‘credible evidence of
accepted or acceptable market practice’ in relation to the Guinness arrangements.
Following the dismissal of that appeal, Saunders applied to the European Court of Human Rights("ECHR") complaining that his rights had been contravened through the use in his trial of evidence provided
by him to DTI Inspectors under their compulsory powers. In December 1996 the ECHR found in his favour
but made no award of compensation to him. It did, however, order the UK Government to pay a contributionof £75,000 towards Mr. Saunders' legal costs. Subsequently the other three defendants made similar andadditional complaints to the ECHR. Similarly, they too were successful on the matter of admissibility of thecompelled evidence.
Following the ECHR decision regarding Mr. Saunders, the Attorney General issued guidance that
evidence contained in compelled interviews should not be used against the maker. The law was later

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amended to reflect this in 1999 by the Youth Justice and Criminal Evidence Act, which came into effect inApril 2000.
The Human Rights Act 1998, which incorporated some of the rights contained in the European
Convention of Human Rights into English law, came into force on 2 October 2000. Using this legislation thefour defendants applied for their cases to be referred again to the Court of Appeal claiming that the European
Convention could be applied retrospectively and therefore that the use in their trial of compelled statements
should not have been admitted in evidence. This last appeal was also dismissed; the Court of Appeal decided
that the Human Rights Act was not retrospective and so could not render previous decisions wrong eventhough the law had subsequently changed.
The Guinness case was something of a critical case for the SFO. It was our first major success but it was
not a wholly convincing one. Errors were made in the prosecution, which could have fatally undermined thecase and, it has to be said, we were somewhat lucky in holding on to the convictions. I do not mean tosuggest that the convictions were not entirely appropriate or proper, merely that our own failings might haveprovided the defendants with an entirely undeserved reprieve.
The two major lessons in this case were that compulsory interviews with defendants were no longer tobe regarded as acceptable and that disclosure of unused material must be considered very carefully. In fact
the law has changed since this case but the issue remains very much a live one. I mentioned the current
regime for disclosure in my other paper which has not really improved matters and presents difficulties forprosecutors on a daily basis.

B. Blue Arrow
Taking place in 1992 the Blue Arrow or County NatWest case was the second major trial for the office
and followed fairly close to the Guinness series of cases. This was a fairly well conducted investigation andprosecution. Except that the trial lasted for nearly a year. At the time this was unheard of. Following theconclusion of the trial, where we secured convictions against most of the defendants involved, the convicted
defendants all appealed.
What was interesting about this appeal was that just before it was heard a national newspaper decided toprint interviews with a number of the jurors because of the grounds of appeal that were being put forward by
the appellants. In effect they were arguing that the jury could not be expected to understand and retain theevidence they had heard over such an extended period. As a result their convictions should be regarded as
unsafe and their convictions should be overturned.
The newspaper, the Mail on Sunday, approached the jurors to get their impressions on this approach and,perhaps unsurprisingly, they were not very impressed that their verdicts were being challenged purely on
the basis that they did not have the ability to remember information over a long period of time. All thoseinterviewed, a majority of the jury, were happy to explain why they felt they fully and properly understoodthe case and were completely satisfied about the guilt of those involved. For a prosecutor it made compelling
reading. In the UK a jury’s deliberations are secret and must remain so. It is a criminal offence to make any
enquiry about it.
The Court of Appeal paid no heed to the newspaper reports and decided that the jury could not be
expected to be able to function effectively in such a complicated case over such a period of time. The appeals
were all upheld and the defendants had all their convictions quashed. The court was especially critical of the‘scatter gun’ approach that we were said to have taken to the charges that were brought by the prosecution.
The charging strategy in such cases is especially difficult to gauge. In the Guinness cases, the case wassplit into three aspects to ensure the trials were manageable. In the event the second and third trials became
ineffective. In the second trial one defendant, who was representing himself, Roger Seelig, was assessed by
the Judge as being unable to stand the strain of his chosen course of action and so he stopped the trial.
In the event in the Blue Arrow case, to avoid the risk to subsequent trials, it was decided to try all thedefendants in one go. It made for a very full dock and was probably an unwise choice but, then again, the jury
did convict the majority of them. The Court of Appeal’s criticism led to a fundamental reappraisal of our111

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approach to charging. Subsequently it was decided that in future cases, charges would be framed such as toensure that the trial would be manageable. This has presented us with other problems, more of which later.
Incidentally, the newspaper was severely fined for contempt of court and threatened with prosecution.
One might be tempted to think that this course of action was adopted because the newspaper report made amockery of the findings of the Court of Appeal, but one must remember how jealously the Court protects
the confidentiality of jury proceedings in reaching their verdicts.

C. BCCI
The investigation into the affairs of the Bank of Credit and Commerce International (BCCI) is a mostimportant case in SFO history. It is partly due to the fact that it was a major success for the office, securingconvictions in all ten trials, that resulted from the investigation into the collapse of the bank. However, it ismainly due to the lessons we learned in how to deal with what we call a ‘blockbuster’ case. These cases
cause immense logistical problems and are inevitably funded by a separate vote by parliament.
At its height the BCCI case had a staff of over forty people, including police officers. There was, as you
might imagine, an immense amount of paperwork involved both emanating from the Bank itself but also thecustomers (both victims and those who became defendants).
One of the major lessons learned was that maintaining the case team in one location was an essential
factor in keeping up the momentum of the investigation which lasted for over seven years following thecollapse of BCCI in July 1991.
In addition there was close co-operation with overseas prosecutors, including the United States, France,
Switzerland, Liechtenstein, Luxembourg and Germany, which has brought considerable enduring mutual
benefits.
It might be worth mentioning a little about some of the trials to give you an idea of the scale of the issues
we were dealing with. In May 1994, following a long trial, Nazmuddin Virani was convicted of a number ofoffences of false accounting and was sentenced to two and a half years imprisonment. Virani had been
Chairman of Control Securities plc, a publicly quoted property company, as well as being Chairman of a
privately owned property group. He was a substantial customer of BCCI and in return for signing false audit
confirmations which appeared to confirm that certain substantial loans had been made to his privatecompanies, and which were designed to, and did in fact, deceive the external auditors of BCCI, he obtained
benefits both for himself and his companies in the form of cash and loans.
The practical difficulties of prosecuting a case such as this can be seen from the fact that although Virani
had prepared and served a written statement of his defence months beforehand, the real defence (that Virani
was allegedly dyslexic and did not know what he was signing) was not revealed until well after the trial had
started.
Imran Imam was an account executive at BCCI who worked closely with its former chief executive
Swaleh Naqvi. In July 1994, Imam was convicted of a number of offences of false accounting and conspiracy,
being sentenced to three years' imprisonment. He had assisted, from the BCCI side, in the deception of the
bank's external auditors by portraying loans made to a large customer of the bank as 'performing'. Thus theimpression was given to the external auditors that interest on and capital from the loans were being repaid
to the bank so that no provision against the loans was needed in the bank's financial statements. In fact nointerest on or capital from the loans was being repaid.
The customer who 'borrowed' more money than anyone else from BCCI was Abbas Gokal. With senior
BCCI officials, Gokal masterminded a massive fraud totalling approximately £800 million.
Gulf was a large group of shipping companies based in Geneva with offices in over 40 countries. From themid-1980s Gokal and his Gulf Group secretly received many millions of dollars from BCCI, even though heknew, as did senior BCCI management, that his companies were hopelessly insolvent. To cover up the factthat massive unsecured loans totalling approximately £800 million were being made, Gokal and his fellow
conspirators falsified documents on a vast scale.

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The symbiotic relationship between the Gulf Group and BCCI meant that their fortunes were
inextricably linked. BCCI's massive unrepaid loans to the Gulf Group inevitably played a significant part inthe collapse of the bank in July 1991. The Gulf Group in its turn could not survive long without the backingof BCCI. It folded shortly afterwards owing many hundreds of millions of dollars.
The SFO's ensuing investigation uncovered documents signed by Gokal in a London safe deposit box
which showed that he and his two brothers owned and controlled the companies involved in the fraud.
Gokal was caught in July 1994 after the SFO heard that he was bound from Pakistan to the United States.
His plane re-fuelled in Frankfurt and thanks to the co-operation of the German authorities he was arrested
and extradited from there. Gokal's trial was one of the biggest ever prosecuted with more than 800
witnesses and evidence from every continent. He was sentenced to 14 years imprisonment which remains
the longest sentence handed out in an SFO case.
There were other lessons learned from this case. The approach to handling ‘blockbuster’ cases remains
based upon the experience gained in this case. In addition, the operational division structure and case teamstructure we have today was based upon that used in the BCCI case.

D. Maxwell
The collapse of the Mirror Group under the stewardship of Robert Maxwell was another ‘blockbuster’investigated by the SFO during the mid-1990’s. Following his death when he fell into the sea from the rear of
his executive yacht, the investigation was forced to concentrate on the actions of his lieutenants, two of
which were his two sons - Kevin and Ian. Investigating such a case with the main defendant absent is always
very difficult, especially when the missing person was a particularly dominant personality, as in this case. In
the event the first trial was unsuccessful, it alleged that Kevin and Ian Maxwell deceived banks that had lentmoney to the Mirror Group companies, both as to the ability of the companies to repay loans that had been
advanced and to secure additional lending. The jury acquitted the brothers, clearly accepting their defence
that they did not know the full picture and relied upon their father, who instructed them what to do.
For the SFO the most significant development was Mr. Justice Buckley's ruling that Kevin Maxwellshould not face a second trial in which he faced allegations of theft from the pension funds of the Mirror
Group companies. The judge effectively decided that we should only have one try at a defendant and not beable to have ‘several bites of the cherry’. The pressures faced by the defendants because of the various
concurrent investigations - by DTI Inspectors, liquidation proceedings in respect of the companies,
bankruptcy proceedings for all the defendants, civil proceedings by losers, disciplinary proceedings byregulators - undoubtedly played a part in the judge’s decision and it cannot be argued that he sympathizedwith the ordeal they had been through.
The Maxwell case was so complex; involving pension funds, banks and other financial institutions, thatone single trial able to encompass the whole extent of the alleged criminality was not possible. You willrecall the Blue Arrow case I mentioned earlier, following which the 'robust and early use' of the power tosever the indictment in order to secure a manageable and fair trial became the norm. As a result, the SFO
made every effort to reduce the amount of evidence and the number of counts in its cases. Adopting thisapproach in Maxwell, it was considered that the counts against the six defendants involved should be divided
between a number of trials.
The judge’s ruling in the Maxwell case that it should be 'unusual' for a second trial to take place posed a
problem for the SFO. The challenge became how to present enough of the full picture to a court in the
biggest and most complex cases without the trial becoming unmanageable and without having more than one
trial.
In the event we have considered the judgment something of an aberration and it does not seem to havebeen followed subsequently. Nevertheless this case is a good example of the impact that questionable
judicial decisions can have. At the time and for some time after the judgment, we were left in an impossible
position, with the defence criticising us whichever approach we followed.

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E. Barings
I mention this case only because it is an excellent example of the need for good and effective
international co-operation. The investigation came about following the collapse of Barings Bank, when one ofits traders based in Singapore, Nick Leeson, amassed losses of the order of £600-700 million without thebank being aware of it.
In any event following the collapse of the bank the SFO was asked to investigate. At the same time theSingaporean authorities investigated the fraud, in the guise of the Commercial Affairs Department (CAD),
which has subsequently been subsumed into the Police.
There developed a classic case of mistrust between the CAD and the SFO which caused both sides
problems. The SFO’s position was, and remained throughout the events that followed, that we wished toprovide a supporting role to the CAD but to ensure that we had sufficient evidence to be able to act to secure
Leeson’s detention and extradition to the UK should the CAD extradition request fail for any reason. You
will recall that Leeson was arrested as his plane landed in Frankfurt, having fled Singapore because hefeared being imprisoned there.
It is fair to say that we received no assistance from the CAD whatsoever. I recall one meeting where thehead of the department asked why we were not prosecuting senior Barings staff in London. I was forced topoint out that as he declined to provide me with access to the documents he had in Singapore, I was unable
to contemplate doing so as the bulk of the evidence to prove the fraud was held by him. Even after the
return of Leeson to Singapore to stand trial, we were not provided with access to any documentation.
I do not think that the situation was helped by the delay that occurred in having face to face meetings
between SFO and CAD staff but where, perhaps, there are concerns about professional rivalry andcompeting interests, this may be inevitable. It is an isolated example fortunately.

F. Mutual Legal Assistance
The SFO has developed a Mutual legal Assistance Unit which allows us to assist our overseas colleagues.
It also provides us with benefits, in that we are the recipients of better mutual legal assistance as a result, ina recent hearing the Divisional Court has ruled that the SFO was justified in helping the Italian authorities intheir investigation into former Italian premier Silvio Berlusconi. Previously search warrants were executedand documents which Signor Berlusconi's lawyers argued should not be allowed to leave the country wereobtained by SFO staff for Milan prosecutors. Finding in favour of the SFO, the Divisional Court provided
valuable confirmation of the extent of the SFO's special investigative powers which compel the provision of
information under Section 2 of the 1987 Criminal Justice Act. The extension of our powers to assist overseas
investigators came into effect in February 1995 and this was the first legal challenge to it.
III. CONCURRENT INVESTIGATIONS
It might not be immediately apparent from the foregoing but it is almost an inevitable fact of life during
our cases that we are forced to contend with concurrent investigations. In a fraud case we might see:
•
•
•
•
•
•
•
•
•
•

A Companies Act investigation S432 – which might be published.
A Companies Act inquiry S477 – which is not published.
Directors Disqualification proceedings against the directors of the companies under investigation.
Administration/Receivership/Liquidation proceedings relating to the Company under investigation.
Bankruptcy proceedings against individuals under investigation.
A FSA disciplinary enquiry.
A Public enquiry.
Professional disciplinary proceedings, e.g. Law Society, ICAEW, OPRA.
Proceedings by the revenue departments – Customs and Excise and Inland Revenue.
Civil litigation by losers.

It is unlikely that all of these would be in progress at the same time – though it is possible they may doso – but they do create difficulties. The multiplicity of the enquiries can put a huge strain on suspects andalthough I am rarely sympathetic, I do have some concerns.

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It also makes evidence gathering hugely difficult. I may be seeking to use someone as a witness but hemay be the subject of an investigation by another agency, for example the FSA or the Law Society. One
man’s witness may be another man’s defendant.
We try to address these issues right at the start and agree, at least, a priority but there is no hard and fast
rule that can be applied to these situations. The only sure thing, is that it involves a great deal of effort tomaintain contact with all those involved to ensure that we co-ordinate our activities such that we do nothamper each other too much. At the same time we cannot become too close and sharing information is ahugely problematic area for us.

IV. COMPUTER FORENSIC EVIDENCE
I mentioned in my other paper the huge volumes of computer data that we are now securing in our cases.
The volumes involved cause us practical problems in terms of our ability to process the information within areasonable time. The use of private businesses to assist in the processing of data is almost always essential
and this merely adds to the issues involved in ensuring that the evidence is properly produced.
We have taken the view that the only safe way to secure the evidence is to ‘image’ the hard drive or otherdata storage media. This effectively means talking a photograph of the data as at the date when we gather
the evidence. This image is produced in such a way as to prevent anyone from tampering with theinformation on the image.
It sounds all rather straightforward. It is far from being so. We usually gather the most computer datawhen we are conducting a search. Nothing could be simpler you imagine. It is not so. The power to seize
material granted by a search warrant only applies to the seizure of material that is relevant to the mattersunder investigation as outlined in the information we supply to the court when granted the warrant. I am
sure you will realize that any computer will contain very significant amounts of data or information that iswholly irrelevant to any issue in the investigation.
In such circumstances it had been our invariable practice to secure the consent of the occupier of thepremises to our imaging the hard drive, either on site or at our offices, and returning the computer within a
day or two. Usually informing the occupier of the amount of time that would be needed for us to review all
the data in his office or home to ensure we only removed relevant data was sufficient to persuade them toagree. Our approach resulted in the minimum inconvenience to the occupier and the maximum advantage toourselves. We would then allow the occupier the opportunity to attend at our offices at which time we would
review the data and remove the irrelevant material. Often they would not bother and we would process thedata only making available to the case team the data that was relevant to our investigation.
However, the problem was not solved. Unfortunately an inexperienced police officer engaged in a search
removed a computer without the agreement of the occupier. Sadly for him the occupier was not satisfied
with the answers given to him and he challenged the seizure of the computer, and other material, as being
unlawful. Very unfortunately for the police officer concerned, the court agreed with the occupier. Indeed it
was an inevitable decision in the circumstances. Nevertheless it left us with a problem. The court’s decision
was widely reported and police forces started to be challenged routinely when they sought to seize computer
data. The response of the government has been to introduce legislation which avoids the problem. So whatis the problem? Whilst the legislation does provide a mechanism for seizing irrelevant material that is‘inextricably linked’ with relevant material where it is ‘impracticable’ to separate them, the provisions do notprovide clear guidance on what ‘inextricably linked’ means and it also provides some difficulties over whatshould be regarded as appropriate circumstances when it can be said that it is impracticable to separate thematerial.
As a result it is now much more difficult to secure the consent of the occupier because they believe that
refusing consent gives them an advantage, that you may be unable to remove the computer and so seize theevidence on it. In consequence the process of securing the computer data is now much more labour
intensive as we have to demonstrate the problems in removing only relevant material on site.
You may be wondering why we do not simply use the new power to remove the computer. The simple
answer is that the legislation creates as many problems as it solves. I mentioned earlier that the processing

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of the seized date is very time consuming. As an example, a colleague recently had a team of eight staff
reviewing the seized data to sift through it for relevant evidence. It took them two months to review 2,000
Gigabytes of data and resulted in about 400 Megabytes of relevant material.
Had the data been seized under the new legislation it imposes burdens on the investigators, personally, tocomplete the review as soon as possible. Clearly this allows some latitude but it is also likely to be subject tochallenge by the occupier just to make life as difficult for the investigator as he can.

V. WHERE NEXT?
I would like to mention two more examples of the kind of situations we face and where this might take us
in the future. The first is the case of Regina v Steen and others.
The circumstances were that operating from business premises in Brighton and in Darlington, thedefendants conspired to defraud people overseas who responded to press advertisements for commercial
loans. The fraudulent scheme required applicants to pay non-refundable advance fees to have theirapplications processed. However no loans were ever forthcoming. Instead, further financial conditions would
be imposed that proved impossible for the applicants to meet.
They avoided promoting their service in the UK so all of the would-be borrowers were overseas, almost
exclusively in Australia, New Zealand and North America. Hundreds of applications were received for loans
ranging between half a million and twenty million pounds.
Once the loan applications had been received, Corporate Advances - the company based in Brighton would notify the applicants that their application had been accepted in principle and that an administration
fee was required to progress it to the “offer stage”. When applicants responded, paying the administration
fee of £6,900, their application would then be referred to the company in Darlington. Steen would arrange tosend applicants an “Offer Letter” from the supposed lender, who was said to be Peninsular Holdings ofPanama. It would state that in order for the matter to proceed further, due diligence enquiries would have to
be carried out and for which the applicant was required to pay another fee in advance. Where the clientsproceeded they would sign the offer letter and pay the due diligence fees, which typically would be theequivalent of £20,000 per application.
Applicants would then receive a ‘Commitment Letter’ in the name of Peninsular Holdings of Panama
stipulating certain conditions. Those conditions included a requirement that the client provide an ‘assignable
collateral bond’. The clients, whose commercial ambitions often exceeded their financial acumen, had either
been led to believe that this condition would not be required or alternatively, in their desperation to obtainthe loan, had given the condition insufficient consideration. When they enquired about the cost of thecollateral bond they learned that it would be in the region of 40% of the value of the loan.
It was obvious to the scheme operators that clients would not have paid either the administration fee orthe due diligence fee if they had known at the outset that they would ultimately be asked to provide such a
sizeable collateral sum. Many clients had made it clear from the beginning that they were not in a position toprovide collateral apart from the assets of their project and that if they were able to raise such a sum thenthey would not have been seeking a loan in the first place.
The defendants, through their business fronts, shared in the proceeds. Corporate Advances received
around £1.5 million in administration fees. Some of this was passed to Peninsular Holdings, which in turn
passed to Corporate Advances some of the £2.5 million it collected in due diligence fees.
Steen fled to the Philippines when the trial went against him and before the verdicts. He was convicted in
his absence and was subsequently returned quickly with excellent co-operation from the authorities there.
Nevertheless we are facing an appeal in this case on an entirely unexpected basis. I mentioned during the
public lecture the case where the prosecuting barrister received a bottle of champagne from a member of thejury, together with an invitation to dinner. It just goes to show that even in the best cases, there is no way of
predicting what will happen to cause difficulties.

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If that fraud was being operated today - and I suspect that something like it is probably going on
somewhere - there would be one major difference. Instead of placing advertisements in the press it would bedone over the Web and Internet. That would allow the fraudster to target many more gullible individuals as aresult. It would also mean that the trail of evidence becomes much more difficult to access, assuming you
can find the computer where the information is stored and much of the information may have been destroyedby the internet service provider as they rarely retain data for very long because of the commercial cost of
doing so.
My last example is a bit silly but just goes to prove that there are many people out there who are verygullible or, perhaps, desperate. I can give you one rather sad example of a lady who wrote to us from America
regarding a company in Cheshire offering:“Magical/spiritual services for $68, every three months, plus $25 for extra spells. I had this service done
starting on 12/01 through 6/02. They said that every thing done for me would work. They also told me how
well the workings were going and how positive the feedback was, and that everything would come right forme after a certain spell was done, then after that spell was done, they wanted to go on for another $68. I was
also told to delete all the emails I got from them so no one could see them.
To this day, nothing has worked, except something that happened that makes the situation they were
working on for me, impossible to get better or change now.
I asked for all of my money back, a total of $211, but after almost a year of asking for a refund, and a mix
up of emails, they gave me just $59. They claim they have clients come back to them over again, so I don’tknow why they can’t give me more.
I then asked for $46 back to make about half of the money, but I never got it. I don’t know how they can
get away with promising people everything done for them would work because Tanith, the high priestessdoing the spells, knew it and felt it. Or to say not to fear and that she wouldn’t let me down, when nothing
she did for me DID work. Then not to give back a fair or reasonable refund. I put my faith, trust, and belief inthem, and I got nothing out of it. I lost instead of gained. It’s like they promise you the magic will work justto get you to give them money. If they won’t give your money back, then they should NOT be promising all
the spells will work. They shouldn’t do that at all. I don’t know how they can do that, and think it’s OK. It’s
not fair to get someone’s hopes up like that, knowing how important the situation they are working on is topeople, and mine was EXTREMELY important to me. Too important to make false promises about it all
coming right for me, when it didn’t.
They don’t seem to care either, or understand how I feel about that. They are so sure the spells work, butthey don’t back it up with a money back guarantee if they don’t work. I paid them for spell work Tanith
promised would work. It didn’t, so why can’t they give me all of my money back?
I talked to a lawyer about this, but she said their service to help me would be more than what I spent on
Shining-light, and that I should report this as fraud to the proper places in the UK.”
A sad case indeed - I am just amazed she got $59 back.

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THE UNITED NATIONS CONVENTION AGAINST CORRUPTIONOVERVIEW OF ITS CONTENTS AND FUTURE ACTION
Dimitri Vlassis*

I. INTRODUCTION
The new United Nations Convention against Corruption has enormous significance. It proves that a
destructive practice as old as history can no longer be tolerated. It manifests the realization that the world of
the 21st century needs new rules to become a better place for all peoples. It demonstrates that core values,
such as respect for the rule of law, probity, accountability, integrity and transparency must be safeguarded
and promoted as the bedrock of development for all.
People around the world, in developing and developed countries alike, have become increasingly
frustrated at witnessing and suffering from the injustice and the deprivation that corruption brings. On adaily basis, people have faced head-on the effects of corruption on areas such as the administration of justiceand the provision of adequate medical care. They have watched with awe and anger the revelations about theluxurious lifestyle and immense fortunes amassed by corrupt leaders, while their people toiled to scrape aliving and were denied the most basic of services.
And that anger becomes resignation and cynicism when people discover that the vast fortunes stolen bycorrupt leaders cannot be recovered because they have been transferred abroad. To these people, diatribes
about good governance, sustainable development, the benefits of a free market and the liberalization of tradering hollow.
It is there that lies one of the gravest dangers, one of the most serious threats posed by corruption. The
loss of confidence in institutions and the de-legitimization of government have destructive consequencesthat can span generations. The best and brightest will eschew local political and economic life or even flee
abroad.
The new Convention offers good reason to look at the future with optimism. It is itself an act of faith.
Only a few years ago, speaking of the possibility of such an instrument, and saying it would be negotiated insuch a short time, would have brought ironic smiles to the faces of most people. Yet, it is a reality and aremarkable achievement.
It became a reality because of the vision, determination and commitment that all Governments displayed
throughout the negotiation process. And it is a remarkable achievement because it is innovative, balanced,
strong and pragmatic. These qualities, together with its universality and functionality, make the newConvention a unique platform for effective action and an essential framework for genuine international
cooperation.
The Convention offers all countries a comprehensive set of standards, measures and rules that they canapply to strengthen their legal and regulatory regimes to prevent and control corruption.
Negotiating the Convention was not an easy undertaking. There were many complex issues and concerns
from different quarters that the negotiators had to tackle. It was a formidable challenge to maintain thequality of the new Convention while making sure that all of these concerns were properly reflected in the
final text. Very often compromise was not easy and all countries made concessions. But the result is asource of pride. This result was made possible by the flexibility, sensitivity, understanding, and above allstrong political will that all countries displayed.
* Chief, Crime Conventions Section, Division for Treaty Affairs; Secretary, Ad Hoc Committee for the Negotiation of aConvention against Corruption, United Nations Office on Drugs and Crime.

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II. BACKGROUND
The new Convention can be seen as the most recent of a series of developments in which experts haverecognised the far-reaching impact of corruption and the need to develop effective measures against it atboth the domestic and international levels. It is now widely accepted that measures to address corruption go
beyond criminal justice systems and are essential to establishing and maintaining the most fundamental good
governance structures, including domestic and regional security, the rule of law and social and economic
structures which are effective and responsive in dealing with problems, and which use available resources as
efficiently and with as little waste as possible.
The gradual understanding of both the scope and seriousness of the problem of corruption can be seen in
the evolution of international action against it, which has progressed from general consideration anddeclarative statements,1 to the formulation of practical advice,2 and then to the development of binding legal
obligations and the emergence of numerous cases in which countries have sought the assistance of one
another in the investigation and prosecution of corruption cases and the pursuit of proceeds. It has also
progressed from regional instruments developed by groups of relatively like-minded countries such as theOrganisation of American States,3 the African Union (formerly Organisation of African Unity),4 the OECD,5and the Council of Europe6 to the global United Nations Convention.7 A series of actions on specific issues
within specific regions has become more general and global in order to deal most effectively with the
problem.

III. OVERVIEW OF THE CONVENTION
A. General Provisions (Chapter I, Art. 1-4).
The first article of the Convention states that its purposes are the promotion and strengthening of
measures to prevent and combat corruption more efficiently and effectively; the promotion, facilitation andsupport of international cooperation and technical assistance, including in asset recovery; and the promotionof integrity, accountability and public management of public affairs and public property.
The Convention then includes an article on the use of terms. In addition to such definitions as“property”, “proceeds of crime” and “confiscation”, the most significant innovation of the new Convention
are the definitions of “public official”, “foreign public official” and “official of a public internationalorganization”.
The Convention contains a broad and comprehensive definition of “public official” that includes any
person holding a legislative, executive, administrative or judicial office and any person performing a public
function, including for a public agency or public enterprise, or providing a public service. The definition
retains the necessary link with national law, as it would be in the context of national law that thedetermination of who belongs in the categories contained in the definition would be made.
During the negotiation process significant debate revolved around whether there was a need for adefinition of “corruption” and, should the answer to that question be affirmative, what the content of such a
definition would be. In the end, negotiators decided that attempting to define in legal terms, i.e., in terms
that would stand scrutiny in a wide array of legal systems around the world and would add value to the rest
1 See, for example GA/RES/51/59 and 51/191, annexes, and the discussion held at the 9th U.N. Congress on the Prevention of
Crime and Treatment of Offenders, held in Cairo from 29 April - 8 May 1995 (A/CONF.169/16/Rev.1, paragraphs 245-261.
2 See, for example, the United Nations Manual Practical Measures against Corruption, ECOSOC Res.1990/23, annex,
recommendation #8 and International Review of Criminal Policy, Special Issue, Nos. 41 and 42, New York 1993.
3 Inter-American Convention against Corruption, OAS General Assembly resolution AG/res.1398 (XXVI-0/96) of 29 March
1996, annex.
4 African Union Convention on Preventing and Combating Corruption, Maputo Mozambique, 11 July 2000, available from the AU on-line
at: http://www.africa-union.org/Official_documents/Treaties_%20Conventions_%20Protocols/Treaties_Conventions_&_Protocols.htm.
5 OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, OECD
document DAFFE/IME/BR(97)20.
6 European Criminal Law Convention on Corruption, 1998, European Treaty Series #173.
7 For a summary of other international legal instruments dealing with corruption, see United Nations Manual on AntiCorruption Policy, Chapter V, available on-line at: http://www.unodc.org/pdf/crime/gpacpublications/manual.pdf.

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of the text of the Convention was neither feasible nor desirable. Corruption could easily be allowed to standas a word describing conduct that was broadly understood in a progressively more consistent manner
throughout the world. While the term might still be understood in a broader or narrower fashion dependingon national exigencies or traditions, attempting to crystallize in a short legal text requiring high precision
the core of the collective perception of the concept entailed a number of unnecessary risks. There was therisk of limiting the Convention to the current understanding, thus depriving the instrument from the
dynamism necessary for it to remain relevant to national efforts and international cooperation in the future.
There was also the risk of capturing in the definition only some aspects of the phenomenon, thus inhibiting
broader action against corruption that countries might have already taken or might be contemplating. In
deciding not to include a definition of “corruption” in the final text the negotiators were inspired to a large
extent by the similar approach taken by the United Nations Convention against Transnational Organized
Crime, which does not define “transnational organized crime” but, instead, contains a definition of“organized criminal group”.
The Chapter contains an article on the scope of application, which states that for the purposes of
implementing the Convention, it will not be necessary, except as otherwise provided in the Convention, forthe offences set forth in it to result in damage or harm to state property. This provision has particularimportance for international cooperation and asset recovery.
Finally, the chapter contains an article on protection of sovereignty, an issue which figures prominently inthe concerns of Member States, especially in view of the jurisdictional provisions that are later found in theConvention. The article was inspired and follows the formulation of a similar article in the United Nations
Convention against Transnational Organized Crime.

B. Preventive Measures (Chapter II, Art. 5-14)
The Convention contains a compendium of preventive measures which goes far beyond those of previous
instruments in both scope and detail, reflecting the importance of prevention and the wide range of specificmeasures which have been identified by experts in recent years. More specifically, the Convention contains
provisions on policies and practices, preventive anti-corruption bodies; specific measures for the public
sector, including measures to enhance transparency in the funding of candidatures for elected public officeand the funding of political parties; comprehensive measures to ensure the existence of appropriate systems
of procurement, based on transparency, competition and objective criteria in decision-making; measuresrelated to the judiciary and prosecution services; measures to prevent corruption involving the private
sector; participation of society; and measures to prevent money laundering. The chapter on prevention has
been structured in a way that would establish the principle of what needs to be put in place, but allows forthe flexibility necessary for implementation, in recognition of the different approaches that countries cantake or their individual capacities.
The provisions on preventive measures are regarded as forming an integral part of the mechanisms that
the Convention is asking States to put in place. It is the one side of the coin, the other being thecriminalization of a variety of manifestations of corruption. It is important to note that the prevention
chapter covers all those measures that the international community collectively considers necessary for theestablishment of a comprehensive and efficient response to corruption at all levels.

C. Criminalization and Law Enforcement (Chapter III, Art. 15-44)
While the development of the Convention reflects the recognition that efforts to control corruption must
go beyond the criminal law, criminal justice measures are still clearly a major element of the package. The
Convention would oblige States Parties to establish as criminal offences bribery of national public officials;
active bribery of foreign public officials; embezzlement, misappropriation or other diversion of property by apublic official; money laundering; and obstruction of justice. Further, States Parties would establish the civil,
administrative or criminal liability of legal persons.
In recognition of the fact that there may be other criminal offences which some countries may havealready established in their domestic law, or may find their establishment useful in fighting corruption, theConvention includes a number of provisions asking States Parties to consider establishing as criminal
offences such forms of conduct as trading in influence, concealment, abuse of functions, illicit enrichment, or
bribery in the private sector.

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The final formulation of the criminalization chapter, with the inclusion of both “mandatory” and“discretional” offences, created a quandary for negotiators as to how to deal with international cooperation,
more significantly certain principles such as dual criminality, which normally govern such forms ofinternational cooperation as mutual legal assistance. The solution found, which is explained below under“international cooperation”, is another innovative feature of the Convention, adding significantly to its value
for the international community.
Other measures found in Chapter III are similar to those of the Convention against Transnational
Organized Crime. These include the establishment of jurisdiction to prosecute (Art. 42), the seizing,
freezing and confiscation of proceeds or other property (Art. 31), protection of witnesses, experts andvictims and cooperating persons (Art. 32-33) and other matters relating to investigations and prosecutions(Art. 36-41).
Elements of the provisions dealing with money-laundering and the subject of the sharing or return ofcorruption proceeds are significantly expanded from earlier treaties (see Chapter V), reflecting the greater
importance attached to the return of corruption proceeds, particularly in so-called “grand corruption” cases,in which very large amounts of money have been systematically looted by government insiders from State
treasuries or assets and are pursued by subsequent governments.

D. International Cooperation (Chapter IV, Art. 43-49)
Chapter IV contains a series of measures which deal with international cooperation in general, but itshould be noted that a number of additional and more specific cooperation provisions can also be found inchapters dealing with other subject-matters, such as asset recovery (particularly Art. 54-56) and technicalassistance (Art. 60-62). The core material in Chapter IV deals with the same basic areas of cooperation asprevious instruments, including the extradition of offenders, mutual legal assistance and less-formal forms ofcooperation in the course of investigations and other law-enforcement activities.
A key issue in developing the international cooperation requirements arose with respect to the scope or
range of offences to which they would apply. The broad range of corruption problems faced by many
countries resulted in proposals to criminalise a wide range of conduct. This in turn confronted many
countries with conduct they could not criminalise (as with the illicit enrichment offence discussed in theprevious segment) and which were made optional as a result. Many delegations were willing to accept that
others could not criminalise specific acts of corruption for constitutional or other fundamental reasons, but
still wanted to ensure that countries which did not criminalise such conduct would be obliged to cooperatewith other States which had done so. The result of this process was a compromise, in which dual criminality
requirements were narrowed as much as possible within the fundamental legal requirements of the States
which cannot criminalise some of the offences established by the Convention.
This is reflected in several different principles. Offenders may be extradited without dual criminality
where this is permitted by the law of the requested State Party.8 Mutual legal assistance may be refused in
the absence of dual criminality, but only if the assistance requested involves some form of coercive action,such as arrest, search or seizure, and States Parties are encouraged to allow a wider scope of assistancewithout dual criminality where possible.9 The underlying rule, applicable to all forms of cooperation, is that
where dual-criminality is required, it must be based on the fact that the relevant States Parties havecriminalised the conduct underlying an offence, and not whether the actual offence provisions coincide.10
Various provisions dealing with civil recovery11 are formulated so as to allow one State Party to seek civil
recovery in another irrespective of criminalization, and States Parties are encouraged to assist one anotherin civil matters in the same way as is the case for criminal matters.12

E. Asset Recovery (Chapter V, Art. 51-59)
As noted above, the development of a legal basis for cooperation in the return of assets derived from or
8 Art. 44, para. 2.
9 Art. 46, para. 9.
10 Art. 43, para. 2.
11 See, for example, Art. 34, 35 and 53.
12 Article 43, paragraph 1 makes cooperation in criminal matters mandatory and calls upon States Parties to consider
cooperation in civil and administrative matters.

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associated in some way with corruption was a major concern and a key component of the mandate of the Ad
Hoc Committee. To assist delegations, a technical workshop featuring expert presentations on asset
recovery was held in conjunction with the second session of the Ad Hoc Committee,13 and the subjectmatter was discussed extensively during the proceedings of the Committee.
Generally, countries seeking assets sought to establish presumptions which would make clear theirownership of the assets and give priority for return over other means of disposal. Countries from which
return was likely to be sought, on the other hand, had concerns about the incorporation of language whichmight have compromised basic human rights and procedural protections associated with criminal liability andthe freezing, seizure, forfeiture and return of such assets. From a practical standpoint, there were also
efforts to make the process of asset recovery as straightforward as possible, provided that basic safeguards
were not compromised, as well as some concerns about the potential for overlap or inconsistencies with
anti-money-laundering and related provisions elsewhere in the Convention and in other instruments.
The provisions of the Convention dealing with asset recovery begin with the statement that the return ofassets is a “fundamental principle” of the Convention, with annotation in the travaux preparatoires to theeffect that this does not have legal consequences for the more specific provisions dealing with recovery.14
The substantive provisions then set out a series of mechanisms, including both civil and criminal recovery
procedures, whereby assets can be traced, frozen, seized, forfeited and returned. A further issue was thequestion of whether assets should be returned to requesting State Parties or directly to individual victims ifthese could be identified or were pursuing claims. The result was a series of provisions which favour returnto the requesting State Party, depending on how closely the assets were linked to it in the first place. Thus,
funds embezzled from the State are returned to it, even if subsequently laundered,15 and proceeds of otheroffences covered by the Convention are to be returned to the requesting State Party if it establishes
ownership or damages recognised by the requested State Party as a basis for return.16 In other cases assets
may be returned to the requesting State Party or a prior legitimate owner, or used in some way forcompensating victims. 17 The chapter also provides mechanisms for direct recovery in civil or otherproceedings (Art. 53) and a comprehensive framework for international cooperation (Art. 54-55) which
incorporates the more general mutual legal assistance requirements, mutatis mutandis. Recognizing thatrecovering assets once transferred and concealed is an exceedingly costly, complex, and all-too-often
unsuccessful process, the chapter also incorporates elements intended to prevent illicit transfers andgenerate records which can be used should illicit transfers eventually have to be traced, frozen, seized andconfiscated (Art. 52). The identification of experts who can assist developing countries in this process is also
included as a form of technical assistance (Art. 60, para. 5).

F. Technical Assistance and Information Exchange (Chapter VI, Art. 60-62)
The provisions for research, analysis, training, technical assistance and economic development andtechnical assistance are similar to those contained in the United Nations Convention against Transnational
Organized Crime, modified to take account of the broader and more extensive nature of corruption and to
exclude some areas of research or analysis seen as specific to organized crime. Generally, the forms oftechnical assistance under the Convention against Corruption will include established criminal justiceelements such as investigations, punishments and the use of mutual legal assistance, but also institutionbuilding and the development of strategic anti-corruption policies. 18 Also called for is work throughinternational and regional organizations (many of who already have established anti-corruption
programmes), research efforts, and the contribution of financial resources both directly to developing
countries and countries with economies in transition and to the United Nations Office on Drugs and Crime,19
which is expected to support pre-ratification assistance and to provide secretariat services to the Ad Hoc
Committee and Conference of States Parties as the Convention proceeds through the ratification process
13 See A/AC.261/6/Add.1 and A/AC.261/7, Annex I.
14 Art. 51 and A/58/422/Add.1, para. 48
15 Art. 57, subpara. 3(a).
16 Art. 57, subpara. 3(b).
17 Art. 57, subpara. 3(c).
18 Art. 60, para. 1.
19 Art. 60, paras. 3-8.

