ANNUAL REPORT FOR 1998
andRESOURCE MATERIALSERIES No. 55

UNAFEI
Fuchu, Tokyo, Japan

March 20001

Mikinao Kitada
Director
Asia and Far East Institutefor the Prevention of Crime andthe Treatment of Offenders(UNAFEI)
1-26, Harumi-cho, Fuchu, Tokyo 183-0057, Japan

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CONTENTS
INTRODUCTORY NOTE .................................................................... vii
PART ONEANNUAL REPORT FOR 1998
Main Activities of UNAFEI .................................................................. 3
UNAFEI Work Programme for 1999 ................................................ 16
Appendix ............................................................................................... 18

PART TWORESOURCE MATERIAL SERIES NO. 55
I. WORK PRODUCT OF THE 110TH INTERNATIONAL TRAINING COURSE“EFFECTIVE COUNTERMEASURES AGAINST ECONOMIC CRIME
AND COMPUTER CRIME”
Visiting Experts’ Papers• Crime in Cyberspaceby Peter Grabosky (Australia) .................................................... 35• The Prevention and Control of Economic Crime
by Peter Grabosky (Australia) .................................................... 44• Combating Credit Card Crime: Enacting Effective Criminal Laws
by Donald Kenneth Piragoff (Canada)....................................... 54• Economic Crime in India
by Shri L. C. Amarnathan (India) ............................................. 69• Economic Crimes in Korea
by Lee Tae-Hoon ( Republic of Korea) ........................................ 82• Effective Countermeasures against Economic Crime and Computer
Crime
by Soh Thiam Sim (Singapore) ................................................ 103

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• Crime as the Growing International Security Threat: The United
Nations and Effective Countermeasures against Transnational
Economic and Computer Crime
by Slawomir Redo (United Nations) ........................................ 117• Economic Crime and the Global Economy: Understanding theThreat and Identifying Effective Enforcement Strategies andCountermeasures
by John D. Arterberry (United States) ..................................... 139
Participants’ Papers• Effective Countermeasures against Economic Crime and Computer
Crimeby Ramon Crespo Carrilho Machado (Brazil) ......................... 148• Effective Countermeasures against Economic Crime and Computer
Crimeby Mahavir Singh Bali (India)................................................. 158• Economic and Computer Crime in Korea
by Choi Joon-Weon (Korea) ....................................................... 188• Effective Countermeasures against Economic Crime in Nepal
by Kedar Paudel (Nepal) .......................................................... 201
Reports of the Course• Economic Crime Damaging Government and the National
Economyby Group 1 ................................................................................. 210• Economic Crime against the Private Sector
by Group 2 ................................................................................. 237• Economic Crime against Consumers and Investors
by Group 3 ................................................................................. 259
II. WORK PRODUCT OF THE 111TH INTERNATIONAL SEMINAR“THE ROLE OF POLICE, PROSECUTION AND THE JUDICIARY IN THE
CHANGING SOCIETY”
Visiting Experts’ Papers• The Role of Police, Prosecution and Judiciary in the Changing
Society
by M. Enamul Huq (Bangladesh) ............................................ 281
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• Towards a Responsive Criminal Justice System in the Philippines
by Lilia C. Lopez (Philippines) ................................................. 291• The Role of Police, Prosecution and the Judiciary in the Changing
Society-The Singapore Approachby Suriakumavi Sidambaram (Singapore) ............................. 303• Public Prosecutors in the Changing Society
by Suchart Traiprasit (Thailand) ............................................ 336• An Overview of the Right to Speedy Trial in Criminal Cases in the
United States
by Rya W. Zobel (United States) ............................................... 350• An Overview of the United States Sentencing Guidelines
by Rya W. Zobel (United States) ............................................... 357
Participants’ Papers• The Role of Police, Prosecution and Judiciary in the Changing
Society
by Rebeka Sultana (Bangladesh) ............................................. 377• The Role of Police, Prosecution and Judiciary in the Changing
Society
by So Chit-Kwan, Isabel (Hong Kong) ..................................... 392• The Role of Police, Prosecution and Judiciary in the Changing
Society
by Muhammad Arif Chaudhry (Pakistan) .............................. 402
Reports of the Seminar• Topic 1: Effective Measures for Better Detection of Crime and More
Thorough Investigations................................................................ 416• Topic 2: The Role of Prosecution in the Changing Society........... 432• Topic 3: Effective Countermeasures for Speedy Trial .................. 448
APPENDIX .......................................................................................... 457v

INTRODUCTORY NOTE

It is with pride that the Asia and Far East Institute for the Preventionof Crime and the Treatment of Offenders (UNAFEI) offers to theinternational community the Resource Material Series No. 55.
This contains the Annual Report for 1998, the work produced in two
UNAFEI international training programmes: the 110th International
Training Course (conducted from 31 August to 20 November 1998) andthe 111th International Seminar (conducted from 18 January to 19
February 1999). Specifically, papers contributed by visiting experts,
selected country reports from among Course and Seminar participants,
and reports of the Course and Seminar are published.
I regret that not all the papers submitted by the Course and Seminar
participants could be published. Also, I must request the understandingof the selected authors for not having sufficient time to refer the
manuscripts back to them before publication
I would like to pay tribute to the contributions of the Government ofJapan, particularly the Ministry of Justice and the Japan International
Cooperation Agency, and the Asia Crime Prevention Foundation forproviding indispensable and unwavering support to UNAFEI
international training programmes.
Finally, I would like to express my heartfelt gratitude to all who sounselfishly assisted in the publication of this series, in particular, theeditors of Resource Material Series No. 55, Mr. Hiroshi Iitsuka (Chief ofTraining Division) and Ms. Rebecca Findlay-Debeck (Linguistic Adviser),who so tirelessly dedicated themselves to this series.
March 2000

Mikinao Kitada
Director of UNAFEI

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MAIN ACTIVITIESPART ONEANNUAL REPORTFOR 1998• Main Activities of UNAFEI• UNAFEI Work Programme for 1999
• Appendix

UNAFEI

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MAIN ACTIVITIESMAIN ACTIVITIES OF UNAFEI(1 January 1998 - 31 December 1998)
I. ROLE AND MANDATE
The 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 tosound social development in Asia and the Pacific region by promoting regional cooperationin the field of crime prevention and criminal justice through training and research.
UNAFEI has paid the utmost attention to the priority themes identified by theCommission on Crime Prevention and Criminal Justice. Moreover, UNAFEI has been
taking up urgent, contemporary problems in the administration of criminal justice inthe region, especially problems generated by rapid socio-economic change (e.g., organizedtransnational crime, re-integration of prisoners into society, and economic and computer
crime) 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 ofcriminal justice discuss and study pressing problems of criminal justice administrationfrom various perspectives. They deepen their understanding, 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.
Each year, UNAFEI conducts two international training courses (duration: threemonths) and one international seminar (duration: one month). Approximately 60
government officials from various overseas countries receive fellowships from the Japan
International Cooperation Agency (JICA; a governmental agency for ODA programmes)
each year to participate in UNAFEI training programmes.
Training courses and seminars are attended by both overseas and Japaneseparticipants. Overseas participants come not only from the Asia-Pacific region but also
from the Middle and Near East, Latin America and Africa. These participants areexperienced practitioners and administrators holding relatively senior positions incriminal justice fields.
During its 37 years of existence, UNAFEI has conducted a total of 111 international
training courses and seminars, in which approximately 2700 criminal justice personnel
have participated, representing 94 different countries. In their respective 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.

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ANNUAL REPORT FOR 1998
A. The 108th International Seminar
1. Introduction
From 26 January to 27 February 1998, 28 participants from 22 countries attended
the 108th International Seminar to examine the main theme of “Current Problems in
the Combat of Organized Transnational Crime.”
2. Methodology
Firstly, the Seminar participants respectively introduced their countries’ experiences
regarding organized transnational crime. Secondly, General Discussion Sessions in theconference hall examined the subtopics of the main theme. In sum, the causes anddynamics of organized crime were analyzed in order to seek concrete countermeasures.
In order to conduct each session efficiently, the UNAFEI faculty provided the following
four topics:
Topic 1: Current Situation of Illicit Drug Trafficking;
Topic 2: Current Situation of Organized Crime (Except Drug Trafficking);
Topic 3: Framework Against Organized Transnational Crime by Criminal Justice
Systems in Different Countries; andTopic 4: Current Situation of Detection and Investigation.
A chairperson, co-chairperson, rapporteur and co-rapporteur who were electedorganized the discussions in relation to the above topics. Subsequently in the conferencehall, all the participants and the UNAFEI faculty seriously studied the designatedsubtopics and exchanged views. Final reports were compiled based on said discussion,
which were ultimately adopted as the reports of the Seminar. These reports will be
printed in their entirety in UNAFEI Resource Material Series No. 54.
3. Outcome Summary
Of grave concern worldwide is the prevalence and complexity of organizedtransnational crime, which seems to be growing exponentially yearly. The manifestations
and seriousness of organized transnational crime are overwhelming; for example, thesmuggling of illegal migrants, money-laundering, large-scale corporate fraud, and illicit
trafficking in drugs, firearms, stolen motor vehicles, and- most appalling- women andchildren. These crimes, as well as their perpetrators, are increasing exponentially.
Moreover, organized transnational crime remains largely undetected due to the fact
that, traditionally, it is committed behind a veil of secrecy.
The proliferation of such crime poses a great threat at various levels of society. First,
the life and welfare of individual citizens are imperiled. Secondly, national security
and the rule of law are threatened. Moreover, in the extreme case, it may destabilize
the fundamental framework of a nation. In this regard, the importance of detecting
and preventing such crime in every country and the international community cannot beemphasized enough.
The seriousness and heinousness of these crimes speak for themselves. Consequently,
in light of the growing threat posed by organized transnational crime at both national
and international levels, states and organizations have attempted to address this problem
in the international arena, such as the United Nations Commission on Crime Prevention
and Criminal Justice, and the P-8 Group (comprised of the G-7 Summit member countries

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MAIN ACTIVITIESand Russia). Additionally, some crucial problems stemming from organized transnational
crime are now being targeted as most urgent agenda issues in the coming United Nations
Congress on the Prevention of Crime and the Treatment of Offenders, scheduled for theyear 2000.
B. The 109th International Training Course
1. Introduction
UNAFEI conducted the 109th International Training Course (from 13 April to 2 July
1998) with the main theme, “Effective Treatment Measures for Prisoners to Facilitate
Their Re-integration into Society”. This Course consisted of 29 participants from 17
countries.
The Institute’s selection of this theme reflects its concern regarding the effective andsmooth re-integration of prisoners into society. Facilitating this end requires theestablishment, proper implementation, and strengthening of treatment programmes
within and outside the prison walls.
2. Methodology
The participants identified obstacles to the re-integration of prisoners into society
and searched for effective measures to facilitate integration. In this regard, theunderlying tension between the need to offer rehabilitative services to offenders andthe need to execute punishment and/or maintain order in the prison was acknowledged
and explored, with a view to reducing recidivism.
The objectives were primarily realized through the Individual Presentations and theGroup Workshop sessions. In the former, each participant presented the actual situation,
problems and future prospects of their respective country with respect to the main
theme of the Course. The Group Workshops further examined the subtopics of themain theme. To facilitate discussions, the participants were divided into the following
three groups under the guidance of faculty advisers:
Group 1: Rehabilitation Programmes in the Prison to Prevent Prisoners’ Recidivism:
The Actual Situation, Problems and Countermeasures;Group 2: Early Release of Prisoners to Facilitate their Re-integration into Society:
The Actual Situation, Problems and Countermeasures; andGroup 3: Rehabilitation and Correctional Programmes in the Community to Prevent
Recidivism by Discharged Prisoners: The Actual Situation, Problems andCountermeasures.
Each group elected a chairperson(s) and rapporteur(s) to organize the discussions.
The group members seriously studied the designated subtopics and exchanged theirviews based on information obtained through personal experience, the Individual
Presentations, lectures and so forth. Nineteen sessions were allocated for Groupdiscussion.
In the sixth week, Plenary Meetings were held to discuss the interim outline of theGroup Workshop reports and to offer suggestions and comments. During the final
Plenary Meetings in the ninth week, drafts of the Group Workshop reports were examined
and critiqued by all the participants and the UNAFEI faculty. Based on these discussions,
the Groups further refined their reports and presented them in the Report-Back Session,

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ANNUAL REPORT FOR 1998
where they were endorsed as the reports of the Course. The full texts of the reports are
published in UNAFEI Resource Material Series No. 54.
3. Outcome Summary
The imprisonment of offenders is executed as a punishment. However, at the sametime, imprisonment (through the correctional treatment given in prison) is expected torehabilitate offenders so as to facilitate their smooth re-integration into society after
release. Even though countries are making every possible effort to realize this latter
objective, various factors impair effectiveness. Consequently, worldwide there is a highreported rate of re-offense by discharged prisoners, and of their resultant recommitment.
The guarantee of basic living conditions in prisons is a prerequisite to appropriately
implementing the necessary treatment for the future re-integration of each prisoner
into society. However in some countries, these conditions are not satisfied due to staff
and budgetary constraints, as well as various complications resulting from prison
populations exceeding legal capacity.
Under such circumstances, the need to offer rehabilitative services to offenders isovershadowed by the need to execute punishment and/or maintain order in the prison.
Additionally, in other countries, despite the existence of prisoner rehabilitation treatment
programs, an inadequate scope and improper methods of implementation make suchprograms relatively ineffective.
Consequently, considering that correctional treatment in prison is the first major
step towards re-integrating offenders within society, the establishment and strengtheningof such treatment is an urgent issue requiring attention. Moreover, to sustain orcomplement such efforts within the prison, importance should also be placed on early
release systems and measures, which assist offenders upon release.
For example, the systems of many countries permit the release of selected prisoners
before the expiration of their sentence by such means as parole, good time system, andremission. When such early release systems operate properly and efficiently, the reintegration of releasees into society can proceed smoothly. However, a flawed system islikely to result in discharged prisoners committing further offenses, which subsequently
exposes the community to further harm. Thus, the effectiveness of early release systems
as a criminal policy hinges on the careful screening of prisoners. In this regard,
consideration should be given to factors which reflect that a discharged prisoner will beable to adjust easily to society, such as whether an offender has made genuine efforts toreform themself within prison and has acquired vocational and living skills.
Further, it is essential to provide adequate supervision, as well as guidance and care,to releasees (whether discharged early or upon serving a full sentence) in order to ensure
their re-integration into society. However, in many countries, such systems of supervision
and aftercare within the community are either nonexistent or function poorly.
Consequently, discharged prisoners who encounter difficulties or challenges in their
daily lives may return to a life of crime.
As evidenced above, the smooth re-integration of discharged offenders into society
relies upon the establishment, proper implementation, and strengthening of treatment
programs within and outside the prison walls. Thus, correctional treatment in prisons,release systems, and treatment in the community must be designed to supplement and6

MAIN ACTIVITIES
complement each other in order to secure the re-integration of prisoners into thecommunity, as well as to benefit the community which will receive them after release.
C. The 110th International Training Course
1. Introduction
From 31 August to 20 November 1998, UNAFEI conducted the 110th International
Training Course with the main theme, “Effective Countermeasures against Economic
Crime and Computer Crime.” This Course consisted of 28 participants from 17 countries.
2. Methodology
The 110th Course endeavored to explore the best means to more effectively combat
economic and computer crime by discussing the strengthening of criminal justice systems.
This was accomplished primarily through comparative analysis of the current situationand problems in the participating countries. Our in-depth discussions enabled us to
put forth effective and practical countermeasures to such problems, so as to improve
the fight against economic and computer crime.
This Training Course provided a forum for the exchange of information and views on
how criminal justice agencies in the respective countries detect, investigate and prosecute
economic and computer crime cases, as well as the problems and difficulties encounteredin that regard. Discussions also highlighted the importance of establishing a more
efficient system and effective countermeasures, and the need to increase international
cooperation in this field in order to eradicate such crimes.
The objectives were primarily realized through the Individual Presentations and theGroup 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 discussions, the participants were divided into the following three groups under
the guidance of faculty advisers:
Group 1: Economic Crime Damaging Government and the National Economy;Group 2: Economic Crime Against the Private Sector, andGroup 3: Economic Crime Against Consumers and Investors.
Each group elected a chairperson(s) and rapporteur(s) to organize the discussions.
The group members seriously studied the designated subtopics and exchanged theirviews based on information obtained through personal experience, the Individual
Presentations, lectures and so forth. Nineteen sessions were allocated for Groupdiscussion.
In the sixth week, Plenary Meetings were held to discuss the interim outline of theGroup Workshop reports, and to offer suggestions and comments. During the final
Plenary Meetings in the ninth week, drafts of the Group Workshop reports were examined
and critiqued by all the participants and the UNAFEI faculty. Based on these discussions,
the Groups further refined their reports and presented them in the Report-Back Session,
where they were endorsed as the reports of the Course. The reports will be published infull in UNAFEI Resource Material Series No. 55.

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ANNUAL REPORT FOR 1998
3. Outcome Summary
In recent years, business activities, such as commercial and financial trading, have
expanded dramatically both domestically and internationally, and new technologies
reflected in transportation, telecommunications and computer networks have developedwith equal rapidity. Despite the unquestionable benefits of such advancements, thesetrends also have been manipulated for illegal purposes, thereby significantly increasing
the scale, transnationalization and sophistication of crime. The interrelated offences of
economic crime and computer crime are particular forms of great concern in today’ssociety.
The nature and scope of economic crime is incredibly diverse. The detection,
investigation and prosecution of economic crimes are impaired significantly by various
factors including the complexity of the transactions used to effectuate these offences,and the limited expertise of criminal justice officials in these fields. Moreover, reluctanceby the victims to report such crimes for fear of negative business repercussions, such as
the loss of consumer confidence, further frustrates and delays detection.
Computers are widely utilized in the activities of commerce and banking, as well as
in the life of ordinary citizens. Regrettably, the advancement of computer technology
has also facilitated various crimes, whether as instrument of crime (e.g., economic crime,
forgery, copyright infringement of intellectual property and pornography) or the targetof crime (e.g., unauthorized access and damage to, or modification of, computer data/
programs).
Considering the extensive damage that can be caused in an instant worldwide bycrime facilitated by computer technology, proper and immediate response by criminal
justice agencies to computer crime is indispensable. However, since such crimes are
relatively new to many countries, responsive legal frameworks, including what conduct
should be criminalized, has not been specifically developed to date. Even if such legal
framework is effectuated, difficulties will undoubtedly ensue in the investigation andprosecution of these crimes due to the limited knowledge of criminal justice officials
about computer-related crime and technological problems stemming from thevulnerability of computer systems to sabotage, particularly as to the identification of
offenders and the collection of evidence.
It is noted that threat posed by the proliferation of both economic and computer
crimes to the sound development of a nation, as well as to the international community,
has been severely underestimated. Thus, appropriate, stringent control and preventative
measures for these crimes should be introduced as soon as possible. To this end, it isimperative for criminal justice agencies to understand thoroughly the current situationof these crimes; to establish a proper legal framework to address such crimes; to develop
more advanced techniques commensurate with the nature of these crimes; and to enhanceinternational criminal justice cooperation in this regard.

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MAIN ACTIVITIES
III. EXPERTS MEETING ON CRIMES RELATED TO THE COMPUTERNETWORK
From 5 to 9 October 1998, during the 110th International Training Course, the“Experts Meeting on Crimes Related to the Computer Network” was convened at
UNAFEI in preparation for the Workshop on “Crime Related to the Computer Network”
to be held at the Tenth United Nations Congress on the Prevention of Crime and theTreatment of Offenders. UNAFEI willingly assumed this responsibility to organizeand host the experts meeting, as well as act as a coordinator for the said Workshop, in
response to a request made during the Twelfth Co-ordination Meeting of the United
Nations Crime Prevention and Criminal Justice Programme Network held in
Courmayeur, Italy in 1997.
Participants in the Experts Meeting included sixteen experts from eleven countries
representing all regions of the world and 2 United Nations officers, as well as the UNAFEI
Director and faculty. The Experts and other participants discussed the scope of issues
to be taken up at the Workshop, its objective, programmes, methodology, etc. It wasagreed that the Workshop will focus primarily on issues relating to investigation, searchand seizure of computer systems, tracing of communications to determine their sourceand destination, industry cooperation and mutual legal assistance, together with somepreliminary attention devoted to issues of the nature of the problem, prevention, and to
the substantive criminal law in proscribing conduct as criminal.

IV. TECHNICAL COOPERATION
A. Joint Seminars
Since 1981, UNAFEI has conducted 17 joint seminars under the auspices of JICA
and in collaboration with host governments in Asia including China, the Republic ofKorea, Malaysia, Nepal, Pakistan and the Philippines. With the participation of policymakers and high-ranking administrators, including members of academia, the joint
seminars attempt to provide a discussion forum in which participants can share theirviews and jointly seek solutions to various problems currently facing criminal justiceadministration in both the host country and Japan.
1. Bangladesh-UNAFEI Joint Seminar
From 14 to 18 March 1998, UNAFEI held the Bangladesh-UNAFEI Joint Seminar in
the Bangladesh capital city of Dhaka. The Government of the People’s Republic ofBangladesh, through the Ministry of Home Affairs and UNAFEI, organized the Joint
Seminar. The Joint Seminar concluded with the adoption of draft recommendations forthe betterment of the Bangladesh criminal justice system and society, based on
discussions on effective crime control, fair and speedy trial, and rehabilitative andhumane treatment of offenders.
2. India-UNAFEI Joint Seminar
The India-UNAFEI Joint Seminar was held in Delhi under the theme of “Crime
Prevention and Control Strategies in the Fight against Organized Crime” from 14 to 17
December 1998. The Government of the Republic of India, through the National Instituteof Criminology and Forensic Science of the Ministry of Home Affairs, and UNAFEI

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ANNUAL REPORT FOR 1998
organized the Joint Seminar. The Joint Seminar consisted of six sessions: an overview
of organized crime; effective investigation and prosecution of organized crime; effective
trial against organized crime; effective treatment of organized criminals;
countermeasures against drug-related crime; and countermeasures against organizedcrime relating to firearms, explosives and economic offences. The Joint Seminarconcluded with the adoption of draft recommendations for the betterment of the Indiancriminal justice system, as formulated in each of the above sessions.
B. Regional Training Programmes
1. Thailand
From 2 to 13 March 1998, UNAFEI dispatched an expert to Thailand to assist the
Office of the Narcotic Control Board (ONCB) in organizing the Sixth Regional Training
Course on “Effective Countermeasures against Drug Offences and the Advancement of
Criminal Justice Administration.” This training course was held with the cooperationof JICA and the Royal Thai Government. Participants from various Asian-Pacificcountries attended this two-week seminar and discussed such issues as theimplementation of the Vienna Convention in their respective countries and international
cooperation based upon the Convention, as well as the improvement of investigativetechniques.
2. Kenya
From 27 July to 3 October 1998, one UNAFEI professor was dispatched to Kenya toassist the Children’s Department of the Ministry of Home Affairs and National Heritage
in a project to develop nationwide standards for the treatment of juvenile offenders.

V. COMPARATIVE RESEARCH PROJECT
Reflecting its emphasis on the systematic relevance of training activities and priority
themes identified by the Commission, the research activities of the Institute are designed
to meet practical needs, including those for training materials for criminal justicepersonnel. For example, UNAFEI is updating its research by requesting several experts
from countries in the Asia-Pacific region to report on their respective probation systems.
UNAFEI will subsequently compile and publish these reports for international
distribution in a book titled “Adult Probation Profiles of Asia.”

VI. 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 use of this information in its training courses andseminars. The Information and Library Service of the Institute has been providing,upon request, materials and information to United Nations agencies, governmentalorganizations, research institutes and researchers, both domestic and foreign.

10MAIN ACTIVITIESVII. PUBLICATIONS
Reports on training courses and seminars are published regularly by the Institute.
Since 1971, the Institute has issued the Resource Material Series, which contains
contributions by the faculty members, visiting experts and participants of UNAFEI. In
1998, the 51st, 52nd and 53rd editions of the Resource Material Series were published.
Additionally, issues 95 to 97 of the UNAFEI Newsletter include a brief report on eachcourse and seminar (from the 108th to the 110th respectively) and provide other timely
information.

VIII. THE INTERNATIONAL PENAL AND PENITENTIARY FOUNDATIONEIGHTH COLLOQUIUMUNAFEI collaborated with the International Penal and Penitentiary Foundation(IPPF) to organize and host the Eighth Colloquium “Some Essential Issues inContemporary Correctional Policy” from 17 to 20 January 1998. IPPF is an internationalorganization which promotes studies in the fields of crime prevention and the treatment
of offenders, especially by scientific research, publications and teaching. This event
was of particular significance as it was the first IPPF colloquium conducted in Asia. In
attendance were about 50 high-ranking criminal justice officials from around the world.

IX. OTHER ACTIVITIES
A. Public Lecture Programmes
On 10 February 1998, the Public Lecture Programme was conducted in the Grand
Conference Hall of the Ministry of Justice. In attendance were many distinguishedguests, UNAFEI alumni and the 108th 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 purport to increase the public’s awareness of criminal
justice issues through comparative international study by inviting distinguished speakers
from abroad. This year, the Programme sponsors invited Dr. Ernesto Ugo Savona(Professor, School of Law, Trento University, Italy) and Mr. Lau, Yuk-kuen (Director of
Crime and Security, Hong Kong Police Force Headquarters, Hong Kong). Their lectures
were entitled “The Organizational Framework of European Crime in the Globalization
Process” and “Policing for the Millennium-The Hong Kong Police Perspective on Law
Enforcement in the Twenty-first Century,” respectively.
B. Assisting UNAFEI Alumni Activities
Numerous UNAFEI alumni associations in various countries have commenced orare 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 toimprove the overall crime situation.

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ANNUAL REPORT FOR 1998
C. Overseas Missions
Mr. Yuzuru Takahashi (Chief of Training and Professor) and Mr. Akihiko Abe(Administrative Staff) visited two Asian countries from 15 to 24 January 1998.
Specifically, they traveled to the Republic of Korea and the People’s Republic of China
to study the unique criminal justice systems of these two nations. In the Republic ofKorea, Mr. Takahashi and Mr. Abe toured the Supreme Court and the District Court,
where they observed a criminal trial. In the People’s Republic of China, they visited theSupreme People’s Procuratorate, the Supreme People’s Court, the Ministry of Justice,
the Institute of Public Security of the Ministry of Public Security, the Beijing High
People’s Court and Beijing Prison. While in Beijing, a UNAFEI Alumni Association
reception was held.
Mr. Masahiro Tauchi (Deputy Director) and Mr. Fusao Takayama (Chief of Secretariat)
traveled to Nepal and India from 21 to 31 January 1998. While in Nepal, they toured
Nakkhu Prison and met with the Home Secretary and the Special Secretary of the
Ministry of Home Affairs. In India, Mr. Tauchi and Mr. Takayama first visited Calcutta,
where they toured Police Headquarters. Subsequently, they attended the Asian Regional
Workshop on Firearm Regulation for the Purposes of Crime Prevention and Safety. On
the first day of the Workshop, Deputy Director Tauchi presented the UNAFEI position
paper entitled “Overview and Discussion of the United Nations Regional Study on
Firearms”, which primarily highlighted the work product of the 102nd International
Seminar “Crime Prevention through Effective Firearms Regulation”.
Mr. Masahiro Tauchi (Deputy Director) traveled to Melbourne, Australia from 14 to
18 February 1998 at the invitation of the Australian Institute of Criminology (AIC). In
preparation for the 110th International Training Course, Mr. Tauchi attended theInternet Crime Conference organized by AIC. Additionally, he met with the director
and other officers of AIC to discuss preparations for the workshop on “Crimes related to
the Computer Network”, which will be held at the Tenth United Nations Congress on
the Prevention of Crime and the Treatment of Offenders.
Ms. Tomoko Akane (Professor) served as a visiting expert for the Sixth Regional
Training Course on “Effective Countermeasures against Drug Offenses and Advancementof Criminal Justice Administration” in Bangkok, Thailand from 2 to 13 March 1998.
She delivered a lecture entitled “Effective Countermeasures against Drug-Related Crime
in Japan.” Additionally, Ms. Akane visited various Thai criminal justice agencies during
her stay.
Mr. Toichi Fujiwara (Director), Mr. Masahiro Tauchi (Deputy Director), Mr. Yuzuru
Takahashi (Chief of Training and professor), Mr. Terutoshi Yamashita (Professor), Mr.
Ryosuke Kurosawa (Professor), Mr. Shoji Imafuku (Professor), Ms. Makiko Miyamoto(Administrative Staff) and Mr. Shunichi Komatsu (Administrative Staff) represented
the Institute at the Bangladesh-UNAFEI Joint Seminar in Dhaka, Bangladesh from 14
to 18 March 1998.
Mr. Terutoshi Yamashita (Professor) represented UNAFEI as an observer at the Asia
Regional Ministerial Meeting on Transnational Crime held in Makati City, Manila,
Philippines from 22 to 25 March 1998. The Meeting was organized by the United Nations
Office at Vienna and hosted by the Government of the Republic of the Philippines.

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MAIN ACTIVITIES
Mr. Toichi Fujiwara (Director) and Ms. Tomoko Akane (Professor) attended the Seventh
Session of the United Nations Commission on Crime Prevention and Criminal Justiceheld in Vienna, Austria from 21 to 30 April 1998. During the plenary meeting, theDirector delivered a statement regarding the recent activities of UNAFEI.
Mr. Toichi Fujiwara (Director), Mr. Hiroshi Iitsuka (Chief of Training and Professor),
Mr. Shinya Watanabe (Professor) and Ms. Tazuko Saitoh (Librarian) conducted researchon the criminal justice system of the People’s Republic of China from 6 to 15 July 1998.
Additionally, they visited various Chinese criminal justice agencies during their stay.
Mr. Masahiro Tauchi (Deputy Director) and Mr. Shoji Imafuku (Professor) attended
Pacific Islands Conference for International Cooperation on Criminal Justice andAdministration organized by ACPF, held in Fiji from 14 to 17 July 1998. The theme ofthis conference was “International Cooperation in Criminal Justice and Administrationin the New Millenium.” They made presentations entitled “Crime and the Internet”
and “Public Participation for Prisoners’ Rehabilitation in Japan: Volunteer Probation
Officers and Women’s Association for Rehabilitation Aid” respectively.
Mr.Shoji Imafuku (Professor) served as an expert and provided technical assistanceto the Juvenile Crime Prevention and Treatment of Offenders Project in Kenya from 27
July to 3 October 1998.
Mr. Toichi Fujiwara (Director) and Ms. Tomoko Akane (Professor) attended the 12th
International Congress on Criminology “Crime and Justice in a Changing World: Asianand Global Perspective”, held in Seoul, Korea from 24 to 29 August 1998.
Mr. Toichi Fujiwara (Director) represented UNAFEI at the Thirteenth Meeting of
the United Nations Crime Prevention and Criminal Justice Programme Network in
Courmayeur, Italy from 21 to 29 September 1998. Additionally, Mr. Fujiwara attended
the Asian and Pacific Regional Preparatory Meeting on the Prevention of Crime andTreatment of Offenders held in Bangkok, Thailand from 2 to 4 November 1998.
Mr. Masahiro Tauchi (Deputy Director) attended the International Crime andTechnology Conference in Singapore from 13 to 17 October 1998. Additionally, Mr. Tauchi
served as a visiting expert for the International Symposium on the Prevention andControl of Financial Fraud, held in China from 18 to 24 October 1998.
Mr. Hiroshi Iitsuka (Chief of Training and Professor) participated in the Working
Group Meeting on Drugs organized by the Asia Crime Prevention Foundation and held
in China from 27 October to 1 November 1998.
Ms. Tomoko Akane (Professor) served as a visiting expert for the Regional Seminarfor Police Officials of United Arab Emirates, hosted by the Naiif Arab Academy for
Security Sciences in United Arab Emirates from 13 to 17 November 1998.
Ms. Kayo Konagi (Professor) conducted research on the treatment and rehabilitation
system for adult offenders in Malaysia from 22 to 24 November 1998. A similar researchstudy was undertaken by Ms. Konagai and two administrative staff from UNAFEI, Mr.
Kenji Matsuda and Mr. Yoshinori Todaka, in Thailand from 24 to 27 November 1998.
Mr. Chikara Satoh (Professor) participated in the ACPF Working Group Meeting on
the role of criminal law in the protection of the environment, held in India from 7 to 11
December 1998. In this meeting the participants finalized the commentaries of each13

ANNUAL REPORT FOR 1998
article of the Guidelines on the subject adopted at the 6th ACPF World Conference,
held in 1997.
Mr. Shinya Watanabe (Professor) participated in an International Conference withthe theme of “Present and Future Perspective of Police Sciences”, held in Sharjah in the
United Arab Emirates from 13 to 16 December 1998.
Mr. Toichi Fujiwara (Director), Mr. Masahiro Tauchi (Deputy Director), Mr. Hiroshi
Iitsuka (Chief of Training and Professor), Mr. Ryosuk Kurosawa (Programming Officer
and Professor), Ms. Tomoko Akane (Professor), Mr. Chikara Satoh (Professor), Mr. Wataru
Okeya (Administrative Staff) and Mr. Tomohiro Tatsumi (Administrative Staff)
represented UNAFEI at the India-UNAFEI Joint Seminar held in Delhi under thetheme of “Crime Prevention and Control Strategies in the Fight against Organized
Crime” from 14 to 17 December 1998.
D. Assisting ACPF Activities
UNAFEI cooperates and corroborates with ACPF to further improve crime prevention
and criminal justice administration in the region. Since UNAFEI and ACPF have many
similar goals, and a large part of ACPF's membership consist of UNAFEI alumni, therelationship between the two is strong. Some examples of cooperation and corroboration
can be seen as follows:a. UNAFEI faculty members attended ACPF working group meetings held in China
in October 1998 and Delhi in December 1998 regarding drug-related crimes andenvironmental protection respectively.
b. UNAFEI dispatched faculty members to Fiji to attend the Pacific Islands
Conference for International Cooperation on Criminal Justice and Administration
organized by ACPF in July 1998.

X. HUMAN RESOURCES
A. Staff
In 1970, the Government of Japan assumed full financial and administrative
responsibility for running the Institute. The Director, Deputy Director and sevenprofessors are selected from among public prosecutors, the judiciary, corrections andprobation. UNAFEI also has approximately 20 administrative members, who areappointed 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 or seminar. The Institute has also received valuable assistance from various
experts, volunteers and related agencies in conducting its training programmes.
B. Faculty Changes
Mr. Yuzuru Takahashi, formerly Chief of Training Division and Professor of UNAFEI,
was appointed Judge and transferred to the 14th Division of the Civil Department of
the Tokyo High Court and on 1 April 1998.
Mr. Hiroshi Iitsuka, formerly Appeals Judge of the Tokyo Regional Tax Tribunal, wasappointed Chief of Training Division of UNAFEI on 1 April 1998.

14

MAIN ACTIVITIES
Mr. Hiroyuki Yoshida, formerly Chief of Research and Professor of UNAFEI, wastransferred to the Office of International Affairs of the Ministers’ Secretariat of the
Ministry of Justice and appointed as Assistant Director on 1 April 1998.
Mr. Shinya Watanabe, formerly Professor of the Training Institute for Correctional
Personnel of the Ministry of Justice, joined UNAFEI as a Professor on 1 April 1998.
Mr. Terutoshi Yamashita, formerly Professor of UNAFEI, was transferred to the Trial
Department of the Yokohama District Public Prosecutors on 1 April 1998.
Mr. Chikara Satoh, formerly a Public Prosecutor of the Investigations Department of
the Tokyo District Public Prosecutors Office, joined UNAFEI as a Professor on 1 April
1998.

XI. FINANCESThe Ministry of Justice primarily provides the Institute’s budget. The total amountof the UNAFEI budget is approximately ¥325 million per year. Additionally, JICA
provides assistance for the Institute's international training courses and seminars.
Through its financial contributions, ACPF is another constant and reliable supporter of
UNAFEI activities.

15

ANNUAL REPORT FOR 1998

UNAFEI WORK PROGRAMME FOR 1999
I. TRAINING
A. The 111th International Seminar
The 111th International Seminar, “The Role of Police, Prosecution and the Judiciaryin the Changing Society,” will be held from 18 January to 19 February 1999. Suchfactors as industrialization, technological advancements and socio-economic change will
be explored in terms of their effect upon crime, the criminal justice system and society
as a whole. Particular attention will be given to the suitability of present-day criminal
justice measures.
B. The 112th International Training Course
The 112th International Training Course, “Participation of the Public and Victims
for More Fair and Effective Criminal Justice Administration”, is scheduled to be heldfrom 12 April to 4 July 1999. Participants are expected to explore measures to enhance
participation of public and victims in all aspects of criminal justice administration from
crime prevention, to community-based treatment of offenders, to develop a more fairand effective criminal justice administration.
C. The 113th International Training Course
The 113th International Training Course entitled “The Administration of Criminal
Justice for the Prevention of Corrupt Activities by Public Officials,” is scheduled to beheld from 30 August to 19 November 1999. The prevalence of corruption in many
countries and severe difficulties encountered by criminal justice officials in tacklingand effectively deterring such crime prompted the selection of this theme. Thus, the113th Course will examine the current situation regarding corruption in each of theparticipating countries, and analyze the causes and dynamics of corruption in order toseek concrete and practical countermeasures.

II. SPECIAL SEMINAR FOR SENIOR CRIMINAL JUSTICE OFFICIALS OF
THE PEOPLE’S REPUBLIC OF CHINA
The 4th Special Seminar for Senior Officials of Criminal Justice in People’s Republicof China, “Rational Structure of Criminal Justice and Relationship between the Different
Agencies of Criminal Justice,” will be held from 1 to 19 March 1999. Ten senior criminal
justice officials and UNAFEI faculty will comparatively discuss contemporary problems
faced by China and Japan in the realization of criminal justice.

III. TECHNICAL COOPERATION
A. Thailand-UNAFEI Joint Seminar
In December 1999, the Thailand-UNAFEI Joint Seminar is scheduled to be held in
Bangkok. The Office of the Attorney General of the Kingdom of Thailand and UNAFEI
will organize the Seminar.

16

UNAFEI WORK PROGRAMME FOR 1999
B. Regional Training Programmes
1. Seventh Regional Training Course on Effective Countermeasures against Drug
Offences and the Advancement of Criminal Justice Administration
In January 1999, two UNAFEI Professor will travel to Thailand to assist the Royal
Thai Government and the Office of the Narcotics Control Board (ONCB) in organizing
the Seventh Regional Training Course on Effective Countermeasures against Drug
Offences and the Advancement of Criminal Justice Administration. Approximately 20
participants from various Asia-Pacific countries will attend the two-week course andwill discuss drug-related issues identifying the actual problems in the participating
countries. Discussion topics in the Course will include the improvement of investigativetechniques, effective measures against money laundering, the implementation of theVienna Convention, international cooperation, and the treatment of drug offenders.
2. Preparatory Survey for Costa Rica Regional Seminar
In February 1999, the Preparatory Survey for the Regional Seminar on “Effective
Measures for the Improvement of Prison Conditions and Correctional Programmes”
will be held in San Jose, Costa Rica. The Government of Costa Rica through the United
Nations Latin American Institute for the Prevention of Crime and Treatment of Offenders
will organize and host this seminar, should the results of the Preparatory Survey bepositive, with the support of JICA and UNAFEI. This seminar will be held annually forfive years and will target correctional officers in Latin America.
3. Kenya
From August to October 1999, two UNAFEI professors will be dispatched to Kenya toassist the Children’s Department of the Ministry of Home Affairs and National Heritage
in a project to develop nationwide standards for the treatment of juvenile offenders.

IV. OTHER ACTIVITIESA.

Preparation for the workshop at the tenth United Nations congress
UNAFEI will continue to prepare for the Workshop on “Crimes Related to theComputer Network” at the Tenth United Nations Congress on the Prevention of Crimeand the Treatment of Offenders in 2000, in response to a request made during the
Twelfth Co-ordination Meeting of the United Nations Crime Prevention and Criminal
Justice Programme Network held in Courmayeur, Italy in 1997.

17

APPENDIXANNUAL REPORT FOR 1998

MAIN STAFF OF UNAFEI

Director

Mr. Toichi Fujiwara

Deputy Director

Mr. Masahiro Tauchi

Faculty:
Chief of Training Division

Mr. Hiroshi Iitsuka

Chief of Information andLibrary Service Division
and Professor

Ms. Kayo Konagai

Chief of Research Division
and Professor

Mr. Ryosuke Kurosawa

Professor

Ms. Tomoko Akane

Professor

Mr. Mr. Chikara Satoh

Professor

Mr. Shinya Watanabe

Professor

Mr. Shoji Imafuku

Linguistic Adviser

Ms. Priscilla Ferrazzi

Secretariat:
Chief of Secretariat

Mr. Tadashi Ito

Deputy Chief of Secretariat

Mr. Kenji Matsuda

Chief of General and Financial
Affairs Section

Mr. Rentarou Ueta

Chief of Training and Hostel
Management Affairs Section

Mr. Wataru Okeya

Chief of International Research
Affairs Section

Mr. Yoshinobu Gouda«AS OF 31 DECEMBER 1998»

18

APPENDIX

1998 VISITING EXPERTS
THE 108TH INTERNATIONAL SEMINAR
Dr. Ernesto Ugo Savona

Professor, School of Law, Trento University, Italy

Mr. Frank J. Marine

Deputy Chief, Organized Crime and Racketeering
Section, Criminal Division, U.S. Department of Justice

Mr. Lau, Yuk-kuen

Director of Crime and Security, Hong Kong Police
Force Headquarters, Hong Kong

Mr. Dimitris Vlassis

Crime Prevention and Criminal Justice Officer, Centre
for International Crime Prevention, United Nations
Office at Vienna, Austria

Mr. Madan Lal Sharma

Joint Director, Central Bureau of Investigation, India
Seminar Counsellors

Dr. Enamul Huq

Ex-Inspector General of Police, President ACPF
Bangladesh

Mr. Severino H. Gaña, Jr.

Senior State Prosecutor, Department of Justice,
Philippines

THE 109TH INTERNATIONAL TRAINING COURSE
Dr. Don A. Andrews

Professor, Department of Psychology, Carleton
University, Canada

Mr. Matti Laine

Principal Lecturer, The Prison Personnel Training
Centre, Finland

Ms. Celia Capadocia Yangco

Assistant Secretary , Department of Social Welfare
and Development, Philippines

Mr. Lohman Yew

Deputy Director of Prisons, Prison Headquarters,
Prisons Department, Ministry of Home Affairs,
Singapore

Dr. Kenneth G. Adams

Associate Professor, School of Public andEnvironmental Affairs, Indianapolis, United States
Course Counsellor

Mr. Alfredo C. Benitez

Halfway House Manager, Bureau of Corrections,
Department of Justice, Philippines

19

ANNUAL REPORT FOR 1998
THE 110TH INTERNATIONAL TRAINING COURSE
Mr. Donald Kenneth Piragoff General Counsel of Criminal Law Policy Section,
Department of Justice, Canada
Dr. Lee, Tae-Hoon

Chief Prosecutor Seongam Branch Office, Suwong
District Public Prosecutor’s Office, Republic of Korea

Mr. Soh Thiam Sim

Head, Computer Crime Branch, Commercial Crime
Division, Criminal Investigation Department,
Singapore Police Force, Singapore

Mr. John D. Arterberry

Deputy Chief, Fraud Section, Criminal Division
United States Department of Justice, Washington
Course Counsellors

Dr. Slawomir Redo

Criminal Justice and Legal Affairs Officer, Centre forInternational Crime Prevention, Office for Drug
Control and Crime Prevention,Vienna International
Centre, Austria

Dr. Peter Nils Grabosky

Director of Research, Australian Institute of
Criminology, Australia

Mr. Shri L. C. Amarnathan

Director General of Police, Sikkim of Police
Headquarters, India

20

APPENDIX

1998 AD HOC LECTURERS
THE 108TH INTERNATIONAL SEMINAR
Mr. Mitsuhiro Ohara

Assistant Director, Second Organized Crime Division,
National PoliceAgency, Japan

Mr. Motohiro YoshidaCounsellor, Public Security Division, Criminal Affairs
Bureau, Ministry of Justice, JapanTHE 109TH INTERNATIONAL TRAINING COURSE
Mr. Takeyoshi Hongoh

Director General, Rehabilitation Bureau, Ministry ofJustice, Japan

Mr. Masaharu Yanagimoto

Professor of Law, Asia University, Tokyo, Japan

Mr. Ichiro Sakai

Director General, Correction Bureau, Ministry ofJustice, Japan

Dr. Ohashi Hideo

Director, Medical Care and Classification Division,
Correction Bureau, Ministry of Justice Japan

Mr. Akio Harada

Director General, Criminal Affairs Bureau, Ministry ofJustice, Japan

Dr. Ezzat A. Fattah

Professor Emeritus, School of Criminology, Simon
Fraser University, Vancouver, Canada

THE 110TH INTERNATIONAL TRAINING COURSE
Mr. Masayo Hirao

Deputy Director, Special Investigation Division,
Executive Bureau, Securities and Exchange
Surveillance Commission, Tokyo, JapanMr. ShuzoYamamoto

Deputy Director, Special Investigation Department of
the Tokyo District Public Prosecutors Office, Japan

Mr. Takahiko Iiri

Superintendent, Assistant Director 2nd Investigation
Division, Criminal Investigation Bureau, Japan

Mr. Kunio Mikuriya

Director of Enforcement, Customs and and Tariff
Bureau, Ministry of Finance of Japan

Mr. Mamoru Izumisawa

Director, Management and Planning Division,
Investigation Bureau, Fair Trade Commission, JapanMr. Hideo Arai, Director

Criminal Investigation Division, Examination andCriminal Investigation Department, National Tax
Administration, Japan

21

ANNUAL REPORT FOR 1998
Mr. Akira Nakata

Public Prosecutor, Tokyo High Public Prosecutors
Office, Japan

Mr. Chin Fook Leong

Deputy Director, Public Affairs Department, Singapore
Police Force

Mr. Kunihiro Matsuo

Director General, Criminal Affairs Bureau, Ministry ofJustice of Japan

Mr. Takashi NonoueCounselor, Criminal Affairs Bureau, Ministry ofJustice of Japan

Mr. Mikio Itoh

Assistant Director of Life Environment Division, Life
Security Bureau, National Police Agency, Japan

Mr. Kiyoshi Yasutomi

Professor of Law, Keio University, Japan

22

APPENDIX

1998 UNAFEI PARTICIPANTS
THE 108TH INTERNATIONAL SEMINAR
Overseas Participants
Mr. Abdul Wahhab Sarkar

Deputy Secretary (Law), Bangladesh
Secretariat, Bangladesh

Mr. Leonardo Ananias
González Gómez

Legal Adviser, Ministerio del Interior, Dirección
General Juridica, Colombia

Mr. Armogam Gounder

Assistant Superintendent of Police, Central
Police Station, Fiji Islands

Mr. Cheung, Yim-Fui

Chief Inspector I, Organised Crime and Triad
Bureau, Police Headquarters, Hong Kong

Mr. Purushottam Sharma

Senior Superintendent of Police, Police
Headquarters, India

Mr. Claude Ranjatoson

Deputy Chief of Air and Border Police, Ivato
International Airport, Ministry of Police,
Madagascar

Mr. Lai Yong Heng

Deputy C.I.D. Chief, Pahang, C.I.D.
Headquarters, Malaysia

Mr. Eduardo Barclay Arce

Secretario Ejecutivo, Consejo Estatal de
Coordinación del Sistema Nacional de Seguridad
Pública, Mexico

Mr. Tserentsoodol Enkhtsogt

Senior Officer, Legal Reform Strategic
Management and Integrated Planning
Department, Ministry of Justice, Mongolia

Mr. Udaya Nepali Shrestha

Special Secretary, Ministry of Law and Justice,
Nepal

Mr. José Eduardo Boza Guerrero

Criminal Judge, Supreme Court of Nicaragua,
Nicaragua

Mr. Tahir Anwar Pasha

Deputy Inspector General of Police, Civil
Secretariat Lahore, Pakistan

Mr. Maring Kataka

Acting Director of Prosecution, Police
Headquarters, Papua New Guinea

Mr. Alberto Rama Olario

Deputy Regional Director for Administration,
Philippines National Police

23

ANNUAL REPORT FOR 1998
Mr. Yang, Bu-Nam

Public Prosecutor, Kwangju District Public
Prosecutor’s Office, Republic of Korea

Mr. Abdallah Ali
Mohammed Al-Shihry

Director, Sewaidi and Shobra Police Station,
Saudi Arabia

Mr. Surasakdi Chungsanga

Interpol Superintendent, Foreign Affairs
Division, Royal Thai Police, Thailand

Mr. Semisi Fonua Fifita

Assistant Chief Inspector, Officer-in-Charge,
Investigation Training Unit, Tonga Police Force,
Tonga

Mr. Muammer Yasar Özgül

Deputy General Director of Personnel, The
General Directorate of Personnel, Turkey

Mr. Efrén Manuel Marin Taborda

Chief of Investigations, Cuerpo Técnico Policia
Judicial, División Contra la Delincuencia
Organizada, Venezuela

Mr. Pham Ba Khiem

Deputy Chief, General Department of thePeople’s Police, Economic Police Department,
Viet NamJapanese Participants
Mr. Yasutaka Harada

Judge, Tokyo District Court, Japan

Ms. Kuniko Hokin

Chief, Tokyo Probation Office, Japan

Mr. Toshio Kusunoki

Chief of Kokura Branch, Kyushu Regional
Narcotics Control Office, Japan

Mr.Yutaka Nagashima

Senior Research Officer, Research and Training
Institute of the Ministry of Justice, JapanMr. Hiroyuki Osawa

Assistant Director, Foreign Affairs Division,
Security Bureau, National Police Agency, Japan

Mr. Ken Umemura

Deputy Superintendent, Tama Juvenile Training
School, Japan

Ms. Sakiko Watanabe

Public Prosecutor, Tokyo District Public
Prosecutors Office, Japan

24

APPENDIX
THE 109TH INTERNATIONAL TRAINING COURSE
Overseas Participants
Mr. Md. Hemayet Uddin

Assistant Inspector General of Prisons, Prisons
Directorate, Bangladesh

Ms. Elizabeth Malebogo Masire

Social Welfare Coordinator, Department of
Prisons and Rehabilitation, Botswana

Mr. Sairusi Gauna Tuisalia

Assistant Superintendent of Prisons, Prison
Headquarters, Fiji

Mr. William Kwadwo Asiedu

Assistant Director of Prisons, Ghana Prisons
Service, Ghana

Mr. Chung, Wai Man

Chief Officer , Staff Training Institute,
Correctional Services Department, Hong Kong

Mr. Mokhammad Frandono

Chief of Batam Prison, Indonesia

Ms. Josephine Muthoni Murege

Senior Probation Officer, District Probation
Office Makadara-Nairobi Area, Kenya

Mr. Titera Tewaniti

Prison Inspector, Kiribati Prison Service, Policeand Prisons Headquarters, Republic of Kiribati

Mr. Osman bin Ahmad

Superintendent of Prisons, Malaysian Prisons
Department, Simpang Rengam Prison andRehabilitation Centre, Malaysia

Mr. Gyan Darshan Udas

Under Secretary, Ministry of Home Affairs,
Nepal

Mr. Mohammad Yamin Khan

Deputy Inspector General of Police, Office of theInspector General of Police, Police Head Office,Pakistan

Mr. Michael Naplau Waipo

Deputy Commanding Officer, Bomana
Metropolitan Jail, Papua New Guinea

Ms. Emilie Pantoja Aranas

Training Officer, Jail National Training
Institute, Philippines

Mr. Yoon, Bo-Sik

Correctional Official, Correction Division,
Ministry of Justice, Republic of Korea

Mr. Joseph Elvy Szetu

Assistant Controller of Prisons Training,
Solomon Islands Prison Service, Solomon
Islands

Ms. Yossawan BoriboonthanaChief of Correctional Development Unit, Bureauof Penology, Department of Corrections,Thailand25

ANNUAL REPORT FOR 1998
Japanese Participants
Ms. Junko Fujioka

Principal Psychologist, Fuchu Prison, Japan

Mr. Tetsuya Kagawa

Assistant Judge, Tokyo District Court, Japan

Mr. Kenichi Kiyono

Public Prosecutor, Nara District Public
Prosecutors Office, JapanMr. Hideharu Maeki

Narcotics Agent, Kinki Regional Narcotics
Control Office, Japan

Ms. Fumi Murakami

Probation Officer, Kanto Regional Parole Board,Japan

Mr. Takao Nakamura

Probation Officer, Chubu Regional Parole Board,Japan

Mr. Satoshi Nakazawa

Family Court Probation Officer, Aomori Family
Court, JapanMr. Yoshio Shibata

Immigration Control Officer, Higashi-Nihon
Immigration Centre, Japan

Mr. Akihito Suzuki

Principal Supervisor, Kawagoe Juvenile Prison,Japan

Mr. Mamoru Suzuki

Researcher, Crime Prevention Section, National
Research Institute of Police Science, Japan

Mr. Mamoru Takatsu

Public Prosecutor, Yokohama District Public
Prosecutors Office, Japan

Mr. Nobuyuki Yamada

Senior Chief Programme Officer, Osaka Prison,Japan

ObserverMr. Hisashi Ishizuna

26

Planner, Facilities Division, Minister’s
Secretariat, Ministry of Justice, Japan

APPENDIX
THE 110TH INTERNATIONAL TRAINING COURSE
Overseas Participants
Mr. Saadi Lahcene

Public Prosecutor, Tribunal of Algiers, Algeria

Mr. Md. Mahfuzur Rahman

Additional Deputy Commissioner, Office of the
Deputy Commissioner, Bangladesh

Mr. Ramon Crespo
Carrilho Machado

Federal Criminal Expert, Federal Police
Department, Ministry of Justice, Brazil

Mr. Mao Borin

Assistant of Criminal Department Chief,
Department of Criminal Police, Cambodia

Ms. Wang Yabin

Vice Director, Tieling Research Institute of the
Public Security Bureau, The People’s Republic of
China

Mr. Marino Francisco
Sagot Somarribas

Sub-Director General, Social Adaptation andCrime Prevention Direction, Ministry of Justice,
Costa Rica

Mr. Burama Dibba

Assistant Superintendent of Police, Prosecutions
Division, Police Headquarters of the Gambia

Mr. M. S. Bali

Deputy Inspector General of Police, Central
Bureau of Investigation, Anti-Corruption
Branch, India

Mr. Patrick Ochieng Obimo

Deputy Officer in Charge of Police Prosecution,
Nairobi Area, Police Department, Office of the
President, Kenya

Mr. Wasana Sisaykeo

Director of Transnational and Economic Crime,
ASEAN Police Office, Lao People’s Democratic
Republic

Mr. Kedar Paudel

Under Secretary (Judicial Service), Ministry of
Law and Justice, Nepal

Mr. Asif Nawaz

Deputy Inspector General of Police, Central
Police Office, Pakistan

Mr .Wilfredo Vizon Lapitan

Assistant Chief Attorney, Office of the Chief
Attorney, Supreme Court of the Philippines,
Philippines

Mr. Choi, Joon-Weon

Public Prosecutor, Seoul District Public
Prosecutor’s Office, Republic of Korea

Mr. Jeshop Remember Shabangu

Commander of Crime Prevention, South Africa
Police Service, South Africa

Mr. Torsak Buranaruangroj

Senior State Attorney, International Affairs
Department, Office of the Attorney General,
Thailand27

ANNUAL REPORT FOR 1998
Japanese Participants
Mr. Shinji Iwayama

Public Prosecutor, Tokyo District Public
Prosecutors Office, Japan

Mr. Takahiro Maeda

Immigration Inspector, Tokyo Immigration
Bureau, Japan

Mr. Masahiko Motoyoshi

Probation Officer, Saga Probation Office, Japan

Mr. Tetsuo Nagakura

Judge, Nagoya District Court, Japan

Mr. Akihide Nakamura

Probation Officer, Takamatsu Probation, JapanMr. Hiroshi Narikawa

Judge, Tokyo District Court, Japan

Mr. Tetsuo Ogura

Police Inspector, National Police Agency, JapanMr. Shuji Ohta

Chief Specialist, Sunpu Juvenile Training
School, JapanMr. Yoshihiro Ono

Chief Program Supervisor, Mito Juvenile Prison,Japan

Mr. Teruo Taniguchi

Public Prosecutor, Osaka District Public
Prosecutors Office, Japan

Mr. Atsushi Tohyama

Maritime Safety Officer, 11th Regional Maritime
Safety Headquarters, Japan

Ms. Kiyoko Yokota

Public Prosecutor, Urawa District Public
Prosecutors Office, Japan28

APPENDIX

DISTRIBUTION OF PARTICIPANTS BY
PROFESSIONAL BACKGROUNDSAND COUNTRIES(1st International Training Course-111th International Seminar,
U.N. Human Rights Courses and 1 Special Course)

17
8
3

1

2

1

12
4
18

3
4
1

52
4
2
1

12
9
7

5
2
21

18
18
4
28
1
5
175

1
26
15
17
4
10
21
12
20
2
10
1
269

1

5

24
6
13
6
5

3
1

9
1
3

1

3
2
5

7
1
6

5

2
2

18

4

3

30

7

3

7
8
3
10
17
1
13

1
3

2
9

5
11
2
35
1
2

1
31
24
31
6
12
19
2
13
2
6

3
1

10
10

7

10

182

324

168

1

35

61

3

1

5

1

5

1

3
2

1

4

8

4

23
54
3
6
5
32
65
3
85
1
95
1
41
28
3
9
2
98
22
108
1
2
2
76
1
63
5
112
1
15
1
73
1
101
21
1
140
7
28
1
19 1,319
2

2
2
8
11
44
19
8
5
3
4
2
6
10
38

Total

10
20
11
3

5

Others

4
3
11
13
12
17
5
5

4

Training &Research Officers

4Social Welfare
Officers

3113Child Welfare
Officers

Correctional
Officials (Adult)

5

Family Court
Investigation Officers

Police Officials

8
10

Probation/Parole
Officers

PublicProsecutors

7
18

Correctional
Officials (Juvenile)

JudgesCountry
Afghanistan
Bangladesh
BhutanBrunei
Myanmar
China
Hong Kong
India
Indonesia
Iran
Iraq
JordanCambodia
Oman
Korea
Laos
Malaysia
Maldives
Mongolia
Nepal
Pakistan
Philippines
Saudi Arabia
Singapore
Sri Lanka
TaiwanThailandTurkeyViet Nam
United Arab Emirates
ASIA

Judicial and Other
Administration

Professional
Background

3

2
2
1
1

4

4
1
1

42

36

29

ANNUAL REPORT FOR 1998

1

1
2

1
4

1
1

1
1
3
2
10
1

1

1
6

6
2

2
1

1
1
1
1
1

2
4

1
22

1
3
1

13

4

10

4
1
2
1
2
13
2
2
6
2
2
59

1
5

1
1
1

1

2

1
1
15

0

1
6
1
1

1

8

9

0

0

1
1
18

0

8

3

1

11

1

3
1

1
9
3
2
1
24

3
1
2

12

1
1
11
2
6
1
44

8

2

1

2
21

2
1

0

1
5

0

0

3

1

1
3

Total

OthersTraining &Research Officers

Social Welfare
Officers

Child Welfare
Officers

Family Court
Investigation Officers

Probation/Parole
Officers

2

1
3

5

Correctional
Officials (Juvenile)2

Correctional
Officials (Adult)

3
1
2

Police Officials

30

PublicProsecutors

Australia
VanuatuFiji
Kiribati
Marshall Islands
Micronesia
Nauru
New Zealand
Papua New Guinea
Solomon Islands
Tonga
Western Samoa
THE PACIFIC

JudgesCountry
Algeria
Botswana
Cameroon
Cote d'Ivoire
Egypt
Ethiopia
GambiaGhana
GuineaKenya
LesothoLiberia
Madagascar
Mauritius
MoroccoMozambique
NigeriaSouth Africa
Seychelles
Sudan
Swaziland
Tanzania
ZambiaUgandaZimbabwe
AFRICA

Judicial and Other
Administration

Professional
Background

5
3
2
2
4
4
1
5
3
34
3
1
1
1
5
3
9
2
3
19
2
14
7
3
3
139
3
1
45
1
4
1
1
2
36
5
12
4
115

APPENDIX

1
3
1
3

2
3
1

11
3
1

1
2
1
1

4

1
1

3
1
1
1
10

3

2
9
1

1
1
1
1

1
18

14

0
127
335

0
209
427

6
43
1

1
2
86
558

1
6

2

0

1
1

0
75
285

0
68
105

0
158
233

0
53
58

2

0

3

0
38
44

0
2
47

0
45
93

Total

1
1
1

OthersTraining &Research Officers

Social Welfare
Officers

Child Welfare
Officers

Family Court
Investigation

Probation/
ParoleCorrectional
Officials (Juve-

Correctional
Officials (Adult)

2

Police Officials

PublicProsecutors

Country
Argentina
2
Barbados
BelizeBolivia
Brazil2
Chile
1
Colombia
3
Costa Rica
3
EcuadorEl Salvador
1
GuatemalaHonduras
Jamaica3
Mexico1
Nicaragua
PanamaParaguay
Peru
4Saint Lucia
1
Trinidad and Tobago
1
Venezuela
1
U.S.A. (Hawaii)
NORTH & SOUTH AMERICA 23
Bulgaria
Hungary
1
Macedonia
1
PolandEUROPE
2
JAPAN
100
TOTAL
440

JudgesJudicial and
Other

Professional
Background

5
1
1
1
2
17
6
1
9
2
12
6
1
1
3
4
1
1
1
4
10
2
21
2
2
9
1
7
119
1
1
1
1
0
4
45 1,006
77 2,702

31

MAIN ACTIVITIESPART TWORESOURCE MATERIAL SERIES
No. 55

I. Work Product of the 110th International Training Course“EFFECTIVE COUNTERMEASURES AGAINST ECONOMIC CRIME
AND COMPUTER CRIME”

UNAFEI33

110TH
INTERNATIONAL
TRAINING
COURSEVISITING
EXPERTS’
PAPERSVISITING EXPERTS’ PAPERSCRIME IN CYBERSPACEPeter Grabosky*
I. INTRODUCTION
It has almost become trite to suggestthat we are entering an age as significant
and profound in its impact as was theIndustrial Revolution. The convergence ofcomputing and communications has
already affected most if not all of the major
institutions of society. It has createdunprecedented opportunities for education,
health services, recreation, and commerce.
Unfortunately, it has also createdunprecedented opportunities for crime.
Identifying these vulnerabilities, andmobilizing appropriate countermeasures,will be one of the great challenges of thenext century. As we will observe, thechallenge is so great that it defies thecapacity of law enforcement alone tocontrol. Consequently, new forms ofpolicing, involving the harnessing of nongovernment resources, will become
essential. Given the fact that cyberspace
knows no boundaries, and that computer
crime often transcends national frontiers,
effective countermeasures will also requirea degree of international co-operation
which is without precedent.
II. VARIETIES OF COMPUTERCRIME
The variety of criminal activity which
can be committed with or against
information systems is surprisingly
diverse. Some of these are not really new
in substance; only the medium is new.
Others represent new forms of illegality
altogether.

* Director of Research, Australian Institute of
Criminology, Australia

A. Theft of Information Services
Ever since the original ‘‘phreakers’’ of aquarter century ago attacked telephones y s t e m s o u t o f c u r i o s i t y,telecommunications services have been
vulnerable to theft. From those whose
motives were confined to simple mischief
making, to those who have made theft ofservices a way of life and major criminal
industry, those who steal services pose asignificant challenge to carriers, service
providers, and to the general public, who
often bear the financial burden of fraud.
The market for stolen communications
services is large. There are those who
simply seek to avoid or to obtain a discounton the cost of a telephone call. There areothers, such as illegal immigrants, who areunable to acquire legitimate information
services without disclosing their identity
and their status. There are others still who
appropriate information services to conduct
other illicit business with less risk ofdetection.
The means of stealing
telecommunications services are diverse,
and include the ‘‘cloning’’ of cellular phones,
counterfeiting of telephone cards, andunauthorised access to an organization’s
telephone switchboard. In one case,hackers were reported to have obtained
unauthorised access to the telephonefacilities of Scotland Yard, and made US$1
million in phone calls.
B. Communications in Furtheranceof Criminal Conspiracies
Modern information systems clearlyprovide an effective means by which
offenders can communicate in order to plan35

RESOURCE MATERIAL SERIES No. 55
and execute their activities. There isevidence of information systems being used
to facilitate organised drug trafficking,gambling, prostitution, money laundering,child pornography and trade in weapons(in those jurisdictions where such activities
are illegal). Although the use of
information facilities does not cause such
illegal conduct to occur, it certainly
enhances the speed and ease with which
individuals may act together to plan andto execute criminal activity.
C. Information Piracy/
Counterfeiting/Forgery
Each year, it has been estimated thatlosses of between US$15 and US$17 billion
are sustained by industry by reason of
copyright infringement. Arguably, thespeed and accuracy with which copies ofworks may now be made has been
dramatically enhanced by such modern
technology as online information networks.
Copyright infringement may occur quickly
and without difficulty, and may be carriedout by anyone capable of using the Internet.
The Software Publishers Association has
estimated that $7.4 billion worth ofsoftware was lost to piracy in 1993, with
$2 billion of that being stolen from theInternet.
As broadband services continue tobecome available with text, graphics, soundand video information being freely
accessible via cable modems, the potential
for copyright infringement involving suchworks will be enhanced enormously.
Already in the United States it is possible
to download compact disks and featurefilms from the Internet.
D. Dissemination of Offensive
Materials
Content considered by some to be
objectionable exists in abundance incyberspace. This includes, among muchelse, sexually explicit materials, racist

36

propaganda, and instructions for the
fabrication of incendiary and explosive
devices. Information systems can also be
used for harassing, threatening or
intrusive communications, from thetraditional obscene telephone call to its
contemporary manifestation in ‘‘cyberstalking’’, in which persistent messages aresent to an unwilling recipient. In one
recent case, a student composed a sadistic
fantasy and sent it out over the Internet.
He used the name of a fellow student as
the story’s victim, and was initially charged
with communicating a threat, although
this was later withdrawn.
The rich diversity in thresholds oftolerance around the world, combined withthe global reach of information, make thisa particularly difficult regulatory
challenge. What is offensive to authorities
in the People’s Republic of China, mightb e w e l c o m e i n o v e r s e a s Ti b e t a n
communities. Materials offensive toreligious leaders in Iran may fail to raise
an eyebrow elsewhere.
E. Electronic Money Laundering
For some time now, electronic funds
transfers have assisted in concealing andmoving the proceeds of crime. Emerging
technologies will greatly assist inconcealing the origin of ill-gotten gains.
Large financial institutions will no longer
be the only ones with the ability to achieve
electronic funds transfers transiting
numerous jurisdictions at the speed oflight. The development of informalbanking institutions and parallel banking
systems may permit central banksupervision to be bypassed, but can also
facilitate the evasion of cash transaction
reporting requirements in those nations
which have them.
Tr a d i t i o n a lunderground banks, which have flourishedin Asian countries for centuries, will enjoy
even greater capacity through the use of
information technology.

110TH INTERNATIONAL TRAINING COURSE
VISITING EXPERTS’ PAPERS
With the emergence and proliferation ofvarious technologies of electroniccommerce, one can easily envisage how
traditional countermeasures againstmoney laundering may soon be of limited
value. I may soon be able to sell you aquantity of heroin, in return for an
untraceable transfer of stored value to my‘‘smart-card’’, which I then download
anonymously to my account in a financial
institution situated in an overseas
jurisdiction which protects the privacy ofbanking clients. I can discreetly draw uponthese funds as and when I may require,
downloading them back to my stored value
card.
F. Electronic Vandalism andTerrorism
As never before, western industrial
society is dependent upon complex dataprocessing and information systems.
Damage to, or interference with, any ofthese systems can lead to catastrophic
consequences. A recent United States
government study estimated that some
250,000 separate attempts to penetrate
United States defence installations had
occurred during the previous year. Not allof these are attributable to harmlesscuriosity. Defence planners around theworld are investing substantially in
information warfare as a means of
disrupting the information technology
infrastructure of defence systems.
W h e t h e r m o t i v a t e d b y c u r i o s i t y,vindictiveness or greed, electronic
intruders cause inconvenience at best, andhave the potential for inflicting massive
harm.
G. Sales and Investment Fraud
The use of the telephone for fraudulent
sales pitches, deceptive charitable
solicitations, or bogus investment
overtures is a billion dollar a year industry
in the United States. The intensificationof commercial activity in the United Statesand globally, combined with emerging
communications technologies, would seemto heighten the risk of sales fraud. Alreadyevidence is emerging of fraudulent sales
and investment offers having beencommunicated over computer networks
and Bulletin Boards.
Furtherdevelopments in electronic marketing will
provide new opportunities for theunscrupulous and new risks for theunwitting.
H. Illegal Interception ofInformation
Developments in information provide
new opportunities for electronic
eavesdropping. From activities as timehonoured as surveillance of an unfaithful
spouse, to the newest forms of political andindustrial espionage, informationinterception has increasing applications.
Here again, technological developments
create new vulnerabilities. In New York,for example, two individuals recently useda sophisticated scanning device to pick upsome 80,000 cellular telephone numbers
from motorists who drove past their
Brooklyn apartment. Had the two not beenarrested, they could have used theinformation to create cloned mobile
telephones which could have resulted in up
to $100 million in illegal calls being made.
The electromagnetic signals emitted by acomputer may themselves be intercepted.
Cables may act as broadcast antennas.
Existing law does not prevent the remotemonitoring of computer radiation.
I. Electronic Funds Transfer Fraud
The proliferation of electronic funds
transfer systems will enhance the risk thatsuch transactions may be intercepted anddiverted. Existing systems such as
Automated Teller Machines, and Electronic
F u n d s Tr a n s f e r a t P o i n t o f S a l etechnologies have already been the targetsof fraudulent activity. The development of
stored value cards or smart cards, super37

RESOURCE MATERIAL SERIES No. 55
smart cards and optical memory cards will
no doubt invite some individuals to apply
their talents to the challenge of electronic
counterfeiting and overcoming security
access systems. Just as the simple
telephone card can be reprogrammed,
smart cards are vulnerable to reengineering. Credit card details can be
captured and used by unauthorised
persons. The transfer of funds from homebetween accounts and in payment oftransactions will also create vulnerabilities
in terms of theft and fraud and thewidescale development of electronic money
for use on the Internet will lead to further
opportunities for crime. What has for the
past quarter century been loosely describedas ‘’computer fraud’’ will have numerous
new manifestations.
The above forms of illegality are notnecessarily mutually exclusive, and need
not occur in isolation. Just as an armed
robber might steal an automobile tofacilitate a quick getaway, so too can one
steal information services and use them for
purposes of vandalism, fraud, or in
furtherance of a criminal conspiracy.
Communication of some forms ofprohibited material (such as that relating
to the manufacture of drugs or explosive
devices) may itself entail criminal
conspiracy. Even legitimate telemarketing
may be regarded as intrusive and offensive
to some recipients. Intrusions andinterceptions for the purposes of industrial
espionage may also be accompanied bytheft of intellectual property.
In addition, a number of themes run
through each of the forms of illegality
described above. Foremost of these are thetechnologies for concealing the content ofc o m m u n i c a t i o n s . Te c h n o l o g i e s o f
encryption can limit access by law
enforcement agents to communications
carried out in furtherance of a conspiracy,

38

or to the dissemination of objectionable
materials between consenting parties.
Also important are technologies forconcealing a communicator’s identity.
Electronic impersonation, colloquiallytermed ‘‘spoofing’’, can be used infurtherance of a variety of criminal
activities, including fraud, criminal
conspiracy, harassment, and vandalism.
Technologies of anonymity further
complicate the task of identifying a suspect.
III. THE TRANSNATIONALIMPLICATIONS OF CRIME IN
CYBERSPACEInternational crime of a moreconventional nature has proved to be a very
difficult challenge for law enforcement.
Computer and telecommunications related
crime poses even greater challenges. Theremay be a lack of agreement between
authorities in different jurisdictions about
whether or not the activity in question iscriminal at all, who has committed it,
whether in fact it has been committed, who
has been victimised because of it, whoshould investigate it, and who should
adjudicate and punish it. If an online
financial newsletter originating in the
Bahamas contains fraudulent speculation
about the prospects of a company whose
shares are traded on the Australian Stock
Exchange, where has the offence occurred?
Other issues which may complicate
investigation entail the logistics of searchand seizure during real time, the sheer
volume of material within which
incriminating evidence may be contained,
and the encryption of information, which
may render it entirely inaccessible, oraccessible only after a massive applicationof decryption technology.

110TH INTERNATIONAL TRAINING COURSE
VISITING EXPERTS’ PAPERS
IV. COUNTERMEASURESIt has long been recognized that thecriminal justice system is a very imperfectmeans of social control, and that effective
crime prevention requires the contributionof families, schools, and many otherinstitutions of civil society. This is no lessthe case with crime in cyberspace than it
is with crime in the streets.
It will be immediately apparent that thedetection, investigation and prosecution of
all of the above forms of criminality pose
formidable challenges. Crime in the digitalage can be committed by an individual in
one jurisdiction against a victim or victims
on the other side of the globe. The control
of cyber-crime lies beyond the capacity of
any one agency. What principles can we
articulate to assist us in controllingcomputer crime?
A. Emphasize Prevention
It is a great deal more difficult to pursue
an online offender to the ends of the earth
than to prevent the offence in the firstplace. The trite homily that “prevention isbetter than cure” is nowhere more
appropriate than in cyberspace. It applies
no less to high technology crime than it
does to residential burglary. Just as one
would be most unwise to leave one’s house
unlocked when heading off to work in themorning, so too is it foolish to leave one’s
information systems accessible tounauthorised persons.
B. Self Defence Should Be the First
Line of Defence
The first step in the prevention of online
crime is to raise awareness on the part ofprospective victims to the risks which they
face. Individuals and institutions should
be made aware of the potential
consequences of an attack on theirinformation assets, and of the basic
precautionary measures which they shouldtake. Those businesses who stand to gain
the most from electronic commerce havethe greatest interest in developing secure
payment systems. Technologies ofcomputer security, to be discussed below,
can provide significant protection against
various forms of computer crime. There
are other, ‘‘low technology’’ measures whichshould not be overlooked. Perhaps
foremost among these is staff selection.
Surveys of businesses reveal that one’s own
staff often pose a greater threat to one’s
information assets than do so called‘’outsiders’’. Disgruntled employees andformer employees constitute a significant
risk. Suffice to say that great care should
be taken when engaging and disengaging
staff.
C. Non-governmental Resources
Should Be Harnessed WheneverPossibleGiven the resource constraints whichmost governments face, it is desirable toenlist the assistance of private sector andcommunity interests in the prevention anddetection of computer-related crime.
Market forces will generate powerful
influences in furtherance of electronic
crime control. Given the immense fortunes
which stand to be made by those who
develop secure processes for electroniccommerce, they hardly need any promptingfrom government. In some sectors, there
are ample commercial incentives which canoperate in the furtherance of cyber-crime
prevention. Information security promises
to become one of the growth industries of
the coming century. Some of the newdevelopments in information security
which have begun to emerge include
technologies of authentication. The simple
password for access to a computer system,
vulnerable to theft or determination byother means, is being complemented or
succeeded altogether by biometricauthentication methods such as retinal
imaging and voice or finger printing.

39

RESOURCE MATERIAL SERIES No. 55
Detection of unauthorised access to or
use of computer systems can be facilitatedby such technologies as artificial
intelligence and neural networking, which
can identify anomalous patterns of use
according to time of day, and keystroke
patterns.
Issues of objectionable content can beaddressed at the individual level byblocking and filtering software, by which
parents or teachers can prevent children’saccess to certain types of sites. Selective
consumption of internet content can befurther assisted by classification schemes
such as the Platform for Internet Content
Selection.
The energies of private individuals canalso be enlisted in furtherance of security
and prosperity in cyberspace. A wide range
of websites, under governmental or nongovernmental auspices, invite private
citizens to report suspected illegal conduct
on the internet to authorities. Some suchas the Cyber Angels, invite disclosures ofall kinds, while others tend to specialize inparticular areas, such as fraud or childpornography. What might be described asan ‘‘Electronic Neighbourhood Watch’’enhances the capacitity to detect someforms of electronic illegality.
The are other areas in which the statemight arguably take a subordinate role tothe individual. Consider violations of
copyright or theft of intellectual property.
In situations where civil remedies might
be available to the victim, it is arguably
more appropriate for the individual tosecure their own rights than to rely upon
the state to act on one’s behalf. One could,of course, envisage circumstances where awider state role may be justified—for
example when the perpetrator in questionis engaged in other criminal activity, or
when the theft in question has wider
economic ramifications. But conferring

40

rights upon the individual and providing
the individual with the means of enforcing
these rights may be appropriate in somecircumstances.
In extreme cases, some would take thelaw into their own hands. The metaphorof cyberspace as a frontier is not entirely
inapposite. There are vigilantes incyberspace. In some instances, self-help
by victims of telecommunications related
crime may itself entail illegality. ‘‘Counterhacking’’ by private citizens or by
government agencies has been suggested
as one way of responding to illegal
intrusions. A group calling itself ‘Ethical
Hackers Against Pedophilia’ havethreatened to disable the computers of
those whom they find dealing in digitalchild pornography.
A radical response to the problem ofsoftware piracy is to make use of so-called
Logic Bombs which are installed into
programs. When activated through an actof unauthorised copying, the malicious code
would destroy the copied data and evendamage other software or hardware
belonging to the offender. The potential
for such practices to result in liability forcriminal damage, however, makes their use
problematic.
D. Enhancing the Capacity of Law
Enforcement
The continuing uptake of digitaltechnology around the world means that
law enforcement agencies will be required
to keep abreast of rapidly developing
technologies. This will entail training in
new investigative techniques. As newtechnologies are exploited by criminals, it
becomes even more important for law
enforcement not to be left behind. This isa significant challenge, given the emerging
trend for skilled investigators to be‘‘poached’’ by the private sector. The
collaboration of law enforcement with

110TH INTERNATIONAL TRAINING COURSE
VISITING EXPERTS’ PAPERS
specialized expertise residing in the private
sector will be a common feature in years tocome.
One may also expect to see the use of
fairly aggressive investigative methods incyberspace. Even the domestic policing of
telecommunications-related illegality may
require measures which go beyond
traditional law enforcement tactics. The
technologies of encryption and anonymity
noted above are invoked to justify
aggressive investigative methods such as
covert facilitation, more commonly referred
to as ‘‘stings’’. In mid-1995 for example,
the FBI charged an adult male whoarranged over the Internet to meet what
he thought was a 14 year old girl at a motel.
The Internet contact was in fact an FBI
agent. The accused was targeted becauseof his history of sex offences involving
minors. Similar tactics have been directed
at those who traffic in pornographic
material, as well as perpetrators oftelemarketing fraud. Law enforcement
officers can easily pose on-line asprospective consumers of pornography.
Laws will vary across jurisdictions withregard to the defence of entrapment, andthe extent to which an offence was
encouraged or suggested by police.
E. The Imperative of International
Cooperation
The global nature of cyberspacenecessitates the development of new
strategies to combat criminal activity
which can originate from the other side of
the world. At present, if I, in Australia,
were gullible enough to fall victim to a
fraudulent investment scheme originatingin Albania, I suspect that I could count onvery little help from authorities in either
jurisdiction. But transnational electronic
crime seems destined only to increase.

The basic approach to overcoming thetransnational issues of crime in cyberspacelies in developing cooperation between
nations. This is more easily said than done,
given the significant differences in legal
systems, values and priorities around theworld.
Enlisting the assistance of overseas
authorities is not an automatic process, andoften requires pre-existing agreements
relating to formal mutual assistance incriminal matters.1 Nevertheless, there are
numerous examples of successful
measures.
1. Unilateral Action
Some governments may take unilateral
action against their citizens or residents
who commit criminal offenses on foreignsoil. Two of the most familiar examples inAustralia are prosecutions for engaging insexual activity with children, and for war
crimes alleged to have been committed in
World War Two. However in many cases,
this may still require the co-operation of aforeign government in obtaining evidence
and possibly in extraditing the offender.
2. Bilateral Agreements
The mobility of criminal offenders in ashrinking world has increased the need forarrangements to facilitate theapprehension and repatriation of those who
seek to evade the law by fleeing to anotherjurisdiction. The most common mechanism
for this is extradition, which is done
pursuant to a treaty or other formal
1

Following recent amendments to the Mutual
Assistance in Criminal Matters Act 1987, Australia
may now grant assistance in criminal matters to
any country. Bilateral mutual assistance treaties
are currently in force with 18 nations. A further
four treaties have been signed, but are not yet inforce.

41

RESOURCE MATERIAL SERIES No. 55
arrangement between two nations. 2
Australia was the originator of 33 and therecipient of 37 extradition requests pendingat 30 June 1997.
Since 1985, Australia has adopted a ‘‘noevidence’’ approach as the preferred basis
for international extraditions. The earlier
approach required the production of a
prima facie brief against the person sought,
which effectively required foreign
jurisdictions to produce evidence whichaccorded with Australia’s technical rules ofadmissibility. This was particularly
difficult for civil law countries. The new
approach is reflected in most of Australia’s
modern extradition treaties and has
generally facilitated cooperation between
Australia and other jurisdictions.
Some jurisdictions seek to prosecuteoffences committed abroad by foreign
nationals against their own citizens. The
United States, for example, can seek
extradition of alleged terrorists who haveoffended against citizens of the UnitedStates while abroad. Extradition is by nomeans an automatic matter, as the recent
experience of Australian fugitive
Christopher Skase illustrates. Moreover,other impediments exist. Some nations
will not extradite their own citizens under
any circumstances. Australia, as a matterof policy, will not extradite a fugitive who2

By the end of 1997, Australia had signed bilateralextradition treaties with 32 countries. Twenty nineof these were in force. A further 64 jurisdictions
were covered by the London Extradition Scheme,
which provides for the rendition of fugitive
offenders among members of the Commonwealthof Nations. A special extradition relationship exists
with New Zealand. Australian extradition laws
have been applied to seven additional countries
without a treaty. Australia has succeeded to
extradition treaties entered by the United Kindom
with 21 countries in the late 19th and early 20th
centuries.

42

would face execution in the jurisdiction
seeking his or her return. Those
jurisdictions which do practice capital
punishment may waive the death penalty
in order to obtain the extradition of afugitive.
There are circumstances in which, as analternative to extradition, a nation may
prosecute a citizen for offences committed
in, and against the laws of, a foreign
jurisdiction. Australia, for example, mayprosecute Australian citizens for offences
committed on foreign soil, provided therelevant conduct would have been an
offence under Australian law had it
occurred within Australia. This process isonly available within Australia incircumstances where extradition has beenrefused on the sole ground that the person
was an Australian citizen at the time of theoffence, and only if the Commonwealth
Attorney-General is satisfied that therequesting State would have refused
extradition of its nationals incorresponding circumstances. There are norecorded cases of such prosecutions within
Australia.
In addition to extradition, a variety ofarrangements may be put in place tofacilitate cooperation between nations in
the location and collection of evidence infurtherance of criminal investigation.
Mutual assistance treaties, as they arecalled, provide a legal basis for authorities
in country ‘‘A’’ to obtain evidence forcriminal investigations at the request of
authorities from country ‘‘B’’. Instrumentsof this kind cover a range of assistanceincluding:• the identification and location of
persons;• the service of documents;• the obtaining of evidence, articles anddocuments;• the execution of search and seizure

110TH INTERNATIONAL TRAINING COURSE
VISITING EXPERTS’ PAPERS
requests; and• assistance in relation to proceeds ofcrime.
Australia was the originator of 162
mutual assistance requests, and therecipient of 130 requests by other nations,which were pending at 30 June 1997.
The Mutual Assistance in Criminal
Matters Act 1987 was amended in March
1997 to provide for ‘‘passive’’ application of
the Act to all foreign countries, rather thanrequiring the Act to be specifically applied
to particular countries by regulation. This
enables assistance to be requested andprovided much more expeditiously than
was previously the case.
In addition, the posting of law
enforcement personnel overseas canfacilitate the development of informal
networks which can help expedite responseto the various requests which may arise
from time to time. Formal agreements are
essential, but there is often no substitutefor interpersonal contact. The AustralianFederal Police has 29 liaison officers
stationed in 13 nations around the world.
In addition to serving Australia’s needs, the
AFP and Australian consular staff are able
to help overseas governmental authorities
check on the probity of prospective
investors from Australia. AFP liaison
officers may also assist their hosts in the
training of law enforcement personnel andin the exchange of intelligence.

V. CONCLUSION
It has become trite to suggest that theworld is a shrinking place. On the one
hand, this shrinking is highly beneficial.
People around the world now enjoy
economic, cultural and recreational
opportunities which were previously notaccessible. On the other hand, the rapid
mobility of people, money, information,ideas and commodities generally, hasprovided new opportunities for crime, andnew challenges for law enforcement
agencies. Linkages between events andinstitutions at home and abroad areinevitable, and will proliferate. This will
require unprecedented cooperation
between nations, and will undoubtebly
generate tensions arising from differencesin national values. Even within nations,
tensions between such values as privacy
and the imperatives of enforcement will behigh on the public agenda. New
organizational forms will emerge to combat
new manifestations of criminality. The
21st century will be nothing if notinteresting.

Steps taken following the G-8
Birmingham meeting in May 1998 fornations to designate liaison offices, which
will be on call on a 24 hour basis, illustrates
the need for prompt concerted responses
to the problem of transnational digital
crime.

43

RESOURCE MATERIAL SERIES No. 55

THE PREVENTION AND CONTROL OF ECONOMIC CRIMEPeter Grabosky*
I. INTRODUCTION
Economic crime, by which I refer
generally to fraud in its various
manifestations, is among the most costlyof all criminal activities. Although it would
be interesting to determine its cost withsome precision, the total impact isunquantifiable. There are a number ofreasons why attempts to estimate the costof economic crime are bound to be futile.
First, the most skilfully perpetrated
offences are not even detected by victims.
Even when an offence is detected, and thevictim knows that he or she has sustained
a loss, they may be reluctant to report it.
In the case of an individual, he or she may
simply be too embarassed, and the
expectation of recovering lost assets may
be remote or nonexistent. In the case ofan organization, they may be concerned
about possible damage to their commercial
reputation, and decide as a matter ofbusiness judgment not to disclose theirvulnerability.
Statistics aside, our reasons for being
concerned about economic crime should be
obvious to many. The essence of fraud is abreach of trust. Trust is the very
foundation of commerce, and the very basisof civil society. Economic crime thus
jeopardises basic interpersonal relations,
economic development, and in some cases,
even the stability of governments. One
wonders, for example, what the economyof the former Zaire might have become had
its corrupt leadership not plundered thenation’s wealth. The collapse of the
Albanian regime following massive losses* Director of Research, Australian Institute of
Criminology, Australia

44

sustained by thousands of citizens in an
investment fraud constitutes anotherexample. One could compile a long list ofcases, but the purpose of this paper is to
discuss the risks of economic crime, and thecountermeasures which might be put inplace to minimize them. It will place
special emphasis on computer-related
crime, because the convergence ofcomputers and communications will
become the dominant factor in commerce
as we enter the new millenium.
Crime is a changing phenomenon. Some
activities, such as criminal exploitation of
on-line commerce, which wereinconceivable less than a decade ago, now
pose significant risks to the economy andsociety of many nations. Fraud is one
general type of crime which, whilst as old
as commerce itself, may be expected to takenew forms as the 21st century progresses.
In some cases, these forms have alreadybegun to emerge. In the following pages, I
will outline a number of social,demographic and economic developments
which may be expected to influence theshape of economic crime in years to come.
One quickly notes that these trends, andthe variety of economic crime which may
be expected to accompany them, are beyond
the capacity of law enforcement agencies
alone to control.
A. The Environment of Economic
Crime
It has become trite to suggest that theworld is shrinking. The world is now
characterized by unprecedented mobility of
information, finance, goods and services,people, cultural artefacts, flora and fauna,even viruses-both those of the microbial

110TH INTERNATIONAL TRAINING COURSE
VISITING EXPERTS’ PAPERS
variety as well as those which infect one’s
hard drive.
The globalization of finance, where
electronically mediated exchanges occur innanoseconds, is far removed from the days
where deals were sealed with a handshake,and ‘‘a man’s word was his bond’’. In recent
times, the Barings and Sumitomo
experiences have had significant global
repercussions, with adverse effects onfinancial markets and commodity prices.
In brief, the proliferation of anonymous
financial transactions is accompanied by acommensurate proliferation ofopportunities for betrayal of trust.
II. VARIETIES OF ECONOMIC
CRIME
Let me just outline some of the major
forms of economic crime which confront us
as we approach the 21st century. The
following categories are not mutually
exclusive, but are intended to illustrate therange and variation of economic crime.
A. Insurance fraud
Insurance is a most important
institution, enabling us to spread risk andthereby engage in activities of tremendous
commercial or individual benefit. With
insurance, however, comes the opportunity
for fraud. The fabrication of false insurance
claims is as old as the institution of
insurance itself. Whether at the hands ofopportunistic individuals, or criminalorganizations, the cost of insurance fraud
is substantial, and often borne by honest
and law abiding policyholders.
B. Fraud against Governments
Governments are at great risk of fraud.
They dispense benefits, and many citizens
are not beyond obtaining these benefits
fraudulently. They buy goods and services,and many purveyors of these goods andservices are not beyond providing inferior

products or otherwise inflating their
invoices. Governments raise taxes, andmany taxpayers evade payment.
Government employees may divert public
assets for private use. When governments
are defrauded, all honest citizens pay theprice. To the extent that funds defrauded
would otherwise be spent on worthwhile
government programs, the public suffers
twice.
C. Fraud against Employers
Organisations, whether in the public or
private sector, may be at risk from theiremployees. Embezzlement or theft ofmoney, goods or services by employees canmean the difference between economic
survival or collapse. When an employer’s
business fails because of employee theft,
law abiding employees are among those
who pay the price.
D. Fraud against Consumers
Purveyors of goods and services cancheat their customers in many ways. They
may provide defective or inferior products
or fail to deliver goods and services
entirely. They may advertise theirproducts in a deceptive manner. At theextreme, this can lead to death or injury,in the case of dangerous products
purported to be safe. At the very least, theconsumer or will pay more for a productthan he or she should
E. Telemarketing Fraud
The media of commerce are alsochanging. The days of face-to-faceexchange are yielding to increased sales bymeans of mail-order and telemarketing.
Telemarketing may involve the use of thetelephone, or increasingly, the internet,
which may well become the dominantmedium of commerce in the coming
century. While these new media offer
greater opportunity and choice for
consumers, they also pose greater risk; the45

RESOURCE MATERIAL SERIES No. 55
greater the uptake of new technologies forcommercial application, the greater therisk that they will be exploited for criminal
purposes.
F. Fraud against Shareholders andInvestors
The directors of large companies may
divert company assets for personal use.
When this occurs on a scale sufficient toeffect the company’s financial performance,
shareholders and investors suffer. At theextreme, companies may collapse leaving
investors and creditors at a loss. Endemic
fraud can taint an entire economy, leading
to capital flight and discouraging foreign
investment.
G. Superannuation Fraud
The world’s industrialised nations are atpresent experiencing economic change at
a dramatic pace. One of the most dramatic
examples of such change is the growth of
the superannuation industry, which
establish and manage private pension
funds. Over 100,000 superannuation funds
currently exist in Australia alone. Aroundthe world, vast sums have accumulated,
and the superannuation savings poolcontains trillions of dollars.
This is not to suggest that persons
charged with the stewardship of such funds
have unusual criminal propensities, but
again, the sheer volume of money
constitutes what may be an irresistible
temptation to the unscrupulous. Abusesof superannuation funds in the UnitedStates and the United Kingdom illustrate
the attractiveness of such enormous
amounts of money to those who would
commit fraud. Short of the risk of outright
fraud, the risk of imprudent management
cannot be ignored.
H. Bribery and Corrupiton
Public officials may demand or accept
financial or other considerations as the46

price of doing business. This can erode thelegitimacy of an entire government.
Companies in the private sector may
require side payments from suppliers. In
the long run the cost is borne by consumers.
Widespread, entrenched corruption cand e t r a c t f r o m a n a t i o n ’s e c o n o m i ccompetitiveness, and may discourage
foreign investment.
I. Money Laundering
The term ‘Money Laundering’ is used todescribe the process by which the proceedsof crime (‘dirty money’) are put through aseries of transactions which disguide theirillicit origins, and make them appear tohave come from a legitimate source (‘clean
money’). This makes criminal activity moredifficult to detect, can lead to the criminal
infiltration of legitimate business, and candistort the ecnomies of small nations.
J. Telecommunications Fraud
As telecommunications services become
more widely accessible, the theft of suchservices becomes more common. From the‘cloning’ of cellular telephones, to theunauthorised access and use of telephoneswitchboards, to the fabrication of stored
value telephone cards, millions of dollarsof telecommunications services aremisappropriated.
K. Credit Card Fraud
There are four basic vulnerabilities ofplastic card payment systems:
1. Vulnerability of cards to alterationand counterfeiting;
2. Vulnerabilities arising from the issueof cards;
3. Vulnerabilities arising from card
holder identification systems (PINs);
and
4. Vulnerabilities arising from themisuse of cards.
As plastic cards eclipse the use of

110TH INTERNATIONAL TRAINING COURSE
VISITING EXPERTS’ PAPERS
currency, opportunities for their misuse
will increase. The cost will be borne bymerchants, and by card issuers.
L. Industrial Espionage
The world of international business isin some respects a jungle. Competitors athome and abroad, and nations which might
be hosts to a company’s investment, may
have a strong interest in a company’s trade
secrets and other economic intelligence.
The lengths to which some will go in orderto acquire such information are
substantial, and at times, illegal.
Industrial espionage by governments andprivate sector institutions is a fact ofcontemporary commercial life. One’sc o m p a n y ’s , i n d e e d o n e ’s n a t i o n ’s ,competitive advantage may be at stake.
M. Theft of Intellectual Property
Copyright infringement can occur
quickly and easily, greatly facilitated by theadvent of digital technology. Text, video,
sound, designer labels and computer
software can be copied and reproduced asnever before. Unrestrained, such modern
forms of piracy can discourage invention
and innovation, and deprive artists andcreators of the royalties to which they areentitled.
N. Forgery
Currency, negotiable instruments, anda variety of other valuable documents may
be forged or counterfeited. The advent ofdigital technology, including scanning andcopying, enables almost perfect
reproduction. Not only may the recipient
be left holding a worthless piece of paper,
but forged documents can be used in thefurtherance of a variety of other economic
crimes.
O. Business Opportunity Fraud
In the industrialised world, thedownsizing of organizations in both the
public and the private sector has begun to

generate growing numbers of individuals,
in mid-career, with significant disposable
income. With increasing sums of money toinvest, the temptations of fiduciary fraud
are bound to increase.
In addition to entrusting their funds tofinancial managers, those with money toinvest may wish to start a small business.
Unfortunately, they are also within reachof other fraudsters who would exploit them.
Business opportunity fraud or other ‘getrich quick’ scams may be an unfortunate
by-product of a nation’s move to a morecompetitive economy.
One of the easiest avenues into small
business is through purchase of a franchise.
It has been estimated that in the UnitedStates, by the year 2000, over half of allretail sales will occur through franchisedestablishments. Short of the most blatantform of franchise-related fraud, i.e. simply
taking the new franchisee’s up-front moneyand disappearing with it, there remains thepotential for a variety of lesser
misrepresentations, such as overstatementof earnings potential and understatementof risks or other hidden costs of a franchise
agreement.
P. Electronic Funds Transfer Fraud
The move to a cashless society has
significant implications for both law
enforcement and society. Although
reducing the use of cash in the community
may help to solve traditional forms of bankrobbery and theft, new cashless payment
systems will create new problems. The
proliferation of electronic funds transfer
systems will enhance the risk that suchtransactions may be intercepted anddiverted. Existing systems such as
Automated Teller Machines and Electronic
F u n d s Tr a n s f e r a t P o i n t o f S a l etechnologies have already been the targetsof fraudulent activity. Most of the large
scale electronic funds transfer frauds which

47

RESOURCE MATERIAL SERIES No. 55
have been committed have involved theinterception or alteration of electronic data
messages transmitted from bankcomputers, sometimes with the complicity
of bank employees. The development ofelectronic commerce will be impeded to theextent that the security of electronictransactions is threatened.
Q. Commonalities
One common thread running throughmost if not all of the types of economic crime
listed above is that they are greatly
facilitated by recent developments in
information technology. This does notmean that we should ‘pull the plug’ on our
computers. Indeed, if we were to reject alltechnologies because of their potential forabuse, we would have rejected the wheel.
Rather, we must learn to exploit thebenefits of new technologies, and manage
the risks which accompany them. But weshould not underestimate the challenges
which the digital age poses to those of us
involved in the prevention and control of
economic crime.
Where computers are used in thecommission of fraud, difficulties ofinvestigation are exacerbated, as offenders
are able to disguise their identities andactivities through the use of complex
electronic technologies. Those who seek tomask their identity through the use ofcomputer networks are often able to do so,by means of ‘looping’, or ‘weaving’ throughmultiple sites in a variety of nations.
Electronic impersonation, colloquiallytermed ‘spoofing’, can be used infurtherance of a variety of criminal
activities, including fraud. Anonymous emailers and encryption devices can shield
one from the scrutiny of all but the mostdetermined and technologicallysophisticated regulatory and enforcement
agencies. As a result, some crimes may not
result in detection or loss until some timeafter the event, thus making the process48

of investigation ever more challenging.
Other issues which may complicate theinvestigation of computer-based frauds
entail the logistics of search and seizure
during real time, the sheer volume ofmaterial within which incriminating
evidence may be contained, and theencryption of information, which may
render it entirely inaccessible, or accessible
only after a massive application ofdecryption technology.
R. Economic Crime in a Shrinking
World
It bears noting that not only can many
fraudulent initiatives originate on theother side of the globe, few remedies areavailable to the unfortunate individual who
might fall victim to transnational economic
crime. Even if one is able to mobilize thelaw, the chances of locating the offender,
obtaining extradition, mounting aprosecution, or recovering compensation
may be impossible.
Particular problems arise when financial
crimes are committed against a local
company or government agency by a person
situated in a foreign country.
Enlisting law enforcement assistance inthe foreign country may be difficult, as
their resources will be finite, and theirpriorities may well lie elsewhere.
Even when a perpetrator has been
identified, two problems arise in relation
to the prosecution of offences which havean international aspect: first, thedetermination of where the offence
occurred in order to decide which law toapply and, secondly, obtaining evidence andensuring that the offender can be locatedand tried before a court. Both thesequestions raise complex legal problems ofjurisdiction and extradition.

110TH INTERNATIONAL TRAINING COURSE
VISITING EXPERTS’ PAPERS
Additional problems are reflected in the
difficulty of exercising national sovereignty
over capital and information flows.
Jurisdictional issues may arise fromtransborder online transmission. If an
online financial newsletter originating in
Albania contains fraudulent speculation
about the prospects of a company whose
shares are traded on the Tokyo Stock
Exchange, where has the offence occurred?
Even if the host law enforcement
agencies are willing and able to assist,collection of evidence in the foreign country
may be problematic. Distance will be moreof an impediment to the thief-taker than
to the thief. The cost of sending law
enforcement officers abroad to assist in an
investigation, or the cost of bringing
witnesses from abroad to testify inproceedings, may be prohibitive. Eventhen, there are often legal impediments
which must be overcome. The laws ofevidence of one’s own country are not likely
to be instantly hospitable to all evidence
obtained from abroad. In nations where adegree of thought has been given to theseissues, mutual assistance arrangements
may be reached with selected nations forthe collection of evidence on their soil, andspecial legislation may be enacted toprovide for the admissibility in one’s own
courts of evidence taken abroad.
It must be emphasized that none of these
impediments to the investigation andprosecution of transnational economic
crime are unique to high technology
offending. They exist for more conventional
forms of criminality as well. Theirsignificance is heightened, however, given
the increased opportunities fortransnational offending which newtechnology provides.
Extraterritorial law enforcement costs
are also often prohibitive. Moreover, thecooperation across internationalboundaries in furtherance of suchenforcement usually requires a congruenceof values and priorities across nations
which, despite prevailing trends towards
globalization, exists only infrequently.
This may be less of a problem with fraud
than with matters relating to political or
artistic expression.
III. COUNTERMEASURESThe extreme diversity of economic crimein its many manifestations means that noone institution of prevention or control will
suffice. There can be no ‘magic bullet’ orpanacea. The police alone will be unable
to cope with economic crime. Rather, eachseparate type of economic crime will be best
addressed by a combination ofcountermeasures. Some of these will begovernmental, some will lie in the handsof the prospective victim, and some will beat the disposal of third parties.
1. The first line of defence against
economic crime is awareness of one’s
vulnerability. The popular term for thisis ‘risk assessment’. This applies to theindividual consumer or investor, whoshould become familiar with the basic
pitfalls of the marketplace; tocompanies, who should be aware of theprocedures and processes which are
likely targets; and to governments,
whose various functions (such as
payment of benefits, and purchasing ofgoods and services) may be targeted for
criminal exploitation.
2. The next step is to take necessary
precautions. The key to fraud
prevention on the part of organisations,
whether of the public or the privates e c t o r, i s t h e d e v e l o p m e n t a n drefinement of a fraud control system.
Having identified one’s points ofvulnerability, one should put individual
systems and processes in place which

49

RESOURCE MATERIAL SERIES No. 55
protect these vulnerabilities from‘‘attack.’’ These principles apply to thecontrol of ‘‘electronic’’ economic crime;
those offences committed with oragainst telecommunications andinformation systems, as well as themore conventional. The foundation forsuch a system is a management
philosophy which is sensitive to fraudrisk. The basic elements of such asystem are careful recruitment of staff,
a culture of integrity and loss
prevention within the organisation,and formal procedures for theprotection of assets.
The design of systems can be an
important means of fraud prevention. The
introduction of a requirement that therecipients of public funds have an accountwith a financial institution in which thefunds can be deposited automatically, has
dramatically reduced the risk of lost or
stolen cheques, or fraudulent claims.
Fraud control systems may include
technologies as diverse as the requirementthat company cheques be signed by two
people, to sophisticated systems of
biometric authenticalion (based on physicalcharacteristics such as fingerprints orretinal images) required for access to acomputer system. Let us briefly review
some of the basic principles for theprevention and control of economic crime.
A. Audit
The scrutiny of a company’s accounts byan independent auditor is an importantsafeguard against economic crime. It is by
no means ‘fail-safe,’ as accountants all too
often fail to detect irregularities. The very
necessity of having to prepare accounts in
a form suitable for independent scrutiny
and then subjecting them to a degree of
examination is an important first step.
B. Transparency
It was once said that ‘sunlight is the best50

disinfectant’. Procedures for the public
disclosure of basic aspects of agovernment’s or a company’s operations
can help safeguard against a variety ofcrimes. Freedom of information legislation
can facilitate citizen access to government
information. This is not to suggest that
trade secrets, or military secrets for thatmatter, be made available to anyone whowants them. Rather, that fundamental
information is available to keep markets,and citizens, informed.
The requirement that organizations inboth the public and private sectors publish
regular accounts which disclose details of
income and expenditure, including thesalaries of executives, and liabilities
relating to environmental pollution, has
become an international standard of bestpractice. Markets are beginning to expect
nothing less.
C. Procedures for Independent
Review of Administrative
Decisions
The possibility of bias or otherirregularities in the administrativedecisions of governments can be addressed
through the system of administrative law.
Procedures for the independent review
of administrative decisions by a speciallyconstituted court, the institution of an
Ombudsman with investigative powers
who can hear complaints by individual
citizens, and freedom of information
legislation which provides public access togovernment documents are three ‘prongs’of an administrative law system which cancontribute to the integrity of governments.
D. Specialized Bodies for theInvestigation and Prosecution of
Serious Economic Crime
In many nations around the world, theinvestigation of complex and sophisticatedeconomic crime lies beyond the capacity of110TH INTERNATIONAL TRAINING COURSE
VISITING EXPERTS’ PAPERS
conventional law enforcement agencies.
Some have thus created new agencies withspecial powers and expertise to address
specific issues. The Independent
Commission Against Corruption (HongKong); the Serious Fraud Office (UK) andtheir variations elsewhere, are all
examples of such agencies. This is not tosuggest that specialised bodies are an
essential solution to all problems in all
jurisdictions. Where more general law
enforcement bodies are adequate, there
may be no need to create new ones. Indeed,a proliferation of agencies may lead tooverlap and duplication, to bureaucratic
rivalries, and to important cases ‘falling
between the cracks’. The effective
exchange of intelligence and operational
information can be made difficult. Such alack of cooperation may often be to theadvantage of offenders who may be able todelay or avoid detection and prosecution
through a lack of coordination on the partof law enforcement agencies. But theincreasing specialisation of economic life
suggests that designated organizations
may be appropriate in some circumstances.
E. Cash Transactions Reporting
The challenge of money laundering andtax evasion is made that much easier, when
the offender is able to shift funds from place
to place undetected. To this end, a growing
movement among nations around the world
has seen the development of cashtransactions reporting systems. Banks andother financial institutions are now
required to report to a central authority alltransactions over a specified amount, or
any transaction of any amount whichappears in some manner to be suspect. In
those jurisdictions where cash transaction
reporting systems are in place, it becomesthat much easier to ‘follow the money trail’.
F. A Free Press
We have already noted the famous adagethat sunlight is the best disinfectant. To

the extent that an open and free press
exists within a nation, questionable
practices will be subject to questioning.
This is important across a range of offences,from bribery and corruption, to consumer
fraud, to fraud against shareholders anddirectors. This is not to suggest that somemedia are always virtuous and responsible
in their coverage. They most certainly are
not, but it cou1d be said that the best
antidote for irresponsible speech is more
speech.
G. An Adequate Regulatory System
Freedom of expression does not extend
to the freedom to publish false or
misleading advertising, or spurious
commercial claims. A regulatory system
which can identify such misconduct, andrespond to it effectively, will help insure
the integrity of markets. This need not be
the exclusive province of government.
Private remedies such as civil litigation,and self regulatory regimes by individualcompanies and industry associations, areno less important than government
agencies. A regulatory system which
combines private and public remedies islikely to be more effective than one based
solely on government or on self regulation.
H. Mechanisms for Building Public
Awareness
By no means should knowledge about
fraud and fraud risks remain the monopolyof law enforcement agencies. The first lineof defence against fraud can and should beself help; appropriate knowledge should beshared with private citizens, businesses
and public sector agencies alike. All
prospective victims of fraud, this includes
just about everyone, should be aware of thetypes of fraudulent activity to which they
are most vulnerable: the ‘red flags’ orindicia of fraud; the most appropriate
means of prevention; and the best avenuesof response when they detect an offence.

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New developments in communications
permit not only the dissemination of basic
fraud control information, but also thereporting of suspicious activity toappropriate authorities. The Internet
abounds with materials on fraud control;some industry-specific, others focusing on
certain vulnerable groups such as seniorcitizens. Other sources of information are
medium-specific; sites are dedicated towarning of fraud on the Internet.
Moreover, many law enforcement andregulatory agencies have establishedhotlines which are available to fraud
victims or civic-minded third parties toreport illegal or questionable conduct.
I. Freedom for Individuals to Form
Non-governmenta1 Organizations
Some of the most effective activities tocombat economic crime comes from citizen
activity. Before the rise of the modern
State, citizens performed a number offunctions (including policing, prosecution,and imprisonment) which later became
governmental functions. Even in modern
times, one sees in some nations activities
undertaken by citizens’ groups which
complement the work of government
agencies. The examples of victim
assistance and prison aftercare
associations come immediately to mind.
The control of corruption is greatly
facilitated by organisations such as
Transparency International. Consumer
groups and Better Business Bureaus
remain vigilant against unfair trading.
Citizens crime commissions are vigilant
against activities as diverse as abuse of
power by law enforcement agencies,
bribery, and electoral fraud.
J. Responsible Banking
In addition to their role in the preventionof money laundering, banks and otherfinancial institutions have an importantrole to play in the prevention and controlof economic crime. Prudent lending

52

practices will deny opportunities to theunscrupulous. The challenge facing
governments today is to allow sufficient
flexibility in the financial services industry
to permit the economy to flourish, but also
to provide sufficient safeguards to protect
against irresponsible or predatory conduct.
K. Commercial Third Parties
A variety of other third parties cancomplement the work of governments inthe prevention and control of economic
crime. A burgeoning industry in
information security can assist clients inboth public and private sectors to ensure
the integrity of their systems. All of thelarge multinational accounting firms offer
fraud control services to clients anywherein the world. Many have establisheddepartments or subsidiaries specialising in
fraud prevention. Their products range
from a total review of risk management
practices to more narrowly focused issues
such as security of information technology
systems.
Private fraud control services are by nomeans limited to prevention. Privateorganisations which find themselves thevictims of fraud may retain their own
inhouse investigators, or may engage
specialised fraud investigators residing in
the private sector. These private
investigators may conduct an entire
investigation, handing the matter over tothe police for prosecution. This is common
in the Australian insurance industry in
response to insurance fraud.
Market forces themselves may exert
positive effects from time to time on the
behaviour of some public and privateorganizations. There are opportunities forthe second-order operation of market forces
through the guidance provided by financial
and insurance institutions, and by
institutional investors.