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and enters into force.20

G. Mechanisms for Implementation (Chapter VII, Art. 63-64)
The Convention contains a robust mechanism for its implementation, in the form of a Conference of theStates Parties, with comprehensive terms of reference already specified in the Convention and with asecretariat that would be charged to assist it in the performance of its functions. These provisions are
inspired by the United Nations Convention against Transnational Organized Crime, but go considerably
beyond that instrument, both in terms of scope and detail. The Secretary General is called upon to convene
the first meeting of the Conference within one year of the entry of the Convention into force,21 and the Ad
Hoc Committee which produced the Convention is preserved and called upon to meet one final time toprepare draft rules of procedure for adoption by the Conference, “well before” its first meeting.22 The
bribery of officials of public international organizations is dealt with in the Convention only on a limited basis(Art. 16), and the General Assembly has also called upon the Conference of States Parties to further address
criminalization and related issues once it is convened.23
H. Final Provisions (Chapter VIII, Art. 65 - 71)
The final provisions are based on templates provided by the United Nations Office of Legal Affairs and aresimilar to those found in other United Nations treaties. Key provisions include those which ensure that theConvention requirements are to be interpreted as minimum standards, which States Parties are free to
exceed with measures which are “more strict or severe” than those set out in the specific provisions,24 andthe two articles governing signature and ratification and coming into force. The Convention is open for
signature from 9 December 2003 to 9 December 2005, and to accession by States which have not signed any
time after that. It will come into force on the 90th day following the deposit of the 30th instrument of
ratification or accession with the Office of Legal Affairs Treaty Section at U.N. Headquarters in New York.25
IV. THE ROAD AHEAD
The Signing Conference that the United Nations Office on Drugs and Crime organized in Mérida lastDecember was yet another manifestation of the political will that made the Convention possible and enabled
the Ad Hoc Committee to negotiate it in record time, fully respecting the deadline set for it by the General
Assembly. Ninety-five countries signed the Convention and, in an unprecedented and highly significant
move, one country also deposited the first ratification of the new instrument.
While we should all rejoice with the adoption of the new Convention, we must guard againstcomplacency. The new instrument must be only the beginning of our redoubled efforts to prevent andcontrol corruption. We must all make sure that the momentum that made its negotiation possible is notallowed to dissipate. The collective political will that permitted the innovative and groundbreaking solutionsof the new Convention must continue unabated.
Before highlighting our vision for what lies ahead, let me use this opportunity to clarify what we consider
a matter of crucial importance. Quite often, and with some consternation, we come across a fundamental
misperception about the new Convention, namely that it does not foresee monitoring of its implementation.
Nothing can be further from the truth. The Convention contains provisions for a vigorous and effective
mechanism to ensure and follow up on its implementation. The relevant provisions were carefully negotiatedand, while inspired by similar provisions in the United Nations Convention against Transnational Organized
Crime, go considerably beyond that Convention both in terms of details and potential impact. We must dispel
this misperception and, instead of engaging in theoretical discourses about our own individual image of how
20 GA/RES/58/4, paras. 8 and 9 and Convention Art. 64. UNODC is already designated as the secretariat for the Ad Hoc
Committee pursuant to GA/RES/55/61, paras, 2 and 8 and GA/RES/56/261, paras. 6 and 13. By convention, the General
Assembly calls on the Secretary General to provide the necessary resources and services, leaving to his discretion thedesignation of particular U.N. entities and staff to do so.
21 Art. 63, para. 2.
22 GA/RES/58/4, para. 5.
23 GA/RES/58/4, para. 6.
24 Art. 65, para. 2.
25 Art. 67 (signature, ratification, acceptance, approval and accession) and 68 (Entry into force). For further information see
the segment on procedural history and footnotes 10 and 11 (sources of assistance), above.

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the Convention should read, concentrate on the task at hand, which is formidable.
We must organize our efforts around some key elements that we must always keep in mind.
The first step must necessarily be to secure the necessary ratifications for the entry into force of theConvention within the shortest time possible. Implementation would be a word devoid of meaning if theConvention languishes on the shelves for long. The best way to achieve implementation is to bring into
existence the Conference of the States Parties and make sure it functions effectively. To secure thenecessary ratifications, we should exercise all the influence we possess to bring ratification to the top of thedomestic political agenda in as many countries as possible, in all regions of the world. We have been
informed that a number of Governments, which were also very active during the negotiation process, arethinking about forming an informal group of “friends of the Convention” to seek ways to keep the
momentum alive. We should support them and encourage them in pursuing that direction.
The Office on Drugs and Crime intends to pursue the following actions in achieving the objective ofeffectively promoting the new Convention and securing the necessary ratifications for its entry into force.
•
•

•
•
•

Organization of high-level seminars to increase awareness of the Convention on the part of Member
States, as well as intergovernmental and non-governmental organizations.
Assistance to requesting States in the development of legislation and regulations to facilitate theratification of the Convention. The Office intends to develop a Legislative Guide for the
Implementation of the United Nations Convention against Transnational Organized Crime andfurther explore the development of appropriate implementation tools.
Provision of expertise or technical cooperation to requesting States with a view to strengthening
domestic criminal justice systems capabilities in dealing with corruption.
Assistance in the establishment or intensification of bilateral and multilateral cooperation in theareas covered by the Convention.
Facilitating the sharing of information, experience and expertise between States.

Implementation rests firmly in the hands of States. And for good reason. First, effective action against
corruption is the responsibility of Governments. Only through their commitment and determination can we
see tangible results. Second, the Convention is the first truly global instrument of its kind. This is aprominent feature that distinguishes it from the very commendable initiatives and instruments thatpreceded it at the regional level. This global nature is also the source of special attributes that we must notignore. Mechanisms for implementation that were developed for, and are functioning in the context ofregional legal instruments cannot be readily emulated at the global level. We can learn from the experience
gained by those mechanisms, and we fully intend to continue and strengthen our close working relationships
with the international organizations that are supporting those mechanisms. But, we must also take into
serious consideration legitimate concerns of our constituency and, most importantly, the gaps in capacitythat exist in many developing and least developed countries. On that basis, and remaining faithful to theletter and spirit of the Convention, we must nurture its implementation mechanism and support the widest
possible participation in the development and functioning of that mechanism, including through welltargeted technical assistance to developing countries.
While guided by these considerations, we must not underestimate the role that civil society and theprivate sector can and must play. Governments must be prompted, encouraged, supported and held
accountable. And both civil society and the private sector can help in all of these efforts. To complement andsupport the initiative of Governments forming a support group for the Convention, we are exploring thepossibility of putting together two other informal groups, one that would serve as a forum for civil society
and one that would offer the opportunity to the private sector to become engaged and bring to bear its own
great potential and influence. In putting together these groups, we would seek the cooperation and guidanceof the Global Compact and would welcome ideas and support from all concerned.
In the United Nations, we believe that it is a matter of consistency, credibility and efficiency to lead byexample. Our interaction with Governments and all other members of our constituency stand to gain
enormously from the realization and the firm belief that we “practice what we preach”. And theOrganizational Integrity Initiative, spearheaded by the Office of Internal Oversight Services is a case inpoint.

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The same principle applies to the private sector. I believe that the issue must be approached in a twopronged fashion. The private sector must realize and accept that its position and operations in a globalized
economy bring with them great potential, but also great responsibility. Integrating and projecting
transparency, and using influence to help fight corruption is a sound business practice, it makes eminent
business sense. Investments require a stable and secure environment to produce returns. They require a“level playing field”. Corruption produces invariably a host of distortions in markets, it removes the mostbasic elements from the environment that is conducive to productive investment and thrives on the
confusion that ensues. Just like businesses invest seriously in their own infrastructure, they must look very
carefully at investing in the infrastructure of the environment in which they wish to operate. And it is asound investment, an investment in the future carrying very little risk, to support the efforts of countries tostrengthen their systems in order to fight, domestically and together with others, corruption. Its returns
may not be easily and immediately quantifiable in a way that they would be reflected in a balance sheet. But
the results and returns are bound to show in the medium to longer term. This is why the Office on Drugs
and Crime is an avid supporter of the Global Compact and stands ready to contribute to its efforts in any way
it can, especially in view of the imminent introduction of transparency and action against corruption as its
tenth principle.

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THE UNITED NATIONS CONVENTION AGAINST CORRUPTIONORIGINS AND NEGOTIATION PROCESS
Dimitri Vlassis*
I. BACKGROUND
In a world of relative turmoil produced by radical changes in the Post-Cold War era, there are newopportunities and incentives to engage in corrupt practices. The assumption that “free markets” and noninterventionism are the remedy against corruption is challenged by recent experience. It now appears thateach socio-political and economic system produces its own version of corruption and that no system iscompletely corruption-free.
The problem of corruption is systematic rather than individual. It occurs in monopolistic or oligopolistic
situations, in which one or a handful of companies control a given market. The state may wish to engage
private companies to perform specific tasks, provide services or carry out public works. To the extent that
only a very small number of companies are practically able to carry out the work, the ground is fertile forcorrupt practices, i.e. overcharging, low quality work, delays, etc.
In addition, very wide discretionary powers in the hands of individuals or organizations may generate
temptations and incentives for corruption. Whenever there are few or no mechanisms of “checks andbalances”, people have plenty of opportunities to take undue advantage of their power. Another contributing
factor is the lack of transparency, which reduces the ability to control those in positions of authority. This
lack of transparency may be caused by factors ranging from secrecy in banking to dictatorial regimes
disallowing the questioning of authority.
Most of the time, corruption entails a confusion of the private with the public sphere or an illicit exchange
between the two spheres. In essence, corruption-related activities involve public officials acting in the bestinterest of private concerns regardless of, or against, the public interest. Abuses of public office to secure
unjust advantage may include any planned, attempted, requested or successful transfer of a benefit as aresult of unjust exploitation of an official position.
While planning and developing anti-corruption strategies and policies, it is essential to begin fromdetermining the extent of the harmful effects of corrupt practices. In many countries, particularly developing
countries and countries with economies in transition, corruption hampers social, economic and politicalprogress. Public resources are allocated inefficiently and the population’s distrust of political institutions
rises. Consequently, productivity becomes lower, administrative efficiency is reduced and the legitimacy ofpolitical order is undermined. In addition, projects are left incomplete and economic development isimpaired, which, in turn, leads to political instability, as well as poor infrastructure, education, healthsystems and other social services.
On the other hand, the phenomenon of corruption has also detrimental effects in developed countries by
undermining ethical principles, rewarding those willing and able to pay bribes for their own benefit andperpetuating inequality. The result is that individuals who wish to conduct their affairs honestly aredemoralized and lose faith in the rule of law. Moreover, competition is distorted and the quality of products
and services tends to deteriorate. National budgets are severely depleted and rules and regulations designed
to enhance social responsibility of corporations and other businesses are undercut and undermined.

II. EARLY WORK OF THE UNITED NATIONS AGAINST CORRUPTIONThe United Nations Crime Prevention and Criminal Justice Programme began exploring whether the
ground was fertile for action against corruption at the international level at a time when it was deemedadventurous even to mention the word “corruption”.

*Chief, Crime Conventions Section, Division for Treaty Affairs; Secretary, Ad Hoc Committee for the Negotiation of aConvention against Corruption, United Nations Office on Drugs and Crime.

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True to its tradition that prevailed from its establishment and is at the root of many of its successes, theProgramme approached the issue from the technical rather than the political perspective.
In December 1989, working in close cooperation with the (then) Department of Technical Cooperation
for Development of the Secretariat, the Programme organized an interregional seminar, which was hosted by
the Government of The Netherlands in The Hague. Following a thorough review of the impact of corruption
on good governance, public administration and the judiciary, the seminar produced a set of comprehensive
recommendations. It is interesting to note that the seminar prefaced its recommendations on certain special
considerations, which were cast as overarching conditions for effective action against corruption, or in otherwords, as essential elements of an enabling framework and environment for such action to have meaning.
The participants in the seminar recognized the importance of democratic institutions, a free press, the ruleof law, the independence of the judiciary and the creation of a political, administrative and social-economic
environment in which the public and civil service can operate without improper interference. The
recommendations of the seminar covered considerable ground, ranging from the need to embrace economic
and development strategies, to the requirement of putting in place a broad range of preventive and law
enforcement measures, and including the establishment of independent specialized bodies to implement oroversee the implementation of policies and measures against corruption. In the area of international
cooperation, the seminar called for improved mutual legal assistance and extradition, as well as confiscationof illicit proceeds, and stressed the importance of technical cooperation in this sphere. The seminar also
proposed the preparation of an international code of conduct for public officials and a United Nations
programme to promote compliance with that code. It should be noted that the seminar provided theopportunity for the Crime Prevention and Criminal Justice Programme to present a first draft of a manual on
practical measures against corruption on which it had been working and receive valuable comments.
In August 1990, the Programme organized the Eighth United Nations Congress on the Prevention of
Crime and the Treatment of Offenders. One of the resolutions that received the most support and passed
unanimously was resolution 7 on action against corruption, which was inspired by the recommendations of
the seminar and called for the preparation of a draft international code of conduct for public officials and thefinalization and publication of the manual on practical measures against corruption.
Action against corruption featured prominently among the priorities established for the United Nations
Crime Prevention and Criminal Justice Programme by the Versailles Ministerial Conference that revamped
the Programme in 1991. It was also among the issues that the Commission on Crime Prevention andCriminal Justice decided to pursue when it was established in 1992. Under its guidance, the Programme
developed the International Code of Conduct for Public Officials, which was adopted by the General
Assembly by its resolution 51/59 of 12 December 1996. The General Assembly recommended it to Member
States as a tool to guide their efforts against corruption. Further in its resolution 51/191 of 16 December
1996, the Assembly adopted the United Nations Declaration against Corruption and Bribery in International
Commercial Transactions, annexed to that resolution, and requested the Economic and Social Council and its
subsidiary bodies, in particular the Commission on Crime Prevention and Criminal Justice, to examine ways,
including through binding international legal instruments, to further the implementation of the Declaration,
to keep the issue under regular review and to promote the effective implementation of that resolution. Itshould be noted that the Declaration is generally regarded as the precursor of the OECD Convention against
the bribery of foreign public officials.

III. THE NEGOTIATION PROCESSThe question of a convention against corruption was raised for the first time in connection with thenegotiations for the United Nations Convention against Transnational Organized Crime. The Ad Hoc
Committee that carried out those negotiations debated whether corruption should be covered by that
Convention. The view that prevailed was that corruption was too complex and broad an issue to be covered
exhaustively by a convention dealing with transnational organized crime. However, it was also evident to all
negotiators that that Convention would not be complete without provisions on corruption, because
corruption was both a criminal activity in which organized criminal groups often engage and a method usedby those groups to carry out other criminal activities. The Ad Hoc Committee agreed on the inclusion oflimited provisions on corruption in the United Nations Convention against Transnational Organized Crimeon the understanding that a separate instrument would be envisaged to cover corruption in an appropriatemanner. The United Nations Convention against Transnational Organized Crime, which was adopted by the127

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General Assembly in resolution 55/25 of 15 November 2000 and entered into force on 29 September 2003,
includes provisions related to corruption. The Convention envisages criminalization of active and passive
bribery involving a public official (Article 8 para. 1) or a foreign public official or international civil servant(Article 8 para. 2), as well as of participation as an accomplice in corruption-related offences (Article 8 para.
3). In addition, States Parties are required to adopt measures designed to promote integrity and to prevent,detect and punish the corruption of public officials (Article 9). The article criminalizing corruption includes
also a basic definition of public officials, essentially deferring to national law.
Following the successful conclusion of the negotiations for the United Nations Convention against
Transnational Organized Crime and its three Protocols, and the establishment of the new Ad Hoc
Committee, the issue of fully realizing the commitment taken during those negotiations to pursue thedevelopment of an independent instrument against corruption came to centre stage. At the beginning, there
was some brief debate about whether the new instrument should be a separate convention, or the objective
could be as effectively achieved through the development of a protocol to the United Nations Convention
against Transnational Organized Crime. The argument about the multifaceted nature of the problem ofcorruption necessitating a separate and comprehensive approach proved to be convincing enough that thequestion was laid to rest at the early stages of the debate.
However, Member States wished to time the beginning of the new negotiation process in a way thatwould ensure sufficient preparation, both on the part of their substantive services and agencies, and on thepart of the Secretariat that would support those negotiations. Member States also wished to ensure that thenegotiation process would be based firmly on shared objectives and a clear understanding about the scope ofthe objective to be achieved, precisely in view of the broad nature of the phenomenon of corruption and,most importantly, because of the rather nebulous character of the terminology employed to describe thephenomenon. Corruption was a term used in different contexts to embrace different, sometimes widely
divergent concepts and had not acquired the certainty that is demanded invariably in a legal context, or more
importantly, in the context of making international law. At the same time, Members States wished to ensurethat the expertise and experience gained, as well as the spirit achieved during the negotiation process for
the United Nations Convention against Transnational Organized Crime would be fully preserved and built
upon. These attributes were considered of the utmost importance and as guarantees for the success of the
new endeavour that the international community was about to embark upon.
In view of all these considerations, debate at the Commission on Crime Prevention and Criminal Justicerevolved around devising a preparatory process that would satisfy all concerns and create an environmentthat would be conducive to pursuing the new negotiations on a sound basis.
In its resolution 55/61, the General Assembly established an Ad Hoc Committee for the Negotiation of aConvention against Corruption. That resolution also outlined a preparatory process designed to ensure thewidest possible involvement of Governments through intergovernmental policy-making bodies. The Centre
for International Crime Prevention (CICP) was asked to prepare an analysis of existing international legal
instruments for the Commission on Crime Prevention and Criminal Justice, whose central theme in 2001
was the issue of corruption. The resolution also called for the convening of an open-ended
intergovernmental group of experts, which was asked to draft terms of reference for the negotiation of the
new instrument, taking into account the analysis of existing legal instruments and recommendations
prepared by the Secretariat and the views and comments of the Commission. The Group was asked tosubmit its recommendations to the General Assembly, through the Commission and the Economic and Social
Council, for approval.
There was an interesting development that merits special mention. At the time that the General
Assembly was considering resolution 55/61, Nigeria, on behalf of the Group of 77 and China, proposed to theSecond Committee of the General Assembly a draft resolution on the illegal transfer of funds and therepatriation of such funds to their countries of origin. As originally proposed, the draft resolution was calling
for the negotiation of a separate instrument on this subject. Through negotiations at the General Assembly,
the two resolutions were brought in line and the Intergovernmental Expert Group mentioned above was
asked, by General Assembly resolution 55/188, to examine the issue of illegal transfer of funds andrepatriation of such funds when considering the draft terms of reference for the negotiation of the newconvention against corruption. This new mandate placed the issue of asset recovery squarely within theframework of the new convention.

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Pursuant to General Assembly resolution 55/188, the (then) Centre for International Crime Prevention of
the United Nations Office on Drugs and Crime begun studying the issue and seeking input from Member
States, other entities of the United Nations system and other international organizations, in order to comply
with the request of the Assembly to the Secretary-General to submit a report on this matter. Over the last
three years, the Centre submitted three reports on this issue to the General Assembly and carried out astudy to assist the Ad Hoc Committee charged with the negotiations of the new Convention against
Corruption.
In elaborating these reports and the study for the Ad Hoc Committee, we found that the issue was ascomplex as it was crucial. In fact, the complexities surrounding it could not be underestimated. These
complexities derived as much from the nature of the activities that produce the illicit wealth, as from thedifficulties associated with the authors of these activities and their position of power. Such complexities
were compounded by corollary factors, such as gaps in domestic legislation, perceived deficits in legitimacy
of processes initiated to establish facts and determine culpability and, last but not least, deficiencies ininternational cooperation.
One of the key conclusions in the reports of the Secretary-General was that notwithstanding difficulties
or complexities, the dimensions of the problem demanded joint and conclusive action by the international
community. For this action to be effective, the international community must embark on sustained efforts toforge consensus. Such consensus needs to be based on a common understanding of the constituent elementsof the issue, a common perception and appreciation of its impact on national efforts towards development
and on the international quest for globalization beneficial to all, and finally agreement on the international
aspects of the problem that require genuine and meaningful cooperation.
The sensitive and complex nature of asset recovery became evident during the tenth session of theCommission on Crime Prevention and Criminal Justice, in 2001, when it negotiated a draft resolution, which
later became Economic and Social Council resolution 2001/13. While maintaining the matter as one of the
key issues to be covered by the new Convention, the debate on the draft resolution produced an evolution of
the terminology employed to approach the question. The new resolution spoke of transfer of funds of illicit
origin, derived from acts of corruption, including the laundering of funds, and the return of such funds.
The Intergovernmental Expert Group met in Vienna from 21 to 30 July 2001 and recommended, bymeans of a draft resolution, terms of reference for the negotiation of the new convention regarding bothsubstance and procedure. The Commission approved the draft resolution at its resumed session in
September 2001 and, following approval also by the Economic and Social Council, the General Assembly
adopted it as resolution 56/260 on 31 January 2002.
In that resolution, the General Assembly decided that the Ad Hoc Committee established pursuant toresolution 55/61 should negotiate a broad and effective convention, which, subject to the final determinationof its title, should be referred to as the “United Nations Convention against Corruption”.
The General Assembly requested the Ad Hoc Committee, in developing the draft convention, to adopt acomprehensive and multidisciplinary approach and to consider, inter alia, the following indicative elements:
definitions; scope; protection of sovereignty; preventive measures; criminalization; sanctions and remedies;confiscation and seizure; jurisdiction; liability of legal persons; protection of witnesses and victims;
promoting and strengthening international cooperation; preventing and combating the transfer of funds ofillicit origin derived from acts of corruption, including the laundering of funds, and returning such funds;
technical assistance; collection, exchange and analysis of information; and mechanisms for monitoring
implementation.
The General Assembly also invited the Ad Hoc Committee to draw on the report of theIntergovernmental Open-Ended Expert Group, on the report of the Secretary-General on existing
international legal instruments, recommendations and other documents addressing corruption, as well as on
the relevant parts of the report of the Commission on Crime Prevention and Criminal Justice at its tenthsession, and in particular on paragraph 1 of Economic and Social Council resolution 2002/13 as resource
materials in the accomplishment of its tasks.

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The General Assembly requested the ad hoc committee to take into consideration existing international
legal instruments against corruption and, whenever relevant, the United Nations Convention against
Transnational Organized Crime.
The Assembly also decided that the Ad Hoc Committee should be convened in Vienna in 2002 and 2003,
as required, and should hold no fewer than three sessions of two weeks each per year and requested the Ad
Hoc committee to complete its work by the end of 2003 according to a schedule to be drawn up by its
bureau. Finally, the Assembly accepted with gratitude the offer of the Government of Argentina to host an
informal preparatory meeting of the Ad Hoc Committee established pursuant to resolution 55/61, prior to its
first session.
The Informal Preparatory Meeting took place in Buenos Aires from 4 to 7 December 2001. In preparation
for that meeting, CICP asked Governments to submit proposals they wished to make in relation with the
new convention. The purpose of the Informal Preparatory Meeting was to consolidate any proposals madeby Governments, in order to pave the way for the work of the Ad Hoc Committee. The meeting had before it
26 proposals, submitted by countries of all regions of the world. Some of these proposals contained full texts
for the draft convention, while others offered more general observations and comments regarding thecontent of the new instrument or the methodology of the negotiation process. The multitude and wealth ofthe proposals were evidence of the interest of countries from all regions and their willingness to be actively
engaged and involved in the negotiation process. These elements augured well for the comprehensivenessand quality of the final product of the negotiation process. They also offered a guarantee of the universal
nature of the new instrument, a key component of its effectiveness, acceptance and success. The Informal
Preparatory Meeting consolidated all textual proposals in a single document, which the Ad Hoc Committee
could use as the basis of its work.
The Ad Hoc Committee commanded the attention of Governments, international organizations and thecivil society throughout its work; and for good reason. Doubtless, its task was demanding: to deliver to theworld a broad, comprehensive, functional and effective international instrument to fight corruption. The
pressure was considerable: success would mean turning the page in international cooperation and theestablishment of new standards by which the international community will be measuring its performance incrucial sectors; failure would essentially condemn all relevant efforts for a considerable time.
The General Assembly gave the Ad Hoc Committee clear and broad terms of reference, and asked it tocomplete the negotiation process by the end of 2003. This deadline was doubly significant.
Firstly, it carried an important political message; the international community was intent upon showingthat it meant business. There was no room for drawn out negotiations, but the product was needed urgently.
Secondly, this deadline was to serve as yet another tangible proof that significant, groundbreaking newlegal instruments can be produced in the United Nations within a pre-determined and reasonable timeframe. The same goals had been achieved by the previous Ad Hoc Committee on the negotiation of theUnited Nations Convention against Transnational Organized Crime and its three Protocols, and there was no
reason why the positive experience could not be repeated
The principal strengths of the Ad Hoc Committee were: (a) the very good spirit prevailing among
delegations; (b) the experience those delegations had gained by negotiating the United Nations Convention
against Transnational Organized Crime; (c) a strong expanded bureau; and (d) a fully participatory process,manifested by high levels of attendance and a good mix of negotiators and practitioners making up
delegations.
The Ad Hoc Committee made every possible effort to comply with the mandate it received from theGeneral Assembly and develop a broad, effective and comprehensive convention. At the core of thenegotiating process was the desire of all delegations to find an appropriate balance in the new instrument, inorder to make sure that adequate and proportionate attention was devoted to prevention, criminalization,international cooperation and asset recovery.

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From the very beginning of its existence, the Ad Hoc Committee added one unwritten rule to its rules ofprocedure. All its members demonstrated that they would be guided by a spirit of cooperation,
understanding, flexibility and consideration for differing positions. That spirit was fundamental not only tothe achievement of consensus, but to the safeguarding of the quality of the instrument that it was entrustedwith developing. Indeed, the Ad Hoc Committee explored all avenues for reaching consensus, taking into
account the concerns of all States, but keeping a watchful eye at all times on certain key qualities of the newConvention. The Ad Hoc Committee wished to make sure that the new instrument would be truly universal,
functional, ratifiable and implementable.
Consensus in issues as complex as those covered by this Convention required certain key components.

First, good knowledge of the issues and an equally good understanding of the implications that provisionsof the draft Convention might have. The solutions that the Ad Hoc Committee would find for the various
provisions of the Convention could have implications for domestic regulatory regimes or for national
capacities to deal with particular aspects of the problem, or they could have implications for other provisionsof the new Convention and for the way it would operate as an instrument of international cooperation.
The detailed discussion that took place and the very balanced mixture of delegations, which wereenriched by practitioners and seasoned negotiators, were proof that that knowledge and understanding wereabundant in the Ad Hoc Committee.

Second, a good understanding of national positions and the concerns that drive them, coupled withsensitivity for these concerns and the desire to find ways to accommodate them. The new Convention
needed to heed all concerns if it aspired to be a universal instrument.
The extensive debate that the Ad Hoc Committee held, over three readings of the draft text, provided
every opportunity for all delegations to listen to each other and comprehend the reasons for each other’s
positions.

Third, and closely related to the second point above, a willingness to modify national positions andexplore every possibility of meeting each other in the middle of the road. It was of crucial importance to beinspired through and by the development of new international standards in order to bring about changes ormodifications at the national level, when those were necessary to improve international cooperation.
The Ad Hoc Committee began its work in January 2002. It held seven sessions and completed thenegotiations successfully on 1 October 2003. It is important to note that the Ad Hoc Committee was an
open-ended body and was consistently attended by a very high number of delegations (a total of over 130
delegations took part in the process).

131PARTICIPANTS’ PAPERSECONOMIC CRIME IN CAMEROON – ITS IMPACT ON THE SOUNDDEVELOPMENT OF THE STATE
Dohgangsin Prudence Tangham*
I. INTRODUCTION
As a result of the declining terms of trade and increasing debt situation of Africa, the continent has been
rendered poorer than it was two decades ago thus worsening welfare and increasing its marginalization inthis era of globalization. Although globally, foreign investments have increased, Africa receives less than 5%
and this capital is heavily concentrated in a few countries. This situation has been exacerbated by the factthat the region is a net exporter of capital to the rest of the world (UNCTAD, 2001). The state of trade andinvestment and its impact on development in sub-Saharan African countries and in particular the developing
countries of the Central African region have greatly worsened.
Cameroon as part of Central Africa has not been spared by this negative trend whose effect on thenational economy and the livelihood of its people has been devastating. Severely impacted by the economiccrisis of the late ‘80s the phenomenon of poverty has been amplified. The devaluation of the FCFA,
successive reductions of salaries in the public sector and the massive layoffs in the private sector, thewinding up of most para-public agencies, private establishments and credit institutions, greatly weakened
the national economy. At a macro-economic level, the consequence of the crisis was a total decrease of atleast 55% of Cameroon’s investment between the financial year 1985/86 to 1991/92. For the private sector
this decrease was 37% and the public sector 80%. This economic recession led to the degradation of
conditions of living.
This phenomenon was aggravated by the increasing demographic pressure with a growth rate of 2.4%
(UNDP). The alarming situation in the urban cities is similar to most urban cities in Africa and otherdeveloping countries. Cities in Cameroon are faced with rapid and controlled urban growth of 6% per annum,(Annual Statistics 2000) resulting in inequalities and high unemployment rates.
A perturbing cause and effect of this prevailing phenomenon is one of increasing criminality andinsecurity which greatly threatens the security of persons, their property and state property and shakes thefoundation of democratic institutions. Of crucial importance are crimes of an economic nature which greatly
discourage foreign investors and in a vicious circle negatively impact the already fragile and ailing economy.
Economic crimes are criminal offences that violate the economic rights of the state and its citizens, andfrustrate socio-economic conditions. This has also been defined as a state where an individual(s) in theexercise of their liberty, brutally expropriate the individual and collective resources of others for theirprivate interests. (Jean Cartier-Bresson, 1997). Although viable statistics on economic crimes areunavailable and sometimes inaccessible, a known effect has been its disruption of security and social orderwhich are requisites for sound economic development. At a global level where the free and secure
movement of persons, goods, services and capital that generate economic growth cannot be guaranteed, thisconstitutes a discouraging factor for both private internal and foreign investment.
Globalisation offers opportunities that can contribute to the much-needed national economic
development. For developing countries like Cameroon there is an increasing fear of economic and financial
destabilisation from globalisation. Marginalisation within the market forces in this new world order for tradepresents a risk to nations that do not provide a judicial system that is adapted and possesses the necessary
capacity to guarantee security for trade and investment within its territorial competence. Another dimension
to this threat is the existing technological gaps between developed and developing countries which
exacerbates this situation as it erodes the competitiveness of national economies. Though the threat isgreater for developing countries, a major challenge of globalisation therefore is that of ensuring that its
benefits extend to our country.

*Deputy Attorney General, Legal Department, Yaoundé, Cameroon.

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It is within this context that within the last decade, the Government of Cameroon, with the support of the
Bretton Woods institution, undertook to define a socio-political and economic architecture that is favourable
to reversing the current negative trends and put the nation on a path of sound economic development. The
sweeping liberalisation of the economic sector led to important structural reforms in the export sector, theprivatisation of several productive state agencies and paved the way for financing and credit institutions tobe put in place.
Addressing Cameroon’s policy, legal, regulatory and institutional framework for combating economic
crimes is therefore of critical necessity to the national and international collaborative efforts in addressing
the nations financing and investment needs necessary to ensure sustainable development and poverty
reduction even within the time frames for the Millennium Development Goals (MDG).
This paper seeks to contribute to the international initiative under the Japanese Government within its
JICA programme which, aims at providing a forum for exchange of views and experiences on various issues
pertaining to economic crime. It is from this background that this paper attempts to analyse below thecurrent trends of the phenomenon of economic crime in the Republic of Cameroon. The impact of theexisting legal and institutional framework will also be examined with the view of identifying opportunities,
constraints and areas for further strengthening our reforms.

II. CURRENT TRENDS
An analysis of emerging trends in criminality of an economic nature clearly depicts two categories of
economic crimes: traditional types as defined by existing legal instruments and modern types withpeculiarities that do not confine these crimes to the essential elements that constitute any single traditional
type.

A. Traditional Economic Crimes
An examination of the available judicial statistics on economic crimes reveals that the number ofprosecutions and convictions are limited to traditional crimes defined by the Penal Code. Although theseclassic provisions have a limited area of application to the phenomenon it is interesting to observe that theireffectiveness is excessively limited even with respect to traditional crimes which are on a continuous
increase. The list of such crimes may not be exhaustive but would include economic related offences definedby the Penal Code as enumerated in Part III of this paper.
Although figures for the whole country were unavailable at the time of writing this draft, the classificationof offences registered by law enforcement officers in the town of Yaoundé from January-July 2001 are
indicative of major urban towns where economic crimes are dominant. Simple theft 49.6%, Armed Robbery
19.5%, Rape 3.5%, Theft by Use of Force or Climbing 16.8%, Others 10.8%. (2002 Diagnostic de laDelinquance Urbaine a Yaoundé. Page 42)
The putting in place of various multi-disciplinary teams by the forces of law and order during this period
is conclusive of the increasing rate of violent criminality that came on stage posing serious threats topersons and property. An emerging phenomenon to combat the increase in criminality was the proliferationin the setting up of private security services such as Wackhenhurt and DAK services, etc. to ensure thesecurity of private businesses and residences.

B. Modern Economic Crimes
This form of delinquency manifested itself at the advent of the economic crisis and has also been
described as ‘white collar crimes’ relating to the quality of offenders and their mode of operations. The mostcommon of these are ‘feymania’ and corruption. Organized crimes affecting the economy have also taken on
a wide dimension both at a national level and on the international scene
1. ‘Feymania’‘Feymania’ is an economic crime that manifests itself in multidimensional forms but is basicallycharacterised by the classified offences of breach of trust and credit by fraud.
Affected by the high rate of unemployment and poverty, its authors go in search of quick and easy profits,
and this goal is achieved based on the victim’s naivety.

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Statistics on this phenomenon are unavailable and furthermore, the police and the banks are usuallyunable to detect such crimes. Beyond this, the victims out of shame hardly lodge a complaint against theoffender and hesitate to make public their misfortune (Afrique Magazine, No 157, of October 1998, Page 65).
Feymen are a prototype of economic delinquents in Cameroon today. Though well known and very
dangerous they maintain solid relationships at high political levels. Aged from 25-35, they are known to livein great affluence and are supposedly understood to be very rich men. Related offences include the
manufacture of money through the use of multiple strategies i.e. minting counterfeits or multiplying money,
sale of fraudulent precious stones and credit by fraud. They however, have an educational level classified as
below minimum.
The mode of operation of feymen though apparently simple is complex. Its operation is preceded by arelationship of confidence established with his victim. The naivety of the victim is exploited and a large
amount of money extorted. The tolerance of this phenomenon has led to severe social consequences. An
increasing number of delinquents have led to the downfall of businessmen and traders - thus putting at risk
economic operations.
2. Corruption
Corruption is non-respect of economic regulations which leads to disfunctioning of the market order.
Actors are put out of market, the market is disorganized and profit affected. These practices retard social
progress, and lead to misappropriation of resources and slow economic development.
Corruption is a phenomenon that is insidious to Cameroon. It has been engraved in certain daily habits
i.e. ‘Tchoko’, ‘Gombo’ are regularly demanded for service to be rendered for various public services. Otherknown practices include percentage charges (30%) in the award of public contracts and the payments ofpublic internal debts.
The impact of corruption is frustrating to any economy. Generally, the risks to the establishment are
increased as management orientations, growth and survival are affected. The growth of banks for example, isconditioned by the capacity for self-financing generated by credibility and security. Corruption affecting thebanking sector has great repercussions on the national economy.
3. Organized Crimes
Drug trafficking, firearms trafficking, etc.
4. Offences Linked To Recent Communication Technology
Recent technological advancements in the communication sector have been used by economic crime
offenders to render their crimes more complex and difficult to investigate. The proliferation of Cyber cafésand the increasing use of electronic banking/credit cards have generated diverse types of technologicalrelated economic crimes. Law enforcement officers, bank officials and managers of business operations areunable to identify these crimes.

C. Victims
An analysis of socio-professional categories of victims to economic crimes highlights the following
groups:•••Traders are principal victims of armed robbery and feymania. Target businesses being petrol
stations, pharmacies, supermarkets, banks, bakeries, bars, hotels and telephone booths.
Economic operators and businessmen. They are subjected to giving inducements or paying
percentages to be awarded contracts. They are also victims of armed robbery, and feymania
International civil servants, diplomats and tourists. They are targets for aggravated theft andmisappropriation.

III. LEGAL AND REGULATORY FRAMEWORKA description of Cameroon’s legal architecture is based on International Conventions, the Constitution,Laws, Sectoral laws and regulatory texts

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A. International Conventions
The trans-border nature of most economic crimes greatly affects the common interests of humanity andthus makes it necessary to cooperate in the exchange of information and harmonisation of strategies forintervention. Cameroon’s adherence to international legal movements is a determination and demonstrationof political will by the public power to cooperate with the global community. It is in this regard that
Cameroon has participated over the years in various international and regional initiatives relevant to theinvestigation and execution of decisions against criminal offenders in general and those specific to economic
crimes and maintaining economic order, such as several UN and other international organized conferences
relating to Crime Prevention and Criminal Justice on organized crime, money laundering, etc.
B. Constitution
The liberalisation of the socio-political environment in Cameroon necessitated major reforms in theConstitution to create an enabling environment for economic growth. The amended Constitution of 1996 hasenshrined in its preamble various fundamental principles and rights that provide a framework for security ineconomic activities. The Constitution guarantees the right to freedom and security, free movement of
persons and goods, and the right to ownership of property.
C. Criminal Law and Procedure
It is worth mentioning here that Cameroon has a chequered legal history that is linked to its historicalbackground. Ruled under protectorate, mandate and trusteeship regimes, Cameroon was administered by
the Germans, British and French whose legal systems have greatly influenced Cameroon’s legal architecture
for combating economic crimes. As a colonial legacy the English speaking provinces of Cameroon, formerly
under British administration, continue to apply the common law legal system while the French speaking
provinces, formerly under French administration, apply French civil law. The institution of local legislation in
substantive and procedural law has been a gradual process since independence in 1960 and 1961. As an
outcome, Cameroon today applies three categories of substantive and procedural law. Harmonised local
legislation applies throughout the national territory and in default of such laws, each criminal or civil court
applies the Civil law or Common law systems as was applied by that court before independence.
In examining the extent to which the current substantive and procedural laws are effective in combating
economic crimes as a means to maintaining economic order, pieces of local legislation and provisions ofapplicable common law and civil law need to be visited.
In Criminal law, the Cameroonian legislator through the Penal Code (Law No. LF –1 of 12th June 1967)
makes available various economic offences, which provide the opportunity for the judiciary to protect
economic development. These offences of the Penal Code include Misappropriation of Public Funds (Art.
184), Forgery of Treasury Security (Art. 202), Counterfeiting (Art. 211), Striking Money (Art. 215), Other
offences against the national economy (Arts. 222-226), Cheque without cover (Art. 253), other offences
against the public economy (Art. 252-257), Signature in blank (Art. 309), Violation of commercial secret (Art.
311), Corruption of public servant/employee (Art. 134, 312), Deception of Shareholder (Art. 313), Forgery(Art. 314). Offences against proprietary interests include (Aggravated) theft, misappropriation and stealing
by false pretences (Art. 318 -326), offences against copyright, patents, trademarks (Arts. 327-330),
Insolvency/bankruptcy (Art. 331-336), etc.
These provisions are not exclusive of other economic criminal provisions contained in various laws andregulatory instruments notably the Tax Code, Customs Code, Investment Code, etc., which enable thecriminal judge to ensure that economic order is established.
1. Procedure
Cameroon’s judicial revolution of 1972 shaped after the nation’s political revolution of the same year had
a major impact on the criminal procedure that is applicable today. Ordinance 72/4 of 26th August 1972 on the
Judicial Organisation (JO), led to the harmonisation of the repressive jurisdictions, their competence rationae
materiae and territoriae and the competent authorities in criminal and civil matters. Certain procedural
matters relevant to preliminary inquiries and prosecution were also addressed.
While these major aspects of the rules of criminal procedure were unified, section 34 of the JO referred
the courts for further procedural matters to the procedures, usages and practices formerly in force in thetwo states (today the French and English provinces) before the promulgation of the ordinance. By virtue of
this clause, criminal procedure in the investigation and prosecution of offenders of crimes of an economic

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nature and the execution of related judgments is defined by the Criminal Procedure Ordinance (Commonlaw) and the Code D’Instruction Criminelle (French Civil Law).
2. Investigation and Trial
As a major innovation, the JO of 1972 makes mandatory the conduct of a preliminary inquiry for offencesclassified as felonies and discretionary for misdemeanours and charges the State Counsel as the competentauthority to conduct such inquiries. Although slow judicial processes have been attributed to preliminary
inquiries, the importance of this pre-trial process is relevant to gathering evidence in economic related
felonies and misdemeanours of a very complex nature. In the event of a committal for trial, the deposition
and attendance of sometimes high-ranking witnesses involved in economic crimes, such as corruption andorganized crimes, are secured.
The application of two criminal procedures has led to the application of the accusatorial and inquisitorial
procedural system in the common law and civil law courts respectively. Although attempts have been madeat instituting a mixed procedural system, by virtue of Art. 34 of the JO, the common law and civil law courts,
continue to apply the procedural systems in force prior to 1972. Under the accusatorial system as applicablein the English speaking courts, the presence of the accused during trial is mandatory and the burden of proof
cast upon the prosecution can only be discharged by proof beyond reasonable doubt. The accused who may
opt not to give evidence, may by cross examination throw doubt on the truth of the evidence by theprosecution. The inquisitorial system as applicable in the French speaking jurisdictions is conceived on thebasis that the interests of society are a priority. Here the accused is presumed guilty until he discharges theburden, which is incumbent on him. The accused once notified of his trial may be tried by default and thepresiding magistrate plays a prominent role in the conduct of the trial.
Under both systems a victim may apply for the award of civil damages during a criminal trial through acivil claimant procedure (‘Constitution des parties civiles’) which, limits the duplication of actions.
In the absence of any unifying laws on various aspects of procedural law, this constitutes the generalstate of the applicable procedures by the criminal and civil courts that provides a framework for pursuingeconomic criminals and compensating their victims.
The myriad of procedures involved, their sometimes ill adapted nature and the complexities that arise
when litigants opt in favour of one legal system over the other, where economic offences/violations cross theboundaries of legal systems, are complicated issues business operators and victims often face. An on-goinggovernment initiative aimed at addressing this state of affairs is the drawing up, by the Ministry of Justice, of
a draft Criminal Procedure Code which takes into account Cameroon’s double heritage and the peculiaritiesof the Cameroonian society. It is expected that this draft will soon be tabled in parliament.
3. Punishment
The nature of sanctioning economic crimes is defined on the same general principles for other crimes as
contained in the Penal Code. Based on principal penalties as provided for by Section 21(1) of the Penal code,a felony is punishable with death or with loss of liberty for a maximum of more than 10 years while amisdemeanour is punishable with loss of liberty or with a fine where the loss of liberty may be for more thanten days but not more than 10 years. The traditional economic crimes as outlined above are thus sanctioned
in accordance with the provisions of the specific section of the law, which follows the classification given
above. For example, Misappropriation of public funds is punishable either as a felony with 15 - 20 years andlife imprisonment or as a misdemeanour with 5 – 10 years imprisonment based on the value of the property
lost. The issuing of cheques without cover, simple theft, breach of trust and stealing by false pretences arepunishable as misdemeanours with an imprisonment term of 2 – 5 years, corruption of a public servant 5 10 years and corruption of employees 1 - 3 years. Aggravated theft and misappropriation are however
punishable as felonies, etc.
These provisions notwithstanding, the criminal judge is empowered to mete out a lesser sanction unlessotherwise prohibited by the law creating the offence. Where an accused is a first offender or other mitigating
circumstances are established, and this happens to be the prevailing situation, the judge has a wide
discretion in mitigating the sentence with a less severe sanction.