110TH INTERNATIONAL TRAINING COURSE
VISITING EXPERTS’ PAPERS
L. An Open Political System
An open political system permits
individual citizens, interest groups, or an
organised opposition the freedom toquestion policies and programs. A viable
political opposition can be alert to financial
irregularities in both public and private
sectors, and can make them more difficult
to conceal.
M. International Co-operation
Because many fraud offences do not
involve face-to-face interactions in theircommission, it is possible for offenders andvictims to be located in more than one
jurisdiction. More sophisticatedconspiracies may involve individuals inthree or more jurisdictions with i nAustralia or overseas. Few remedies areavailable to the unfortunate individual who
might fall victim to such activities. The
transnational dimension of many economic
crimes requires unprecedented
international cooperation. This
cooperation must occur on many levels,from the most formal, involving treaties
and mutual assistance arrangements, toinformal liaison between and exchange oflaw enforcement personnel. In the case oftransnational electronic crime, it will
require very timely cooperation indeed,
involving the capability of contacting
overseas authorities at a moment’s notice.
N. Sanctioning of Offenders.
While some would argue that severe
penalties do not always deter crime, or that
increasing penalties are unilikely toachieve a commensurate decrease in crime,
one should not ignore the potential
usefulness of punishment for economic
crime. Perhaps to an extent greater thanin other areas of crime, economic crime isoften based on rational decision making.
Embezzlement does not occur in a momentof passion; corrupt payments are not madein an alcoholic rage. Penalties
commensurate with the seriousness of thecrime can send a message to would-be
offenders, as well as educating the publicthat economic crime is serious and will not
be tolerated.
O. Economic Crime Prevention
Requires a Combination ofCountermeasures
None of the above solutions isguaranteed to prevent economic crime. But
each helps reduce the risk. The more thatare in place, the more difficult it is toperpetrate fraud and other forms of
economic crime. Here it may be useful to
use the analogy of a web. Any one strand
of a web may be insufficient to support aload. But many strands, interwoven, may
be very strong indeed. Alternatively,
consider a cable. The same principle
applies.
The prevention and control of economic
crime, however, should avoid imposing
unrealistic burdens on commerce or on
agencies of the State. Absolute integrity
may be unattainable, and its pursuit may
have counterproductive consequences. One
might speak of ‘burning the house to roast
the pig’. At the end of the day, it is theoverall health of the economy and theintegrity of its markets which mattersmost. Initiatives for the prevention andcontrol of economic crime should beundertaken according to a risk-benefit
calculus. This would see the most stringent
controls operating where there issignificant vulnerability to catastrophic
loss, with fewer controls in place when risk
is correspondingly less. The challenge forthe future lies in designing systems which
will reduce opportunities for fraud, whileat the same time allowing commerce toflourish.

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COMBATING CREDIT CARD CRIME:
ENACTING EFFECTIVE CRIMINAL LAWS
Donald K. Piragoff*
I. INTRODUTION
Modern technology has advanced to thepoint where, around the world, a large
percentage of financial transactions involvethe use of credit cards and devices for
obtaining goods and services. Complicating
the issue is the proliferation of other typesof information-carrying cards, such as debit
cards, and pre-paymemt cards designed forspecific purposes, and electronic cash cards.
The economy of any country that relies on
the use of such cards must have an effective
legal structure for deterring abuse.
Credit cards and other such cards
function by transferring data or
information; the cards themselves are oflittle value. It is the data or information
stored on the card that is of use to trigger
or make a commercial or financialtransaction. The card is merely a physicalmechanism by which this information canbe stored and easily transported and usedby the person wishing to make thecommercial or financial transaction.
However, the possibility of abuse is great.
The relevant information can beintercepted and manipulated at various
stages, from manufacture of the card, todelivery of the card to the card-holder, topossession and loss of the card by the cardholder, to the use of the card at a retailer.
Abuse can occur in various ways, fromunauthorized use of a card, to falsifying acard, and to unauthorized use of theinformation even without possession or useof the card. Moreover, the card andinformation may be subject to abuse by just
* General Counsel of the Criminal Law Policy
Section, Department of Justice, Canada

54

about anyone, from the card-holder to themerchant, from persons in temporary
possession to sophisticated criminalorganizations to a person who catches a
glimpse of someone else’s card andremembers the key information embossedon it.
Ultimately, modern technology brings
more than just convenience, it also creates
tremendous opportunity for clever
criminals unlawfully to use or appropriate
credit cards or the stored information.
Industry losses from credit card crime
reach millions of dollars every year, andthe figure keeps increasing. In Canada
alone, it was estimated that there were
89,000 occurrences of credit card fraud in1997.1 Equally important, the number offraudulent uses of credit cards has
increased dramatically over the past
several years. As techniques forcounterfeiting cards and misappropriating
information become more sophisticatedand less expensive, the problem of payment
card fraud will continue to escalate.
Credit card companies and otherfinancial institutions have implemented
numerous technical and operational
mechanisms for preventing and detecting
credit card crime. Individuals who arelegally in possession of cards may also takeprecautionary behavioural steps to reduce
the likelihood of someone else obtaining thecard or information for unlawful purposes.
The problem can be attacked from manysides, and with the efforts and ingenuityof everyone involved with the cards.
1

Courtesy of Canadian Bankers Association.

110TH INTERNATIONAL TRAINING COURSE
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In addition to the various technical andbehavioural countermeasures against
credit card crime, there is a role for thecriminal justice system in deterring credit
card crime, and in providing an effective
system for prosecuting offences when they
do occur. This paper will address the latterissue: the role of substantive criminal law
in addressing credit card crime. Reference
will be made to various legal structures inNorth America, particularly within
Canada, to illustrate and determine some
optimum legal proscriptions andprocedures for countering credit card crime.

technology has advanced and evolved
rapidly, and continues to do so at a fantastic
rate. The criminal law must keep up withthat pace of change in order to be effective.
Therefore, it is important that definitions
not be too technologically or commercially
specific.
For example, the state of New Yorkdescribes “credit card” in the following
way2:“Credit card” means and includes any credit card,credit plate, charge plate, courtesy card, or otheridentification card or device issued by a person toanother person which may be used to obtain a cash
advance or a loan or credit or to purchase or leaseproperty or services on the credit of the issuer or of
the holder;

II. ESSENTIAL ELEMENTS OF A
CRIMINAL LAW
Any criminal law that is intended toeffectively prevent crime involving credit
cards must have certain basic elements.
The criminal law functions by describing
as offences those acts that are to beprohibited, establishing a procedure forprosecuting individuals accused of thoseacts, and providing for penalties where thecommission of those acts has been proved.
Different jurisdictions may choose topenalize particular crimes in any numberof different ways. However, in the case ofa global and universal problems such as
credit card crime, there may be certain
common features to an effective set of
criminal offences and procedures that arenecessary for a coordinated international
approach.
A. Defining ‘‘Credit Card”
One fundamental feature of an effective
criminal law against credit card crime is adefinition of what is included within theterm “credit card”. Absent a clear
definition, a criminal law would be
potentially too broad in which case it mightcatch behaviour that should not becriminalized, or too vague and ambiguous
and therefore difficult to apply or interpret.
It is also important to note that modern

New York penal law also applies to “debit
cards”3:“Debit Card” means a card, plate or other similar
device issued by a person to another person which
may be used, without a personal identification
number, code or similar identification number, codeor similar identifcation, to purchase or leaseproperty or services. The term does not include acredit card or a check, draft or similar instrument.

While the New York definitions areadequate in describing cards used to obtain
credit or to debit directly an account for the
purpose of purchasing property or services,
it is not clear that bank cards used solely
to access one’s bank account to withdraw,
deposit or transfer money are included inthese definitons. Interestingly, certain
offences in New York also apply to a “publicbenefit card”, defined as any “medical
assistance card, food stamp assistancecard, or any other identification,authorization card or electronic accessdevice issued by the state or a social
2
3

CLS Penal Law § 155.
CLS Penal Law§ 155 as am. L1987, ch556, § 7.

55

RESOURCE MATERIAL SERIES No. 55
services district... which entitles a person
to obtain public assistance benefits undera local, state or federal program...”.4
In Canada, the Criminal Code5 defines
the term “credit card” in s. 3216 as:“any card, plate, coupon book or other device issued
or otherwise distributed for the purpose of being
used:(a) on presentation to obtain, on credit, money,
goods, services or any other thing of value; or(b) in an automated teller machine, a remote service
unit or a similar automated banking device toobtain any of the services offered through themachine, unit or device”.

A definition such as this one takes into
account the multiple functions served by
payment and access cards. Paragraph321(a) is commercially specific to a credit
transaction. Paragraph 321(b), however,contains a broader definition, recognizingthat modern technology has reached astage where the ways in which a card isused are greater than just the presentationof the card to a merchant for the purchaseof goods and services on credit. The
definition catches not only debit cards (i.e.
cards permitting direct debit of a bankaccount), but also what are commonlyreferred to as bank or access cards, a card
inserted into automated machines for the
purpose of obtaining any services offeredby the machine associated with a financial
institution. However, it should also be
noted that paragraph 321(b) is still
somewhat limited in that it applies only tocards used in automated machines
somehow connected to the banking
industry. So for example, long distance
telephone calling cards or telephone prepayment cards would not appear to be
included.7
4

CLS Penal Law§ 155 as am L1995, ch81, § 169.
R.S.C. 1985, c. C-46.
6 R.S.C. 1985 c. 27 (1st Supp.), s.42.
556

The United States Federal Codecontains an even broader definition. The
Code focuses on “access devices”, defined
as “any card, plate, code, account number,or other means of account access that canbe used, alone or in conjunction withanother access device, to obtain money,
goods, services, or any other thing of value,or that can be used to initiate a transfer offunds (other than a transfer originatedsolely by paper instrument)”. 8 Thisdefinition is very useful. It is sufficiently
broad and open-ended to cover any
technological advances in account access.
It is also broad in terms of the types oftransactions to which it applies. For
instance, it applies not only to devices used
for purchase of goods and services, but also
to transfer of fund transactions, as well astransactions for “any other thing of value”.
Unlike the Canadian definition, it is not
limited to automated machines associatedwith financial institutions. As well, it
includes “account number” as an accessdevice, so that the offences apply to the useof the pertinent information alone, even in
the absence of a card or other physicaldevice.
B. Proscribing Offences
In addition to the difficult task ofdefining the term “credit card”, it isessential that the criminal law carefully
and adequately define all of the conductthat is to be prohibited. Because of thecomplexity and number of ways that credit
cards are used, there is perhaps an evengreater number of ways that credit cards
can be used fraudulently or unlawfully.
Each of these should be explicitly covered
in a criminal law to ensure that allloopholes are closed to potential crime. It
7

It should be noted, however, that fake telephonecards or other devices to improperly obtaintelecommunication services are addressed bysections 326 and 327 of the Criminal Code.
8 18 U.S.C. § 1029(e)(1).

110TH INTERNATIONAL TRAINING COURSE
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should be noted that if numerous offences
are set out, there may be overlap between
the elements from one offence to another.
Moreover, factual circumstances may
reveal that more than one offence has beencommitted. Some of the types of criminal
conduct associated with credit card (oraccess card) crime include: theft of the card;
forgery or falsification, possession, use ortrafficking of stolen, forged or falsified
cards; possession, use or traffic in credit
card data; possession of instruments forforging or falsifying credit cards.
Different jurisdictions may employ
different techniques to proscribe conduct.
Some may simply apply offences of generalapplication, such as theft and forgery, tooffences involving credit cards. Others may
have specific offences concerning credit
cards. Finally, some jurisdictions may use
a combination of approaches. In Canada,
a combined approach is used. The mannerof prosecution and range of penalty for thegeneral offence of theft is largely dependent
on the value of the property that has beenstolen. 9This approach is not appropriate withrespect to theft of credit cards, since thecards themselves, the stolen property, havelittle or no value, but the economic loss
associated with their misuse can be great.
As the existing structure was not easily
9

Pursuant to s. 334 of the Criminal Code, where thevalue of the property stolen exceeds $5000, theoffence is indictable and carries a maximum penalty
of 10 years imprisonment. Where the value of theproperty stolen is equal to or less than $5000, theoffence is either indictable, with a maximum of 2
years, or summary, with a maximum of 6 months.
An additional consequence is that theft under $5000
is within the absolute jurisdiction of a provincial
court judge according to s. 553 of the Criminal Code,while theft over $5000 can be tried before a judge,
a judge and jury, or a provincial court judge, at theoption of the accused.

adapted to credit cards and other payment
cards, a new and separate provision wasenacted to deal specifically with credit
cards.10 Within the specific provision on
credit cards, reference is made to otherexisting offences, thereby importing thedefinition of these offences as part of thetypes of prohibited conduct in relation tocredit cards. As well, the new provisioncontains new and specialized offences
which relate exclusively to credit cards.
Section 342 of the Criminal Code reads:
342. (1) Every person who(a) steals a credit card,(b) forges or falsifies a credit card,(c) possesses, uses or traffics in a credit cardor a forged or falsified credit card,knowing that it was obtained, made oraltered(i) by the commission in Canada of an
offence, or(ii) by an act or omission anywhere that,
if it had occurred in Canada, would
have constituted an offence, or(d) uses a credit card knowing that it has
been revoked or cancelled, is guilty of(e) an indictable offence and is liable toimprisonment for a term not exceedingten years, or(f) an offence punishable on summaryconviction

1. Theft of Property
As the nature of property rights can bequite complex and because there are a
multitude of types of property and uses ofproperty, there may be many ways in which
property can effectively be misappropriatedby another without consent. It is, therefore,
important that ‘‘credit cards’’ be considered
as property, both in terms of the physical10 R.S.C. 1985 c.C-46 as am. S.C. 1997, c.18, s.16(1).

The manner of prosecution and the penalty are notdependent on the value of the card. This is one
range or penalty, and the manner of prosecution is
subject to prosecutorial discretion.

57

RESOURCE MATERIAL SERIES No. 55
card and as evidencing rights to property
that the card may represent.
In Canada, “property” is defined in
section 2 of the Criminal Code as:(a) real and personal property of every description
and deeds and instruments relating to or
evidencing the title or right to property, or giving
a right to recover or receive money or goods,(b) property originally in the possession or under thecontrol of any person, and any property into or forwhich it has been converted or exchanged andanything acquired at any time by the conversion
or exchange, and(c) any postal card, postage stamp or other stamp
issued or prepared for issue under the authorityof Parliament or the legislature of a province forthe payment to the Crown or a corporate body of
any fee, rate or duty, whether or not it is in thepossession of the Crown or of any person...

In Canada, s.322 of Criminal Codedefines the offence of theft:
322. (1) Every one commits theft who fraudulently
and without colour of right takes, or
fraudulently and without colour of rightconverts to his use or to the use of anotherperson, anything, whether animate or
inanimate, with intent(a) to deprive, temporarily or absolutely, theowner of it, or a person who has a special
property or interest in it, of the thing orof his property or interest in it;(b) to pledge it or deposit it as security;(c) to part with it under a condition withrespect to its return that the person who
parts with it may be unable to perform;or(d) to deal with it in such a manner that it
cannot be restored in the condition inwhich it was at the time it was taken or
converted.
(2) A person commits theft when, with intent
to steal anything, he moves it or causes it
to move or to be moved, or begins to cause
it to become movable.

58(3) A taking or conversion of anything may be
fradulent notwithstanding that it is effectedwithout secrecy or attempt at concealment.
(4) For the purposes of this Act, the question
whether anything that is converted is taken
for the purpose of conversion, or whether it
is, at the time it is converted, in the lawful
possession of the person who converts it is
not material

In this statute, the act of theft iscommitted by either a “taking” or a“conversion” of the property to the accused’s
own use. Even in the absence of a taking,a person commits theft if they lawfully
come into possession of the card anddishonestly intends to keep it, eventemporarily, and use it for their own
purposes. This is what is meant by“conversion”. The notion of conversion isimportant to address the situation of a card
being borrowed and used without or beyond
the consent of the cardholder. The taking
or conversion must be done fraudulently
and without colour of right. The term
“fraudulently” has been interpreted tomean “dishonestly”and proof of fraud is notnecessary. The term “without colour ofright” means without an honest belief inthe legal right to act as the person does.
The accused must also have had the intent
to deprive the owner or lawful holder of thecard either permanently or temporarily.
This catches, for example, the taking of acard from someone’s possession. or theconversion of the card, with the intent tomake an unauthorized purchase and thenreturn the card.
An important consideration with respect
to the offence of theft is that it protects
property rights vis-à-vis a lawful possessor
and not merely the owner of the property.
With respect to credit cards, this element
is very important. Many agreements
governing the relationship between thecard issuer (e.g. credit card company) andthe client provide that the card always

110TH INTERNATIONAL TRAINING COURSE
VISITING EXPERTS’ PAPERS
remains the property of the issuer. The
company remains owner and the cardholder is merely a lawful possessor.
Therefore, the phrase “the owner of it, or aperson who has a special property orinterest in it” is of significance as it allows
the card-holder (the person who has apossessory property interest) to be thecomplainant or “victim” in a case of theft.
In New York a person commits theoffence of larceny when “with intent todeprive another of property or toappropriate the same to himself or to athird person, he wrongfully takes, obtains
or withholds such property from an owner
thereof”.11 To “deprive” another of propertymeans to withhold it or cause it to be
withheld from him permanerntly or for so
extended a period or under suchcircumstances that the major portion of its
economic value or benefit is lost to him,
while “appropriate” means to exercise
control over property, or to aid a third
person to exercise control over it. The
notion of “appropriate” roughly parallels
the Canadian concept of “conversion”.
However, the New York statute limits theftto taking or appropriating property fromthe “owner”.
2. Theft of a Credit Card
Credit cards, being property, are capableof being stolen. Theft of credit cards canbe subsumed under the general offence oftheft, or it can be specifically prohibited in
an offence that targets credit card crime.
As noted above, in Canada, theft of a credit
card (and other criminal acts in relation tocredit cards) is a distinct offence, but theft
is defined within that provision byreference to the general offence of theft.12
3. Forgery or Falsification of a Credit
Card
Credit cards, like other documents that
11 CLP Penal Law §155.05.
12 See subsection 342(1)(c).

contain and are intended to convey
information, are vulnerable to being falsely
fabricated and made to look legitimate. For
example, blank cards can be imprinted
with account information obtained frommerchants or from discarded sales slips
and an encoded magnetic strips can be
added. The result is a card that looks
authentic and liable to be accepted bymerchants. Closely related to the act offalsely manufacturing a credit card is theact of altering or modifying an existing
legally manufactured card. Numbers or
letters can be smoothed out and reembossed to reflect a different account.
When a forged or falsified card is used
to obtain goods and services, the purchaseis made on credit and the user of the card
obviously incurs no cost. The cost will beborne by one of the other parties, either
the card-issuer, the card-holder or themerchant. Crime involving counterfeit
cards accounts for approximately 50% of
all losses related to credit card misuse in
Canada. 13 As well, as counterfeiting
techniques become cheaper and more
effective at circumventing security
features, the problem will continue to cost
millions of dollars in losses. An effective
criminal law must, therefore, prohibit
various acts related to manufacturing false
credit cards and altering legally
manufactured cards.
In Canada, s.342(1)(b) of the Criminal
Code prohibits the forgery or falsificationof a credit card. Forgery and falsification
are defined in s.366 of the Code as:366. (1) Every one commits forgery who makes afalse document, knowing it to be false, withintent(a) that it should in any way be used or
acted on as genuine, to the prejudice
13 Statistics for year 1997 in Canada, courtesy of

Canadian Bankers Association.

59

RESOURCE MATERIAL SERIES No. 55
of any one whether within Canada or
not; or(b) that a person should be induced, by the
belief that it is genuine, to do or torefrain from doing anything, whether
within Canada or not.
(2) Making a false document includes(a) altering a genuine document in any
material part;(b) making a material addition to agenuine document or adding to it afalse date, attestation, seal or otherthing that is material; or(c) making a material alteration in a
genuine document by erasure
obliteration, removal or in any otherway.
(3) Forgery is complete as soon as a document
is made with the knowledge and intent
referred to in subsection (1),notwithstanding that the person who
makes it does dot intend that any
particular person should use or act on it
as genuine or be induced, by the belief that
it is genuine, to do or refrain from doing
anything.
(4) Forgery is complete notwithstanding thatthe false document is incomplete or does
not purport to be a document that isbinding in law, if it is such as to indicatethat it was intended to be acted on as
genuine.

Section 321 of the Criminal Code
expressly includes “credit card” within thedefinition of “document”. The definitionsof “forgery” and “false document” in s.366
recognize that there are multiple ways inwhich a card or other document can bealtered. They also recognizes that harmstems from the intent to use the false cardor document to someone else’s detriment.
For this reason, it is important that the law
also address incomplete forgeries, if there
was intent to use the document upon its
completion. As is the case with respect totheft of a credit card, the offences offalsification and forgery can be dealt with60

in a specific provision dealing with credit
card crime, or in a general forgery andfalsification provision. In Canada, theoffence can be prosecuted under either the
specific or the general offence provision.
In the United States, a person commits
a federal offence who “knowingly and withintent to defraud produces, uses, or traffics
in one or more counterfeit access devices”.14“Produce” is defined as including design,
alter, authenticate, duplicate or assemble.15“Counterfeit access device” is defined as
any access device that is counterfeit,
fictitious, altered, or forged, or an
identifiable component of an access device
or a counterfeit access device”.16 In New
York, it is a crime to forge a credit card. A
persons commits forgery when, “with intent
to defraud, deceive or injure another, hefalsely makes, completes or alters a written
instrument which is or purports to be [acredit card], or which is calculated to
become or to represent [a credit card] if
completed”.17
4. Possession of Instruments for Forging
or Falsifying Credit Cards
If falsifying or forging a credit card iscriminalized because of the potential harmof counterfeit cards, it follows that various
other activities that assist or facilitate theforgery or falsification of credit cards
should also be prohibited. Schemes forforging and falsifying credit cards can bequite complex and sophisticated, andinvolve numerous levels of individuals.
Each link in the chain should be
criminalized to deter more effectively suchcriminal operations.
In Canada, the Criminal Code 18
14 18 U.S.C. § 1029(a)(1).
15 18 U.S.C. § 1029(e)(4).
16 18 U.S.C. § 1029(e)(2).
17 CLS Penal Code § 170.10.
18 R.S.C. 1985 c. C-46 as am. 1997, c.18, s.17.

110TH INTERNATIONAL TRAINING COURSE
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specifically prohibits activities related tothe possession of instruments for forging
and falsifying credit cards:
342.01 (1) Every person who, without lawful
justification or excuse,(a) makes or repairs,(b) buys or sells,(c) exports from or imports into Canada, or(d) possesses
any instrument, device, apparatus, material or
thing that the person knows has been used or knows
is adapted or intended for use in forging or falsifying
credit cards is guilty of an indictable offence andliable to imprisonment for a term not exceeding ten
years, or is guilty of an offence punishable onsummary conviction.

The offence is drafted broadly to apply
where there is knowledge of either past use
or intended future use of the instruments
for forgery. As well, it covers any
instrument, whatever its original purpose,that is intended to be used for forging or
falsifying credit cards. It is sufficiently
broad to include any “material thing” andtherefore would encompass materials suchas blank cards. This provision is alsosufficiently broad to prohibit many typesof conduct related to forgery equipment ormaterial, from possessing to selling or
buying to repairing and manufacturing.
Notably, it also prohibits the importationand exportation of such instruments ormaterials. This is important, especially in
the Canadian context, since at present
most instruments for forging cards are
manufactured outside Canada, andbrought into the country.
Under US federal law, anyone who“knowingly, and with intent to defraud,
produces, traffics in, has control of, or
possesses device-making equipment” isguilty of an offence.19 “Device making
equipment” includes any equipment,

mechanism or impression designed or
primarily used for making an access device
or a counterfeit access device.20 The offence
is less precise than the Canadian model,
in that it does not expressly include the actsof repairing, buying or selling, or importingand exporting forgery equipment. It is also
somewhat more narrow than the Canadianmodel in that it applies to instruments thatare “designed or primarily used” for making
cards. It is, therefore, not clear whether
an instrument designed or generally used
for another purpose, but which is adapted
to use in forgery of credit cards, or whether
blank cards, are covered by the definition.
In California, it is an offence to design,
make, possess, or traffic in card making
equipment or incomplete access cards with
the intent that the equipment or cards beused to make counterfeit access cards.21
This offence is interesting because it
expressly includes blank or incomplete
access cards. Other jurisdictions may stillprohilbit possession of blank cards underanother offence, but California expressly
treats blank cards in the same manner asother instruments of forgery, as Canada
does by implication.
5. Possession, Traffic or Use of Stolen,
Forged or Falsified Credit Card
Just as it is a crime to steal, forge or
falsify a credit, debit or access card, acriminal law should also adequately deter
against the possession of a card knowingthat it has been dealt with illegally in someway. Mere possession of the unlawfully
handled cards creates the potential forserious economic harm.
Trafficking is another problem that must
be addressed. Trafficking involves the
movement or distribution of property.
Some criminal organizations have
20 18 U.S.C. § 1029(e)(6).

19 18 U.S.C. § 1029(a)(4).

21 Penal Code § 484i.

61

RESOURCE MATERIAL SERIES No. 55
sophisticated systems in place fortransferring possession of unlawfully
handled cards from person to person; many
people who are involved do not actually use
the cards to make a purchase or to obtain
credit, and they may not remain inpossession of the cards for any significant
period of time. In other cases, individuals
who come into possession of a lost or stolencard, for example, may sell it quickly forprofit, or trade it for other property. This
intermediary phase creates an equally
damaging potential for economic harm andmust be adequately prohibited.
More importantly, while forging,falsifying, stealing and possessing
unlawflly handled credit cards creates thepotential for economic harm and loss, that
potential is fully realized when the cards
are actually used. Credit Cards and otherpayment cards are primarily devices used
for convenient access to goods and services.
It is the purchase of those goods andservices without payment that has major
consequences for a society. Typically, thefinancial institution that issued the card
will bear the cost of unlawful purchases,
but in some cases, the merchant or the
card-holder may be responsible for acertain portion of the loss. Even if the cardissuers generally absorb the cost of
unlawful transactions, it is considered acost of doing business, and so is ultimately
passed on to the consumer in the form of
higher service charges or fees. It isessential, therefore, that the criminal law
adequately prevent the ultimate use ofstolen or forged cards.
In Canada, section 342(1)(c) of the
Criminal Code provides a global offence
that catches each of the above types ofconduct. It states that it is an offence topossess, use or traffic in a credit card or aforged or falsified credit card, knowing that
it was obtained, made or altered by thecommission of an offence, either in Canada

62

or elsewhere. This offence is quite broadin three ways: first, the types of predicate
offences that result in the obtainment,
making or alteration of the card are notspecified, so that it applies broadly to any
offence which could have any of thoseresults, for example fraud; second, thepredicate offence can occur anywhere, evenoutside Canada; and third, the definitionof “traffic” is broad and means “to sell,export from or import into Canada,
distribute or deal with in any other way”.22
Under US federal law, the offences are
set out separately. A person who does thefollowing acts is guilty of an offence:§1029 (a)(1) knowingly and with intent to defraud
produces, uses or traffics in one or morecounterfeit access devices;(2) knowingly and with intent to defraud
traffics in or uses one or moreunauthorized access devices during any
one-year period, and by such conductobtains anything of value aggregating$1,000 or more during that period;(3) knowingly and with intent to defraud
possesses 15 or more devices which arecounterfeit or unauthorized accessdevices;···(5) knowingly and with intent to defraud
effects transactions, with 1 or moreaccess devices issued to another person
or persons, to receive payment or any
other thing of value during any 1-year
period the aggregate value of which isequally to or greater than $1,000;...

Each term is in turn defined, providing
greater clarity. An “unauthorized accessdevice” is a device that is “lost, stolen,
expired, revoked, cancelled, or obtainedwith intent to defraud”. A “counterfeit
access device” is one that is “counterfeit,
fictitious, altered, or forged, or an
22 Section 342(4), R.S.C. 1985, c.27 (1st Supp.), s.44

as am. 1997, c.18, s.16.

110TH INTERNATIONAL TRAINING COURSE
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identifiable component of an access device
or a counterfeit access device”.
Interestingly, it is only possession offifteen or more counterfeit or unauthorizedaccess devices that constitutes an offence,
while with respect to counterfeit devices,use or trafficking in a sigle card is anoffence, and with respect to unauthorized
devices, it is only use or trafficking that
results in the acquisition of property
equaling or exceeding $1,000 that isprohibited. No monetary or quantum
distinctions are made in the Canadian
offence. Although worded differently, both
the Canadian and US federal offence
require knowledge by the accused of theillegal character of the card that ispossessed, used or trafficked. This supplies
the requisite mental element, along withany dishonest intent or intent to defraud.
In New York, a person commits theft ofservices when he “obtains or attempts toobtain a service, or induces or attempts to
induce the supplier or a rendered service
to agree to payment thereof on a credit
basis, by the use of a credit card or debitcard which he knows to be stolen”. 23
Interestingly, this offence seems quite
restrictive, in that it prohibits use of a cardthat is known to be stolen, but not the useof a card that is known to be counterfeit.
Other offences relating to credit cards, suchas possession of stolen cards and possessionof forged cards, are subsumed under the
more general laws applicable to those
offences.
6. Use of Revoked or Cancelled Card
In addition to the use of a card that may
have been obtained or altered illegally, alegitimately issued card can be used beyond
its expiration or cancellation date, or after
it has been cancelled on account of theft orloss. This results in equally direct financial

loss to the card issuer.
Revoked and cancelled cards areincluded within the definition of“unauthorized access device” in the US
Federal Code, and consequently dealt
together with stolen cards and cards
otherwise obtained with intent to defraud,
as noted above. Therefore, in addition tothe offence of using revoked and cancelled
cards, it is also an offence to knowingly andwith intent to defraud possess fifteen or
more revoked or cancelled cards. As
possession of revoked or cancelled cards is
not in itself wrongful, an intent to defraud
is also required in addition to knowledgeof the card’s character.
In other jurisdictions, revoked andcancelled cards are dealt with separatelyfrom forged or stolen cards. For instance,in Canada it is a separate offence to use “acredit card knowing that it has been
revoked or cancelled”.24 Similarly, in New
York, a person commits an offence when,“in the course of obtaining or attempting
to obtain property or a service, he uses ordisplays a credit card, debit card or publicbenefit card which he knows to be revokedor cancelled”.25 As these two jurisdictions
have treated the use and possession offorged and stolen cards separately from useof revoked or cancelled cards, there is noneed to require an intent to defraud, in
addition to knowledge, in respect of theoffence of usage.
7. Unlawful Use of Credit Card Data
One of the unique features of credit cards
is that, unlike other forms of property, thevalue lies in the account information thatis accessible by the data programmed intoor embossed on the card. The card itself
has little economic or other value. For thisreason, the information alone, even in the
24 Section 342(1)(d).

23 CLS Penal Law § 165.15.

25 CLP Penal Law § 165.17.

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RESOURCE MATERIAL SERIES No. 55
absence of the card, can be used unlawfully.
For example, a person who knows thename, number and expiration dateembossed on a card can use that
information to obtain goods and services,
without any need for presenting the card;for example, over the telephone orc o m p u t e r, o r b y m a i l o r d e r. T h i s
information can be obtained in any numberof ways, from observing an actual card andremembering the data, to obtaining carbon
copies discarded by the card-holder, tointercepting a card in the mail, to amerchant taking a second electronic
recording of the card’s magnetic stripe.
Fraudulent use of credit card data or
information is on the rise. In Canada, a
recent phenomenon known as “skimming”
has been observed by law enforcement.
This practice involves a merchant double
swiping a card, effectively capturing andrecording the relevant data on the second
swipe. The data is later transferred onto a
Internet false or counterfeit card. The
Internet is an entire new area of concern
in the fight against credit card crime. For
Instance, websites have been identified
that contain lists of stolen card numbers
and account numbers; the information isavailable to anyone to obtain and use for
their own purposes. As well, law
enforcement have discovered that security
systems of internet commerce have beenbreached, and credit card intformation sent
over the internet to merchants has beenintercepted, recorded, and used to makecounterfeit cards. With so much commerce
taking place over the telephone andthrough computer networks, actual use ofcards is diminishing in frequency. In theabsence of a law that clearly prohibits
unlawful use of the critical data, credit card
crime will continue to be a major concern.
In Canada, this problem is addressed
specifically by section 342(3) of the
Criminal Code26 which reads:

64

Every person who, fraudlently and without colourof right, possesses, uses, traffics in or permits
another person to use credit card data, whether or
not authentic, that would enable a person to use acredit card or to obtain the services that areprovided by the issuer of a credit card to credit card
holders is guilty of [an offence].

United States federal law takes a moregeneric approach: the definitions of “accessdevice” includes account numbers or othermeans of account access, so that every
offence related to access devices applies
equally to access device data or
information.
In California, it is a specific offence27 fora person to:
publish... the number or code or an existing,cancelled, revoked, expired or nonexistence accesscard, personal identification number, computer
password, access code, debit card number, bankaccount number, or the numbering or coding whichis employed in the issuance of access cards, with
the intent that it be used or with knowledge orreason to believe that it will be used to avoid thepayment of any lawful charge, or with intent to
defraud or aid another in defrauding...

This section defines “publishes” to mean“the communication of information to any
one or more persons, either orally, in personor by telephone, radio or television, or on acomputer network or computer bulletinboard, or in a writing of any kind, including
without limitation a letter ormemorandum, circular or handbill,newspaper or magazine article, or book”.28
As well, California also makes it a specificoffence to acquire access card accountinformation with respect to an access card
validly issued to another person, without
the cardholder’s or issuer’s consent, with
26 R.S.C. 1985, c. C-46 as am. 1997, c.18, s.16(2).
27 Penal Code § 484j.
28 Ibid.

110TH INTERNATIONAL TRAINING COURSE
VISITING EXPERTS’ PAPERS
the intent to use it fraudulently.29
8. Merchant Fraud
Credit card crime can be especiallydifficult to detect and prosecute where amerchant participates in the unlawful
activity. California has enacted laws that
directly address the merchant.30
Every retailer or other person who, with intent to
defraud:(a) Furnishes money, goods, services or anythingelse of value upon presentation of an access card
obtained or retained in violation of Section 484e oran access card which he or she knows is acounterfeit access card or is forged, expired, or
revoked, and who receives any payment therefor,
is guilty of theft. If the payment received by theretailer or other person for all money, goods,
services, and other things of value furnished inviolation of this section exceeds four hundred
dollars ($400) in any consecutive six-month period,
then the same shall constitute grand theft.
(b) Presents for payment a sales slip or otherevidence of an access card transaction, and receives
payment therefor, without furnishing in thetransaction money, goods, services, or anything elseof value that is equal in value to the amount of thesales slip or other evidence of an access cardtransaction, is guilty of theft. If the difference
between the value of all money, goods, services, andanything else of value actually furnished and thepayment or payments received by the retailer orother person therefor upon presentation of a sales
slip or other evidence of an access card transaction
exceeds four hundred dollars ($400) in any
consecutive six-month period, then the same shallconstitute grand theft.

California deems the obtaining of
payment from the card-issuer, in thecircumstances described, as theft. Other
jurisdictions, however, address suchconduct under the general offences of
29 Penal Code § 484e(e).
30 Penal Code § 484h.

“fraud”; i.e. payment by the card-issuer was
voluntary and consensual, but was
obtained as a result of deceit or false
pretences by the merchant.
C. Jurisdictional Issues
Technological advances have created asystem of electronic commerce that does
not require the merchant and the cardholder to be in the same location.
Purchases are regularly made over the
telephone or computer using only the
information contained on a credit card; themerchant and card-user being in different
countries. Moreover, people who own credit
cards can travel great distances, acrossborders, and use the card far from theirresidence or the location of the card-issuer.
Each of these types of cases can resultin jurisdictional problems when a crime iscommitted. Is the crime committed in theplace where the card or its information isstolen? In the place where the person iswhen he or she makes an unlawfulpurchase? In the place where the merchantis located? In the place where the cardissuer is located? Which location has
jurisdiction to prosecute? The law should
account for the various possibilities andprovide mechanisms for prosecuting
offenders even where much of the criminala c t o c c u r s o u t s i d e o f a c o u n t r y ’s
jurisdiction. Of course, there arelimitations to the extra-territorial
application of a country’s criminal laws, but
certain mechanisms can reduce thecriminal’s ability to evade prosecution.
In Canada, section 342(1)(c) makes it
an offence to possess, use or traffic in a
credit card or a forged or falsified card,knowing that it was obtained, made oraltered either by the commission in Canadaof an offence, or “by an act or omission
anywhere that, if it had occurred in
Canada, would have constituted an
offence.” Thus while the accused’s act of65

RESOURCE MATERIAL SERIES No. 55
possessing, using or trafficking must occur
within Canada, the circumstances that
render the character of the card as being
unlawful can have arisen anywhere and byanother person.
However, even with respect to conduct
such as use or trafficking, portions of the
conduct may often traverse a border. For
example, trafficking or using a card may
involve a transborder transaction, such as
sale or distribution of the card across aborder, or the purchase of goods across aborder with use of the card. In the case oftransborder conduct, where is the offence
committed?
It is important that states have flexible
jurisdictional laws in cases of transborderoffences, particularly given the increase ininternational commerce by individual
consumers. In Canada, an offence may besubject to the jurisdiction of Canadian
courts if a significant portion of theactivities constituting the offence took
place in Canada. It is sufficient that there
is a real and substantial link between theoffence and Canada. For this purpose, thecourt must take into account all of therelevant facts that occurred in Canada
justifying a prosecution, and consider
whether there is anything in those facts
that offends international comity such thatthe court should refrain from exercising its
jurisdiction.31
With respect to the jurisdiction of thecourts as between internal territorial
jurisdictions within Canada, a prosecution
in respect of credit card offences can occur
not only in the place where the offence wascommitted but also in the place where theaccused is found or arrested. This issignificant in a country as geographicallylarge as Canada. The cost of transferring
31 Libman v. The Queen (1985), 21 C.C.C. (3d) 206(S.C.C.).
32 R.S.C. 1985, c.27 (1st Supp.), s.44.

66

an accused back to the place where theoffence was committed can dissuade thecommencement of a prosecution. Section
342(2) of the Criminal Code32 states that:
An accused who is charged with an offence undersubsection (1) may be tried and punished by any
court having jurisdiction to try that offence in theplace where the offence is alleged to have beencommitted or in the place where the accused isfound, is arrested or is in custody, but where theplace where the accused is found, is arrested or isin custody is outside the province in which theoffence is alleged to have been committed,noproceedings in respect of that offence shall becommenced in that place without the consent of the
Attorney General of that province.

D. Evidentiay Matters
Due to the jurisdictional complications
in credit card crimes, a trial may take place
far away from some of the victims or
witnesses who are required to testify about
the ownership or possession of the card, orsomething else in relation to its character.
For example, the card may be used in one
jurisdiction, or part of a country, while thecard-issuer and lawful card-holder are
located elsewhere. The law should provide
for evidentiary rules that facilitate theoccurrence of trials in locations far fromsome of the witnesses.
As noted earlier, in Canada, it is possible
to conduct a trial involving a credit card
offence not only in the place where theoffence is alleged to have been committed,
but also in the place where the accused isfound, is arrested or is in custody. Any oneof these places can be far away from theplace of residence or business of the cardissuer or the card-holder. In Canada, anevidentiary provision facilitates the proofof essential issues that can be provided bysuch witnesses. Section 657.1 of the
Criminal Code33 reads.
33 R.S.C. 1985 c.23 (4th Supp.), s.3; S.C. 1994, c.44

s.63; S.C. 1997, c18, s.79.

110TH INTERNATIONAL TRAINING COURSE
VISITING EXPERTS’ PAPERS(1) In any proceedings, an affidavit or a solemn
declaration of a person who claims to be thelawful owner of, or the person lawfully entitledto possession of, property that was the subjectmatter of the offence, or any other person who
has specialized knowledge of the property or ofthat type of property, containing the statements
referred to in subsection (2), shall be admissiblein evidence and, in the absence of evidence tothe contrary, is evidence of the statements
contained in the affidavit or solemn declaration
without proof of the signature of the person
appearing to have signed the affidavit or solemn
declaration.
(2) For the purposes of subsection (1), a person shallstate in an affidavit or a solemn declaration(a) that the person is the lawful owner of, or islawfully entitled to possession of, theproperty, or otherwise has specialized
knowledge of the property or of property ofthe same type as that property;(b) the value of the property;(c) in the case of a person who is the lawful
owner of or is lawfully entitled to possessionof the property, that the person has been
deprived of the property by fraudulentmeans or otherwise without the lawfulconsent of the person;(c.1) in the case of proceedings in respect of an
offence under section 342, that the credit
card had been revoked or cancelled, is afalse document within the meaning ofsection 321 or that no credit card that meetsthe exact description of that credit card wasever issued; and(d) any facts within the personal knowledge ofthe person relied on to justify thestatements referred to in paragraphs (a) to(c.1).
(3) Unless the court orders otherwise, no affidavit
or solemn declaration shall be received inevidence pursuant to subsection (1) unless theprosecutor has, before the trial or otherproceeding, given to the accused a copy of theaffidavit or solemn declaration and reasonable
notice of intention to produce it in evidence.

(4) Notwithstarding subsection (1), the court may
require the person who appears to have signed
an affidavit or solemn declaration referred toin that subsection to appear before it for
examination or cross-examination in respect of
the issue of proof of any of the statements
contained in the affidavit or solemn declaration.

These provisions greatly facilitate theprosecution of trans-Canadian andtransnational offences related to property,
including credit cards.
E. Procedural Matters
Other peripheral matters are also ofgreat importance in the criminal justicesystem’s fight against credit card crime.
Without being exhaustive, certain matterswhich are useful include:• the power to seize and, upon conviction,
forfeit instruments for counterfeiting or
forging credit cards.
• provision for wiretap authorizations todetect and gather evidence of credit
card and other organized criminal
activity.
• provision for seizing and, uponconviction forfeiting the proceeds ofcriminal activity, including credit card
crime.
In Canada, it is clear that the first twoof the above noted procedural measures canbe applied in the investigation andenforcement of credit card crime.34 With
respect to seizure of proceeds of crime,
while the provisions do not apply
specifically to credit card offences, theproceeds obtained by such criminal activity
can be seized within the context of the moregeneral offences of theft, forgery, utteringforged document, and fraud.35

34 Sections 183 and 342.01(1) respectively.
35 Section 462.3.

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RESOURCE MATERIAL SERIES No. 55
III. CONCLUSION
Modern technology doubtlessly improves
our lives in countless ways. In the realmof commerce, it allows us to search theworld for a product or service that serves
our needs and desires, with just the clickof a few buttons. More importantly, we canacquire that desired thing of value, nomatter how far away it is, with amazing
ease and convenience. It is as simple asreading off a few numbers over a telephoneline or punching them into a computer
keyboard. Moreover, we do not even haveto pay immediately. The immediate cost isborne by one of numerous credit cardcompanies, who in turn request payment
from us at a later date.
As noted at the outset of this paper,
however, this technology brings more thanjust convenience. It also brings
opportunity; opportunity for clever
criminals to wreak economic havoc on a
global scale. With each new technologicaldevelopment designed and intended tomake our lives more comfortable andconvenient, there comes a corresponding
potential for criminal activity. It is adiffcult but not an insurmountable task todiscern what laws are needed to combat
existing modes of credit card crime; that iswhat this paper has attempted to do. The
first challenge will be for criminal laws to
keep pace with current and future
developments. The second challenge will
be to ensure that similar laws exist in all
countries in order that differences between
the laws of states cannot be exploited tothe benefit of clever criminals.

68110TH INTERNATIONAL TRAINING COURSE
VISITING EXPERTS’ PAPERSECONOMIC CRIME IN INDIA
Shri L.C. Amarnathan
I. INTRODUCTION
Crimes in whatever form or category
they may fall in, impact mankind in
multifarious ways. They damage
democratic development, skew social
development, inhibit industrial
development and endanger economic
development. Overall crime is theantithesis of development and is strongly
pitted against it. Development is an innate
urge nurtured by nations. Economic
development, a pre-requisite fordevelopment of any other kind, anddevelopment is also intrinsically linked tomutual and international cooperation.
The United Nations Declaration and theProgramme of Action on the Establishmentof a New International Economic Order(1974) aims at the creation of better
conditions so that all peoples may attain adecent life. It then proceeds to define new
guiding principles for the future course ofcrime prevention and criminal justice inthe context of development needs and thegoals of an International Development
Strategy for the third U.N.Development
Decade. This would appear as a collective
global response towards development, thekey element being economic development.
Countries, without exception, have been
spurred into economic activities in the
recent decades, with the objective ofensuring improved quality of living fortheir citizens. The ‘haves’ sharing with the‘have nots’ through monetary and material
aids became a norm, serving mutualinterests equally. As if to add conviction to* Director General of Police, Sikkim Police
Headquarters , India.

the trite saying that ‘good and evil go
together’ is the emergence of new forms ofcrime, more sophisticated at exploiting
loopholes and opportunities. These arecharacterised as economic crimes,
growingly becoming the order of the day,robbing the masses of the assurances of theState.
The global march from the industrial age
to the economic age is confronted
principally by the growth of crime, that
impedes progress towards an egalitariansociety. The disruptive effects of crime,
particulary economic crime, that makes
mankind collective victims, can not becheckmated unless countries stand united.
The effective countermeasures against
economic crime need, therefore, to be on a
firm foundation of international
cooperation.
A. Globalization and Liberalization
From time immemorial, the driving force
behind every nation is to boost trade andbuild the economy. The dominant economic
trends of the current decade areglobalization and liberalization.
Globalization is being growingly recognized
as the present day compulsion for growth.
Liberalization has put countries world overon a fast track to grab the opportunities
that lie ahead to establish economic
competitiveness.
There is a revolutionary tide sweeping
the world as a consequence of the above.
Profound changes are taking place in theway businesses, small or large are being
done. Remarkable technologicaldevelopments, significantly the
information revolution and enticing

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RESOURCE MATERIAL SERIES No. 55
economic opportunities, have opened a newworld of commerce. Traditional paper
based procedures are fast being replacedby new standards such as Electronic Date
Interchange (EDI), Electronic FundTransfer (EFT), Electronic Commerce (EC)etc.
A Pandora’s box of opportunities toindulge in crime of a sophisticated kind
have also grown. With an openness of
economy coupled with the vacuum in law
and procedures, ‘economic crime’ was not
far behind. Even the traditionally known
forms of economic crimes such as cheating,fraud, larceny, embezzlement, criminal
misappropriation and criminal breach oftrust have taken serious proportions
involving enormous sums of money andaffecting scores of victims. Globally,nations seem to be driven to the realisationthat it is not possible to be at once
politically internationalist andeconomically isolationist.
B. Globalization of Crime
In recent times we are witness to a
growth of crimes not merely in quantity but
more so in quality. The threats posed bypresent day dimensions of crimes,
particularly their sophistication inpersonal and public security are mattersof serious concern. Crimes are presently
modeled on business ventures, operated insyndicate styles and with ‘profit’ as the
motive, practically emulating the current
economic development in this respect.
Organised crimes, as they are called, haveeven transcended borders to constitutetransnational organised crime.
In the above developments, crimes are
ignoring or overcoming borders. However,borders have established themselves as thebane of law enforcement. The criminals
thus operate as if they are in a borderlessworld, while the law enforcers are confined
to operate in a bordered world. If efforts

70

towards economic development and growthcompel countries to stop recognizing
borders and start cooperating, it is a major
question as to why there is reservation orresistance to the same in the effort tocurtail crime.
Cosmopolitanism has led to theemergence of criminal networks. This
would call for the development of a law
enforcers network capable of countering
the commissions of criminal networks.
Many relevant question will arise; should
not economic liberalization anddevelopment be matched by theliberalization and development of criminal
justice system? Should not the emergenceof criminal networks be countered by theestablishment of a law enforcess network?
Does it not call for law enforcement
cooperation that emulates economic
cooperation?
C. Crime Prevention
The United Nations commemorated
their golden jubilee in October 1995. Whatfigured prominently on the agenda was theurgent need for international cooperation
against crime. The serious global concernsof the late 20th Century are economic
crimes and organised crimes, thetransnational kind in particular.
In the present day global trends, if
criminal development outpaces economic
development it would be a disquietingdevelopment because of its deleterious anddestabilising effects. The rule of law andpublic security are as essential for
democratic development as they are for
economic development. Governments aregoverned by priorities. The compulsionsof economic growth may have given
precedence for economic development overdemocratic development. In this context,
issues of contention and conflict may also
arise. Are globalization and liberalization
aiding and contributing to growth and110TH INTERNATIONAL TRAINING COURSE
VISITING EXPERTS’ PAPERS
sophistication in new crimes? Should thepriority be shifted towards crime control
with strict regulations and stringent laws?
However, a base approach can not be
advocated, nor will it ever be acceptable.
For analogy, if there are bank hold ups, canwe stop banking? In the conflict between
the administrators of economic
development and criminal justice, theoverarching question concerns
identification of a balance between the twin
exigencies of economic development anddemocratic development. Both areessential for the establishment of a new
economic order and improved quality ofliving.

explanatory.

A response to resolve the conflicts could
be crime prevention as a policy, withstrategies and plan of actions. Also,
possibly to conceive the appointment of
Crime Prevention Managers whose
singular task would be to prevent crime.

B. Definition

II. ECONOMIC CRIME
Barter, a trade by direct exchange ofgoods, as was prevalent even at the
beginning of the millenium, would perhaps
appear as the safest economic practice.
With a monetary system consisting ofmoney currency, money value, exchange
value, market determined goods/products
value etc., controlling the present economic
practices in relation to trade in diverse
forms, the idea of going back to barter
system would be a utopian one.
A. Crime Classification
Over the decades, a few broadclassifications of crimes have come into
general usage. One set distinguishes themas ‘crimes against life’, ‘crimes against
body’, ‘crimes against property’, ‘whitecollar crimes’ and ‘others’. Prevalently in
use is the set that classifies them as ‘violent
crimes’, ‘property crimes’, ‘economic crimes’
and others. These terms are self-

The U.N.Crime Survey adopts a directclassification of crimes by type, undereleven (11) heads. The Interpol crime
survey adopts a direct classification ofcrimes by the type under ten (10) heads,
but using slightly different terminology.
Though not differing much in generalclassification, some degree of difference inthe usage of terminologies continues toexist in the approaches of countries. It
would be suffice to mention that similarity
helps foster appreciation and further
generate conviction to cooperate andcoordinate efforts to curb crimes.

“Economic crimes are a manifestation of criminal
acts done either solely or in an organised mannerwith or without associates or groups with an intent
to earn wealth through illegal means, and carryout illicit activities violating the laws of the land,
other regulatory statutory provisions governing the
economic activities of the Government and its
administration” (Crime in India, NCRB, Govt. ofIndia).

Once popularly known as ‘white collar
crime’ by virtue of the fact that it can be
indulged in by a person of responsibility(holding an office) in the course ofoccupation, these forms of crime were
known to cover cheating, fraud, larceny
criminal misappropriation, embezzlement,
criminal breach of trust and to some extent
forgery, corruption and counterfeiting.
Considering the profound economicchanges and directions, these forms ofcrime have taken a hydra-headed
transformation as economic crimes,
encompassing many more new generation
crimes from misappropriation to money
laundering; from simple fraud to floating
fictitious firms; from breach of trust to bankmanipulations. Thus in form and content,
crime would appear to be dynamic andever-changing.

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RESOURCE MATERIAL SERIES No. 55
When it comes to defining ‘economic
crime’ there appears to be agreement thati t c a n n o t b e d e f i n e d p r e c i s e l y,comprehensively and wholly acceptably.
There are as many definitions as there arecountries, with each one correct inthemselves and based on the perceptions
as well as experiences in dealing with these
forms of crimes already manifested andmanifesting. The sheer diversity of suchcrime makes us appreciate that it can be
defined infinitely. This would only go toproject the scope and extent to which
economic crimes have become all pervasive
universally.

Some of the major impacts on thenational economy that may be caused by
the economic crimes, are:As far as criminality is concerned these
economic offences, while bearing similarity
to traditional offences, constitute a
separate class by virtue of their scale anddimension; modus operandi; and in making
individuals/state/society as collective
victims of financial loss.

• Increase in inflationary pressure• Uneven distribution of resources andcreation of elitism• Marginalisation of tax base
• Generation of abundant black money• Creation of parallel economy• Undermining of developmental
works/efforts• Becomes a breading ground forcorruption• Illicit businesses thrive affecting licit
business• Resources of financial and commercial
institutions are diverted and distorted• Weakens morale and commitment of
citizens• Poor/weakest continue to be at risk
• Countries economic equilibrium is at
stake

Summarising, “an evil (criminal) intent
is evident in economic crime - an intent togain wrongfully by the perpetrators andcause loss wrongfully to the perpetrated”.
Wi t h g e n e r a l a c c e p t a n c e o n t h i sfundamental, the call of tomorrow may be
a comprehensive “economic offences code”,
distinct from penal codes, to effectively
counter economic crimes.

A significant corollary to the above is thediversion and investment of the illicit
money (black money) acquired bycommitting such crimes into furthering
crimes and the hegemony of the criminal
syndicates rule. The threats to public
security and eventually national security,
would appear imminent as an ultimate
consequence.

C. Impact on National Economy
Economic crimes cause significant
damage to the general economy of thecountry, adversely affecting the growth anddevelopment of the nation. Internationally
it erodes confidence in the financial
credibility and stability of the nation, thus
weakening its global competitiveness andf u r t h e r, b e c o m i n g u n a t t r a c t i v e t oinvestments from within as well as outside.
Where there is a high incidence level of
economic crime, the government andbureaucracy are also viewed as being
corrupt and weak.

D. Problem of Definition
Controlling and effectively dealing withcrimes, even the ordinary kind, pose somechallenges. Some of the major ones are:

72

(i)

A legal definition and precise
conception of economic crime is yet
to come into acceptance.
(ii) In a large number of cases, these
forms of crime are viewed not as‘criminal’ but as ‘civil’ in nature,
falling somewhere between ‘crime’and ‘tort’.
(iii) Often mens rea, criminal intent or110TH INTERNATIONAL TRAINING COURSE
VISITING EXPERTS’ PAPERS
malafides may prove to be difficult
to establish, and they can beeffectively hidden by claiming
carelessness, procedural infirmities,
lack of supervision, pretention of notknowing the consequence, transfer
or distribution of culpability anddiluted liability.
(iv) While individual liability for a crimeis the accepted principle, collective
liability and/or vicarious liability is
yet to be strongly encoded instatutes and law. These constitutethe grey areas of law.
(v) There is application of the rigid
judicial doctrine of evidence beyond
all reasonable doubt. Adverse
presumption of conduct of theaccused and shifting of the onus of
proof is yet to become acceptable asa relaxation of the doctrine.
(vi) There is a tendency to treat these
forms of crime as ‘fine only’ offences,whereas the calculated manner inwhich these crimes are schemed,organised and committed strongly
call for prison terms in addition tofines and forfeitures.
(vii) Generally public awareness islacking for want of legal education,with the result they get preyed on
are to their gullibility. They also
continue to get trapped despite
lessons learnt, in their craze to getrich quick.
(viii)No less important are a score oforganisational issues such as
information sharing, availability of
trained manpower, collective drive,
coordination of efforts, trust
between law enforcement agencies
etc.
(ix) There are innumerable regulations
in government, with areas ofincompatibility. This coupled withcompartmentalisation of various
regulatory and enforcement
measures lends to easy exploitationand commission of economic crimes.
(x) By the very nature of such crimes,
economic crimes surface long after
the actual period of commission andevidence (oral/documentary/circumstantial) is hard to come by.
F u r t h e r, w h a t i s r e p o r t e dconstitutes the tip of the iceberg,leaving scores of others unexposed
and not dealt with.
E. Cost of Crime
A precise and universally acceptable
method of computing the costs of crime is
yet to emerge. Society pays substantial
costs, both directly and indirectly, as aresult of crimes and in confronting them.
The operation of the criminal justicesystem and crime prevention efforts direct
cost is itself quite substantial. The U.N
Survey (1990) revealed that highly
developed countries expend on an average
2% to 3% of their budgets on crime control
and the administration of justice. The
same in developing counties showed a highpercentage ranging from 9% to 14% of thenational budgets. The 3rd U.N. Crime
Survey revealed that developed countries
enlist the services of 225 police officers forevery 1,00,000 population for crime control,
and about 20 per 1,00,000 to staff prisons.
The developing countries maintain morethan 500 police officers and more than 50
prison staff per 100,000 population.
Victims face colossal losses in both direct
and indirect terms. While precise costs areavailable for property of various kinds,
there are no yardsticks to compute theindirect costs. Even in respect to theformer, constituting the direct kind, it isoften alleged that property lost isundervalued and correspondingly theproperties recovered are overvalued.
Since 1990 the U.N. has carried out anovel ‘Victimisation Survey’ to indicate thegrowth of crime and the indirect costs as a73

RESOURCE MATERIAL SERIES No. 55
result of these; largely in terms of the levelof general insecurity of the citizenry. Basedon empirical data and on an interviewbased approach, a cross-section of theurban population of 50 countries
principally, the first round of study showedthat more than half the urban populationworldwide have been victimized by a crimeat least once during the period 1990-1994.
It profiled regions of high crime rates as
Africa, Latin America on the one hand andCanada, Australia and the USA on theother, as well as regions of relatively low
crime rates in Asia, Europe, west Asia andArab Countries.
Citizens not usually perceived as victims
do also pay for crime. The cost of the same
being indirect can not be easily estimatedand quantified. For example, witnesses
spend hours and days in investigation andtrials. Consumers pay higher prices,
without knowing that they do, in crimes
related to business or economic crime. Car
owners and real estate owners pay higher
insurance premium than what they would
have otherwise paid. Take into account the
manhours lost through leave on mourningand obsequies. Tax evasion by theunscruprulous brings on higher taxationof honest tax payers. Ultimately everyone,
every citizen of every country, is short on
the goal of improved quality of living.
Crime discourages investments andinhibits economic growth. Low income
slums and ghettos of countries intransition, when plagued by crimes, bear
the brunt when capital is diverted to moreproductive environments. The ability ofcrime to distort economic activities is moremanifest in the emergence of organised
crimes of a transnational nature. The
criminal syndicates are a force to reckonin the world economy and determine eventhe destiny of developing nations. The‘Economist’ in an article (1995) points outthat “where the main purpose of74

investment (illegal) is to launder drugmoney, the effect is often to crowd out legal
business”.
F. Classification
Though ‘economic crime’, being nonviolent in nature with often organised orcollective perpetrators, could be precisely
set as a major classification distinctively
from ‘violent crime’ and ‘property crime’,its minor classification based on nature andform could generate a healthy debate. The
popular understanding of ‘economic crime’at the functional level is that these offences
concern money and matters of finance. The
traditional classification of ‘white collaredcrime’ covers cheating, fraud orlarceny;misappropriation or
embezzlement;beach of trust andcounterfeiting principally involving money.
To attempt a sub-classification of
economic crime purely on a criteria that itconcerns money and matters of finance will
be contestable, as it would exclude some
important types already characterised as
economic crime. Correspondingly, there
may arise logical questions as to traditional
offences where gain, in terms of money andvalue figures, may be included under
economic crimes. These are all matters toconsider before a sub-classification is
attempted. Largely the following forms ofcrimes have been characterised as
constituting economic crimes or offences:(i) Tax evasion(ii) Excise/Custom duty evasion(iii) Smuggling in contraband goods(iv) Bank frauds/Scams(v) Corporate frauds(vi) Stock market manipulations/Scams(vii) Insurance frauds(viii) Foreign Exchange violations(Hawala)(ix) Money laundering(x) Drug trafficking(xi) Real estate dealings (Benami)

110TH INTERNATIONAL TRAINING COURSE
VISITING EXPERTS’ PAPERS(xii) Industrial espionage(xiii) Intellectual Property Rights
violations(xiv) Credit Card crimes(xv) C o r r u p t i o n ( P o l i t i c a l / G o v t /Corporate)(xvi) Counterfeiting (Currency/Bonds/
Shares)(xvii)Floating fictitious firms(xviii)Floating Non-Banking Financial
Corporations (NBFC)(xix) Collection of protection money(Extortion)(xx) Frauds relating to government
subsidy(xxi) Abuse of Foreign Aid programmes
Considerations may arise whether‘organised crime’, including ‘transnational
crime’, should figure as the ‘genus’ and theabove forms as ‘species’, particularly whenthe main motive of these crimes is ‘profit’.
It still leaves from consideration a few moretypes of crime such as ‘theft of culturalobjects’, ‘Real Estate frauds/land hijacking’,‘Trade in human body parts’, ‘Racketeeringin employment’, ‘Racketeering in
passports’, ‘Illegal migration’, ‘Computerrelated crimes’ including software piracy.
It would be a constructive exercise toattempt ‘major’ and ‘minor’ classificationsof economic crime by harmonizing views.
One such attempt is a classification by thenature of crime and by form of punishment.
In a broad way, the former can be
subclassified as:(i) C r i m e s i n v o l v i n g g o v e r n m e n tfinances (eg. tax evasion, duty
evasion, subsidy frauds etc.)(ii) Crimes involving individuals’
finances (eg. cheating,misappropriation, breach of trust
etc.)(iii) C r i m e s r e l a t e d t o c o r p o r a t emanagement (eg. commissions asbribes, illegal gratification, floating

fake firms, copyright violations etc.)(iv)Crimes affecting national economy(eg. foreign exchange manipulations,stock market manipulations,counterfeiting currency etc.)
The latter can be sub-classified as:(a) Crimes punishable by penal codes(b) Crimes punishable by special laws
III. INDIAN SCENARIO
A. Institutional Support
A sound institutional arrangement
exists in India to collect, collate and analyse
reported crime statistics, to support
effective decision making and regularly
review policy formulation. The National
Crime Records Bureau is such an
institutional arrangement set up under the
Ministry of Home Affairs (interior) on thestrength of the National Police Commission(1979). A strong organisational structure
exist at the: district level (province), theDistrict Crime Records Bureau; the Statelevel (regional), the State Crime Records
Bureau; again networked at the national
level, the National Crime Records Bureau,
to collect information on crimes andcriminals.
The common objective, “to act as aclearing house of information on crimes andcriminals”, has greatly enabled effective,
efficient and economic law enforcement.
The statistical information for analysis isa by-product and is published as “Crime inIndia” for public dissemination covering
more than 55 million crimes, thus making
the criminal justice system accountable.
The report covers all the criminal cases
reported under a score of laws and by all
enforcement agencies set up to deal withordinary, as well as sophisticated, crimes.
A major technological upgrade is
responsible for attaining this capability,
establishing a fully computerised “Crime75

RESOURCE MATERIAL SERIES No. 55
Criminal Information System”. A captive
sat.com based network styled “Polnet”, an
exclusive law enforcement computer
network that offers voice, data and imagetransfer facilities, is the next step ofupgrade to be taken up.

A major step was recently initiated by
setting up a Commission for
Administration of Law to take up legal
reforms holistically. In the first reportsubmitted only recently, the Commission
has observed the following:

In addition to the key steps ofinstitutional networks and technology
upgrade, a major unifying step is theuniformity of procedures, forms andreporting systems. This has become thefocal issue for achieving “standardisationin policing” as a vision for the future.

(i) List of Central (federal) Acts-morethan 2500(ii) List of Central Acts to be scrapped1300(iii) List of laws to be changed-60(iv)List of laws to receive regular review115

B. Economic Crime Statistics
The ‘Crime in India’ publishes annually
the reported crimes and also profiles thepercentage of detection, number of accused
persons charged, the result of trial etc. Itfeatures the list of criminal laws thatdemand effective enforcement by law
enforcement agencies. The bulk of reported
crimes constitute those falling under the
relevant sections of the Indian Penal Codenamely cheating, fraud or larceny;
misappropriation or embezzlement;
criminal breach of trust, counterfeiting,and narcotic drugs cases.

As anachronistic laws abound, they
advocate recourse to ‘sunset’ provisions in
all laws, which compel review atpredetermined periods for decision as
whether to continue, amend or scrap suchlaws.

C. Law Enforcement Agencies
Besides strengthening laws where there
are perceived loopholes, regular upgradeof laws, by enacting ‘special laws’ to deal
with emerging crimes, have received close
attention. Institutionalised arrangements
ensure that a close degree of monitoring is
exercised. A few of the recent legal
initiatives are:(i) Foreign Exchange Management Bill(ii) Money Laundering (Prevention) Bill(iii)Security Exchange Board of India
Act(iv) Depositories Ordinance(v) Computer Crimes (Prevention) Bill(draft)(vi) Information Technology Bill (draft)76

D. Estimates and Guestimates: Costof Economic Crime
The fall out or consequences of economic
crime, are colossal. At the high end arearguments that the illegitimate economy
generated by various forms of crime
virtually matches the size of the legitimate
economy of the country. Economic crime,
being a high reward and low risk activity,
is also construed as an area of expansion,much like the national economy. The
existence of ‘black money’, principally incash form, is known to exist in practicallyevery country. Drug crimes have added a
new dimension by bringing into existence‘dirty money’. While black money isobtained by avoiding taxes/duties,
including circumvention of regulations,dirty money is obtained completely byillegal means.
A recent survey estimated that nearlyRo 46,000 crores ($460 million) proved to
be bad loans given by banks, with little orno scope for recovery. If this represents theaccounted for input of loss to the national

110TH INTERNATIONAL TRAINING COURSE
VISITING EXPERTS’ PAPERS
economy, it is possible to guestimate thetrue, staggering size of the illegitimate
economy. The National Institute of Public
Finance and Policy estimated in 1985 a
black economy of Ro 405 billion. Tax
evasion is stated to be anywhere close to70%.
There should be well formulated effort
in the days to come to estimate, as
accurately as possible, the damage in termsof money as a result of the commission of
economic crimes. This, in other words,
would be a step to estimate the cost of crime
itself. The obvious benefit would be acompulsion for proper policy formation,
regulations for plugging loopholes coupledwith effective enforcement measures.
Needless to add, the strategy of thecriminal justice system should not only beto establish that ‘crime does not pay’ but
also to assert that ‘crime will entail
recovery of illegitimate money’.
IV. THE COUNTERMEASURES
A. Introduction
It is difficult to make anything foolproof.
Further, law enforcement becomescomplicated when on the one side, crimes
are growing in sophistication and on theother, individual rights recognition is
growing in stringency. In the present day
reality, the criminal justice system can atbest make things difficult, and aim in theprocess to achieve crime prevention. If ourexperiences are any lesson, a successful
example of crime prevention exists incounterfeit proofing currency and travel
documents. By its very nature economic
crimes call for counterfeit proofing
measures.
Though some battles have been won, thewar waged against economic crimes willcontinue to be a relentless one; with every
modus operandi adopted by criminals
countered by successful strategies by law

enforcement agencies. It would not be aconvincing argument to maintain or expectthat the traditional law enforcers, namely
the police or the anti-corruption agencies,
alone are to come to grips with thedevelopment of economic crime. The
growing complexity and diversity of
economic operations would neccessitate amultiplicity of enforcement agencies, butwith a high degree of coordination. This is
expected to be achieved only by sensitizing
all the enforcement agencies adequately.
B. The Progress
What was viewed essentially as anational malady, with duty and tax evasion
constituting black money, assumed global
dimensions with the coming into
circulation of ‘dirty money’ as aconsequence of drug money or laundered
money. The U.N Drug Convention (Vienna
1998) focused attention on this problem.
The constructive development is theconstitution of the Financial Action Task
Force (FATF) to conceive policy measuresthat inhibit and detect money laundering
attempts. A recent attempt is the
preparation for a UN declaration on
Organized Transnational Crime (Warsaw
1998). It would be a matter of interest to
study the forty (40) recommendations givenby the FATF which zeroes in on the banking
operations that contribute in a major way
in the perpetration of money laundering.
The principal recommendations are:(i) Limit bank secrecy laws(ii) Adopt ‘know the customer policy’(iii)Compel banks to report suspecttransactions(iv) Regulate non-banking business(v) Introduce measures for asset
forfeiture(vi) Treat money laundering as an
offence and as extraditable
Progressively, attempts have been madein few counties to consider largely legal

77

RESOURCE MATERIAL SERIES No. 55
reforms involving measures to amend andupgrade existing laws, and introduce
special laws to deal with emerging formsof sophisticated crimes. Principal among
them are laws to deal with money
laundering; enabling asset forfeiture;
regulating bank transactions, operation ofnon-banking financial corporations; andregulating operations of stock markets.
Institutional support for enforcement, fineand imprisonment as penalty, andmeasures for expeditions trial, are otherconcrete steps that have been initiated.

The emerging concept of sunset laws isborne out of years of long experience.
Under this principle, laws are enacted fora specified period (say 10 years) to meetthe challenges of a new form of crime. At
the due time, a review of the law becomes
a compulsory measure either to extend or
to allow its continuance, or it becomesanachronistic at the time of review.
Considering the proliferation of laws, newenactments should necessarily containsunset provisions to keep the list at an
optimal level.

In India, a number of special laws havebeen enacted to deal with various forms of
economic crimes. The existing legal
provisions in the following legislation for
asset forfeiture are being increasingly andeffectively used with a growing degree ofsuccess:

C. Recommendations
1. Conceptual
In battling economic crimes there has
been an overwhelming introduction ofregulations and enactments of new laws.
Regulations and laws are good, provided
they are regularly monitored andeffectively enforced.

(i) C r i m i n a l L a w A m e n d m e n t
Ordinance (1944)(ii) Customs Act (1964)(iii)Code of Criminal Procedure (1973)(iv)Foreign Exchange Regulation Act(1973)(v) Smugglers and Foreign Exchange
Manipulates (forfeiture of property)
Act (1976)(vi)Narcotic Drugs and Psychotropic
Subtances Act (1985)
The mere conception of new laws can not
be deemed as a panacea for legal ails.
Proliferation of laws many prove over a
period of time counter-productive for very
many reasons. One school of thought holds
that we should stop making new ineffective
laws and seek means to render effective theexisting laws. Effective enforcement
becomes relevant in this context. However,a blend of both, or a balance by enacting
laws on a needs based manner (coupledwith effective enforcement) is advocated.

78(i) Counterfeit Proofing
It has been elaborated that ‘crime
prevention’ holds a lot of promises, if proper
strategies are devised. If counterfeit
proofing measures have proved effective toprevent counterfeiting of currencies andtravel documents, similar approaches/measures in economic operations may
result in prevention of economic crimes.
Illustratively:(i) Shares can be counterfeit-proofed toprevent use of forged shares fortransactions.
(ii) The Depository System can be
adopted where shares are held in
trust by the depository and theirtrading be done notionally, without
physical exchange/transaction inshares.
(iii) Floating of fictitious firms in thename of non-existing persons can be
frustrated by obtaining photographsof the constituent members, byverifying their addresses, by110TH INTERNATIONAL TRAINING COURSE
VISITING EXPERTS’ PAPERS
subjecting the cases to physicalinspections.
(iv)Operation of Non-Banking Financial
Institutions can be subject to tighter
regulations, regular monitoring, theirmembers made accountable, and bysimply generating public awarenesscampaigns.
(v) Unauthorised taking of deposits canalso be made a cognizable offence.
(vi)Operation of bank account can be
subject to regulations such as keeping
photographs of account holders,
restricting the limit of monetarytransactions on a single day etc.
Many more innovative steps can beconceived and regularly monitored after
implementation.
(ii) Crime Prevention Officers
The time-tested approach to deal withcrime has at best proved to be a post
mortem step. Typically, a law enforcement
officer comes into role after the commissionof a crime, to set the law into motion or
investigate. Economic crimes are
distinctively different from ordinary crime.
The crime that gets committed remains
shrouded in secrecy and surfaces
incidentally when a situation has gone outof control.
This situation is unlikely to improve
unless there are meaningful measures,such as by appointing Crime Prevention
Officers whose sole task would be as
watchdogs to monitor developments day to
day and report suspicious transactions. If
there exists a concept of a vigilance officer
in government departments, it has topermeate widely and role redefinition is
also needed.
2. Legal(i) Redefining Economic Crime
It is difficult to deal with sophisticatedcrime by relying on the traditional sectionsof the law. A glaring disparity in economic
crime is the existence of collective
involvement in crime as in corporations
and other institutions, as against theconventional concept of an individual’s
involvement in the crime. Legally, this
aspect needs to be addressed.
Most importantly, existence of mens rea
or criminal intent is difficult to prove inthis form of crime; having to pass the
judicial doctrine when it comes to trial. A
recognized concept in defining the
culpability of an individual can be:
1. Misconduct, as in departmental
discipline.
2. Criminal misconduct, as in corrupt
practices
3. Criminal conduct, as in a crime.
A path breaking measure could be toconceive acts involving economic crimes as
either ‘financial misconduct’ or as ‘criminal
misconduct’, to give the same a new
dimension and meaning. The next
progression, linked to the same, would be
innovative punishments for such offencesthat involve recovery of the illgotten money.
(ii) Economic Offences CodeEconomic offences are even now dealt by
the relevant provisions of the Penal Code.
This has resulted in an anachronistic
status wherein sophisticated crimes aretreated as conventional crimes, namely
cheating, fraud or larceny;
misappropriation or embezzlement; andbeach of trust. This carries many pitfills.
The newer forms of economic crimes canbe countered effectively by evolving a newand comprehensive ‘Economic Offences
Code’. The Code should also contains
institutional arrangements and proceduresfor its enforcement. The Code may modify
investigation procedures, methods/
standards of proof, as well as system of

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RESOURCE MATERIAL SERIES No. 55
trial. There can be scope for regulated,negotiated settlements. Sentencing can bemade innovative and imaginative,
including confiscation of property,
deprivation of privileges etc. The Code may
have to be constructed to convey a message
to all that economic liberalization should
not mean freedom to exploit.
(iii) Independent CJSThe political system has to bearpressures from various corners and theelected bodies’ judgements in relation to thenational economy is often influenced byvarious considerations. A reasonably
independent criminal justice system, withchecks and balance measures, would be
more capable of dealing with the crimes
effectively in the overall interests of thenation. This is a measure that is muchwanted when political parties sustenanceis dependent on contributions of theundisclosed kind.
3. Organizational
A sound infrastructure is essential as acountermeasure to deal with economic
crime, more so because of their organizedmanner of operation. Some of the issues
concerning organization have been
indicated as passing remarks in thepreceding paragraphs.
The coming into operation of a numberof independent law enforcing agencies is
neccessitated by the sheer complexity of
governmental functions and the inabilityof one organization to emerge as anomnipotent enforcement agency. Whileaccent will be on strictly monitoring theregulations with an aim of crime
prevention, the independent departmental
enforcement agencies can play a fruitfulrole as crime prevention managers; while
the criminal acts that gets noticed can be
dealt with by law enforcement authorities,
namely the police.

80

Some of the factors that would be
resulted oriented are:(i) Organized/standardized collection of
information and close monitoring of
the same(ii) Setting up of common database witha view to exchange information(iii) E s t a b l i s h m e n t o f p r o p e r
infrastructure to discharge crime
prevention responsibilities(iv) I n f o r m a l m e a s u r e s , s u c h a s
personnel exchange and coordination,at the operational level(v) A g r e e m e n t f o r a t r a n s p a r e n t
information sharing mechanism(vi)Networking of all agencies throughinnovative technological solutions(vii)Hosting the set up with officers ofproven integrity(viii)Incentives to effective enforcement ofcrime prevention, detection andrecovery measures(i) Technical Cooperation and Assistance
A measure to enable and vitalize
collective efforts can not be achieved
without technical cooperation within the
country or among countries. There is needfor specialized organizations to combat
these sophisticated crimes. This would callfor training of personnel, regular exchange
programmes and a means to constructively
share experience as a confidence building
measure.
(ii) Mutual Cooperation
Economic crimes, particularly the money
laundering kind, transcend national
borders. The effect of such crimes are also
felt not only in one’s own country, but also
in other countries. Traditionally, the placeof occurrence of a crime is highly relevantfrom the viewpoint of jurisdiction. The
enforcement of law is by its natureterritorial, for no State allows other States,
as a general rule, to exercise powers ofgovernment within it. National borders are110TH INTERNATIONAL TRAINING COURSE
VISITING EXPERTS’ PAPERS
regarded, thus, as inviolable. Mutual
cooperation has become the only available
means to overcome these borders. The
available practical solutions are:(i) Bi-lateral/multi-lateral treaties(ii) Mutual legal assistance treaties(iii)Extradition(iv) Neutral trial venues
V. CONCLUSION
In the words of Oscar Wilde, a “thief isan artist, and a policeman is, at best, acritic”. If this carries conviction, law
enforcers are required to remain
convincingly ahead in the race between thelaw breakers and law enforcers. If
countries are to cooperate for economic
development, there seems to be no valid
reason not to cooperate in curbing crime.
The foregoing would substantiate thatinternational cooperation is built and restson the pivotal props of:(i) Legal reforms/harmonization oflegislation(ii) Institutional growth/professional
skills(iii) Technical cooperation/assistance(iv)Mutual cooperation/assistance
Ultimately, trust could be the trumph
card.

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RESOURCE MATERIAL SERIES No. 55

ECONOMIC CRIMES IN KOREA
Lee Tae-Hoon*
I. INTRODUCTION
Korea marked its 50th anniversary in1998 as a free democratic republic. Korea
was in ruins after three years of bombing
in the Korean War that came to an end withthe signing of the armistice agreement inJuly 1953. Korea, however, has madeenormous stride in economic development
since that time, particularly from the1970’s until 1997, when Korea turned to
the International Monetary Fund (IMF) fora record $58 billion rescue package. Prior
to this, the Korean economy reported anaverage annual growth rate of 8%, shiftingfrom light industries to heavy industries
in the 1970’s and into high tech industries
in the 1990’s. Korea’s Gross Domestic
Product (GDP) grew 312-fold from $1.4
billion in 1953 to $437 billion in 1997,
making Korea the 11th largest economy in
the world. The per capita income, less than
$70 in 1953, soared to the $10,000 level in
1996, although it slightly fell to $9,511 in
1997 and may decline further in 1998 if
affected by the IMF program. Exports, a
trifling $22 million in 1947 reached astaggering $136 billion in 1997. The
success story of Korean economy
culminated in Korea’s joining, in December
1996, the Organization for Economic
Cooperation and Development (OECD), theso-called ‘rich countries club’, as the second
Asian nation after Japan.
However the miraculous economic
development was accompanied by largescale economic crimes. Statistics show a
growing number of large scale economic* Branch Chief Prosecutor, Sungnam Branch Officeof Suwon District Prosecutor’s Office, Republic of
Korea

82

crimes since the 1970’s, which should not
be punished as mere personal property
crimes. Given the complexity and hugeamounts involved, such economic crimes
create various socio-economic problems,and contributed to jeopardising thedomestic financial systems, ultimately
prompting Korea to enter the IMF
retrenchment program (as the cases
illustrate in this paper). It is ironical thatlarge scale economic crimes, that were thenatural outgrowth of economic
development, in turn were partially
responsible for the current financial crisis.
II. ECONOMIC CRIMES IN KOREA
A. Definition of Economic Crime
It is not so easy to define economic crime
as generally recognized. In defining theterm, there has been discrepancy between
legal practitioners’ group and legal
theorists’ group, i.e., law professors andscholars.
In Korea, it is safe to say that theprosecution represents the legal
practitioners’ group. The prosecution took
the initiative in defining economic crime
as an act that is punished among acts
which are violative of economy-related
law’s compulsions or prohibitions. In 1962,
the Supreme Prosecutor’s Office, i.e., theOffice of the Prosecutor General, issued adirective (No. 287) categorizing economic
crime for the first time in Korean modern
history. Here, 26 items which were inviolation of criminal law or economyrelated laws were named as economic
crimes.
In 1977, the Ministry of Justice, setting
new standards of crime classification,

110TH INTERNATIONAL TRAINING COURSE
VISITING EXPERTS’ PAPERS
expanded economic crimes to 39 items. In
this directive (No. 69) the Ministry ofJustice reflected the economic changes of
Korea since the 1960’s and newly included
illegal financing and violation of
intellectual property rights as economic
crime. In 1988, the Ministry of Justice,through its directive (No. 145), again
expanded the category of economic crimeto 52 law violations. Under this directive,
violations of the Securities Exchange Act,
Unfair Competition Prevention Act,
Monopoly Regulation and Fair Trade Act
and the Act Regarding Real NameTransactions etc., were newly added toeconomic crimes. According to thisdirective, in the prosecutorial definition of
economic crime (among the 52 economic
crimes), only one crime regarding money
is in violation of the Criminal Code; the rest
are in violation of economy-related laws.
Since 1984 general property crimes suchas fraud, embezzlement and breach of trustof the Criminal Code were also added toeconomic crimes, if the damages exceededcertain amounts, i.e. W500 million($625,000). This was possible because on
December 1983, a law called “Act on the
Aggravated Punishment, etc. of Specific
Economic Crimes” was promulgated; theviolation of which was also added toeconomic crime in 1984.
However, this definition of economic
crime, from a practitioner’s viewpoint, hassome problems in establishing economic
crime theoretically. Definition is mainly
done by the names of crimes, based on theconvenience of the investigation authority.
This definition narrows the range of
economic crime too much by including
fraud, embezzlement and breach of trust
in a very restrictive way. In reality,
however, such property crimes occupy alarge portion of economic crime.

From a theoretical viewpoint, economic
crime is defined as “an act which violatesor endangers social or super-personaleconomic order or economic systems bybreaking trusts which are required ineconomic life and economic transactions.”
This definition appears to be supported bymany law professors and scholars. Of
course, there is also some criticism over thisdefinition. It is argued, for example, thatthe notion of either “breaking trusts which
are required in economic life” or “violationof social or super-personal interests” is soabstract that it is not easy to establish it
between offenders and victims. The
uncertainty or ambiguity of this definition
makes it difficult to adopt it ininvestigation practice. This ambiguity also
makes the range of economic crime too
broad.
B. Patterns of Economic Crime
Economic crimes which are committed
in Korea could be classified as below:(i) Crimes Related to Government
Finance
These crimes are with respect tocurrency, securities, postage stamps,
and include violations of the Tariff
Act, Punishment of Tax Evaders Act,Act on Government Monopoly ofTobacco Sales, Salt Control Act, Act
on Government Monopoly of Red
Ginseng Sales, etc.
(ii) Crimes Related to National Economy
These crimes include violations of the
Marine Industry Act, Decree on the
Preservation of the Marine
Resources, Foreign ExchangeManagement Act, Grain
Management Act, Act on Preventionof Draining Domestic Properties,
Petroleum Business Act, Foreign
Capital Inducement Act, Foreign
Capital Control Act, Fertilizer
Management Act, Illegal Check83

RESOURCE MATERIAL SERIES No. 55
Control Act, Act on Prevention of
Selling Specific Foreign Goods,
Interest Limitation Act, Price
Stabilization and Fair Trade Act,
Market Act, Bank Act, Special Banks
Act, Measure Act, Act on Stabilizing
Demand and Supply of Coal, Mutual
Savings Company Act, Energy Use
Rationalization Act, Act on Real
Name Financial Transactions, etc.
(iii) C r i m e s R e l a t e d t o C o r p o r a t e
Management
These crimes include violations of theForeign Trade Act, Act on the
National Association of Small andMedium Sized Enterprises,
Insurance Act, Construction Business
Act, Quality Control of Manufactured
Goods Act, Trademark Act, Design
Patent Act, Utility Model Act,
Electricity Business Act, Heavy
Vehicles Act, High Pressure Gas
Safety Control Act, Securities andExchange Act, Electric Appliances
Safety Control Act, Unfair
Competition Prevention Act, Antimonopoly and Fair Trade Act, Act onExternal Audit of Corporation, etc.
(iv) Crimes Related to Consumers andGeneral Public
These crimes are represented by
Fraud, Embezzlement, Breach of
Trust, and include violations of
National Association of Marine
Industries Act, National Associationof Agriculture Act, National
Association of Mutual Credits Act,
Live Stock Feed Control Act, Act on
Aggravated Punishment etc. ofSpecial Economic Crimes, etc.
C. Recent Trend of Economic Crime
Cases
Please refer to Appendix 1 and 2.
Appendix 1 shows the number of economic
crime cases by type and year for the period

84

from 1991 to 1996. The number of total
cases of economic crimes including fraud,embezzlement and breach of trust
increased 2.7 fold from 118,771 in 1991 to
325,416 in 1996, in line with the general
growth of the national economy. It isnoteworthy that the number of economic
crimes grew even faster than the national
economy, which increased 1.8 fold from$271 billion in 1991 to $485 billion in 1996,
in terms of Gross Domestic Products.
Appendix 1 also shows that continued
increase in the portion of major economic
crime cases among all crime cases. Fraud
represents the largest single economic
crime accounting for 62% of total economic
crime cases in 1996. Appendix 2 shows thenumber of cases of fraud, embezzlement
and breach of trust involving damages of
W1 million ($700) or more for each year
from 1991 to 1996. With respect to fraud,embezzlement and breach of trust, thenumber of cases involving damages of W1
million ($700) or more grew almost fivefold in 1996 over 1991, with continued
increase in these cases from 54% in 1991
to 74% in 1996 for fraud, and from 44% in
1991 to 65% in 1996 for embezzlement.
These trends reflect the increasingly
complicated economic activities in a rapidly
growing economic environment have led to
growing dependence on lawsuits forsettlement of conflicts.
III. MAJOR CASES OF ECONOMIC
CRIMES
A. The Case of Yoolsan Group
This is one of the early cases of economic
crime that shocked the public due to thescale of the amount involved, at a time
when such economic crimes were a rareoccurrence. The Yoolsan Group started
business as a single company by the nameof Yoolsan Corporation, with a paid-in
capital of W1 million ($1,250) in 1975.
However, in three years the Group grew

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into a conglomerate with 14 affiliatedcompanies and a combined capital of W10
billion ($12.5 million), drawing theattention and admiration of the Korean
public.

Criminal Code. He had lent W23.6 billion($29.5 million) to the Yoolsan Groupknowing that it would be impossible toretrieve the loan because of the YoolsanGroup’s aggravated financial conditions.

In March 1979, the Seoul District
Prosecutor ’s Office obtained some
information that the Yoolsan Group had
been heavily dependent on curb market
loans since October 1978 and the scale oftotal debt had reached W150 billion ($187.5
million). The prosecution also heard that
the Yoolsan Group’s extremely shaky
financial structure was the result of thegroup chairman’s illegal business activities.

In the trials that followed, defendant
Shin Sunho was sentenced to 7 years
imprisonment, and the Seoul Bank
President, Hong was sentenced to 3 years
imprisonment. This case showed how
reckless expansion of business could harm
the national economy as well as ruining theowner and the business itself.

Around the end of March 1979, twoSpecial Investigation Divisions of Seoul
District Prosecutor’s Office initiated aninvestigation into the Yoolsan Group. They
finally proved that Chairman Shin Sunhoof the Yoolsan Group owned about 89% ofGroup companies’ shares worth W8.9
billion ($11.1 million), purchasing themwith the money he had illegally taken out
from the Group’s affiliated companies.
Prosecutors also proved that he also hadbought W260 million ($325,000) worth ofreal estate under his personal title with thecompany money he embezzled.
He had also embezzled $72,000 out of
employees’ overseas travel expenses andthe W160 million ($200,000) the company
had withheld for interest payments. He
also defaulted on payment of W22.7 billion($27.4 million) worth of cheques. The
prosecution arrested Chairman Shin
Sunho and indicted him on charges ofoccupational embezzlement in the
Criminal Code and violations of the Foreign
Exchange Control Act.
At the same time, the prosecution alsoarrested and indicted the president of Seoul
Bank, Hong Yoonsup, on charges ofoccupational breach of trust in the

B. The Case of Bills Fraud by Lee
and Jang
On June 2, 1982, the Special
Investigation Division of the Supreme
Prosecutor’s Office indicted defendants Lee
Chulhee and his wife, Jang Youngja, andother 29 defendants on fraud charges.
Lee Chulhee once served as deputy
director of the Agency for National Security
Planning. Jang Youngja used to introduce
herself as a relative of the then Korean
President Chun Doowhan. This intrepid
husband and wife conspired to make afortune by defrauding owners of large
corporations. Lee and Jang approachedcorporations which were in dire need ofworking capital, offering to provide themwith funds at a very low interest rate. In
return for the loans they asked
corporations to issue, as security,
promissory notes with combined face value
twice as much as the money they would
lend, deceitfully stating that such a process
was required to hide the source of theirfunds. As soon as Lee and Jang received
the promissory notes from corporations,they discounted them in the curb market
and took the difference between the loan
they made to the companies and the funds
they obtained from notes discounting. In
this way, Lee and Jang defrauded 6
corporations and swindled W168 billion

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RESOURCE MATERIAL SERIES No. 55($210.5 million) in total.
Lee and Jang case has been the biggest
fraud case since the foundation of the
Republic of Korea. This case dealt a heavy
blow on the morality of the newly
inaugurated 5th Republic in 1981. Lee
Chulhee and Jang Youngja were sentenced
to 15 years of imprisonment respectively
by the Seoul High Court. Their appeals to
the Supreme Court were rejected.
Later Jang Youngja was later releasedon parole and in 1994, she was again
arrested and indicted on charges ofdefrauding several company owners of
W7.7 billion ($9.6 million). Jang Youngja
was sentenced to 4 years imprisonment in
February 1994. She was released again
on August 15, 1998. This time she wasreleased on suspension of execution ofpenalty.
C. The Case of Myungsung
On September 2, 1983, the Special
Investigation Division of the Supreme
Prosecutor’s Office indicted Kim Chulho,
chairman of the Myungsung Group, who
had been arrested on charges of
embezzlement and tax evasion, and 37
other defendants.
With the inauguration of the 5th
Republic in 1981, the Myunsung (meaning‘Venus’ in Korean) Group was rising highin a very short period of time. Within acouple of years, it grew into a conglomerate
specializing in the leisure industry
including construction of condominiums allover Korea. Chairman Kim Chulho
pretended to have a strong connection witha close relative of the then President Chun.
He bribed bank officials and conspired withthem to embezzle W106.6 billion ($133.3
million) that depositors had placed withbanks. He also evaded various taxes
totalling W4.7 billion ($5.9 million) andbribed high ranking government officials

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to rezone the “Green Belt” area into acommercial area for construction of
condominiums. Kim Chulho dreamed ofmaking a quick fortune, with almost no
money of his own, by selling ownership ofa condominium when the real estatebusiness was booming in the early 1980’s.
Kim Chulho was sentenced to 15 years
imprisonment by the Seoul High Court in
April 1984. After 10 years in prison, he
was released on parole in March 1993.
D. The Case of Youngdong Scandal
On October 24, 1983, the Special
Investigation Division of the Supreme
Prosecutor’s Office indicted Lee Bokrae,c h a i r w o m a n o f t h e Yo u n g d o n g
Development Promotion Corporation, andLee Hunseung, president of Cho HungBank, and 28 other defendants on charges
of forgery of negotiable instruments,
negotiation of forged negotiable
instruments, occupational breach of trust,etc.
Youngdong Development Promotion
Corporation, which was run bychairwoman Lee Bokrae, had financial
difficulties. So she decided to borrowmoney in an irregular manner, conspiringwith her son, who was the president of thesame corporation, to bribe bank officials
and employees. They bribed the presidentof the Cho Hung Bank, the branch managerof the Bank’s Central Branch and several
other bank employees. Then, they attached
Cho Hung Bank’s forged guarantee to theirblank corporate promissory notes anddiscounted them in the curb market andshort-term money market. In this way,
they financed W101.9 billion ($127.4
million).
They also settled their corporate bills
illegally when the bills were presented to
the Cho Hung Bank for payment. When
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Youngdong Corporation’s accounts, thebribed officials and employees of the Cho
Hung Bank shored up balances byfabricating their bank book, as if they had
credited managers’ cheques issued by otherbanks. In this way, the president, branchmanager and employees of the Cho HungB a n k i l l e g a l l y s e t t l e d Yo u n g d o n g
Corporation’s bill totalling W47.1 billion($58.9 million).
This was somewhat of a bank corruption
case in that among the 30 indicted, 19 werebank personnel including a bank president
and a branch manager. This case shocked
the nation particularly in that the bankofficials and employees were major
accomplices in a significant fraudulent
economic crime. Citizen’s faith in banks
in general was shaken. In the trials that
followed, chairwoman Lee Bokrae wassentenced to 15 years imprisonment, thePresident of Cho Hung Bank, Lee
Hungseung to 4 years imprisonment, andthe bank branch manager, Go Gunho, to
12 years imprisonment.
The seriousness of these three big
economic scandals of the early years of the
1980’s prompted the 5th Republic to enact
new laws that could deter and punish
economic crimes more effectively. Thus, in
December 1983, the Act on the AggravatedPunishment, etc., of Specific Economic
Crimes was promulgated.
E. The Case of Hanbo Group
Chairman Chung, Taesoo
In December 1996, Hanbo Steel Co. Ltd.,the flagship of the 14th largest businessconglomerate in Korea, defaulted on
payment while constructing steel mills at
Tangjin, with excessive borrowings frombanks and other financial institutions
totalling W5.7 trillion ($7.1 billion).
The demise of the debt-ridden Hanbo
Steel worsened the troubles of Koreanbanks and other financial institutions and,
together with the collapse of Kia Motors
with a total debt of W9.3 trillion ($11.6
billion) in July 1997, played a critical rolein triggering the country’s financial crisis,
forcing Korea to turn to the IMF for a $58
billion loan in December 1997. Given thenegative impact of the Hanbo bankruptcy
and the alleged irregularities Chairman
Chung conducted in day-to-day
management, the Central Investigation
Division of the Supreme Prosecutor’s Officecommenced an investigation into this caseand revealed the wrongdoings of Hanbo
Group Chairman Chung as summarized
below:(a) He swindled W107.7 billion ($134.6
million) by discounting W111.6 billion($139.5 million) worth ofaccommodation bills with various
creditors during the period from
December 3, 1996 to January 18,
1997.
(b) He misappropriated a total of W108.9
billion ($136.1 million) from affiliatesof Hanbo Group on 24 occasions fromJanuary 1994 to December 1996 topurchase real estates under his
name.
(c) He forced Hanbo Credit Union Co.
Ltd., one of Hanbo Group’s affiliates,
to make loans totalling W43.2 billion($54 million) to Hanbo Steel Co. Ltd..
(d) He failed to honor checks totalling
W53.9 billion ($67.4 million) from
July 1995 to January 3, 1997.
(e) He offered a total of W400 million($0.5 million) each to Shin Kwangsik,
former president of Korea First Banka n d Wo o C h a n m o o k , f o r m e rpresident of Cho Hung Bank, in July
1996 in return for a huge amount ofloans they offered to the company
during their terms.
(f) He offered a total of W700 million($0.9 million) to Lee Chulsoo, who
was serving as president of Korea
First Bank from August 1994 to April

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RESOURCE MATERIAL SERIES No. 55
1996 in return for loans provided by
the bank.
(g) He handed over a total of W450
million ($0.6 million) to twopoliticians in the ruling andopposition parties from October 1995
to October 1996 asking them not totake the Hanbo Steel issue to the
National Assembly.
(h) He offered W200 million ($0.3
million) to Kim Woosuk, who wasserving as the Minister ofConstruction asking construction ofroad connecting Hanbo’s Tangjin
mills to the highway passing the mills
nearby.
Chung Taesoo was indicted on February
19, 1997 on the above noted criminal
charges, sentenced to a 15-year
imprisonment on December 16, 1997 andis currently serving his prison term.
Hanbo Chairman Chung, a former tax
official, harbored the naive dream ofmaking the world’s fifth largest steel
company. With only W90 billion ($112.5
million) in capital, he pushed for theconstruction of the steel plant allegedly
with support from those in power andpolitics. Initially, it was projected that thesteel plant project would cost W2.7 trillion($3.375 billion). Hanbo, however, pouredin W5.7 trillion ($7.125 billion) to complete
90% of the project by early 1997 apparently
due to unrealistic projections.
Hanbo Chairman Chung’s tragic end to
the debt-financed expansion strategy
taught the lesson that overly aggressive
business expansion, beyond financial
means, would result in a bankruptcy
during a period of business recession.
Businesses also realized the need for
restructuring aimed at improving financial
structure. For this, many business groups
have implemented business strategies
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disposing of marginal or unprofitablebusiness lines and non-business purpose
real estate. Korean banks realized theimportance of credit decisions based on
assessment of the creditworthiness of aborrower or the feasibility of a project.
Several banks have already implemented
stricter credit approval procedures orintroduced new risk management
techniques to improve asset quality.
Mergers among banks were accelerated in
one financial reform effort. The scandal isalso likely to help sever corrupt andirregular links between politics andbusiness enterprises in the long run, as it
resulted in the arrest of several
congressmen, two bank presidents andeven the second son of former President
Y.S. Kim.
The government, for its part, introduced
a tighter credit control system for fear that
excessive loans to a single conglomerate
can threaten the lending bank’s survival
itself. Effective August 1, 1997, businessgroups with external debts of over W250
billion ($280 million) are prohibited fromborrowing loans in excess of 45% of a bank’s
shareholder’s equity. The scandal also
prompted the government to introduce fivecorporate reform guidelines for effective
implementation of the reform program
which include:(a) I m p r o v e m e n t o f c o r p o r a t etransparency:• Introduction of combined groupfinancial statements beginning fiscal
year 1999.
• Improvement of accounting practices
and full disclosure of financial
information.
• Appointment of outside boards of
directors by listed companies at least
one in 1998 and 25% of board
members by the end of 1999.
• Strengthening of minor shareholders’rights.
(b) Eliminate cross-payment guarantees

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with full clearance by the end of 1999.
(c) Dramatic improvement of financial
structure with lower financial leverage(debt to capital ratio) to below 2:1 by
the end of 2000.
(d) Streamline focus on core businesses
and cooperate with small/mediumsized companies.
(e) Strengthen legal liability of major
shareholders:• Major shareholders must take legal
responsibility for corporate failure.
• Major shareholders should makeevery effort to improve group company
financials even through thecontribution of personal assets.
• Remove the position of groupchairman and office of groupchairman.
• Laws have been revised to expedite
the bankruptcy proceedings and force
companies which have no possibilityof reviving to exit from the businessquickly.
F. The Case of Forgery and
Fraudulent Use of Listed
Companies’ Promissory Notes
In 1997, the second Special Investigation
Division of the Seoul District Prosecutor’s
Office conducted an investigation after
obtaining information that a substantial
amount of promissory notes, issued bycertain companies listed on the Korea Stock
Exchange, were offered to some financial
institutions and curb market dealers in
downtown Seoul for discounting in
September 1997. The prosecution foundout that six individuals forged anddiscounted seven promissory notes of six
listed companies with a combined facevalue of W3,070 million ($3.8 million), in
their attempt to forge and discountW23,380 million ($29.2 million) worth ofpromissory notes.
The investigation revealed that thesuspects swindled W326 millions ($0.4

million) by discounting only two of theseven forged promissory notes, and thenconspired to forge and sell national andpublic bonds (realizing that promissory
notes were no longer sellable sinceNovember 1997 when Korea was placed
under the IMF program). It was also
revealed that the suspects attempted toforge 17 promissory notes of nine large
companies with a combined face value of
W23,380 million ($29.2 million).
Subsequent to the findings three
individuals were indicted with physicaldetention and one was placed on thewanted list. This case also revealed that
new IMF-type economic crimes appear to
be looming near.
G. The Case of Smuggling Advanced
Technology for Semiconductor
Chips
In late January 1998, the Suwon District
Prosecutor’s Office obtained informationthat KSTC (Korea Semiconductor
Technology Company), established byformer researchers of Samsung Electronics
Co. Ltd., had been smuggling advanced
technology for semiconductor chips into aforeign country. Judging that this would
be a very critical crime which could weaken
the international competitiveness of
Korean semiconductor chips, which is oneof Korea’s strategic export items, theSuwon District Prosecution immediately
initiated an investigation into this case.
After months of full-scale investigation,
the prosecution proved that the former
researchers of Samsung Electronics Co.
Ltd. and LG Semiconductor Co. Ltd. hadestablished what they claimed to be
semiconductor venture firms, KSTC and
DESTEC (Dream of Engineer’s Technology)
for illicit purposes that they then lured
present and former researchers of
Samsung and LG to steal memory chip
manufacturing technology from theircompanies. Finally they sold the smuggled

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technology with respect to 64M DRAM and
256M DRAM to NTC (Nan Ya Technology
Company) of Taiwan, which allegedly
promised officials of the two venture firms
kickbacks and research jobs in its
laboratory at huge salaries. The
prosecution also found that the smuggled
technology included about 800 items stolen
from Samsung and about 40 items stolen
from LG which were critical to the whole
manufacturing process including design,
fabrication and inspection of 64M DRAM.
The value of stolen technologies wasestimated at W70 billion ($50 million) interms of research and development
expenses, while the two semiconductor
manufacturers claimed that the value ofthe possible loss from the illegal outflow of
the chip manufacturing technology would
amount to W1,250 billion ($900 million).
On February 28, 1998, the Suwon
District Prosecutor’s Office prosecuted 20
defendants (including Kim Hyungik, aprincipal offender and managing directorof KSTC) on charges of violating the Act
on the Aggravated Punishment of Specific
Economic Crimes with respect to breach oftrust, occupational breach of trust, theft
and for breach of the Unfair Competition
Prevention Act.
In the trial that followed, the Suwon
District Court sentenced from four to two
and a half years’ actual imprisonment thefive principal defendants including Kim
Hyungik, and from three to two years’suspensed sentence to the rest of the fifteen
defendants. This case represented thebiggest industrial espionage case attracting
the attention of the government and the
public. This case also prompted theP r o s e c u t o r ’s O f f i c e t o r e c o m m e n dlegislation of the so-called Industrial
Espionage Act in order to prevent
recurrence of similar intellectual property
theft cases in Korea.

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H. The Case of Dongsuh Securities
Co. Ltd.
In February 1998, the Special
Investigation Division of the Seoul DistrictP r o s e c u t o r ’s O f f i c e i n i t i a t e d a n
investigation into the case of Dongsuh
Securities Co. Ltd., which became insolvent
due to illegal financial support of its
affiliated construction company which was
suffering financial crisis.
Dongsuh Securities Co. Ltd., an affiliate
of Kukdong Group, provided W144.2 billion($180.2 million) worth of financial support
to Kukje Construction Co. Ltd., anotheraffiliate of Kukdong Group, during theperiod of June to December 1997. This waswithout collateral, even though they werecognizant of the fact that the financiallytroubled company would not be able tohonor its obligation to Dongsuh when they
became due. Certain officials andemployees of Kukje Construction Co. Ltd.
illegally set aside W10.5 billion ($13.1
million) in a slush fund and embezzled
W4.5 billion ($5.6 million) for personal use,which gave rise to the financial difficultiesof the construction company.
As this was the first case where a Korean
financial institution defaulted on payment,
it led to the withdrawal of more than W300
billion ($375 million) by the depositors of
the securities firm, creating a ripple effecton the national economy and society. By
providing financial support totalling
W144.2 billion ($180.1 million) to its
affiliate, Dongsuh Securities Co. Ltd.
violated the Securities Exchange Act
Article 54 and the Standing Rule on
Financial Soundness of Securities
Companies Article 25. Both prohibit
securities companies from extending loans
and credit to their affiliates and individuals
identified as having a “special relationship”
with the lender. The company also failed
in its due diligence by extending credit to
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without collateral.
The prosecution conducted aninvestigation into this case in February
1998 based on the outcome of the Securities
Supervisory Board’s special examination ofDongsuh Securities Co. Ltd.. In May 1998,
Kim Yongsan (age 76), Chairman of
Kukdong Group, and Kim Kwangjong (61),Representative Director of Dongsuh
Securities Co. Ltd., were indicted without
detention on charges of violating the Act
on the Aggravated Punishment of Specific
Economic Crimes with respect to breach oftrust and the Securities Exchange Law.
Kim Sejung (42), Representative Directorof Kukje Construction Co., and Yoo
Chongwhan (55), Managing Director of
Kukje Construction Co. Ltd., were indictedwith physical detention on charges ofviolating the Act on the AggravatedPunishment of Specific Economic Crimes
with respect to embezzlement.
I. The Case of False Financial
Statements Produced by Shinwa
Group
In Early 1998, the Seoul District
Prosecutor’s Office initiated a probe of theallegation that a couple of Shinwa Groupaffiliates produced false financial
statements to make their status appear
better than it actually was. The two corecompanies of the seven Shinwa Groupaffiliates produced false financial
statements since 1995 in an attempt to gain
easy access to bank borrowings, and toprevent a fall in share prices of the twolisted companies. The debt ratio of thegroup affiliates including the twocompanies rose considerably since 1994 due
to loose management. Taehung Leather
Co. Ltd. for example, by means of window
dressing, increased sales for the first halfof 1997 from W27.9 billion ($34.9 million)
to W30.7 billion ($38.4 million); converting
the bottomline result from the net loss ofW400 million ($0.5 million) to net profit of

W8.8 billion ($11 million) and decreased theamount of total liabilities as of 6/30/97 from
W75.7 billion ($94.6 million) to W64.2
billion ($80.3 million).
In addition, Shinwa Co. Ltd., anothercore group company, cheated stock
investors by announcing that it concluded
a big sales contract. In fact, the new hightech "car location tracking system" did notsell well and had uncertain businessprospects. Based on the credit the company
obtained as a result of false financial andbusiness information, the company
borrowed W157.2 billion ($196.5 million)
from financial institutions by discounting
fake commercial bills.
On February 15, 1998, Lee Eunjo,
Shinwa Group Chairman, was indictedwith physical detention, and Huh Pilju,
Finance Director of Shinwa Co. and Chung,Sukhun, Finance Director of Taehung
Leather Co., Ltd. were indicted without
physical detention. Charges filed on thesethree suspects included violation of the Act
on the Aggravated Punishment of Specific
Economic Crimes with respect to fraud andbreach of trust, the Commercial Code, theAct on External Audit of Limited Liabilities
Companies, and the Securities ExchangeAct.
Occurrence of similar cases would be lesslikely in the future as one of the five major
guidelines of the Corporate Reform
Program has improved managerialtransparency through disclosure of detailed
financial information based oninternational accounting standards.
J. The Case of Irregularities
Relating to Real Estate TrustBusiness (Kyungsung Scandal)
In June 1998, the Special Investment
Division of the Seoul District Prosecutor’s
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RESOURCE MATERIAL SERIES No. 55
irregular real estate trust business. Thiscase involves irregular financial support bycertain officials and employees of Korea
Real Estate Trust Co. Ltd., in collusion withlandowners, subcontractors andpoliticians. Such irregularities placed thereal estate trust company in financial
difficulties.
During the period from January 1996 to
February 1998 the Korea Real Estate Trust
Co. Ltd., in relation to the development
project of land owned by Kyungsung Co.
Ltd., committed irregularities by extending
credits to Kyungsung Co. Ltd. andKyungsung Construction Co. Ltd.. These
irregularities include issuance of payment
guarantees totalling W36.4 billion ($45.5
million), payment of W15.6 billion ($19.5
million) in advance without obtaining
collateral and extension of loans totalling
W20.4 billion ($25.5 million) based on
insufficient securities collateral worth only
W6.8 billion ($8.5 million).
Lee Jaekil (55), Kyungsung Group
Chairman, and Lee Jaekook (54), former
president of Korea Real Estate Trust Co.
Ltd., were indicated with physicaldetention on charge of violating the Act on
the Aggravated Punishment of Specific
Economic Crimes with respect to breach oftrust. With investigation still going on asof July 16, 1998, as many as 25 suspects
were indicted; 17 suspects with physicaldetention and 8 suspects without
detention. Included in the 17 arrestees was
Chung Daechul, Vice President of theruling party, National Congress for New
Politics, who was placed under arrest on
September 2, 1998 on the charge of taking
W30 million ($37,500) in bribes fromcertain officials and employees ofKyungsung Co. Ltd..

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IV. MAJOR CONTROLSTRUCTURES FOR ECONOMIC
CRIMES
A. Legislation(i) Criminal Code (Act)Traditional personal property crimes in
the Criminal Code such as fraud,embezzlement and breach of trust of morethan a certain extent, could constituteeconomic crimes. Fraud, embezzlement,
occupational embezzlement, breach oftrust, occupational breach of trust, forgery
of currency and securities are punished by
the Criminal Code promulgated on
September 18, 1953. The penalty for fraud
is imprisonment for not more than ten
years, or fine not exceeding W20 million($14,200 at current exchange rate of$1:W1,400).
The penalties forembezzlement and breach of trust are
imprisonment for not more than five years
or by fine not exceeding W15 million($10,700), respectively. The penalties ofoccupational embezzlement andoccupational breach of trust isimprisonment for not more than ten years
or by fine not exceeding W30 million($21,400).
(ii) Act on the Aggravated Punishment ofSpecific Economic Crimes
Stunned by the enormous damage to thenational economy caused by the three big
economic crimes in the early 1980’s, the 5th
Republic, in order to deter recurrence ofeconomic crimes, promulgated on
December 31, 1983, the Act on the
Aggravated Punishment of Specific Crimes(hereafter referred to as the Act). The
major provisions of this Act against
economic crimes are as follows.
First, the Act expands the range of
economic crime according to the amount of
profits which have been acquired by fraud,embezzlement and breach of trust(traditionally personal property crimes). In

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cases when the illegal profits acquired
through those crime exceed W500 million($625,000 at then prevailing exchange rateof $1:W800), offenders are not punished by
the Criminal Code but by this Act.
One of the most important means ofdeterrence of this Act is the aggravatedpunishment. In cases of fraud,embezzlement and breach of trust when theamount of profit obtained by those crime
exceeds W500 million (now $357,000) or
more, offenders shall be punished by
imprisonment for life or not less than five
years. There is no fine penalty. It is clearthat so long as a case of fraud,embezzlement and breach of trust falls
within this Act, it is an economic crime.
Second, this Act also expands theoffenders of economic crime. Traditionally,
according to the Criminal Code, the subjectof bribery used to be public officials or
mediators. However, the Act expands the
subject of bribery to officials or employees
of a financial institution. Any person who
promises or gives a bribe to them is also
punishable by this Act.
Third, any money or other benefits that
officials or employees of a financial
institution have illegally gained in violationof this Act shall be confiscated. In addition,anyone who is convicted of property crimes
under this Act, and officials or employees
of a financial institution who are convictedof bribery under this Act, may not be
employed by a related company for acertain period of time.
Since its promulgation, this Act has
played a major role in deterring, detecting
and punishing economic crimes. Together
with Real Name Financial System Orderof 1993, this Act is one of the mostimportant pieces of legislation to suppress
economic crime.