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Various accessory penalties such as the publication of a judgment, closure of an establishment andconfiscation may accompany the principal penalty. While the later penalty ensures that offenders arepunished and the victims compensated in the event of a civil award of damages, accessory penalties provide
a framework for the criminal judge to raise public awareness on the commission of serious economic crimes
and further pursue the ill-gotten proceeds from these crimes. Where the owners of confiscated property are
unknown, such proceeds are ordered to be part of the state funds or estate.

D. Civil Law and Procedure
In Civil law, several national efforts have led to the enactment of relevant harmonised legal instrumentswith defined procedures for contractual relationships of specified business transactions, conditions forresolving disputes, penal and administrative sanctions for violators and compensating victims of various
economic violations. The Insurance Law (Code CIMA), Labour Law and the Africa Regional Business andCommercial Law (OHADA) adopted at the close of the twentieth century seek to address the challenges of
economic activities within the global market economy. Foreign investments in the oil, gas, mining andforestry sectors have led to an increase in finance and economic related violations in these sectors. The last
decade thus saw the enactment of sweeping local legislation to regulate these sectors providing sanctions forviolators and compensation measures for victims.
Cameroon’s civil procedure is based on the English received legal instruments (Magistrates Court Civil
Procedure Ordinance of 1948, Southern Cameroon’s High Court Procedure of 1955) and the French ‘Codede Procedure Civile’, whose provisions have sometimes become obsolete in their countries of origin. The
Supreme Court is however regulated by a local legislation, Ordinance 72/6 on the Organisation andFunctioning of the Supreme Court. The Government in recognition of the ill-adapted nature of theseprocedures of relevance to economic activities and their negative effect on victims of economic crimes,
notably major financial institutions, adopted a number of regulatory instruments which, though piecemeal innature, seek to speed up the process of judicial recourse. These include the Simplified Procedure for therecovery of debts; Ordinance N0 92/008 of 14th August 1992 on the Stay of Execution of Judgments, etc.

E. Preventive Measures
The measures adopted at an administrative level to combat the phenomenon of criminality of an
economic nature have been principally disciplinary and preventive in character.
Administrative disciplinary action, though closely related to criminal proceedings, is nonetheless anautonomous action specifically applicable to a defined institution or profession. Although the rules for
instituting such actions may be the same, their spheres of application greatly differ. The use of disciplinary
measures such as recovery of deficits, warnings, and suspensions have been of great significance in pursuing
civil servants charged with the misappropriation of state finances or other property under their control andcustody. Charges for misappropriation of public funds for example, are initiated after an investigation by
fiscal or administrative control services. The Public Department of State Control upon the detection of theseoffences have recommended and proceeded with forwarding suspects to the Prosecution department for
further investigation and trial. The State Counsel of the Yaoundé Court of First Instance was seized of thefamous Mounchipou case (Former Minister and high-ranking officials of the Ministry of
Telecommunications), after the control and recommendation of the State Control Department.
During Cameroon’s 3 year Economic and Financial Development Plan for 1997/2000, major economic,
financial and structural reforms were achieved with the support of donor organisations. Within the Structural
Readjustment programme a major achievement was the putting in place of a Good Governance Programme
which envisages various economic development measures. These amongst others include: the respect ofrules of public contracts whereby independent auditors were instituted; reforms on the system of award ofcontracts; the strengthening of the state of law to ensure judicial security for investments and theintensification of the fight against corruption by improving public access (transparency) to information on
public affairs.
Major judicial structural reforms carried out were aimed at implementing Government policy of bringing
justice closer to the people, decongesting the courts, speeding the judicial process and thus instituting acredible judicial system in the fight against crimes. These measures provided an appropriate response tocriticisms of the judiciary relating to slow judicial processes in treating case files and the high number of
preventive detainees awaiting trial. The recent creation of several Courts of First Instance and137

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infrastructural investments in the judiciary has provided a more conducive working environment. Statisticsof the Centre Province for example reveal that, the Yaounde-Ekounou and Ngoumou Magistrate Courts werecreated within the last two years. Construction of the State Counsels Chambers for the Yaoundé
Administrative Centre and the Yaounde-Ekounou Magistrates Court were completed, and the Constructionof the Bafia Court is on-going.
Other efforts by the Government provide a preventive mechanism for the commission of economic
crimes due to mismanagement of public property. Preventive measures for example, taken in
implementation of the National Programme on the Fight Against Corruption include the vast national
campaign in 1998 to sensitize the public as both culprits and victims of corruption. Within this programme a
National Commission with a coalition of partners, CSO/Private Sector/Public Sector, has been created andplaced at the level of the Prime Ministry. Various Observatories which feed into this commission have beencreated at the level of ministerial departments for an improved management of public affairs. These
measures are expected to control and prevent the increase in economic crimes against the state.
A significant effort of the private sector worth mentioning is that of the banking sector aimed atpreventing financial and economic crimes. At the dawn of the 21st century, major para public corporations
such as the National Electricity Corporation (SONEL), National Water Corporation (SNEC), Cameroon
Airlines (CAMAIR), National Social Insurance (CNPS), etc., and major private institutions, due to lessrigorous accounting systems, were victims of diverse types of cheque related offences. Bank officials thoughunable to produce specific statistics of offences identified, confirm that an increasing number of fraudulent
and stolen cheques were being cashed, signatures of heads of institutions falsified and fraudulent
identification papers used by the offenders. The culprits, who sometimes worked with the complicity of
employees of these institutions, were mostly unidentified. The impact of these bank related economic
crimes on customers and the likely impact on their relationships with the financial institutions led to achange in the banking policy and the adoption of preventive measures in the payment of cheques. By adecision of the Professional Association of Credit Institutions of Cameroon (APECA), counter payments ofcheques issued to third parties were abolished. All cheques issued to customers are required to be prebarred and can only be paid through a bank account of the third party. These provisions notwithstanding,bank officials complain of emerging trends in new methods of falsification where payments are made under‘Transfer Orders’.
IV. INSTITUTIONAL ARRANGEMENTS
The institutional framework for combating economic crime includes repressive jurisdiction, law
enforcement institutions, penitentiary institutions and the following.

A. Criminal Law Courts
In accordance with the judicial organisation regulated by the JO of 1972, the Court of First Instance(Magistrates Court) will be competent to entertain economic crimes classified as misdemeanours and simple
offences and all criminal matters pertaining to juvenile offenders below the age of 18 years. Actions for civil
remedy by victims of economic offences will be entertained by this court where the damage claimed does
not exceed 5 millions Fcfa (approximately $8000). Where however the economic offence is classified as afelony, the High court is competent and in civil matters can hear and determine claims in economic issues
with an amount exceeding 5 million Fcfa. At an appellate level, the Court of Appeals established at Provincial
levels entertains appeals from the courts below. Appeals from a Courts of Appeal are heard by the Supreme
Court whose decisions bring an end to any litigation of an economic nature.
The legal Departments headed by legal officers are charged with heading and controlling investigations ofcrimes by the judicial police officers

B. Judicial Police Officers
As forces of law and order, the Police and Gendarmes are also specifically charged with the investigationof criminal offences. In the exercise of this function they act as judicial police officers (JPO) under the controlof the legal department.
The Police Service is made up of the department of information, public security, judicial repression andimmigration. Public security is particularly responsible, amongst others, for the security of persons and theirgoods. The Mobile Intervention Group (GMI) of the police is charged with special interventions, while the138126TH INTERNATIONAL SENIOR SEMINARPARTICIPANTS’ PAPERS

Special Operation Unit (GSO) as a specialised unit is made up of ‘anti-gangs’ for the fight against grandcriminality and serious offences.
The Gendarmerie is also charged with the security of persons and their goods and as judicial police
officers investigate criminal offences. Equally structured as the Police, this service consists of a criminal
investigation office, a Mobile Unit ‘Escadron Mobile’ charged with special interventions, and a Gendarmerie
Operational Centre (COG) charged with the fight against grand criminality.
Upon receipt of a complaint or information as to the commission of an economic crime, the Judicial Police
office are charged with conducting investigations and establishing a case file which is forwarded to the legal
department for perusal, inquiry and committal where necessary.

C. Penitentiary Units
Regulated by Decree 92/052 of 27 May 1992 on the penitentiary system in Cameroon, various
penitentiary centres created nationwide are charged with the detention of convicts or detainees. The overpopulation of these prisons has been a cause of great concern. The Yaoundé prison for example constructed
more than 40 years ago with a capacity of 800 inmates today has 3024 persons.
D. Multidisciplinary approach
The multidimensional characteristics of serious crimes and modern crimes call for a multidisciplinary
approach to be adopted in the prevention of and fight against increasing criminality. Faced with an increase incriminal activities, particularly organized crimes with the use of arms which greatly threatened persons,their property and the business community in urban towns and most particularly Cameroon’s economic city,
Douala, a series of multi-disciplinary teams of the forces of law and order were set up with the mission tocarry out operations aimed at strengthening existing intervention forces. Major operations carried out in
February 2000 were the ‘Commandement Operationnel’ in Douala and ‘Operation Vautour’ in Yaoundé.
Besides these repressive measures, have been preventive measures of great significance. An on-going
initiative by the Government of Cameroon and UNDP is the ‘Yaounde Plus Sure’ and ‘Douala Plus Sure’
Initiative which, aims at putting in place a multi-sectoral and multi-stakeholder programme for theprevention of urban and juvenile delinquency in Cameroon’s political and economic capitals.

V. CONSTRAINTS TO EFFECTIVENESS
Although economic crimes have considerably multiplied, taking on diversified and complex forms,
Cameroon’s criminal legislation enacted in 1967 is yet to be reviewed to render it effective in regulating thecurrent forms of economic crimes. In its obsolete form, the traditional economic crimes legislated upon,
provide an inappropriate and ill adapted framework to vigorously combat emerging forms of serious crimes
which greatly hamper the global economy. Enforcement of criminal court judgments encounters increasing
difficulties in the Civil law jurisdictions where accused persons are tried in default. Default judgments incriminal matters so delivered have recorded alarmingly low levels of execution.
A major problem has been one of unavailability, insufficiency, non-viability and inaccessibility to statistics
on the phenomenon. Where there is available data, this is usually not properly managed due to a lack oftechnological resources. As an outcome of these weaknesses, the dimension of economic crimes and theextent of the effectiveness of the judicial system to fight this phenomenon needs to be given increased andparticular attention.
Major difficulties encountered during investigations and inquiries include unavailability andinaccessibility of information. The high ranking officials both of the public and private sector involved ineconomic crimes and the sometimes political nature of the issues surrounding the commission of the officerender investigations and inquiries an arduous task for the judicial police officer and the legal and judicial
officer.
Wanton behavioural patterns of victims not only compound their plight but render investigations difficult.
Victims of economic crimes committed by feymen, behave as if they were seemingly tied under a pact of
secrecy and are usually unwilling to denounce the act. Complacency by the society to certain economic
criminal acts will have a long-term impact as the young generation continues in like manner. Securing theattendance of prosecution witnesses during inquiries and trial is also faced with difficulties where witnesses

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exhibit great impatience with judicial procedures. Regular complaints from process servers charged withexecuting summonses relate to witnesses who do not respond to the witness addresses provided during
investigation.
Non disclosure, unavailability of information and victim behaviour compromise the pursuit of proceedsfrom economic crimes and victim compensation. A major factor that contributes to combating money
laundering is accessibility to information and disclosure by individuals, the banks and other channels.
In another area, the cross boarder (national/international) nature of economic offences necessitates ahuge investment in human, financial and material resources that are usually inadequate and sometimes
unavailable.
Of critical importance are problems related to the wanton expertise to deal with the complex andcomplicated nature of emerging economic crimes. The want of highly specialised experts to establish expert
reports has led to protracted inquiries. A major problem is related to lack of expertise in communications
technology. Technological dependency is a root of economic dependency. Opportunities offered by recent
technological advances to combat crime are not fully exploited yet this is a crucial issue that determines theextent of success of any preventive or repressive measures.
The capacity of Police and Gendarme forces in the wave of increasing criminality, especially armed
bandits, is insufficient. Yaoundé urban town for example is made up of 1300 uniformed policemen thus giving
an insignificant ratio of 2.5/1000 for police/population.
Sub-regional cooperation to combat increasing trans-boundary criminality needs to be strengthened.
Instability from civic wars, which affect most neighbouring countries of the sub-region, has negatively
impacted economic stability. The influx of refugees and the trans-boundary movements of arms haveresulted in increased pressures on natural resources, generated labour problems and increased criminality.
The free movement of persons, goods, services and capital, which are generators of economic growth,cannot be guaranteed within the sub-region faced with these socio-economic problems.

VI. RECOMMENDATIONS AND CONCLUSIONSThe celerity in treating case files, the quality of the judgments delivered and objectivity in the use of
discretionary powers is certain to make the judge a major actor in economic development and support of theState in its fight against economic crimes. The existing legal and institutional framework can no longer copewith emerging and new forms of economic crimes. As the nation seeks to put its economy on the path ofgrowth and increase the efficiency of Africa’s economy for the enhanced welfare of its people, there is anurgency to define ways of providing the much-needed judicial security which is a priority incentive for
attracting investment.
A proactive stand calls for a number of priority and appropriate measures to be put in place
1. Adapting the Legal and Regulatory Framework• Reform of repressive legal instruments to be adaptable to emerging economic crimes• Define preventive strategies to combat the increasing crime wave
• Implement victim compensation measures
2. Strengthening Capacity of Major Actors Involved In Combating Economic Crimes• Enhance institutional capacity to investigate, prosecute and execute court decisions• Support law enforcement agencies and courts involved in the fight against economic crime• Build capacities of legal and law enforcement officers to master the new communication technology
and thus reinforce capacity to open up to the global village
3. Availability and Management of Information• Provide up to date history on economic crimes• Enhance capability/capacity to effectively expand the collection and sharing of information andintelligence on economic offences

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4. Implement and Institute Economic Crime Prevention Programmes• Alternatives to repressive approaches: Citizen Education on Economic Crime Prevention• Juvenile delinquents. Educate and prevent involvement in crime• Effectively implement National Good Governance and Fight against Corruption programmes that
aim at ensuring security and judicial credibility
5. Promote Multi-disciplinary Economic Crime Management• Develop collective steps to mitigate, reduce, control and prevent economic crime• Integrate members from various operation programmes to strengthen and enhance capacity toachieve operation priorities specific to economic crimes
6. International• International Policing to contribute to global security by improving national capacity to collect andshare intelligence• Enhance bilateral cooperation within the sub-region to combat crime
In conclusion, building on the manifested political will through the Government’s initiative alongside thesupport of The Bretton Woods institution, to put in place conditions favourable to a credible justice system,
provides an opportunity for revamping Cameroon’s vulnerable economy. A major lesson from the economic
depression experienced is that solid economic growth must be accompanied by the security of persons andtheir property as an incentive to attract foreign and private investments. Strengthening the existing legal
and institutional framework to prevent and fight crimes and making it particularly adaptable to traditionaland emerging serious economic crimes paves the way for greater investment and constitutes a major
contribution to Cameroon’s criminal justice system in support of diverse national efforts aimed at putting the
economy on the right path for economic development.

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COUNTRY REPORT - GHANA
Bright Oduro*
I. INTRODUCTION
Ghana formerly the Gold Coast is about 238,500 sq. km and our immediate neighbours are Burkina Faso
in the North, Togo in the East, Cote D’Ivoire in the West and the part of the Atlantic Ocean called the Gulf ofGuinea in the South. Currently the population of Ghana is close to 20 million.
My paper will attempt to highlight the various forms and manifestations of economic crime and the
problems that it presents to our criminal justice system. The paper also covers the rules that are applicable,
available mechanisms up to the institutions that are required to control economic crime.
I have also examined what I perceive to be preventive and counter measures to confront the crime. Alsoan examination of the existing provisions of the criminal code and the current manifestation of the problem
has been highlighted to expose the uses to which the old provisions have been put as well as a considerationof their adequacy for the current task.
I have also examined the operations of the police, the court and other investigative agencies such as theserious fraud office and the securities regulatory commission.

II. WHAT IS ECONOMIC CRIME
Economic Crime may be defined broadly as the range of crimes that occur in the course of economictransactions, or crimes that result in loss of an economic nature to the victim while the perpetrator and or
his/her accomplices become the ultimate beneficiary of the illegal economic or financial gain. The victim of
the economic crime may be an individual, an institution or a state.
In recent times the field of economic crime has grown by leaps and bounds on account of globalisation andthe changed nature of instruments of communication. The categories of crime of an economic nature in thepast years when advancement in technology had not been so high were largely those of officials or otheragents who handled other people’s money or other economic resources hence the name ‘white collar
crimes’. As the name suggested these were crimes committed by those of the clerical and administrativeclass of employees and other agents by reason of their pen-pushing occupations. Such crimes did not requirephysical presence or contact with the property, only ability to have access to and deal with the property on
paper. Thus the offences were mostly of a financial nature such as embezzlement, fraud by agents, fraud byfalse pretences, counterfeiting, issuing false prospectuses, etc. The range of offences was also limited insphere because the perpetrator had to be the custodian or trustee before the crime could be possible.
These days, owing to the advancement in technology, globalisation and improvements in communicationand computers as well as the developments in financial markets, credit financing and the scope ofinternational trade, many economic crime possibilities have opened up.
The range and variety of crimes of a financial nature have so multiplied that the term ‘white collar crime’has become too narrow and the more general term ‘ECONOMIC CRIME’ reflecting the current trends andnature of the activity appears to be a more appropriate term to describe the myriad of criminal activity in theeconomic domain with which the Police and other law enforcement agencies must now contend.
‘White Collar Crime’ has ceased to be an appropriate term for the other reason that as the categories offraud have so been opened up by technological advancement and developments, so has the profile of theoffender or perpetrator changed. With emphasis shifting from pen and paper to telephone, facsimile andcomputer, the economic criminal has ceased to be the one who has to be well educated to have thenecessary access and opportunity to commit the crime. In consequence in economies with high illiteracy
rates such as ours those capable of perpetrating economic crimes may no longer be the ‘white collar’ type.
* Chief Superintendent of Police, Ghana.

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III. ECONOMIC CRIMES UNDER THE GHANA CRIMINAL LAW
Our Criminal Code recognises several forms of economic crime, the oldest of course, being fraud.
Sections 131-135 of the Criminal Code act 29/1960 deal with fraud. They are:(i) Fraud by false pretences(ii) Stamp offences(iii) Falsification of accounts(iv) Fraud in sale or mortgage of land(v) Fraud as to boundaries or documents(vi) Fraud as to things pledged or taken in execution(vii) Fraud in removing goods to evade legal process(viii) Fraud by agents.

A. What Is Fraud
Fraud occurs when an act is done by one person with the intention that it should deprive another personof some value to which the person is otherwise entitled and when it in fact causes such loss.
To establish fraud under Ghana’s Criminal law one must prove a conscious act done, as well as intention
on the part of the actor that he or she should acquire some gain with a corresponding loss to the victim i.e.
the act must be done with intent to defraud. An intent to defraud is defined under section 16 of our criminal
code Act 29/1960 as follows:
An intent to defraud means an intent to cause, by means of such forgery, falsification or other unlawfulact, any gain capable of being measured in money, or the possibility of any such gain, to any person at theexpense of any other person.
From the definition it is clear that fraud is about acquiring a financial or other benefit capable of being
quantified in monetary terms, at the expense of the other person. All of these frauds also contain an elementof dishonesty since the intent of the fraudster is to bend another’s will by trickery or other devious means to
do an act which benefits the one unjustly, to the detriment of the victim’s own interests.
Fraud by False Pretences
The commonest form of defrauding is the art of the confidence trickster, who adopts or uses false
pretence to induce the victim to part away a benefit or his property. This offence, which is a second-degree
felony under our criminal Code, attracts a maximum penalty of twenty-five years when convicted. The
offence is committed if a person misrepresents an existing state of facts such that the misrepresentationinduces another person to consent to parting with the ownership of any chattel. The representation may
take the form of either ‘written or spoken words’ or by any conduct, sign or means of whatever kind. It canalso be about anything and may even be misrepresentation of a right, liability, authority, ability, dignity or
ground of credit or confidence. It can also cover impersonation of another as well as consciously deriving
benefit from a situation of mistaken identity. It is also applicable to a person who by reason of identical nameobtains advantages and privileges that would not have otherwise been granted had the fraudster not been
mistaken for the more famous namesake. It is not only confidence tricksters of the more obvious sort who
can be prosecuted under this head. The scope of the offence extends into the world of commerce and covers
those who induce people to extend them credit when they actually have no intention of ever paying for thecommodity or services rendered.
In Ghana and some parts of Africa, rampant political corruption and entrenched corruption in public life
coupled with the need to launder the money so acquired has produced a new brand of confidence trickster.
So common is this brand of fraud in Nigeria in particular that every person on the street of Nigeria knows it
is called ‘419’ after a section of the penal code under which provision for the offence of defrauding by false
pretence is made. Unfortunately the perpetrators of the offence have found fertile grounds in Ghana and the
net for victims has also spread over to Ghana. This type of fraud by false pretences is based on the wellknown fact that African Politicians and junior public servants loot their national treasury and then seek totransfer the money into foreign banks in order to be able to travel abroad in the course of time and live inluxury. Persons claiming to have some such resources then seek the assistance of a foreigner resident inanother country, who would not have ready opportunity to effect background checks, and then defraud them.

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Typically, it begins by one person usually form Nigeria writing to a Ghanaian businessman whom he has
never met. The letter would typically inform the person/businessman of some funds corruptly obtained
which needed to be laundered and a promise of a percentage cut to the collaborator. The request would thenbe made for the businessman’s account number to be given for the ‘slush’ funds to be deposited therein.
Once the account number is given the account’s holder/businessman is impersonated and the accountcleared of whatever it contained.
Another variation of this trick is to indicate that the illicit monies have been deposited in a trust and that
it would be necessary to ‘unlock’ the trust.
Subsequently, a letter demanding some advanced payments written on the forged letterhead of a
reputable bank would be received by the victim. Once the so-called advance payments begin they never stopbecause several unforeseen expenses necessary to complete the ‘unlocking’ process emerge. By the timethe victim realises that it is a scam a lot of money would have been parted away to the fraudsters. Several
millions of dollars have been lost this way by victims of this particular trick. Clearly the scenario is that theperson who seeks to profit from the wrongdoing of another rather becomes the victim of this crime.

B. Falsification of Accounts
Those who handle financial resources of others in the capacity of servant or agent also have opportunities
for committing economic crimes. Obviously falsification of accounts is usually a preparatory step in somecriminal enterprise, usually acts of dishonest appropriation. Section 140 of the criminal code provides asfollows:
Whoever being a clerk, a servant or public officer and whoever being an officer of any partnership,company or co-operation, does any of the acts herein after mentioned, with intent to cause or enable any
person to be defrauded, or with intent to commit or to facilitate the commission, by himself of or by anyother, of any crime, that is to say:(a) Conceals, injures alters or falsifies any book, paper, or account kept by or belonging or entrusted tohis employers or to such partnership, company or corporation or entrusted to him, onto which hehas access, as such clerk, servant or officer, or omits to make a full and true entry in any account ofanything which he is bound to enter therein; or(b) Publishes any account, statement or prospectus relating to the affairs of such partnership, company
or corporation, which he knows to be false in any material particular, commits an offence.
The provision clearly covers a wide range of offences and includes, those employed by private companies
as clerks or servants and the state as public officers. It also covers any officer of any partnership company or
corporation. The code also provides a definition of ‘officer’, which is also very wide.
Any officer, chairman, director, trustee, manager secretary, treasurer, cashier, clerk, accountant or otherperson provisionally, permanently or temporarily charged with or performing any duty or function in respectof the affairs of the company or corporation, whether for or without any remuneration.
The categories of personnel set down in the provision are wide enough to cover even gratuitous
volunteers who are involved in the running or organisation of the affairs of the entity. In effect the entire
group of persons who are employed in the public or private sector in whatever capacity could be liable forthe offence extending even to officers of voluntary welfare associations or other charitable groups.
In order to ensure that entities, which do not have separate legal existence from their owners, are notexcluded, the code defines ‘Company’ not in the technical legal sense, but also includes:
Any partnership or association whether corporate or incorporate, and whether the purposes thereof be or
be not the carrying on of any trade or business and whether it be in course of formation or be actuallyformed or be in course of dissolution, winding up as liquidation.
The entity need not be fully in existence; whatever its stage of formation it can be the victim of suchoffence if the people at the helm of affairs misconduct themselves. In committing the offence, the person
must tamper with entries made on paper or into books of account or must have failed to make a full andaccurate entry into such book of account.

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Indeed ‘tampering’ which is the crux of the offence could take the form of concealing the document inquestion, cutting away part of or burning it in whole or in part, altering part of the document and falsifying
any book i.e. changing the content such that it gives false information.
From this, it is inferred that the information contained in a ‘document’, is usually on a paper or scroll orother material in which information is written which is tampered with. Therefore the types of conduct thatcan be criminalized are visible physical records that can be falsified. The present situation however isdifferent. These days ‘accounts’ are kept on computers. The problem is if one gains unauthorised access to acomputer network by entering a password or a number into a computer, given the definition of a document
which apparently does not cover material visible on a computer screen which is tampered with; can he beeffectively tried under this law?
The offence of falsification of accounts may also be committed in respect of acts involving the flotation ofcompanies, or securing fresh investment for an existing company. Usually the motive for tampering with or
making false entries with books of accounts is to give such a favourable impression of the financial status of
the company, as would make potential investors take the bait. Therefore, the law provides that it is anoffence to publish any account, statement or prospectus relating to the affairs of such partnership, company
or corporation which he knows to be false in any material particular. There is thus criminal liability for
fraudulent misrepresentation in respect of accounts or other documents related to investments.

C. State Revenue Related Frauds
Invoicing/Vat Frauds
One of the frauds we have been contending with and believe will grow in importance relates to alteringand falsification of bills of lading and invoices, manifests, receipts or other documents, evidencing quantity,
character or condition of any property, or the receipt or disposition of or the title of any person to any
property. This is because not only do customs and excise duties depend on them, but also the appropriate
Value Added Tax (VAT) payable or refundable on such goods. Since there are refunds for such goods there isbound to be an increased possibility for fictitious documents evidencing such transfer.
D. Fraud by Agents
In Ghana this is an area with great potential for abuse of power and corruption. Agents could be officersof the state or employees of private persons. Agents of the state are usually entrusted with a lot of power
because they either do not have adequate rules to work with or have extensive discretion in granting
exemptions from the application of rules. In Ghana these officials are usually grossly underpaid thus creating
both opportunity and motive for extortion, corruption and abuse of office. I believe that the officials or
agents’ will to resist extortion and corruption must be shored up by our criminal law.
In Ghana the offence is provided for under section 145 of the code and covers financial inducements
offered by third parties to agents or taken by them in order that they might show favour to that person or
they would forbear to do what they are required to do by their principal. In our context, agents cover thosein the private sector, servants of the state such as civil servants and officers of the District Assemblies. As
the provision goes (section 145):
Any agent who dishonestly accepts or obtains or agrees to accept or attempts to obtain, from any person,for himself or for any other person any gift or consideration as an inducement or reward for doing orforbearing to do or for having done or forborne to do any act in relation to his principal, affairs or business orforbearing to show favour or disfavour to any person in relation to his principals affairs or business shall be
guilty of a misdemeanour.
From the provision, a civil servant who takes or demands a ‘kick back’ (or the usual 10% commission) inorder to grant a contract to a particular contractor is guilty under the law. Turning a blind eye to an infraction
or not taking appropriate sanctions because of the gift or consideration given is also punishable under theprovision. Third parties are equally guilty and punishable under the law. The reason for including themstems from experience that third parties sway agents from their duties with tempting offers.
The making of such offers or the agreement to give consideration must therefore be tackled as a potent
contribution to the offence of fraud by agents.

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The following are typical happenings in Ghana in the contract business that the various categories of
agents handle.
(a)
(b)
(c)
(d)

Contract sums are usually padded up.
Receipts which evidence payment are sometimes lower than the sums stated therein.
Receipts which reflect payments which have not been made.
Accounts that reflect services that have not been contracted and paid for, even though the services
may not have been performed.
(e) Goods paid for that may not have been delivered.
Financial appropriations made for goods and services never yield value for money because they are either
misapplied or used for shoddy jobs, which soon require re-doing.
The provision relating to frauds by agents cover these offences even though the designation of some ofthem as misdemeanours only attracts lighter criminal sanctions compared with the harm that could becaused to the economy. In Ghana the list of such acts, which amount to corruption, may be endless.

E. Special Offences
In the light of the foregoing considerations and the apparent lighter punishments for these crimes, a new
breed of offences known as the ‘SPECIAL OFFENCES’ were enacted in the middle of the 1980s. These
offences, largely economic in nature, were lifted from a group of offences under the same name in a previous
legislation as our response to the increasing world of economic crime. These special offences are considered
so serious that they are punishable by a fine not less than five million cedis and or imprisonment notexceeding ten years. The text of the provision is as follows:
1.
2.
3.

Any person who by a wilful act or omission causes loss, damage or injury to the property of any
public good or any agency of the state commits an offence.
Any person who in the course of any transaction or business with a public body, agency of the state
intentionally causes damage or loss whether economic or otherwise to the body or agency commits
an offence.
Any person through whose wilful, malicious or fraudulent action or omission:(a)
The state incurs a financial loss;(b)
The security of the state is endangered commits an offence.

From the provisions, it is difficult to get a clear picture of the specific acts, which the provisions seek toproscribe. However, it covers a wider ground of the categories of offences relating to fraud by agents. In
Ghana, however some human rights activists have argued that the provision offends the principles of the
Ghana Constitution and that even though the harm caused by economic crime is deeply appreciated theState in its desperation should not make such laws.

F. Investment Fraud
One other worrying crime that is emerging from globalisation, which can cause chaos to any country’s
economy, is investment fraud. Ghana experienced a sudden wave of this type of fraud in and around 1995.
The offence is growing in importance as people seek ways of investing surplus income without thenecessary familiarity with the complexities of the financial world. In Ghana people were willing to invest
money with some dubious financial firms, which promised them huge interest on sums invested. These socalled financial institutions then folded up within no time and it became also difficult to track the fraudsters
as they left either misleading addresses or no clues as to their whereabouts, leaving the investors with great
financial losses.
G. Securities Fraud
The recent emergence and growth of the securities market in Ghana would undoubtedly produce certain
economic offences. Market manipulation is known all over the world to be one of the more common forms of
securities fraud. This is a wilful conduct intending to deceive or defraud investors by controlling or
artificially affecting the price of securities. This is perpetrated by engaging in wash sales, matched orders or
rigged prices that merely seek to mislead investors.
The market manipulator goes through four main stages namely, accumulation, price appreciation,
promotion and sell off.

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In the accumulation stage, the market manipulator identifies a non-existent company except in name inthe stock market. He then acquires a lot of shares in that company by buying from private hands creating asituation where the public distribution of shares comes under his control. He then sets in motion, theappreciation stage, which also involves the false movement of shares into friendly hands in fictitious trading
such that the prices appear to be going up. Massive promotional acts are done with the view to arousing
investor interest in the shares. Advertisements are then made in attractive financial magazines andpromoters are hired to promote the company by issuing news releases and doing other promotional
activities. In this way more people are baited to buy into the company and the share prices go higher until
they reach a peak. The manipulator begins to sell off his shares making profits from the genuine investors.
In no time the profits are taken out, the company collapses and the real investors lose their money.
In Ghana, the Securities Industry Law in 1993 makes provision for some of these offences, but whether
anybody has been tried and convicted is another thing. The various stages of the practice are made criminalby the act.
“A person who creates or causes to be created, or does anything that is calculated to create a false andmisleading appearance of active trading into securities on a stock exchange in Ghana, or a false or amisleading appearance with respect to the market for or the price of such securities commits an offence.”
The law further provides that the person who by means of purchases or sales of securities that do not
involve a change in the beneficial ownership of those securities or by fictitious transactions or devices
maintains, inflates, depresses or causes fluctuation in the market price of any securities commits an offence.
Even though these economic criminal acts are not perpetrated on a large scale in Ghana, the laws havebeen made to protect the genuine investor. But again, are they deterrent enough to scare the economic
criminal?

H. Advance Fee Frauds
The use of modern communications equipment and advancement in technology, enable persons in far
distant locations on the globe to communicate and transact business without necessarily meeting. This hasbrought in its wake commercial frauds where goods ordered are not paid for because addresses used werefalse and letters of credit presented were forged. This type of fraud presents a real challenge to the world ofcommerce since the pace of life in the modern world does not permit extensive and thorough backgroundchecks on potential clients who operate thousands of miles apart. Two manifestations of advance fee fraud
are discernible - those that have an international flavour and those with domestic characteristics.
In maritime frauds, which are international by nature, persons who claim to be shipping agents contact
victim companies to transact business and to tranship commodities at an agreed fee. Some advances are thenpaid for processing so that the goods could be shipped. Once the fee is paid, the shipping agent disappears
and the goods are not shipped.
In Ghana, various forms of domestic advance fee frauds are perpetrated on a regular basis. The shortageof housing units in Ghana, have contributed to some extent to the increased spate of the crime. People, who
do not own buildings, purport to rent out non-existent buildings after making false representations andsucceed in taking monies from potential tenants. Others pose as estate agents, locate houses that are on therental market and under false representation succeed in stringing the victims along till they themselves giveup after having parted with good money. Others who do not have enough funds to complete their buildings,
put their building on the rental market, enter into an agreement with potential tenants by which they takerent advances of the equivalent of about two years rent to complete the building. Once the building iscompleted the owners rent them to other people at higher rates and refund the initial advance payment to
the disappointed party. Many people have been victims in this way who have been made to finance otherpeoples building, while they still remain homeless.
One common advanced fee fraud that has also become very popular but very disturbing in Ghana isrelated to gold transactions. Local Ghanaians purporting to be private businessmen often lure foreigners
from their home countries with attractive business connections in gold in Ghana and then defraud them. The
usual practice is for the so-called businessman to obtain samples of the gold which he shows to the foreignbusiness partner with the promise of buying greater quantities from small scale licensed miners or winners,

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usually, in the gold mining areas in the hinterlands. Usually the foreigner becomes satisfied once the initialsample turns out to be gold and becomes less cautious and parts away with huge sums of money in the belief
that his so-called businessman would supply the gold as promised. By the time he realizes that he has been
defrauded the fraudster has vanished into thin air. It is not only persons living outside Ghana who have fallen
victim to this sort of scam but other genuine foreign investors in the country who are not familiar with the
intricacies of the gold business. A number of foreign businessmen have sadly left the country after having
gone through this ordeal. The other common fraud which has also emerged on the scene is related to travel
documents. Ghana is a relatively poor country and it is a common practice for the unemployed youth to seek
to travel outside especially the United States, Western Europe and Japan among others for greener pastures.
The situation has produced another brand of the confidence trickster who parades as having contacts withthe various Embassies and High Commissions and then under false pretence of assisting in securing travel
documents notably visas for unsuspecting victims defraud them of the monies paid by them. Indeed in thepast few years the CID has been inundated with several of these cases.

I. Trademark and Copyright Fraud
Illegal infringement on trademarks and copyright is on the increase owing to international trade and thevast profits that are made if a scheme to copy other people’s products is successful. In consequence, big
markets have flourished for imitation goods, be it pharmaceutical, food and beverages or music. Initially, in
Ghana, these acts have been subject to civil actions at common law or action for damages under the Ghana
Trademarks Acts of 1965. However, civil remedies have been seen not to be enough of a disincentive
considering the vast amount of profits that the violator of trademark and copyright stands to gain.
The criminal law has thus had to enter the stage to control the extent of infringements on account of thedamage that these activities pose to the economy of the state or to the individual whose creativity andingenuity produced those commodities. Even though the copyright law of Ghana prescribes the criminal
sanction, these are merely ridiculous in light of the illegal profits that are made and the extent ofconsequential injury that may be inflicted upon the victims in particular and the economy as a whole.

IV. MONEY LAUNDERING
Illegal trade and activities, such as the narcotics trade that produce huge profit, engender money
laundering. The laundering involves not just individuals but sometimes major banks. The money accrued
from illegal trade is transferred into spurious or fake businesses so as to distance it from its source. The
illegal act of money laundering may be committed not just by private individuals but also usually with theconnivance of respectable banking or other financial institutions.
In Ghana it is an offence for anyone to engage in laundering of the proceeds of the narcotic trade. The law
states:“No person shall use, transfer the possession of, send or deliver to any person or place, transport,
transmit, alter, dispose of or otherwise deal with, in any manner, any property or proceeds or any property
with intent to conceal or convert that property or those proceeds knowing that all or part of that property
was obtained or received directly or indirectly as a result of … the commission of a drug offence”.
The provision is aimed not only at the acquisition of removable property but at all forms of property,
including money. Therefore all acts, that ensures the proceeds in the narcotic trade are concealed,transformed or converted within the economy with the intention of hiding the links with illegal narcotic
trade have been made criminal,
V. EFFECTS OF ECONOMIC CRIME
Economic crime in its various forms inflicts economic loss, sometimes serious loss on the victim, whileat the same time it provides an unjustifiable gain to the perpetrator. It can wreck whole economies and evenmake nations politically unstable. In Ghana, the various coup d’etats that our nation has experienced
beginning in 1966, have always been explained by the coup leaders as being due to the corrupt practices ofthe previous governments and their inability to stem the scourge. The scale of destruction that economic
crime can unleash makes individual victims suffer irreparable injury. Ghana’s traditional law uses monitory
penalties and imprisonment as the usual sanctions. These fines and or imprisonments are not adequate
compensation for the victim considering the scale of loss he may have sustained. Again a conviction must148

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first be obtained against the accused person who usually is wealthy enough to procure the best legal
representation against the charges, and sometimes comes out clean. The concerns are; the laws themselves,the enforcement mechanisms and whether the traditional methods of punishment, as in Ghana, are adequate
tools for effectively fighting this kind of crime?