(iii) Real Name Financial Transaction
SystemIn connection with the suppression of
economic crime in Korea, another major
step was taken in 1993. On August 12,
former President, Kim Youngsam, issued
a Presidential Financial and Economic
Emergency Order on Real Name Financial
Transactions and the Protection ofConfidentiality. This Emergency Ordershocked the nation by its serious effect on
the national economy, as well as household
economies.
By this Emergency Order, a Real Name
Financial Transaction System has beeneffectuated. The causes of implementating
this Real Name System are traced back to
the case of Lee and Jang bank bills fraud
in 1982. In the wake of this case, the Chun
Doowhan administration enacted andpromulgated the Act Regarding Real Name
Financial Transactions in December 1982.
However, implementation of the core of thisAct, i.e. compulsory real name financialtransactions, had been delayed until theEmergency Order of 1993.
The essentials of effective Real Name
Financial Transactions are as follows:(a) Financial Institutions shall carry on
Financial Transactions with theircustomers under the real names ofcustomers. Here, “Real Name” shallmean names designated byPresidential Decree such as names
appearing in resident registration
books and tax registration
certificates.
(b) Regarding Financial Assets held inaccounts created before the effective
d a t e o f t h e O r d e r, F i n a n c i a l
Institutions shall, at the time of thefirst transaction after the effective
date, verify whether such Financial
Assets are held under the real namesof account holders.
(c) For Existing Financial Assets which

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RESOURCE MATERIAL SERIES No. 55
have not been verified pursuant tothe above, or which have been
identified to be under non-real names
as a result of such verification,
financial institutions shall not allow
any payment, refunding, repayment,
repurchase, etc.
(d) Obligation to convert existing nonreal name assets to real name assets
within two month from the effective
date of the Order.
(e) Penalty for breach of real nameconversion Obligation:(1) Penalty rate ranging from 10% to
60% of the asset value dependingon the period from the effective
date of the Order (e.g., 10% up to
1 year, 20% from 1 to 2 years, 40%
from 3 to 4 years, 50% from 4 to 5
years, and 60% over 5 years).
(2) 90% of income tax to be imposedon the interest income anddividend income to be earned on
non-real name assets.
(f) Default Fine: Officials or employees
of a financial institution who violate
the provisions of real name financialtransactions shall be subject to adefault fine of not more than W5
million ($3,570).
Minor revisions have been made on theReal Name Financial Transaction System
Act on several occasions since December
1997 to avoid inconveniences in the dayto-day financial transactions, to remove
public concern on possible audit by tax
authorities on their financial transactions,and to induce non-real name funds into
certain industries.
The contribution of the Real Name
Financial Transaction System Act to thedetection of economic crimes has beenenormous. If it had not been for the realname system, the prosecution of the former
Presidents Roh Taewoo, Chun Doowhan
and the likes in November 1995 would not94

have been possible.
B. Investigative Structure(i) Prosecutor
The prosecutor is the supreme
investigative authority under theConstitution and the Criminal Procedure
Act in Korea. As long as investigations ofcrimes are concerned, both judicial police
and special judicial police are under thecontrol and supervision of a prosecutor.
The prosecution of a case is the sole
responsibility of a prosecutor.
The prosecution is comprised of three
offices with different hierarchies: District
Prosecutor’s Offices, High Prosecutor’s
Offices and the Supreme Prosecutor ’s
Office. Most District Prosecutor’s Offices
which have jurisdiction over provinces or
special cities have, respectively, several
Criminal Investigation Divisions and one
Special Investigation Division.
Criminal Investigation Divisions aremainly responsible for general criminalcases. One division among them is
exclusively assigned to take charge of
economic crimes. Prosecutors belonging to
the economic division are appointed
exclusively responsible for one specific areaof economic crime under the supervisionof a division-chief prosecutor. They carryout investigations in the specific area
assigned to them.
The Special Investigation Division isdesignated to independently investigate
major crimes which are deemed
inappropriate for judicial police to control.
Generally speaking, it is difficult forjudicial police to handle some kinds of
economic crime requiring specialized
knowledge and techniques, such as
analysis of account documents and tracingof bank transactions in investigation.
Thus, economic crime is one of the items
which the prosecutors of the Special

110TH INTERNATIONAL TRAINING COURSE
VISITING EXPERTS’ PAPERS
Investigation Division willingly handle in
Korea.
National confidence in the prosecution
system is very high in Korea. Thisconfidence tends to impose a remarkableburden on the prosecution in some
important cases. Whenever large scaleeconomic crimes or scandals are brought
to public attention, the public tend to ask
the prosecution to investigate and disclosethe entire picture of the case or scandal
within a short period of time. When a caseor scandal is related to a high-ranking
official or is viewed to be extremely
important, the Central Investigation
Division of the Supreme Prosecutor’s Officetends to investigate the case or scandal
directly.
For certain economic offenses,
investigation team personnel must havespecialized knowledge in order toeffectively review and analyze relevant
evidence. Therefore, Korea’s prosecution
frequently carries out investigations into
a given case with the cooperation of therelated expert organizations. For instance,in the event of tax crimes, bank loanrelated crimes, securities-related crimes
etc., the experts of the Tax Office, the Officeof Bank Supervision, or the Securities
Supervisory Board are temporarily
assigned to the prosecution investigationteam in order to help the prosecutors’
investigation.
Occasionally, the prosecution does notinvestigate a given case until the related
authorities inspect that case in advance.
In many cases, this method has proved tobe very effective. In most economic crimes,
the decisive clue is not easily available
because the critical evidence is alreadyconcealed or destroyed. This is why suchinvestigations will fail to reveal the entire
picture unless they are conducted in a very
sophisticated manner.

(ii) Judicial Police
Among the police force, judicial police areassigned to investigation of crimes. The
judicial police that are under the control
and supervision of a prosecutor arecomprised of police administrative officials,
superintendents, captains, lieutenants,
and patrolmen.
The Korean National Police also play animportant role in enforcing the economyrelated laws. In Korea, the police initiate
the investigation of most criminal cases
including economic crimes. However, sinceprosecutors have the authority to supervise
and instruct the police investigation under
the Criminal Procedure Act, the police
should report important cases toprosecutors and conduct investigation
under instruction of the prosecutor.
(iii)Special Judicial Police
The Chief Prosecutor of the District
Prosecutor’s Office may appoint special
judicial police officials among public
officials when investigations involve sucha r e a s a s f o r e s t r y, m a r i n e a f f a i r s ,monopolies, taxes, customs, military
investigation organization and otherspecial matters. The customs office did nothave the authority to investigate economic
crimes until 1990. In August 1990, thelegislature vested that office with theauthority to investigate customs-related
crimes within the area of each customs
office.
V. PROBLEMS IN SUPRESSINGECONOMIC CRIMES
A. Difficulty in Initiating
Investigation
Unlike other criminals, offenders of
economic crimes generally have strong
influence on those in power and politics.
The influence they buy brings them moremoney and in turn, greater funds forfurther influence, which brings more

95

RESOURCE MATERIAL SERIES No. 55
money to them. This vicious circle makes
it very difficult for investigators to detectand carry out investigations into economic
crimes.
For example, in the case of the Hanbo
Group Chairman, Chung Taesoo, Chungb r i b e d t h e t h e n - r u l i n g p a r t y ’s
Congressmen, Hong Ingil (W1 billion, or$1.25 million), Hwang Byungtae (W200
million, or $250,000), Chung Jaechal(W200 million), and then- opposition party
Congressman, Kwon Rogap (W200 million),and then-Minister of Construction Kim
Woosuk (W200 million). Other cases
introduced in this paper show similar
patterns.
B. Unfair Punishment System under
Criminal Code(i) Method of Aggravating Penalties
While working as a prosecutor for morethan twenty years, I have noticed criticalproblems with the way aggravatedpenalties are imposed on concurrent
crimes, and felt the strong need to rectify
the system. Under the Criminal Code,when concurrent crimes are adjudicated at
the same time, aggravated punishment
shall be imposed as follows:(a) In the event that the punishment
specified for the most severe crime isthe death penalty or imprisonment
for life or imprisonment without
prison labor for life, the punishment
available for the most severe crime
shall be imposed.
(b) In the event that punishments
specified for each crime are the samekind, other than the death penalty or
imprisonment for life or
imprisonment with prison labor forlife, the maximum term or maximum
amount for the most severe crime
shall be increased for one half thereof, but shall not exceed the total
maximum term or maximum amount96

of punishments specified for eachcrime. Besides, the Criminal Codealso stipulates that the term of
imprisonment shall be from one
month to fifteen years: provided, thatit may be extended twenty-five years
in case of aggravation of punishment.
These legal provisions, I believe, indirectly
serve to favor violations of crimes,
including economic crimes, rather thandeterring or suppressing them.
Let me take some examples. There isno death penalty for economic crimes.
Therefore, life imprisonment is the
maximum penalty for economic crimes.
Suppose an offender committed three
independent economic crimes which call for
legal penalty of life imprisonment, themaximum penalty for the offender will bejust one, not three, life imprisonment
terms. Economic crime offenders tend tohire the best lawyers their illegally earned
money can buy. Again, suppose that a judge
in charge wants to mitigate thepunishment for some reason, using their’s
discretionary mitigation authority under
the Criminal Code, a life imprisonment
term could be mitigated to imprisonment
for not less than seven years.
Suppose again that an offendercommitted more than two independent
frauds and the maximum penalty for eachfraud is ten years imprisonment. The
aggravated maximum punishment in thiscase will be 15 years imprisonment,
whether he or she committed two
independent frauds or one hundred
independent fraud crimes. Again the
maximum limit of the penalty systemallows an offender to benefit fromcommitting more crimes if he or she isdetermined to make a fortune out of
economic crime.

110TH INTERNATIONAL TRAINING COURSE
VISITING EXPERTS’ PAPERS(ii) Problem with “Definite ImprisonmentTerm” System
Another problem related to the Criminal
Code is the unreasonableness in imposing
penalty terms under the “definite
imprisonment term” system. Allow me totake another example. W100 million($71,400 at current exchange rate of$1:W1,400) is a lot of money for mostordinary Koreans. They may have to savefor ten or twenty years to make that muchmoney. However, an offender who
defrauded W100 million ($71,400) or less,generally, is sentenced to only one year orless imprisonment with prison labor. Thislenient sentence, in many cases, motivate
average offenders to serve a one year termin prison rather than reimbursing W100
million to the victim, to be released on asuspension of execution of penalty, etc.
Based on the above “one year term per
W100 million” rule, 15 years of
imprisonment would be sentenced to those
who defrauded W1,500 million ($1.71
million).
While I believe that even one year
imprisonment is not enough for W100
million, in the Hanbo Group case Chung
Taesoo was sentenced to a 15-year
imprisonment for various charges
including fraud of W107.7 billion ($134.6
million at then prevailing exchange rateof $1:W800). If “one year term per W100
million” rule is to be applied, Chung
Taesoo’s maximum imprisonment term
should be 1,070 years. Also, the scope ofthe fraud money involved in the case was
big enough to warrant a life imprisonment
term under the Act on the AggravatedPunishment of Specific Economic Crimes.
Nevertheless, Chung Taesoo was sentenced
to only a 15 year term under the Act,
raising the value of Chung Taesoo’s one
year service in prison to as high as W7,180
million ($9.0 million). Here again, the moremoney an offender swindles, the moreadvantages, not disadvantages he or she

gets. The issue of such unfair punishment
under the Criminal Code has never beenraised in Korea before.
C. Too Generous Sentences
Keeping in mind what is presented
above, court sentences should be severe
enough to deter offenders from committing
crimes or repeating crimes. This isparticularly true for economic crimes,
considering the astronomical amount ofdamages inflicted upon individuals,
societies, and the national economy.
However, there has been a tendency in
Korea that sentences have been too
generous to deter crimes. Especially inmost economic crime cases, defendants
have the best lawyers helping them toreduce sentences. Furthermore,defendants get more and more favorable
sentences as they appeal to the High
Courts and the Supreme Court.
D. Problems with Execution of
Punishment
As I have presented, it is not easy forthe prosecution to investigate and toprosecute economic offenders, to have themsentenced to actual imprisonment. It istrue that effectiveness of criminal
punishment comes from strict execution ofpunishment as sentenced. From time totime, however, some of the convicted
offenders of economic crimes or related
crimes have been released either on paroleor suspension of execution of punishment
or amnesty.
This has been seen rather frequently incases where politicians or high ranking
government officials were involved. For
example, in the Hanbo Group case,
Congressman Chung Jaechul, who had
been sentenced to 3 years imprisonment
with 4 years suspension of execution ofsentence, was rehabilitated on August 15,
1998. Congressman Kwon Rogap, who had
been sentenced to 5 years imprisonment,

97

RESOURCE MATERIAL SERIES No. 55
was released on special amnesty on thesame day. Also Congressman Hong Ingil
was released on suspension of execution of
6 years imprisonment on January 15, 1998,
although he was arrested again on August25, 1998 on a charge of accepting bribes ofW4,500 million ($5.625 million at thenprevailing exchange rate of $1:W800) froma conglomerate called Chunggu. Frequent
use of the early release of prisoners
discourages not only the prosecution but
also most law-abiding public and weakens
enforcement of the laws.
E. Fugitive Offenders
Unlike other offenders, those of economic
crimes have tended to flee easily to foreigncountries with huge amounts of money
illegally taken. Prior to the partial revisionof the Criminal Procedure Code on
December 29, 1995, fugitive offenders could
enjoy two things. First, they were able toescape justice. Second, the limitations
period for prosecution proceeds towards
expiration during their stay in foreigncountries. However, under the amended
Criminal Procedure Code, a fugitive can nolonger enjoy the second advantage, because
the limitations period shall be suspended
during the period of his or her stay out of
the country. For Korean offenders of
economic crimes, Japan and the UnitedStates have been the most popular hiding
places.
F. Other Problems
There are some other problems that havebeen generally recognized by otherprosecutors, researchers, law professors
and scholars in Korea as obstacles toeffective suppression of economic crimes.
These problems include: lack of specialized
knowledge in economic crimes on the partof general investigators and judicial police;difficulties in collecting evidence andmaintaining prosecution in trial ; andloopholes in the local law that easily allow
offenders of economic crime to start98

business again by using somebody else’s
name.
VI. EFFECTIVE
COUNTERMEASURES AGAINSTECONOMIC CRIME
A. Continued Efforts to Remain
Independent of Political
Influences.
The foremost thing to overcome
difficulties in initiating investigation into
economic crimes is to protect theprosecutor’s office from political influence.
It is true that, notwithstanding the highcredibility of the prosecutor’s office in
Korea, the prosecution has occassionallybeen criticized for being influenced bypolitics. Ironically, these criticisms comemainly from the politicans according totheir political interests at stake.
The Korean prosecution has achieved
remarkable progress in terms of
independence. The prosecution
investigated and indicted two former
Korean Presidents with arrests in
November 1995. The prosecution alsoarrested and prosecuted then ruling
President Kim Youngsam’s son, Hyunchul,with charges of tax evasion and accepting
money in connection with a mediation in
1997.
The second most important thing is toprovide specialized training toinvestigators and to consolidate related
investigative forces. Investigators should
be given an opportunity to learn generalknowledge in accounting, economics,
foreign trade, business administration,
economic law, and so on. They must be
equipped with the ability to collect andanalyze all of the proof and informationneeded to investigate economic crimes.
Presently in Korea, the Institute of
Research and Training for Legal Affairs
under the Ministry of Justice has been

110TH INTERNATIONAL TRAINING COURSE
VISITING EXPERTS’ PAPERS
providing both prosecutors and generalinvestigators with training programs in theeconomic crime area.
To effectively suppress these economic
crimes, it is necessary to consolidate
various organizations and task forces. By
doing so, investigators are able to actively
cope with changes in criminal trends andalso build up their specialized techniquesof investigation. Principal District
Prosecutor’s Offices in Korea have special
task forces exclusively responsible for tax
crimes, tariff crimes, and infringements ofintellectual property. Those task forces arecomposed of prosecutors, judicial police,
and expert personnel of the relatedorganizations.
In addition, integration of judicial police,
apart from administrative police, with theProsecutor’s Office should be considered tomaximize the deterrence of crimes ingeneral.
B. Revision of Punishment Systemin the Criminal CodeIn order to effectively suppress and deter
criminal offenses, as well as economic
crimes, we need to revise the current
systems with regard to aggravation ofpunishment and definite term of
imprisonment. Therefore, I strongly
recommend revision of the Korean
Criminal Code as follows:(i) The aggravation of punishment on
concurrent crimes should be revisedso as to add all the penalties
a r i t h m e t i c a l l y, w h e n e v e r
independent crimes are committed.
For an example, if an offendercommitted one fraud, the maximum
penalty would be less than 10 years
imprisonment as the Criminal Codeprescribes. If an offender committed
two fraud crimes, the maximum
aggravated penalty would be 20 years

imprisonment. If ten fraud crimes
were committed, the maximum
aggravated penalty would be 100
years imprisonment, and so on.
Under the system, I believe that only
few offenders would dare to commit
as many crimes as current
opportunities allow.
(ii) In addition, the present system ofdefinite imprisonment term should be
revised for effective deterrence ofeconomic crimes of an astronomical
scale and, ultimately, for guaranteeof the people’s constitutional right ofequality before the law. Specifically,
imprisonment terms in the case of
economic crimes should increase inproportion to the amount of damages
that an offender had inflicted on a
victim. Suppose $100,000 damage isapproximate to one-year
imprisonment. If a swindler
defrauded $100,000, the maximum
term of imprisonment would be one
year. If a swindler defrauded $1
million, the maximum term of
imprisonment would be 10 years. If
any person were to swindle $134
million, like defendant Chung in the
Hanbo case, he or she would have toserve 1,340 years of imprisonment.
C. Establishing of Sentencing
Guidelines
The Constitution of Korea provides thatjudges shall rule independently according
to their conscience and in conformity with
the Constitution and Acts. However, thisprovision does not necessarily mean
approval of different sentences on similarcases by the same judge, or quite different
sentences on similar cases by different
judges. In order to avoid such unfairness
and inconsistencies, something like theU.S. Sentencing Guidelines needs to beestablished.

99

RESOURCE MATERIAL SERIES No. 55
D. Restraint on Frequent Use of
Parole, Amnesty, etc.
If execution of punishment were shaken,
it would shake the law and order which are
the foundation of a country. Therefore,
release of convicts based on parole,suspension of execution of punishment oramnesty should be exercised in a fair andimpartial manner or, if possible, should be
avoided.
E. Better International Cooperation
Regarding Extradition
I am confident that no lawyers in theworld are against extradition. All lawyers
would agree that no country should give asanctuary or safe haven to criminals. To
make a prosperous world without crime, it
is urgent for all countries in the world toshare the consensus that crimes, likepoverty and disease, are common enemiesof mankind.
In connection with extradition, one goodway is to conclude extradition treaties withas many countries as possible. Concluding
regional extradition treaties seems to be abetter solution. However, entering into
treaties is a time consuming process. Korea
has tried to conclude extradition treaties
with the United States and Japan forseveral years. Korea, was only successful
in concluding an extradition treaty with the
U n i t e d S t a t e s t h i s y e a r, w i t h i t s
enforcement is still reserved, pending
ratification of the treaty by the twocountries.
Considering the time consuming process
of extradition, not to mention urgent needfor it, it would be beneficial for every
country to incorporate the principle ofreciprocity with respect to extradition inits domestic law. This would enable better
cooperation in providing extradition
between countries that have no extradition
treaty.

100VII. CONCLUSION
I believe the proposition “where there isa society, there is law” very well symbolizes
relations between people and law. If I wereallowed, it could be paraphrased as “where
there is a society (or people), there is crime.”
There always exist law and crime in thesociety we live in.
As I have presented so far, Korea has
seen a lot of large scale economic crimes
that have not only inflicted enormous
damage on the national economy, but also
discouraged and even frustrated ordinary
citizens. However, the prosecutor’s officein Korea, with assistance from judicial
police and other economy-related special
judicial police, has been successful incoping with those economic crimes.
So long as man has a desire to make afortune daring to break laws, it will be hard
to make a prosperous society without
crime. However, if we were better preparedto suppress economic crimes, we could
deter economic crimes to a considerable
degree and make better countries to live
in. In this sense, the role of law
enforcement officers is crucial to building
such good systems. Their important role
can not be emphasized too greatly.

110TH INTERNATIONAL TRAINING COURSE
VISITING EXPERTS’ PAPERS
APPENDIX I
MAJOR ECONOMIC CRIME CASESVIOLATIONS OF MAJOR ECONOMY-RELATED LAWS
Violation of

Year

1991

1992

1993

1994

1995

1996

Construction Business Act
996
1,372
933
Measure Act
784
1,004
343
39
3
High-Pressure Gas Safety Control Act
51
58
78
170
Quality Control of Manufactured Goods
274
281
302
118
4
Act
336
243
998
374
556
439
Customs Duties Act
Enforcement Decree of the State
55
86
73
Properties Act
Act on Distribution and Price Stabilization
77
16
31
of Agricultural and Fishery Products
118
10
16
Agricultures Cooperatives Act
Act on Government Monopoly of Tobacco
190
163
216
358
882
843
Sales
Price Stabilization and Fare Trade Act
21
Unfair Competition Prevention Act
203
249
336
624
668
373
36,328 48,760 55,834 85,957 104,940 84,166
Illegal Cheque Control Act
472
1,023
Trademark Act
33
28
29
Mutual Savings Company Act
Petroleum Business Act
75
71
102
Fisheries Act
1,910
1,802
2,191
2,667
2,708
2,203
Decree on the Preservation of Marine
1,158
1,577
1,499
Resources
144
157
148
Utility Model Act
Grain Management Act
63
Energy Use Rationalization Act
166
133
291
220
130
208
Foreign Exchange Control Act
606
935
682
1,547
664
421
Crimes with regard to Securities, Posts,
576
905
1,168
1,634
1,817
1,841
Stamps
222
233
204
Design Act
Electric Appliances Safety Control Act
171
460
379
358
284
153
Punishment of Tax Evaders Act
9
71
292
961
380
603
Heavy Vehicles Act
4,891
6,908
935
15
8
Securities and Exchange Act
31
45
41
56
82
114
37
10
18
Crimes with regard to Currency
Act on Aggravated Punishment, etc. of
9,849 11,272 15,852
653
697
725
Specific Economic Crimes
Patent Act
50
41
60
Fraud
51,100 72,640 97,854 132,537 170,613 200,879
Embezzlement
13,346 16,789 19,120 21,976 23,836 24,194
2,732
3,200
4,009
4,829
4,693
5,036
Breach of Trust
118,771 164,352 207,912 258,841 316,614 325,416
Total% of Total Crime Cases
9.6
13.2
15.3
18.8
22.6
21.8
* Source: “Analysis of Crimes” published by Korea’s Supreme Prosecutor’s Office101

RESOURCE MATERIAL SERIES No. 55
APPENDIX IINUMBER OF CASES OF FRAUD, EMBEZZLEMENT, BREACH OF TRUSTINVOLVING DAMAGES OF W1 MILLION ($700) OR MORE
Name

Year

Fraud
Embezzlement
Breach of Trust
Total% of Total Crimes

1991

1992

1993

1994

1995

1996

27,517(53.8)
5,844(43.8)
1,277(46.7)
34,6382.840,369(55.6)
7,860(46.8)
1,519(47.5)
49,748
4.0

57,566(58.8)
9,454(49.4)
2,024(50.5)
69,044
5.

96,792(72.8)
13,759(62.3)
3,158(64.4)
113,7098.3

130,023(76.3)
15,496(65.0)
3,268(67.4)
148,698
10.6

149,741(74.4)
15,755(64.8)
3,179(63,7)
168,764
11.3* Numbers in parentheses represent the percentage of cases involving damages of W1 million ($700) or
more, to total cases for each type.
**Source: “White Paper on Crime” published by the Institute of Research and Training for Legal Affairs,
Ministry of Justice.

102

110TH INTERNATIONAL TRAINING COURSE
VISITING EXPERTS’ PAPERSEFFECTIVE COUNTERMEASURES AGAINSTECONOMIC CRIME AND COMPUTER CRIME
Soh Thiam Sim*I. INTRODUCTION
In the last two decades, the Asia-Pacificregion has made significant economic
progress. Economic growth has led to anincrease in the region’s wealth andpurchasing power. Money, people andgoods can move with greater ease from one
s t a t e t o a n o t h e r. H o w e v e r, s u c hdevelopments have opened up
opportunities for cross-border economic
criminals to thrive. Due to its increased
wealth, the Asia Pacific region has
inevitably become a target of economic
crime. Singapore is also not spared andcommercial crime has resulted in a total
loss of about S$78 million in 1997.
Apart from increased wealth, the adventof information technology in the Asia
Pacific has made communications andbusiness transactions more sophisticated.
As the region enters the information age,
the use of computers in both commercial
and non-commercial environment has
increased significantly. While information
technology enables business enterprises tocompete globally and provides for a higher
quality of life, it also enables criminals tocommit a whole range of computer andcomputer-related crime. Indeed, the FBI
predicted that in the near future almost
every major crime would involve the use ofsome form of information technology. The
emergence of new and complex technocrime and the cross-border nature ofsyndicated economic crime have posed
problems to the law enforcement agencies.
* Head, Computer Crime Branch, Commercial Crime
Division, Criminal Investigation Department,
Singapore Police Force, Singapore

The challenge to the law enforcement
agencies lies in devising effective measures
to counter such crime.
Economic crime can range from fraud,embezzlement, forgery, insurance fraud,and computer-related offences to insider
trading, and organised crime schemes
involving money laundering. In Singapore,
the agencies investigating economic crime
are the police and the Commercial Affairs
Department (CAD) which comes under the
Ministry of Finance. Most of thecommercial crime cases are investigated by
the police in the Police Land Divisions
while the complex cases are investigatedby the Commercial Crime Division (CCD)of the Criminal Investigation Department.
The cases handled by the CAD are more
specialised, eg offences under theCompanies Act, the Banking Act, theSecurities Industry Act and fraud andembezzlement involving company officials
who abuse their position of trust. On theother hand, computer crime cases areinvestigated by the Computer Crime
Branch which is one of the four branches
under the CCD.
The following four specific types ofcommercial crime and computer crime
continue to be areas of concern as
Singapore strives to be a financial/transport center and IT hub in the region:(i) counterfeit credit card fraud;(ii) maritime fraud;(iii) documents of identity fraud; and(iv)advance fee and telegraphic transfer
fraud.
This paper was prepared to share with103

RESOURCE MATERIAL SERIES No. 55
you some of our experience in handlingthese types of crime and thecountermeasures adopted. The material
for this paper is based largely on theexperience of CCD.

shortest possible time, before thecardholder is alerted. The only
hurdle for the culprits is imitating
the cardholder’s signature and they
are able to overcome it by producing
a signature close to the
cardholder’s;

II. CREDIT CARD FRAUD
A. Background
Unlike cash, credit cards operate in aninternational payment system, crossing
jurisdictional confines. A credit cardtransaction can be made anywhere in theworld. Currently, there are more than 700
million credit cards in circulation globally.
Nearly 22,000 financial institutions areissuers of credit cards. About 13 million
merchants world-wide accept cards as
payment. The total annual cardholders’spending exceed US$1 Trillion. Credit
cards have thus become a lucrative
business and an integral part of thebanking world. Its use has gained
overwhelming popularity in the Asia
Pacific region in recent years, including in
Singapore.

(ii)(iii) Fraudulent Applications: The
culprits would apply for cards using
a fictitious identity or the identityof another person. Upon receipt of
the card, they would go on a
shopping spree with no intention of
making payment;(iv)

Colluded Merchant Fraud:
Merchant fraud is multi-faceted. It
can involve a dishonest merchantmaking multiple charges on anunsuspecting customer’s card andsubmitting the fraudulent charge
slips to the bank for payment. The
merchant may also collude withother perpetrators to accept
counterfeit cards for payment. A
merchant may also steal a
cardholder’s card information andsell it to syndicates to makecounterfeit cards;(v)

Mail Order/Telephone Order(MOTO): Dishonest cashiers or
counter staff at shops may
compromise a cardholder’s account.
Using computer software such as‘CreditMaster’, valid card accountnumbers are generated from the
shoppers’ data. The culprits thenorder goods and services via

The increase in card usage has led to arise in card fraud. In 1996, the industry
lost US$2.1 billion globally to card fraud,
double that of 1995. Credit card fraud iscommitted by both petty offenders
operating on their own and by wellorganised syndicates. From arrests
handled by the Singapore Police, it appears
that syndicates have built themselves a
network between Malaysia, Thailand,
Singapore, Indonesia, Hong Kong, Japan,
Europe, South Africa and the U.K.
B. Types of Credit Card Fraud
Credit card fraud is perpetrated in thefollowing ways:
(i)

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Lost & Stolen Cards: When a cardis misplaced, lost or stolen from the
cardholder, the culprits use thesecards to make purchases in theIntercepted Cards: Cards may beintercepted through the mail or by
the internal staff before thecardholder receives it. As the newly
issued card is unsigned, the culprit
would append a signature before
using it;

110TH INTERNATIONAL TRAINING COURSE
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telephone or mail, quoting the card
account numbers and expiry dates.
In such cases, the delivery
addresses given by the culprits areusually vacant premises, orpremises rented for the specificpurpose of collecting the delivered
goods;(vi)

Altered Cards: The culprits would
alter the details on a genuine card
which was stolen, lost or expired.
Alteration is done through a ‘heatprocess’ whereby the accountdetails on the face of the card areflattened and new account details
are re-embossed and re-encoded.
The genuine account holder would
be unaware of this until theyreceive the statement of accounts
showing the unauthorised
transactions;(vii) White Plastic: White Plastic is ablank plastic card, with an
integrated magnetic stripe, that isused to imitate the functions of acredit card. It is not necessarily
white in colour and does not bear
any resemblance to a normal credit
card. The culprits would emboss
details of legitimate accounts on theplastic, or encode account details
onto the magnetic strip, or both. As
white plastic does not have thephysical appearance of credit cards,
they are often used with theconnivance of dishonest merchants;
and(viii) Counterfeit Cards: Statistics showthat organised syndicates using
counterfeit cards perpetrate mostcredit card fraud. Advanced
technology enables syndicates to
produce counterfeit cards of closeto-genuine quality. The final stageof counterfeit card production is theencoding of genuine account details
onto the cards. Such details areusually supplied by dishonest
merchants who steal theinformation from cardholders.
C. Skimming Fraud- Latest Modus
Operandi in Counterfeit Cards
By 1995, credit card fraud syndicateswere able to penetrate the security systemsof credit card companies and produce
counterfeit cards complete withinformation and security codes using a“Skimmer Machine”. In January 1995,
credit card issuing banks in Singapore
received complaints that their customers’
cards had been used extensively in Europe.
None of the cardholders, however, had losttheir cards. Investigations conducted by
CCD revealed that all the cards had beenused at a local Karaoke lounge between
May and October 1994. The informationon the cards was stolen at the lounge andsupplied to the syndicate to produce
counterfeit cards. About 500 fraudulent
transactions were made in Europe on thesecounterfeit cards, amounting to S$160,000.
The counterfeit cards were believed tohave been produced with genuine cards’
information which was captured by aportable card reader called a “skimmer”.
The skimmer can electronically record
access codes encoded in the magnetic stripof the cards. Skimming fraud has hit thecard industry world-wide, causing millionsof dollars in losses. In recent years, theAsia Pacific region alone suffered losses
from skimming exceeding US$10 million.
More than 40 % of these losses wereincurred in Japan. The detection ofskimming activities is difficult as the Pointof Compromise (POC) is very mobile.
In March 1998, CCD arrested a
Malaysian for skimming fraud. The
culprit, a waiter in a KTV lounge, had used
the KTV lounge as a point of compromise

105

RESOURCE MATERIAL SERIES No. 55(POC) for skimming. He had obtained askimming machine from another
Malaysian and was promised M$50 for thedetails of each gold credit card he swiped.
The culprit stole customers’ card data byswiping the cards through his skimmer andfurnished the information to the accomplicein Malaysia. Subsequently, counterfeit
cards were made from the data captured
in the skimmer and fraudulent charges
amounting to S$16,260 incurred in
Malaysia. The culprit was charged in
Singapore in July 1998 for fraud offences.
The Prosecution pressed for a deterrent
sentence and he was sentenced to 5 years
imprisonment.
D. Countermeasures
Given the nature of the crime,
countermeasures against credit card fraudshould be organised on a regional orinternational basis. The Singapore Police
Force has thus undertaken the following:(a) Intensify the sharing of information
through regular meetings andexchanges with the card industry andinternational law enforcement
agencies to cripple cross-border
syndicates;(b) Increase regional co-operation in
ASEAN through:(i) Intelligence sharing. By setting
up a database on such fraud
reported in the ASEAN region,
early detection and apprehensionof criminals can be facilitated; and(ii) Appointing a liaison officer in eachmember country. This would help
co-ordinate cross-borderenquiries, investigations andexchange of information.
International co-operation should leadto development of effective strategies
aimed at breaking up and defeating the
spread of criminal organisations, including
dismantling their alliances and support

106

networks. To this end, legislative
mechanisms could further international cooperation; legislation on asset seizure is
one such means.
In the area of prevention, the card
industry and law enforcement agencies
feel that both merchants and cardholders
play important roles in curtailing such
fraud. Merchants must be accountable forthe fraud that takes place at their outlets
and cardholders should assist by providing
information on suspicious transactions.
However, these are short and medium termsolutions. A long term solution would be
to make cards more difficult to be
duplicated.
In particular, for skimming fraud, there
is presently no one standard preventive
solution. Various Task Forces have been
set up to devise strategies to combat
skimming fraud. The card industry andlaw enforcement agencies agree that timely
identification at the point of compromise(POC) sites and sharing of suchinformation can contribute to thesuccessful crackdown on such syndicates
and thus a reduction of fraud losses. The
Singapore Police also believes in training
to strengthen officers’ capabilities andupgrade their investigative skills throughtraining on handling transnational
economic crime. We would also press fordeterrent sentences against criminals so as
to prevent like-minded persons fromcommitting crimes of a similar nature.
III. MARITIME FRAUD
A. Types of Maritime Fraud
Maritime fraud can range from the crude
to the very sophisticated, from ship
scuttling to stealing cargoes using‘phantom ships’. In most cases, it involves
the issue of false or altered documents
which misrepresent the existence of certain
goods, their quality, value, ownership or

110TH INTERNATIONAL TRAINING COURSE
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location. The extent and complexity of suchcrimes may be beyond the capacity andjurisdiction of any single law enforcement
agency to deal with. A law enforcement
agency investigating such activities within
its own country may not detect any
particular criminal offence. However, when
examined in totality, such activities may
constitute a criminal conspiracy to commit
fraud. However, the complications ofjurisdictional boundaries make it difficult
to apprehend and prosecute the offenders
with success. Three common types ofmaritime fraud are:Having done this, the perpetrator
would claim insurance not only forthe lost vessel, but also for the fullvalue of its cargo, purportedly lost
together with the vessel; and(i) Charter Party Fraud: In charterparty fraud, the perpetrator would
first charter a vessel from anunsuspecting ship owner. Afterpaying the ship owner the initialinstalment of the freight, the culprit
would offer all the available cargospace to unwary shippers. When thesecond or subsequent payment is dueto the ship owner, the culprit would
abscond with all the freight charges
that he has collected, rendering theship owner incapable of delivering thecargo to its final destination. If theshippers or consignees refuse to pay
any freight surcharge to complete theshipment, the ship owner is left withno alternative but to discharge thecargo at any port and sell it so as torecover the freight charges due;(iii)Phantom Ships: In recent years,
phantom ship fraud has seen asignificant increase in number. It isa developing phenomenon that
requires close scrutiny. A ‘phantom
ship’ is a vessel with a phantom
identity. The registration of such a
vessel is based on false informationand documents provided by theperpetrators to the registering
authority, and may include thevessel’s name, owner’s particulars
and technical specifications. Suchfraud is facilitated by ship registry
officials who are not stringent and areprepared to grant provisional
registration based on the unverified
information and documents provided.
Owners of phantom ships are usuallyshell companies using the premisesof secretarial service providers,sometimes set up a few days prior to
the illegal operation. The crew hired
for the job are often of mixed
nationalities and sometimes given
false identities, thus making it
extremely difficult to trace themwhen the phantom ship and its cargo‘disappear’ in the high seas.

(ii) Ship Scuttling: In ship scuttling, theperpetrator would charter or own an
old vessel, and offer cargo space tounwary shippers at extremely low
freight rates. Once the vessel isloaded with cargo, worth much morethan the value of the vessel, it would
set sail for an unscheduled port where
the cargo is discharged and sold forthe highest proceeds. The vessel
would thereafter leave port for thehigh seas and be deliberately sunk.

Between April 1997 and March 1998,
CCD investigated three cases involving
phantom ships. In two of the cases,
Singapore companies had chartered thevessels for the carriage of cargo which
subsequently disappeared en-route to theport of discharge. In the third case, theprovisional voyage documents had beencollected in Singapore. However, theMaritime and Port Authority records
showed that none of the vessels had calledat Singapore. Investigation conducted by

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RESOURCE MATERIAL SERIES No. 55
CCD however does not reveal any evidence
to substantiate a criminal charge against
any of the parties.
B. Countermeasures
As the investigation and prosecution ofmaritime fraud is fraught with problemsof jurisdiction, the best approach is to work
towards preventing it. Based on CCD’s
experience, some possible preventive
measures include:(i) Tightening procedures for theregistration of marine vessels toprevent registration through the useof false or forged documents;(ii) Installation of technologicallyadvanced gadgets on board marine
vessels, such as black boxes, toenhance the identifying and tracingof movements of vessels; and(iii)Working in partnership with theshipping, freight and insurance
industries, as well as with other law
enforcement agencies.
IV. DOCUMENTS OF IDENTITY
FRAUD
A. BackgroundThe enhanced movement of people
across borders has given rise to the use off r a u d u l e n t d o c u m e n t s o f i d e n t i t y.
Fraudulent identification documents areused by illegal aliens to enter a country.
Criminals also use fraudulent
identification documents to prevent
detection from law enforcement
authorities. The use of fraudulent
documents would make it laborious for law
enforcers to establish a criminal’s identity.
Whilst advanced technology has
facilitated the production of high-quality
identification documents, with improved
anti-counterfeiting features, fraudsters

108

have been able to match this by producing
convincing fakes. Indeed, technology willcontinue to facilitate such fraud and posechallenges to law enforcement.
B. Types of Fraudulent Documentsof Identity
In Singapore, four main types offraudulent documents of identity havesurfaced in recent years. They are:(i) Photo Substituted Passports: where
the genuine passport is eitherpurchased or stolen from the owner.
The syndicates would tamper withthe passport’s laminate and security
features to change the photograph on
it. Biological data may also be alteredin the photo-substituted passport;(ii) Altered Passports: which are often
used by syndicate runners to smuggle
children. A common ploy is to imprinta child’s photograph with forgedimmigration endorsement onto arunner ’s passport. Fictitious
biographical data may also be
imprinted on the passport. An
altered passport enables the runnerto pass off as a guardian or parent of
the smuggled child. Syndicates haveattempted to smuggle Sri Lankanchildren using altered passports;(iii) Counterfeit Passports: which are theleast common of fraudulent
passports. The distinguishingfeatures in a counterfeit passport are
the inferior quality and lack of
security features. Counterfeit
Singapore international passports
were detected in the mid 1990s.
However, this is a dwindling trend
due to improved anti-counterfeiting
security features in genuine
passports; and110TH INTERNATIONAL TRAINING COURSE
VISITING EXPERTS’ PAPERS(iv) C o u n t e r f e i t I d e n t i t y C a r d s :Counterfeit Singapore identity cards
were recently detected. The
distinguishing features in acounterfeit identity card are the lackof security features and inferior
quality. Most of the counterfeit
identity cards had been used byillegal immigrants and illegal
overstayers who tried to make theirstay in Singapore appear legal.
C. Proliferation of Syndicates
Syndicates have grown significantly inrecent years because of two main reasons.
The first is the constant demand for such
fraudulent documents. Fraudulent
passports are in high demand as they areneeded for illegal migration purposes. This
demand is created when people want tomigrate and look for jobs in other countries,
but could not meet immigration
requirements. The Singapore passport,
particularly, is highly sought after for
illegal entry purposes. The Singapore
passport is popular because Singapore’s
multi-racial community enables illegals
from various nationalities to pass off as
Singaporeans in other countries. Its highdemand has resulted in the emergence offraudulent passport cross-border
syndicates made up of Singaporeans,
Chinese or Indians.
The second reason for the proliferationof such syndicates is profitability.
Trafficking in fraudulent documents ofidentity has become a profitable venture.
Alien smuggling rackets, for instance, may
charge between S$6,000 and S$12,000 fora ‘package’ which could include afraudulent passport, accommodation and
air ticket. During an operation in June
1996, police arrested 20 Chinese nationals
who attempted to leave Singapore withfraudulent Singapore international
passports. If we assume the subjects werecharged S$6,000 each, this particular

venture would have generated S$120,000
for the syndicate.
D. Countermeasures
Document fraud, in particular involving
criminal syndicates, may be tackled from
4 broad angles:(i) Prevention: A preventive strategy
may be adopted to counter such
fraud. For instance, the document ofidentity may be made tamper-proof
and forgery-proof. In the case of
Singapore passports, much of theabuse occurs in other countries.
P r e s e n t l y, t h e S i n g a p o r einternational passport is being redesigned. Features deterring photosubstitution, counterfeit and forgery
have been factored into the passport’s
new design and make. The re-design
process is still in progress. Other
countries could similarly review their
passport design to prevent document
fraud.
(ii) Detection: Another vital strategy isdetection. This may be facilitated bya good intelligence network which
can ferret out the criminals.
Currently, information on criminals
involved in such activities is scarce.
End-users of these fraudulent
documents are often reluctant tocooperate with law enforcers.
Intelligence is often the key todetection. For instance, theintelligence and investigation
initiatives of the Singapore Police
have resulted in the prosecution ofseveral alien smuggling syndicates.
Between 1995 and 1997, 465 personsof various nationalities wereidentified and prosecuted in
Singapore for passport-related
offences. These persons included
both syndicate leaders and runners,
as well as users of the fraudulent

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RESOURCE MATERIAL SERIES No. 55
passports;(iii) Deterrence: In Singapore, theauthorities take a stern view offraudulent passport offences. Courts
are urged to impose deterrent
sentences on those convicted of suchactivities. Those convicted of selling
their passports are also denied future
passport facilities. These measures
help deter fraudulent passport
syndicates and quell the supply of
Singapore passports to illegal aliens;
and(iv) International Co-operation: Close
cooperation on a regional andinternational basis, is another key
strategy which could be adopted.
Law enforcement agencies could
work closely and pinpoint transit
points and sources of illegal aliens.
Singapore participates in ASEANorganised discussions on trends inalien smuggling and coordinatedefforts in combating the problem.
Regional states could also work
closely through existing Interpol
channels to combat these problems.
Accelerated enforcement pressure willcause criminals to change tactics. Also,with access to the latest technology, it isunlikely that fraudulent identity document
syndicates can be easily eradicated. In fact,
documents of identity fraud will become
more sophisticated. Law enforcement
agencies may also have to employ new
measures and seek new alliances, eg
working closely with the airline industry,in order to identify emerging trends andnip these developments in the bud.

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V. ADVANCED FEE &TELEGRAPHIC TRANSFER FRAUD
A. Advanced Fee Fraud - Nigerian
Scams
In recent years, African nationals,
operating alone or as part of larger
syndicates, have employed several methods
to perpetrate large scale and elaborate
scams in this region. One such target isSingapore, perhaps because of its
reputation as a business and financial
centre. Such scams often involve
extracting an advance fee from victims totransfer non-existent overseas funds.
In the early 1990s, such fraud wasperpetrated largely by syndicates in
Nigeria. There are several variations in
the modus operandi of Nigerian scams.
The following are the two more common
scams:(i) Bank Deposit Scams: A syndicate
member claiming to be a highranking government official, would
send letters to various recipients,
mostly businessmen. The victims areinvited to receive transfers of large
sums of money into their bankaccounts in return for a commission.
The syndicate would claim that themoney is excess government funds
left from over-invoiced government
projects. The victims are advised tosend them their bank accountparticulars, company letterheads andpre-signed company invoices, andalso lured to Africa to purportedly
arrange for the funds. Once the offer
is accepted, the syndicates make therecipients pay various forms ofadvance fees, ostensibly foradministrative purposes such as local
taxes, legal fees, money-transfer feesand bribery. In Singapore, local
companies and individuals in
Singapore have been forwarding

110TH INTERNATIONAL TRAINING COURSE
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Nigerian letters to CCD. In 1995, a
total of 551 letters was received but
this decreased to 414 in 1996 and 187
in 1997; and(ii) Money Duplicating Scams: Anothermodus operandi commonly applied isthe ‘money duplicating scams’.
Syndicates lure victims into believingthat US dollar notes may be
duplicated after treatment by ‘special
chemicals’. Victims are shown
demonstrations during whichcurrency notes are duplicated. The
culprits then cheat their victims into
making advance payments ostensibly
to purchase the ‘special chemicals’.
The increasing number of such scams
has prompted Interpol’s Secretary General
to label them as “advance-fee frauds”. He
has also issued a general alert to allmember countries. African advance fee
fraud, like other economic crime, is subject
to changes in technology. With hi-techchannels replacing conventional modes ofcommercial transactions, criminals now
have a wider, global reach. The Internet
for example is increasingly being used as acommunication means. Its relative low costhas facilitated the entry of new players andproviders. Its usefulness, however, isfrequently abused by criminal enterprises.
It is therefore not surprising that African
advance fee fraud is increasingly
perpetuated via the Internet. Again, law
enforcement agencies would have to find
updated means to combat these newproblems.
B. Telegraphic Transfer Fraud
Recent cases investigated by Singapore’s
CCD indicate that syndicates emanatingfrom Africa were engaged in telegraphictransfer fraud. In these cases, banks in
Britain and the USA received letters
purportedly from their account holders,authorising the wire transfer of money tothe culprits at Singapore banks. Between
March and April 1998, CCD handled 3 suchcases. The sums involved ranged from
US$10,000 to US$40,000. However, theAfrican culprits were not able to withdraw
the money successfully when they calledat the Singapore banks. This was because
the local authorities were alerted in timeby the UK and US enforcement agencies.
The close working relationship between thebanks and CCD resulted in the arrest of
the African culprits. They were charged
in court for offences of attempted cheating
and possession of forged documents andsentenced to imprisonment terms ranging
from 12 to 24 months.
Like many types of cross-border crime,
telegraphic transfer fraud confronts the
problem of comprehensive solvability. In
telegraphic transfer fraud, a fraudulent
release of money in one country would
result in the illegal receipt of money inanother country. Even though the offenderis successfully prosecuted in one country,
the law enforcement agency would have
solved only a part of the crime.
Jurisdictional limits often hamper suchcrime from being solved as a whole.
C. Countermeasures
Advance fee fraud and telegraphictransfer fraud may be tackled using thefollowing broad strategies:(i) Prevention: Public awareness of such
scams is a key preventive strategy.
The Singapore Police works with thelocal media to increase Singaporeans’awareness of such scams. As such
scams may come on and off, the publicshould be alerted on a periodic basis.
This has proven to be a successful
strategy as the number of victims
cheated have declined over the years;(ii) Detection: As with most cross-bordercrime, detection through a good111

RESOURCE MATERIAL SERIES No. 55
intelligence network is another usefulstrategy. Currently, victims often
hesitate to report the crimes for fearof embarrassment. There is thus
little information for law enforcers towork on. In Singapore, Policeinitiated intelligence efforts haveresulted in the detection of several
African nationals involved inadvanced fee fraud. Between 1995
and 1998, 7 different syndicates were
uncovered and prosecuted for
criminal offences;(iii) Deterrence: In Singapore, courts areoften urged to impose deterrent
sentences on those convicted offraudulent advance fee activities.
The tough penalties could serve todeter such fraudsters from making
Singapore a target of such scams; and(iv) Enforcement: In view of the crossborder nature of advance fee andtelegraphic transfer fraud, law
enforcement agencies should work
closely with one another to fight suchcrime. This would facilitate
detection, investigation andsuccessful prosecution of criminals
involved in these transnational
illegal activities. Close cooperation
between the local law enforcement
agencies and the private sector, suchas banks, could also lead to early
detection and apprehension of theculprits. In the 3 cases of telegraphictransfer fraud mentioned earlier, theclose coordination between the UK,
US law enforcement agencies, thelocal banks and the Singapore Police
resulted in the arrest of the culprits.
VI. COMPUTER CRIME
A. Introduction
Commercial and non-commercialorganisations increasingly realize the112

strategic potential of Information
Technology (IT) and they use IT to gain
competitive advantage in the rapidchanging global environment. IT enables
business enterprises to compete globallyand ensures that we will enjoy a higher
quality of life. Unfortunately, the progressof IT also enables criminals to commit awhole new range of high-technology crimes
eg computer hacking, unauthorized access,and sabotage of computer materials.
Organized crime syndicates also employed
IT to facilitate commission of traditional
offences such as forgery, cyber gaming andprostitution.
B. Computer Crime in Singapore
A global definition of computer crime has
not been achieved. In Singapore, what
constitutes computer crime is defined
under the Computer Misuse Act, enacted
in August 1993. There are four maino f f e n c e s u n d e r t h i s A c t , n a m e l y,
unauthorised access to computer material(eg. hacking), unauthorised access tocommit further offences involving property
or fraud, unauthorised modification ofcomputer material (eg. introduction ofviruses) and unauthorised use/interceptionof computer service (eg. unauthorised useof other’s Internet account). The Act wasamended in middle of 1998 to include
another two offences, namely, unauthorised
obstruction of use of computer andunauthorised disclosure of access code forany wrongful gain or for unlawful purposes.
There are other computer-related crimes
where a computer is used as an instrument
in committing crimes. These cases aredealt with under other existing legislation,for example, the Penal Code. The numberof computer crime cases in Singapore isrelatively low compared to other crimes.
However, the numbers are increasing over
the years. In 1993 and 1994, only 1 casewas reported. In 1995, only 3 cases werereported. The number of cases reported

110TH INTERNATIONAL TRAINING COURSE
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more than doubled in 1996 to 7 and theincrease was more than 5 times in 1997 to
38 cases. Until the middle of 1998, 39 cases
have been reported and the figures are still
increasing (table 1). Although the majorityof these cases are unauthorised access to
obtain computer service, committed byteenagers, there are a few cases of economic
computer crime which resulted insignificant losses.
Most of the economic computer crimewere perpetrated by employees of thevictimised companies. Some examples
include a case where an ex-employee of abank siphoned away S$1.2 million from thebank. In this case, the ex-employee wasallowed entry into the working area of thebank manager and left alone to move freely.
He managed to find an unattended
terminal, keyed in his account number andbank over-riding codes, and credited a sumof S$1.2 million into his account. He knew
the bank’s over-riding code through‘shoulder surfing’. (i.e. peeping over theofficer’s shoulder to observe the keying inof the over-riding code). Later in the sameday, he withdrew the entire sum of S$1.2
million and fled from Singapore. He was
eventually arrested in Malaysia andextradited. He was charged in court andsentenced to five years’ imprisonment. In
another case, an employee gained accessto the payroll system and credited morethan S$30,000 to his own salary. This was
not detected until three years later.
In another case involving smart card
technology reported in early 1997, twomanagers of a major cinema chain modified
the cinema’s ticketing system to siphon off
cash amounting to about S$500,000. The
managers were convicted and sentenced to
36 months and 24 months’ imprisonment.
A Computer Service Engineer who assisted
the manager to illegally modify thecomputer system, was also convicted andsentenced to one month’s imprisonment.
Sabotage of companies’ computer
systems usually occurs when the offenderis unhappy with the company
management. In one such case, adisgruntled System Administrator inserted
a Trojan horse program that replaced theoriginal system files with damaged files
while the back up of the system was done.
He also used a logic bomb program to time
the back up process so that he would not
be in the country at that point of time. As
a result, the company’s system crashed andthe entire manufacturing process came to

TABLE I40

COMPUTER CRIME TRENDS

35
30
25
20
15
10
5
0

1993/
1994

1995

1996

1997

1st halfof 1998

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RESOURCE MATERIAL SERIES No. 55
a stand still. The offender was convictedunder the Computer Misuse Act and fined
S$20,000.
The profile of criminals committing casesof unauthorised access commonly known
as ‘hacking’ is quite different from
criminals who commit economic computer
crime. Generally, hackers are teenage
students. They usually commit
unauthorised access to a computer systemfor kicks, without further criminal intent.
Our Computer Crime Branch has solved
cases where students ‘hacked’ into local andoverseas servers for free access to theInternet. They obtained the knowledge of‘hacking’ through the Internet or fromfriends. The technical knowledge of acomputer criminal varies from novice toprofessionals (e.g. with tertiary educationin computer related subjects). In our
experience, computer criminals are often
bright, serious and relish a technicalchallenge, but they are not geniuses.
C. Countermeasures
Cyberspace will present newopportunities for criminals and change themodus operandi of crime. This has
implications on the strategies andcapabilities required for detecting,enforcing and preventing of crime. The
integrity of the social and economic
environment in which law enforcement
agencies operate is therefore likely to beaffected by these characteristics in the newmillennium.
Countermeasures
implemented to fight computer crime
include the following:(i) Expertise in criminal investigation;(ii) Preventive measures;(iii)Detection measures;(iv)Legislation; and(v) Partnerships and International cooperation.

114

1. Expertise in Criminal Investigation
The Singapore Police Force has
responded to this challenge as early as 1981
when an officer was sent to the FBI
Academy, USA, for training in computer
crime investigation. Since then, officers
have been sent to the USA, UK, Canadaand Hong Kong for training andattachment. To further enhance ourcapabilities, the Computer Crime Branchof CID was set up in January 1997 tohandle the investigations of computer
crimes and to conduct computer forensic
examination. Most of the officers of theComputer Crime Branch have received
formal education in computer studies.
They were also trained locally byprofessional trainers from the USA and UK
to handle computer forensic examination.
Criminals who commit high-technology
crime usually leave behind electronic
fingerprints. We start by asking, “Whatneeds to be done?” in order to leverage on
the opportunities provided by IT. Our
experience shows that electronic
fingerprints has helped the investigation
agency to solve crimes. We must take on
the challenge of technology and develop
capabilities to retrieve and examine theseelectronic fingerprints.
2. Preventive Measures
The importance of IT security is always
neglected by the users. Generally, there isa lack of security standards for thosesystems operating in cyberspace. A soundsecurity system will deter, if not reduce,
the incidence of computer crime. Public
education is a means to bring security
awareness to the community. Towards thisend, our National Computer Board and theComputer Crime Branch have held regularseminars and talks to highlight theimportance of computer security to theindustry.

110TH INTERNATIONAL TRAINING COURSE
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3. Detection
Most of the computer crime cases areeither not detected or are discovered
sometime later. In one of the cases
highlighted earlier, the offence was only
discovered three years later. In our public
education seminars/talks, we constantly
remind the business community to adopt
security practices to detect the occurrenceof crimes. Such measures include physicalsecurity, proper procedures and audit
capabilities. Early detection of a crime will
prevent the victim from suffering drastic
losses.

5. Partnerships and International
Co-operation
Law enforcement agencies needs to tap
industry and academic expertise in thefield of forensic computing. Information
technology is wide ranging and no one
person can profess to know everything
about information technology. Partneringwith various organisations having
expertise in the related fields willcomplement our capabilities. We will needto liaise and employ the services of industry
experts to retrieve and analyse evidence on
proprietary devices or software.

4. Legislation
Legislation has to be constantly
reviewed to ensure that it can keep up withtechnological progress and adequately deal
with computer crime. The Computer
Misuse Act was enacted in August 1993 tomake provision for securing computermaterial against unauthorised access or
modification. With the increasing use ofcomputers, not only has the number ofcomputer crimes increased, but new crimes
have also come about. The Act was thus
amended in July 1998 to enhance thepenalties against computer criminals andprovide stiffer penalties for repeat
offenders. It also introduces new offencesof unauthorised obstruction of use of acomputer and unauthorised disclosure ofaccess code for any wrongful gain or for any
unlawful purpose. The concept of‘protected computers’, which are systems
used in connection with national security,banking and finance, emergency services
and essential public services, was also
introduced and offences committed against
these systems would attract enhanced
penalties. The tough laws will serve as adeterrent to potential computer criminals.
In addition, the amended Act also provides
additional police powers for investigation
into computer crime.

There is also increasing need forcountries to cooperate in the fight against
computer and computer-related crimes.
With the rapid expansion of large-scaletransnational computer networks and theeasy accessibility of many systems throughcommunication lines, such crimes areeasily committed on an international scale.
A criminal can physically operate in one
country, access systems in another country,
and cause the consequences to be felt in athird country. Committed and concerted
mutual co-operation and assistance canassist to combat transnational computer
crimes more effectively. The commitment
among nations to assist each other ininvestigation and prosecution can also
resolve potentially complex issues ofterritorial jurisdiction, extradition andtrans-border searches and seizures ofelectronic evidence.
VII. CONCLUSION
Organised economic crime andtransnational computer crime can result insignificant losses of revenue and resources.
It could render the financial and legal
systems vulnerable and diminish the Asia
Pacific region’s credibility as an investment
and business hub. This would in turnadversely affect the region’s economic
wealth.

115

RESOURCE MATERIAL SERIES No. 55
Effective responses are needed tocounter organised economic crime andcomputer crime, both at the national andinternational levels. At the national level,a review of existing legislation may benecessary to address the difficulties inprosecuting cross-border criminals. Close
cooperation between the police and private
sector (e.g. banks, credit card service
providers, IT service providers) would
facilitate better exchange of information.
This could lead to the early detection andapprehension of culprits.
On an international level, regional
States should work closely with one
another to fight economic and computer
crime. This would facilitate investigationand prosecution of cross-border criminals.
States would eventually recognise thatpolicing is now carried out over a global
community. In the region, there are
currently conferences organised by regionalgroupings such as ASEANAPOL on crossbroder crime and enforcement concerns.
Such regular meetings are helpful infostering mutual understanding andcooperation. They may also enable regional
States to map out long-term working
relationships with one another.
In the next millennium, policing will be
carried out over a borderless community,
rather than within the confines of nationalboundaries. Therefore, Asia Pacific Statesshould aim towards cultivating strong links
in the areas of intelligence and operations.
In this way, we can overcome the limits
posed by such crimes’ cross-border natureand speed at which the criminals work. We
could then look forward to solving suchcrimes in a more effective andcomprehensive manner.

116110TH INTERNATIONAL TRAINING COURSE
VISITING EXPERTS’ PAPERSCRIME AS THE GROWING INTERNATIONAL SECURITY
THREAT: THE UNITED NATIONS AND EFFECTIVE
COUNTERMEASURES AGAINST TRANSNATIONALECONOMIC AND COMPUTER CRIME
Slawomir Redo*
I. INTRODUCTION
This paper, which seeks to integratecriminological, legal and public policy
perspectives on transnational crime,emphasizes that crime has markedly
extended its reach beyond any borders. It
also has an exemplary negative influenceon the official domestic economies. With
the rapid advance of the Internet,
perpetrating transnational economic andcomputer crimes became easier. This paper
reviews various forms of transnational
illicit trafficking, including illicit profits
derived from it, and addresses the problemsof search, seizure and confiscation of those.
If emphasizes that transnational crime
poses an increasing threat to the economies
and security of States, as seen from theUnited Nations standpoint. In conclusion,
this paper calls for further strengthening
and consolidating of criminal policy andlegal action. This would enhance theeffectiveness of global countermeasuresagainst transnational crime.
II. DIMENSIONS OF
TRANSNATIONAL CRIME
Tr a n s n a t i o n a l c r i m e , w h i c h i sincreasingly becoming organized, assumes
many dimensions. From the public policy(governance) perspective it is seen as an* Criminal Justice and Legal Affairs Officer, Centre
for International Crime Prevention, Office for Drug
Control and Crime Prevention, United Nations
Office at Vienna, Vienna International Centre,
United Nations

expression of “uncivil society”1. From thecriminological (crime prevention andcriminal justice) perspective, it is a threat
to the security and well being of peoples2.
In practical terms, one may note that mostrepresentative dimension of transnational
crime includes at least two Statejurisdictions, not necessarily adjacent to
one another3. This will be demonstrated
by the first of the three cases below.
1

Kofi Annan, Secretary-General of the United
Nations. In November 1997, the CICP/ODCCP/UNOV was designated to deal with criminal
manifestations of “uncivil society” (see: doc. A/51/
950, Renewing the United Nations: a programme
for reform. Report of the Secretary-General, para.
209). United Nations resolutions and otherdocuments may be obtained electronically throughthe Internet at <http://www.un.org>.
2 United Nations Declaration on Crime and Public
Security, General Assembly resolution 51/60 of 12
December 1996 (art.1).
3 Criminological definition suggested by G.O.W.
Mueller, speaks of “criminal activities extending
into, and violating the laws of several countries”(Global Report on Crime and Justice, (chapter 9),
O x f o r d U n i v e r s i t y P r e s s , N e w Yo r k
1 9 9 9 ( f o r t h c o m i n g ) ) . Tr e a t y d e f i n t i o n o ftransnational organized crime has been a subjectof discussions in the process of elaboration of a draft
United Nations convention against transnatinalorganized crime, due to be finalized by the end of
the year 2000. Ongoing drafting work is officiallyreported to the General Assembly through the
Economic and Social Council, in the form of reportson the sessions (sixth-eighth) of the Commission
on Crime Prevention and Criminal Justice (docs E/
1997/30-E/1999/30).

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RESOURCE MATERIAL SERIES No. 55
On 17 December 1995, huge quantities
of firearms and ammunition were airdropped by parachute into Purulia (WestBengal, India) from an AN-26 Russianmade aircraft. An estimated two to threehundred AK-47 assault rifles, 17 000
rounds of ammunition, 8 rocket launchers,
80 anti-tank grenades, seven 9 mm pistols
and various combat accessories wereamong the dropped weapons. Reportedly,in addition to this cargo, two otherconsignments were dropped in Pakistan,
and another in the sea of Thailand. The
plane, purchased in Latvia, carried arms
loaded in Bulgaria. It was manned by a 4
person crew of Latvian, Dutch, Danish andBritish. Before it was stopped by the
Indian authorities in Bombay, the planetransited Pakistan, Thailand, andattempted to land in Bangladesh. The
shipment it carried was financed by a
Hong-Kong based Chinese withconnections to a Romanian arms trafficker,
as well as British, Chinese and Indian
shipping companies. The plane was
impounded, and the crew of the aircraft
have been arrested and detained by the
Indian authorities. However, the two main
operatives in the scheme remain at large.
One of them is also wanted for gold anddrug smuggling, and for counterfeiting US$100 bills. On behalf of the Indian police,
INTERPOL issued its pre-arrest “rednotices”4.
The following example of a “local”
transnational crime shows how it may be
4

Donald Manross, Developing new links andinternational policing (in:) Pericles Gasparini Alves,
Daiana Belinda Cipollone (eds), Curbing Illicit
Trafficking in Small Arms and Sensitive
Technologies. An Action-Oriented Agenda, United
Nations Publication, Sales No. GV.E.98.0.8, NewYork and Geneva 1998, p. 105; Raymond Bonner, A
world of arms: weapons in the sky. The murky lifeof an international gun dealer, New York Times, 14
July 1998.

118“grounded” in one particular area. In 1996,
in a border triangle between Argentina,
Brazil and Paraguay, in a Paraguayan city
Ciudad del Este, the law enforcement
agencies of the Paraguayan and Brazilian
Governments jointly carried out an
investigation with a view to eliminating across-border firearms trafficking between
those two countries. The scheme involveda legal purchase (with an export license)of such weapons in the U.S., and their legal
import (no import license was necessary)
to Paraguay. Shipments arriving to Ciudaddel Este were sold to Brazilian customers,
and illegally brought (import license isrequired) into one of the Brazilian
bordering cities. There they fell into thehands of organized crime traffickers.
Alternatively, shipments ordered in Ciudaddel Este ended up directly from the U.S.
in Sao Paulo (Brazil), where they were sent
to the “favelas” (slums). There, again, theyfell into the hands of organized criminals5.
Reportedly, in the same Paraguayan city,
organized crime groups were involved incross-border trafficking to Argentina andBrazil of various other contraband (e.g.,
drugs, alcohol, cigarettes, pirated compact
disks, software). The city’s trade industry
were, partly, involved in the illicit
manufacturing of such commodities, and,plainly, in their massive sale. It wasestimated that the official gross national
product of Paraguay (US $ 10 billion)
matched the profits from provision of suchcontraband, that ends up in Argentina andBrazil and undermines their official
economies. To visualize the amount ofillicit trafficking originating in Ciudad delEste, in 1997, according to an Argentine
intelligence report, more than 1500 freightcontainers passed through the borders
5

Silvia Cucovaz, Interrelationship between illicit
trafficking in small arms, drug trafficking andterrorist groups in South America (in:) Pericles
Gasparini Alves, Daiana Belinda Cipollone (eds),
Ibid. p. 38.

110TH INTERNATIONAL TRAINING COURSE
VISITING EXPERTS’ PAPERS
without scrutiny. According to otherestimates, most of the 40 000 people
crossing each day the bridge between
Paraguay and Brazil were not controlled.
In a spot check by the Brazilian police,
within two hours, they arrested 200 illegal
immigrants.
Finally, a Taiwanese bussinesman,taking advantage of good investment
opportunities, who built up his toy factoryin Ciudad del Este, reportedly became avictim of extortion demands. These werecarried out by two Chinese gangsters, and
one Paraguayan women (such groups arealso composed of Arabic nationalities). In
sum, the amount of criminal violence (e.g.,
extortions and gang wars), vice (gambling),
perpetrated by various foreign andParaguayan nationals in the city, andtransnational smuggling originating fromit, is so great, that one of its residents
sarcastically and with resignation
concluded to a visitor: This is the United
Nations of crime”6.
The Transnational nature of crime isbrought home to almost any visitor of theInternet. One may imagine a group ofcomputer users involved in penetrating, forfinancial gain, a computer system of a tradecompany. The penetration takes placeindirectly through computer networks inother jurisdictions, in the same State or
abroad. Investigating law enforcement
agencies, tracing the origin, finds out thatits last stage was carried out by a computer
in country B. The law enforcement
authority turns to that country forassistance under an existing mutual legal
assistance treaty. Country B offers suchassistance, but informs that it was only a6

Sebastian Rotella, Jungle hub for gangsters,
terrorists, The Yomiuri Shimbun (Tokyo, Japan),in the article of 7 September 1998 jointly publishedwith The Los Angeles Times, p. 12. Other alleged
facts and estimates are also drawn from that article.

transit country through the computer
network of which the penetrators send
their communications to the victimized
trade company. That communication
arrived earlier from country C with whichcountry B has neither a mutual legal
assistance treaty nor friendly relations.
Ultimately, after further such tracing, itturns out that both the penetrators and thevictim reside in the same jurisdiction incountry A.
Obviously, purpetrators want to conceal
their identity by routing their actions
through countries from which it would be
difficult, if not impossible, to detect their
original location 7 . In fact, similar
penetration has already taken place in the
United States, as reported by the press8.
What appeared to be a transnational crime
planned abroad, turned out to be local, inthe sense that both offenders and victim
were of the same country and place ofresidence. In the virtual world nowadays,
the “United Nations of crime” has arrived
at the doorsteps of Internet users under theguise of foreign involvement.
III. DIMENSIONS OF THE
INTERNETOne hundred and ninety four countries
with about 70 000 networks are now
connected by one Internet meta-protocol.
In January 1997 there were 16.1 million
computer hosts worldwide serving 57
million users, not including 14 million who
have access only to electronic mail. All
those included governments, transnationaland domestic financial and commercial
institutions, millions of private individuals
and, last but not least, academics, withwhom the dynamic growth of the Internet
7

This example was drawn by Mr. Gregory P. Shaffer,
Computer Crime Unit, U.S. Department of Justice(private conversation, 6 October 1998).
8 Ibid.

119

RESOURCE MATERIAL SERIES No. 55
started 9 . Although the majority ofcomputer servers are located in thedeveloped world, this proportion becomes
more favourable to developing countries,
where the growth of the Internet isparticularly strong10. Needless to say, thisdynamic growth, currently estimated at a
rate of 20 % a month, basically takes placein the developed world (North America andWestern Europe) 11. However, the U.S.
holds 80 % of all global computing power.
As of this writing, there existed about 320
million world wide web sites, mostly in thedeveloped world12.
Estimates suggest that by the year 2001
there may be 1 billion personal computer
users, with one third connected to theInternet (that is about ten fold more thanin 1996). This about 175 million of themwill have an access to, and the possibility
to enter into, various financial transactions
facilitated by this medium13. By the year
2001 the value of financial operations
carried out through the Internet may
exceed US $ 210 billion.
This may be very little in comparison
with the total volume of economictransactions carried out in the world now,by means other than the Internet. But one
would need to put such estimate into
perspective to realize, for instance, thatwhat is now 100 % of all available data andinformation in the world, will represent
only 5 % of that available in 50 years14.
Consequently, the growth of electroniccommerce on the Internet will alter the
proportions between the Internet and nonInternet-based commerce steadily andmore dramatically, as the time goes by.

9

In 1969 Internet begun its origins as a very smallinternal network connecting about 100 computersof scientists and engineers forming a team of theAdvanced Research Projects Agency (ARPANET) of
the U.S. Department of Defense (DOD). Itsinternational outreach started in 1971.
“Cyberspace”, as a term, was first used in a sciencefiction novel “Neuromancer” by William Gibson(1964). Currently, “cyberspace” tends to be equatedwith “the Internet,” though cyberspace isgenerically broader than the Internet, and better
communicates a meaning of this new
multidimensional, non-physical global community.
10 Matrix Information Directory Services, Inc. (MIDS),
Austin, Texas, USA <http://www.mids.org/>.
11 Neil Chambliss, Lee W. McKnight, and Richard J.
Solomon, Re-Engineering the Elephant:
Organizational Alternatives for Accelerating
Internet Access in Africa (in:) White Paper for
United Nations Development Programme in
Cooperation with the World Bank, US National
Aeronautics and Space Administration, US Agency
for International Development, US Department ofState, 16 May 1995, <http://www.undp.org/sdnp/aif/
mitrep.html>.
12 <http://www.neci.nj.nec.com/homepages/lawrence/websize.html>

120

Last, but not least, in sharp contrast
with the facts, figures and estimatessuggesting expanding dimensions of theInternet, one must note that in the world
population of about 6 billion people, morethan 60% of the world’s population havenever made a phone call15. The great divide
between developed and developing
countries may be even greater in the years
to come.

13

Estimates published by a private transnational
company, International Data Corporation <http://
www.idcresearch.com/HNR/ii7sf.htm>.
14 S.L. Amranathan, Crimes related to the Computer
Network. From New Economic Order to New
Information Order, position paper submitted for the
Experts Meeting on “Crimes related to theComputer Network,” UNAFEI, 5-9 October 1998,
para. 3 (available from UNAFEI).
15 Pekka Tarjanne, Secretary-General of theInternational Telecommunication Union,
TeleEuropa’s Communications Newsletter, 30
October 1995.

110TH INTERNATIONAL TRAINING COURSE
VISITING EXPERTS’ PAPERS
IV. TRANSNATIONAL ECONOMIC
AND COMPUTER CRIME
Abuse of the Internet for illicit or
criminal purposes makes economic andcomputer crime more intermingled than
before. Before the computer era, illicit
profits derived from various forms of
economic crime could be concealed byfraudulent (paper) book-keeping. With theoutset of computer (“paperless”) bookkeeping records held on stand alone
machines could be more readily
manipulated. However, the outcome ofsuch manipulation could be exclusively
identified and pursued within a local
parameter. Local computer networking
and global computer networking throughthe Internet overwhelmed such limits. It
enabled honest and dishonest users tocarry out paperless financial transactions
anyplace in the world. For the latter ones,
it also allowed them to hide and legalize
illicitly earned profits any place where
domestic legislation and regulatory
schemes were more favorable (“taxhavens”). The burden, anxiety or fear ofcarrying through State checkpoints cash of,e.g., US $ 1 million, in false-bottomed
suitcases or smugglers’ vests is no longer
felt. By one computer key stroke, the sameamount of cybercash within a moment ends
up in a bank account in one of the manytax havens in the world. There is no
physical trespass of a border, only virtual16.

16

Obviously, crimes related to the computer network
go beyond money laundering, and involve violations
the essential motive of which is not economic. For
instance, stealing passwords (hacking), sending
harrasing e-mail or intrusion to destroy computer
records, including “cyberterrorism”, have othermotives. This article focuses mainly on economic
computer crimes.
17 E.g., Trafficking in children for medical exploitation<http://www.uia.org/uiademo/pro/d4271.htm>.

A. Illicit Trafficking: Facts, Figuresand Estimates
Facts and figures about various formsof transnational trafficking, even if
occasionally questionable, are plentiful17.
Every day, on a case-by-case basis, theinternational press reports on spectacular
seizures, arrests and convictions. Policeand other criminal records which evidence
how the criminal justice apparatus handle
those cases hardly confirm the composite
picture of developments in illicit
trafficking, especially if it transcends
national boundries. However, there are notransnational crime statistics on these
phenomena; there is hardly any country in
the world whose statistics would accountfor them, and there is no treaty definitionof transnational crime or transnationalorganized crime. Moreover, amongst geopolitical, legal and economic factors, thevolume of illicit traffic in certain
commodities would also be influenced byblack market relations between the
demand for and supply of that commodity,
and the more active or passive activities oflaw enforcement apparatus involved inseizing it.
Depending upon the assumptions andmethodologies of experts, governmental
authorities, international and nongovernmental organizations, informed
estimates on the full scope of the traffic in
the commodities in question, and resulting
illicit profits, will vary18. To these many
limitations is added still another: none ofthose estimates consider what proportionof illicit profits remains within thejurisdiction of the country of origin of theassessed activities, and what is abroad,thus making them really transnational.
Questionable as the estimates may be,
the most overarching estimate, supposedly
covering all forms of illicit trafficking, washazarded by a group of economists in 1997,
and reported by the Financial Times 19.

121

RESOURCE MATERIAL SERIES No. 55
According to that source, the total annual
amount of laundered money would be about
US $ 1000 billion, resulting from illicit
traffic in various commodities. In the mostfrequently repeated, but also speculative
estimate, the first part of this sum (US $300-500 billion) involves annual sales ofdrugs; out of which there are enormous,
unnaccounted for and, of course, untaxed
profits.20 The lowest estimate of US $ 85
billion acquired in the late 1980s from illicit
sales of cocaine, heroin and cannabis in the18“Police seize at most 40 percent of the drugs coming
into the U.S. and probably a smaller percentageof those entering western Europe. The supply of
nuclear materials is obviously much smaller, but
law-enforcement agents are also less experienced
at stopping shipments of uranium than they are
in seizing marijuana or hashish. To believe that
authorities are stopping more than 80 percent of
the trade would be foolish’’ (Phil Williams and PaulN. Woessner, The Real Threat of Nuclear
Smuggling, <http://www.sciam.com/0196issue/
0196williams.html>. Nevertheless, all appear toagree that the number of incidents is growing andrepresents a disturbing trend, especially inqualitative terms. For example, the New YorkTimes in February 1995 cited a “Western European
intelligence report” to the effect that the numberof cases of actual or attempted nuclear smugglingfrom former communist countries reported toWestern governments had more than doubled in
1994, to 124 from 56 the previous year and 53 in
1992. Furthermore, of the 1994 cases, a total of 77
had involved uranium or plutonium rather than“more harmless materials”. For its part, theGerman federal criminal police (the BKA) recently
reported that it had investigated no fewer than
267 cases of “illicit traffic in nuclear or radioactive
materials” during 1994, compared to 241 in 1993,
158 in 1992, and just 41 in 1991. See A. Robitaille;
R. Purver, Commentary No. 57, Canadian Security
Intelligence Service Publication, Smuggling
Special Nuclear Materials, <http://www.csisscrs.gc.ca/eng/comment/com57e.html>.
19 Vincent Boland, Earnings from Organised Crime
Reach 1000, Financial Times, 14 February 1997.

122

US and Europe equalled the individual
Gross Domestic Products (GDP) of 150 of
the 207 economies of the world. The
highest estimate of USD $500 billion would
approach 13 % of the combined GDP of theEuropean Union (EU) countries, 8 % of the
GDP of the U.S., or about 4 % of countriesof the Organization for Economic
Cooperation and Development (OECD)21.
Apparantely, the turnover in and illicit
profits obtained from selling othercommodities follow suit. Stolen art is said
to be second to drug trafficking, in turnoverand in laundering the profits 22 . Not
corraborated by any evidence, this isundermined by an equally unsubstantiatedand competing claim that it is the illicit
traffic of flora and fauna which occupies
second place23.

20

Freda Adler, G.O.W. Mueller, William S. Laufer,
Criminology, (sec. ed.) Mc-Graw Hill, Inc. 1994, p.
327. This estimate was originally calculated by the
Financial Action Task Force working withinOECD. United Nations estimates, based on cash
flows from international banking and capital
account statistics, suggested that up to US $ 300
billion globally turned over annually may havebeen available globally for lundering in the 198Os,
amounting now to US $ 500 billion in the 1990s.
This is to represent 8 - 10 times of the originalvalue of drugs before their entering the US market,
i.e., $ 50 billion. See further: United Nations Drug
Control Programme, Economic and Social
Consequences of Drug Abuse and Illicit Trafficking,
UNDCP Technical Series Number 6, Vienna 1997,
p. 27.
21 Human Decelopment Report 1997, Oxford
University Press, New York 1997, pp. 222-223.
22 Norman Palmer, Statutory, forensic and ethicalinitiatives in the recovery of stolen art andantiques (in:) Norman Palmer (ed.) The Recovery
of Stolen Art. A Collection of Essays, Kluwer Law
International, London 1998, p. 4.
23 Deutsche Presse Agentur, 17 November 1994
(Global, op.cit note 3., (chapter 9)).

110TH INTERNATIONAL TRAINING COURSE
VISITING EXPERTS’ PAPERS
Available estimates show the possible
financial scale of illicit traffic.
International traffic in human beings,
which is claimed to involve millions ofpeople, reportedly produced about US $ 9.5
billion in illicit profits in 1994,24 stolen,
smuggled and looted art between US $ 4.5
to 6 billion a year25, and in trafficked floraand fauna, between US $ 2-3 billion ayear26. Quite notable are believed to be theillicit profits caused by maritime fraud,illicit trafficking in human organs, and inmotor vehicles27. Last but not least, in
1997, while illicit traffic in computer
software reportedly caused losses of US $11.4 billion in roughly half of the world (80surveyed countries) against US $ 17.2
billion in revenues, there were also
unaccountable illicit profits untaxed by
States28. The heaviest losses in taxes, andthe highest profits for illegal traders, wereabsorbed because of developing countries
which seemed to be a scene of,comparatively, more cases of software
pirated from the originals manufactured indeveloped countries, than within developed
countries themselves29.

24

D. Torres, Esclaves: 200 Milliond’ Esclaves
Aujourd’hui, Phebus, Paris 1996; Financial
estimate of the International Center for Migration
Policy and Development (Global, op. Cit note 4(chapter 9)). In comparison with that suggested in
the above book, the United Nations estimate is of
4 million people trafficked worldwide annually.
Also “[t]here is an estimated seven billion dollars
annual profit in this market” (Gillian Caldwell, CoDirector of the Global Survival Network,
interviewed by Associated Press, 22 June 1998).
25 Global, op. cit note 3 (chapter 9).
26 Estimate of the World Wildlife Found (Global, op.
Cit note 3 (chapter 9)).
27 See further, Global, op. Cit note 3. (chapter 9).
28 Software Publishers Association, Software piracy
and global competitiveness. Report on global
software piracy, 1998 <http://www.spa.org>.
29 Global, op. cit note 3 (chapter 9).

Separately, one should mention a very
sizeable traffic in small arms and light
weapons, but the proportion between traffic
driven by political and economic motives
cannot be ascertained. While aggregate
estimates are extremely tenuous, 30
information on black market prices ofsingle items shows a great disparity inprices, hence illicit profits31. Profits fromthat traffic are additionally increased frombarter transactions involving illicit selling
30

The legal turnover of the armaments industry “hasbeen estimated at around $ 5 billion a year-plus
at least as much again on the black market” (The
Economist, Hey, anybody want a gun ?, 16 May
1998, p. 47).
31 An AK-47 automatic machine gun in Albania canbe bought for a few U.S. dollars. In Uganda, an
AK-47 can be purchased for the cost of a chicken
and, in northern Kenya, it can be bought for the
price of a goat (Note by the Secretary-General,
Impact of armed conflict on children, UN doc. A/
51/306 of 26 August 1996, para. 27). Research inSouth Asia reveals that locally produced AK-47s
are everywhere, but those manufactured innational arsenals still fetch a higher price (TheNew Field of Micro-disarmament: Addressing theProliferation and Buildup of Small Arms and Light
Weapons, Brief 7, based on a study prepared for
the German Foreign Office by Edward J. Laurence,
assisted by Sarah Meek, Bonn International
Centre for Conversion (BICC), September 1996,
p. 13). In Japan, a handgun is as expensive as acompact car (Statement in : Firearms Enforcement
Strategy of Japanese Police, Firearms Control
Division National Police Agency, Japan). The profit
margins for retail shipments of firearms are high.
For example, and reportedly, in the Purulia dropcase, the contracting company operated at a 65 %profit margin (Bonner, op.cit. note 4.).
32 R.T. Naylor, The structure and operation of themodern arms black market (in:) Jefferey Boutwell,
Michael T. Klare and Laura W. Reed (eds), Lethal
Commerce: The Global Trade in Small Arms andLight Weapons, Committee on International
Security Studies, American Academy of Arts andSciences, Cambridge, MA 1995.

123

RESOURCE MATERIAL SERIES No. 55
of arms for diamonds, precious gems, jade,ivory, teakwood, recreational drugs, andalso looted antiques32.
In other forms of illicit trafficking,financial profits may still be very
considerable, e.g. in the case of traffic innuclear material33. However, experts, even
if they emphasize the seriousness of
nuclear smuggling, add also that suchtraffic “has been overblown by the media
because it was a good scare”34. Secondly,
they are not sure whether the motive of
smuggling (political or criminal) has been
identified clearly enough. Only acccording
to some is it now, with the onset of Mafiatype organizations, becoming increasingly
criminal, whereas earlier it had mainly
been political35. Nontheless, transactions
in all the above mentioned commodities
would contribute to part of a total of an
estimated US $ 1000 billion in money to
be laundered. In what percentage, it is
impossiblle to say.
B. Illicit Trafficking: Search,
Seizure and Confiscation of Illicit
Profits
Traffic in most of the above involves
receiving countries but also countries
where obtained illicit profits may be finally
returned as laundered, through the
network of others and legislation
vulnerable to such processes. In 1998, theUnited Nations listed 48 countries andterritories with such legislation attractive
33

In an unsuccessful police entrapment attempt, US$ 250 million had been offered for four and a half
kilograms of plutonium (Barry Kellman, David S.
Gaultieri, Barricading the nuclear window - a legal
regime to curtail nuclear smuggling, University
of Illinois Law Review, Vol. 1996, Number 3, p.
672). See also: P ricles Gasparini Alves, Daiana
Belinda Cipollone (eds), op.cit. note 6, pp. 125-152.
34 Statement ascribed to the IAEA official, as quoted
in: Barry Kellman, David S. Gaultieri, Ibid, p. 676.
35 Ibid, p. 673.

124

to stock fraudsters, drug traffickers,
corporate embezzlers and commodity
smugglers. The problem seems to be not
only identified with a particular location,
but also with evolving comparativeadvantages that any banking system in theworld may offer their clients36.
Technically, identifying possible money
laundering schemes is a tedious task. In
the U.S. the volume of annual money wiretransfers reaches approximately $500
trillion per year. Assuming that alllaundered funds pass through the UnitedStates, sent by wire transfers (either single
or several), a median of 0.05 percent wassuggested to represent the portion of moneyw h i c h i s l a u n d e r e d 37. E s t i m a t e s
concerning other countries in the world are,generally, not available (except forAustralia)38. For the time being, findingout the global extent of money laundering
is impossible.
The legal and technical context enablingsearch, seizure and confiscation of
incriminated funds gets even more
complicated in cases of identyfying
computer records of operations supporting
illicit traffic. As official traders rely moreon computer networks, so do the criminals,
organized or not, who carry out theiroperations39. Commission of crime by using
36

Financial Havens, Banking Secrecy and Money
Laundering, United Nations Office for Drug
Control and Crime Prevention, Global Programme
Against Money Laundering, Preliminary Report,
20 May 1998, p. 51.
37 For further details see: OTA, Information
Technologies for the Control of Money Laundering,
September 1995 (OTA-ITC-630).
38 John Walker, Estimates of the Extent of Money
Laundering in and through Australia, AUSTRAC,
Sydney 1995.
39 Raphael Winnick, Searches and seizures ofcomputers and computer data, Harvard Journalof Law & Technology, Vol. 8, No. 1 (1998), p. 76.

110TH INTERNATIONAL TRAINING COURSE
VISITING EXPERTS’ PAPERS
traditional techniques only (e.g., making
the paper based operation of money
laundering as seemingly legal as possible)
is already a very difficult investigative andjudicial task. But with the increasing useof computer networks for criminal purpose,the difference in the methods of operation(paper based or paperless) makes atremendous impact on the way in whicht w o s u s p e c t s , u s i n g , r e s p e c t i v e l y,
traditional or modern techniques, will behandeled by the criminal justice system.
This will be illustrated by the example
below.

vehicle. Since, at the time of the police
action, Mr. J. D. was visiting a neighbour
in the vicinity of his house, and noticed an
imminent danger of being arrested, hemanaged to elude police and flee to country
A. An extradition request prepared bycountry D, was not granted by country A
because that country’s constitution
prohibits extradition of its own nationals
abroad. Instead, country A initiatedpreparatory proceedings with a view todetermining if Mr. J. D. may be charged
with a serious criminal offence in country
A.

Mr. J. D., who is a citizen of country A,
had been suspected of illicit drugtrafficking to country D, through country
B and C. While he was staying there, policeof country D surveilled his activities. Police
surveilled visits made to Mr. J.D’s house,and controlled incoming letters. Afterobtaining a search and arrest warrant,
provided in two days at the request of thepolice by a judge, and delivery of last mailof which police knew contained
incriminating material, they decided tostart with the search. Police simultanously
searched the premises rented by Mr. J. D.,
and where he lived. They entered therented premise by force, and found large
quantities of drugs hidden in a cargo with
officially imported coffee. In Mr. J. D.’shouse, which stood open, police foundpapers documenting his illegaltransactions with accomplices and banks
in which he deposited profits from thosetransactions. They also found suspected
papers, located in a container in a locked
safe, which they opened with the assistanceof a locksmith. Further, they found in his
house merchandise (TV set and a radio),
allegedly stolen from a nearby shop.
Outside his house, police found a car witha counterfiet vehicle identification number.
Police seized the drugs, papers, TV set andradio, sealed off the rented premises andhis house, and towed away a suspect

Depending on the legal tradition of acountry (common, civil law) from which one
may want to assesses the situation ofcountries A and D, there will be rather clear
answers to the questions asked. If actions
taken by their respective criminal justiceauthorities regarding various objects
searched and/or seized, and Mr. J. D.
himself, were legal or not. With moredifficulty, the same actions may be legallyassessed in terms of their compliance with
the United Nations criminal justice andhuman rights standards and norms.
Hardly in any country in the world, andnot in the United Nation law at the time ofthis writing, could one find comprehensive
and uncontested answers to the following
series of questions, if they were posed inrelation to an alleged crime related to thecomputer network:(i)

May police monitor the traffic ofdata on the Internet ?
(ii) Is the data regarded as a tangible
or intangible object ?
(iii) Can criminal justice authorities ofcountries B and C be asked for legal
assistance, in finding out if theInternet service provider(s) (ISP) in
their countries have any computer
records evidencing a suspect’stransactions, both with alleged
accomplices and/or financial

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RESOURCE MATERIAL SERIES No. 55
institutions ?
Is the ISP under the obligation tokeep its own records for a specified
period of time for possible
inspection by the police in cases ofalleged computer criminal
activities of receivers of theirservice ?
(v) What if a suspect used an alias on
the Internet to hide their true
identity and original location fromwhich s/he was communicating by
the Internet ?
(vi) Is it necessary to catch a suspect in
the act (striking the keys on thec o m p u t e r ’s c o n s o l e ) o r i s i t
sufficient that incriminating data
would be found on the computer intheir absence?
(vii) Does the ISP have an obligation tocooperate with the police in country
A, by notifying the arrival of specificsuspected messages ?
(viii) What happens if some of thosemessages were not anticipated ?
(ix) May any messages be read by theircontent, or only from whom they
originate ?
(x) Should the search warrant andsubsequent possible seizure beparticularized or extended to any
d a t a f o u n d o n t h e s u s p e c t ’s
computer, including those which asuspect may have deposited abroad,for example with the affliatedfinancial institutions abroad on
their computer servers there ?
(xi) What if some of the data stored on
the hard disk of a suspect’s
computer are personally very
sensitive and private (e.g.,correspondence with family, healthrecords) ?
(xii) May a computer system of an ISP
provider be searched, all its
equipment with data seized, thus
bringing its operation to a complete
halt ?

(xiii) How soon can the police receive asearch warrant from a judicial
authority, given that computer data
may be faster, more readily andinadverently destroyed than objects
like drugs or papers ?
(xiv) Is it possible for the police to force(hack) entry to a suspect’s computerand use an encryption key todecipher the contents of thecommunication (data on
transactions, and transactiondata) ?
(xv) May the police search for and size
computer data from an unrelated
alleged criminal activity by asuspect ?
(xvi) Does the bilateral extradition
treaty cover the question of making
and granting requests for crimes
related to the computer network ?
(xvii) Is the suspect entitled to any
remedy against the seizure of theirlawful belongings, either in the
country of seizure or in the country
to which the suspect fled ?

(iv)

126

The above set of questions is far frombeing exhaustive. However, they do notseem to be farfetched, even though FATF
admits that no case of Internet-based
money laundering has been noted 40 .
Finding legal answers to those questionsin the near future may be ever more urgent
for determining effective countermeasuresagainst crimes related to the computer
network.
Fragmentary replies can now be foundin the United Nations trade and criminal
law. They have the form of various
recommendations. Regarding drug related
40“The fact that no laundering operation has been
identified to date may mean that the appropriate
services lack the necessary means and capabilityof detection” (FATF Annual Report 1997-1998,
para. 7 <http://www.oecd.org/>).

110TH INTERNATIONAL TRAINING COURSE
VISITING EXPERTS’ PAPERS
crimes, there are the recommendations andtreaty provisions of the 1988 United
Nations Convention against Illicit Trafficin Narcotic Drugs and Psychotropic
Substances (the 1988 Convention). In the“Model Law on Electronic Commerce,” theUnited Nations Commission on
International Trade Law (UNCITRAL)
defined “data message” as “information
generated, sent, received or stored byelectronic, optical or similar means,including, but not limited to, electronic
data interchange..., electronic mail,telegram, telex or telecopy” (art. 2 (a))41.
The provisions of the 1988 Convention
oblige each party to adopt such measures
as may be necessary to enable theidentification, freezing or seizure of any
item which constituted either
instrumentalities of incriminated acts ortheir proceeds for the purpose of eventual
confiscation (art. 2). “Proceeds” means any
property derived from or obtained, directly
or indirectly, through the commission of an
offence covered by the Convention.
“Property” means “assets of every kind,
whether corporeal or incorporeal, moveable
or immoveable, tangible or intangible, andlegal documents or instruments evidencing
title to, or interest in, such assets” [art. 1(p), (q), respectively, italics added]. The
draft United Nations convention against
transnational organized crime (UNTOC)
extends such provision to all other offences
to be covered by it. However, in art. 2b itlumps in the definition of “proceeds ofcrime,” “property” which in tangible orintangible form is “of any description,” asin the 1988 Convention.
Both instruments also empower State
Party’s courts or other competentauthorities to order that incriminated
41

UNCITRAL Model Law on Electronic Commercewith Guide to Enactment 1996, United Nations,
New York 1997.

bank, financial or commercial records bemade available or be seized (art. 5 (3); arts
4. 3 (c) and 7 (2), respectively). The UNTOC
would impose the obligation to retain suchrecords by a financial institution (which
could also be a fund transmitter, casino or
securities dealer) for at least 5 years (art.
4bis (c)). Currently, however, regulationsof the 1988 Convention have no treaty
parallel for commodities other than drugs,
and themselves are no longer regarded as
sufficient. For the time being, model and“soft law” seeks to fill out this gap.
In 1995 the United Nations
International Drug Control Programmeelaborated a “Model law on money
laundering: confiscation and international
cooperation in relation to drugs” (Model
Anti-Money Laundering Law)42. This law
not only deals with the seizure and placing
under seal any plants, substances,
instrumentalities or other things connectedwith a drug offence, but also allows for the
42 This model law responds to the legal needs of civil

law countries. Common law countries may beinterested to use a set of six UNDCP model laws
(bills) on drug abuse, money laundering andproceeds of crime, mutual legal assistance,
extradition, foreign evidence, and witness
protection. All texts are available from the United
Nations International Drug Control Programme(<undcp_hq@undcp.un.or.at>). Before the 1988
Drug Convention, the General Assembly of Interpol
adopted a model legislation which provides for the
temporary freezing of property prior to the filing of
criminal charges. Additionally, the legislation
authorizes the issue of restraining orders,injunctions and other actions upon property which
is deemed to be derived from criminal activity(Bruce Zagaris, The emergence of an internationalanti-money laundering regime: implications forcounselling businesses (in:) Richard D. Atkins (ed.),The Alleged Transnational Criminal. The Second
Biennial International Criminal Law Seminar,
Martinus Nijhoff and International Bar
Association, The Hague 1995, pp. 136-137).

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RESOURCE MATERIAL SERIES No. 55
taking of provisional measures, including
the freezing of capital and blocking offinancial transactions, relating to movebale
or immovebale property suspected of being
used or intended for use in the commissionof a drug offence (arts 26 and 27).
Moreover, the law clearly extends its scope
to surveillance of operations which, without
apparentely being connected with drugmoney laundering, either involve sums
equivalent to US $ 200 000 or are
surrounded by circumstances of unusualcomplexity (art. 9).
FA T F f i l l s t h a t g a p w i t h i t s
recommedations approved later by the
Lyons Summit of 1996. Next year, the same
recommendations were submitted to theUnited Nations General Assembly whichannexed them to its resolution 51/85.
Recommendions welcome the resolve of
FATF to extend criminalization of money
laundering to other serious offences, butalso states that countries ‘‘should consider
adopting legislative measures for...seizureof illicit proceeds from drug trafficking andother serious offences..., as required’’.
Concerning provisional arrangements,
they should include the freezing or seizingof assets, always with due respect for theinterests of bona fide third parties(recommendation 29 and 30).
Regarding the confiscation of illicit
profits, the most elaborate and far reaching
United Nations scheme can be found in the1988 Convention, and the draft UNTOC.
In both, there is an obligation for
confiscation of proceeds, property,
equipment and other instrumentalities
used or intended for use in violation of
specific substantive provisions of bothconventions (art. 5 (a), (b), and 7,
respectively). As the assets fromtransnational organized crime may bedispersed over several countries, thatobligation extends to all such countries,
and not only to a country which has

128

exercised jurisdiction over the offender (UNTOC, arts 4 and 7 (3)).
Model Anti-Money Laundering Law
elaborates in detail on the confiscation ofproceeds and properties. Starting from thepremise that such confiscation is not only
a sanction. It is also “a kind of restitution,
to the community, of property unlawfully
obtained to its detriment”43. Among many
provisions, the Law refers to confiscationof proceeds and property directly or
indirectly from the offence, including
income and other benefits obtained
therefrom; places on the offender theburden of proving the lawful origin of
property belonging to them; leaves it to the
public prosecutor’s office to prove the illicit
origin of property obtained by third parties
from convicted offenders. In cases where
proceeds of illicit origin have beenintermingeled with property acquired fromlegitimate sources, confiscation of suchproperty shall be ordered only up to thevalue, as assessed by the court, of theintermingled proceeds (art. 30).
FATF recommendations state thatcountries should consider adopting
legislative measures for the confiscation
and assets forfeiture, always with due
respect for the interest of bona fide third
parties. Countries should also consider the
introduction of arrangements for theequitable sharing of such forfeited assets(recommendation 30).
V. CRIME AS THE GROWINGINTERNATIONAL SECURITY
THREAT
A. New Security Threat
Inspired by the statement on governance(attributed to the German philosopher
Emmanuel Kant, 1724-1804), that the“establishment of a civil society which
43

Model Anti-Money Laundering Law, op. cit.note
42, p. 20.

110TH INTERNATIONAL TRAINING COURSE
VISITING EXPERTS’ PAPERS
generally administers the law” has been
discribed as “mankind’s most difficult
problem,” the commentators felt that:“[i]n a community of states afflictedwith clashing conceptions of theappropriate ends of law and civilsociety, whose largest arena is amilitary arena of multiplying devices
that promise both infernal destruction
and access to the havens, theestablishment of a society generally
administering law adequately
expressing the deepest aspirations of
the world’s peoples for freedom,security, and abundance - theestablishment, in other words, of aworld public order of human dignity is truly a problem of the most heroic
proportions”44.
B. Redefining Global Security
Conceptually
Two ages after Kant’s statement, andshortly before the outset of the 21st century,transnational crime as an expression of an“uncivil society”, and security, as one of theelements of civil society, have both been
increasingly seen as the two sides of one coin.
New dimensions of security are
emerging. They start replacing the
traditional notion of global security
understood as balancing out military
security by a more, albeit only gradually
surfacing, universal notion of security. A
prominent expert concedes that the initialstage of this development ensues from thetwo inabilities: to establish a global
security scheme by only one super power,
and by all. There is no country in the world,
including the United States, which would
have significant security interests. In
t o d a y ’s v e r y i n t e r d e p e n d e n t a n dheterogenic world, what determines order
44

Myres S. McDougal, Florentino P. Feliciano,
Transnational Coercion and World Public Order,
New Haven Press, New Haven, Martinus Nijhoff
Publishers, Dordrecht/Boston/London 1994, p. 261.

exists in a particular civilization andbeyond it45.
How to define and deal with what is“beyond” is a matter of further
consideration. It has been argued, forexample, that much more atention mustbe given by the United Nations Security
Council to:“the most pressing economic, social,and environmental problems. The
connection between the absence of
democracy, gross human rights
abuses, and the propensity for
aggression and other forms ofinternational irresponsibility was
clearly established even before Iraq’s
attack on Kuwait. The spread of
democracy, and respect of humanrights, are indespensible elements ofa more stable, less violent humansociety, and are, as such, a legitimate- indeed an indispensible
international concern”46.
The Human Development Reportobserves that:“[w]hen the security of people isendangered anywhere in the world, allnations are likely to get ivolved.
Famine, disease, pollution, drugtrafficking, terrorism, ethnic disputes
and social desintegration are nolonger isolated events, confined within
national borders. Their consequences
travel the globe”47.
45

Samuel P. Huntington, The Clash of Civilizations
and the Remaking of the World Order (1996),
Zderzenie cywilizacji i nowy kszatlt ladu
swiatowego (Polish translation of 1997, Muza SA,
Warszawa 1997, p. 227).
46 Brian Urquhart, The UN and international
security after the Cold War (in:) Adam Ck andBenedict Kingsbury (eds), United Nations, Divided
World. The UN’ s role in International Relations,
Clarendon Press, Oxford 1993, p. 97.
47 Human Development Report 1994, UNDP, Oxford
University Press, New York 1994, p. 22.

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RESOURCE MATERIAL SERIES No. 55
The chairman of the U.S. Senate task
force on economic sanctions observes that
his country’s sanctions should balance theU.S. economic interests with the desire topromote “improvements in basic civil
liberties, human rights andnonproliferation, or defeating terrorism,
narcotics trafficking and crime”48. The U.S.
Ambassador to the U.N. extends thisobservation, saying that:“[n]arcotics trafficking,international crime, migrantsmuggling, terrorism andenvironmental degradation...theseare our enemies. The illegal drugtrade and related activities such as
money laundering and terrorism
undermine fragile democratic
institutions, distort economies andhinder long-term growth”49.
Those developments and phenomena are“beyond” the sphere of influence of any one
country. They are out of reach, in tax,
extradition or money laundering havens
from where they threaten the security ofnations by pouring onto them illicit drugs,
aliens and arms, writes another high-level
U.S. official50. Others emphasize that whileearlier, manufacturing and providing smallarms and light weapons was once accepted
as a necessary evil or even welcomed as agurantor of security, nowadays cause
concern that their excessive amounts canhave devastating consequences for global48

Senator Mitch McConnel, quoted in: Thomas W.
Lippman, Clinton seeks authority to waive any
sanctions, International Herald Tribune,
September 10, 1998, p. 3.
49 Bill Richardson, U.S. Ambassador to the UN,
Narcotics Enforcement and Prevention Digest Vol.
2 No 6 (1996), p. 3.
50 Jonathan M. Winer, International crime in the newgeopolitics: a core threat to democracy (in:) William
F. McDonald, Crime and Law Enforcement in the
Global Village, ACJS/Anderson Monograph Series,
Anderson Publishing Co. 1997, pp. 61-62.

130

security51.
C. Redefining Global Security
Legally
Save terrorist bombing, the above
mentioned manifestations of transnational
crime have not yet been legally embracedby the resolutions of the United Nations
Security Council within the concept ofglobal security. However, the General
Assembly, in the aforementioned “United
Nations Declaration on Public Security,”
undertook steps to redifine global security.
Several illicit trafficking activities (illicit
trafficking in drugs, firearms, humanbeings, laundering of proceeds from serious
crimes) have already been declared by theGeneral Assembly as endangering “thesecurity and well being of citizens and all
persons” (art. 1). Looking into other official
records (statements) of or for the Security
Council from the above group Statesponsored or convieved acts involving illicit
drug trafficking, illicit arms trafficking, butalso corruption (art. 10) may fall under theredefined concept of global security52.
As noted, and as of this writing, there
was only one case of Council’s involvement
in one possible type of transnational crime51

Michael Renner, Curbing the Proliferation of
Small Arms (in:) Lester R. Brown et.al., State of
the World 1998. A Worldwatch Institute Report on
Progress Toward a Sustainable Society, W.W.
Norton & Company, New York-London 1998, p. 148.
52 For an interesting review of the question of thetransnationalization of corruption, see: Michael
Jonson, “Cross-border corruption”. Points ofvulnerability and challenges for reform, and Susan
Rose-Ackerman, Corruption and the global
economy, both published in: United Nations
Development Programme, OECD Development
Centre, Corruption. Integrity. Improvement.
Initiatives in Developing Countries, Sales number
E.98.III.B.18, United Nations Development
Programme, New York 1998, pp.13-24, and 25-44,
respectively.

110TH INTERNATIONAL TRAINING COURSE
VISITING EXPERTS’ PAPERS- t e r r o r i s t b o m b i n g 53. B y a d d i n g“terrorism” to the list of acts which either
are “a threat to international peace andsecurity” (apartheid,54 internal conflict) or“a breach” thereof (aggression 55 ), theSecurity Council broadened theinterpretation of the above quoted notions,and opened the way for possible
considering other international crimes orviolations as threatening or breaking peaceand security. Currently, the catalogue fromwhich the Security Council may draw thesecrimes extends to 26 types56.
On the occasion of passing other
resolutions, various declarations and otherstatements were made either by theCouncil itself, its President or the
Secretary-General, which included
references to illicit drug and arms
trafficking, violence, banditry, etc. Thosereferences or developments provided a partof the entire factual and legislative context
in which the Council imposed sanctions on
target States.
For example, in 1997, after adoption of
the resolution concerning Afghanistan, thePresident of the Council noted that human
53

Against Libya to surrender two Libyan nationals
suspected of terrorism and to renounce all formsof terrorist action (S/RES/748 (1992) of 31 March
1992, and S/RES/883 (1993) of 11 November 1993).
54 Against South Rhodesia to bring to an end therebellion in Southern Rhodesia (S/RES/232 (1966)of 16 December 1966; S/RES/253 (1968) of 29 May
1968), and South Africa to end violence against
the African people and neighbouring States (S/RES/418 (1977) of 4 November 1977). However,
the treaty notion of apartheid first was used in1965 in the Convention on all Forms of Racial
Discrimination, and does not appear in the two
first resolutions.
55 Against Iraq to restore the sovereignty andterritorial integrity of Kuwait (S/RES/661 (1990)of 6 August 1990, S/RES/670 (1990) of 25
September 1990, S/RES/687 (1981) of 3 April 1991.

suffering and material destruction there
threatens to lead to the disintegration of
the country and “represents a growing
threat to regional and international peaceand security”. He stressed the Council’s
concern about mass killings of prisoners of
war and civilians in Afghanistan, and thelooting of United Nations premises andfood supplies. He reiterated that, in theopinion of the Council, the continuation of
the conflict in Afghanistan provided afertile ground for terrorism and illegal drug
production and trafficking which
destabilize the region and beyond57. The
Secretary-General observed that concerned
parties must be held responsible forexacerbating the conflict, which alreadywas spreading beyond the borders of
Afghanistan, posing a serious threat in the
shape of terrorism, banditry, narcotics
trafficking, refugee flows, and increasing
56

While there is no definitive list of such crimes,
expert classification includes the followinginternational crimes : genocide, aggression,
slavery, torture, apartheid, war crimes, crimes
against humanity, crimes against the United
Nations and associated personnel, unlawful
possession, use or emplacement of weapons, theftof nuclear materials, mercenarism, unlawful
medical experimentation, piracy, unlawful acts
against the safety of maritime navigation and thesafety of platforms on the high seas, aircraft
hijacking, threat and use of force againstinternationally protected persons, taking of civilian
hostages, unlawful use of the mail, falsification andcounterfeiting, destruction and/or theft of national
and archeological treasures, unlawful acts against
certain internationally protected elements of theenvironment, unlawful interference withinternational submarine cables, internationaltraffic in obscene publications, bribery of foreign
public officials, drug offences, and terrorist
bombing (see further: M. Cherif Bassiouni,
International Criminal Law Conventions and theirPenal Provisions, Transnational Publishers, Inc.,
Irvington-on-Hudson, New York 1997).
57 Presidential Statement S/PRST/1997/55.

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RESOURCE MATERIAL SERIES No. 55
ethnic and sectarian tension58.
References to various forms of crime
either in the Council’s resolutions or
justifications thereof, are certainly notcoincidental. There seems to be an
emerging agreement that the concept ofglobal security should gradually embrace
select forms of international andtransnational crime.
VI. UNITED NATIONS AGAINSTCRIME IN THE 21ST CENTURY:
NEW DIMENSIONS OF
INTERNATIONAL COOPERATION
A. Global Economy and Crime
The above examples of crime, as dealt
with by the Security Council, point strongly
to ramifications it has to the security ofnations. Traditional transnational (andinternational) crime, like trafficking in
narcotic drugs has been for a long time aworldwide concern. And so terrorism,
which, because of its original political orpoliticized nature, has only recently started
entering the classification of “international
crime”, has entered the Council’s agenda59.
As helpful as defining certain activity as
international crime or transnational crimeis, there are overriding issues which may
drive discussions on redefining global
security ahead of other considerations.
Two crime issues, partly interlinked,
may contribute to further focus on
globalization of the notion of security. First,
the spread of economic crime across theworld. The global economic recession
looming in 1998 prompted some experts toargue that international criminal cartels
58
59

Press Release SC/6453.
In its resolution 51/210 of 16 January 1997 on“Measures to Eliminate International Terrorism,”
the General Assembly noted the risk of terrorists
using nuclear, biological and chemical agents, andinvolving electronic or wire communications
systems and networks to carry out criminal acts.