VI. INVESTIGATIVE AND REGULATORY AGENCIESIn Ghana, the agencies tasked with investigation, prevention and detection are the police, the serious
fraud office and securities regulatory commission. Indeed, as the nature and complexity of economic crime inits modern form has widened, so the battle to confront it needs to be intensified. Since many of these crimes
depend on manipulation of figures and financial transactions, so has the need arisen to jointly use law andaccountancy in solving these crimes. It has therefore become necessary, for more professionals with anaccounting background to be roped into the investigations of economic crime. Consequently, instead of usinga group of police investigators, it is now accounting experts that may be required to investigate theeconomic criminal. As a result certain agencies have been established in the criminal justice system, otherthan the traditional ones like the police, with a view to effectively and efficiently investigating economic
crimes. In Ghana, even though agencies such as the securities regulatory commission, serious fraud office
and regulatory arms of national banks have all been established and operate alongside the traditional police,
the perpetrators of economic crime are undeterred and are keeping up the momentum.
In terms of international economic crimes, such as securities fraud, it is always better to nip in the bud
the commission of the crime before it occurs or grows. Therefore these investigative agencies and otherregulatory bodies have been mandated to investigate economic crime or monitor the conduct of dealers inthe stock market so that potential manipulators and other fraudsters can be kept at bay. In spite of all thesesecurity, investigative and regulatory apparatus that have been introduced into the criminal justice system,
the courts remain the potent weapon to deal the final blow to the perpetrators of the crime.

A. Securities Regulatory Commission
The securities regulatory commission was established under the securities industry law with extensive
administrative, monitoring and investigatory functions. Among the many functions of the commission, set
down in section 10, the ones that are of interest for the purposes of this paper are:
1.
2.
3.

To maintain surveillance over activities in securities to ensure orderly, fair and equitable dealings insecurities;
To formulate principles for the guidance of the industries; andTo protect the integrity of the securities market against any abuses arising from the practice ofinsider trading.

The commission has extensive powers to inspect goods of various persons and organisations that operate
in the financial market. It can also procure a warrant from the court to inspect any premises on which books
that have been ordered to be produced may have been hidden. These powers appear to be necessary on the
grounds that there is really a thin line between legitimate activity and illegitimate conduct in financial
dealings. Thus many of the activities that could be twisted to perpetrate a fraud could also be innocently
done in the course of normal activity on the securities market. The commission’s role is telling them apart,and bringing the weight of the law hard on to the potential fraudsters. Therefore, if the commission is to beeffective in preventing the commission of securities fraud, then the watchword should be vigilance but thecommission lacks the machinery to maintain the necessary level of vigilance.

B. The Serious Fraud OfficeThis investigative agency was established in 1993 to investigate “serious fraud”. Apart from the generaldifficulty in defining exactly what serious fraud is the agency’s functions revolves around investigations into
acts that cause serious financial or economic loss to the state as well as political corruption and other acts
calculated to defraud or affect the economy. This really means that unless there is a state-connected fraud,
the agency would have no interest in interpersonal fraud, however great the extent, or ingenious themethod. This is indeed a limitation that affects its ability to make a proper impact on the system.
The agency itself has had a credibility problem right from the start. It is unclear whether it is not justanother state agency founded on the principle of political patronage and whether the officials have the149

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necessary expertise in the areas in which they are required to operate. Internal wrangling founded uponpolitical differences, which have sometimes made front-page news, has not helped its situation. In addition, it
has not as yet completed an investigation that has resulted in a successful prosecution, in all of its years ofexistence. Since, even the efficacy of its investigative methods has not as yet been tested by the courts, it isuncertain whether it is a toothless bulldog or sleeping giant, or neither. Consequently, it is not possible now
to assess its contribution, if any, to the war on economic crime.

C. The Bank of Ghana
The Bank of Ghana has statutory power to licence financial institutions and operations whether of thebanking or non-banking sector. Its functions cover those who seek to operate as a bank by taking in deposits
and lending out money. Such deposit-taking therefore seems to be a potential route for investment fraud.
The work of the Bank, among others, is to ensure that potential investors are not deceived into depositingmonies into financial “scams”. It also has the responsibility of ensuring that the operations in the financial
sector are conducted so as not to be harmful to the economy. However, the Bank failed its major public testof protecting the public from financial scams when one of the biggest investment frauds occurred in Ghana inor around 1995 with the ‘Pyram’ and ‘R5’ schemes. The “scam” occurred when two companies emerged on
the financial scene with investment schemes that promised about 30% interest a month on any sums
invested. These companies did not comply with any of the official rules for operating investment schemes,
but the Bank of Ghana did not react to the operations. Many people invested heavily in the schemes andthey were even dubbed “wonder banks” in the local press. When the Bank of Ghana finally woke up to its
responsibility and moved in to enforce the regulations, the companies folded up because they could notcomply with the regulations. Most people lost their money when the scheme collapsed. The Bank itself,caught flat-footed, could only rake up such tame charges against the local Directors as “operating a nonbanking financial institution without a licence”. In the meantime, the fraudsters had left the country with
their money intact. It is not surprising that the ire of the investors, who had been left holding the empty can,turned on the Bank officials.
Clearly, the Bank was caught napping. Officials who were naïve enough to sit and watch what was
happening even though the news about these “wonder banks” was common knowledge realised too late thatthey had been negligent. Should the Bank not have offered better protection to the general public than this?
Did this event not bring the entire financial system of Ghana into disrepute? Will an institution that sits andwaits for a formal complaint against a company that operates as a financial institution before moving its
regulators in, be capable of protecting the public against investment frauds? Yet, if the Bank of Ghana cannot
do this, then who can?

D. The Police
The Police are a much-maligned institution, but it is currently the most effective barrier against all typesof crime. It has traditionally operated in an area where ordinary police skills of detection can be usefully
employed. However, in the world of high finance, there are no bloodstained clothes or weapons, neither are
there fingerprints or other telltale signs of interference. A sound understanding of financial operations aswell as accounting and other forms of expertise are the requisite tools for investigation. The regular Ghana
Police are indeed not familiar with the world of the sophisticated modern criminal or even equipped with thenecessary skills needed to investigate the sophisticated economic crime.
E. The Courts
It is the courts that are going to have to come down hard on securities fraud and other economic crime.
Obviously diligent prosecution and aggressive sentencing is a necessary deterrent to manipulation, as it iswith other forms of economic crime. However, the efficacy of the traditional approaches to the processing of
criminals has been called into question. The major issue then is whether our courts are equipped to deal
effectively with the phenomenon of economic crime.
VII. PUNISHMENT/SANCTION
Fines and or imprisonment have been the traditional sanction systems employed by the criminal law in
Ghana. However, in economic crimes they do not seem to serve the situation appropriately. Where a person
fraudulently misappropriates another’s money imprisonment and heavy fines are usually the options that are
imposed. However, none of these compensate the victim for the loss he has suffered. The fine when paid ispaid into the consolidated fund. Therefore the victim has to live with the loss. Even though the courts may

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impose heavy fines there are many occasions the court cannot exact a penalty as heavy as the loss, which
has been caused. For example a person whose acts defraud another to the tune of one billion cedis could
never be fined that amount. It is also noteworthy that the criminal law is strictly governed by statutes. And
for many of these offences their current designation as felonies makes the perpetrators liable toimprisonment but not a fine.
Even though, imprisonment may be ordinarily a severe sanction and discourage potential criminals it
appears inadequate for the purposes of the criminal law as well as the needs of the victim. This is because
financial benefit illegally acquired by the criminal if properly invested could be doubled or trebled after theperiod of imprisonment. Having already been punished for the crime the criminal could return from prisonand live in affluence on the illegally acquired wealth while the victim languishes in poverty. It is in the lightof these concerns that other mechanisms have to be made, and be made available to the courts, to ensurethat penalties imposed offer relief for the victim.

VIII. COUNTERMEASURES
Given the wealth and resources at the disposal of the economic criminal, the existing tools are inadequate
to counter the menace posed by him or her. The need has therefore been felt to improve the quality of crime
investigators, train adjudicators as well as improve the processes available for dealing with criminals. Indeed
there is the need for more specialization in terms of the personnel who will investigate economic crime andalso the structures of the court system.
Severe prison sentences remain significant even though not completely effective. Compensatory andconfiscatory orders as well as other mechanism of restorative justice obviously seem better prospects forcompensating the victim and creating a disincentive for the potential criminal. Although confiscations earned
a bad name in the 1980s in Ghana when it became associated with the strong arm tactics of the revolution, it
is now becoming an attractive weapon in generally fighting crime and drug related economic crime inparticular. Again our criminal justice system has had to realise that even though it was not meant to be a
debt collecting system the nature of modern economic crime is such that the system ought to be able toassist with the recovery of some of the money appropriated or misappropriated. Presently consideration is
on restorative justice which means various means by which harm that has been done may be repaired or thevictim adequately compensated. This consideration has become necessary because it is unrealistic to expectthat after losing a lot of money to the perpetrator the victim would find more money to bring a civil claim
against the perpetrator. Even in situations where this has been possible - delays in court processes result ina double victimization of the victim. Would it therefore not be more responsive to the needs of the time if anorder of compensation could be made upon a conviction. In Ghana compensatory orders have become
fashionable for physical injuries in assault cases. The courts have usually made compensatory orders when
imposing fines on others. This makes it unnecessary for the victim to incur the extra expense of bringing acivil action for damages.
The making of compensatory orders has been extended by statute to enable the high court or regional
tribunal to make such or other orders of reparation in situations where economic loss, harm or damage may
have been caused to the state or any of its agencies.
In the era of the international drug trade the need to marshal resources to fight it has opened up otherpossibilities in the arsenal of the criminal justice systems. The realization that it is the extraordinary wealthwhich is available to the drug dealers which acts as the attraction for new recruits has led to a change oftactics. Instead of merely imprisoning such persons for long periods leaving the illegally acquired properties
intact for enjoyment later there is now a worldwide trend to deprive them of their gains by confiscatingthese properties and other resources proven to have been acquired from illegal trade. In Ghana the property
of a person who has been convicted of a narcotic offence may be confiscated under section 13 of the Narcotic
Drug (Control) Enforcement and Sanctions Law 1990.

IX. PREVENTIVE MEASURESThe establishment of a commission on corruption with regulatory and investigative functions, as well as
receiving information and complaints relating to economic crime and creating the necessary awareness in
the Ghanaian society, is considered a pragmatic approach towards reducing the scourge. The media must151

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also be encouraged to give publicity and coverage to economic crime cases as a way of sensitising the publicagainst the various forms of economic crime. The various bodies, such as the securities regulatorycommission and the other regulatory arms of the Bank of Ghana, should be adequately resourced to maintaintheir levels of vigilance.

X. CONCLUSION
It must be stated that since criminality is a part of human existence, any development, whether
technological or otherwise, has implications for the criminal law and criminal justice system. As the capacity
for law enforcers has been increased by the use of technology so has it helped the criminal to improve
his/her capacity for crime as well as creating new opportunities for criminal conduct. Indeed it would appear
that it is largely technological developments that have succeeded in widening the gap between law breaking,lawbreakers and law enforcers. Consequently if economic crime and law enforcers are in an unequal struggle
then it is because the opportunities for the criminal have really improved, whilst the certainty of being madeto pay adequately for the crime has rather decreased. Therefore there is the urgent need to sharpen thetools that are currently available in order to hold its own or be ahead of the economic criminal. A good firststep towards confronting economic crime is to identify and deal with the difficulties inherent in the system.
There is the need to develop appropriate mechanisms and strengthen the requisite institutions. New
institutions with wide powers of investigation need to be established to combat some forms of criminality.
The capacity of existing institutions should be improved to enable them to adopt creative methods inhandling the issues and also to be able to adapt to the current circumstances of economic crime. The
personnel of these institutions need to be equipped both materially and intellectually to cope with the agile
mind of the economic criminal.
Operatives with accounting skills have become important in detection and investigation of economic
crime while lawyers and judges need to understand issues pertaining to the world of high finance. Clearly
there are implications for the training of law enforcers and other personnel in the criminal justice system in
the intricacies of modern technology, and in specialised areas such as management, accounting and stock
brokerage.
The criminal justice system is indeed in the battle, which is weighted against it on several fronts.
However improving its tools both in terms of capacity and logistics is the surest means by which the
purposes of the criminal law can still be upheld. The globalisation of crime has come to stay and live with us,
and it is up to the criminal law and the criminal justice system to brace up for the revitalised battle against
economic crime.

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THIRD PARTY RESPONSIBILISATION FOR CRIME CONTROL-TELECOMS AND FINANCIAL POLICING
Keiji Uchimura*
I. ABSTRACT
Technological developments, globalisation and diversification of industrial services have weakened thetechnical and social control of crime and indirectly facilitated more serious crime, endangering the law
enforcement mission. To meet these challenges, law enforcement authorities have developed a relationshipwith industries. For example, the telecommunication industry is obliged to provide interception capabilities.
In the same way, financial institutions are required to lodge Suspicious Transaction Reports. These are typesof ‘responsibilisation’ of the industries, as David Garland termed such political strategies of the state. The
aim of this paper is to shed light on the actual conditions of the relationship and to find out keys to improve
the relationship. Based a review of the literature and the recognition of limits of such open sources oftelecoms and financial policing, interviews were conducted in Belgium, Hong Kong, Ireland, Singapore andthe UK. It was concluded that the keys to crime control and socially sound development of industry aremutual understanding and collaboration between law enforcement and industry rather than controlling theindustries unilaterally. In particular, it became clear that a good relationship with financial institutions isachieved through the upstream flow of information on the progress of criminal investigation. On the other
hand, finding a successful model in telecoms policing is still a difficult problem for the time being. The rootof trouble with the relationship is the difficulty in determining who should pay the cost of telecoms policing.
In order to ameliorate the circumstances, the author proposes applying technical standardisation schemes.
Concerns about privacy and the resolution of costs might arise through such standardisation processes bycollaboration of all parties in question.

II. INTRODUCTION
Cyberspace is not only the scene of cybercrime but is also tainted with ‘traditional’ crime. 1 The
capabilities of telecoms policing typified by interception and data seizure have increasingly become
vulnerable with the advance of technology and the expansion of services. Thus, the public police cannot
appropriately cope with policing needs in cyberspace by themselves. Instead, having a universal relationshipto crime facilitation and inhibition, the private telecommunications (telecoms) industry has been persuaded
and compelled to assist in measures that are not automatically in its own short-term economic interests.
Interestingly, almost the same pattern is recognised in the relations between financial policing and thefinancial industry.
Focusing on telecoms and financial policing, this paper will shed light on the actual conditions of therelationship and find keys to improve the relationship. Throughout this paper, the term ‘telecoms policing’
stands for any policing activities conducted (not necessarily by the public police) in cyberspace forpreventing, detecting, investigating and remedying (not necessarily cyber-) crime.
To begin with, various aspects of the relationship between policing authorities and the telecoms industry
are reviewed in the next chapter. Chapter IV deals with issues of financial policing and then these arecompared with telecoms policing matters. Proposals are made based on theoretical discussions in the
concluding chapter in weaving the findings of the author’s interviews with foreign law enforcement officials.

III. RESPONSIBILISING TELECOMS POLICING
A. The Interception Law in JapanThe ‘Telecommunication Interception for Criminal Investigation Law’ (Interception Law)2 was enacted in* Professor of Applied Technology, Police Info-Communications Academy, National Police Agency, Japan.
1 See Council of Europe (2001: para. 5).
2 The author concerned himself with the law by liaising with the telecoms industry and by settling on the procedural details of
the due process of the Law.

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2000 in Japan. The aim of the law is to tackle organised crime by authorising law enforcement agencies tointercept telecommunications related to organised crime. The history of such investigative method in Japanis shorter than the legislative traditions in Western countries.3
1. Precedents: Substituting ‘Inspection’ for ‘Interception’There were five precedential and quite exceptional cases before the legislation (Homusho 1998: 29-34).
The courts diverted the ‘inspection’4 procedure issuing warrants that permitted the police to ‘inspect’ thetelecommunications contents. These cases were characterised by the system called Tachiainin (Presence of
the Responsible). The purpose of the system is to guarantee procedural appropriateness (Inoue 1997: 77).
The court applied the principle that police should ensure the presence at the site of personnel of thetelephone company concerned (or, failing that, local government personnel).5 However, the telephonecompany staff refused, in all five cases, to become tachiainin arguing that such co-operation contradicts theindustry’s legal responsibility on confidentiality of communications.6 Consequently, the police had to depend
on local government officials instead of telecommunication experts.
2. A Challenging Situation: Inheritance of the Tachiainin system
The tachiainin system was handed over and developed as a new distinctive due process for interception.
The law concerning the tachiainin system stipulates that-7
in case interception is to be executed, a person who is responsible for the part of the telecommunication means or any
suitable substitute shall be present on the spot. If such persons are not available, a local government official shall be present.

Thus, the primarily eligible persons to be tachiainin are the staff of the telecoms service provider
involved. The presence of tachiainin at all times is the most important part of the procedure. The Criminal
Procedure Code allowed the non-attendance of tachiainin for exceptional circumstances of non-availability.8
However, such an exceptional clause was removed from the Bill to place a responsibility on tachiainin tocarefully watch the process of interception.9 Unlike the precedents, they are prohibited from monitoring thecommunication contents and neither the right nor the responsibility of stopping interception is placed onthem. In this sense, the new system sets a lighter responsibility for tachiainin than that of the inspectioninterception scheme.
According to the testimony of a government delegate of the Yuseisho (Ministry of Posts andTelecommunications, MPT),10 tachiainin have two important roles. The first function is to be present during
the entire process at the scene in light of the need for the telecoms carrier to maintain their entire service
without any adverse effect. Secondly, being tachiainin is an obligation for telecoms service providers,forming a part of the due process of the law. The delegate further set forth that telecoms service providers
are fundamentally responsible to carry out duties of tachiainin in order to keep the integrity of their own
telecommunication business.
Notwithstanding, the telecoms industry has speculated that the burden 11 of constantly seconding
3 For example the Interception of Communication Act 1985 in the UK and Title III of the Omnibus Crime Control and Safe
Streets Act of 1968 in the US.
4 Article 218 of the Criminal Procedure Code.
5 Tachiainin were permitted to monitor the telephone conversation in common with investigators. In addition, they were thenrequested to disconnect temporarily the branched line to disable it from monitoring and recording if the call contents were notrelated to the crime (Homusho 1998: 29-34).
6 “Soshiki Hanzai Hoan no Yukue” (Organised Crime Bill’s Whereabouts). The evening issue of Mainichi Shinbun, 21st May
1999. http://www.mainichi.co.jp/eye/feature/article/digital/55/55_4.html.
7 Article 12, para. 1 of the Interception Law.
8 Article 114, para. 2 of the Criminal Procedure Code.
9 Statement of Sasagawa Takashi, a member of the House of Representatives, before the Legal Committee, House ofCouncillors, 29th June 1999.
10 Testimony before the Legal Committee, House of Representatives, 19th May 1998.
11 “Tachiainin Keihi mo‘Jigyosha de’”(‘Operators’ are compelled to pay tachiainin costs). The morning issue of Asahi Shinbun,
13th August 2000, http://www.asahi.com/tech/jiken/20000813b.html. However, the validity of the media's articles about theInterception Bill of the media was questioned. Seko, Hiroshige, a lawmaker who had been employed by the common carrier(NTT), indicated (before the Legal Committee, House of Councillors, 13th July 1999), with evidence, that the article contained
false information and was biased.

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personnel over a long period might be too heavy to bear. A newspaper article appeared just two days before
the Law came into force criticising the heaviness of the burden . It quoted the view of the compliance officer
of a fixed-line telephone company that it would be difficult to station tachiainin if interception is enforced one
after another. The article also included the comment of a mobile phone operator expressing the view thatthey couldn’t refuse their tachiainin duties because the company had a social responsibility to do so. At leastin the short period immediately after the law became effective and when the author liaised with them for
preparation, they repeatedly requested the police to release them from their duties of tachiainin because
they thought it would interfere with their business.
3. Interception Capabilities
Another concern about interception investigation was the costs of development to facilitate telecoms
interception. Hitherto, Japanese legislation provided neither a legal obligation for service providers to installinterception capabilities nor a legal claim for the costs of doing so.12 Lawmakers permitted the police tomake requests to the industry provided they were non compulsory and not excessive. Since the legal andpolitical circumstances in Japan are quite different from other countries,13 it is inevitable that the technicalimplementation for interception in Japan is limited in extent. Although, the cause and effect cannot be fully
discussed, it can be recapitulated that the technical difficulties combined with operational barriers resulted in
the limited applicability of the law.14 Nevertheless, the imbalance between telecoms policing needs andcapabilities is a globally common issue.

B. Global Difficulties and Responses to Telecoms Policing
1. The Era of Analogue Technology and the Monopolised Supplier
Traditionally, the technical methods of telecoms policing were relatively simple. As for telephoneinterception, call content was available by the following means (see Grabosky and Smith 1998: 21-22). First,
a pair of copper cables were branched off near the local switch. Then the branch was extended to theinterception site. Traffic data, e.g. call length and dialled numbers, were logged in correlation with subscriber
data for billing purposes (Lloyd 2000: 179-180). Dialled numbers were also obtainable, without assistance of
telephone service providers, by attaching a device called the ‘pen-register’ to the branch (Diffie and Landau
1999: 117).
Unlike the Internet or mobile phone services, subscribers’ static data of fixed line services were easily
accessed by lawful powers because the customers are literally connected. Another facilitating factor was themonopolisation of services. As Grabosky and Smith (1998: 206) pointed out, ‘[e]nlisting the co-operation of asingle, large organisation was a relatively routine matter.’ Thus, it can be summarised that the telecoms
policing of early days was easy.
2. Technical Developments and Increasing Anonimity
Because of advances in the technology and popularity of services, the importance of data handled by theindustry has grown. Additionally, technologies needed for telecoms policing of modern systems have become
far more difficult (see Diffie and Landau 1999: 97-99). Furthermore, the global popularity of mobile phones
and the Internet has brought about challenging situations. It is almost impossible, and arguably
inappropriate, for public police to install functions by themselves within the huge networks, whether
confidentially or not. There seems to be no other solution than pre-installing capabilities friendly for policing(Diffie and Landau 1999: 116).
To make matters worse, digital technology is applied in almost all telecoms systems removing biologicalfeatures of users (Council of Europe 2001: para. 62). Diversified services have also deteriorated. The traffic
12 Testimony of Matsuo, Kunihiro, before the Legal Committee, House of Councillors, 29th July 1999.
13 For example, the Communication Assistance for Law Enforcement Act of 1994 (CALEA) of the US places
telecommunication providers under an obligation to be equipped with interception capabilities. Similarly in the UK, theRegulation of Investigatory Powers Act 2000 stipulates in article 12 that persons providing public telecommunications services
are liable to assist by interception capabilities.
14 After two Annual Interception Reports reported that there were no cases, the first productive report was submitted to theDiet in February 2003. It disclosed that four interception warrants for mobile phones were enforced for drug dealing cases in
the previous year. See http://www.npa.go.jp/keiji/boujyuhouoku.htm.

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data of the modern systems are not usually recorded if the services are flat-rated or free of charge because
they are not needed for billing purposes (APIG 2003: para. 128). Similarly, the allocation data of IP addresses(subscriber data) and the history of IP addresses of destination (traffic data) were also immediately deleted
by Internet Service Providers (ISPs) because they are regarded as valueless (Council of Europe 2001: para.
29). In addition, many free email services are accessible to anybody. Such services are not only free ofcharge but also require little proof of identity. The most problematic services are ‘anonymous remailers’(Mostyn 2000: 81-82). The problem of anonymity is also found in pre-paid mobile systems (Denning andBaugh 1997: 128).
3. International Responses - The Requirements
In parallel with domestic struggles, already discussed, remarkable international efforts have been madesince the mid 1990s mainly in order to regain interception capabilities. The first initiative was started under
the EU and bore fruit as the Council Resolution in 1995. A set of ‘requirements’ of law enforcement agencies
for telecoms policing, often referred to as the ‘International User Requirements (IUR)’, is acknowledged in
the first half of the resolution. Then in the latter half, member states are required to implement therequirements (The Council of the European Union 1996). This resolution would be epoch-making for it
pioneered an international concern about capabilities of telecoms policing.
4. International Responses - Standardisation
An international effort was also made by the ITU (International Telecommunication Union) adopting
Resolution 1115, ‘International Harmonization of Technical Requirements for Legal Interception of
Telecommunications’. The motivation for the resolution was ‘that the costs of legal interception capability
and associated disruptions can be lessened by providing for the capability at the design stage’.15 Although
the ITU has made no progress since 1997, the regional standardisation has been active in Europe. The ETSI(European Telecommunications Standards Institute) has established standards relating to lawfulinterception.16 The reason for the difference in productivity between the two projects is that, whereas the
ITU could not co-ordinate the diverse political and economic conditions of members, the law enforcement
needs and industrial efforts to respond to them have been matched among European countries (Tsuchiya
2001: 16). Standardisation in the ETSI has produced satisfactory results not only in the economies of scale
but also in removing trans-border barriers among jurisdictions and markets with different legal
requirements (p. 16).
5. International Responses - Countermeasure against Cyber-crime
Members of the Council of Europe and some extra regional countries signed the ‘Convention on
Cybercrime’. The significance of the treaty for telecoms policing is that it requires states to establish new
powers to enable ‘the expeditious preservation of’ existing computer data, including traffic data.17 Backed by
the provision, the Japanese government is preparing domestic legislation to create new investigative powers
to request telecom service providers to retain traffic data up to ninety days.18
However, the industry has opposed the data retention policy because it costs a great deal of money. As
the WITSA (World Information Technology and Services Alliance) (2000) appealed ‘as the global voice of the
IT industry’ to governments in the statement for the Draft Convention to avoid imposing new requirements [for data preservation] on ISPs that result in significant financial burdens on theiroperations. Such added costs will ultimately affect the access costs of end users, and may negatively affect the growth ofInternet usage.

C. Case Studies of Telecoms Policing
1. Legal Solution: Internet Auction Providers’ New Responsibility
The first case study deals with the world’s first legal regulation for on-line auction providers. The
15 See http://www.itu.int/council/index97/1997/135/135.html.
16 See http://www.etsi.org/.
17 Article 16 of the Convention on Cybercrime: Explanatory Report.
http://conventions.coe.int/Treaty/en/Reports/Html/185.htm.
18 See http://www.moj.go.jp/SHINGI/030324-2.html.

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Amendment of the Second-hand Dealing Law went into effect in April 2003 in Japan.19 The amendment
requires any online auction provider (1) to notify police as a ‘service provider of second-hand articles auction
mediation’ (an Auction Mediator), (2) to report to the police if any article on the auction block is suspected ofbeing a stolen item, and (3) to take the appropriate action to halt the auction if the article is obviously
recognised as a stolen item.
The amending process was tangled. The industry opposed the bill partly because the burden of
inspecting the suspiciousness of articles is too heavy.20 Moreover, lawmaker Yoko Tajima’s criticism of thebill was as follows.21
Police must be admitting the ineffectiveness of their cyber-patrol to lobby this bill. [. . .] Presumably, the real intention of
the crafty bill might be to divert the responsibility of impotent police onto the industry’s shoulder.

2. Telecoms Policing in the UK
Secondly, the measures for telecoms policing in the UK are examined. The Regulation of Investigatory
Powers Act 2000 (RIPA) established the powerful and expanded legal framework of telecommunicationinterception. In addition, unlike Japanese legislation RIPA provides that the operational costs for the
implementation of individual interception warrants are paid in full by the government. Presently discussions
are going on between the industry and the Home Office on fair compensation from the government for
installing interception capabilities in compliance with section 13 of RIPA. Sutter (2001) argues that due tothe compliance burden, British ISPs are at risk in the domestic market because of the challenge bycompetitors based outside the jurisdiction who might provide cheaper services.
The ‘Anti-Terrorism, Crime and Security Act 2001’ (ATCS) legalising communications service providers(CSPs) to retain any sort of communications data on a voluntary basis to enable anti-terrorism measures.22
ATCS has been criticised because the government disregarded groundwork with the industry (Thomas
2002). Further, a Parliamentary group pointed out how the system is economically not feasible. Rather than
voluntarism, they made the counterproposal of a reasonable ‘Data Preservation’ system- to comply with arequest to preserve certain communications data (APIG 2003: para. 179).
3. Paralegal Solution (1): ‘Know Your Customer’ for Prepaid Phones
The next case study is about the crime investigation and prevention measure taken by the Japaneseindustry. This case was characterised as being of a paralegal nature, achieved through administrative
guidance.
When a pre-paid mobile phone was used in a kidnapping for ransom case in 1999, the police had difficulty
in investigating the case because of the anonymity of the user. In response, the Keisatsucho requested
mobile operators to collect user identification for crime prevention and the maintenance of investigative
capabilities.23
The industry held a wait-and-see policy as the first response with informal and theoretical support fromthe Yuseisho, the regulating authority. According to their argument, the customers’ identity information for
pre-paid services is not needed for billing purposes by definition. Thus, it was considered that the collectionof such unnecessary information was prohibited by the Privacy Guideline for Telecommunications Business.
In addition, the industry contended that collecting such data would be fatal to the service since theconvenience of the service is its raison d’etre.

19 See http://www.npa.go.jp/safetylife/seiankis9/kobutu.htm.
20 See http://www.watch.impress.co.jp/internet/www/article/2002/0315/npa.htm.
21 Testimony of Tajima, Yoko, a member of the House of Councillors, before the Cabinet Committee, House of Councillors,
19th November 2003.
22 Anti-Terrorism, Crime & Security Act 2001: Summary.
http://www.homeoffice.gov.uk/oicd/antiterrorism/atcsa.htm.
23 “Keitai Denwa: Tokumei no Kyoki” (Mobile phone: an anonymous weapon). Morning issue of Asahi Shinbun, 26th April
2000. http://www.asahi.com/tech/jiken/20000426a.html.

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An imitative kidnap case, using a more sophisticated technique, occurred four months later. The
Keisatsucho made the same request again and wanted the operators to act without delay. The reaction of
the Minister of Yuseisho, to this was to report, a few hours later, his solution to these kidnap cases asfollows.24
Pre-paid mobile phones were abused in the kidnap case committed in December last year and the case in Kanagawa
Prefecture this time. I apprehend this situation as a serious social problem. Therefore we have just instructed the industry todevise immediate measures against this matter taking privacy concerns into consideration since the service is a sort ofdisposable-type. In this context, on the grounds that a serious social evil has arisen from this service through a variety ofcrimes, not to speak of drug dealing, we would like to discuss immediately the government’s countermeasures [. . .].

Under the guidance of the Yuseisho, the industry then began to collect identity data by checking photo
identification at shop fronts on the purchase of handsets.25 According to a Yuseisho official, a modified
interpretation of the Guideline made available such a measure. In other words, ‘preventing crime’ and‘keeping a record to provide against a time of need’ were newly authorised to be necessary which allowed
the telecoms to avoid potential liability for the infringement of privacy requirements.
4. Paralegal Solution (2): the Anti-mobile Theft Initiative
The last case study is the anti mobile phone theft initiative in the UK. The chronological development of
this case is somewhat similar to the above mentioned case; it appears that the escalation of the serious
situation brought turning points in both cases.
The Home Office worked on mobile telephone companies to take measures to deny the benefits of mobile
phone theft (see Clarke 1997: 23). In January 2001, the government began to request mobile operators toblock phone calls from stolen handsets. Whereas three new operators complied with it, two refused. The
reasons for the non-compliance were reportedly that the timing of upgrading network systems wasapproaching and ‘customers [were] not demanding it’.26
The threat of mobile phone theft and the operators’ refusal to comply attracted media concern since theHome Office publicised the results of research into ‘mobile phone theft’ (Harrington and Mayfew 2001) a
year later. A Home Office spokesman revealed that the government has the legislative option of forcing theindustry to install technical measures to deter mobile phone theft as a last resort.27 In addition, they
criticised the operators for being unethical:28[N]etwork operators, as well as criminals, benefit from the problem. They estimate that [they] make tens of millions ofpounds each year through calls made via stolen phones. [. . .] [The only party to be hurt is] the customer - and [themechanism] actually benefits the network because people are still paying for airtime, even if they do so on a stolen handset they seem to have lost the knack of throwing millions of pounds at the problem.

Just a week after the article appeared, the two mega-carriers simultaneously announced their adoption of
the measure to bar calls from stolen handsets and to help to trace them.29

IV. THE COUNTERPOINT: FINANCIAL POLICING
A. Overview
This chapter will review financial policing typified by Anti Money laundering (AML) measures as thecounterpoint to telecoms policing and examine how these policing schemes resemble each other.
24 Testimony of Yashiro, Eita, before the Budget Committee, House of Councillors, 25th April 2000.
25 “Pre-paid Shiki Keitai Denwa ni Kansuru Taiosaku” (Safeguard of Pre-paid Mobile Phone). NTT DoCoMo, 5th May 2000.
http://www.nttdocomo.co.jp/new/contents/00/whatnew0512.html.
26 “Phone Firms Defend Security Record”, BBC, 8th January 2002.
http://news.bbc.co.uk/1/hi/uk/1749215.stm.
27 Ibid.
28 “The Key to the Mobile Phone Theft Epidemic” Guardian, 2nd February 2002.
http://www.guardian.co.uk/Print/0,3858,4348454,00.html.
29 “Ministerial Statement in Response to Vodafone and mmO2 Announcement on Mobile Phones”. Government News
Network, 8th February 2002. http://www.nds.coi.gov.uk/coi/coipress.nsf/.

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B. Co-operation of the Financial Sector in Controlling Money Laundering
Global countermeasures have been arranged by the Financial Action Task Force on Money Laundering(FATF) as the Forty Recommendations in 1990 and revised in 1996. The majority of the Recommendations
are about the ‘role of the financial system in combating money laundering’30 because of the effectiveness of
the involvement of financial institutions in detecting money laundering (ML): Further, as Gilmore (1999: 83)
noted, the more important factor was the awareness ‘of the negative impact which “dirty money” can haveon the credit and financial institutions through which it passes or in which it is deposited or invested in thecourse of laundering operations’, though this ‘awareness’ amounts to an assertion rather than ademonstration of harm. Banks in the US spend from five to six percent of their compliance budget for AML
and foreign asset control requirements.31 Four important tasks are imposed upon banks and non-bankfinancial institutions of member countries.
1. ‘Know Your Customer’ (KYC) Requirement
Firstly, financial institutions have been required to know in order ‘to identify, on the basis of an official orother reliable identifying document, and record the identity of their clients [. . .] when establishing business
relations or conducting transactions’.32 The policy is slightly enlarged in the UK as the Money Laundering
Reporting Officer (MLRO), who is appointed by the financial institution, is requested to verify not only the
KYC information but also the ‘know [their] business information’ (FSA 2001, Annex A: 17). However, thepractical lengths to which institutions should go to ‘know their customer’ are variable: some jurisdictions33
are required to identify the beneficial owners of accounts, whereas others34 are not. KYC rules themselves
should not be considered a burden because to comply with the rules benefits the industry as well.35
2. The Requirement to Retain Evidence
Having a close relation to the previous mentioned requirement, financial institutions are required toretain the data. The FATF requests to keep ‘for at least five years, all necessary records on transactions,both domestic or international, to enable them to comply swiftly with information requests from thecompetent authorities’.36 Retained data in this manner becomes evidence of internal audits (Gilmore 1999:
87), to say nothing of criminal prosecution by means of seizing.
3. Transaction Scrutinising Requirement
In addition, financial institutions should examine, with special attention, any transaction which they
regard as particularly likely, by its nature, to be related to ML.
Although a majority of the FATF jurisdictions have adopted the system of self-vigilance of financial
institutions, the US and Australia have applied a variation of this system. The latter system merely applies a‘fixed threshold’ of transactions for triggering the reporting and thus financial institutions are not required tobe cautious about the dubiousness of transactions (Gilmore 1999: 88).37 Thus, compliance with this scheme
may be easier than the former. In other words, Financial Intelligence Units, rather than the industry, fulfil
the duties of identifying suspicious (in the professional criteria of crime control) transactions from massive
amounts of data. Nevertheless, the development of counter-techniques should not be ignored.
4. Requirement of Suspicious Transaction Reports (STR)
The final requirement is to report the information of transactions that are suspected (or are over thethreshold) to the Financial Intelligence Units (FIUs). Since reporting without firm criminal evidence may
30 Recommendations 8-29, FATF.
31 “Anti-money laundering rules among most expensive compliance cost for banks, ABA says”. Money Laundering Alert, June
11 2003. http://www.moneylaundering.com/.
32 Recommendation 10, FATF.
33 Jurisdictions such as Guernsey and Jersey.
34 For example, Japan, the UK and US.
35 Dan McAleese argues that firms are naturally expected to know their customers in order ‘to reduce counterparty risk’ and‘to offer the best service to the customers’. See “KYC - a guide to the processes and techniques”. Complinet, 5th June 2003.
http://www.complinet.com/ml/dailynews/print_display.html?ref=46690.
36 Article 12, FATF.
37 Since then, they have introduced suspicious activity reporting to supplement routine reporting. See
http://www.fincen.gov/reg_statutes.html.

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give rise to conflicts with the interest of banking secrecy, the FATF suggests the need to exempt reportersfrom the liability to maintain confidentiality.
To summarise the impact of these requirements, it can be deduced that financial institutions have shareda considerable burden and responsibility for AML measures despite the fact that they are private businesses.
The relationship between the financial sector and the authorities responsible for combating ML may becomparable to that of the telecoms industry and law enforcement agencies.

C. Analogical Points to the Counterpart
Thus, the relationship between policing and the financial sector is surveyed in this paper in parallel withthat of the telecoms sector. The reason why these two issues are paired is that they are comparable. Threecomparable points can be found as follows.
1. Increasing Universality in Relation to Crime
The first point is that both of these industries have a universal relationship to crime facilitation andinhibition, and, in both cases, the private sector has to be persuaded and compelled to assist in measuresthat are not automatically in its own short-term economic interests.
As the explanatory report of the Convention on Cybercrime points out [technical] developments have given rise to unprecedented economic and social changes, but they also have a dark side:
the emergence of new types of crime as well as the commission of traditional crimes by means of new technologies. Moreover,the consequences of criminal behaviour can be more far-reaching than before because they are not restricted by geographicallimitations or national boundaries.
(Council of Europe 2001: para. 5)

Meanwhile, financial gain is the most important aspect of the majority of crimes. According to the PIU
report around 70 percent of recorded crime in England and Wales is acquisitive (PIU 2000: para. 2.5). In
addition, some non-acquisitive crime, most significantly terrorism, is only available when it is facilitated byunderground money transactions. Johnson (2002) states that the definition of ML has changed after theterror attacks on the US. Whereas the term originally focused only on ‘the criminal origin of what appears to
be clean money’, it is now re-defined and widely accepted as ‘moving funds through financial institutions or
accounts to disguise its origin and/or purpose’ (Johnson 2002: 10, italics added). In fact, the Bushadministration devised the Uniting and Strengthening America by Providing Appropriate Tools Required toIntercept and Obstruct Terrorism (USA PATRIOT) Act. The Congress found thatmoney launderers subvert legitimate financial mechanisms and banking relationships by using them as protective cover forthe movement of criminal proceeds and the financing of crime and terrorism[.]38

The definition of money laundering in Japan has been enlarged by two steps. First, adopting the FATF
Recommendations, the Punishment of Organised Crime and Control of Proceeds of Crime Law in 2000
defined it. The introduction was remarkable progress as the FATF evaluated thatthe Japanese money laundering system in [June 1998], was not effective in practice[.] [. . .] The new Law extends thedefinition of money laundering to cover over 200 predicate offences.
(FATF 2000, para. 95 and 96)

The second step was taken by the Punishment of Terrorism Financing Law in 2002. It was to create atype of criminal offence which punishes an act of financing for the purpose of committing terrorism, and thento make it a predicate offence for money laundering.
In this manner, financial policing has become increasingly significant and capable of wide application for
criminal investigation, and thus it can be regarded as one of the primary investigative tools, like telecoms
policing.

38 Section 302 (a) (3) of the USA PATRIOT Act.

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2. Global Nature
Issues of facilitating financial policing are global matters in striving towards effective countermeasures
for the global threat of trans-border crime, for example drugs dealing and international terrorism. Especially,
the AML initiatives are even comparable with the issue of ‘tackling global warming’39 for insufficientmeasures by any responsible party may cause worldwide vulnerability. Since the beginning of the FATF,
members have self-assessed and a mutual assessment scheme was added in 1992 (Gilmore 1999: 94). The
latter might be observed as being a powerful method to harmonise policies among sovereign countries,
although there is some risk of stigmatising ‘rogue states’ (Levi and Gilmore 2002: 361).
A similar situation can be found in the field of telecoms policing. Law enforcement capabilities haveincreasingly been vulnerable with the advance of technology and services. The international roaming
function of mobile telephones, for example, offers criminals a more reliable and useful tool. On the Internet,
the threat of an anonymous remailer controlling crime is aggravated by the existence of boundaries ofjurisdiction. Generally, technologies and services are not defined domestically in the global age. Rather, thedesign of domestic facilities is bound by de facto standards designed by the oligopolistic manufacturers andthe core technologies and system configurations are substantially based on international technical standards.
Another concern in a global context is the impact on the international competitiveness of businesses
subject to compliance. A UK ex-investigator remarked that financial institutions in the UK are greatly
handicapped in the European competitive market by the compliance burden of the AML provisions of the
Terrorism Act 2000 and the Anti-terrorism and Security Act 2001 (Hamblin 2002). In this sense, offshorebanking might be viewed as a threat to the domestic industry in common with law enforcement.
The identical concern in conjunction with lawful interception capabilities is expressed by Sutter (2001).
He argues that due to the compliance burden of interception capabilities borne by RIPA, ISPs in the UK are
at risk in the domestic market from international competitors located outside the jurisdiction of the UK who
might provide cheaper services.
Again, it is summarised that telecoms policing is comparable with financial policing in the light ofglobalisation; in that both have been impacted negatively. However, unlike telecoms,40 the reaction offinancial policing, i.e. the AML movement, is backed by a fairly coherent global movement of key politicalinstitutions, such as the G7, OECD, UN, Council of Europe and EU, that has evolved over the past decadeand a half (Gilmore 1999).
3. Compliance Costs
The compliance cost is also comparable. For the financial industry, AML compliance leads to a ‘heavy
burden’ of paper work (Sheptycki 2000: 146). Especially, the examination of transactions would be mentallyburdensome if the transaction were made, for example, by a ‘good’ customer. In addition, as a respondent to
the FSA proposal of AML, particularly large-scale organisations might have the problem of an ‘unmanageable’ number of transactions to be examined (FSA 2001: 12). Even in the earliest stage of AML, KYC
rules have been unwelcome. For example, British banks see the principle to be the ‘high compliance costs,
with little demonstrable benefit other than for anti-money laundering purposes’ (FSA 2001: 10), althoughsuch outspoken complaints cannot be heard in the post 9/11 era.41
Similarly, it is known that various requirements, they are arguably burdensome, are assigned to thetelecoms industry. However, unlike the impact of financial policing, there are few fact-finding enquiries into
the burden of the industry except for the ‘data retention’ issues.

39 “Cleaning up dirty money”, The Economist, 24th July 1997.
40 The only exception to this is the Convention on Cybercrime which obliges member states to adopt the procedural law ontelecommunication policing.
41 Hamblin (2002) raises the question of jurisdictionally differentiated anti terror regulations in the aftermath of 9-11. Firms incountries that adopted draconian legislation would suffer ‘a competitive disadvantage with firms from other countries’, rather
than the internal compliance cost of AML and anti-terrorism requirements.

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V. DISCUSSION AND CONCLUSIONS
A. Theoretical Discussion on State vs. Non-state
1. Crime Control by the State and Private Sectors
By Max Weber’s definition, the ‘state’ inevitably monopolises the legitimate enforcing powers (Weber
1947: 154). However, this classic paradigm was denied half a century later. Stanley Cohen (1985: 40-41)
noticed that not only the state but also lay volunteers and professionals took measures in an overlapping
manner to control deviance. The expansion of social control was conveniently justified by the state
explaining that benign and professional players who have ‘natural resources’, rather than bloated‘overburdened, inefficient and inhumane’ state systems, should be given the power (p.77). According to his
metaphor, there are many fishers (parents, neighbours, teachers, social workers, probation officers, prison
officers) setting their own nets to catch fish (offenders) in the sea (jurisdiction). Whereas the catches of theformal net (prison) are politically or fiscally controlled, the coverage of the nets of non-state fishers has
widened or the nets have been changed into more finely woven ones to catch more fish (p. 41-42). In
addition, ‘there is far more room for the weaker form of privatization [than that of offender treatment
apparatus] where the state contracts out certain services to private enterprise, retaining some measure ofcontrol’ (p. 64).
Here, Cohen’s visions of social control are reinforced. Various cases of telecoms policing examined inprevious chapters fit exactly in his recognition by converting the sea from the real jurisdiction of the state tocyberspace. For, cyberspace is composed of private domains with public access, like rising mass-private
property (p. 67), operated by the private telecoms industry. The same is equally true of financial policing, as
Sheptycki (2000: 137) takes up the problem of the uncontrollability of ‘electronic money [. . .] in cyberspace’.
Garland (1996) analysed the macro strategies on criminal control of the sovereign state. He began byidentifying the limitation of the state’s capability in controlling crime in the contemporary circumstances. He
discovered the ‘responsibilization’ strategy adapted by the sovereign state. That is, the state has handedsome roles of crime control, which had long been monopolised by the governmental agencies, over to nongovernmental organisations and individuals. In this process, risks and costs incurred by crime have been
distributed to the responsibilized private sector (p. 451).
The role of the state and non-state players in controlling ‘Electronic Theft’ - type crime is examined by
Grabosky et al. (2001). Due to the limitations of law and law enforcement, the state has responsibilized
various parties to prevent cybercrime on the principle of potential victims’ self-help. Based on the situation,
they predict that technology will be primarily entrusted with the mission to control electronic theft, and thatthe state will have a mutually complementary relationship with industry for technological intervention (p.
206).
2. The Shortcomings of Responsibilization
Garland’s criticism of responsibilization was that it might damage a balance of security level in its
distribution distorted by the market principle. He (1996: 463) applied this idea in the real space focusing only
on the dimension of the haves versus the have-nots. Upon reflection the dichotomy may be applied to thecomposition between the conventional telephone services operated by state-owned and/or mega-carriers vs.
tiny ISPs who have the ethos of self-governance. The former would be more tolerant than the latter toward
responsibilisation in complying with the state’s request. Therefore, responsibilising in cyberspace mightbring forth a disparity in crime control. Otherwise, an effective and fair cost sharing mechanism has to bedevised. The same is true of responsibilizing financial policing measures. As the results of interviewssuggest, banks have complied more loyally with AML requirements than non-banks and non-financial
services have.
3. Charging the Compliance Costs to ‘Those Who Benefit’
The discussion on the burden sharing of Situational Crime Prevention (SCP), the simple
responsibilisation form of crime control (Garland 1996: 453), are two-fold. First, if the costs are ‘modest’,then the potential victim would pay the costs. The second approach is to invoice the costs to ‘would-be’
offenders. Namely, potential offenders should pay as beneficiaries because they are incapacitated fromcommitting crime. These methods appear, at first glance, ethically unproblematic for they conform to thebenefit principle (Duff and Marshall 2000: 23-24).

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However, identifying ‘those who benefit’ is a complex issue. First, the major part of targeted crime fortelecoms policing, e.g. drugs dealing,42 victimises nobody or society on the whole. In the same way, there
may be no other choice than determining that legitimate society is the victim of ML. In a sense, society has
paid the policing costs through taxation and the state ought to compensate the industries. One might argue
that the industries are the potential victims in an indirect manner because their integrity is at reputationalrisk43 through crime facilitated by services provided by the industries. Even so, as far as such an intangiblerisk might be negligible, and the compliance costs would be, arguably, too much, the responsibilisingstrategy unavoidably seems to be not very effective.
However, the second option would be more problematic. Would-be offenders may be a subset ofcustomers of the services at large. This logic might justify the diversion of compliance costs to all customers
because differentiation between would-be offenders and the law abiding might be impossible andinappropriate. Based on this pessimistic analysis, all customers are equally treated as possible offenders andwill receive bills. Thus, it is problematic and presumably ineffective if the beneficiary-payment principle
alone is applied. In addition, since crime prevention is not the sole purpose and effect of telecoms andfinancial policing, stronger accountability is needed.
4. Boomerang Effect on the StateThe next method is to return the fiscal responsibility to the state from the responsibilized party.
Surprisingly, few theorists advocate this method for AML measures. However, for telecoms policing, it has
already materialised in many jurisdictions. Inoue argues that the compliance costs of the telecoms industry
in installing interception capabilities should be compensated by the state if the costs exceed a reasonablelevel (Inoue 1997: 212), though there may be arguments about what a ‘reasonable level’ is.44 The notion
might be influenced by the dogma that policing ought to be the monopolistic mission of the state. Either way,since the state is not a cornucopia; the costs are collected from taxpayers. In this case, the policing regime isreinforced because the paid industries are not only responsibilized but also obligated to comply.45 Thus,
moderating the compliance dilemma, the strategy might be welcomed by the non-state agencies. For, theconcern of crime control being not a priority for them even though they are responsibilized, they would
otherwise give profit making, for example, priority over responsibility.46 The bottom line seems to be thatthe policy needs the backing from taxpayers consisting of haves and have-nots, netizens (network citizens)and non-netizens, criminals (provided that they pay tax, which is rare) and non-criminals.47
5. Para-taxation system: Responsibilizing cost recovery as wellAt least in the traditional context, this state contribution strategy might be quite appropriate and bejustified because the citizens are assumed to be the principal beneficiary of policing. Nevertheless, taking
into consideration the history and the dynamism of industrial services, applying such a burden sharing
approach to the responsibilization of financial and telecoms policing seems to be still unfair. Rather, the liable
party would be the industry as they have an ethical responsibility, and the redirection of the costs tocustomers should be justified. Of course, the state, rather than responsibilized industry, continues to holdthe primary responsibility for crime control. Consequently, the expenses being borne only by customers of
responsibilized services may be equated with a kind of earmarked tax imposed on the customers by theindustries.

B. Improving the AML Scheme
Responsibilizing the industry for financial policing is a good example of para-taxation.48 In all interviewed
42 Japanese interception has never been applied to crime other than drugs related crime.
43 See case studies above on both Japanese and British mobile phone operators.
44 The notion may not always be applicable. For example, subsidising the tachiainin costs for the Interception Law might beproblematic. Since watching the process is the role of the tachiainin, such compensation by the party to be watched might beviewed as the emasculation of the watchman. In addition, reimbursing might distort the market and create an entrance barrier
to the business (APIG 2003: para. 176).
45 See Duff and Marshall (2000: 33) for the difference between responsibilities and obligations.
46 See Garland (1996: 464).
47 In addition, it is needed for taxpayers to approve the cases offering mutual legal assistance, for example, where
beneficiaries of the system are citizens of other states on the reciprocity principle.
48 Having this conception, Sheptycki (2000: 165) predicts that the responsibilised financial institutions for a global AML
system will become cogs in the global tax collection systems in the future.

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countries and in Japan, AML costs are borne by responsibilized institutions and ultimately passed on to thecustomer. In order to ensure full cooperation with the industry it is recommended that they be informed of
the significance of their compliance obligations. In fact all interviewees understand the burden on theindustry of compliance, although none of them mentioned the conflicts with the industry.49 In recognition ofthis burden some government agencies have taken steps to motivate the industry by, for example, liaising ona regular basis, issuing guidelines and giving feedback of information.
1. Interaction with the Industry
First, information sharing is the most universal tactic, as Johnston (1992: 192) pointed out. In order tofacilitate STRs with intelligence value, good sanitised cases and negative examples are provided throughweb-sites or newsletters by every FIU. In addition, the Suspicious Transaction Report Office (STRO) in
Singapore has regularly organised outreach programmes to discuss the STR scheme and obtain feedback.
The STRO believes that these programmes contribute to a mutual understanding and build a close
relationship with the industry. Similarly in Ireland, an interviewee pointed out how regular meetings withbanks that are held twice a year and a bi-monthly steering committee with industrial representatives areimportant in establishing a good relationship.
2. Providing Guidelines
Almost all interviewees perceived the significance of supporting the industry by providing routine
procedures to comply practically with the rules. Guidelines for AML compliance are issued by regulating
authorities and industry organisations. Even where the government provides them, authorities welcome
industrial participation to make them practical. In Britain, consultation papers for rules50 and guidelines51
have been circulated to incorporate opinions since before the first guidelines were published in 1990. In
Hong Kong, the HKMA has published and updated the guideline entitled the ‘Prevention of Money
Laundering’ since 1993. The draft guidelines and updates involved consultation with the industry. Copingwith recent developments of FATF recommendations after the 9/11 event, and the issuance of the paper‘Customer Due Diligence for Banks’ by the Basel Committee on Banking Supervision, the ‘Supplement to
the Guideline on Prevention of Money Laundering’ was drafted in consultation with banks. Many questions
and comments submitted to clarify the requirement in a practical context are quite helpful to establish afeasible system. Through the consultation process, these guidelines have become the product of the cooperative work.
3. Feedback Systems for STRs
The feedback systems for STRs in two jurisdictions are remarkable. The GBFI in Ireland is obliged togive feedback on the status of investigation to the reported institution every six months until the content of
the feedback becomes ‘no further action’. A MLRO of a bank set a high valuation on the system, not only
because the two-way communication is crucial to mutual understanding. Rather, the information is useful toimprove the internal reporting system by providing sanitised good and bad cases as materials in annual
training classes and newsletters for bank staff.
Similarly in Singapore, the police are responsible for giving feedback for emergency telephone calls andcomplaints within six months in order to maintain the service level, and the feedback system for STRs wasestablished by improving this system. The STRO is responsible for giving notice to those who lodge a STR,
whether the police will proceed with the case or not, within fourteen days.
By contrast, the CTIF-CFI in Belgium is prohibited by law from providing information to reporters. FIUs
and law enforcement agencies in Hong Kong and the UK are in between these two cases; i.e. theysometimes provide feedback. However, no feedback is given for the majority of reports. A current issue thathas arisen in the UK is how to improve the communications between the industry and law enforcement
agencies.
49 A British interviewee referred to the estimate by the think-tank KPMG that calculated the total compliance costs for all the
British banks at ninety million pounds per year.
50 Issued by the FSA.
51 Issued by the British Banker’s Association, Association of British Insurers, etc.

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Without doubt, feedback would be welcomed by the complying party in general and might increase
overall performance of the AML system. Are not compulsory feedback systems feasible in otherjurisdictions? One reason why the larger jurisdictions like the UK (67,000 STRs in 2002) and Japan (18,768
STRs) do not apply such systems may be that responding within a certain period of time is not feasible,
unlike in smaller jurisdictions like Ireland (4,398 STRs) and Singapore. The organisational structure might
be another factor, e.g. the FIU and the user of financial intelligence are separated or many agencies use theintelligence.52 As the Belgian system prohibits disclosing the confidentiality of investigations, the sensitive
nature of investigative information can be another reason for hesitating to disclose information.
However, the author thinks a compulsory feedback system should be introduced to larger jurisdictions
rather - because they are more complicated and thus require more transparency. As far as the information issensitive, the FIU may maintain confidentiality by just informing the complying party that the case isongoing. Granted that the majority of feedback messages will state that it is ongoing, and no further
information will be provided for a long period because of limited human resources and organisationalarrangements, for example in the UK and Japan; such a situation would be far better than having no feedback
at all.
In the UK, there are 50,000 backlogged STRs to be processed and even if some reports are distributed ‘tothe local police forces, there is very often nobody there to deal with them’.53 If there has been no active
investigation of an STR for a long time, it may be assumed that the value of the STR has decreased.54 As inmany other policing spheres, criticism may be needed to improve systems and the absence of open criticism
may merely reflect the absence of evaluation rather than that systems are working well. Thus, the feedback
system might place FIUs and law enforcement agencies under surveillance. If there is no (or poor) feedback
because of the insufficiency of investigative resources, then the heaviness of the industrial burden cannot bejustified. Therefore, the government has to allocate resources proportional to the compliance costs of theindustry rather than calling for ever more STRs.

C. Reasonable Burden Sharing for Telecoms Policing
1. Subsidising Telecoms Policing
In summing up the interviews - policies for the subsidisation of telecoms policing may be categorised into
three types. (1) The first option is to compensate the initial compliance costs. The arrangement in the UK
for installing interception capabilities55 and for retaining data56 falls under this. (2) The second one is to
subsidise in exchange for fruits of the initial compliance. The Belgian subsidy scheme for ‘usage fees ofinterception capabilities’ and ‘the purchase of retained data’ epitomise this method. The US applied a similar
reimbursement system for interception capabilities. 57 The governmental standards of ‘pay-per-use’
disbursements for (only operational) costs are always defined irrelevantly to the actual costs incurred
initially by the industry and may be disproportionately low to the latter. However, paying only corresponding
sums of usage might be more rational, at least for the states, than pre-paying. Because, in adopting the prepayment scheme, it would be extremely difficult to determine the installation costs of interception
capabilities and data retention functions integrated into sophisticated network systems without affecting thedomestic free competition market. (3) Finally, if the government does not subsidise at all, the industry would
face the ‘price of doing business’.58 The same applies to the Japanese policy on interception capabilities
provided that the costs are reasonably low. 59 Both in Ireland and in Japan, not complying with therequirement of capabilities is not illegal. However, unlike in Japan, the conditional licensing policy ofBelgium guarantees that the industry will comply.

52 Both criteria are applied to Japan and the UK.
53 “A few tips about suspicious transaction reports”. Complinet, 23rd April 2003.
http://www.complinet.com/ml/dailynews/print_display.html?ref=45552.
54 Of course, there is some possibility of having later ‘hits’ on the same individual or on intermediaries working with him/her.
Nevertheless, the chronic delay in processing might spoil the secondary effect as well.
55 Section 14 of RIPA.
56 Section 106 of ATCS.
57 See AOUSC (2003: 11).
58 See APIG (2003: para. 144).
59 Again, the definition of ‘reasonableness’ comes into question.

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If the burden of financial policing is settled by adopting para-taxation systems after all, then the tactics
might be applicable to telecoms policing in general as well without resort to the regulatory powers. Because,
the author does notice internet-widening rather than net-widening. The para-taxation systems can bejustified for several reasons.
2. Justifications for the Para-taxation Systems
First, unlike the condition of real world policing, there was neither a crime opportunity nor a victim incyberspace. Thus, policing powers were not necessary at all. The balance was lost when the ‘new social
space’60 was created. Although major telecoms services were state owned (e.g. the Japanese telephone
network)61 or monopolised for research purposes (the Internet) in the beginning; unfortunately the crime
opportunity was facilitated with the earliest forms of cyberspace. Both the opportunity and victimisation ofcrime has increased since then. Second, presumably the customers of telecoms policing, i.e. criminals, areunevenly distributed among the customers of the telecoms service who pay for the services as well as statetax, than non-customers who pay tax only. Further, within the community of netizens, the more the netizens
pay for the services, presumably the more criminal opportunities would be available for them. Almost thesame applies to the distribution of potential victims. Third, the trans-border nature of crime facilitated bytelecoms services ‘is in conflict with the territoriality of national law enforcement authorities’ (Council ofEurope 2001: para. 8). Although the capabilities and experience of state-funded policing has increased, on
the one hand, such policing practices might threaten the sovereignty of foreign countries (see Sheptycki
2000: 161), and on the other, they would be less accountable to domestic taxpayers than domestic policing.
Thus, diverting the costs for policing in cyberspace to netizens would be justified by the fact that the costs ofreal-space policing are supported by the state’s tax-collection from citizens under the jurisdiction.
Thus, the netizens would naturally shoulder the costs of counter-crime mobilised in cyberspace just as
citizens do for crime in real space. The author does not mean that the industry caused criminals to commit
crime. On the contrary, it is evident through the studies in previous chapters that they have been always
willing to defend their integrity.62 However, they have unfortunately faced two fundamental limits. The
telecoms industry should, on the one hand, provide a universal service (Hayashi and Tagawa 1994), and, on
the other, comply with the constitutional request to keep confidentiality of telecommunications, the freedomof expression and the ban on censorship.63 In other words, the industry had been incapacitated fromcontributing to controlling crime. From this perspective, the responsibilization process is serving theremedial purposes by immunising as long as it is appropriately grounded.
3. Feasible Steps Forward
Nevertheless, such a utilitarian solution would not work if adopted aggressively. First, thoughinvolvement should be limited being beyond the scope of this paper, concerns of citizen or netizen rights
should be settled by establishing appropriate due process systems. In addition, such a cost-redirection policy
would arouse the hostility of smaller sized or new entrant service providers and benign customers. Moresubstantially, the issues of international competitiveness of the domestic industry should be taken into
consideration. Providing that the responsibilizing degrees are unbalanced, customers of domestic services
are vulnerable to differentiated (1) redirected costs, (2) degrees of inconvenience, and (3) at least Orwellian
unpleasant feelings. By the nature of cyberspace, sensitive customers with sufficient motivation would
migrate from nuisance domestic services to ‘offshore’ (APIG 2003: para. 159) or elsewhere. In addition,
there is no reason for would-be offenders to hesitate to do so (para. 162). Thus, there is the danger of boththe ‘hollowing out’ of the industry and the negative effect of the displacement of crime. In effect, thestrategy might ironically cause damage to the national interests.
After all, domestic responsibilization policies without due consideration would not be advisable. Rather,
the solution should be facilitating the international harmonisation of (1) the extent and the justification ofdiverting costs to customers, and (2) the extent of telecoms policing capabilities, i.e. the potential degree of
60 See Manning (2000).
61 The service was privatised in 1985 (Hayashi and Tagawa 1994: 216).
62 The reason why the industry was often reluctant to comply would be the weak justification of diverting costs, the Orwellian
concerns of reputation and the anxiety of losing competitiveness. As subsequently discussed, these spells should be broken.
63 Article 21 of the Constitution, for example in Japan.

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restriction on human rights. There may be at least two approaches to harmonise the disparities of domestic
conditions.
First, law enforcement agencies as well as regulatory agencies of telecommunications need to organise acollective policy on policing needs and regulating telecoms services. The Convention on Cybercrime is amonumental first step. In addition, there are comparable forerunning projects. The feasibility of the
responsibilization policy is proven by AML movements. As FATF have powerfully tackled problems of interjurisdictional ML, establishing, for example, a Telecoms Action Task Force (TATF) or some other body forthe resolution of the inter-net issues of telecoms policing might be worth considering. The agenda of the
TATF would resemble that of the FATF. The main issue may be how to distribute costs and functions oftelecoms policing among those jurisdictions that i) are the hosts of the hub of an international network; ii)
have intense competition; or iii) provide offshore services. Some existing practical problems in conducting
mutual legal assistance might be naturally resolved through these discussions. However, the author does not
advocate establishing only the TATF, because such a top-down solution might be less accountable for thetime being than the approach discussed below.
Second, the most recommended approach would be to facilitate the standardisation of technology (seeGrabosky et al. 2001: 206). Because, all components of cyberspace are microscopically interconnected inonly a technical dimension, by neither market pressure nor political dynamism nor law, as Lessig (1999: 207)
puts it, ‘code is law’. Through the sober standardisation process, a technically rational system design would
be obtained. Thus, the friction arising from introducing telecoms policing measures might be smoothened if
it conforms to legitimate technical standards. A part of the standardisation effort in conjunction with lawfulinterception capabilities has already been established by the ETSI. The standardisation may not necessarily
be bound within the purely technical sphere. As ISO 9000 and 14000 series64 standardised not purely
technical matters but managerial, the standards of telecoms policing may treat security matters in a wider
sense. The ‘security-related function’ may contain functions of surveillance, incapacitating criminals, theremoval of illegal contents, the retention of data for the access of law enforcement, etc. The functions of theinternationally average level of due processes should be embedded with policing functions. Above all, thestandardisation processes should be operated in an open and democratic way. All stakeholders, e.g. not only
the service providers and manufacturers, but also representatives of customers, human rights advocates andlaw enforcement agencies, should have access to the process. Especially, law enforcement officials have totake the trouble to persuade by explaining the significance of telecoms policing capabilities. At the sametime, governments would be well advised to ensure that the costs of cybercrime control do not become an
impediment to the creative and productive use of digital technology.
The author neither assumes such a prescription to be the Utopia nor advocates realising the Orwellian
surveillance society. The absence of police, surveillance, control and responsibilization is the largest
happiness of the greatest number provided that there is no crime or victim. Rather, we, who enjoy thecurrent prosperity and convenience brought forth by telecommunication and financial services, should duly
be responsibilized to solve the difficult problems derived from the utility.

64 http://www.iso.ch/.

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Grabosky, P.N. and Smith R.G. (1998) Crime in the Digital Age: Controlling Telecommunications andCyberspace Illegalities. Leichhardt, NSW: The Federation Press.
Grabosky, P.N., Smith R.G. and Dempsey, G. (2001) Electronic Theft: Unlawful Acquisition in Cyberspace.
Cambridge: Cambridge University Press.

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Hamblin, C. (2002) The UK’s terrorist legislation: a risk manager’s warning. Complinet (Money
Laundering), 11 March 2002. Retrieved 23rd December, 2002 at
http://www.complinet.com/ml/dailynews/print_display.html?ref=33044.
Harrington, V. and Mayhew, P. (2001) Mobile Phone Theft, Home Office Research Study 235. London: Home
Office.
Hayashi, K. and Tagawa, Y. (1994) Universal Service: the principle of ‘fairness’ in the multimedia age. Tokyo:
Chuko Shinsho.
Homusho (Ministry of Justice, Japan). (1998) Hanzai Sosa no tameno Tsushin Boju ni Kansuru Horitsu An
Kankei Shiryo (Reference Data for ‘Bill of Telecommunication Interception for Criminal Investigation’).
Tokyo: Homusho.
Inoue, M. (1997) Sosa Shudan to shiteno Tsushin/Kaiwa no Boju (Telecommunications’ Interception andEavesdropping as Investigative Tools). Tokyo: Yuhikaku.
Johnson, J. (2002) 11th September, 2001: Will it make a difference to the global anti-money laundering
movement? Journal of Money Laundering Control, Volume. 6, Number 1, pp. 9-16.
Johnston, L. (1992) The Rebirth of Private Policing. London: Routledge.
Keisatsucho (National Police Agency, NPA). (1996) Heisei 8 Nen Keisatsu Hakusho (White Paper on Police1996). Tokyo: Keisatsucho.
Keisatsucho. (1999) Heisei 11 Nen Keisatsu Hakusho (White Paper on Police 1999). Tokyo: Keisatsucho.
Keisatsucho. (2000) Explanatory Notes to Punishment of Organised Crime and Control of Proceeds of Crime
Law. Tokyo: Keisatsucho.
Lessig, L. (1999) Code and Other Laws of Cyberspace. New York: Basic Books.
Levi, M. and Gilmore, B. (2002) Terrorist finance, money laundering and the rise and rise of mutual
evaluation: a new paradigm for crime control? European Journal of Law Reform. Volume 4, Issue 2, pp. 337364.
Lloyd, I. J. (2000) Information Technology Law (third edition). London: Butterworths.
Manning, P.K. (2000) Policing new social spaces. In: Sheptycki, J.W.E. (Ed.) Issues in Transnational Policing.
London: Routledge.
Mostyn, M.M. (2000) The need for regulating anonymous remailers. International Review of Law
Computers & Technology, Volume 14 (1), pp. 79- 88.
PIU (Performance and Innovation Unit). (2000) Recovering the Proceeds of Crime. (A PIU Report). London:
Cabinet Office. Retrieved 21st March 2002, at
http://www. cabinet-office.gov.uk/innovation/2000/crime/recovering/contents.htm.
Sheptycki, J. (2000) Policing the virtual launderette: Money laundering and global governance. In: Sheptycki,
J.W.E. (Ed.) Issues in Transnational Policing. London: Routledge.
Sutter, G. (2001) A tale of two interception regimes: RIP v CALEA, a comparison. 16th BILETA Annual
Conference (April 9th - 10th, 2001). Retrieved 30th December 2002, at
http://www.bileta.ac.uk/01papers/sutter.html.
Thomas, P.A. (2002) Legislative responses to terrorism. In: Scraton, P. (Ed.) Beyond September 11: An
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Tsuchiya, T. (2001) Digital jidai no gohoteki tsushin boju Europe hen (Lawful interception in the digital age Europe issue). Chijo, November, pp. 14-20. Retrieved 6th May 2003 at
http://www.glocom.ac.jp/project/chijo/2001_11/2001_11.pdf.
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THE DEPARTMENT OF SPECIAL INVESTIGATION (DSI):COUNTERMEASURES IN REGARD TO THE INVESTIGATION OF
ECONOMIC CRIMES AND SPECIAL CRIMES IN THAILAND
Sutthi Sookying*
I. INTRODUCTION
Thailand has experienced and suffered from many kinds of economic crimes for a long time. The
economic crisis in 1979 and in 1997 partly erupted from the fraudulent activities and malpractices of thefinancial institutions and the stock market. The country is also faced with drug trafficking, money
laundering, underground banking, cheating and fraud on the public. Yet, typical economic crimes such as
corruption, tax evasion, and government procurement fraud are prevalent.
At present, Thailand has successfully enacted new laws and established new agencies to combat theprevailing threats of economic crimes which I elaborate on later in this paper. Although, some favourable
signs of achievement have been observed in combating offences like corruption, drug trafficking and money
laundering, the success of implementation and enforcement of laws in relation to other economic crimes, isyet to be ascertained. Particularly, after the economic crisis of 1997 until now, the government has failed topunish the malpractice executives and the wrongdoers. So, Thai society has come to realize that someexisting agencies and the old system of criminal justice are not capable of fighting economic crimes andother serious crimes.
The failure of the criminal justice system stirred up the awareness of society and caused the government
to put its effort and resources into coping with economic crimes. Also, the struggles for political and legal
reform of the Thai people over decades have resulted in the Constitution of the Kingdom of Thailand B.E.
2540 (1997) which led to the reform of the whole criminal justice system. The establishment of the
Department of Special Investigation (DSI) in October 2002 is also the outcome of the reform and the effort
of fighting against economic crimes.

II. THE SITUATION AND THE PROBLEMS OF INVESTIGATION OF THE ECONOMIC
CRIMES IN THAILAND
A. The Situation of Economic Crimes
As mentioned above, Thailand is faced with many kinds of economic crimes. However, the recent trends
in the economy have created serious problems in the arena of the stock market and financial institutions
such as fraud in financial institutions, price manipulation in the stock market, insider trading, crimes relating
to securities, etc.
In 1979 Thailand had its first experience of economic crime relating to the stock market in the Raja
Finance case. Raja was a big finance and securities company that lent a substantial amount to its associates
in order to manipulate its share price on the Securities Exchange of Thailand (SET) which started operationsin 1975. As Raja’s financial position was weakened by a collapse of the stock index, depositors who had lost
confidence in Raja, withdrew their deposits and Raja was eventually closed down. The depositors further
withdrew money from other finance companies due to a lack of confidence in the sector. Then, the economiccrisis occurred.
In 1983, four years after the collapse of Raja, Thailand encountered another banking crisis. This wascaused by loopholes in the supervisory power of the Bank of Thailand to regulate bank executives against
malpractice. A number of finance companies could not redeem their deposits and some were closed down
and the government had to take direct ownership of several weak financial institutions.

* Public Prosecutor, Acting Director of Financial and Banking Crimes Office, Department of Special Investigation, Ministry ofJustice of Thailand.

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During the 1980s, Thailand was faced with a scheme of cheating and fraud on the public when “MaeChamoi,” a Thai woman, set up an investment scheme to lure the public into investing in a “Share Fund” or“Chit Fund.” Mae Chamoi promised to pay high returns to her members at no risk. It was a kind of highyield investment programme or money pyramid scheme. In fact, those returns were actually generated fromthe principal of members who joined later. The scam expanded until it finally collapsed when Mae Chamoi
mismanaged the cash-flow and some members started to withdraw their money. Again, the economy of thecountry went down.
In 1992, Thailand established the Securities and Exchange Commission (SEC) to supervise and develop
the capital market. The SEC launched its first preliminary investigation into a price manipulation caseknown as “Sia Song” or the “Song Wacharasirote’ case. However, the accused was later acquitted by theSupreme Court.
The economic crisis in 1997 partly erupted from the fraudulent activities and malpractices of financial
institutions and the stock market, particularly the Bangkok Bank of Commerce (BBC) and many relatedcases. The patterns of the case were similar to the Raja case in 1979 and the malpractice of the executives ofthe banks in 1983. However, until now the related government agencies, or in other words, the criminal
justice system failed, to punish the malpractice executives and the wrongdoers.

B. The Existing Investigative Apparatus
Before the establishment of the DSI, the following were the related agencies dealing with economic
crimes in Thailand.
1. The Bank of Thailand (BOT)
Established in 1939 and started operation in June 1940, the BOT served as the central bank of thecountry. Among other functions, the BOT is responsible for the supervision of commercial banks, financecompanies, and other kinds of financial institutions.
In the fraudulent cases committed by the bankers or financial crimes involving financial institutions or
financial transactions, the BOT has the power of administrative and preliminary investigation after that thecase is referred to the Economic Crime Investigation Division (ECID) of the police.
2. The Stock Exchange of Thailand (SET)In July 1962, a private group established and organized the stock exchange as a private company named
the “Bangkok Stock Exchange Co., Ltd. (BSE).” However, the BSE was inactive and stocks continued toperform poorly. Without government support, the BSE finally ceased operations in the early 1970s.
In May 1974, the Securities Exchange law was enacted and the Securities Exchange of Thailand (SET)
officially started trading in April 1975. On January 1, 1991, the SET changed its name to “The Stock
Exchange of Thailand (SET)”.
As the SET is the immediate monitor of securities trading information, whenever any suspicious
practices in securities trading occur, the SET holds primary responsibility for inspection and gathering all
related evidence and facts for further action and coordination with the Securities and Exchange Commissionof Thailand (SEC) and the police at the ECID.
3. The Securities and Exchange Commission of Thailand (SEC)
In spite the fact that the Thai capital market has been playing a pivotal role in the country’s economic
development, in the past, the supervision and development of the Thai capital market was governed undervarious laws and regulations. To emanate the new legal framework and mark a new era for the Thai capital
market, the Securities and Exchange Act B.E. 2535 (1992) was enacted on March 16, 1992.
The Act was promulgated and came into force in May 1992. This law empowered the office of the
Securities and Exchange Commission of Thailand (SEC) to be the independent state agency to reinforce theunity, consistency, and efficiency in supervision and development of the capital market of the country.

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The SEC is empowered to examine unfair securities trading practices such as trading securities by using
inside information, causing unusual price movement by the continual practice of price manipulation,dissemination of misleading information related to the facts of securities to the public, etc. Such cases arereferred to the police at the ECID and the office of the Attorney General respectively.
4. The Fiscal Policy Office (FPO)
The Fiscal Policy Office of the Ministry of Finance has the power of administrative and preliminary
investigation according to some particular laws such as the Royal Proclamation Governing Fraudulent
Borrowing B.E. 2527 (1984) and offences relating to cheating and fraud of the public or so called “Chit Fund”
cases.
5. The Revenue Department, the Excise Department, and the Customs Department
The Revenue Department is mainly responsible for the collection of Individual and Corporate Income tax,
and Value Added tax while the Excise department is mainly responsible for the collection of excise taxes andduties, such as liquor, tobacco, specific electrical appliances, specific vehicles, etc. and the Customs
department is mainly responsible for the collection of customs taxes and duties.
In tax and duty evasion cases, the above related departments have the authority to carry out anadministrative and preliminary investigation.
6. The Anti-Money Laundering Office (AMLO)
Established in 1999, the AMLO has been actively fighting against money laundering in Thailand
particularly in narcotic and corruption cases. In 2003, the AMLO played a very important role in the war on
drugs; which has been a very successful operation of Thailand.
However, the AMLO has power only on the civil asset forfeiture side. On the criminal provisions ofmoney laundering, the AMLO has to refer the cases to the local police station (but in the future the case will
be referred to the DSI.)
7. The Office of the National Counter Corruption Commission (NCCC)
Before 1975 corruption investigations were carried out by the normal government agencies andinspections were carried out by the supervisors within the relevant agencies themselves.
In 1975, the Counter Corruption Act was promulgated and established the Office of the Commission ofCounter Corruption (CCC). However, the CCC did not have much power to combat corruption because of its
limited jurisdiction.
In 1999, the office of the National Counter Corruption Commission (NCCC) was established according to
the provisions of the Constitution 1997.
In 2003, the NCCC and the office of Criminal Litigation against Persons Holding Political Position of theoffice of the Attorney General were successful in filing law suits against the former Deputy Minister of the
Ministry of Public Health and other high ranking politicians and convincing the Supreme Court to convictthem.
8. The Economic Crime Investigation Division (ECID)
In 1987, the Police Department set up a special task force to fight against economic crimes, and later in
1991, developed the Economic Crime Investigation Division (ECID). This division is under the Central
Investigation Bureau (CIB) of the police.
During the economic crisis, ECID was criticized for its role and performance. Since the establishment of
the DSI, the function and future of the ECID is under consideration.
9. Office of the Attorney General (AG)The AG has occasionally established special offices to handle economic crime cases. For instance, the AG
set up the Department of Economic Crimes Litigation, Department of Intellectual Property and173

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International Trade Litigation, Office of Money Laundering Control Litigation and the Department of Tax
Litigation.
Although, the AG set up special offices to handle economic crime cases, the Thai public prosecutors still
have no power in the investigation process. They have to wait for the cases from the police before taking
further action. This problem will be discussed later.
10.The Specialized Courts
The courts of Justice of Thailand are classified into three levels consisting of the Courts of First Instance,
the Court of Appeal and the Supreme Court.
Like the AG, the Courts have occasionally developed efficiency in handling cases by establishing thespecialized divisions or specialized courts such as the Tax Court, the Intellectual Property and International
Trade Court, and the Bankruptcy Court.

C. The Problems Investigating Economic Crimes
1. The Basic Problems
The justice system in Thailand has been confronted with basic problems: the excessive power of thepolice and the police’s abuse of power, the lack of cooperation and coordination among agencies in thecriminal justice system, the delay of criminal process, the unnecessary detention of the accused during trial,
the lack of compensation for the accused later acquitted, etc.
The movement for reform of the criminal justice system started a long time ago and many problems havebeen solved. However, in the area of criminal investigation, particularly for economic crimes, there is still asearch for a suitable solution.
2. The Problems of the Criminal Investigation Process
In many countries, criminal investigation is the joint responsibility of the police and the prosecutor, withthe former under the supervision and guidance of the latter. But according to the Criminal Procedure Code
B.E. 2478 (1935 AD.) of Thailand, there is an almost complete separation between the investigative andprosecutorial functions.
The prosecutor has a passive and limited role in the criminal investigation. The prosecutor’s role begins
only after the police have finished their investigation and submitted the file of inquiry to him/her. The
prosecutor will then review the file, which also includes the police recommendation on whether the caseshould be prosecuted. If the prosecutor is of the opinion that the file of inquiry is incomplete and moreinvestigation is needed before a decision can be made, he/she can direct the police to conduct additional
investigation. However, since the power of investigation belongs exclusively to the police, the prosecutor
can only request the police to conduct the investigation on his/her behalf and cannot initiate it himself/
herself.
Therefore, the police are the only organization who can initiate a criminal investigation and are in aposition to monopolize the state’s power to invoke criminal enforcement. Such complete control of the pretrial criminal process by the police without an adequate opportunity for supervision and control by otherorganizations has left the police virtually unchecked to freely perform their functions with very minimal
review from the other criminal agencies.
However, after the establishment of the National Counter Corruption Commission (NCCC) and
Department of Special Investigation (DSI), the powers of criminal investigation in special cases are vested tothose new agencies which are the result of legal reform.
3. The Problems of Investigation of Economic Crimes
In Thailand, there are many agencies involved in the process of investigation in economic crimes. These
agencies work independently to conduct investigation in their jurisdiction. The other agencies have to wait
until the investigation files are submitted to them. For example, in a securities offence, the Stock Exchange

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of Thailand will gather and analyze information or conduct the preliminary investigation and then submit thecase to the Securities and Exchange Commission (SEC). The SEC will conduct an administrative andpreliminary investigation and submit the case to the ECID. The ECID, will conduct the criminal
investigation, interview witnesses, review (the same) documents, and give their opinion on whether thecase should be prosecuted, then submit the file to the prosecutor at the DECL. Again, the prosecutor will
review the whole file before making a decision to prosecute or drop the case. This may take 4-5 years and inmany cases end up with the failure to punish the criminal.