132

could easily arrange the concerted
withdrawal of US $ 10-20 billion in “black”
money from a single market economy.
“With the threat of such a financiallydevastating blow, they would be able toextort entire countries”60. Second, is thegrowing computerization of economictransactions. To underscore their actualand potential scope, one may reemphasizethat what is now 100 % of all available dataand information in the world, will
represent only 5 % of that available in 50
years, and add that the functional
equivalent of the progress in information
technologies made over past 500 years(from the first printed book until today’s
computer) now will probably be repeated
ten times faster in the next 50 years61.
Helpful as computer networking is, it isalso a powerful and increasingly dominantmedium to create, more easily than before,a fictitious (virtual) basis for brass-platebanks, anonymous trade corporations andother commercial firms62.
B. Progress in Legal Assistance(i) Mutual Legal AssistanceIn the face of computerized
information quickly becoming a new“global commons”, the international
criminal justice community is notprepared to prevent and control crimeon and abuse of computer networks,
let alone transnational crimecommitted with traditional methods.
Presently, only about one third of
most industrialized European
countries have criminalized
60

Expert statement (in personal capacity) by Vito
Tanzi, International Monetary Fund at the press
conference on 10 June 1998 (United Nations, DPI/
1452, Development Update # 24, July-August1998).
61 S.L. Armanathan, op.cit. note 14.
62 Pino Arlacchi, Under Secreatry-General, United
Nations Office at Vienna, at the press conference(DPI/1452, op.cit. note 60).

110TH INTERNATIONAL TRAINING COURSE
VISITING EXPERTS’ PAPERS
unauthorized access to data or
information, which, by and large,
makes such penetrations still
legitimate63. Consequently, mutual
legal assistance is, in principle,
possible only when, in both therequesting and requested country theact in question is criminalized.
(ii) Bilateral Extradition
Other facets of legal assistance,such as bilateral extradition treaties,
have not caught up with thenecessities resulting fromglobalization and informatization. In
the 19th and the 20th century,
available data shows that 112
bilateral extradition treaties wereregistered and published in the
League of Nations Treaty Series. The
first 550 volumes of the United
Nations Treaty Series (1945-1964),
contain texts of 50 extradition
treaties. In making a very roughestimate of valid treaties at the
beginning of 1970s, one commentator
hazarded a figure below 500 for still
functioning old (the 19th-20th
century) extradition treaties, andabout 1000 for others, unregisteredand registered with the United
Nations Secretariat64.
Against this total estimate of 1500
bilateral extradition treaties, thesame expert assumed that if every
Member State of the United Nations
were to be linked with every other(and at the time of that writing there
were 120 Member States) through63

Doc. CDPC (97) 5; PC-CY (97) 5, Council of Europe,
European Committee on Crime Problems,
Implementation of Recommendations No. R (89) 9
on computer-related crime, Report prepared byProfessor Henrik W.K. Kaspersen, Amsterdam,
February 1997.
64 Shaffer, op.cit. note 7, p. 37.

bilateral extradition treaties,
theoretically, there could have beenno less than 14 000 of such treaties.
However, since extradition problems
were also dealt with throughmultilateral conventions, regionalarrangements secured by reciprocal
legislation, and by reciprocal practiceof extradition, that magnitude would
have been less. Such qualified
estimates look pale against thedevelopments in the 1990s.
According to the United Nations
database, 131 current Member States
on which data was collected had,roughly, 900 various legal assistanceinstruments. This amount consistedof no less than 525 bilateralextradition treaties, including 65
supplementary extradition
agreements, 174 mutual legal
assistance treaties, and 142
instruments against the struggle ininternational narcotic drugs, plus a
number on the transfer of foreignprisoners 65. Again, if all Member
States (185 at writing) were to belinked by bilateral extradition
65

Judicial assistance treaties may also containextradition provisions. For a fuller review of thevariety of extradition arrangements, see: United
Nations Crime and Justice Information Network(UNCJIN), <http://www.ifs.univie.ac.at/~uncjin/
extradit/extindx.html>. Out of the total known
number of 525 existing bilateral extradition
treaties, including supplementary agreements, atleast 148 (28 %) were signed by the U.S. alone (or38 % of all such instruments in the developed
world). In construction of this database thefollowing sources were consulted: the United
Nations Treaty Series, the Treaties in Force: A Listof Treaties and Other International Agreementsof the United States on January 1, 1994 (TIAS,
1994), The Cumulative List of and Index of Treaties
and International Agreements: Registered or Filedand Recorded with the Secretariat of the United
Nations - December 1969 December 1974, (1977).

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RESOURCE MATERIAL SERIES No. 55
treaties, there would have been noless than 34000 of them. This seems
to be, if not indeed is, pure nonsense.
C. New Approaches(i) Multilateral Legal Assistance andExtradition Provisions
Another approach is needed, which
is now being advanced in drafting the
aforementioned United Nations
convention against transnationalorganized crime. This draft
convention is to cover quite a broad
spectrum of legal assistance andextradition matters invloving more
effective investigation, prosecution
and adjudication of acts recognizedby it as crimes, including illicit
trafficking in and manufacturing of
firearms. The draft may provide legal
answers to some of the questions
ensuing from the case study of Mr.
J.D., but also goes beyond. However,by and large, legal assistance andextradition matters have been
approached in a generic manner,enabling coverage of the widest
possible list of transnationalorganized crime cases, as determinedby the convention itself.
The original draft started with aprovision for considering entering
into bilateral and multilateralagreements, including direct
cooperation between State police
agencies and common operations in
the territory of each Contracting
State (art. 11)66. However Member
States’ observations andcommentaries which the draft
convention evoked, suggest that in
66

Doc. E/1997/30, Draft United Nations Framework
Convention Against Organized Crime, Commission
on Crime Prevention and Criminal Justice. Reporton the Sixth Session (28 April-9 May 1997), Annex
III, p. 14.

134

dealing with the provision on interState cooperation, there should bejoint teams and other arrangements
established for “electronic
surveillance, undercover operations
and controlled deliveries with a viewto gathering evidence,” including“when appropriate, necessary items
or quantities of substances foranalytical or investigative purposes”(art. 19 (c), (d))67. The Netherlands
added to this a proposal thatconvention “States Parties...shallconsider...analyzing trends inorganized crime...as well as thecircumstances in which organizedcrime can operate, the professionalgroups involved and thecommunication technologies” (art. 20(2))68. Supportive of this approachwere Latin American criminal justice67

In favour were also Argentina, Australia, Belarus,
Bosnia and Herzegovina, Brazil, Canada, Chile,
Colombia, Czech Republic, Finland, Greece,
Guatemala, India, Italy, Japan, Mexico, Morocco,
The Philippines, Quatar, Repubic of Korea, Saudi
Arabia, Slovakia and Turkey. This was reiterated
later by the U.S. in doc. E/CN. 15/1998/5,
Commission on Crime Prevention and Criminal
Justice, Report of the Meeting of the Intersessional
Open-ended Intergovernmental Group of Expertson the Elaboration of a Preliminary Draft of a
Possible Comprehensive International Convention
against Organized Transnational Crime (2-6
February 1998, Warsaw, Poland), sec. III. 19 (d)and (e). Such an approach will influence
investigative techniques of cooperating countries
to the point of possible later harmonizing
evidentiary requirements for admission of evidence
by respective courts. For a review of judicial cases
in which U.S courts assessed legality of joint team
operations with a number of countries, see: Richard
Downing, The domestic and international legal
implications of the abduction of criminals fromforeign soil, Stanford Journal of International Law
Vol. 26, No. 573 (1990), p. 107.
68 Doc. E/CN. 15/1998/5, Ibid, sec. III, 20.2.

110TH INTERNATIONAL TRAINING COURSE
VISITING EXPERTS’ PAPERS
ministers, and senior experts of thegroup of eight leading industrializedcountries (P-8, now G-8)69. States, inturn, suggested restrictions on suchforms of inter-state cooperation
dictated by sovereignty and be selfdetermination (Mexico), and humanrights requirements70. The lattershould also generally apply tointernational criminal law
enforcement, including exchange ofcriminal records, suggested in thedraft, and be understood as
information not only on previous
conviction(s), but criminal
investigation and prosecution as well
(Australia). Interestingly, in cases
where double criminality
requirements cannot be observed(e.g., lack of criminalization of
hacking in the requested State, andthus no obligation to provide noncriminal information and/or
evidence), some States were
proposing that mutual legal
assistance should nevertheless berendered, in the interest of more
effective and efficient internationallaw enforcement (Russia) 71. The
proposed texts speaks of an obligation
to render such assistance without therequirement of dual criminality,
unless the assistance required
unvolves the application of coercive
measures (art. 14.6). However, a69Doc. E/CN. 15/1996/2/Add.1, Regional MinisterialWorkshop on Follow-up to the Naples Declaration
and Global Plan of Action against OrganizedTransnational Crime (Buenos Aires, Argentina, 2730 November 1997), Report of the SecretaryGeneral, recommendation No 14; doc. E/CN. 1997/30, Senior Experts Group Recommendations,recommendation No 26.
70 Proposed by the Intergovernmental Expert Group
Meeting on Extradition (doc. E/CN. 15/1997/6,
recommendation No 29).
71 Doc. E/CN. 15/1998/5, sec. III, 14.14.

counterproposal under the revised
United Nations Model Treaty on
Mutual Assistance in Criminal
Matters, states that “[c]ountries may
also consider restricting therequirement of double criminality tocertain types of assistance such as
search and seizure” (art.4)72.
(ii) Preservation of the Integrity of
Evidence
Preservation of the integrity ofevidence is essential for compliancewith the principle of accuracy of data,
as inaccurate or incomplete records
shared, may lead to suppression ofevidence by the court of a requesting
State, if not to violating fair andhumane trial.73
In case of evidence gathered
through electronic surveillance andshared internationally, preservationof its integrity is an extremely
difficult process, starting with theneed to assure that, a file
documenting fraudulent electronic
72

Doc. E/CN. 15/1998/5, Add. 1, Report of theIntergovernmental Expert Group Meeting on
Developing and Promoting the Efficiency of
Mechanisms in International Mutual Assistance
Practice (Arlington, Virginia, USA, 23-26 February1998), Annex I. The proposals from that report, as
reviewed and recommended by the Commission on
Crime Prevention and Criminal Justice, have been
forwarded by the Economic and Social Council for
action of the General Assembly.
73 Those guidelines, adopted over the period 19801995, could be found in the the Privacy
International Archive: <http://privacy.org/pi/
g o p h e r / f t p c p s r. o r g / c p s r / p r i v a c y /privacy_international/>. See also: Christine vanden Wyngaert (ed.), Guy Stessens (ass. ed.),International Criminal Law. A Collection ofInternational and European Instruments, Kluwer
Law International, The Hague/London/Boston
1996, p. 599.

135

RESOURCE MATERIAL SERIES No. 55
banking transactions for example,
does not contain erronous ormaterially false information
accidentally generated by thecriminal justice agencies handlingthe data files. Of course, States are
required to act in “good faith,” butnegligent handling of electronic files
may tremendously complicate
admitting such questionable evidence
into trial. As there are only very
nascent internationally standardized
encryption and decryption
procedures for dealing with electronic
evidence, this risk cannot be
underestimated74.

Specificity in collecting andmaintaining criminal records canbe interpreted more broadly in two
ways. First, so as to cover otherpotential criminal activities towhich ongoing investigation may
be not central. Secondly, also as adisclosure abroad, as far as theobtaining information on suchactivities by other countries isconcerned. It seems, that if theprinciple of equal protection ofdata (in its transborder flows) isobserved by the requesting andrequested State, re-interpretationof the principle of specificity tocover foreign criminal
investigations would be consonantwith the international
recommendations in this regard.
H o w e v e r, t h e c o n s t i t u e n c yreceiving information will be
wider.

(iii)Preservation of the Privacy of
Evidence
The problem of preservation ofprivacy of a suspects’ records
continues to be felt by the law
enforcement community as
hampering the effectiveness of theircriminal investigations. It also alerts
courts and entire human rights
community from the, at times,
opposing rule of law perspective. The
U.S proposal, made in the context of
discussion over the draft United
Nations framework convention,
called for establishing andmaintaining “channels ofcommunication between thecompetent authorities, agencies andservices to facilitate secure and rapid
exchange of information concerning
all aspects of the offences set forth in
this Convention, including, if theStates Parties concerned deem it
appropriate, links with othercriminal activities.”

This is important the in the caseof collecting and sharing electronic
records, which would clearly comewithin the purview of such a
proposed regulation. Experts
emphasize that there will be a
growing conflict between therequirements of privacy, andrequirements to collect data inlawful and fair ways. Solutions
found to deal concurrently withthose requirements,
recommended by the UN
Guidelines and otherinternational instruments will
influence the ways and means ofcombating the increasing dangerof organized crime and terrorist
acts75.
75

74

Recommendation of OECD concerning guidelines
for cryptography policy, 27 March 1997 <http://
www.oecd.org.dsti/sti/it/index.html>.

136

Doc. E/CN. 4/1997/67, Commission on Human
Rights, Question of the follow-up to the guidelines
for the regulation of computerized personal data:report of the Secretary-General prepared pursuant
to Commission decision 1995/114, para. 18.

110TH INTERNATIONAL TRAINING COURSE
VISITING EXPERTS’ PAPERS
D. Ingenuity of Lawmakers andCriminals
Criminals used to be always ahead of thelawmakers, as much as thieves ahead ofpolicemen. Sometimes lawmakers andpolicemen catch up with the criminal
underworld by making the laws more
flexible, with due regard to the rights ofoffenders. For example, the Presidential
decree in Brazil enabled money raising tofight illicit drug traffcking, mostly destinedfor Europe and the United States, byauctioning seized assets before theconfirmed conviction of alleged traffickers.
The seized 100 hundred planes, 200 trucks
and several hundred cars, which would
have otherwise depreciated in value
awaiting valid conviction, can now be
autioned. In case of a suspect foundinnocent, the value of any assets seized
and sold will be reimbursed76.
Another innovation is proposed by thedraft UNTOC which encourages State
Parties to give consideration to the sharing
the value of confiscated proceeds andproperty among themselves, as well as
contributing them to intergovernmental
bodies specializing in the fight againstorganized crime (art. 7 (5)). Finally, andas already suggested in the “Model AntiMoney Laundring Law,” the draft provides
that a State Party may consider putting
on to the alleged offender the onus of proof
concerning the lawful origin of alleged
proceeds of crime or other property liable
to confiscation (art. 7 (7)). This innovation
would have to undergo scrutiny in the lightof domestic constitutional and other legal
principles, and by human rights experts ingeneral.
However, more often, it is the criminal
underworld that is more ingenius than thecriminal justice community. For instance,76

Narcotics Enforcement and Prevention Digest, Vol.
4 No. 17 (1998), p. 9.

in cases of telemarketing and Internet
schemes which involve selling foreign
currencies, investments in high-risk penny
stocks, gourmet coffee shops, and evenostrich farms77. Presently, international
policing of the Internet is far behind suchingenuity (as admitted by FATF).
Another example involved an Ukrainiancriminal group based in California, U.S.A.,
which cracked mathematical codes ofassigning new vehicle identification
numbers (so called “VINs”) of car
manufacturers. The group was able tocreate their own “VINs” that could makethe stolen car appear as if had just rolled
off an assembly line. The cars, the total
value of which was estimated at US $ 10
million, ended up in Central America,
Russia and Ukraine 78 . German car
manufacturers finalized projects for tracingcars’ routes through satellites79. One may
imagine that organized criminals would
illegally access satellite
telecommunications systems, in order toobtain control over cars’ locations and theirpossession. In an attempt to cut financial
losses because of pirated computer
programmes, software manufacturers haveconsidered replacing compact disks with ashareware service offered to end users via
the Internet. One may concede that theftof intellectual property will become moredifficult, but will it be eliminated ?
Many of the new forms of crime employ
or will employ computer or satellite
technology, which in its various forms isincreasingly intermingled and contributes
77

Authorities cracking down on gambling investment
fraud, Organized Crime Digest, Vol. 19 No. 6(1998), p. 7.
78 Warren Richey, World’s cops rev up strategies tonab cross-border car thieves, Christian Science
Monitor, 4 December 1996.
79 The Reuter European Business Report, 2
December 1996.

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RESOURCE MATERIAL SERIES No. 55
to the generic term of “information
technology”. There is little doubt that theinternational community will also resort tonew forms of crime control80. However, it
is not technology itself which will
dramatically improve international
cooperation. In fact, if present trends intechnological applications continue, the“great divide” between developed anddeveloping countries will also stay on.
Transnational abuse of the Internet may
affect countries with weakertelecommunication infrustructures. Poorer
protection gives way to penetrating
computer networks in developing
countries, which are unprepared to face the
new challenge.
VII. CONCLUSION
The potential of transnational crime togrow is very considerable and so are theillicit profits. This paper showed cases oftransnational crime, increasingly legallyand technically complex and in various
dimensions. They are off and on the
ground, in cyberspace and outerspace. All
call for finding commensurate, consolidated
and effective countermeasures, in the wakeof the growing international security threatsuch crime poses. More concerted andcomprehensive efforts on the search,
seizure and confiscation of illicit profits isstill required.

80

First inroads in using space technology for control
of transnational crime have already been made.
See, for example, Panaiotios Xefteris and Maurizio
Fargnoli, Using small satellite constellations totrack and monitor the illicit trafficking in weaponsand sensitive technologies, (in:) Péricles Gasparini
Alves, Daiana Belinda Cipollone (eds), op. cit., pp.
178-194; and B. Jasani, Relevance of outer spacecapabilities to international security (in:) N.
Jasentuliyana and K. Karnik, Space Futures andHuman Security, United Nations Office for Outer
Space Affairs, Vienna 1997, pp. 21-27.

138

For attaining significant progress infighting transnational crime there must bea strong commitment among States,
officials and others involved in combating
it. If there is a new common international
enemy, and crime in its new dimensions
gradually assumes this position, there will
also be such commitment. With it, theinternational criminal justice community
will be able to quickly finalize a draft
United Nations convention against
transnational organized crime. Later, it
can move on to develop new accessory,
flexible and ingenious instruments which
may help in the 21st century to bettercounteract crime related to computer
networks.

110TH INTERNATIONAL TRAINING COURSE
VISITING EXPERTS’ PAPERSECONOMIC CRIME AND THE GLOBAL ECONOMY:UNDERSTANDING THE THREAT AND IDENTIFYINGEFFECTIVE ENFORCEMENT STRATEGIES AND
COUNTERMEASURESJohn D. Arterberry*
I. THE GLOBALIZATION OF
ECONOMIC CRIME“Laws stop at borders, but crime does not.”Speaker at 1997 World Economic Forum,
Davos, Switzerland

During the 1990s, we have witnessed theemergence of the Global Economy from alargely theoretical concept, to a vital andgrowing force in the affairs of nations.
Evidence of that growth can be found in
the airline industry. According to a recent
news report, passenger volume ininternational commercial flights soared
from 26 billion passenger miles in 1960 to
3.5 trillion miles in 1990.
While the Global Economy has
developed, we have experienced acorresponding globalization of crime.
Whether engaged in traditional organizedcrime activities like narcotics trafficking or
sophisticated economic crimes like the
BCCI scandal, criminals and their crimes
now show no respect for politicalboundaries or geographic barriers andexploit the jurisdictional complexities both
to expand and to conceal their crimes.
Increasingly, experts and leading law
enforcement officials are sounding
warnings about the threats posed by the
globalization of crime. Economic crime
stands at the forefront of this new wave oflawlessness that threatens the stability*

and prosperity of global commerce. Thoseof us in law enforcement face an urgent
challenge: effectively countering this global
crime wave by overcoming barriers
presented by institutional rigidity andnational political considerations.
A. Defining the Threat
Often termed “white collar” or “financial”
crime, economic crime inflicts its harms inmany ways. Most directly, there are thefinancial losses suffered by fraud victims.
Other harms are less apparent. At ameeting of police officials from 23 countries
in September, attendees were told that theinvestment by criminals of their illicit
funds in the world economy is generating
annual profits of some $500 billion, about
2% of the global financial activity. These
funds may not only corrupt otherwise
legitimate enterprises through which theyflow, but also provide seed money for new
and more damaging frauds.
1. A Menu of Economic Crimes
Economic or white collar crime presents
itself in many forms. The crimes range
from investment frauds that target the lifesavings of senior citizens to sophisticatedbank frauds that use computers to divertbank funds to hidden accounts. No matterthe degree of sophistication, there will
always be common elements in the crime:
lying, cheating or stealing will be at theheart of the scheme.

Deputy Chief, Fraud Section, Criminal Division,
United States Department of Justice, U.S.A.

139

RESOURCE MATERIAL SERIES No. 55(i) Financial Institution Fraud
During the 1980s and 1990s,
financial institution fraud has beena prominent and persistent problem.
In the United States, we experienced
a crisis in our savings and loan
industry that resulted, in part, frompervasive fraud and other abuses
requiring a massive government
response. To date, the federal
government has suffered losses inexcess of $200 billion resulting fromthe savings and loans (S&L) debacle.
Although the S&L crisis is behindus, financial institution fraudcontinues to be an economic crimepriority for the federal government.
Mortgage fraud inflicts losses
estimated at $60 billion each year.
Cheque fraud involving counterfeit
cheques is conducted by organizedrings that range across the UnitedStates and cause losses to banks ofabout $6 billion yearly.
On a more global dimension, the
BCCI scandal demonstrated thevulnerabilities in regulation ofmultinational financial instruction.
It also demonstrated the benefits
obtained through international
cooperation. Even though its citizens
were not victimized, the UnitedStates successfully prosecuted BCCI
for defrauding its banking regulators.
Through that prosecution the UnitedStates has forfeited more than $1
billion of BCCI-controlled assets, anaction that has enabled the worldcommunity to compensate many of
the individual depositor victims.
(ii) Insurance Fraud
Insurance fraud schemes may
victimize either the insurer or the
insured. Many schemes seek to tap
the immense reservoir of assets held140

by legitimate insurance companies.
Arson for profit, staged accidents
creating sham-injury and property
damage claims, and inflated
automobile body repair bills areexamples of schemes aimed at theinsurance companies.
A l t e r n a t i v e l y, i n s u r a n c ebusinesses may simply be a cleverfacade for massive fraud schemes.
Unscrupulous promoters will
establish insurance operations using“rented” or fraudulently inflated
assets to satisfy governmentestablished capitalization andreserve requirements. These
operations often use off-shore shell
entities to facilitate and conceal theirfrauds. The perpetrators collectpolicy payments from unsuspecting
individuals and businesses before
abruptly ceasing operations anddeparting with the scheme proceeds.
(iii) Government Program Fraud
Government programs andoperations also are vulnerable tofraud. Dishonest claimants ingovernment social welfare programs
undermine citizen support for thiseffort and cause losses to thetaxpayers of billions of dollars eachyear.
Health care presents a dramatic
example of this problem. In the
United States, health care has
government programs and private
sector components that are equallysusceptible to fraud. In addition toindividual, corporate and private
insurance expenditures for healthcare, the federal government provides
various health care programs thatentail federal outlays of hundreds ofbillions of dollars annually.

110TH INTERNATIONAL TRAINING COURSE
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Some estimates place spending on
health care in the United States atmore than $1 trillion each year, andas much as 10 percent of that amount,or about $100 billion, resulting fromfraud and related abuses. With suchenormous sums of money spent eachyear, it is not surprising that frauds
have proliferated. Health care fraudin the United States thus has
emerged as one of the most serious
domestic crimes in this decade.

than the credit card. Accepted
universally, the credit card has
revolutionized commerce andtransformed business and personal
travel. The credit card industry
tallies billions of dollars in worldwide
commerce annually. On the negativeside, the industry suffers billions ofdollars in fraud losses each year. Visa
alone acknowledged in 1997 annual
worldwide fraud losses at well over$700 million.

The Department of Justice has
instituted an aggressive enforcement
campaign against health care fraud.
Convictions in health care fraud cases
have increased over 300 percent since
Fiscal Year 1992 and hundreds ofmillions of dollars have been returnedto the federal treasury through these
prosecutions and related civil cases.

Closely akin to credit card frauds
are schemes in which victims’
identification is appropriated bycriminals and used to obtain funds
and property through credit cards
and bank accounts. Approximately
25 percent of credit card losses in the
United States can be traced to thisrelatively new crime known as“identity theft”. Identity thieves
obtain, through various fraudulentmeans, the personal identifying dataof their victims, including names,
addresses, telephone numbers andfederal Social Security numbers,
which they then employ to gain
unauthorized access to bank andcredit card accounts. A consumer
magazine reports that more than
1000 cases of identity theft occur each
day in the United States. Just thisyear, federal law was amended toaddress this abuse.

(iv) Commercial Bribery and Foreign
Corrupt Practices
In the private sector, one of themost corrosive and costly abuses iscommercial bribery. Businesses are
victimized by dishonest employees
who, in exchange for bribes, cause
their companies to purchase defective
goods, enter into inflated or bogus
contracts or otherwise cheat theiremployers.
Closely related to commercial
bribery is bribery of foreign officials
by corporations seeking to obtain or
retain business in foreign countries.
In the United States, the Foreign
Corrupt Practices Act expressly
prohibits such conduct. Efforts areunderway to obtain international
agreement on similar prohibitions.
(v) Credit Card Fraud
Nothing symbolizes the global
economy in personal terms better(vi) Securities/Investment Fraud
Investment and securities fraud
blossomed during the boom years of
the world’s equities markets in thelate 1990s. The mutual fund industry
in the United States, with assets ofabout $5 trillion, is now larger than
the nation’s banking industry.
The euphoria created by enormous
gains in the market prices of141

RESOURCE MATERIAL SERIES No. 55
securities has led investors to discard
caution and place their hard-earned
funds, often representing theirretirement savings, to promoters who
promise unrealistic profits to their
victims. The securities industry
estimates about $6 billion annually
in investor losses to securities fraudin the United States.
2. Costs of Economic Crime
Beyond the direct losses inflicted byfraud, which total in the tens of billions ofdollars each year, there are less apparent
costs. For example, businesses incur
substantial expenses stemming from
efforts to prevent and detect fraud. These
precautions include comprehensive audits,large security staff, and sophisticatedmonitoring and other high-tech preventive
measures. An official of a private security
firm stated, in remarks at an international
conference, that there has been an
explosion in the private security industry,
which currently employs 1.6 million
individuals and consumes $65 billion inresources. The speaker estimated that by
the turn of the century the industry willgrow to $100 billion and employ 2 million
persons. Ultimately, these costs are passed
on to the consumer or are absorbed bybusinesses as profit reducing expenses.
Fraud also exacts less tangible losses.
It distorts the flow of commerce anddisrupts the development of global trade.
Its staggering costs stifle developing
economies and can undermine the stabilityof banks and other commercial enterprises.
Economic crime, simply stated, is one of thegreatest threats to the realization of avibrant and healthy global economy.

142

II. COMBATING ECONOMIC
CRIME: STRATEGIES AND
COUNTERMEASURES FOR AN
EFFECTIVE GLOBAL RESPONSE
A. Criminal Enforcement Measures
Success in fighting white collar crime
requires a focused and coordinatedresponse that blends the domestic effort
with the broader international response.
On the domestic front, available resourcesmust be applied to the most pressing
economic crime problems. These priorities
can be set through a consultative processthat includes the investigative andprosecutive authorities, as well as all
relevant government departments andagencies.
International cooperation and mutual
legal assistance treaties and agreements
are essential tools in fighting global
economic crime. As countries focus theirattention on transnational crime, the needto modernize the methods by which we
obtain legal assistance from othersovereigns becomes more apparent.
1. Domestic Strategies(i) Investigative Techniques
During the past two decades, theDepartment of Justice has
formulated varied approaches ininvestigating and prosecuting
economic crime. We have moved
away from the traditional practice ofstrictly separating investigators andprosecutors. Instead of keeping theprosecutor away from theinvestigative process, we regularly
team agents and prosecutors toinvestigate cases jointly. Thisencourages closer collaboration andconsultation in developing an
investigative plan and leads to more
expeditious completion of that phasein the development of a criminal case.
At the same time, this collaboration

110TH INTERNATIONAL TRAINING COURSE
VISITING EXPERTS’ PAPERS
ensures that promising avenues ofinvestigation are not overlooked, thatsuccessful strategies for prosecution
are fully exploited and that legal
pitfalls are avoided.

not only reduces the burden of
preparation and presentation for theprosecutor but also facilitates a better
understanding of the case and theevidence by the adjudicatory body.

Undercover operations (UCOs),
originally developed as a means ofinfiltrating traditional organizedcrime groups like the Mafia, are now
an important part of our arsenal ofanti-fraud weapons. UCOs areespecially valuable in exposing
corrupt firms and individuals
imbedded in regulated sectors of theeconomy. UCOs provide additional
deterrence by keeping the criminal
element off balance. White collar
criminals can never be certain thatthe apparent collaborator may notactually be an undercover agent
ready to expose their criminal
activity.

Prosecutors and investigators may
be grouped together in specialized
units, or task forces, to concentrate
on a particular economic crimep r o b l e m . Ta s k f o r c e s p r o v e despecially effective in addressing thefrauds uncovered during the savingsand loans (S&L) crisis in the UnitedStates earlier in this decade.

(ii) Prosecutive Strategies
Prosecuting economic crimes
presents many challenges. The
schemes are often complex andpotentially confusing. Thus,
presenting the evidence necessary toprove criminal conduct may require
numerous witnesses and voluminous
documentary exhibits.
Experience gained by federal
prosecutors over the past decadesuggests that there are certain
strategies that significantly enhanceprospects for success. For example,
charging decisions can sharpen thetheory of prosecution and reducesome of the evidentiary burdens
inherent in these cases. Rather thanfocusing charges on the entire episodeof criminal conduct, our experiencehas shown that selecting the mostegregious acts or those transactions
for which the evidence is strongest

Denying criminals the fruits of
their crimes through the forfeiture of
their assets is one of the mostdramatic and effective economic
crime prosecutive tools to gain
prominence during the 1990s.
Forfeiture eliminates the profit incrime and also serves to remove
valuable instrumentalities of crime,
whether aircraft, office buildings or
the criminals themselves.
At the end of 1997, approximately$450 million had been deposited into
the Department of Justice Asset
Forfeiture Fund. The funds areshared with state and local law
enforcement agencies to supplement
their crime-fighting assets. In
addition, the fund assists incompensating crime victims.
2. International Strategies
Established and predictablemechanisms for obtaining evidence fromforeign jurisdictions is essential to fighting
economic crime on the international front.
Mutual legal assistance treaties (MLATs)
are one of the most common means ofachieving this goal. Rather than relying
on the cumbersome process of lettersrogatory, which invokes time-consuming

143

RESOURCE MATERIAL SERIES No. 55
diplomatic processes for conveying
assistance requests, nations are turning
increasingly to the MLAT to ensure thatborders are not barriers to pursuingeconomic criminals.
Treaties for extraditing individuals
charged with economic crimes are being
renegotiated in order to incorporate, as
covered crimes, more modern versions offraud and related offenses that may nothave existed in domestic law when thetreaties were first executed.
(i) Regulation
A key component in combating
economic crime is effective
regulation. Regulation helps by
suppressing practices that invite orconceal fraud. Regulation can also
deter migration of undesirable
individuals into positions of trust or
substantial financial responsibility.
In the United States, all federally
insured financial institutions are
required by law to file reports withlaw enforcement agencies wheneverthey have reason to believe thatcrimes may have occurred at theinstitutions. The federal bankregulatory agencies recently revised
the reporting procedures toincorporate the benefits of
information technology. Under therevised system, known as theSuspicious Activity Report (SAR)
system, the reports are filed at one
central point where they are enteredinto a computer database. Law
enforcement agencies access the SAR
database and retrieve all SARs fortheir respective jurisdictions. In
addition, the computerized databaseenables law enforcement andregulatory agencies to analyze the
SARs and identify emerging crime
trends.

144(ii) Regulation of Currency Transactions
Because money laundering
facilitates criminal activity, Congressenacted statutory provisions thatcreate a paper trail for currency that
resembles the document trail createdby other financial transactions
involving bank cheques and money
wire transfers. Essentially, thelegislation creates reporting
requirements when currency entersor leaves the country and whenever
cash transactions take place at banks
and certain other businesses.
On the international level, several
organizations are engaged insponsoring money laundering
enforcement programs. The
Financial Action Task Force (FATF),
an organization comprising oftwenty-six nations, issued revised
recommendations in 1996 thatbroadened the scope of the original
recommendations to include monies
derived from all serious crimes andto mandate the reporting of
suspicious transactions by financial
institutions. FATF also conducts
mutual evaluations and assessmentsof member states’ anti-money
laundering measures byrepresentatives from fellow
members.
The United Nations Global
Program Against Money Laundering(GPML), based in Vienna, Austria,
uses technical cooperation andresearch projects aimed at providing
member states with the means tocombat money laundering. GPML
is working with other internationalorganizations to develop an Internet
website on money laundering
matters, including a database of law
and regulations.

110TH INTERNATIONAL TRAINING COURSE
VISITING EXPERTS’ PAPERS
A relative of the credit card, thestored value or smart card, may
someday replace currency entirely.
But the stored value card adds
another dimension to money
laundering. Simply loading thestored value card with a value of $5
million in credit renders it thefunctional equivalent to several
suitcases of hard currency.
(iii)Coordination and Working Groups
The presence of government
regulation is an important step in
helping to protect an industry or
sector of a country’s economy. To
maximize the benefits of regulation,
however, another ingredient must be
added, coordination with the law
enforcement community. We havefound that interagency bodies, which
we call working groups, are aneffective means of developing andmaintaining that coordination. For
example, during our recent savingsand loan (S&L) crisis, we reliedheavily on our national Interagency
Bank Fraud Enforcement Working
Group to ensure that our law
enforcement and regulatorycommunities were working intandem to fight fraud against our
financial institutions. In addition to
the Bank Fraud Working Group, theDepartment of Justice currently
maintains at least five other working
groups for insurance, health care andtelemarketing fraud, as well as formoney laundering and securities andcommodities fraud.
III. TRENDS AND STRATEGIES
A. The Challenges of the Next
DecadeMany of today’s fraud schemes are
simply repackaged versions of classic
frauds. We can expect, however, that

tomorrow’s frauds will continue to embraceadvances in technology and to exploit gaps
created by the absence of international
agreements and coordination.
(i) Cybercrime
Cybercrime, a term that has cometo embrace computer-related crimeand other high-tech offenses, seems
certain to be the crime of the next
decade. Computers may be used asa storage or communications device
in the execution of a fraud scheme.
As an example, a fraudulent
telemarketing firm could store names
and relevant data concerningprospective victims to be telephoned
in a systematic execution of thescheme.
Computers may be used more
directly in the scheme as an
instrumentality of crime, a tool
facilitating the fraud. For example,
personal computers have been usedsuccessfully to gain unauthorized
entry into bank computer systems
and then to transfer bank funds toaccounts controlled by the cybercriminals.
The computer also serves as a weapon
for the theft of data, telephone or computer
services, or for damage to computers andcommunications systems. Recent media
reports described precautions being taken
by some governments against the threatof a computer terrorist attack on vital partsof a country’s infrastructure.
B. Effective Countermeasures
1. Prevention
The United States Attorney General has
placed high priority on crime prevention.
In the white collar crime arena, this is anespecially cost-effective approach tofighting crime. It has great potential not
only to prevent billions of dollars in fraud

145

RESOURCE MATERIAL SERIES No. 55
losses but also to conserve precious law
enforcement resources.
Crime prevention enlists the private
sector and citizens in the campaign to fighteconomic crime. The preventive measuresneed not be expensive or rely heavily on
high-tech solutions. Our experience withprevention programs suggests great
promise. For example, the banking
industry, plagued by mounting losses fromcounterfeit cheque schemes, recently
adopted a straightforward preventive
measure. When a non-customer seeks to
cash a cheque, the bank requires that the
non-customer place his/her fingerprint on
the cheque using an inkless fingerprint
pad. In states in which this practice has
been adopted, cheque fraud has been
reduced by 60% or more.
Credit card companies are experiencing
success in fighting fraud through the useof neural network technology that uses
computers to track individual cardholder
spending habits. Visa reported this yearthat fraud, as a percentage of volume,
reached an all-time low in 1997 as a resultof the neural network and related fraud
detection measures. “Smart” cards, thenext generation of credit cards, employ
embedded computer chips to store a wealthof information about the cardholder,
including biometric information that
includes the cardholder ’s physicalcharacteristics.
Government benefit fraud has been
reduced through the use of electronic
benefit cards that create a computer trail
to detect illegal usage of the welfare
benefits.
2. International Cooperation
The Global Community has come torealize the critical need for coordinationand cooperation in meeting the threat ofglobal economic crime. Some groups, like

146

UNAFEI, operate under the auspices of theUnited Nations. Others are based onregional or economic relationships.
Although their precise missions may differ,
all of these organizations share one
common goal, ensuring that borders do not
remain barriers to effective law
enforcement cooperation.
3. Training
Training is an essential ingredient inmounting a successful law enforcement
response to economic crime. White collar
criminals are clever and resourceful andoften operate in sophisticated segments ofindustry and finance. Moreover, many
white collar crimes occur in regulated
business environments. Investigators andprosecutors require specialized training inorder to navigate these difficult areas.
Commerce is exploding on the Internet.
Stocks can be bought and sold,merchandise and airline tickets purchased,
and banking transactions conducted fromthe home personal computer. Our law
enforcement agencies must expect financial
crime to gravitate to the Internet as it
becomes the global marketplace. Thus,
investigators and prosecutors will facedifficult issues, both technical and legal,
as we confront cybercrime. Only throughformal, structured training programs will
we be able to develop the necessary
expertise to meet the challenge.
IV. THE FUTURE : PROMISING OR
PROBLEMATIC?
As we prepare to enter the newmillennium, the law enforcement
community faces the dual challenges ofe v e r- e v o l v i n g e c o n o m i c c r i m e a n dtechnological innovation that constantly
accelerates the pace of change in the Global
Economy. Technology serves as a powerfultool in the hands of criminals, but it also
can be a devastating weapon against thesesame criminal forces. Through training

110TH INTERNATIONAL TRAINING COURSE
VISITING EXPERTS’ PAPERS
and professional development ofinvestigators and prosecutors, the law
enforcement community can continue tosuppress the global white-collar crime
threat. International cooperation andcoordination are central to enforcement
responses and to ensuring that a tidal waveof global crime does not engulf the many
benefits of the Global Economy.

147

PARTICIPANTS’ PAPERSRESOURCE MATERIAL SERIES No. 55

EFFECTIVE COUNTERMEASURES AGAINSTECONOMIC CRIME AND COMPUTER CRIME
Ramon Crespo Carrilho Machado*
I. ACTUAL SITUATION OF
ECONOMIC CRIME
Brazil is no exception to the late-century
economic crime sweeping the world. On
the contrary, it bears a long list of financial
scandals, strenuously prosecuted or stillunresolved serious cases and a widespreadsense of impunity. The existing set of laws
and regulations are under a continuous,
although slow, improvement process in an
attempt to fill legal gaps, stay abreast of
criminal innovations and fulfill
international agreements.
At the same time, criminal businessactivities constantly change their means ofaction, quickly adapting to the legal ande c o n o m i c c o n t e x t . S u r e l y, m o n e ylaundering constitutes one of the mostserious problems to study and control.
Money to be legalized come from countless
illicit sources; drugs and arms traffic,
corruption, import/export schemes,
financial system fraud, contraband andorganized crime, the most significant ofthem.
Economic crime seems to present atypology of special importance and frequent
occurrence in Brazil. It concerns large
corporations fraud, particularly banks andfinancial institutions. In the beginning ofmost cases, banks emerge as financiallytroubled institutions and later, afterinvestigation, turn out to include a
substantial criminal component. That was
the case of Banco Economico. Its financial
problems became public in December 1994
* Federal Criminal Expert, Federal Police
Department, Ministry of Justice, Brazil

148

and upon continuous demand for official
monetary assistance, Central Bank
intervention amounting to USD $3 billion
began only in August 1995. Later in thesame month, the National Monetary
Council approved PROER, which is atreasury fund that guarantees accountdeposits and finances to troubled banks for
restructuring. Banco Economico’s “goodpart” was sold to other banks while “therest” remained under Central Bank
administration, demanding USD $2.9
billion from PROER; due November 1996
and never paid.
As to the fraud, the police inquiry
process came across several illicit actions
entrusted to Banco Economico’s owners
who cooperated with the financial
insolvency. Among these actions weremoney transfers to foreign accounts, thetransfer of assets to associated companies
and to controlled off-shore companies,
simulated real state operations, bad loans,etc., which significantly reduced its asset
guarantees. A remarkable fact was that
the Central Bank noticed these frauds only
after the police inquiry.
A private bank called Banco Nacional
has an even more astonishing story. The
Central Bank intervention of it took placein November 1995, although there isevidence that inspectors knew about
misdeeds since September 1987. The
inquiry process conducted by the Federal
Police resulted in 700,000 pages,
distributed in 900 volumes. Forensic
computer experts went through 6,000
magnetic tapes containing 30,000 software
programs used by Banco Nacional. They

110TH INTERNATIONAL TRAINING COURSEPARTICIPANTS’ PAPERS
selected evidence from over 50,000 backup
magnetic tapes and developed over 100
data filtering programs in ‘Easytrieve’,‘Cobol’ and ‘Clipper’ computer languages.
One IBM 9672 mainframe and several
personal computers were used tomanipulate this material.
Accounting and computer forensic
examinations managed to prove that Banco
Nacional utilized up to 1,046 of its accounts
to grant phony credit amounting to USD$
16.9 billion over a period of seven years.
There was no real money involved in these
operations, but on manipulating
accounting computer programs, thosecredits incorporated positive results into
the audited balance sheets and made it lookfinancially sound. Banco Nacional
demanded USD $4.98 billion from PROER,
due November 1996 and still unpaid.
Again, its “good part” was sold to anotherbank.
Brazil’s land border with Paraguay has
also provided an opportunity for large scalemoney laundering after the Central Bank
imposed limitations on foreign residentbank accounts and financial operations in
1996. Some exempt status was granted toa few banks and exchange bureaus, toremain working under the old rules inconsideration of border intense commercial
transactions. This exception attracted anenormous amount of money laundering
operations to the border. Some of Banco
Nacional’s accounts analyzed during theinquiry process raised clues to the border
operations, and investigation began. The
present status of investigation points tooperations amounting to USD $10 billion,
under scrutiny through 152 police inquiry
processes, with 50 more being started
nationwide to identify these money sources.
The Central Bank revoked the special
status for that area and enhanced
inspections.

Another instance of illicit money transfer
being explored is related to “Annex IV”, aCentral Bank Ordinance that permits
foreign investment in Brazilian capital andstock markets through Foreign Investment
F u n d s . To g e t h e r w i t h l e g i t i m a t e
investment money, money previously sent
abroad as a result of corruption, tax
evasion, parallel accounting schemes, etc.,
has an excellent method of legally
returning to the country and leaving again
in the same way. Finance specialists
estimate that 50% of Brazilian foreign
reserve is funded in Annex IV investments.
The most recently noticed economic
crime typology, being followed closely by theCentral Bank and the Federal Police, isrelated to NGOs (Non Governmental
Organizations) and “Foreign Entities
Assistance Funds”. They are moving large
amounts of money into Brazil, justified as
relief assistance by NGOs and as social
investment by Foreign Entities.
One of the few statistical data studies
available on economic crime was developedby a Federal Public Prosecutor as a doctoral
thesis. It became a book titled “Criminal
Control on Crimes Against the National
Financial System” (Ela Viecko Volkmer deCastilho) published this year. It researched
all Central Bank communications to the
Public Prosecutors Office related to facts
defined as ‘economic crime’ by a 1986 law,which is the main legal provision defining
crimes against the national financial
system. This law places financial
institutions under Central Bank
inspection, thus greatly centralizing in it
all information. During the Central Bank’s
exercise of this attribute, identified
irregularities are addressed via an
administrative process. When illicit facts
come up, the Central Bank must refer thecase to Prosecutors Office, which candismiss it or request the Federal Police
institute a police inquiry process. Upon

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RESOURCE MATERIAL SERIES No. 55
completion, police inquiries end up in theFederal Justice courts for trial. The
research period covered July 1986 (whenthe 1986 law was enacted) to July 1995 andconsiders a selection of 606 Central Bank
communications, as shown in Table 1.
TABLE 1NUMBER OF CENTRAL BANKCOMMUNICATIONS
Year
1987
1988
1989
1990
1991
1992
1993
1994
1995
Total

No.
0
8
14
25
87
117
131
125
99
606

fr %
0.00
1.32
2.31
4.13
14.35
19.31
21.62
20.63
16.33
100.00

Table 2 shows the information gathered
about the average time, in years, calculated
from the time the alleged criminal facts
occurred and the date they werecommunicated to the Prosecutors Office.
TABLE 2
ELAPSED TIME BETWEEN FACTAND COMMUNICATIONTime
No. of years
0 to less than 1
63
1 to less than 2
93
2 to less than 3
102
3 to less than 472
more than 4
33
Total
363
Average time = 2.2 years

fr %
17.36
25.62
28.10
19.83
9.09
100.00

Table 3 shows the elapsed time, inmonths, calculated from the date of theCentral Bank communication to theProsecutors Office, and the date that the150

police inquiry process was instituted.
TABLE 3
ELAPSED TIME BETWEENCOMMUNICATION AND
PROCESS INSTITUTIONTime
No. of years
0 to less than 1
63
1 to less than 246
2 to less than 3
43
3 to less than 425
more than 4
35
Total
212
Average time = 2.1 months

fr %
29.72
21.70
20.28
11.79
16.51
100.00

Table 4 shows the elapsed time, in years,
calculated from the date of the police
inquiry process being instituted and its
conclusion by the Federal Police.
TABLE 4
ELAPSED TIME BETWEENPROCESS INSTITUTION AND
CONCLUSIONTime
No. of years
0 to less than 1
2
1 to less than 2
14
2 to less than 3
26
3 to less than 4
14more than 4
4
Total
60
Average time = 2.5 years

fr %
3.33
23.33
43.34
23.33
6.67
100.00

Table 5 shows elapsed time, in years,
calculated from the date of the police
inquiry process being instituted andindictment by the Prosecutors Office, whichis the beginning of the judicial process.

110TH INTERNATIONAL TRAINING COURSEPARTICIPANTS’ PAPERSTABLE 5TABLE 7ELAPSED TIME BETWEENPROCESS INSTITUTION AND
INDICTMENTNUMBER OF ADJUDICATED CASESTime
No. of years
0 to less than 1
38
1 to less than 248
2 to less than 337
3 to less than 4
22
Total
145
Average time = 1.8 years

fr %
26.21
33.10
25.52
15.17
100.00Item
Dismissed sentence
Merit sentence
Total

No.
62
15
77

fr %
80.52
19.48
100.00

Table 8 shows the nature of meritsentences.
TABLE 8
NATURE OF MERIT SENTENCES

Table 6 shows the elapsed time, in years,
calculated from the date of indictment by
the Prosecutors Office and the sentencing
by a Federal Justice Court.
TABLE 6ELAPSED TIME BETWEEN
INDICTMENT AND SENTENCINGTime
No. of years
0 to less than 1
5
1 to less than 2
4
2 to less than 3
93 to less than 4
2
Total
20
Average time = 2,5 years

fr %
25.00
20.00
45.00
10.00
100.00Item
Acquittal sentence
Conviction sentence
Mixed sentence
Total

No.
10
3
2
15

fr %
12.98
3.90
2.60
100.00Additionally, table 9 shows the Federal
Police Department statistics about the total
number of police inquiry processes initiatedbased on the two main laws regulating
economic crime. They amount to 7,742
inquiry processes since 1986 (when the firstlaw was approved) up to the present day.
Only 2,893 of these cases are registered as
being concluded.

Table 7 shows the number of adjudicatedcases. The distinction between a dismissed
sentence and a merit sentence is as follows.
The first one is issued after the conclusionof the police inquiry or Prosecutors Officeapprasial, when there is no basis forreferral to a Federal Justice Court. The
latter, after the conclusion of instruction
in Federal Court, is provoked by referral.

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RESOURCE MATERIAL SERIES No. 55
TABLE 9NATURE OF MERIT SENTENCES
Law 7.492/86 Law 8.137/90
Year
Started Concluded Started Concluded
1986
1987
6
1
1988
11
1
1989
46
7
1990
78
36
2
2
1991
154
35
60
17
1992
201
100
59
35
1993
481
235
280
114
1994
401
255
434
209
1995
369
190
518
288
1996
821
470
550
252
1997
629
228
851
257
1998
1,107
81
684
80
Subtotal 4,304 1,639 3,438 1,254
The research study and table dataeloquently demonstrate the application of
the economic crime law. The small numberof registered criminal offences bear no
proportional significance when comparedto the total criminality registered in official
statistics; estimated as one million Penal
Code offences per year in the country. Itshows the necessity to investigate thecurrent interpretation of the legal
provisions and to study the Central Bank,
Public Prosecutors Office, Federal Police
and Federal Justice system’s operation andprocedures.
II. PROBLEMS IN INVESTIGATION
AND PROSECUTION OF
ECONOMIC CRIME AND THEIRCOUNTERMEASURESThe economic crime research mentioned
before showed the Central Bank’s
predominant role in identifying illicit
procedures and reporting them to justiceauthorities. Legal power to inspect thefinancial system’s operating procedures

152

places the Central Bank under a judicial
duty to communicate crimes to the Public
Prosecutors Office. This communication is
not a requirement to start the police
inquiry process or criminal justice process,but it has conditioned other instances ofaction in practice.
The 1986 economic crime law predicts
the assistance of the Central Bank inprosecuting cases in the criminal process.
However, it is not rendering greater andbetter scrutiny of economic crime. As
became evident in the bank crash cases
cited in the previous section, Central Bank
monitoring has not prevented trouble infinancial institutions. Its inspecting
structure is oriented to law-abiding
auditing actions, instead of real financial
situations and assets quality evaluations.
Among other institutions withinspecting duties and illicit communication
obligations are the CVM (Securities
Exchange Commission), the Internal
Revenue Service (IRS) and somegovernment banks. Compared to thenumber of Central Bank communications,
CVM has communicated a total of 85 cases
to the Public Prosecutors Office, based on
the 1989 law defining responsibilities fordamages caused to investors on the
Exchange Market.
The Central Bank’s functions andautonomy are expected to undergo
significant changes as further regulations
are being debated in Congress. Its
autonomy, in relation to Executive power,
is intended to avert political influence inall areas. The same autonomy is desired
for CVM as well, including a greater rolein assisting prosecution.

110TH INTERNATIONAL TRAINING COURSEPARTICIPANTS’ PAPERS
III. CRIME PREVENTION
MEASURES TO CONTROLECONOMIC CRIME
The first step to preventive action on
economic crime is a sound, effective set oflaws. It is a prevalent belief that theresolution and significant change of serious
problems can only take place in a country
as a consequence of political motivation.
Observation of recent trends in Brazil leads
to the conclusion that important changes
are taking place.
Recent developments include the March
1998 Congress approval of Law 9.613/98,
incriminating money laundering activities.
This long-awaited law filled an important
gap in Brazilian criminal legislation, whileat the same time complying with several
international agreements, (among themthe 1991 Vienna Convention). It also
created COAF (Council to Control
Financial Activities) responsible formonitoring the activities of money
laundering suspects in financial andcommercial operations. COAF isempowered to apply administrative
penalties and request needed information.

A new anti-drug policy is to be developed
based on prevention and rehabilitation,
including better laws and regulations,particularly on the concept of preserving
national sovereignty and individual rights.
This new policy will also pursue
investigating the financial flow of drugs
and Brazil’s incorporation into FATF
(Financial Activities Task Force). The
Brazilian Federal Police Department also
has improved its structure, aiming tobecome a more effective and specialized
force against economic crime. A specificcommissioners division was created to thisend, namely DICOIE (Organized Crime
and Special Inquiries Division), under the
direct guidance of the General Director.
Finally, its crucial to optimize international
cooperation, especially with Interpol.
IV. ACTUAL SITUATION OFCOMPUTER CRIME

Along the same line, the constitution of
SGT-4 (Money Laundering Subcommitteeof the Mercosul Financial System
Commission) is intended to develop
strategies for the Mercosul countries. They
are presently evaluating the Brazilian
proposal for a minimum regulatory code.

The term “computer crime” is being
widely utilized and is well established anddefined. However, due to the fast pace oftechnological innovation, a comprehensive
approach must be adopted to efficiently
combat this type of crime. Based on thethe Brazilian Federal Police Department’s
experience relating to computer crime, aspecialized Computer Crime Investigative
Division was created as part of the National
Forensic Institute. In developing a
cognizance for, and extending this categoryof crime, it was first necessary to devise
three kinds of offences, as follows:

Another important initiative was thecreation of the National Anti-drug Bureau,
upon the recognition that Brazil has
become a corridor for drug export, and thebiggest manufacturer of chemical productsin Latin America. The estimatedconsumption of illegal drugs in the country
is USD $7.5 billion. Brazil has also become
more attractive for money laundering andcapital recycling, due to economic stability.

A. Computer Aided Activities
These are activities usually developed
without ‘computer demand’, but the use ofcomputers come from the assistance they
provide. It presents the possibility ofevidence retrieval when police action comes
across these types of devices. Some
examples are:• computer organizers used by drugtraffickers to store telephone numbers

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RESOURCE MATERIAL SERIES No. 55
and addresses, and computers storing
information about their business;• parallel accounting control incomputers.

these institutions suffered a USD $800,000
loss through illicit Internet credit card
purchases between July 1997 and March
1998, which were not reported to police.

B. Technology as an Instrument
In this category, the presence ofcomputers in the process is required toperpetrate the offence. Without thecomputer, the fact of the crime would notoccur. This category is not intended toindicate the appearance of new criminal
facts, although this might be the case. It
is mainly for activities using computers as
a new tool to gain efficiency, lower costs andimprove crime member security. An
illustrative example is counterfeit money,
which migrated from labor intensive andcostly printing processes to the average costof a graphics workstation. Likewise, thisis also the case for economic crime.

Counterfeit money produced throughgraphics workstation resources, andprinted on laser and inkjet printers, has
increased dramatically since theintroduction of the ‘Real’ (Braziliancurrency denomination) in 1994, with
newly designed bills. The number of forgedcurrency bills made through this method
and seized by the Central Bank increased
as shown in table 10.