III. DEPARTMENT OF SPECIAL INVESTIGATION (DSI) : THE COUNTERMEASURES INREGARD TO THE INVESTIGATION OF ECONOMIC CRIMES AND SPECIAL CRIMES
A. The Pressure from Society and Development of the Concept
In 1997, two important events occurred by coincidence in Thailand - the economic crisis and thepromulgation of the new Constitution - which led to the radical reform of the legal system and socioeconomic structure and also the reform of the government administrative system, including theestablishment of the Department of Special Investigation (DSI) .
1. Economic Crisis in 1997 : Turn Crisis into Opportunity
The economic crisis known as “Tom Yum Kung Disease” caused more than fifty financial institutions inThailand to collapse. The crisis stemmed from the rapid expansion in real estate, construction and financial
sectors that generated over-investment and a high level of external short-term loans. Also, the crisis partly
erupted from the fraudulent activities and malpractices in the financial institutions and stock market,
particularly in the Bangkok Bank of Commerce (BBC) and related cases. The crisis erupted when export
slowed and the country lacked cash-flow. To resolve the problems, the Thai government sought help fromthe International Monetary Fund (IMF) and the international community, particularly from Southeast Asian
nations and Japan.
As a debtor, Thailand had to follow the guidance of the IMF in many ways, including the amendment ofbusiness laws. During the three years under the IMF programmes from 1997 - June 2000, Thailand amended
eleven statutes that obstructed a solution to the economic crisis.
However, after the crisis, scholars and activists criticized those laws for being in favour of creditors.
They suggested that the laws should respect both the creditors and the debtors’ rights. The debates, led to a
proposal to reform the whole system of business laws. Now the process of reform is still going on.
Furthermore, after the crisis, the public demanded that the government investigate the cause of thecrisis and declare who should be blamed. In particular, the public demanded that the government punish thewrongdoers who were involved in the financial fraud and caused the crisis.
However, under the old system of investigation in which the investigation power belongs exclusively tothe police, the police and the whole criminal justice system failed to do so. This later led to the accelerationof the establishment of the Department of Special Investigation (DSI) in order to cope up with the problems
of investigation of economic crimes and other special crimes.
2. The Constitution B.E. 2540 (1997) : The Outcome of Public Awareness
On June 24, 1932, a group of young intellectuals, educated abroad staged a bloodless coup demanding achange in the Thai government system from absolute monarchy to a democracy with a constitutionalmonarchy. King Prajadhipok (Rama VII) agreed and thus ended 700 years of Thailand’s absolute monarchy.
However, over six decades of democracy has undergone a long process of refinement and struggle. In theearly period of democracy, the armed forces took control of the country then the people demonstrated anddemanded democracy. Many pupils, students, and others sacrificed their lives for democracy during thedemonstrations demanding real democracy in October 1973, October 1976, and May 1992.
The bloodshed demonstrating for democracy in May 1992 and the struggles of the Thai people over the
decades, led to political and legal reform. The Constitution of the Kingdom of Thailand B.E. 2540 (1997) is
the significant outcome of the event.

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The Constitution has reformed the whole structure of the country. It created a new kind of check andbalance system, not only of the three branches of traditional powers - the Judiciary (Court), Legislature(Parliament) and Executive (Government), - but also the powers of the people, community, and new
independent agencies such as the Election Commission, an Ombudsman, Human Rights Commission,
Administrative Court, Constitutional Court, State Audit Commission and the National Counter Corruption
Commission (NCCC).
The Constitution also set up a new era of the Court and the Ministry of Justice. The Ministry of Justice
had been the secretariat of the Court responsible for the administrative work of the Judges. But under the
new Constitution, the Court is totally separate from the government. The Court has its own budget andadministrative office. It is the duty of the government and the parliament to provide a sufficient budget for
the Court.
Before the promulgation of the Constitution, the justice affairs agencies were scattered under many
Ministries. The result of that caused problems of cooperation and coordination. By the provisions of theConstitution, the Ministry of Justice is the centre for the administration of justice affairs of the country. By
this, all government agencies relating to the administration of justice affairs - such as the Office of the
Attorney General, Office of Anti-Money Laundering, Office of Narcotics Control and Correction Department,- have been transferred to the Ministry of Justice. It is also necessary to set up the new agencies under the
Ministry of Justice such as the Central Forensic Science Office, Office of Justice Affairs, Department ofRights and Liberty Protection, and importantly, Department of Special Investigation, (DSI); the new law
enforcement agency entrusted with the detective and investigative powers.

B. The Process of Establishment of the Department of Special Investigation (DSI)
After the political turmoil in May 1992, there was an increase in the public’s demand for political andlegal reform, particularly reform of the Constitution and the criminal justice system as mentioned above.
This process took many years of development and struggle.
In 1995, the Committee on Administration and Judicial Affairs of the Senate, after thorough study,
proposed to restructure the Ministry of Justice. In their paper the Committee of the Senate also stated the
problems of investigation carried out by the police; therefore, they recommended establishing the DSI to be
entrusted with investigative power in complicated and serious criminal cases.
In 1997, as mentioned above, Thailand had a new Constitution which entrusted the Ministry of Justice tobe the centre of the administration of justice affairs.
In 1998, the Prime Minister set up a special committee to study and design the model and structure of
the Minister of Justice. The committee reported to the Prime Minister and recommended establishing the
DSI to be the independent agency under the direct supervision of the Minister of Justice.
In conclusion, from the year 1995 - 2002, the legal scholars and practitioners, particularly the Committeeof the Parliament, from time to time, held academic seminars and research and finally suggested establishing
the DSI.
Finally, after taking a long time to gain public support and political will, in the year 2002, by the proposalof the Government, the Parliament passed the Bill for Reformation of the Government Agencies. This law
came into effect in October 2002, establishing many new government agencies, including the DSI.
However, according to the Act for Reformation of the Government Agencies and the Ministerial
Regulation of the Ministry of Justice, the DSI has only administrative power. It is necessary to have a special
law to authorize the detective and investigative power and other authorities of the DSI - that is the Special
Investigation Bill which came into effect in early January 2004, when the King signed the Bill.

C. The Role of the DSI in Fighting Economic Crimes
1. The Central Unit for Fighting Economic Crimes
The Special Investigation Act B.E. 2547 (2004) which came into force after the King signed the Bill in176

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January 2004, authorizes the DSI to be the central unit of the investigation of economic crimes and special
crimes at the very beginning.
The concept of working in an interdisciplinary manner will be applied. The DSI can appoint or invite any
related persons or experts to join the investigation team, including from the international community. The
DSI will work closely with the prosecutors and other agencies as a team. The Government and theParliament allow the DSI to pool the resources of the country to fight economic crimes. For instance, theDSI can request officers from other agencies to work at the DSI for a certain period.
2. Seeking Cooperation and Bringing in Experts
The Special Investigation Act aims to solve the problems of lack of cooperation and coordination amongagencies in the criminal justice system. The Act authorizes the Special Investigation Board (the Board) topass a resolution or adopt a Memorandum of Cooperation and Coordination among agencies. The Board
headed by the Prime Minister, comprises of the heads of the criminal justice agencies and scholars. If there
are conflicts among agencies, then the problems will be solved by the Board.
According to the Special Investigation Act, the DSI will consult and work closely with the prosecutors. In
particular cases, such as transnational crimes and crimes committed by influential persons or politicians, theDSI and the prosecutors are jointly responsible for investigation.
The Act also allows the DSI to appoint experts from various fields and organizations, including frominternational communities to join the investigation team.
3. The Special Power of the DSIThe DSI can request a Court to issue a warrant to access the accounts, computer, communication
instruments or equipment, electric mail, data, or any electronic telecommunications of the suspects for nolonger than a ninety day period. The DSI can also operate a sting operation or set up a mobile unit orcommando unit if necessary.
4. The Jurisdiction of the DSI
According to the Act, the DSI is responsible for crime prevention and suppression and for investigating
specific crimes, such as Financial and Banking crimes, Intellectual Property Rights crimes, Taxation crimes,
Consumer Protection and Environmental crimes, Technology and Cyber or Computer Crimes, Corruption in
Government Procurement, and other serious crimes that have a seriously negative effect on public peaceand order, morale of the people, national security, international relations, and the economic or financial
system. The DSI will also have responsibility for investigations involving Transnational and Organized
Crimes and also other white collar crimes.
The Act aims to promote the DSI to be the experts in the investigation of those kinds of special crimes.

D. The Difference Between the Roles of the Police and the DSI
The Government and Parliament intend to entrust the DSI with the power to investigate serious,
complicated and sophisticated crimes and particularly economic crimes or white collar crimes, transnationaland organized crimes; while the police have the power to maintain peace and social order and have thepower to investigate street crimes.
The DSI will operate on the basis of a data collection and technology base; therefore, it is like anIntelligence Unit rather than an Army. While the Police still need a foot patrol operation, the DSI will not,but it may be necessary to have a sting operation or sleeper unit to spy on a specific organization or area.

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E. The Organizational Structure of the DSI
Ministry of Justice⇩
The Minister⇩
The Permanent Secretary⇩
Deputy Permanent Secretary⇩
Department of Special Investigation (DSI)⇩
Director General
Development of Management
System Group
Human Resource Group
Strategy Planning GroupInternal Audit Group
Dissenting Cases Group
Legal Counsel Group●

Office of the Secretary●

Office of Development and Logistics●

Office of Technology and Information●

Office of Special Crimes●

Office of Taxation Crimes●

Office of Financial and Banking Crimes●

Office of Foreign Affairs and Transnational Crimes●

Office of Intellectual Property Rights Crimes●

Office of Consumer Protection and Environmental Crimes●

Office of Technology and Cyber Crimes

IV. CONCLUSION
Since special crimes under the jurisdiction of the DSI have modus operandi that differ from other crimes
in various aspects, the DSI will train its officers to be well equipped with specific knowledge along withsuperior skills, tactics and teamwork that will be necessary to conduct successful investigations.
The DSI expects itself to be an interdisciplinary organization aiming at proactive operations to deliver
justice to society and to reduce financial loss. Also it aims to work towards ensuring the safety, security andwealth of the nation and the world community possessing accountability and integrity in order to be wellrespected by the public and the world community.

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COUNTRY REPORT: ZIMBABWE
Samson Mangoma*
I. INTRODUCTION
The Land Reform Programme adopted by the Zimbabwe Government in the year 2000 and thesubsequent smart sanctions imposed by the Western Countries has resulted in the mushrooming of various
forms of serious economic crime. The inflation rate stands at 600% and this is a good breeding ground for
economic crime. The most notable forms of economic crime manifest themselves in corruption, market
manipulation by multinational corporations, insider trading, externalisation of foreign currency, andembezzlement of funds both in private and public sectors and a thriving parallel market. This paper shallenlighten you on the current situation in the country, problems and countermeasures in the investigationand trial of economic crime, prevention of economic crime and ways of strengthening the legal framework
for the punishment of economic crime.

II. THE CURRENT SITUATION AND THE PROBLEMS OF SERIOUS
ECONOMIC CRIME IN ZIMBABWE
As alluded to earlier, the Land Reform Programme brought both positive and negative aspects to thecountry. The Zimbabwean economy is agro-based and thus the Land Reform Programme affected the growthof the economy.
The few whites who owned the land and who were supported by masters of industry and multinational
companies were not supportive of the reform. As a result, they worked in cahoots to derail the reform and at
the same time involved themselves in various forms of economic plunder as pointed out earlier. Thus today,
Zimbabwe is in a very serious economic problem of high inflation and high unemployment rates. This
scenario tends to promote economic crime. The statistics shown in Appendix A portray the situation for theyear 2002/2003.
As can be seen from the statistics, serious economic crime was on the increase in 2002 while in 2003 it
has been on the decrease. This is attributable to the measures put in place to combat economic crime. The
Police as an organisation have also put various strategies into effect to fight economic crime such as i) Crime awareness campaignsii) Seminars with the stake holders on prevention of economic crimeiii) Beat and patrols, etc.
iv) Surveillancev) Effective use of informersvi) Lobbying the courts to pass stiffer sentences on the would be criminalsvii) Lobbying the courts to remand such people in custody
Most of the perpetrators who commit serious economic crimes are leaving the country for Botswana,South Africa, Britain, Australia, Canada, and the United States of America. When these criminals leave thecountry heading to Western countries, they falsely claim political asylum and their extradition to face trial
becomes difficult. Since these criminals are enjoying this protection and proceeds of the crime, more andmore people are getting involved, as there is no fear of arrest and prosecution.

A. Drought
In Southern Africa, there have been successive years of drought. The drought has worsened theeconomic situation forcing law-abiding citizens to engage in criminal activities to make ends meet. Donor
agencies have come forward to assist by providing food aid. However, people entrusted with the distributionof the aid are corruptly enriching themselves at the expense of the intended beneficiaries.
B. Urbanisation
In Zimbabwe many people have migrated from rural set ups for major cities in search of jobs mainly due
to the persistent droughts that have affected the whole of southern Africa. However, the people find it isdifficult to secure jobs since some companies are closing down due to the reasons mentioned above, and* Chief Superintendent of Zimbabwe Republic Police, Zimbabwe.

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thus, they are forced to commit crime in order to make ends meet.
The following are the economic crimes mostly committed in Zimbabwe under Common Law:i) Fraudii) Theft by false pretencesiii) Theft by conversioniv) Extortionvi) Forgery and utteringvii) Receiving stolen property

For definitions and essential elements see Appendix B
As mentioned earlier on, the following are just a sample of the serious economic crimes under the statutelaws of Zimbabwe:i) Corruptionii) Smugglingiii) Money launderingiv) Externalisation of foreign currencyv) Trading in foreign currencyvi) Insider tradingvii) Flouting tender procedures, etc.

III. PROBLEMS AND COUNTERMEASURES IN REGARD TO THE
INVESTIGATION AND TRIAL OF ECONOMIC CRIMEIn Zimbabwe, the police are constitutionally mandated to investigate all criminal matters and bring thematters before the Courts for judicial investigation, and prosecution. The police and the prosecutors operate
independently although there is some co-operation, which exists. The Police complete investigations andcompile their criminal dockets which they hand over to the prosecutors who scrutinises them. If they are
happy with the evidence, they take the matter for prosecution and if they are not happy with the evidence,
they indicate this and return the dockets to the police for further investigation. However, economic crimes
are difficult to prosecute let alone to investigate and some specialised training is required for both theprosecutors and the police investigators. A number of the cases take a long time to be finalised at court andthe main reasons are lack of manpower at the courts and also that sometimes the prosecutors do not possess
the capabilities to deal with such matters. Sometimes, the relationship of the prosecutors and police isaffected by these delays as there is mistrust between the two departments. The other problem we have ison investigations and extraterritorial connotations, as some of the member countries are not ready to assist
or to respond to requests. This contributes to the delay in the completion of our cases.
The following are the types of Courts found in Zimbabwe:i) Magistrate Courtii) Provincial Magistrate Courtiii) Regional Magistrate Courtiv) High Courtv) Supreme Court
1. Magistrate Court
This type of court is presided over by a junior magistrate and is for minor offences. Also juveniles andyoung persons are tried in this court.
2. Provincial Court
This court is presided over by Provincial Magistrates who may sentence someone for up to twelve
months imprisonment or two thousand dollars fine.
3. Regional Court
This court is presided over by Regional Magistrates for offences of a serious nature and may punish
someone with up to seven years imprisonment or twelve thousand dollars.

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4. High Court
Judges preside over this Court which deals with cases of an extremely serious nature like murder andthey may impose the death penalty or life imprisonment.
5. Supreme Court
This is the highest court of appeal in Zimbabwe which also deals with matters involving the constitution.
Ordinarily the Regional and the high Courts mostly deal with serious economic crimes in the country.
These institutions play an important part in the fight against economic crime by imposing stiffer sentenceson the accused persons in order to deter them from committing such crimes.

IV. INVESTIGATIVE APPARATUS
The Zimbabwe Republic Police is an establishment of the Zimbabwe Constitution and is mandated tomaintain Law and Order in the country. The Police organisation is further given powers by various Acts of
Parliament notably the Criminal Procedure and Evidence Act Chapter 9:07. Thus, the police have all theinvestigative powers in the country though the President of the country can establish a commission to carryout investigations if it is deemed necessary. The police are independent of any other body when carrying out
investigations.
The Fraud Squad has been set up to deal with all serious forms of economic crimes nationally and has set
up their offices in the two major cities of Harare and Bulawayo. The office in Harare is headed by an
Assistant Commissioner and deputised by a Chief Superintendent whilst the Bulawayo Office is headed by a
Chief Superintendent and deputised by a Superintendent. Where expertise that cannot be found within thepolice is required, such experts can be hired to carry out tasks like auditing, accounting, etc. The
organisation is aware of the challenges brought about by technology and has constantly been providing on
the job and off the job training to keep the officers abreast of new trends in criminal activities. However,resources have not been adequately supplied to meet the required levels. Computerisation of the Fraud
Squad is still to be fully implemented to meet operational requirements. This is to keep the branch abreast
with the new technology in order to fight the criminals of today who have become technologically advanced.
The Bulawayo office is yet to be computerised.
Organisations Involved In the Fight against Serious Economic Crimes:i) Policeii) Courtsiii) National Economic Conduct Inspectorateiv) Anti Corruption Unitv) Bankers Security Unitvi) Customs Investigations Unitvii) Reserve Bank of Zimbabwe Investigation Unitviii) Controller and Auditor Generalxi) Attorney General’s Office
As mentioned earlier on, the Police have all the powers to investigate crimes in Zimbabwe. However, theabove organisations marked iii) to viii) assist the police by way of gathering evidence and hand it over to thepolice for further investigations whilst the courts prosecute accused persons involved in serious economic
crimes.

V. COLLECTION OF INFORMATION IN ORDER TO INITIATE THE INVESTIGATIONS
A. Information
In offences committed in the public sector, co-operation is very high, as the authorities are forthcoming in
supplying all relevant information that is relevant to the commission of the offence. However, in the private
sector, if the management is involved, there is a tendency to conceal evidential information.
The police as an organisation have set up various means of collecting or receiving information, which
include:(i) Suggestion Boxes(ii) Hotlines

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RESOURCE MATERIAL SERIES No.66(iii) Informers(iv) Community based policing practises such as:(a) Neighbourhood Watch Committees(b) Home Officer Schemes(c) Police Junior Call
The community-based approach has yielded very pleasing results as members of the public come forward
to give tip-offs.
When crimes are committed against the corporate sector, they are forthcoming in lodging formal
complaints to the police. This has always been the traditional means of alerting the police of crime.
Criminals, themselves sometimes give information of other criminals. Syndicates usually are aware ofwhat other groups are doing and if approached are sometimes helpful in supplying useful information inorder to fix their criminal counterparts.

B. Protection of Whistle-Blowers
The prevention of Corruption Act Chapter 9:16, provides for the prevention of victimisation of whistle blowers. Section 14 (2) provides that: - Any person who without lawful excuse;(a) Prevents any other person from giving any information concerning any corrupt practice or(b) Threatens or does any other thing calculated or likely to deter any other person from giving any
information or(c) Does anything calculated or likely to prejudice any other person because the other person has given
any information shall be guilty of an offence.
The Police Act Chapter 11:10 also provides for protection of informers. The police are not compelled todisclose the source of their information.

C. Collection of Evidence and Securing an Appropriate Adjudication
The collection of evidence and securing an appropriate adjudication is covered by the Criminal Procedureand Evidence Act Chapter 9:07.
D. Search and Seizure
Section 48 of the Criminal Procedure and Evidence Act deals with search and seizure of articles,
documents, or substances with or without a warrant. The Act empowers a police officer to search any person
or container or premises for the purpose of seizing any article. These powers conferred upon the police
enables police officers to collect and secure articles that can be produced as evidence before the courts. The
Police can search premises without warrant if they believe that the delay in obtaining the warrant may defeat
the course of justice and that the warrant may be obtained latter. They can also enter any premises for the
purposes of interviewing and obtaining names and addresses of a person, who on reasonable grounds, issuspected of having committed an offence.
E. Acquiring Banking Transaction Records and Protecting their Confidentiality
This is covered under sections 286-289 of the Criminal procedure and Evidence Act chapter 9:07. Section
286(2) provides that: Any banker’s documents shall be admissible as prima-facie evidence of the matters oftransactions recorded therein or endorsed thereon on proof of being given by the affidavit of any director,
manager or officer of the branch concerned or by other evidence that such documents: (a) have been received or executed and kept by the bank in the usual and ordinary course of business; or(b) are in or come immediately from the custody or control of the bank.
The issue of confidentiality is provided for by section 288, which provides that a bank shall not becompelled to produce its banker’s books or any banker’s documents in any criminal proceedings unless thecourt specially orders that such banker’s books or banker’s documents shall be produced.
The Banking Act Chapter 24:20 also provides for the preservation of secrecy under section 76 of the Act.
However, at times, the banks take a long time to avail the requested evidential information required by the
Police in their investigations and this causes unnecessary delays in the finalisation of cases.

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F. Questioning of Suspects and Witnesses
Questioning of suspects is dealt with under the Criminal Procedure and Evidence Act Chapter 9:07.
Suspects who are accomplices are provided for under section 267 of the Criminal Penal Code. The Act
clearly spells out guidelines on how suspects should be questioned and how statements should be obtained
i.e., a suspect has the right to remain silent, the right to legal representation and the right to have his family
informed of his arrest.
Witnesses are dealt with under sections 229-237 of the Criminal Procedure and Evidence Act. The
provisions of the Act adequately cover the securing of witnesses to attend court and further provides fortheir punishment when they default. Granting of immunity and plea-bargaining is dealt with underaccomplice evidence. Sections 290 to 293 of the Code deal with the privileges that are accorded to a witness.
Measures have been put in place to provide effective protection from potential retaliation or intimidation incriminal proceedings.

VI. PREVENTION OF ECONOMIC CRIMEIn Zimbabwe, the law enforcement agencies’ main priority is the prevention of crime; however, economic
crime is difficult to prevent unlike other crimes where the presence of a Police Officer serves as a deterrent
to the would be criminals. A number of programmes have thus been put in place as a means to prevent
economic crime. The most effective strategy are the Public awareness campaigns as for the other strategies
see page one of this report. For the success of these strategies, the co-operation of the public is necessary.

A. Regulation of Economic Activities
There are a number of regulations in place to control economic activities. These are:(i)
Companies Act Chapter 24:05(ii)
Exchange Control Act Chapter 22:05(iii)
Banking Act Chapter 24:01(iv)
Building Societies Act Chapter 24:02(v)
Insurance Act Chapter 24:07(vi)
Corruption Act Chapter 9:16
(vi)
Gold Trade Act Chapter 21.03(vii) Mines & Minerals Act Chapter 21:05(viii) Criminal Procedure in Evidence Act Chapter 9:07
(ix)
Reserve Bank Act Chapter 22:15(x)
Copper Control Act(xi)
Extradition Act Chapter 9:08
(xii) Rates of Exchange & Money Laundering Act(xiii) Postal & Telecommunications Services Act Chapter 12:02(xiv) Sales Tax Act Chapter 23:08(xv) Estate Agents Act Chapter 27:05(xvi) Audit & Exchequer Act Chapter 22:03(xvii) Companies Act Chapter 24:03(xviii) Public Accountants & Auditors Building Societies Act Chapter 27:03
These Acts are effective, though sometimes criminals circumvent the provisions in order to enhancetheir criminal activities.
To compliment these economic activities the Police have put in place a number of strategies to fighteconomic crime.

B. Corporate Governance
In Zimbabwe Corporate Governance is viewed as an effective tool in strengthening the foundation forsustained performance by corporations. It also helps fight (inter-alia) corruption, corporate scandals, poverty
and ensures that managers of corporations avoid serving their own interest. Actually it encourages fairness,
responsibility, accountability and transparency in the way the affairs of the corporations are run.
Measures have therefore been put in place through the above mentioned legislation such as:(i) Independent Risk Management Departments(ii) Independent Internal Audit Departments(iii) Composition of Executive Directors

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The legislation encourages financial institutions to have the above critical areas addressed. The National
Reserve Bank is responsible for monitoring and ensuring compliance of the regulations.

C. Establishment and Implementation of a Corporate “Compliance Programme”
As pointed out above, monitoring and compliance is the responsibility of the Reserve Bank of Zimbabwe.
Banks are encouraged to set up compliance departments to ensure that the particular institutions adhere to
the statutes. The Reserve Bank reserves the right to withdraw the Banking Licence. Inspectorate Units tomonitor activities of the Banks are in place.
(i) Banks are compelled to submit monthly returns(ii) Control banking activities(iii) Require certain information from Banks
D. Establishment of a System to Monitor Economic Activities
The National Reserve Bank has, through various regulations, established a system to monitor economic
activities such as:(i) Control of Banks, Building Societies, Discount Houses and Financial Houses(ii) Submission of Financial Statements by corporate companies(iii) Implementation of the Stock Exchange Act(iv) Monitoring the importation and exportation of goods, etc.
All these measures are calculated to serve as preventive steps in curbing economic crime.

VII. STRENGTHENING THE LEGAL FRAMEWORK FOR THE PUNISHMENT
OF ECONOMIC CRIME
The continuing rise of economic crime and their harmful effects, especially on an emerging economy, hasresulted in the legislature coming up with new laws to criminalize new types of harmful economic activities.
In Zimbabwe, the following laws and bills have been put in place.
(i) Serious Offences (Confiscation of Profits) Act Chapter 9:17, an Act to provide for confiscation of
profits of crime, and to provide for matter connected therein or incidental thereto.
(ii) Bank Use Promotion and Anti-Money Laundering Bill, 2003, to provide for the encouragement of theuse of the banking system for major money transactions while at the same time discouraging the useof the financial system to launder the proceeds of serious crime.
(iii) Anti-Corruption Commission Bill, 2003, to provide for the establishment for an independent,
powerful and high profile body to spearhead the battle against corruption and provide mechanisms toinvestigate corruption at all levels and in all sectors.
(iv) SADC Protocol against corruption - to foster the development and harmonisation of policies anddomestic legislation of the state parties relating to the prevention, detection, punishment anderadication of corruption in the public and private sectors.

VIII. RATIFICATION AND UTILISATION OF INTERNATIONAL STANDARDS
Zimbabwe is not merely involved in International Conventions but is actively participating in theSouthern African Development Community (SADC) to fight crime. Various protocols, including the SADC
protocol against corruption, have been signed and ratified.
Zimbabwe is moving towards meeting the United Nations Conventions against Transnational organised
crime, which is intended to promote co-operation to prevent and combat Transnational Crime. A few
examples of articles of the UN Convention against Transnational organised crime are: (i) Article 7
Measures to combat laundering(ii) Article 8
Criminalisation of corruption(iii) Article 9
Measures against corruption(iv) Article 11
Prosecution, adjudication, and sanctions(v) Article 18
Mutual legal assistance.
Under the FATF, 40 recommendations, the critical problems faced by Zimbabwe are measures to detect
or monitor the physical cross-border and transportation of cash and bearer negotiable instruments. In 2003,
Zimbabwe faced a critical shortage of banknotes after they had been exported to neighbouring countries
resulting in chaos in the banking industry. The situation was only alleviated by the introduction of negotiable
Bearer Cheques with expiry dates.

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However, most of the recommendations have been put in place. As pointed out earlier. Money launderinghas been criminalised and it is an offence in Zimbabwe to obstruct the due process of law either by physicalforce, threats, or intimidation.

IX. REPATRIATION OF CONFISCATED PROPERTYIn Zimbabwe, confiscated or seized property is dealt with under section 58-63 of the Criminal Procedureand Evidence Act Chapter 9:07. Articles involved in offences committed outside Zimbabwe are, on the orderof the court, delivered to a member of the police force established in such country who may remove it from
Zimbabwe. This is further strengthened by Civil Matters (Mutual Assistance) Act Chapter 8:02, which
provides for the enforcement in Zimbabwe of Civil judgements given in foreign countries.

X. CORPORATE SANCTIONSThe Criminal Procedure and Evidence Act Chapter 9:07, Section 385(6) provides that, when an offence
has been committed, whether by the performance of any act or by the failure to perform any act for which
any corporate body is or was liable to prosecution, any person who was, at the time of the commission of theoffence, a director or employee of the corporate body, shall be deemed to be guilty of the offence, unless it isproved that he did not take part in the commission of the offence and shall be liable to prosecution therefore,
either jointly with the corporate body or apart therefrom, and shall upon conviction be personally liable topunishment therefor.
Administrative sanctions are dealt with by Section 385(7)(b), which provides that any document,
memorandum, book or record, which was drawn up, entered up or kept in the ordinary course of that
corporate body’s business or which was at that time in the custody or under the control of any director,
employee or agent, shall be prima-facie evidence of its contents.

XI. CONCLUSION
Concerted efforts to put mechanisms in place to control serious economic crime are being made by
Zimbabwe. National Policies, Regional Protocols, and International Conventions have been entered into by
Zimbabwe. In this global village, both regional and international co-operation is required to control all formsof crime. Results of the efforts are pleasing though remarkable results could have been achieved had it notbeen for the inadequate resources provided for in the fight against crime. As has been pointed out earlier, theeconomy is not doing well; thus, resources are not easy to come by.

185

186

60

18

1

1

154

THEFT BYFALSE
PRETENCES

THEFT BY
CONVERSIONPREVENTIONOFCORRUPTIONACTEXCHANGE
CONTROLACTTOTALS

106

4

6

16

30

140

0

1

19

38

95

3

2

6

25

61

74

FRAUD

82

2002 2003

2002 2003

50

FEB

JAN

OFFENCE

77

0

1

9

24

43

101

2

3

7

20

69

2002 2003

MAR

114

0

1

7

38

68

94

3

3

8

22

58

2002 2003

APR

139

3

1

15

55

75

101

5

0

9

23

65

2002 2003

MAY

188

2

5

31

60

90

117

2

5

8

34

68

2002 2003

JUN

193

10

11

16

42

114

111

1

5

3

30

72

2002 2003

JUL

121

0

0

10

36

75

97

1

1

8

14

73

2002 2003

AUG

124

1

0

15

31

76

117

2

3

9

22

81

2002 2003

SEP

142

1

3

19

39

81

141

2

0

20

20

99

2002 2003

OCT

MONTHLY CRIME STATISTICS: JANUARY - NOVEMBER 2002 AND JANUARY - NOVEMBER 2003

APPENDIX A

NOV

108

0

2

12

24

70

132

2

0

6

30

94

2002 2003

27

28

100

270

760

1510 1185

18

26

171

447

848

2002 2003

TOTALSRESOURCE MATERIAL SERIES No.66

126TH INTERNATIONAL SENIOR SEMINARPARTICIPANTS’ PAPERS

APPENDIX B
DEFINITIONS AND ESSENTIAL ELEMENTS
A. Fraud
It consists in unlawfully making, with intent to defraud, a misrepresentation which causes actual
prejudice or which is potentially prejudicial to another.
1. Essential elementsi) Unlawfullyii) Making a misrepresentationiii) Causingiv) Prejudice
2. Other forms of frauds
Cheque fraud
Transit Fraud
Charity Fraud
Master Card Fraud
Insurance Fraud

B. Theft by False Pretences
Consists in unlawfully making with intent to steal, a misrepresentation which effects a contractatio of
property capable of being stolen.
Essential Elementsi) Unlawfullyii) Making a misrepresentationiii) Intent to stealiv) Property capable of being stolenv) Contractatiovi) Effecting

C. Extortion
Consists of taking from another some advantage by intentionally and unlawfully subjecting him/her topressure which induces him/her to submit to the taking.
Essential Elementsi) Some advantageii) Intentioniii) Pressureiv) Unlawfulnessv) Inducement

D. Forgery
It consists of unlawfully making, with intent to defraud a false document which causes actual prejudice or
which is potentially prejudicial to another
Essential Elementsi) A documentii) Which is falseiii) Making the document falseiv) Intent to defraudv) Causingvi) Prejudicevii) Unlawfulness

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E. Uttering
It consists in putting off, unlawfully and with intent to defraud, a false document which causes actual
prejudice or which is potentially prejudicial to another.
Essential Elementsi) A documentii) Which is falseiii) Unlawfulnessiv) Intent to defraudv) Causingvi) Prejudice

F. Receiving Stolen Property Knowing It to Have Been Stolen
It consists in unlawfully receiving possession of stolen property knowing it to have been stolen.
Essential Elementsi) Unlawfullyii) Stolen propertyiii) Receiving possessioniv) Mens Rea

G. Theft by Conversion
This depends on the circumstances in which the conversion is done but this occurs where someone isentrusted with goods or money on behalf of a company or organisation. Instead of honouring his/her
obligation, he/she converts such goods or money to his/her own use.

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REPORTS OF THE SEMINARGROUP 1ECONOMIC CRIME IN A GLOBALIZING SOCIETY~ITS IMPACT ON THE SOUND DEVELOPMENT OF THE STATE
Chairperson
Co-Chairperson
Rapporteur
Co-Rapporteur

Ms. Prudence Tangham Dohgansin
Mr. Kongchi Yangchue
Mr. Bright Oduro
Mr. Tsutomu Sunada
Mr. Hesham Mostafa Abd El kader Abo Salem
Mr. Suharto
Mr. Tomoyuki Mizuno(Cameroon)(Laos)(Ghana)(Japan)(Egypt)(Indonesia)(Japan)Advisers

Prof. Sue Takasu
Prof. Keisuke Senta
Prof. Kei Someda(UNAFEI)(UNAFEI)(UNAFEI)

I. INTRODUCTION
The work of the group was preceded by plenary sessions during which individual presentations ofparticipants from the respective countries, lectures and professional guidance by experts and UNAFEI
professors were made. These presentations provided a lead to the seminar’s content and the issues of focus
for the group’s discussion.
The Group discussed and explored ways of confronting the menace of economic crime in this globalizing
society. Indeed consideration was given to the forms and manifestations of economic crime as they occur inthe individual countries, and the problems they present to their respective criminal justice systems. Efforts
were made to identify various countermeasures as far as investigations and trials are concerned.
Emphasis was also laid on the mechanisms of preventing the scourge and the need to develop, sharpen
and improve the requisite tools and institutions in the criminal justice system so as to create a disincentive
for the economic criminal.

II. CURRENT SITUATION AND THE PROBLEMS OF SERIOUS ECONOMIC
CRIME IN PARTICIPATING COUNTRIES
We are confronted with the traditional types of serious economic crimes and the new types. In regard to
the traditional type, corruption was identified by all countries as a serious economic crime largely
responsible for the continued economic instability in many developing and some developed countries. In
regard to the new types, we also agreed cyber fraud, securities crime, credit card fraud, drug/narcotic trade
offences, money laundering, smuggling, trademark and copyright offences need to be addressed with therecent rapid development in communications technology and transportation. Specifically, serious problems in
Cameroon are fraud related crimes by offenders referred to as feyman, embezzlement and corruption. In
Egypt, large scale money laundering effects the national income. In Ghana, serious economic crimes takethe form of fraud by agents of state and in the private sector who usually have a considerable amount of
power. In Indonesia, the advancement in telecommunications and computers has opened up possibilities forthe commission of many economic crimes. In Laos, the extent of economic crime is quite low but tax
evasion, falsification of accounts and the illegal use of checks or banknotes are harming the economy. In
Japan, underground banks have sent a huge amount of money to overseas illegally.
In all countries, the serious problems of weak capacities and inaccessibility to information of law
enforcement officers greatly hamper the investigation and the detection of these offences. In addition, thecurrent criminal legal framework has become inadequate to combat economic crimes.

III. PROBLEMS AND COUNTERMEASURES IN REGARD TO THE
INVESTIGATION AND TRIAL OF ECONOMIC CRIME
Several issues were identified as major constraints in the trial and pre-trial processes. However, thegroup focused its discussions on problems critical to the investigative apparatus and the collection of189

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evidence relevant to securing an appropriate adjudication.

A. The Investigative Apparatus
Economic crime has been traditionally investigated by the conventional law enforcement agencies suchas the police, prosecution services, customs, tax offices and so forth. However, because of the proliferationof economic crime and globalizing society, etc., we came to face difficulties in investigating serious economic
crime by the conventional investigative apparatus. This situation led to the recent creation of special
investigative bodies to exclusively investigate serious economic crime (see Appendix).
The functioning of these conventional and special bodies in some countries is nonetheless hampered byvarious problems, which were observed to be similar and common in nature.
(i) Lack of independence in initiating and conducting investigations(ii) Lack of expertise of investigative bodies(iii) Inadequate and inappropriate human and material resources
1. Elaboration of Item i and its Countermeasures
The group observed that even though investigative agencies derive their authority from relevant
legislative provisions to initiate investigations into serious economic crimes, there are in some countries,
certain restrictive provisions that require them to initially seek executive authorization before certainclasses of persons can be investigated. In other countries even though such express legal provisions don’t
exist, investigators still wait on orders from the executive. These express or implied impediments to theeffective functioning of investigators and prosecutors are prevalent where top officials of Government are
major suspects.
It is therefore recommended that these restrictive laws, which provide some privilege (immunity) to acertain category of persons, be reviewed to enable investigative agencies to operate independently.
The institution of watchdog units from the general public is an appropriate mechanism to monitor theinvestigative apparatus and guard against interference and undue influence.
2. Elaboration of Item ii and its Countermeasures
Participants observed that due to the advancement in telecommunication and computer technology as
well as developments in the stock market, the economic criminal has become more sophisticated. Criminal
acts such as insider trading, market manipulation, cyber fraud, embezzlement and various forms ofcorruption in public and corporate life require technical and professional expertise to investigate them.
In some countries, there is no special body to investigate serious economic crime. In such countries, theestablishment of a special independent or autonomous investigative body with sufficient expertise should be
encouraged.
Where however such special investigative bodies have been established, great attention should be given
to building the appropriate expertise. The first suggestion is that special training in the relevant areas of
economic activities such as legislative knowledge (newly introduced legislation), accounting, auditing,management and stock brokerage should be provided to the investigators.
Secondly, relevant experts like certified public accountants (CPA), lawyers, bankers and computer
technologists should be invited. For this purpose a list of experts should be established to assist
investigators and prosecutors. This requires the selection of renowned experts who possess the skill anduseful knowledge relevant in detecting the commission of economic crime.
3. Recommendations Concerning Item iii
Participants noted the inability to appreciate the dimension of the harm caused by serious economic
crime. This has led to the low prioritization by governments in providing adequate budgetary allocation to
the agencies in charge of investigation of such crime. It was therefore recommended that raising publicawareness is most appropriate to increasing the political will required to secure adequate financial andhuman resources.

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B. Collection of Evidence and Securing an Appropriate adjudication
1. Search & Seizure(i) Authorization for basic search and seizure
The mandatory practice in most countries is for search and/or seizure warrants to be issued by the
court or the public prosecutor. Delays in obtaining these orders constitute a constraint to theeffective investigation of modern economic crimes whose modus operandi necessitate prompt
interventions for the collection of relevant material evidence. As an example, warrants cannot be
obtained during holidays and weekends in some countries. Adopting the system where a judge andprosecutor are both available in office around the clock was recommended for ensuring that warrants
are obtained whenever necessary. Participants however noted that the putting in place of a systemshould ensure a careful balance between the need for an expeditious process in obtaining warrants
and the respect for the human rights of the suspect and his/her relations.

(ii) Interception of communication
Another point of observation made was that in some countries, investigators are empowered by law
to intercept electronic communications and conversations of criminal gangs in cases of murder andnarcotic trading but under very strict conditions. It was recommended, these laws could be extended
to cover situations involving serious economic crime in order to facilitate the process ofinvestigation.
(iii) Trans-border search and seizure
A real and practical constraint relating to search and seizure, involves trans-border money
laundering. Investigators are yet to overcome the legal technicalities in conducting search andseizure beyond national borders notwithstanding the ratification by their countries of relevant
treaties or Conventions. As an effective strategy to overcome this difficulty, the establishment ofbilateral and/or multilateral agreements necessary to strengthen international cooperation andcollaboration is recommended. Beyond this, investigative agencies within the member countries arefurther encouraged to establish inter-agency links by having memorandum of understanding (MOU).
2. Banking Transactions and Protecting Confidentiality
A major common problem faced by investigators is that the crime proceeds obtained from economic
crime are lodged in banks to hide their links, and it is sometimes difficult for investigators to accessinformation on the state of the account owing to restrictive laws or special complex procedures that provide
confidentiality and protection to the banking sector. In addition, in countries with no centralized banking datasystem for financial institutions accessing information of suspicious’ accounts poses an enormous difficulty
in detecting the movement of crime proceeds.
It has now become necessary to review or reform these laws and practices in order to enable
investigators to have necessary access to information on any account credited with illegal proceeds.
A centralized data system for banks will provide easy access and facilitate the process of investigations.
In order to effectively detect proceeds of crime in bank accounts, every financial institution in the world
should institute and apply policies favourable to better knowing their customers. Recommended practices
include “Customer Due Diligence” and a “Suspicious Transaction Reporting (STR) System” provided by the
Financial Action Task Force (FATF) 40 Recommendations. Governments are recommended to report every
financial transaction beyond a specified amount of money.
3. Securing and Protecting Witnesses
A major constraint identified in collecting evidence was the difficulties in securing the appearance of
witnesses in serious economic offences for several reasons; fear, time and money.
(i) Fear
Witnesses to such crimes express fear and feel insecure about being identified where the suspects
are high-ranking political officials or members of organized criminal groups and likely to retaliate
against their person, property and family members.
As a countermeasure, investigators must ensure that witnesses are not confronted with suspects at
an investigational stage. At the preliminary enquiry and trial stage, countries should endeavour to191

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provide screens or partitions to protect the identities of witnesses, or where possible use videolinks. To guarantee protection after trial, witness protection programmes such as relocation and theprovision of a new identity might deserve some consideration. Intimidation towards witnesses
should be criminalized and punished severely.

(ii) Time-consuming procedures caused by the delay in the justice system
There are many causes resulting in the delay of the criminal justice system. The complicated natureof economic crime sometimes requires a lengthy period to carry out investigations and trial, and insome countries, the trial is repeatedly adjourned.
As a countermeasure, it was recommended that countries put in place mechanisms to expedite boththe investigative and trial processes to avoid such undue delays that could keep off vital witnesses.

(iii) Lack of funds for travel expenses
Sometimes witnesses personally have to incur travel costs to testify, thus placing on themselves afinancial burden without compensation. In some cases, witnesses are often reluctant to turn up whensummoned.
As an incentive to secure the appearance of witnesses, it was recommended that a compensation
scheme be instituted to cover travel expenses for such witnesses. In countries where such a scheme
exists, its implementation should be made more effective and timely.
4. Questioning Suspects
Each country was found to possess a procedural system that recognizes the right of the suspect to give
evidence free of duress and renders inadmissible evidence induced or extorted from the accused. These
legal requirements notwithstanding, the practice was found to be tainted with cases of violations byinvestigation officers. The group identified the growing concerns of the society on the increasing use ofconfessions in the investigation of serious economic crimes and the extent to which such statements are
realistically made through the free will of the deponents.
To install public confidence in the use of confession as an evidentiary tool and strengthen the guaranteeof the accused rights during investigations, reforms in the investigative process to guard against any
possible violations were recommended. Appropriate countermeasures should include, reforms which allow
defence counsel to be present at all stages of interrogating suspects and/or the use of video tapes to record
such questioning sessions.

IV. PREVENTION OF ECONOMIC CRIME
A. Public AwarenessParticipants took cognizance of the enormous resources it demands from governments as well as theinsurmountable difficulties they encounter in detecting and investigating serious economic crimes.
Repressive measures were thus becoming increasingly insufficient to reverse the growing trend in thecommission of this class of offence. Prevention through public awareness was considered an appropriate
strategy to involve all segments of the society in overcoming the complexities and peculiarities thatcharacterize detection and investigation of serious economic crime. To ensure any success in the use of thisoption, a framework for designing and implementing a public awareness programme that targets serious
economic crime was proposed.
1. The Approach
Public awareness as a prevention option calls for raising the level of consciousness and responsiveness toserious economic crime in the general public.
Participants concluded that through public awareness, public collaboration can be better guaranteed as
informed citizens willingly provide information on suspicious activities or groups and will exhibit greater
tolerance with protracted judicial processes. Most importantly, citizens are more likely to guard against
victimization by unscrupulous offenders.
The content of public awareness programmes should therefore focus on the identified types of serious
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public collaboration for prevention.
2. Institutional Framework
Each country was found to have put in place some mechanism relevant to creating public awareness onsome serious economic crimes. Nevertheless, the measures adopted were either at an embryonic stage or
ill-adapted to emerging forms of serious economic crime. With regard to existing institutional arrangements,
these were sectoral based with the investigative and prosecution agencies having the sole responsibility of
informing the public. In other countries, commissions with public awareness functions have been established
to combat specified economic crime such as corruption and fraud. Extending this approach to other forms ofserious economic crime is favourable to harmonizing action by various institutions, which can also provide
statistics for the number of various economic crimes as basic information for public awareness. It was agreed
that governments should be encouraged to institute multidisciplinary approaches involving government
institutions, the private sector, NGO’s and local community institutions.
3. Communication Channels
Strategic tools and channels for communication were found to differ with countries. However, foreffective results, the option of communication channels should be determined based on the serious
economic crime targeted:
4. Publicity by the Mass MediaThe arrest of politicians and high ranking government officials for bribery and other forms of economic
crime, and the search of premises relating to securities fraud always make sensational news in many
countries. It was agreed that this information delivered by the mass media is the most effective method toraise public awareness about serious economic crime and deter them from committing it. However in somecountries the state controls the public media and often due to political reasons censors information for public
consumption. The situation does not promote transparency and obviously tends to shield wrongdoers in
responsible positions of trust who misconduct themselves whilst in public office.
As a recommendation Governments should create an enabling environment that will ensure press
freedom and enable the mass media to operate freely and independently.
5. Public Shame List
The publishing of a ‘shame list’ modelled after the Corruption Perception Index of the German based
Transparency International and Current list of Non-Cooperative Countries and Territories of the Financial
Action Task Force showing the number of public officials in various ministries implicated in acts ofcorruption and other economic crimes was considered an appropriate public awareness strategy that will act
as a catalyst for Government and people concerned to do more to restore some sanity into the system.
Where necessary, the names of high-ranking public officials convicted can also be published on the ‘shame
list’. In order to respect the rights of the accused person this approach should be adopted when judgments
have been finalized.
6. Community AwarenessIn many countries chiefs and community leaders wield influence and traditional power over their subjects
and can influence decisions in their communities.
The group suggested that these leaders could be used as a mouthpiece for various public awarenessprogrammes where the dangers in giving and or accepting bribes as well as other crimes of an economic
nature can be further espoused.
7. Pamphlets and Posters
In some countries the Department of the Ministry of Information or the Mayor’s office collates
information on important events and informs the public through a public address system or distribution ofpamphlets and materials. It is recommended that such an approach be adopted for serious economic crimes.

(i) Youth awareness
It was noted that a strong impact could be made in preventing economic crimes, such as cybercrime, if the Internet generation, especially the youth are targeted and made to benefit from an

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appropriate awareness programme. A start could be made in schools by incorporating into theschools’ activities special programmes that seek to educate the youth on the various forms of
economic crime and the harm to the nation’s economy.

(ii) Publication of declared assets
A useful approach adopted by some countries to combat corruption and misappropriation of publicfunds is the mandatory requirement for politicians and high-ranking public officials to declare theirassets before they assume office. The enforcement and effective outcome of this approach has been
fraught with a lot of difficulties. It is in this regard that the publication of declared assets in thenational gazettes and the print media is recommended as appropriate to procuring the public alertand detection of any investments from illegal proceeds by high-ranking officials.
(iii) Complaint centres
The institution of a private Consumer Centre by some countries was found to be effective inreceiving all kinds of complaints from consumers relating to fraudulent commercial behaviours ofcorporations, forwarding the same to investigative bodies and feeding back results to the public.
Based on the successful output of these centres in preventing victimization the adoption andadaptation of a similar system to other economic crime was encouraged.
(iv) Creation of a website on economic crime
Considering the rapid increase across the globe of Internet users, public information through the
web constitutes an appropriate channel to create awareness in the global community on serious
economic crime. It is recommended that an ‘alert system’ be created on the Internet for its users tolearn more about these crimes. The group suggested that investigative bodies and other law
enforcement agencies in the countries work together with various Crime foundations, NGOs and theInternational Police Organizations (INTERPOL) in making this operational.

V. STRENGTHENING THE LEGAL FRAMEWORK AND COUNTERMEASURESOF ECONOMIC CRIME
Priority was given by the group to issues relevant to criminalizing new types of harmful economic
activities and recovery of damage.

A. Criminalization of New Types of Harmful Economic Activities
Economic activities have been diversified by reason of the development of communications andtransportation. As a result, we are confronted with conceivable harmful economic activities. We recognizedthat the following crimes emerging from harmful economic activities have a negative impact on the economy.
-

Obstruction of justice
Theft or espionage of data or information (e.g. illegal access to data)
Piracy (e.g. illegal copyying of software, CD, DVD, etc.)
Money laundering of proceeds derived from old crimes and emerging harmful economic activities
Securities crimes (e.g. insider trading , manipulation of stock prices)
Environmentally harmful activities
Mal usage of automatic teller machines (ATMs)
Possession of forged payment cards (e.g. credit cards, telephone cards)
Non-delivery of contract documents, including important contents to consumers in advance

In some countries, some of the above-mentioned have recently been criminalized. In others, apart frommoney laundering arising out of the drug trade, proceeds from other predicate offences such as smuggling,
human trafficking, organized criminal activities, etc. that generate money laundering have not been
criminalized. It was also observed that in other countries some of these harmful activities have not yet
emerged, and are therefore not criminalized.
Participants agreed that all of the countries should endeavour to criminalize these harmful activities
regardless of the extent of damage on the state’s economy, since these activities are often committed beyond
the borders. To facilitate international mutual legal assistance, we recommended the establishment of aconvention to criminalize these emerging harmful economic activities to enhance international cooperation.

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B. Recovery of Damage
It was noted that the conventional notion of the purpose of the criminal procedures was primarily topunish the offenders and deprive them of the proceeds of crime. Therefore, recovery of damages of thevictims has been set aside as secondary in terms of criminal procedures. However, we originally passed acriminal code to prevent victimization in a sense, and it is a matter of course and very important to make theoffenders compensate for damages caused by their criminal acts. We need to make efforts to recover thedamage of economic crime as much as possible.
Quantifying damages and the capacity of criminal processes to ensure compensation, was identified as areal challenge to attaining this objective.
1. Quantum of Damage
A lot of difficulties are encountered in identifying the damage caused by economic crimes. Some serious
economic crimes such as consumer fraud and Internet fraud generate numerous victims, and sometimes it isalmost impossible to identify all the victims. Furthermore, it is very difficult to identify the quantum ofdamages in some serious economic crimes like corporate crime and securities crime. To overcome such
substantial problems, there is a need to establish appropriate procedures to ensure considerable
compensation. Specifically, the courts need to pay attention to equality of compensation in the course ofrecovery of damages.
2. Criminal/Civil Process
In some countries the law allows the criminal court to make orders for compensation to the victims of
economic crime, yet in other systems recovery is restricted to the jurisdiction of the civil court. However, inother systems, upon the classification of an economic crime as a felony the court becomes incompetent toaddress any issue of compensation. However, the pursuit of civil action in some countries is again madeunattractive by certain judicial procedures and obstacles that come in the way of the victim.
For example, the subsequent institution of a criminal action leads to an adjournment sine die of the civil
action pending the determination of the criminal action. In other systems, the success of the civil action isfurther unlikely where the prosecutor loses his/her criminal action. In addition most legal systems have nosupport facility by way of legal assistance for a civil action especially where the victim is not in a position to
pay for the services of counsel. Participants also noted the existence of international legal assistance in civil
matters which can support a victim’s claim but apparently the procedure is cumbersome anddisadvantageous.
3. Countermeasures
In the light of the foregoing observations participants called for a review of existing legal procedures asfollows:(i) Empower criminal courts to make compensation orders as is appropriate and equitable based on theevidence adduced. In addition for a time and cost effective approach, the criminal courts should
encourage negotiations or settlement between the parties, especially where the defendant pleads
guilty. However, the court should take due cognizance of the interest of other victims who may not
be listed in the indictments.
(ii) Keep civil and criminal actions as independent and separate processes particularly where civil action
by a victim precedes the criminal litigation. Where the existing criminal procedures are favourable, aconsolidation of the criminal and civil action should be encouraged.
(iii) Institute a legal support system for victims who are financially weak to procure the services ofcounsel in a civil action.
(iv) Countries should further facilitate access to international legal assistance in civil matters for victims
of massive economic crimes who are compelled to take civil action against perpetrators who may
have crossed borders. To overcome the complex procedure involved in executing civil judgments andpursuing illegal proceeds abroad, countries should be encouraged to ratify the existing international
instruments relevant to recovery of damages, e.g. the United Nations Convention against corruption
and the United Nations Convention against transnational organized crime.
(v) To overcome delays in the recovery of damage process arising out of appeals from defendants, thecourts should be empowered to make such provisional execution orders as it deems appropriate forrecovery, particularly in countries where the courts have no such powers.

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APPENDIX

SPECIAL INVESTIGATIVE AGENCIES FOR ECONOMIC CRIMEStatesInvestigative Agencies

Cameroon National Commission for Corruption, Economic Crime Unit of the Police and the Gendarme
Egypt

Economic Crime Units of the Police, Special Prosecution Unit for Financial, Commercial
and Smuggling matters, Special Prosecution Unit for Tax Evasion/Corruption

Ghana

Serious Fraud Office, Narcotic Control Board, Economic Crime Unit of the Police

Japan

Fair Trade Commission (FTC) for Anti-Monopoly Law, Securities and Exchange
Surveillance Commission (SESC), Consumer and Environmental Protection Division of the
National Police Agency, Special Investigative Department of the Public Prosecutors Office

Laos

Economic Crime Department of the Police

Indonesia

Corruption Commission, National Narcotic Board, Economic Crime Investigation Divisionof the Police

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Chairperson
Co-Chairperson
Rapporteur
Co-Rapporteur
Members

Mr. Daisuke Moriyama
Mr. Simon Kauba
Mr. Ian M. Queeley
Mr. Dilli Raman Acharya
Mr. Amarsaikhan Delegchoimbol
Mr. Isidro Castillo Perez Jr.
Mr. Yuji Saito(Japan)(Papua New Guinea)(Saint Christopher and Nevis)(Nepal)(Mongolia)(Philippines)(Japan)Advisers

Prof. Yasuhiro Tanabe
Prof. Kenji Teramura
Prof. Tamaki Yokochi(UNAFEI)(UNAFEI)(UNAFEI)

I. INTRODUCTION AND THE CURRENT SITUATION AND THE PROBLEMS OF
SERIOUS ECONOMIC CRIME IN PARTICIPATING COUNTRIES
A. Introduction
This group was assigned the task of deliberating on the issue of the current situation and problems ofserious economic crime in the participating countries. Further, the problems and countermeasures in regard
to the investigations and trial were discussed at length, as seem to be the core to reducing the spread of
economic crime.
In view of the challenges posed by globalization, and technical developments, the reinforcement of multilateral cooperation is essential. All nations over the world should therefore be actively involved in theframing of new international regulations aimed at securing the smooth operation of financial markets, and inparticular at combating economic or financial crimes. We may also need to launch more initiatives targetingthe enhancement and effectiveness of the international fight against financial crimes.
The politico-financial history of the last thirty years reveals a worrying correlation between financial
crimes, indebtedness and poverty. At the moment, it may be impossible to calculate the financial losses todeveloping countries associated with offshore activities. Tax havens may seem far removed from the
problem of poverty, but we must bear in mind that they are intimately connected. Unlawful debt andeconomic crime against human developments definitely undermines the interest of developed countries
much less the poor or developing countries. Faced with this scarcely encouraging situation, the question thatremains to be answered is: will the twenty-first century eventually see justice prevail over the
institutionalized accumulation of fraudulent wealth?
Thus, the establishment of international financial justice has really become essential for all the nations toexist. This involves juridical-economic changes at the national and international levels. In this environment,
the most sophisticated institutions realize the need to upgrade skills and techniques in this area. They alsoneed to share and disseminate knowledge and best practices. In this context, effective models must be
developed for international cooperation between regulators and judicial investigative authorities around theworld. As a significant step to tackle economic crimes, we must be able to provide a coordinated approach tocombating serial, complex and multi-jurisdictional financial economic crimes.
All the governments will have to continue to work with the relevant stakeholders and other countries toprevent, detect and prosecute those who seek to commit economic crimes. In doing this, all concerned must
reaffirm their commitment to work with the law enforcement agencies and the international community toachieve this. Therefore, it goes without saying that the approach for the eradication of economic crimes
imposes the need for creating an organized, mutual approach and cooperation of the authorized investigative
services for the exchange of data and information.

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We are about fighting economic crimes, but we lack the data, the analysis, agreed priorities andorganizational structure to tackle this type of crime effectively. Therefore, if we are really to make any
progress, we need to be able to access the data and better analyze which economic crimes cause the greatest
detriment in terms of their impact on society.

B. Current Situation
For the purpose of the group workshop sessions the course was divided into three 3 groups
alphabetically. Each group comprised of representatives from six different countries, in order to add variety
and diversity to the discussions. This group consisted of participants from Japan, Mongolia, Nepal, Papua
New Guinea, the Philippines and St. Christopher and Nevis. Each participant gave a summary highlighting
the current situation and problems encountered as a result of serious economic crimes in his/her country as
outlined below:
Japan
The number of persons who commit economic crimes shows a general upward trend, and its’ modus
operandi is becoming sophisticated and well organized. We therefore, need further legislative adjustment totackle them effectively.
The problems are as follows: As we face difficulties in getting the information that leads us to serious
economic crimes or corruption acts, we need effective legal methods to get the reliable information such asutilizing whistle-blowers that is now under discussion. We also face difficulties in securing testimony in theinvestigations; “Witness Immunity” would be a very useful method to adopt.

Mongolia
The Republic of Mongolia has undergone a transition period from a so-called closed society to an open
society. During the last few years, the country experienced an increased number of cases that are considered
economic crimes such as corruption, bribery, and tax evasion. However, it is really difficult to investigate
such crimes because some of the prosecutors and even some of the judges are corrupt.
Other contributing factors in dealing with those economic crimes are the apparent inability ofinvestigators because they do not posses the necessary skills and knowledge in those fields; lack of physicalequipment and resources; the absence of a sound legal framework; and the inadequate compensation
packages offered to the judiciary, prosecutors and law enforcement officials, which makes them so vulnerable
to be bribed or get involved in corrupt practices.

Nepal
Nepal is facing serious problems caused by major economic crimes like corruption, tax evasion and illicit
drug trafficking. Corruption, the most prevalent of the economic crimes in Nepal is deep rooted in all facetsof the society. Reasonable investment toward development activities are allocated every year, but the output
in terms of benefit is worsening and decreasing.
The new Prevention of Corruption Act, 2002, New Special Court Act, 2002, and Commission for theInvestigation of Abuse of Authority Act 1991 (Amendment 2002) made the CIAA powerful and active, but
still there are some problems in combating corruptions in Nepal. These are: protection (enjoyed by thecorrupts’), lack of accountability and transparency in the service delivery system, social prestige for those
who gain materially, ineffective internal management audits in the concerned agencies and lack of a rewardand punishment system.

Papua New Guinea
The investigation of Economic Crime in Papua New Guinea is still very challenging to law enforcement
officials. Despite international Conventions and seminars and the best of police cooperation, the obstacles ofthe legal system, police practices and sovereignty are brought into the equation, and this makes it moredifficult to bring offenders to justice or recover lost assets.
Police have tried desperately in the past to bring the situation to a manageable level, and it has now
proved to be too difficult without the cooperation of the community, thus forcing the Police to embark upon
community policing.

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Philippines
In the Philippines today, the most serious economic crime, so far, is graft and corruption. Of course, thisis not to say that other forms or types of economic crimes like stock market manipulation, insider trading,and computer and cyberspace crimes, do not really exist within the territorial jurisdiction of the country.
As a result of the inefficiency in the collection of the much needed revenues brought about by the serious
problem of corruption, the country is now facing a budgetary deficit which is likely to affect the socioeconomic and political development of the country.
The anti-graft bodies, particularly the Ombudsman and Sandiganbayan are seemingly confronted withdifficulties in the prosecution of the cases, due to several factors and unforeseen events thus, requiring
direct intervention from the executive department.
In response thereto, the present administration has launched an intensive campaign against corruptionthat has resulted in the dismissal from the services and imposition of heavy administrative sanctions against
those public officials involved, especially those in the Department of public works and Highways (DPWH),
Bureau of Customs (BOC) and the Bureau of Internal Revenue (BIR).

St. Christopher and Nevis
As a young country, thriving in less than favourable economic conditions worldwide, it is very difficult toprotect our economic image. Gravitating towards a tourism and financial services based economy, economic
crimes, have been the focus of law enforcement officials in recent times.
In this era of globalization, and the advent of technology, we are no longer only experiencing the
traditional economic crimes such as embezzlement, drug trafficking and common fraud, but we areconfronted with modern economic crimes that occur at the touch of a button and have no boundaries, such as
Money Laundering, Credit Card Fraud and other Financial Crimes. However, lack of resources, skills andknowledge has made it rather complicated in some instances to successfully investigate and prosecute theperpetrators. Consequently, the necessary machinery has been initiated based on specific legislation,
education of the relevant stakeholders and the establishment of specialized investigative arms, such as the
Financial Intelligence Unit (FIU), and the soon to be office of the Ombudsman.

II. PROBLEMS AND COUNTERMEASURES IN REGARD TO THE
INVESTIGATION AND TRIAL OF ECONOMIC CRIMES
A. The Investigative Apparatus
In the workshop each participant discussed the problems of investigation and trial of serious economic
crimes in their various countries and shared the experiences in a detailed manner. This aspect “theInvestigative Apparatus” was chosen because it was recognized that this is an integral part of themechanism required to initiate meaningful changes in order to combat economic crimes. In addition, an
efficient investigative apparatus was seen as a preventive measure to serious economic crimes. During thediscussions the advisors raised different, but relevant issues to the participants’ problems regarding theInvestigative Apparatus. Problems on the investigative systems varied and were different from country tocountry, but it was evident that we all had common problems.
Each country to some extent is affected by serious economic crimes, such as corruption, bribery, tax
evasion, market manipulation, money laundering, illicit drug trafficking and credit card fraud. From amongst
the economic crimes highlighted and discussed, it was clear and unambiguous that corruption was the mostprevalent crime. Corruption is rampant in four of the representative countries, Japan, Mongolia, Nepal and
the Philippines. The other two countries, Papua New Guinea and St. Christopher and Nevis do not have sucha serious problem of corruption, but money laundering is fast becoming a worrying issue for them and theappropriate preventative measures are instituted.

B. Overview of Existing Apparatus
It was also discovered that of the six participating countries of the group, in two countries namely
Mongolia and Papua New Guinea, the Police were the sole investigative body for economic crimes. The
remaining four countries, Japan, Nepal, the Philippines and St. Christopher and Nevis all had separate and

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specialized agencies, in addition to the police that dealt with serious economic crimes. The breakdown canbe seen in the Appendix.
The success of investigations of economic crime depends largely on the independence of theinvestigative agencies involved. From within the group it was discovered that some countries already havesuch apparatus in place guaranteed by law and constitution. These include Japan’s SID of the PPO, Nepal’s
CIAA, Philippine’s Ombudsman and St. Kitts and Nevis’s FIU. However, in Papua New Guinea, there is an
ombudsman commission, which is not really an investigative apparatus, but rather plays an integral part in
imposing accountability on the country’s leaders.

C. Common Problems
During the discussions, it was revealed that common problems existed within each country. These
problems are outlined below, together with suggested countermeasures.
1. Lack of Skilled Manpower
As a result of globalization and information technology, fighting economic crime has become increasingly
difficult. Consequently, the criminal justice officers’ must be equipped with the requisite competencies,
knowledge and skills, in order to stay current or even ahead of criminals. Specialized skills in forensic
accounting and auditing, computer science and new methods of detection of these crimes should beprioritized. This can serve both as a deterrent and at the same time enhance efficiency and the detectionrate.
In view of the foregoing, the following recommendations were presented to reduce the effects of a lack ofskilled manpower within the participating countries:• International cooperation, such as AUS-Aid - where funds are provided to train prosecutors,
detectives and lawyers (e.g. Papua New Guinea)• Incorporating skilled persons in specialized fields from other entities (from both the public andprivate sectors)• Provide specialized training for law enforcement personnel and criminal justice officials.
2. Lack of Financial and Physical Resources
It is accepted that all governments have restrictions as it relates to the allocation of its financial
resources. However, in light of the consequences that can follow as a result of the prevalence of economic
crimes in any society, it is deemed necessary to allocate adequate resources to the cause of fighting theepidemic of economic crimes. As a result of budgetary constraints, it impacts on the human resources
requirement, in that the appropriate number of investigators cannot be appointed to carry the workload. The
end result is that the investigators are overworked, which leads to undue and unnecessary delays andultimately a poor quality or sub-standard investigation of the cases.
The lack of human and other physical resources also limits the scope and efficiency of the investigating
agencies. It is also believed that due to their vested interests the government deliberately does not allow thecriminal justice officials to become efficient and capable of effective investigations. As it relates to theexisting workforce, it has a direct impact on the education and training of investigators and judiciary officials.
There are also implications on the low pay packages offered in some of the participating countries such as
Mongolia and Nepal, where the abnormally low pay structures for very senior public officials ultimately leads
to a perverted justification of corrupt practices of public officials.
The appropriate physical infrastructure and equipment are needed to tackle the problems associated withserious economic crimes. It is imperative therefore that adequate building/office space is provided,complimented with the necessary technical infrastructure including laboratories where needed, fully
furnished and equipped. Such equipment should include photocopiers, fax machines, computers withinternet access, communication and surveillance/intelligence equipment, etc.
This problem depends largely on the state of the economy and political situation of the country at thematerial time. However, it was recognized by the participants that for this to be successful the following
must be instituted:• Strong political will and commitment by the government; and• Increased public awareness and sensitization to the issues.

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3. Insufficient Coordination Between Enforcement Agencies
In order to fight against economic crimes, we must start a unified front. It was discovered that in somecountries the cooperation among relevant agencies is inadequate and quite frankly below an acceptable
standard. Therefore, the timely dissemination of information and ideas is essential for the successful
investigation of serious economic crimes. Such uncoordinated efforts often result in the waste of the alreadyscarce manpower and “turf wars” amongst the investigative agencies. Furthermore, the absence of an
integrated information system makes it difficult to collaborate with other independent investigative
agencies.
In order to alleviate this problem, all criminal justice officials should recognize the importance ofcooperation and coordination both nationally and internationally and endeavour to work in harmony. Most ofall, they should also acknowledge the fact that they are all working towards a common goal.
4. Lack of Effective Management Audit Systems
Most of the developing countries do not have sound management audit systems to monitor the activities
of different government agencies. Thus, the opportunity is created for corrupt practices to go undetected
because of the lack of transparency in framing policies and taking administrative decisions to thegovernment in the matter of allocation of contracts, the procurement of goods and supplies and theappointment of officers, etc. In this context, for the effective investigation of economic crimes, there should
be a good system of monitoring the activities of their subordinate apparatus. Most of the participating
countries agreed that each country should create an effective independent management audit system withthe capability to raise the red flag to signal fowl play. On completion of the report, it should be published andmade available for public scrutiny and recommendations for sanctions for misappropriations be forwarded to
the Public Prosecutors Office to take the necessary action.
In some of the participating countries, Transparency International, an International Non Governmental
Organization (INGO), and other non governmental organizations are acting as watchdogs for corruption andmalpractice behaviours by public officials and it’s proving to be effective.
5. Lack of Legislation on Economic Crimes
In order to establish the specialized agencies for tackling the investigation of serious economic crimes,
there should be substantive legislation in the country. In addition, to legislation, procedural andadministrative regulations should be included clearly outlining the structure of the organizations, qualifying
and defining the roles of the persons so employed, the security of independence and the necessary powers
to investigate and prosecute offenders. Some of the participating countries do not have any legislation for
combating economic crimes (e.g. Nepal has no substantive laws to deal with the offences of money
laundering and cyber crime). Therefore, necessary legislation should be enacted to give the investigating
agencies the “teeth” required to investigate those serious crimes.
6. Other Problems
Notwithstanding the common problems highlighted earlier, individual countries have other problems
noteworthy of mentioning. In Mongolia, corruption is so rampant that even criminal justice officers fall preyto the corrupt practices. This continues to ‘deal’ a big blow to the investigative apparatus and even pose athreat to the rule of democracy in that country.
Suggestions for Mongolia to alleviate this problem include:• Strong political will and public awareness• Establishment of separate investigative agencies (e.g. the office of Ombudsman)• Involvement of NGOs, INGOs (e.g. T I) and civil society as a watchdog
In Nepal, the CIAA is working well to combat corruption as an independent investigating and prosecuting
agency. But there is no direct involvement of prosecutors in corruption cases. So the law should be amended
accordingly. Other participants agreed with this fact.
In the Philippines, there is the office of Ombudsman that is guaranteed independence from thegovernment. However, it does not work effectively due to a lack of budget and manpower.

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Suggestions regarding this problem were given indicating that raising public awareness and involvementof an NGO should be considered.

III. PREVENTION OF ECONOMIC CRIME
A. Regulation of Economic Activities
Prevention of economic crime was the aspect of the discussion that generated the most energy.
Accordingly, we saw the need to deliberate on sections (A) and (E), namely, the Regulation of Economic
Activities and Public Awareness respectively. Civil and administrative sanctions as well as laws are in effectnot only to protect consumers but also to act as deterrents to economic crimes. This confirmed our belief
that the presence of regulatory bodies, sound regulations and the enforcement of these regulations are
essential to the prevention of economic crimes. The results of the discussions are hereunder summarized.
Economic Crime is a complex phenomenon, acquiring greater significance in this global era. The
offenders do not commit these crimes on the impulse of the moment, but rather they do so in a carefullyplanned and well-orchestrated manner, so as to leave no trace of their execution. Present day technology
also facilitates the opportunity allowing them to do so transnationally without great difficulty. It is imperative
therefore, that governments the world over contribute to the fight by taking a unified stance and collaborate
by putting in place similar mechanisms to regulate the way business is done in each country. Such regulatory
agencies may be strengthened to play a more proactive role, whether formal or informal.
Crime prevention enlists the private sector and citizens in their campaign to fight economic crimes. The
preventive measures need not be elaborate, excessively expensive or for that matter too ‘high tech’. The
government’s proactive activities, coordination with the private sector, and international cooperation
regionally and internationally are essential tools for the prevention of economic crimes.
1. Establishment of Sound Regulations for Economic Activity
A key component in combating economic crime is effective regulations. Regulations help to suppress
some practices that conceal fraud. They also deter migration of trust or substantial financial responsibilities.
In some countries, corporations are responsible for setting and maintaining the standards for the bestpractices and good governance within the industry. Companies and corporations are mandated to have built
in mechanisms to monitor and detect irregularities of the executive board and members and regulate with aview to preventing illegal activities and malpractices. For example, in Japan the implementation of a
“Corporate Governance Policy” has proved to be very effective. Statutes provide for this self-regulation
practice and sanctions are levied for non-compliance. In St. Christopher and Nevis however, the law
stipulates that the Eastern Caribbean Central Bank (ECCB) shall be empowered to regulate all financial
institutions within the Federation. This system has been working well, as non-compliance with the industry
standards can lead to fines and in some cases suspension of services and ultimately closure. In addition, thefact that the compliance officers of the ECCB can at anytime visit and carry out inspections serves to keep
the institutions in check.
Although having sound regulations is important, deregulation has also proved to be equally important.
Deregulation not only ensures fair competition amongst corporations but also assist greatly in reducing thetrend of public officials becoming corrupted as it reduces each ministry’s power. The Japanese Government
now endeavours to reform regulations in various private sectors by abolishing unnecessary regulations as
this has worked to their advantage. However, in the Philippines, the obvious absence of sound legislation has
lead to the shortcomings brought about by the implementation of the deregulation process. This has
impacted the country adversely and has resulted in increased prices of commodities and basically affects theoverall quality of life.
2. Enforcement of Regulations
Enforcement of such regulations plays a vital role in the prevention of economic crime. In some countries
however, this is not forthcoming and as a result the involvement of Non Governmental Organizations andthe private sector have proven to be effective. They monitor the activities and make recommendations to
the government continually, and then coordinate the implementation of the regulations to effect smoothfunctioning. For instance, the National Vigilance Centre in Nepal makes guidance policy, good governance,transparency and accountability programmes. And the Chamber of Commerce and Industry, which is a selfregulatory body in Papua New Guinea, looks after and monitors the activities of public sectors. In this202

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context, a self-regulating system such as Due Diligence including the “know your customer rule” andCompliance Programmes by companies and corporations is recommended.
3. Coordination between Regulatory Agencies and the Private Sector
The presence of government regulations is an important step in helping to protect the various industries
or sectors of a county’s economy. To maximize the benefits of regulations, however, another dimension must
be added. That is coordination and cooperation with law enforcement agencies and the private sector. In
other words, this has a direct correlation between the regulatory bodies, law enforcement agencies and the
Chamber of Industry and Commerce and other NGO’s within the community. The result is that therelationship amongst them has to be enhanced significantly.
In many countries the private sector dictates the pace at which the economy grows and without thenegotiations and lobbying government may be weighed in the balance and found wanting. Therefore, it isincumbent that governments exercise their best efforts to interact with the law enforcement community, theprivate sector and civil society as a whole in order to regulate the necessary activities. In an open market
economy system the private sector should play the leading role with reference to the conduct of businessand trade.
It was suggested that international cooperation is also important and should also be incorporated into thegeneral sphere of operations. It was highlighted that by referring to and conforming with international
standards relating to regulations for the prevention of economic crimes the outcome would be much moreencouraging. This can be achieved by comparing each other’s regulations and harmonizing them amongst
countries for enabling legislation in a global context.

B. Public AwarenessAs a preventive measure, it is evident that increasing public awareness will play an important role
especially in the case where regulations are not well enforced. However, the question is how to achieve thatgoal? Some countries pointed out that this question must be linked with the socio-economic and politicalsituations that exist in their country. It is essentially important for the government to have a clear concept,
proper structure, and process of enforcement for increasing public awareness. For example, in Nepal,
problems of poverty and low rate of literacy are obstacles, because when the information is disseminatedpoverty may hinder the message from reaching the intended target audience, and if it does, it will not becomprehended by the majority of the population. In this context, it is suggested that we develop a soundpublic education system, as a first step, with the institutional capacity to sell the idea to the layman on thestreets and convince them of the benefits that can be derived.
It is recognized that the public awareness activities by law enforcement authorities should be backed up
by industry. The National Police Agency in Japan enjoys a cordial relationship with private companies andhas held several meetings and distributed brochures with a view to raising awareness in order to prevent
malpractice or illegal activities. In Papua New Guinea, the Police visit the private sector and explain theirpolicy. This policy and campaign is based on the newly adopted Community Policy Initiative by thegovernment.
The building of institutional capacity within organizations charged with the duties of delivering the publicawareness programmes should be strengthened. In St. Christopher and Nevis, a senior police officer is
attached to each school as a liaison officer, and charged with the responsibility of sensitizing the children at
an early age of the corporate plan within the Police Force and how they can play a part in preventing andreducing criminal activities. In addition, the use of the print and electronic media has been used as aneffective tool to increase public awareness. Police representatives from the public relations office (PRO)regularly participate in panel discussions and write articles in the newspapers, providing useful insights tothe public. Although the media has been utilized effectively in some participants’ countries, in others theefforts by the government to inform and distribute its policy are seen as insufficient.
The Public Awareness programmes should be linked and coordinated with other regulatory agencies,
INGOs, NGOs and the civil society to have maximum effect when attempting to educate the public. For
example, in Nepal, the NGOs and the civil society have played the role of the watchdogs in corruption cases.

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IV. STRENGTHENING THE LEGAL FRAMEWORK AND COUNTERMEASURESOF ECONOMIC CRIMES
Economic Crimes are non-violent in nature but they have the propensity to cause serious harm to any
society, nation or the world as a whole. As a result of the grim and startling reality of this menace,internationally recognized bodies’ including the United Nations have frowned on these crimes and instituted
measures to combat them. It is also clearly manifested that in this globalizing society the legal frameworkhas to be strengthened and new legislation adopted, if we are to make the world a safer place for all.
The United Nations convention on corruption offers good reason to look at the future with optimism. It isindeed an act of faith and offers all countries a comprehensive set of standards, measures and rules that canbe applied to strengthen their legal and regulatory framework to prevent and combat corruption. It is hopedthat similar conventions can be ratified relating to all economic crimes.
We recognized that the legal framework within our countries can be significantly strengthened if: therecovery of assets as a result of economic crimes; increased international cooperation through mutual legal
assistance in criminal matters and extradition treaties; and obstruction of justice measures are included in
the framework. We also saw the need to introduce and implement countermeasures to act as deterrents.
Therefore, we focused in this section on the above mentioned aspects and presented our desired
countermeasures.

A. Asset Recovery
Our group decided to discuss some critical issues relating to the ratification of the UN Convention
against Corruption. This was chosen because as stated earlier, corruption is the economic crime that affects
most of the participating countries of the group. Corruption is now a transnational phenomenon, and for thisreason it is necessary to harmonize the criminal law and procedure of each country, as well as enhanceinternational cooperation in order to combat it effectively. In this context, each country has to review its
domestic legal framework, as some of the legislation that currently exists is not adequate to address theissue of asset recovery. In addition, they must as a matter of urgency ratify the Convention. From within thegroup, Japan, Nepal and the Philippines have already signed the Convention, and Mongolia, Papua New
Guinea and St. Christopher are expected to do so in the near future.
We found that the issue of recovery of assets is one of the most important issues highlighted in thevarious provisions of the Convention. The proceeds of crime derived from economic crime, including
corruption, are often transferred beyond the reach of domestic authorities, and also laundered and hidden ina sophisticated manner. It is also pointed out that in some cases, accomplices pretend to be bona fide third
parties, and thus necessary laws and measures should be introduced for the purpose of preventing anddetecting such disguising activities. There are countless cases whereby corrupt officials transfer their illgotten gains to some foreign countries. There are also cases where even political leaders are involved, forexample the former President of the Philippines, Mr. Ferdinand Marcos. He illegally deprived the country of
its national assets and transferred them to a bank in Switzerland. However, they encountered difficulty ingetting the assets returned from Switzerland because there are no international agreements with
Switzerland (bilateral or multi-lateral) and no national legislation in place. In Papua New Guinea, there was asimilar case where the suspects transferred assets to Australia and Singapore, but again there is no domestic
legislation to apply and make any request to that country other than through diplomatic channels. The
perpetrator has since been extradited back to Papua New Guinea and is facing trial.
On the other hand many such cases go uncovered and undetected. Unfortunately, universally the successrate in this area has been very low; moreover, there have been no cases of asset recovery in the participating
countries of this group. It is therefore important to enhance international cooperation in this field, so as toincrease our chances of success. We should also be aware of the fact that substantial loss of resources of thevictim countries can undermine its sound economy and development.
In all of this, the participants recognized that there are some inhibiting factors which impede the asset
recovery process, such as:• The lack of appropriate legal framework which allows the return of assets;• The lack of political will or arbitrary political influence;•
Ineffectiveness of international cooperation;

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Difficulties in tracing and identifying assets in foreign countries.

However, in some counties such as Japan and St. Christopher and Nevis, there is legislation by which
tainted property can be confiscated, but there are no provisions for the recovery of those assets uponconviction. In fact, the trial jurist will determine what should be done with the assets and in most cases they
are forfeited to the crown and go to the national treasury. They are subsequently, included in one account as
national revenue, and therefore it is difficult to return the particular assets to other countries.
Chapter V of the Convention provides for comprehensive mechanisms and measures to be put in place toensure the recovery of assets, which gives us clear guidelines to address this issue. In particular, Article 57(2) requires a State Party to adopt necessary measures to enable its authorities to return confiscatedproperty.

B. International Cooperation
In this era of globalization, international cooperation is deemed one of the most important mechanisms in
the holistic and multi-disciplinary approach needed to tackle and control economic crimes. All nations must
be concerned about the seriousness of the problems and threat posed to the stability and security ofsocieties, undermining the institutional and ethical values, justice, jeopardizing sustainable development andthe rule of law. Economic crimes are no longer national, but rather a transnational phenomenon that often
involve vast quantities of assets, which in some instances may constitute a substantial proportion of theresources of the state and subsequently threaten political stability. Convinced that the illegal acquisition of
personal wealth can be detrimental to democratic institutions and developing nations, soliciting technicalassistance from the international community plays an integral part in enhancing the ability of States,
including the capacity and institutional building required to combat economic crimes.
Bearing in mind that the eradication of economic crimes is the collective responsibility of all States, eachhas to make a concerted effort to cooperate with one another, with the support and involvement of
individuals and groups outside the public sector, such as civil society, non-governmental organizations andcommunity based organizations. In addition, they must manifest the will to prevent, detect and deter in amore effective manner international transfers of illicitly acquired assets and to strengthen international
cooperation in asset recovery, sharing or return. However, in all this we must acknowledge the fundamental
principles of due process of law in criminal proceedings and in civil administrative proceedings in the
adjudication of property rights.
Regional and International cooperation should not be limited to cooperation between governments andNGOs, but should also include the persons actively involved in the investigations, such as the law
enforcement and criminal justice officials. They should be able to liaise with each other and work closely,familiarizing themselves with, and respecting, the relevant legislative framework and administrative
systems to facilitate smooth, harmonizing and effective investigations.
This can only be done if they:• Create and maintain communication links that will allow the appropriate authorities and agencies toexchange secure, rapid and timely information in connection with the crimes committed orsuspected of being about to be committed.
• Determine the identity, whereabouts and activities of persons suspected of being involved ineconomic crimes.
• Determine the movement of proceeds of crime or property derived from the commission of suchcrimes.
• Determine the movement of property, equipment or other instruments used or suspected of being
used in the commission of such crimes.
• Provide necessary items or quantities of substances for analytical or investigative purposes.
• Promote the exchange of personnel and experts to consolidate their resources to respond to offences
committed through the use of modern technology.
Finally, when the crimes extend to more that one country, there should either be bilateral or multilateralagreements, conventions or even just mutual consent, so as to be able to form strategic alliances by
establishing joint investigative bodies to maximize their efforts. Sadly, this type of legal framework does notexist within the participating countries.

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Extradition
The issue of Extradition is also discussed in chapter IV (International cooperation) of the UN Convention
against Corruption. With globalization comes the global criminal. This has caused serious economic crimes
to transcend beyond national borders, thus becoming globalized as well. The extradition of criminals back to
the country where they committed the crimes is therefore imperative, as it could eliminate safe havens forcriminals to hide after committing their illegal criminal activities.
There are two approaches for extradition amongst countries. Some countries such as Mongolia, Papua
New Guinea, the Philippines and St. Christopher and Nevis require an international treaty to extradite, whileothers may however, grant extradition in the absence of binding international obligations. It should also beborne in mind that in cases where there are no formal treaties, there are circumstances, such as theprinciple of reciprocity and dual criminality, that foster cooperation in extradition matters. However,exceptions of some crimes for dual criminality are dealt with under Mutual Legal Assistance in Criminal
Matters treaties.
Examples of when extradition may be granted in the absence of international obligations are Japan and
Nepal.
Both systems have advantages and disadvantages. An advantage of the former is to be able to impose an
obligation on the requested country to execute an extradition warrant and to exclude the circumstances thatexist. On the other hand, the latter is flexibility, in that it permits governments to extradite based on mutual
agreements, common understanding and the principle of reciprocity. However, in the case of Japan, aJapanese citizen cannot be extradited to another country unless there is a current bilateral treaty in effectwith the requesting country.
Most of the participants’ countries have concluded bilateral treaties with some other countries. Japan has
such with United States and Korea; Nepal with India; Papua New Guinea with all Pacific islands and Australia
and New Zealand; Philippines and St. Kitts and Nevis with the United States. Mongolia does not have atreaty with anyone, but usually gets assistance informally, as a result of a common understanding with
Russia and other neighbouring countries. However, in view of fostering international cooperation throughextradition, it is recognized that we need to, as soon as possible, ratify multilateral treaties such as the UN
Convention on corruption.

C. Obstruction of Justice
We discussed also the issue of criminalization of certain breaches within the criminal justice system,
especially obstruction of justice stipulated in chapter III of the UN Convention, as these acts may thwart theefforts of carrying out investigations and trial of serious economic crimes. Actually, for example in Nepal,
there are many acts of obstruction related to corruption, especially the case where influential persons suchas Parliamentarians or high-ranking officials are involved. However, it is unable to tackle this phenomenon
due to a lack of legislation.
The Convention provides the way to criminalize such an act as the use of physical force, threats, orintimidation or the promise, offering or giving of an undue advantage to induce false testimony or tointerfere in the giving of testimony and so on.
In some participants’ countries such as Japan, Mongolia and Nepal, an act of physical force or intimidation
to witnesses is criminalized; however, they do not have specialized legislation, for example, that makes anact of offering or giving an undue advantage a criminal offence. On the other hand, other countries such as
the Philippines, Papua New Guinea and St. Kitts and Nevis have legislation, such as the Financial
Intelligence Unit Act, in cases of money laundering and other financial crimes. Nevertheless, someparticipants pointed out that the legislation available to them does not work well in their countries because
they are suffering from political influence in enforcement of the legislation.
It is suggested that we need to legislate specifically for obstruction of justice in order to execute criminal
sanctions properly and effectively. And it is also suggested that the establishment of a proper witness
protection programme is needed for the physical protection of key witnesses and, if necessary, their
immediate family and to guard against undue influence. Furthermore, to increase public awareness with aview to harmonizing legislation and preventing the offence is needed.

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D. Countermeasures(i) All countries should sign and ratify the UN convention as soon as practicable.
(ii) The harmonization of legislation, based on the Convention, should be introduced in order to enablecountries to trace, recover or return assets to its original country. It is also a preposition to establish
a legal system of freezing and confiscating assets in response to requests from other countries.
(iii) International cooperation should be strengthened in this respect, including information exchange interms of tracing assets. It should also be emphasized to ensure asset recovery in an expeditious
manner.
(iv) Bilateral or multinational agreements should be considered to enhance the effectiveness ofinternational cooperation, undertaken in keeping with the ratification of the convention.
(v) Revise existing extradition treaties to include economic crimes and for those states where there isnone hasten the authorities to enact the relevant legislation.
(vi) Mutual recognition and enforcement of judicial decisions: Not only criminal proceedings, but also
civil actions should be utilized in this matter. Although some cases have demonstrated the
difficulties and ineffectiveness of civil actions where targeted assets are located in foreign countries
due to the difference of legal systems and jurisdictional conditions, the participants of this groupagreed on its usefulness as an alternative approach, or a mix of both.
(vii) Create or maintain a Financial Intelligence unit to be responsible for receiving, analyzing anddisseminating to the competent authorities reports of suspicious financial transactions.
(viii) Create a mechanism for prohibiting the perpetrators from transferring the assets by, for example,
installing or maintaining “know-your-customer rules” or freezing assets for forfeiture, which would
help to prevent the assets being taken to other countries.

V. CONCLUSION
Economic crimes in this globalizing society have been transformed from the conventional types such as
embezzlement, fraud, corruption and breach of trust and have adopted a modern trend such as collusive
bidding cartels, insider trading, market manipulation, financial crimes and computer crimes. By the minutethey are getting more diversified, complicated and sophisticated. This new wave of crimes has thecharacteristics such that the perpetrators and or the damage done cannot be easily identified or measured.
However, this is not to say that the losses are not significant. In fact, it is quite the opposite, in that theyerode investors’ confidence and threaten the country’s ability to compete.
Corruption, as was indicated earlier, is the economic crime that affects most of the participants of thegroup’s national economies. Corruption is not only a crime in itself, but it also acts as a catalyst in promoting
other types of criminal activities and often aids in concealing them. It is a well-known fact that ‘Prevention isbetter than cure’ and it can be applied to our fight against economic crimes. Throughout the entire
discussions in the group workshop sessions, we found that in some instances there were large variations
between each participant country’s legal framework, preventive measures, sanctions, recovery of asset,
international cooperation and so on because of the differences of each country’s culture, politics andeconomic situation, etc. At the same time however, we discovered that all participant countries havecommon problems and need common countermeasures for tackling serious economic crimes; such as a needfor cultivating a strong political will, securing independence of the investigative authorities and adequate
resources, development of personal skills and capacity building of the investigators.
It is therefore imperative that we put in place the necessary infrastructure, such as an efficientinvestigative apparatus, equipped with sound preventive measures, regulations/legislation and monitoring
systems. These measures will ensure the principles of good governance are observed so that an atmosphereof integrity, transparency, accountability and equity can prevail.
In addition, consideration should be given to alternative administrative sanctions and regulatory
measures, because it is accepted that criminal punishment alone has only a limited effect on the offenders or
offending corporations, where corporate crimes are concerned. We must therefore, ‘hit them where it hurts in their pockets’, by putting in place a framework for confiscation and forfeiture of illegal proceeds andensure that it is thoroughly enforced. This will lead to asset recovery and sharing, which can in turn befactored back into the fight against economic crimes.

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To do this, the appropriate legal measures and resources (physical, financial, human and others), shouldbe allocated to those involved in investigating, prosecuting and bringing to justice the perpetrators. Because
influential politicians, high ranking public officials, financiers and powerful businessmen are often involved ineconomic crimes the independence of the investigative agencies should be secured, so as not to be
influenced by them. The law enforcement officials should also take advantage of the new technologicalcapabilities to enhance their investigative techniques. Moreover, the whistle-blowing system, which has
proved to be very effective in other parts of the world, can be implemented and/or the granting of immunity
for persons cooperating in investigations relating to economic crimes.
Cooperation and the timely exchange of information by all stakeholders are vital elements if we are to
succeed in our efforts. It is also important that this be done in a well-coordinated manner, at the national,
regional and international levels. This can be achieved by networking and sharing the tremendous benefits
from the experiences of our counterparts, implementing the required international standards such as UN
Conventions, and accepting the suggestions given by visiting experts, and the professors of UNAFEI.
Lastly, but by no means least, the group agreed and decided that each country should agitate towards theestablishment of a separate, independent, new criminal justice system for the fighting of serious economic
crimes in this globalizing society. Having realized and accepted that international cooperation is imperative
to fight against transnational crimes, such as serious economic crimes, we thought that this could beachieved through increased public awareness, specifically geared towards sensitizing the public andharmonizing national legislation to foster international cooperation.

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APPENDIXCountryJapan

Mongolia

Nepal

Philippines

Papua New
GuineaSt.
Kitts/Nevis

Investigative Agencies

Scope Of Responsibility

Composition

Public Prosecutors’Office(PPO) and Special
Investigation Department(SID)

General Offences andSerious Economic Crimes
including Corruption

Public Prosecutors and Assistant
Officers

National Police Agency

Same as above

Police Investigators

Securities Exchange
Surveillance Commission(SESC)

Securities Offences

Independent Public Officers

Financial Services Agencies(FSA)

Financial Institutions

Independent Public Officers

Regional Taxation Bureau(RTB)

Tax Evasion

Independent Public Officers

Fair Trade Commission(FTC)
PoliceAnti-Monopoly Offences

Independent Public Officers

General Offences
including Economic
CrimesCorruption cases

Police Investigators

Revenue Investigation
Department (RID)

Revenue Leakage

Independent Public Officers

Tax Authorities (TA)Tax Evasion

Independent Public
Officers

PolicePoliceGeneral Offences
General Offences

Police Investigators
Police Investigators

Ombudsman

Corruption cases

Independent Public Officers

National Bureau of
Investigation (NBI)
PoliceOther Economic Crimes

Independent Public Officers

General Offences andSerious Economic Crimes
including Corruption
General Offences

Police Investigators

Financial Intelligence Unit
(FIU)

Money Laundering andother Financial Economic
CrimesFIU Investigators and Public
Officers

Ombudsman (soon to becreated)Corruption cases

Independent Public Officers

Commission for Investigationof Abuse of Authority (CIAA)

PoliceIndependent Public Officers

Police Investigators

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GROUP 3

ECONOMIC CRIME IN A GLOBALIZING SOCIETY~ITS IMPACT ON THE SOUND DEVELOPMENT OF THE STATE
Chairperson
Co-Chairperson
Rapporteur
Co-Rapporteur
Members

Mr. Sutthi Sookying
Mr. Samson Mangoma
Ms. Ayesha Jinasena
Mr. Keiji Uchimura
Mr. Hasan Dursun
Mr. Luis Celestino Garcia Figueroa
Mr. Yutaka Oya(Thailand)(Zimbabwe)(Sri Lanka)(Japan)(Turkey)(Venezuela)(Japan)Advisers

Dep. Director Tomoko Akane
Prof. Toru Miura
Prof. Hiroyuki Shinkai(UNAFEI)(UNAFEI)(UNAFEI)

I. INTRODUCTION AND THE CURRENT SITUATION OF ECONOMIC CRIME
A. Introduction
Economic crime has become a threat to all the States in the global village. The potential damage broughtby economic crime has intensified over the past few years. Economic related crime affects the socioeconomic development of some countries because of the financial damage, which leads to a rise in
unemployment and also to other social evils. This report is based on the information obtained from theinformative lectures delivered by the experts in the field and also from the fruitful discussions the members
had at their group meetings. Furthermore, the country reports submitted by the members of group 3 also
have played a significant role in this exercise. Various topics in relation to the aforementioned subject werediscussed, and the group focused on the problems and countermeasures in regard to the investigation andprevention of economic crime. The group also considered various avenues of strengthening the legal
framework and countermeasures in combating such crimes.
B. The Current Situation of Economic Crime in Participating Countries
Since Japan has occupied the seat of the second greatest economic power, the problem of economic crimeis serious in proportion to the scale. As for traditional forms of crime, such as, fraud, election offences,
bribery and bid rigging; they have not been on the decline in the past several decades. In addition, thebusiness depression affected such crimes. Especially after the burst of the ‘bubble economy’, many
executive officers were indicted for offences like breach of trust and obstruction of an auction by concealing
assets. Criminal organisations, especially Boryokudan and foreign originated organisations, have gained
through various economic crimes. The securities exchange market also has suffered from “market
manipulation”, “insider trading” and so forth.
The Sri Lankan economy, which was based on agricultural products, changed rapidly producing industrial
products with the introduction of a liberalised economy in 1977. As a result, 76% of her national income wasbased on industrial products in the year 2002. However, a close scrutiny of the economy identifies a rapid
and a significant increase in the commission of economic crime, in the guise of bribery and corruption,
dangerous drugs, organised crimes, human smuggling, insider dealing, indigenous spoliation inter-alia which
finally leads to money laundering. Hence, in combating these offences the Legislature is now contemplating
the introduction of new legislation on anti-money laundering, terrorist financing, computer crimes andfurther amendments to the Intellectual Property Act No. 52 of 1979, in addition to the prevailing laws andstatutes.
In Thailand typical economic crimes such as corruption, tax evasion, and government procurement fraud
are prevalent. However, the recent trends in the economy have created serious problems in the arena of thestock market and financial institutions. The economic crisis in 1979 and in 1997 partly erupted from thefraudulent activities and malpractices in financial institutions and the stock market, which were later
referred to as the “Raja Finance Case (1979)” and the “Bangkok Bank of Commerce (BBC) case (1997)”.
The country is also faced with drug trafficking and money laundering. At present, Thailand has successfully

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enacted new laws and established new agencies to cope up with the prevailing threats of economic crime.
For example, the National Counter Corruption Commission (NCCC) and the Anti Money Laundering Office(AMLO) were established in 1997 and 1999 respectively, while the Department of Special Investigation(DSI) was established in 2002, and came into operation in January 2004. Although, some favourable signs ofachievement are observed in combating offences like corruption, drug trafficking and money laundering, thesuccess of implementation and enforcement of the new laws in relation to other economic crimes, is yet tobe ascertained.
Economic crime is continuously a pervasive problem in Turkey, hindering attempts at economic,
administrative and legal reforms and entry into the European Union. Economic crime in the country is so
widespread that it functions almost as a rule, and not as an exception. The entrenched economic crime andbribery of public officials at all levels has undermined fair competition in the economy and contributed
significantly to the economic and financial crisis in 1994 and 2001 in Turkey. The widespread corruption took
the nation to an unprecedented economic and financial crisis in its history in February 2001 and the crisis is
not yet over. Turkey is taking some legal measures against economic crime; however, preventing economic
crime is as complex as the phenomenon of economic crime itself, and a combination of interrelated
mechanisms - including economic, social, cultural measures - is needed for success.
The present living conditions in Venezuela are highly unsatisfactory mainly due to the prevailing politicaland economic situation. The political rivalry between the two groups, namely the government and the
opposition, aggravates the above situation. On the other hand corruption cases are on the increase. The
mass media report of the embezzlement of government funds by the corrupt politicians everyday. Although
the security agencies are making an endeavour to combat narcotic offences, the country is still severely
affected by the menace of drug trafficking.
In Zimbabwe, there has been a marked increase in economic crime due to the current economic
environment. The economy is not doing well due to the sanctions and the persistent droughts experienced
by the country. The sanctions imposed by the Western countries have resulted in the closure of some of thecompanies in the country, thereby creating unemployment, which contributes to the commission of
economic crime. The most notable forms of economic crimes have manifested themselves in corruption,
externalisation of foreign currency, smuggling, a thriving parallel market and embezzlement of funds both in
the private and public sectors. Financial institutions have also suffered huge losses as a result of thefraudulent activities. The country has experienced high inflation and high unemployment rates, which haveforced people to commit economic crime. Despite all these problems, the government has been successful in
implementing effective countermeasures to curb such crime.

II. PROBLEMS AND COUNTERMEASURES OF ECONOMIC CRIME
A. The Problems in the Investigation Stage
Upon a careful consideration of the above mentioned Country Reports and the discussions that took place
amongst the group members it was evident that the lack of expertise and lack of co-operation among law
enforcement agencies inter-alia have impeded the successful investigations in economic crime.
Further, unlike in Japan, the clear demarcation and the distinction of the functions of the prosecutors andthe investigators separating them from each other in countries like Sri Lanka, Thailand and Zimbabwe, wasalso identified as another significant factor, which obstructed the smooth functioning of the investigations.
In order to remedy the situation, initiating countermeasures in regard to the investigation of economic
crime, preventive measures, and the modes of strengthening the legal framework will be considered.

B. How to Overcome the Problems in the Investigation Stage
1. Establishing an Effective Investigative Body
The members jointly identified the departments of police, customs and tax as the already available
apparatus in all participating countries. However, the powers of investigation vested with the departments ofcustoms and taxation appear to be limited in comparison with the powers of the police department. The
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to be similar in nature. Non-constant liaison between the police and the other independent bodies has always
resulted in the overlapping of functions. This scenario leads to the wastage of manpower and the limited
resources of the countries.
On the other hand, as for law enforcement agencies, the lack of expertise within their apparatus in thefields of financial transactions, computer technology, telecommunication, forensic sciences and intellectual
property, has hampered their successful investigations in relation to economic crime.
Another major fact that has contributed to the ineffectiveness of the prevailing investigative apparatus ispolitical intervention. Some of the policy makers who are expected to ensure the smooth functioning of law
and order intervene and hinder the efficient and independent investigations conducted by the police.
Further, the unavailability of a sufficient workforce to meet the demand of rising crimes has widened thegap between the perpetrators and the available law enforcement authorities, which are expected to cover awide range of crimes. Therefore, establishment of a special body to investigate exclusively into economic
crime is an issue that warrants serious consideration.
The group agreed that the body in question may be formed in the following way:
• The body should be created under a special statute by Parliament according to the requirements andthe suitability of each country;• Persons with integrity who are knowledgeable and experienced either in the administration,prosecution or investigation of economic crime should be appointed to the body;• Any other requirements which are compatible with the purpose of establishing this body also may betaken into consideration in making such appointments;• Necessary carder provisions be made to accommodate the services of the experts in the legal(jurists/lawyers), financial (auditors, accountants) and technical (computer forensics, technicians)
fields to facilitate the success of some of the objectives of the special body, especially in relation toinvestigations;• The body itself and its members ought to be free from any political interference. The relevant
provisions to maintain its independence can be provided for in the statute by which it would becreated; and• A scheme should be included to secure the assistance of the public and the mass media.
The independent body, shall among other things, be empowered to:• Conduct investigations and inquiries on its own initiative or on receipt of reports of economic crimefrom the public and any other authorities;• Solicit the assistance of law enforcement agencies or other law enforcement agencies when the needarises;• Secure the prosecution of persons for economic crime as and when it is committed; and• Follow up the payment of damages by the defendant when awarded by the court.
In certain countries, powerful law enforcement agencies have already been established, e.g. the NCCC,
the AMLO and the DSI in Thailand. On the other hand, in Zimbabwe, an independent body to combat
corruption is going to be established once the Anti-Corruption Bill, which is currently before the Parliament
has been enacted. Similarly, the draft Bill on anti-money laundering that will be presented to the Sri Lankan
Parliament shortly, also has made provision for setting up of an autonomous body to curb the offences in thearea of money laundering. However, it is noteworthy that the success of the establishment of an independent
investigative body largely and mainly depends on the commitment and the will power of the political leaders.
2. Bringing in Experts
Due to globalisation, the modus operandi of economic crimes has advanced and increased. The availabilityof credit card facilities and easy access to the cyber world has trans-nationalised the crime in issue. Thus,
corporate related economic crimes committed on a mass scale have a severe impact on the state economy.
The borderlessness of the jurisdiction of the offence has made this crime modernised, complicated anddiversified. It is observed that the absence of expertise in specific fields has disrupted the importantinvestigations conducted by the apparatus on numerous occasions. In specialised investigations, the police
have to hire or employ people with expertise especially in the areas of accounting, auditing, computing, etc.
to assist them in collecting evidence.

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For an example, in Zimbabwe, where a company is investigated for the evasion of tax, the police seek theassistance of the National Economic Conduct Inspectorate, a body specialised amongst other things togather evidence in tax evasion cases. The Public Prosecutors in Japan investigate tax evasion and security
exchange law violation cases in cooperation with the National Taxation Unit (Kokuzei-Cho) and the
Securities and Exchange Surveillance Commission. In Thailand, the DSI can appoint or invite any related
experts from other agencies to join the team of an investigation and work in an interdisciplinary manner.
Therefore, it is observed that for the investigations under consideration, the services of the experts areimperative.
Nonetheless, it has been the experience of many member countries that officers who are especiallytrained in certain fields leave their employment abruptly for better emoluments and better fringe benefits
offered by the private sector. Hence, it is important and advisable for the governments of these countries to:(1) offer these officers a better working environment;(2) facilitate the usage of modern technology such as computers with an internet connection;(3) grant the opportunity for special training in the desired field;(4) grant timely promotions; and(5) introduce a better salary structure and incentive scheme
if the trained officers are to be retained in their services.
3. Providing Special Training for Law Enforcement Personnel
The group has critically analysed the responsibility of investigation vested with the law enforcement
personnel in fighting economic crimes and, as referred to above, has discovered that there is a lack of
specialised training in relation to the crime in issue.
Nevertheless, in this exercise it has transpired that in certain Japanese law enforcement agencies, someofficers are trained according to the necessity and others are temporarily seconded to the more specialised
agencies and vice versa.
To the contrary, in some countries, law enforcement agencies are easily stripped of their trained officers
due to the unsatisfactory work conditions as mentioned above. In order to resolve this problem, a special law
was introduced in Thailand to secure the status of these seconded officers.
On the other hand, a close scrutiny of the circumstances, reveals that the investigators in the parallelinvestigations conducted by other expert bodies, are reluctant to impart with their knowledge. This resultsin the law enforcement personnel confining themselves to the traditional investigative methods whereas theoffenders resort to more sophisticated methodology in the commission of their crimes. Therefore, it isrecommended that the law enforcement personnel be regularly trained in the special fields in keeping withthe demand and the development of modern technology.
4. Improving the Methods of Collecting Information
Information is the key to investigation. The group noticed that various methods of gathering information
are applied in the participating countries in order to initiate an investigation. Formal and verbal complaints,
rumours, surveillance and tip-offs are frequently made use of for this purpose. Sometimes even theinformation obtained from other criminal cases and the information given by the mass media are also used toinitiate the investigation. However, in launching a search for previous criminal records, management of
information technology in relation to the offences under discussion, is a prerequisite. In the circumstances,establishing a database of criminal cases is also imperative.
It is evident that the existence of internal informants of the targeted agencies or organisations is crucial.
The Suggestion Box Scheme in Zimbabwe, where any crime related information is accepted anonymously ina box placed at public places is a good example of information gathering. The ‘Hot line’ schemes andSuspicious Transaction Reporting systems are widely applied in almost every country. Information obtainedby the specialised agencies such as stock exchanges, financial institutions and related governmental offices
is also indispensable to the commencement of a formal investigation.
5. Protection of Whistle-Blowers
According to the Oxford Advanced Learner’s Dictionary, the term ‘whistle-blowers’ stands for ‘a person

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who informs people in authority or the public that the company they work for is doing something wrong orillegal’. From this definition, a whistle-blower appears to be a very important person in combating economic
crime.
Therefore the threat that can be levelled by him against the organization in which he is employed, issevere. In practise, no organisation is willing to accommodate and appreciate any inside information relating
either to administrative or to any other matter being passed on to a third party not belonging to theorganisational structure. Thus, the revelation of the conduct of the whistle-blower generally jeopardises the
future of his career and brings insecurity as well. Even the members of his family are not spared from thedevastating circumstances.
It is therefore imperative that special legal provisions are enacted for the safeguarding of the whistleblowers from such victimisation.
The discussion revealed that Japan has taken a favourable attitude in this regard. Accordingly, the Diet
(Japanese Parliament) will shortly consider a Bill, which provides for the protection and security of thewhistle-blowers in their occupation at the respective organisations. It is strongly recommended that the
governments of other countries have recourse to similar provisions in their legislation if they are genuinely
interested in curbing economic crime.

III. PREVENTION OF ECONOMIC CRIME: CREATING PUBLIC AWARENESS
Numerous surveys conducted in the world and particularly in the participating countries have revealed
that victimisation of the public is largely due to “ignorance”. On the other hand, their earnest desire for
wealth, urge for better comforts in life are also contributory factors to this predicament. It is imperative
therefore to create a public awareness to prevent the commission of economic crime, if not to eradicate it.
It is the observation of the members of the group that a long term solution like “public awareness”
cannot be created within a short spell of time. In generating public awareness, the members propose that a
campaign be launched based on different classifications, aiming at different target groups. Hence, this paper
will concentrate on information gathering, dissemination of information, co-operation with law enforcement
agencies, establishing of a third eye as a preventive mechanism and educational campaigns.

A. Information Gathering
At the group discussion it was revealed that a fair number of people in almost all the participating
countries fail to report crime either to law enforcement agencies (police/related law enforcement, district
attorney, state attorney general) or to consumer protection agencies or at least to other entities (personallawyers, a company or an individual having the ability to assist).
They take an indifferent attitude to the commission of economic crime due to sheer ignorance of theexistence of the offence and remedies available. The majority of these people engage in certain high-risk
behaviours that could make them susceptible to victimization. Gathering information from the public, using
different methodology to make an assessment of the capacity of their “awareness” of “economic crime”
before creating or enhancing their knowledge therefore, would be a prerequisite. In order to achieve thispurpose a questionnaire could be distributed among people ranging from stakeholders to households forwhich there would be feedback.
This exercise serves many purposes. One of such is the revelation of the attitude and the experience ofthe public to the authorities who intend to design a public awareness campaign. Another is the prompt
awareness created among the public of the different forms and varieties of economic crimes such as lottery
scams, online shopping frauds, counterfeit of currency and goods, charity frauds, etc. cautioning them to be
vigilant when confronted with similar situations.
Further, data collected from stakeholders such as bankers, industrialists, manufacturers, agriculturists
and investors who are directly related to the economy of the country will depict the statistics of the cases of
economic crimes filed by and against them. Such data is a cross section of the prevailing situation of theeconomy in one’s country.

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Furthermore, in assembling information, details of the assets and liabilities of the politicians and public
officials can be collected, which data can be analysed by the authorities under appropriate circumstances atlater times.

B. Dissemination of Information
The mere usage of technical terms such as “economic/financial/white collar crimes” will not lead the
public to understand the nature and the different forms of the crime in issue. Therefore, the public should be
educated on the various forms in which economic crime can be committed along with the probableingredients of the offences and the necessity to possess evidence to initiate legal proceedings if they are
victimised. They also could be educated on the details of the existing websites which are exclusively
designed to assist the victims of economic crimes and the ability to file a consumer referral and theavailability of civil injunctive action forcing the discontinuance of deceptive trade practices whereappropriate. Furthermore, their minds also should be addressed to the ability to institute criminal
proceedings in a criminal court to punish the offender and the possibility of claiming damages from theperpetrator through a civil suit.
The dissemination of information should be effective for the recipient. It is observed that community
leaders or the chiefs of certain provinces in some participating countries, such as Zimbabwe are very
powerful. So much so that the people in the area have cultivated the habit of turning to these leaders foradvice and assistance. Hence making these leaders familiar with offences such as drug trafficking, consumer
fraud, corruption, money laundering, bribery, financial frauds, insider dealing, counterfeiting of monies andgoods and other offences that come under the umbrella term of “economic crime”, together with thepreventive measures, in return could be easily communicated to the tribes/villagers.

C. Co-operation with Law Enforcement Agencies
The discussions revealed that the attitude of the people in a country contributes immensely either to therevelation or to the concealment of the commission of a crime. People in certain societies hold backinformation on crimes due to their “social values” and “ideologies”. Revelation of such facts is considered tobe scandalous to one’s self esteem and, or, to the reputation of the country leading to a social stigma. Suchinhibition invariably debars a person from such a background from exposing the facts not only of “economic”
but also of “any” crime, for that matter. Hence, effective modes should be implemented to reform thepattern of thinking of the people.
After clearing the inhibitions of the public they also should be informed of the ability and theeffectiveness of whistle-blowing. Programmes should be launched to educate the public of the prevailing or
the intended legislation meant to safeguard the whistle-blowers from being penalised. Further the persons
who give useful information can be rewarded in an appropriate manner (monetary or otherwise) encouraging
others who are hesitant to come forward.

D. Establishing a Third Eye as a Preventive Mechanism
Offences such as, bribery, corruption and indigenous spoliation prevalent in participating countries, arefound to be committed mostly and mainly by government officials. It is therefore suggested that an
independent body be identified to monitor the public affairs handled by the government officials. A nongovernmental organisation such as Transparency International (TI) is an example of a useful tool in thepreventive mechanism which is widely operating in some countries. This is said to be effectively operativein relation to the offence of corruption. The said organization has adopted a system of bringing out acorruption perception index. The mechanism of this preventive body is advantageous due to the databasethat is maintained by the organization. Further, they are found to encourage the practice of honesty, byundermining, shaming and naming the dishonest officers.
Similarly, being a common office in many of the participating countries the “office of ombudsman” isidentified as another useful device in implementing the “preventive mechanism” in this awarenessprogramme. As an office closer to the public life in grievance, it can disseminate information using effective
mechanisms that will have a tendency to attract public attention resulting in the public furnishing prompt
information of the corrupt officials.
Publicity given in naming and shaming such identified officers and relevant institutions will caution the
public in handling such officials and institutions resulting in complaints being lodged by the public against
such officers forthwith, without fear or favour.

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E. Educational Campaigns
Collection of data from the public, stakeholders and officials will show the disparity in the generalknowledge of existing economic crimes. Hence it is imperative that the authorities use different
methodology in creating and enhancing the awareness of the public of the prevailing crisis in issue. Network
communities should be established in order to disseminate information and to cater to the needs of different
target groups in society.
The usage of a variety of modules will arouse the curiosity of the above target groups. As a medium
common to all these target groups, interviews, short films and tele-dramas based on the subject matter canbe telecasted and broadcasted. Further, in educating the public about the new trends of economic crimes,
literature can either be distributed by way of hand bills or also could be published in the newspapers thathave a wider circulation in one’s country. The articles, advertisements and posters can be exhibited at public
places giving the details of the hot lines and the officers to be contacted in an emergency. Further, panels
consisting of erudite persons learned in the field could be made available at different fora availing theiradvice to the public. Organization of public addresses, art exhibitions, essay competitions and oratory
contests also will generate interest among the different targeted groups in identifying the offences, modes of
prevention and available legislation.
It is believed that a programme of the above nature is likely to create awareness in the public preventing
economic crime.

IV. STRENGTHENING THE LEGAL FRAMEWORK IN THE RECOVERY OF DAMAGE
The group observed the recovery of the loss of assets as the main concern of the victims of economic
crime. It was revealed that sometimes victims who are subjected to economic crime are reluctant to lodge
complaints with the law enforcement authorities if they perceive that the possibility of recovery of property
is remote. In the circumstances, “recovery of damages” becomes a pertinent issue.
Hence, upon the Group’s deliberations the members have identified the area of “strengthening the legal
framework and countermeasures of economic crime in the recovery of damage” as a suitable topic toconcentrate on. Therefore, this part of the paper will deal with the aspects of recovery of damages and legal
framework and counter measures in relation to economic crime with identifiable victims.

A. Outline of Recovery Systems
Generally, the recovery systems of participating countries are two fold relating to the court of recovery ofdamages. On one hand, the criminal court in a country like Zimbabwe has the power to order compensation
for the victims. Similarly, in Thailand, the results of criminal cases are very helpful for the victims in the civil
cases because the civil courts are bound by the facts and findings of the criminal courts.
On the other hand, procedures of recovery in a civil court and implementation of penal provisions in acriminal court are independent of each other in countries like Japan, Sri Lanka, Turkey and Venezuela.

B. Analysis of the Existing Systems
1. Common Issue
Firstly, a feature common to all the participating countries in the recovery of damages is the protractionof the proceedings. Incomplete documentation, non-availability of witnesses, lethargy and inaction of theinvestigators in concluding the investigations, incompetency and the lackadaisical attitude of the law
enforcement authorities, are some of the reasons that contribute to the delay in question.
Secondly, even if damages are awarded at the conclusion of a lengthy legal procedure, a long period after
the date of the commission of the offence, it is unlikely that substantive relief would be achieved by thevictim at the end of the exercise, as he/she would have suffered relentlessly by that time.
Thirdly, the heavy costs of legal fees in civil suits has a severe impact on the meagre finances of thevictims of economic crime in the participating countries. For example, victims of consumer fraud cases arecomparatively financially unsound to that of the defendants, most of those being juristic persons. This
disparity of financial condition is thus identified as a vital factor, which prevents the victims from initiating
civil cases.

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Fourthly, the damages ordered, fine imposed and/or the surcharge levied on the offenders, cannot berecovered by the court or the law enforcement authority, due to the non-availability of assets.
2. Zimbabwe and Thailand’s Systems
The victims of economic crime in Zimbabwe and Thailand are privileged to exercise their legislative rightin filing a civil suit in a civil court claiming damages in the areas of loss of profit, time, opportunity and any
related expenditure incurred by the claimant therein. Thus, at the end of the day economic crime victims in
Zimbabwe and Thailand appear to be financially better off than the victims of other regions.
The Criminal Procedure Code B.E. 2477 (1934) of Thailand makes provision for the public prosecutor toapply on behalf of the victim for the restitution or the value of the property when filing the criminal case to
the court, in particular cases such as ‘cheating and fraud’, criminal misappropriation and receiving stolen
property, where the victim has the right to claim the restitution or the value of the property. Judgment on
the claim for restitution or the value of the property are given as part of the judgment in the criminal case.
Most importantly in giving judgment in the civil case, the court is bound by the facts as found by the
judgment in the criminal case.
However, there are weak points owing to the fact that civil and criminal procedures are not separated.
Criminal courts in Zimbabwe and Thailand cannot make compensation orders for victims who are not related
to the offences tried in the court.
3. The System of Independent Civil Procedure
In Japan, Sri Lanka and Venezuela, only the civil court has jurisdiction over cases to recover damages. In
awarding damages, the civil courts of these countries are not inclined to accept and adopt the proceedings
and the findings of a criminal court. Hence the victim is compelled to incur heavy expenditure in going
through a full trial once again.

C. Countermeasures by Strengthening Legal Frameworks
Considering the differences in the legal backgrounds and situations of victimization of participating
countries, the members of the group unanimously propose the following for the improvement of the systems
in each member country.
1. Settlement Outside Court
In all cases, procedures of court take a long time regardless of it being civil or criminal. Therefore,
settlement between the perpetrators and victims made outside court is more beneficial for both parties. For
example, in the new Japanese system of reconciliation, parties can settle their disputes outside the criminal
court and get the result of the settlement recorded by the court clerks. If the accused fails to agree on asettlement, the victim is free to proceed with a civil suit.
2. Evidence and Findings of a Criminal Court to be Adopted in a Civil Court
In a criminal court the prosecution should prove its case “beyond any reasonable doubt” whereas in a
civil case the burden is only “on a balance of probability”. In view of this fact it would be fair and reasonable
for a civil court awarding damages to adopt the evidence led and the documents marked in the corresponding
criminal trial. This course of action will minimize the duration of the trial period as well as the cost borne by
the litigants - which has already been proved in the legal systems of Japan and Thailand.
3. Seizure of Property
The “recovery of proceeds of a crime” is a fundamental issue to be addressed in the process ofinvestigating economic crime. It is the considered view of the members that the law enforcement agencies
should be encouraged to concentrate on the seizure of the moveable and immovable property acquired
through the predicate offences by the suspect at home and abroad.
4. Legal Aid
The legal aid system is introduced in many jurisdictions. However, it is not always available for claimants
who are victimized by economic crime. In order to mobilize many victims, the expansion of coverage of thelegal aid systems is worth considering. For example, consumer protection agencies should be established to217

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support victims by providing not only advice but also financial support in retaining legal assistance.
Furthermore, the consumer protection agencies can act as the claimant on behalf of the victims or be
entrusted with the power to claim the property or damages for the victims.

V. CONCLUSION
However stringent the laws of a country are, if they are confined only to the paper on which it is printed,
the economy and the public cannot be protected from the evil of economic crime. In order to achieve thepurpose of implementation of countermeasures to prevent economic crime, it is mandatory to create andarouse the public awareness. In addition, strengthening the legal framework to recover damages may
encourage the active participation of the public in curtailing the negative consequences of economic crime.
When the public are aware of their vulnerability to victimisation they will willingly involve themselves in thecrime prevention mechanism and will give effect to the countermeasures in a more meaningful manner.
Furthermore, this awareness of the public also perhaps would result in applying pressure to the governmentor to the policy makers to introduce effective countermeasures to combat economic crime.

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APPENDIXCOMMEMORATIVE PHOTOGRAPH• 126th International Senior Seminar

UNAFEIT h e 1 2 6 th I n t e r n a t i o n a l S e n i o r S e m i n a r

Left to Right:
Above:
Mr. Vlassis (U.N.), Prof. Shinkai
4th Row:
Mr. Inoue (Staff), Mr. Miyake (Staff), Mr. Miyakawa (Staff), Mr. Nakayama (Staff), Mr. Koyama (Staff),
Ms. Masaki (Staff), Ms. Yanagisawa (Staff), Ms. Yamashita (Staff), Ms. Fujimura (Staff), Ms. Aruga (Staff).
3rd Row:
Mr. Tanaka (JICA), Mr. Saito (Chef), Mr. Tada (Staff), Mr. Kongchi (Laos), Mr. Sunada (Japan), Mr.
Uchimura (Japan), Mr. Suharto (Indonesia), Mr. Oya, (Japan), Mr. Saito (Japan), Mr. Dursun (Turkey),
Mr. Amarsaikhan (Mongolia), Ms. Miyagawa (Staff), Ms. Nagaoka (Staff).
2nd Row:
Ms. Dohgansin (Cameroon), Mr. Sutthi (Thailand), Mr. Kauba (Papua New Guinea), Mr. Acharya(Nepal), Mr. Perez (Philippines), Mr. Mangoma (Zimbabwe), Ms. Jinasena (Sri Lanka), Mr. Garcia(Venezuela), Mr. Moriyama (Japan), Mr. Mizuno (Ghana), Mr. Oduro (Japan), Mr. Abo Salem (Egypt), Mr.
Queeley (Saint Christopher and Nevis).
1st Row:
Mr. Cornell (L.A.), Mr. Ezura (Staff), Prof. Teramura, Prof. Senta, Prof. Takasu, Dep. Director Akane,
Mr. Mehta (India), Ms. Mehta (India), Director Sakai, Mr. Singh (Singapore), Mr. Kiernan (U.K.), Prof.
Miura, Prof. Tanabe, Prof. Someda, Prof. Yokochi, Mr. Fukushima (Staff).