C. Virtual Crime
Labeled this way are those crimes
targeting computers and the reality (data)stored in them. The intention is to alter
the digital representation of goods andvalues in order to obtain unmerited
advantages. For this purpose, all it takes
is privileged access to computers,commanding transactions throughkeyboards, which is far more convienent
than handling pistols and machine guns
to demand and withdraw money from abank.
Offenders in these cases seem to be
motivated by the small probability ofphysical injury, together with the support
that a device which processes millions ofoperations per second can offer, to use these
operations to benefit them directly.
Its known that in Brazil, several credit
card companies have been victims of credit
card fraud; but they will not disclose thesefrauds throush fear of negative publicity
and breach of client confidence. One of154

TABLE 10
NUMBER OF SEIZEDCOUNTERFEIT MONEY BILLS
Year
1994
1995
1996
1997
1998
Total

Bills
1.046
9.168
75.283137.489
101.182
324.168

The enormous incidence of this type ofoffence compelled the Federal Police
Forensic Section to develop a computer
database intended to classify eachcounterfeit bill according to its:
• value• printing process: ink jet, laser, off-set,
copying machine• individualizing details: type of paper,
serial number, defects• origin: city where bill wasapprehended• date• inquiry process number• names involved
This database registers money forgery
occurrences in Sao Paulo since February
1996, storing information from 1,387 police

110TH INTERNATIONAL TRAINING COURSEPARTICIPANTS’ PAPERS
inquiry processes and totaling 4,177
currency bills classified to date.
A report containing matching
characteristics keyed by value, printing
process, details and name is then issued
and attached to the forensic analysis reportwhich is sent to the origin for further police
investigation. Another benefit of thisreport is the possibility of quickly
identifying and effectively charging thecriminals also responsible for counterfeit
money with similar characteristics foundin distant locations.
V. PROBLEMS IN COLLECTINGEVIDENCE OF COMPUTER CRIME
AND THEIR COUNTERMEASURES
Within evidence collection, a morepressing and crucial problem is posed bytracking and identifying offenders,
particularly when considering cases
originating in large networks such as theInternet. The actual stage of WWW
computer interconnection allows anyone,from the most remote location, to accessinformation in unsecured systems virtuallyunnoticed. Moreover, his/her system might
be used to store, diffuse and/or promote
such crimes as pornography, bomb
manufacturing, introducing computerviruses, etc.
Although most reported cases relate topornography involving children and teenagers, damage caused by hackers isfrequent, but seldom effectively prosecuted,
due to criminal classification uncertainty.
Questions to address in examinations of
this nature are:i) First, the existence of legal provisions
for the crime;ii) Correct identification of the criminal
acts authorship. Most of the time,computer activities registers (logs)
are obtained, but the possibility offorged computer access using third
parties accounts must be considered,as it is a common procedure inhackers attacks;iii) What can be considered as evidence?
For example, one Internet page
containing illicit material is initially
noticed (browser). Usually, there’s a
responsible person for each page on
the web, and he/she is identified byinquiring through the server operator(it must be remembered that servers
will not take responsibility for users
published material). To bettersupport prosecution, these pages areapprehended in the server’s system.
Couldn’t the hackers be those who
inserted the pages, considering theprevious item’s (2) rationale?
iv) One computer being “invaded” by ahacker theoretically situated in adifferent state poses the problem of
distance, in actions of search andapprehension.
In a recent and very much publicizedcase in Brazil, a TV presenter of a cultural
program which shows its e-mail address on
screen for viewers interaction, received 105
harassing messages from a“rapist@macho.com”. Police weresuccessful in identifying the author, amarried systems analyst, who disguised his
signature using software called
Unabomber. In addition, he had 430 moremessages in his HD sent to a newspaper
columnist. He was charged withharassment and convicted to a one-year
alternative sentence.
To track him, as has happened in othercases, police relied on the network service
provider’s cooperation. Obviously, thiscooperation can not always be expected, assome service providers are resistant todisclose client registers; posing the problem
of devising other effective means ofinvestigation and mandatory disclosure

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RESOURCE MATERIAL SERIES No. 55
regulations.
A relevant case of child pornography wasinvestigated by Interpol in Brazil, basedon information received from counterpartsin other countries and child protectiongroups. Working with remote monitoring,
electronic surveillance and search
warrants, Interpol managed to identify andarrest the service operator, and one of its
users, in another state as responsible for
furnishing several images.
The creativity component found in thepractice of these particular offences is acontinuous challenge for forensic
specialists’ knowledge improvement. Someuseful technical concepts for evidencecollection are presented below, although it
is important to mention that it is difficult
to list a detailed set of proceedings andtechniques suited for all forensic
examinations.
A. Evidence Retrieval
The title expression has been used forsome time by special computer crime units
in international organizations; meaning awhole set of proceedings to be performedin the forensic examination of computermaterials. An elemental sequence in thisset of proceedings is as follows:i) Ambience Analysis: gathering all
information concerning work
environments, hardware andsoftware adopted, user activities,
data flow, connections configuration(e.g. isolated workstation, network
station, modem connections, etc.),
amongst others, is fundamental in
reducing the possibility of error in thenext steps;ii) Search: after taking cautionary
measures to preserve all the material(unchanged), useful data is searchedin the equipment support;iii) Translation: considering that any and156

every computer content is, in fact, a
digital representation of thecomprehensive information of humanbeings, translation processes are used
to both insert into and retrieve
information from computers, thus
making it possible to obtain originalunaltered information. It may look
simple but, considering thepossibility of a faulty translation,
methods and proceedings must be
defined to guarantee sufficient clarity
and accuracy;iv) Presentation: issuing a final report.
B. Search of Information
Special methods and tools are employed
to recover data, information, or remnantsof them, located in permanent memorycomputer media, such as hard and floppy
disks, magnetic tapes, CD-rom, opticaldisks, etc. The usual proceedings are:i) Searches adopting a user point ofview, oriented to understanding thework ambience of the equipment’suser, comprehending directory tree
verification, main software programs
and installed systems;i) Meticulous search of scattered data,such as text and images fragments,
deleted files and printing spools.
The above mentioned cautionary
measures in handling examining material
anticipate the following actions, taken inorder to preserve evidence integrity:i) Technical measures: boot control,
media mirroring etc;ii) P h y s i c a l C a r e : p a c k a g i n g ,transportation, magnetic fields etc.

110TH INTERNATIONAL TRAINING COURSEPARTICIPANTS’ PAPERS
VI. LEGAL FRAMEWORK AND
CRIME PREVENTION MEASURESTO CONTROL COMPUTER CRIME
The existing legal framework on
computer crime in Brazil still lacks aspecific and comprehensive law defining
principles, legal use of information, andrelated offences and punishments. Thereis a draft bill in Congress, which has notbeen submitted to debate yet, whose
proposals contain:• Principles to regulate computer
network services;• Rules for the use of computer andnetwork information;• Definition of computer offences andrespective punishments, ranging
from six months to six years
imprisonment and fine.

iv) Law 7.646 - 1987: software is definedas original intellectual property.
In some cases, certain laws are being
used with a broader interpretation of theirprovisions; to penalize computer-related
crime conduct lacking a specific legal basis.
According to one approach, “If computerequipment is considered someone’s else
property, actions of erasing or altering its
digital representations directly affects thecondition of its regular functionality. In
this way, the equipment can be properly
considered as an aggregate of its physicalparts (hardware), in association withessential instructions to achieve its
intended functionality (software), thus any
such damage could be charachterised as acrime.’’

Some existing laws provide partial
support to the prosecution of determined
offences. The relevant portions of theselaws are summarized below:i) Law 5.988 - 1973: when information
turns to be original material and isrelated to literary, artistic or scientificwork, its author has rights definedin this law;ii) Law 7.170 - 1983: considering a given
set of data as secret and of Brazilian
state interest, its diffusion(communication, delivery, consent tocommunication or delivery) to foreign
governments or groups, ororganizations or groups of illegal
existence, constitutes a crime against
national security, political and social
order;
iii) L a w 7 . 4 9 2 - 1 9 8 6 : t h e p l a i nunauthorized access to extraneous
data kept by financial institutions isalready typical conduct. Article 18
defines as a crime the breach offinancial institutions operationalsecrecy or rendered services;

157

RESOURCE MATERIAL SERIES No. 55

EFFECTIVE COUNTERMEASURES AGAINSTECONOMIC CRIME AND COMPUTER CRIME
Mahavir Singh Bali*
I. INTRODUCTION
Economic crime has been a phenomenonof commercial life since the days of the
Romans, but in the latter half of the 20th
century, it has become a growth industry.
With the development of sophisticatedmeans of communication, jet travel,facsimile machines, the wire transfer ofmoney and now open borders, there are
now no barriers to those who would preyon our financial institutions, destroy the
economic stability of our commercial
enterprises or corrupt our governments.
Moreover, it is a crime of low risk and highgain, with usually very little investment
from the perpetrator. Access to a fax
machine and telephone are sufficient tools
with which to perpetrate massive frauds.
The detection, investigation andsuccessful prosecution of the economic
criminal is difficult enough for those
responsible for it in developed countries.
The cases being complex and multijurisdictional, require not only dedicationand commitment of the investigating
agencies and their governments, but also
the expertise, manpower and funding
necessary for the task. Developing
countries face an insurmountable task inthis regard. The officials of many of thesegovernments, as a result of a combinationof factors, including all pervasive corrupt
practices and low wages, are themselves
highly vulnerable and have little incentive
to change the situation. Many
Governments are loath to delve into
allegations of massive frauds and* Deputy Inspector General of Police, Central Bureau
of Investigation, Anti-Corruption Branch, India

158

corruption committed by theirpredecessors, for fear that their successors
may be inclined to do the same.
At the heart of all free market economies
lies a fundamental paradox. It is the needto provide the greatest degree ofcommercial freedom for the market toenable the entrepreneurial business toflourish, while at the same time ensuringthat those whose criminal activities would
subvert and undermine the commercial
effectiveness of those markets are denied
access to the benefits which that very
freedom allows. It is one of the great ironies
of western capitalism that in so manycases, the most apparently innovative andentrepreneurial financial schemes, which
are most attractive to investors are all too
often the brainchild of the white collar
criminal. For countries whose free market
economies are still evolving, it is extremely
difficult to strike the delicate balance
between the imposition of too great adegree of bureaucratic regulation, which
has a tendency to inhibit entrepreneurial
activity, and deliberately refraining fromintroducing tough regulatory legislation,
thereby allowing emerging markets tobecome infiltrated by criminally corrupting
influences (who offer the tempting shortterm profits, with accompanying long term
damage and subversion). Nevertheless, it
must be recognised at the threshold thatcriminal infiltration of the commercial
infrastructure of society is one of thequickest ways of ensuring the ultimate
corruption of the social and political fabric,with all the inherent implications whichsuch a scenario possesses for the very basisof a free democracy.

110TH INTERNATIONAL TRAINING COURSEPARTICIPANTS’ PAPERS
Economic crime, by the very disparate
nature of its component activities, isincapable of simple definition. White-collar
crime is expressed most frequently in theform of:• misrepresentation in financial
statements of corporations• manipulation in the stock exchange• commercial bribery• bribery of public officials directly or
indirectly in order to securefavourable contracts and legislation• misrepresentation in advertising andsalesmanship• embezzlement and misapplication offunds• short weights and measures andmisgrading of commodities.
• tax-frauds• misapplication of funds inreceivership and bankruptcies.
Measuring the underground economy of
any nation, much less of developing
countries, is an imprecise science, involving
only guesstimates and probabilities basedon imperical hypotheses. According to
Edger L. Feige, Professor of Economics,
University of Wisconsin-Madison;“the world economy appears to
subsume a hidden economy which
employs US currency as its medium of
exchange and is roughly 90 per cent aslarge as the US. economy”.
The Congressional Quarterly
Researcher, puts the size of the global
underground economy at a staggering US$
5.8 Trillion (1993). Generation of
unaccountable funds from an undergroundeconomy is not peculiar to the UnitedStates. Among other industrialised nations
the problem is equally severe. However,the problem is more acute in developing
economies, particularly, in Africa and South
Asia. The International Labour
Organisation estimates that the informal
economy employs 59 percent of the urban

labour force throughout Sub-SaharanAfrica, and accounts for as much as half
the GDP of some countries in the region.
In India, various estimates have been
made to ascertain the extent of blackmoney generated from time to time.
Amongst them, the most authentic is thatof the National Institute of Public Financeand Policy, New Delhi (NIPFP). NIPFP
estimated the black money income in India
at Rs. 405,000/- Million (USD $ 32,440
Million) in 1985, amounting to 18 to 21 percent of the GNP. This study also estimatedthat the tax evaded can be anywhere up to
70 percent. The main headings underwhich the estimates were made are as
below :i) Grant of licences and permits inreturn for bribes or politicalcontributions.
ii) ‘ S p e e d m o n e y ’ t o a c c e l e r a t eadministrative procedures.
iii) The sale of jobs, postings or transfers
in various public services.
iv) Regular bribes to petty functionaries
from different government
departments (for instance factoryinspectors, health inspectors, police,
tax inspectors, etc.). These collections
are often shared with higher officialsof the department concerned.
v) Bribes to alter land use, zoning or to
regularise unauthorised structures.
vi) Bribes to obtain and maintain scarcepublic goods and services, such as
electricity, telecommunications,
irrigation water, and rail wagon
allotments.
vii)Bribes to obtain public contracts.
viii)Bribes to political authorities atvarious levels, ostensibly to financeelections and post election
manipulations.
Apparently the above report did not take
into account many other factors responsible

159

RESOURCE MATERIAL SERIES No. 55
for generating unaccountable funds in
India. According to Prof. Suraj B. Guptaof the Delhi School of Economics, the blackincome in India stood at Rs.1,492,970
Million (US $ 113,241- Million) in 1987-88.
It is to be noted that most of theestimates of black income made byeconomists do not take into accountunaccountable funds generated in arms
sales, organised crimes, drug trafficking,terrorism and money laundering. The
underground economy by definition is
informal, invisible, subterranean and offthe-books. These factors make it extremely
difficult to guesstimate, let alone estimate,
the quantum of funds involved in thesetransactions.
India has a plethora of laws to curb
economic crime in its various
manifestations and dimensions. Appendix‘ A’ i n d i c a t e s s u c h c r i m e s a n d t h ecorresponding statutes to deal with them.
II. CORRUPTION (GOVERNMENT& CORPORATE)
Ingowalter identified four distinct
categories of payments which possess
corrupt characteristics:i) Bribes : Significant payments toofficials with decision making powers
to convince them to do their jobs
improperly.
ii) Grease : Facilitating payments tominor officials to encourage them todo their jobs properly.
iii) Extortion : Payment to persons inauthority to avoid damage fromhostile actions on the part of unions,criminals, utilities, etc.
iv) Political contributions : payments topolitical parties linked to favours or
threats of retribution in case of nonpayment.

160

The effect of such payments means that
ordinary commercial life soon becomesundermined, because the bribes paid areinevitably passed on by the payer of thebribe to the customer, who has to pay more
for inferior goods. At the same time, thecorrosive effect of institutionalised
corruption permeates every level of society.
This leads to the growth of a cynicaldisregard for subjects such as commercial
morality, public sector ethics or the rule oflaw.
Economic crime is invariably associatedwith corruption, which of course represents
an even more direct attempt on the
integrity of the State and its institutions.
Corruption, illegal gratification andconsiderations which are not due, involve
huge amounts of money and valuables.
These transactions not only breed blackmoney but are also potential grounds forparties with vested interests for thecommission and expansion of the activities
directed towards economic offences. Evenfew millions of illegal dispensation by wayof bribery is sufficient for economic
manipulation to the tune of billions, bythese offenders.
Corruption in public and corporate life
has assumed serious dimensions in India.
From the early eighties, political corruption
has been on the increase and many leading
political figures in India and many politicalparties have been accused of accepting
illegal monetary contributions from thebusiness world in the matters of arms
contracts, power and fertiliser contracts,
etc. Liaison agents, both of leading Indianand foreign firms, have been operating thissystem in conjunction with corrupt
politicians and bureaucrats. In some of thecases which have come to light, complicatedmoney laundering operations and “hawala”(underground banking operations) havebeen found to have taken place in order tostash illegal funds abroad. The higher

110TH INTERNATIONAL TRAINING COURSEPARTICIPANTS’ PAPERS
judiciary in India, particularly, theSupreme Court of India and various State
High Courts had to intervene and orderinvestigations against leading politicalfigures on the basis of public interest
litigations, when the normal criminal
justice system and the anti-corruption
machinery was found weak or insufficient
to proceed against them.
The issue of corruption in public life has
engaged the attention of the people, thejudiciary and the Government of India.
India has had the legislative tools (AntiCorruption laws) for the last five decades
to combat corruption in the public service.
The updated Prevention of Corruption Act,
1988 is quite comprehensive in its scopeand covers the bribe giver, the bribe taker,
their aides, abettors and conspirators
including the ‘touts’ or middlemen. Under
Criminal Law Amendment Ordinance
1944, assets acquired through corrupt
means, both in the name of self or“Benami”, can be forfeited. However, thelegal provisions alone are not sufficient totackle the problem on account of theenormity of the problem. Only a small
number of investigators are available totackle the task and a long time is taken in
investigation and trial. The informationcollected from the Central Bureau of
Investigation, India and various State

Vigilance Bureauxs in regard to punitive
actions against the public servants andothers is indicated in Tables I to IV.
Table I indicates cases registered by the
CBI and by the various State AntiCorruption Bureaus.
TABLE INo. of cases
registered
CBI States/Uts
1991 1180
1708
1992 1231
1772
1993 1282
1895
1994 1106
2104
1995 825
2064
Year

Persons
Arrested
CBI States/UTs
1325
1011
1167
463
2296
297
2604

Table II indicates departmental action
taken against various categories of public
servants by the CBI, for their involvement
in corruption cases. Table III indicatesdepartmental action taken against various
categories of public servants by the State/
UT Vigilance Bureau. Table IV gives
statistics with regard to the public servants
prosecuted by the CBI for theirinvolvement in corruption cases along withassets seized from them.

TABLE II
Year

1991
1992
1993
1994
1995

Persons
Persons
reportedreportedfor regular suitable forDept. action action by Dept.
1132
1338
1179
1922
735

364
582
NA
149
44

Departmental
punishment

Catagories of public
servants involved
in regularDept. action
Dismissal Removal Major Minor Gazetted NGO Pvt
35
10
NA
NA
608
493
31
54
24
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
22
22
137 256
249
187
1
11
11
133 194
392
322
21

161

RESOURCE MATERIAL SERIES No. 55
TABLE IIIYear

Persons
Persons
reportedreportedfor regular suitable forDept. action action by Dept.

1991
1992
1993
1994
1995

734
831
939
318
295

317
45
35
103
87

Departmental
punishment

Catagories of public
servants involved
in regularDept. action
Dismissal Removal Major Minor Gazetted NGOs Pvt
1917
207 207868
1623 159
6
2
45
45
1027
1253 151
18
10
52
52
411
1431 294
7
3
27
27
464
1176 229
27
14
53
53
1114
1278 499

TABLE IVYear

No. ofcases regd.

1992
1993
1994
1995
1996
1997
1998

1025
1016
1117
1134
1189
988
430

GO
234
277
295
384
478
385
119

No. of public
servants involved
Convicted
Charge sheeted
Arrested
NGO GO NGO
GO
NGO
252
38
33
31
130
248
45
57
57
10
470
46
65
70
139
425
51
53
87
153
412
57
76
78
131
331
66
110
57
114
195
31
53
14
38

III. ABUSE OF FOREIGN AID
PROGRAMMES
Since World War II, the more developed
countries of the northern hemisphere haveprovided financial and economic aid tounderdeveloped nations in the “Third
World”. A proportion of the aid supplied
has been donated by religious and social
welfare charities who draw their funding,to a large extent, from voluntary
contributions given by private donors.
By far, the greatest proportion of aid
funds are provided by government
agencies. The terms under which such aid
packages are given are often associated162

Total seizure
during searches(Rupees)
6,70,54,928/8,31,94,603/4,55,14,180/3,07,34,994/9,07,95,209/5,60,59,639/92,79,954/-with parallel, reciprocal agreements suchas the supply of arms or other military
hardware, the provision of political advice
or consultancy, or guaranteeing (by therecipient government) the suppression of
the political ambitions of groups whose
aims are perceived to be antithetical tothose of the donor State.
Examples are payments made in the
Iran-Contra Affair. In an investigation in
1991, evidence surfaced of U.S.
Contractors improperly using foreign
military financial funds to pay
unauthorised commissions for contracts in
Egypt and Israel. Huge fortunes in foreign

110TH INTERNATIONAL TRAINING COURSEPARTICIPANTS’ PAPERS
banks, deposited by dictators ofunderdeveloped countries, are nothing but
the systematic plunder of nations by thoseleaders. In India, allegations havefrequently been made of misuse withcorrupt motives of foreign aid programmes
by both officials and politicians.
IV. SMUGGLING AND CUSTOMS/
EXCISE FRAUDS
Smuggling, which involves clandestine
operations leading to un-recorded trade, isanother major economic offence. The
volume of smuggling depends on the natureof fiscal policies pursued by theGovernment. The nature of smuggled
goods and the quantum thereof is also
determined by the prevailing fiscal policies.
India, with a vast coastline of about 7500
kilometres and open borders with Nepal
and Bhutan, is prone to large scale
smuggling of contraband and otherconsumer items. Though it is not possible
to quantify the value of contraband goods
smuggled into this country, it is possible toestimate the extent of smuggling from thevalue of contraband seized, even though it
may constitute a very small proportion of
the actual size. Table V shows the value ofgoods seized.

TABLE VYear Value of Goods Seized (in crores)
1988
443.14
1989
554.951990
760.08
1991
740
1992
535.71
1993
388.96
1994
535.22
1995
631.25The high point of smuggling was in 1990
when contraband worth Rs.760 Crores wasseized. The introduction of various
liberalisation measures, such as withregard to gold and silver imports in 199293, had an impact on customs seizures. The
total value of seizures came down by 30%(Rs.536 Crores in) 1992 and further down
to Rs.389 Crores in 1993. The value of
seizures of other important commodities
from 1991 to 1996 is shown in table VI.
The value of seizures of gold and silver
accounted for about 44% of total seizures
annually prior to the liberalised importpolicies. It came down to 21% after theannouncement of new policies and has
continued to fall. On the other hand, theseizures of commodities like electronic
goods, narcotics, synthetic fibres, wrist
watches, Indian currency, foreign currency,

TABLE VI
Items
Gold
SilverNarcotics
Electronic Items
Foreign Currency
Indian Currency
Synthetic Fabrics
Watches

1990-91
198.8
146.6
25.1
55.5
7.7
6.5
4.8
3.2

1991-92
188.5
147.7
21.8
23.1
10.8
5.6
2
6.2

1994-95
55.4
3.6
54.3
51.2
27.4
6.6
2.4
3.3

(in Crores)
1995-96
50.8
0.54
77.94
38
40.2
5.6
12.9
3.9

163

RESOURCE MATERIAL SERIES No. 55
etc, rose during 1994-95. The value of
seizures of electronic items rose from Rs.35
Crores in 1993 to Rs.51 Crores in 1995. The
value of Indian currency and foreign
currency seized rose from Rs.5 Crores andRs.20 Crores in 1993 to Rs.10 Crores andRs.43 Crores respectively in 1995. In 1987,
gold occupied the top position amongst thesmuggled items followed by narcotics,
electronics, watches and silver. In 1995,
however, narcotics occupied number one
position followed by gold, electronics,
foreign currency and synthetic fibres.
Table VII shows the number of persons
arrested, prosecuted and convicted under
the Customs Act. In addition, 758 persons
were detained under COFEPOSA in 1991;
423 in 1992; 372 in 1993; 363 in 1994 and
350 in 1995.
TABLE VII
Year Arrested Prosecuted Convicted
1991
2358
1669
574
1992
1745
1051
381
1993
1234
679
350
1994
1210
301
352
Sovereign countries of the free port
areas, with few exceptions, impose importtariffs on goods being brought within theirjurisdiction for the following reasons :(i) Indirect taxation.
(ii) To prohibit the importation of articles
which may pose a specific threat tothe host nation.
(iii)As a measure of protection to home
based industries.
Fraudsters find ways and means tocircumvent these regulations/duties. In
Europe, it takes the form of an attempt toobtain unlawful payment of agricultural
subsidies based upon the production offorged documents etc. In India, the various
schemes employed by the fraudsters are:

164(i) Over-invoicing of exports to takeadvantage of the DEEC scheme
wherein imports of duty-free raw
materials are made subject to theexport obligation being fulfilled. The
larger the value of the export goods,
the greater the value of the duty-free
imports permitted. Difficulty
experienced in countering this is that
the Customs Department has toprove the contract between the
Indian and the foreign parties is fake.
An unholy relationship between theexporter and the importer has to beestablished. This requires foreign
investigation which is both expensive
and time-consuming, and cannot be
undertaken in every case. Double
taxation treaties do not help as they
do not exist in every country.
Problems have been encountered byIndia, particularly with regard to theinvestigation of such deals between
Indian exporters and importers in
Dubai.
(ii) Another method adopted by the
fraudsters in India is to over-invoice
the exports, in which case the money
comes back to India through ‘Hawala’
or by the smuggling of narcotics, gold,
etc. Similarly, another method todefraud Customs is by underinvoicing the imports. In this case,money is transferred out of thecountry by ‘Hawala’.
(iii) Fraudulent importers also misuse theprovisions of value-based, advancelicensing schemes for importing raw
materials into the country, and later
for selling the same at huge profits
in the black market.
Table VIII gives the latest figures inrespect of the value of seizures under the
Customs Act.

110TH INTERNATIONAL TRAINING COURSEPARTICIPANTS’ PAPERSTABLE VIIINAME OF ITEM
Value of seizures (smuggling)
Duty value of evasion cases
Total(Value Rs. in Crores - a Crore is ten million).
1994-95
1995-96
1997
1998(to August)
587.46648.59539.96256.1866.83
364.87143.9873.01
654.29
1,013.46
683.94329.19Seizures of major
Commodities
Gold
Foreign currency
Synthetic yarn and fabrics
Electronic items
Narcotics
Narcotics (International value)
Chemicals
Agricultural produce
Ball bearings
Machinery & parts
Others including
vehicles/vessels/aircraft

1994-95

1995-96

1997

60.8
33.26
13.78
57.24
89.7
NA
2.68
NA
NA
NA
330

56.76
51.53
22.62
51.07
73.31
1,250.79
1.92
4.26
5.43
23.74
357.95

54.59
53.05
21.67
24.45
41.32
765.33
3.99
5.58
12.63
32.42
290.26

Major commodities in respectof duty evasion cases
Electronics
Synthetic yarn and fabrics
Machinery & parts thereof
Chemicals
Others

1994-95

1995-96

1997

NA
NA
NA
NA
NA

21.23
13.42
2.15
6.94
321.13

8.73
1.75
2.05
131.45

V. DRUG ABUSE AND DRUG
TRAFFICKING
This is perhaps the most serious(organised) crime with economic overtones
affecting the country, being truly transn a t i o n a l i n c h a r a c t e r. I n d i a i sgeographically situated between the
countries of the Golden Triangle andGolden Crescent, and is a transit point fornarcotic drugs produced in these regions,to the West. India also produces aconsiderable amount of licit opium, part of1998(to August)
30.25
26.77
7.41
5.78
12.9
209.59
14.77
2.6
5.05
16.96
133.691998(to August)
0.01
11.95
2.29
1.87
56.89

which also finds place in the illicit market
in different forms. Illicit drug trade in
India centres around five major substances,namely; heroin, hashish, opium, cannibas
and methaqualone. Seizures of cocaine,
amphethamine and LSD have not been
known, and if occur, are insignificant andrare.
The Indo-Pakistan border has
traditionally been most vulnerable to drugtrafficking. In 1996, out of the total
quantity of heroin seized in the country,165

RESOURCE MATERIAL SERIES No. 55
64% was sourced from the “Golden
Crescent”. The Indo-Mynamar border isalso quite sensitive but the percentage of
seizures from there is much smaller. The
Indo-SriLanka border has also started
contributing considerably to the drug trade.
The seizure of narcotic drugs from 1991
to 1995 and the persons involved in the
trade is indicated in Table IX. In 1996,
13,554 persons were arrested under the
Narcotic Drugs and Psychotropic
Substances Act (NDRS). Out of them, 130
persons were of foreign origin. Eighty
persons were detained under the NDPS Act
in 1991; Eighty each in 1992 and 1993; 123
in 1994 and 89 in 1995.
India has a draconian anti drug law the Narcotic Drugs and Psychotropic
Substances Act 1985, which provides aminimum punishment of 10 years foroffences under this Act. The conviction rate
in drug offences is rather low. It was 48.8%
in 1995. The acquittals mainly result due
to non-observance of statutory andprocedural safeguards, i.e. the enforcement
officer failing to volunteer themself for
personal search before conducting thepersonal or house search of the accused, or
failure in offering to have the accusedsearched by a Gazetted Officer or a
Magistrate. It is being contemplated toamend the Act to plug procedural loopholes

and to calibrate punishments by grouping
the offences.
Investigative skills need to be honed andtrials expedited. Inter-agency exchange of
information amongst the countries by thequickest possible means, coupled withexpeditious extradition proceedings, would
prove helpful in curbing the drug menance.
India has signed bilateral agreements with
the USA, UK, Myanmar, Afghanistan,
UAE, Mauritious, Zambia and the RussianFederation for drug control.
VI. CORPORATE FRAUD (THEFT &FALSE ACCOUNTING)
This consists of the formation of limited
companies which will then obtain large
quantities of goods on credit, in what would
appear to be a normal commercial deal.
The supplies are then secretly re-routed toother corporate entities or sold at‘knockdown’ prices. The proceeds from thesale are then passed back to the controllersof the fraud, whose names and antecedents
in most cases do not appear anywhere in
the company documentation. The maindifficulty lies in being able to differentiate
between a deliberate operation of such a
company and the activity of a wholly
legitimate concern; which falls upon hardtimes owing to economic recession or a fallin commercial demand for its products.
Once the proceeds from the crime have

TABLE IX
Drug Type
Opium
Marijuana
Hashish
HeroinMandrax
Persons Arrested(No.)
Persons Prosecuted (No.)
Persons Convicted (No.)

166

1991
2145
52633
4413
622
4415
5300
5546
855

1992
1918
64341
6621
1153
7475
12850
7172
761

1993
3011
98867
8238
1088
15004
13723
9964
1488

1994
2256
187896
6992
1011
45319
15452
9154
1245

1995
1183
57584
3073
1251
16838
14673
12918
2456

110TH INTERNATIONAL TRAINING COURSEPARTICIPANTS’ PAPERS
been secured, the directors of the company
allow it to be liquidated and start anothercompany in another town using the same
method. During the year 1992-93, theBritish Serious Fraud Office wasinvestigating fraud cases of this nature
where total losses exceeded 5,300 million
pounds.
In India it is very easy to register ac o m p a n y, p r i v a t e o r l i m i t e d , o r apartnership concern. Inter-company
transactions are established with a view
to defrauding income tax authorities. In
banks also corruption invariably plays apart, as in most of such deals, certain
officials of the departments/banks
concerned are compromised.
With the liberalisation of the Indian
economy, positive developments in thestock exchange, primary share/securities
markets, foreign investments,
opportunities for joint ventures abroad etc.,
there has been a sudden spurt in demandfor credit/finance from the corporate world.
Unfortunately, this has also resulted in a
growing incidence of corporate frauds
which can be clubbed in the following
categories :(i) Frauds in Public Issue of Shares:
Many private limited companies havefloated the public issues of shares.
On receipt of application money, theshares have not been allotted. At
times, against the public issue ofshares, bridging loans have beenobtained from the banks. The funds
so obtained have been diverted to thefront companies for various otherpurposes. One securities scam on ahuge scale took place in the country
and will be discussed under bank
fraud.
(ii) Non-banking Financial Companies,
Plantation Companies and Chit

Funds: In the recent past, there has
been a mushroom growth of NBFCs,
Teak/Agro Plantations, Chit Funds,
etc. These promised very high andattractive returns on investments
made with them. Funds thus
collected have been diverted for otherpurposes and most of thesecompanies have become defunct.
(iii) Imports into Bonds: Gold, as an
unfinished product, is imported into
bonded warehouses by specified
agencies without payment of
Customs duty. From the bonded
warehouses, gold is then issued toexport-oriented units for
manufacturing finished products forexports. However, it has been
observed that in a large number ofcases, gold was found to have been
diverted to the local markets for huge
illegal profits.
VII. BANK AND SECURITIESSCAMSAll the free market economies are based,
to a large extent, on trust. Indeed, without
a degree of trust, it is doubtful whether anyof the instruments of the free market
economy would work successfully. At theheart of that trust lies the reputation of
the banking sector. All international trade
is conducted on a documentary basis ; billsof exchange, certificates of deposit, bills of
lading, letters of credit, cheques, bankdrafts, telegraphic transfers andcollateralised lending, to name but a few
of the financial documentary services
provided by banks.
Apart from the obvious kinds offraudulent activities to which the banking
sector is exposed and well-attuned to iecheque and credit card fraud, forged credit
documentation etc, banks are increasingly
concerned about the egregious use of their167

RESOURCE MATERIAL SERIES No. 55
computer systems by dishonest employees
or criminal outsiders to obtain cash.
In the last two decades, India has seena transformation in banking from classbanking to mass-banking. There has beena phenomenal growth in banking - both interms of size and activities/businesses.
This large scale expansion has not been
without attendant risks. It has brought in
its wake, dilution in the quality of various
services, weakened supervision and control
mechanisms in many banks. In 1976,
commercial banks reported to the Reserve
Bank of India 930 cases of fraud involving
an amount of about Rs.9 Crores. During
1990, these figures had gone up to 1785
cases of fraud involving amounts more thanRs.110 Crores. The public sector banks hadreported a total number of 24,918 cases offraud involving an amount of Rs.512 Croresfor the period from 1976 to 1990.
Analysis of the fraud cases reported bybanks to the Reserve Bank, however,broadly indicates that frauds perpetrated
on banks could be classified into thefollowing categories :(i) Misappropriation of cash tendered byt h e b a n k ’s c o n s t i t u e n t s , a n d
misappropriation of cash inremittances.
(ii) Withdrawals from deposit accounts
through forged instruments.
(iii)Fraudulent encashment of negotiable
instruments by opening an accountin a fictitious name.
(iv) M i s a p p r o p r i a t i o n t h r o u g hmanipulation of books of accounts.
(v) Perpetration of frauds throughclearing transactions.
(vi)M i s u t i l i s a t i o n o f l e n d i n g /discretionary powers, non-observanceof prescribed norms/procedures incredit dispensation etc.
(vii)Opening/issue of letters of credit,bank guarantees, co-acceptance of168

bills without proper authority andconsideration.
(viii)F r a u d s i n f o r e i g n e x c h a n g etransactions, mainly through nonadherence to Exchange Control
Manual Provisions.
Category-wise, classification of frauds
reported by the 19 Public Sector Banks to
the R.B.I. during the period from 1/1/90 to
3 0 / 6 / 9 1 i s g i v e n i n Ta b l e X . T h eperpetration of frauds are mainly
attributable to :(i) Laxity in observance of the systems
and procedures by the operational
staff and also by supervisory staff.
(ii) Over-confidence in the bank’s
constituents, who often indulge inbreach of trust; and(iii) Frauds committed by unscrupulous
constituents taking advantage of thelaxity on the part of the officials in
the observance of established timetested safeguards.
An expert committee has undertaken thetask of devising ways and means fortightening regulatory procedures, as well
as for devising effective countermeasures
for the prevention of bank fraud. The
committee has recommended that steps be
taken by the bank authorities in thefollowing areas :(i) Matter of handling cash, valuables
and other negotiable instruments tostop diversion of scarce credit
resources for unrelated purposes, andfor regulating the growing tendency
to use banking channels for money
laundering etc.
(ii) Prevention of fraud in investment
portfolios.
(iii) Prevention of fraud in advances
portfolios.
(iv)Prevention of frauds in the area of
foreign exchange operations.

110TH INTERNATIONAL TRAINING COURSEPARTICIPANTS’ PAPERSTABLE X
Category
Fraudulent encashment,
manipulation of books ofaccount and conversion
of property
Cheating and forgery
Misappropriation or
criminal breach of trust
Negligence and cash shortage
Unauthorised credit facility
extended for illegal gratification
Irregularities in foreignexchange transactions
OthersNo. of frauds(1990)
729(Amount in Crores of Rupees)
Amount No. of frauds Amount(1990)(1991 to June 30) (1991 to June 30)
28.28
345
8.64

215
162

5.7
4.81

134
89

4
6.04

53
18

0.2
3.12

25
7

0.06
0.43

11

0.9

10

0.19

54

5.05

53

4.94

(v) P r e v e n t i o n o f f r a u d s i n acomputerised environment.
(vi)Ensure the effectiveness of existing
systems of inspection, audit andcontrol returns.
(vii)Tone up the vigilance set up in the
public sector banks.
(viii)Co-ordination amongst various
agencies like the Central Bureau of
Investigation, Police and the Bank
Vigilance machinery to ensure
prompt detection and effective
prosecution of fraud cases.

worth of an individual stock offer, as thiswould impose an artificial standard on theworking of a free commercial market. In
other words, it is axiomatic in free market
economies that investors must be free tomake imprudent commercial decisions
which act to their financial detriment. The
need to ensure a continued uniform policyof anti- fraud surveillance of theinternational securities market has become
more acute in the last decade, following agreater degree of internationalisation of thecapital markets.

A. Fraud in the Securities Market
This subject is as old as the markets
themselves. The decision to buy or sell aparticular security is based, in many cases,
upon nothing more than a representationof its future value made by a promoter ofthe share itself. Therefore, the potential
for a fraudulent share offering is very high,and it is with the aim of preventing a fraudin the sale of securities that all mature freemarket economies design their securitiesl e g i s l a t i o n . H o w e v e r, s u c h f r a u dprevention activities cannot be brought tobear on the determination of the specific

The main areas of fraudulent activity,
which possess the greatest degree ofcommercial risks, in the trade of securities
are :(i) Market Manipulation: individuals orgroups operating in such a way as tobring undue influence to bear,
thereby affecting the value of a share.
(ii) Insider Dealing: is a criminal activity
whereby an investor, knowing that abid is about to be made for aparticular stock or having

169

RESOURCE MATERIAL SERIES No. 55
information gained from connections
with the management of a firm which
could directly affect the price of aparticular share, makes aconsiderable short-term profit bybuying as much of the stock as they
can acquire prior to theannouncement of the bid, and thensells the same once the share value
has risen.
(iii)Trading of Worthless Securities: An
example is to famous Wall Street
crash of 1929 before whichapproximately 20 million Americans
took advantage of the post-war
prosperity and tried to make afortune on the stock market.
Between 1918-1929, out of the USD$50 billion worth of new securities
offered to the public, half proved to
be worthless. Variations of this fraud
can be the well-known “PONZI”
scheme to “Pyramid” schemes orchain-letters or the lotteries by“Caritas” of Romania.
The investment in the securities market
has provided organised crime with a fertile
ground for fraudulent activity. Around1990, India and a few developing countries
have started to restructure theireconomies. Economic and fiscal policies
have taken a turn towards liberalisation,
deregulation, non-control and nonlicensing, and the economy has opened up
resulting in macro-adjustments.
As a part of the liberalisation process,foreign exchange regulations were relaxed,
multinational companies and overseas
corporate bodies were permitted to invest
in Indian companies (up to 51 percent
barring a few selected sectors) and foreignbanks were allowed to operate. Under thesame process, there is a talk of the services
and insurance sectors being opened up.
Public sector banks were allowed to set up

170

Mutual Funds and Portfolio Management
Schemes. Public sector companies werepermitted to raise funds from the publicthrough bonds. Government encouraged
companies both in the private and public
sectors to reduce surplus staff through‘golden handshakes’ or other similar
schemes. This resulted in considerable
sums of money entering the market.
The weakness of the securities exchangemechanism was exposed when a massive
security scam, running into several billions
of rupees, surfaced in April 1992 involving
the Standard Chartered Bank, theNational Housing Bank, many othernationalised banks, Mutual Funds andother financial institutions. The committee(CBI) set up by the RBI estimated the loss
at Rs.40,000 million (US$ 1,279.63 million).
In the estimation of the CBI, the loss has
been Rs.83,830 million (US$ 2,665
million). This case was a deliberate andpremeditated misuse of public funds
through various types of security
transactions, with the sole object of illegally
siphoning funds from the banking systemand public sector undertakings.
After the above experience, the Indian
Government set up a Securities andExchange Board of India (SEBI) with thesole objective of regulating the shares andsecurities business. Needless to say,certain individuals and institutions
involved in the above mentioned securities
scam are facing prosecution in a special
court.
VIII. INSURANCE FRAUDAs large funds are available withinsurance companies, they are liable to be
subjected to a high degree of fraudulent
activity. Competitiveness of the insurance
market is such that rather than attract a
reputation for being unsympathetic toclient claims, the companies will pay out

110TH INTERNATIONAL TRAINING COURSEPARTICIPANTS’ PAPERS
claims which they know may be made byprofessional fraudsters, but will be pursued
vigorously by the claimants. However, thesmaller but honest claims, more difficult
to pursue, will suffer because thecompanies feel that the claimants will
eventually get tired of the remorselessbureaucracy and abandon the claim.
The insurance salesmen indulge inwidespread mis-selling of financial policies
in order to enhance their own commission
income and to ensure a regular cash-flowof new capital. In India, at the moment,
both the life insurance and generalinsurance are in the public sector and are,therefore, subject to strict government
regulations and audit requirements.
However, small and medium scale frauds,
do sometimes take place. These frauds aremostly related to the filing of false or
exaggerated claims on the insurancecompanies. Most of the times, these frauds
are perpetrated in collusion with theemployees of the insurance companies likethe surveyors and field agents, who, for
corrupt motives, tailor their reports to theadvantage of the claimants.
IX. FRAUD IN INTERNATIONAL
TRADE
Fraud in the international trade takes
the following forms :(i) Shipping of adulterated products.
(ii) Theft of goods in transit, as in the
Nigerian Oil Fraud.
(iii) Hijacking and piracy at sea.
(iv)Deviation of ageing, low-value ships.
(v) Phantomship fraud in which corrupt
employees, with the registries of suchcountries as Panama and Honduras,
indulge in false registration. The
high-value cargo simply disappears
with the ship, which later appears
again under a new name and guise.
(vi)Product counterfeiting, whereby

cheaper and less stringently
produced products are manufactured
to lower tolerance levels and are
introduced in to the market.
Counterfeit aircrafts parts or bogus
pharmaceuticals with lower chemical
standards, are sold. It is estimatedthat 6 percent of the total world trade
involves trading in counterfeit
products.
X. TAX EVASION & MISUSEOF TAX HAVENSWith the passage of time, the impositionof taxes has become as much a politicalmeans of social and economic control, as it
is a measure of raising revenue. The
dichotomy expressed, in the moral
conundrum of the difference between
lawful tax avoidance (generally perceived
to be the legitimate work of bona fide tax
advisors) and criminal tax evasion (theillegitimate activities of those who hide
lawfully taxable proceeds from the fiscal
authorities) has been reflected in thecompeting effectiveness of tax-shelters as
opposed to tax havens.
Tax-shelters are a legal form of tax
avoidance, expressed most usually, in thecreation of a tax saving incentive for highworth individuals, encouraging them toinvest theoretically in socially responsible
activities, or in schemes which attract alower rate of tax. Since these provisions
are subject to the changes in law and court
rulings, they less popular than tax havens.
Tax-Havens are sovereign off-shore
countries with an advanced degree ofwillingness to permit foreign, non-resident,
high-rate taxpayers to deposit funds
secretly behind anonymous corporate
fronts, or by forming highly complex trust
arrangements.

171

RESOURCE MATERIAL SERIES No. 55
Since the foreign depositors are likely toface considerable difficulties in their homejurisdictions, an obsessive level of secrecy
and the guarantee of complete discretionin the handling of clients affairs are thehallmarks of the most successful tax
havens. Such havens have been one of themain influences on the proliferation ofchannels for moving criminally generated
money, whether it be in the form of theproceeds of drugs, crime or for terrorist
purposes. A typical example of the transfer
of money to off-shore tax havens is thetransfer of money from the USA to the
Bahamas, from where it ultimately lands
in Swiss Banks.
XI. MONEY LAUNDERING &“HAWALA”(UNDERGROUNDBANKING)
Money laundering means the conversionof illegal and ill-gotten money into
seemingly legal money so that it can be
integrated into the legitimate economy.
Proceeds of drug-related crimes are an
important source of money laundering
worldwide. Besides this, tax evasion andthe violation of exchange regulations play
an important role in merging this ill-gotten
money with tax-evaded income, so as to
obscure its origin. The aim is generallyachieved via the intricate steps ofplacement, layering and integration, sothat the money so integrated in thelegitimate economy can be freely used by
the offenders without fear of detection.
Besides the traditional methods ofmoney laundering, with the advent of theInternet, cyber-laundering by means ofanonymous digital cash has also come tothe fore. E-cash may facilitate money
laundering on the Internet. Moneylaundering thus poses a serious threat
world over, not only to the criminal justicesystems of countries, but also to theirsovereignty.

172

The United Nations Convention Against
Illicit Traffic in Narcotics Drugs andPsychotropic Substances Act 1988 (known
as Vienna Convention), to which India is ap a r t y, c a l l s f o r c r i m i n a l i s a t i o n o flaundering of the proceeds of drug crimes
and other connected activities, and for theconfiscation of proceeds derived from suchoffences. There are no reliable statistics
as to how much money is laundered inIndia, but the problem is certainly serious
and a lot of drug money is being laundered
and integrated into the economy. The
tainted money is being accummulated byorganised racketeers, smugglers, economic
offenders and antisocial elements, and isadversely affecting the internal security of
the country. In order to curb the menanceof money laundering, the Government ofIndia is in the process of enacting the
Money Laundering Prevention Act 1998.
In the proposed Act, money laundering has
been defined as:(i) Engaging directly or indirectly in atransaction which involves property
i.e. proceeds of crime; or(ii) Receiving, possessing, concealing,
disguising, transferring, converting,disposing of within the territory ofIndia, removing from or bringing into
the territory of India, the property i.e.
proceeds of crime.
“Crime”, as defined in the Act, covers
several Penal Code offences, i.e. waging
war against the Government of India,
murder, attempted murder, voluntarily
causing hurt, kidnapping for ransom,
extortion, robbery, dacoity, criminal breachof trust, cheating, forgery, counterfeiting
currency, etc. Also for certain provisionsof the Prevention of Corruption Act 1988;
NDPS Act 1985; Foreign Exchange
Regulation Act 1973; and the Customs Act
1962. Thus, crime has been defined very
comprehensively in the Act. The money
generated through crime is liable to be110TH INTERNATIONAL TRAINING COURSEPARTICIPANTS’ PAPERS
confiscated by the State.
Illegal currency transfer via nonbanking channels is called “Hawala”. It isan underground banking system. Secretflows of money can take place in freecurrency areas, as well as in areas where
currency conversion restrictions arepractised, due to the shortage of foreignexchange. An example of the operation is
as follows - somebody in the USA deposits$1000 with an underground banker for apayment to be made to an Indian in India.
The US underground banker contacts theircounterpart in India immediately via
phone, and sends some coded message forpayment to the Indian recipient. The
hawala operator in India would contact therecipient and fix a meeting place. The
recipient, in the meanwhile would have got
instructions on the telephone about thecodeword s/he has to exchange with the
hawala operator. Thus, the hawala
operator in India would, after the exchangeof codeword, hand over money to the Indianrecipient. Of course, the hawala operator
in the USA would charge some fee for theservices rendered. There is no physicaltransfer of money in hawala transactions,as in the regular banking channels. This
channel is generally used by drugtraffickers, smugglers and kidnappers.

Investigations in hawala-related crimes
are conducted under the Foreign Exchange
Regulation Act. Even though the word
‘hawala’ has not been defined in FERA, theessence of the Act is that any person who
retains foreign exchange abroad or sends
foreign exchange abroad, without theReserve Bank’s permission, is violating theprovisions of the Act. In the liberalised
economic atmosphere, the Government ofIndia has felt it necessary to ease
restrictions in the flow of foreign exchange,
both into and out of the country. Thus, a
new draft Act called Foreign ExchangeManagement Act (FEMA) has recently
been introduced in the Parliament toreplace the FERA. After the passage of theAct, foreign exchange offences will acquire
the character of civil offences, as against
criminal offences as is at present. It is
hoped that with ease in transactions
relating to foreign exchange after thepassage of FEMA, the propensity to makeuse of hawala channels will decrease.
Table XI shows figures relating to crime
involving illegal transactions in foreignexchange in India. Table XII shows thedata relating to cases registered, offenders
prosecuted, etc. with regard to foreignexchange offences in India.
XII. COUNTERMEASURES

Basically, the system operates on an
ethnic network and is based on mutual
trust. The network may include more than
three or four countries. The principal
operators engage agents and sub-agents invarious countries for collection anddisbursement of money. Hawala iswidespread in India. Families who havemembers earning abroad are clients of thesystem. The dangerous aspect of thehawala system is the nexus between thehawala and illicit arms smuggling, drugtrafficking and terrorist crimes.

Increase in international law
enforcement activity is having a very
positive result and the doomsday-based
scenario is changing. Organised crime cannever be eradicated, but it can be cappedand controlled. However, there is much to
be done in the form of assisting lessdeveloped countries with expertise,guidance and encouragement. Since work
against the Mafia is resource-intensive andexpensive, it requires talented and skilled
personnel to be able to travel and operatewith the same freedom as the criminals.

173

RESOURCE MATERIAL SERIES No. 55
TABLE XIYear

No. ofCurrency Seized Currency confiscatedFines
Searches Seizures Indian Foreign Indian Foreign Imposed Realised/Raids / Recoveries
1991
2319
1482
11.8
3.6
1.1
1.5
2.8
1992
1215
738
3.9
2.5
2.4
2.2
2.3
1993
1234
843
6.7
4.5
3.1
3
3.2
1994
1540
1046
9.8
8.1
1.8
2.2
27.8
3.4
1995
1175
832
10.2
6.5
1.2
2.3
10.6
2.2
(Cases under FERA in Indian Rs. inCrores)
TABLE XIINAME OF ITEM
Searches & Seizure
Searches conducted
F.E. seized*
I.C. seized*
Total of F.E & I.C
Investigations
Initiated
Disposed
SCNs issued
Amount involved in SCNs issued*
Penalties
Imposed*Prosecutions
Launched
Disposal
Arrests
Persons arrested
Cofeposa
Orders issued
Detained(* in lakhs of Rs.)

1994

1995

1996

1997

1540
314.26974.781,289.04

1175
541.34
1,021.02
1,562.36

1164
724.42
1,083.16
1,807.58

1238
555.481,269.49
1824.97

6,601
5,633
5,486
5,511
6,300
4,652
4,347
5,219
2,771
2,456
2,291
2,721
76,265.32 144,728.58 39,095.21 209804.07
2,775.32

1,067.29

7,804.19

8380.59

264
265

202
125

101
64

92
49

365

228

213

159

107
74

62
67

38
43

49
39

A. Steps at the International Level
Some of the steps which have been takenby the international community andindividual nations as counter measuresagainst economic crime are still in theirinitial stages. As more nations participate
in taking steps against this type of crime,

174

there is every hope that the world economicorder will become more stabilised.
International Co-operation
Efforts have been made in the last five
years for increasing co-operation between
the national police forces and the customs

110TH INTERNATIONAL TRAINING COURSEPARTICIPANTS’ PAPERS
and excise services. It has been matchedby the efforts of government departments,
legislators and judiciaries particularly, theMember States of the European Union, G7 Group of States, the OECD and theBritish Commonwealth, in providing themachinery for assisting each other in the
pursuit of suspected and convictedcriminals, and for their repatriation,prosecution, also for the recovery of theproceeds of crime. Given the disparities
between domestic legislation, judicial
systems, penal codes and the applicationof domestic law to foreign citizens, the taskof harmonising practices internationally isimmensely complex and results have been
mixed. However, the pace of international
co-operation has quickened significantly
during the last five years.
Some of the useful international
conventions in this direction have been:
Council of Europe Convention on
Laundering, Search, Seizure andConfiscation of the Proceeds of Crime;
European Community Directive on
Prevention of the Use of the Financial
System for Money Laundering; European
Convention on Extradition. In thisdirection, some of the other steps
recommended for the collective action of thenations are:(i) Development and regular upgradingof networks of national contact points
on police/customs co-operation andjudicial co-operation.
(ii) Exchange of information regarding
the scale and trends of organised
crime.
(iii) Regular exchange of information on
the provisions and effectiveness ofnational laws relating to organised
crime.
(iv)Continuing study of the scope tosimplify the legal arrangements forjudicial co-operation between States,
to overcome difficulties associatedwith differences in national laws suchas offence definition and prosecution
time limits.
(v) In relation to money laundering,further study of the desirability andpracticability of applying theobligation to report suspicioustransactions (currently applicable tofinancial institutions) to otherrelevant professions andorganisations, and the sharing of
information derived from disclosures.
(vi)E x c h a n g e o f e x p e r i e n c e a n d
information about witness protection
methods and consideration ofeffective measures to protect otherpersons involved in theadministration of justice.
Confiscation
International conventions, as well as
corresponding domestic legislation relating
to confiscation of the illegal proceeds ofserious crime, have their origin inmeasures designed to stop the criminals
from being able to retain and use theproceeds of their criminal activities. A keyelement in the national and international
strategy is to deny criminals the huge
profits derived from organised crime, in theform of laundered money. The aim ofmeasures authorising the confiscation oflaundered money are :(i) Deterrent: making organised crimeless profitable.
(ii) Preventive: stopping reinvestment of
the proceeds in further criminal
activities.
(iii) Investigative: enable investigators tofollow the money trail, thereby
making it easier to identify anddismantle criminal organisations.
As in all aspects of internationalorganised crime, co-operation is vital if
confiscation measures are to be successful.
Major criminals are skilled in concealing

175

RESOURCE MATERIAL SERIES No. 55
and putting their ill-gotten wealth beyond
the reach of the law through the use ofmodern banking, and communications
technology and practice.
In this regard, some of the majorinternational and national efforts havebeen in the form of: European Convention
on Extradition (fiscal offences) Order 1993;
United Nations Convention against Illicit
Traffic in Narcotic Drugs and Psychotropic
Substances; the Prevention of Terrorism(Temporary Provisions) Act 1989 passed by
UK; Vienna Convention 1988; and theproceedings of the Basel Committee on
Banking Regulations and Supervisory
Practices (1990).
National crime control organisations like
FINCEN of the USA, NCIS Financial
Intelligence Unit of UK, TRACFIN ofFrance and AUSTRAC of Australia aresome of the new specialised agencies
making use of financial intelligence anddata-communications in the field of
economic crime. In India, the DRI(Directorate of Revenue Intelligence) andthe EIB (Economic Intelligence Bureau)
have been collecting intelligence, as wellas investigating serious cases of economic
crime and spearheading efforts to plug theloopholes in existing laws, they have also
proposed enactment of new laws like FEMA
(Foreign Exchange Management Act) andthe anti-money laundering legislation.
Other Measures
Some of the other measures required forthe effective fight against the economic
crime are :(i) Steps to provide teeth for regulatorsand international standards ofpractice: Steps should be taken to
ensure that criminals are not able totake advantage of imperfectinvestigative co-operation, a lack ofharmonisation between domestic176

legislation, bank secrecy and absenceof regulations, etc. Confiscation
procedures should be swift andeffective with the result that theaccumulated proceeds from organised
crimes, and assets acquired
subsequently from them, are hard to
replace.
(ii) Steps for making domestic andinternational anti-money launderingsystems effective.
(iii) Steps for protecting the integrity of thefinancial system: This involves
measures to protect the transparency
and integrity of economic andfinancial systems. Criminal
penalties are often applied toreinforce the integrity ortransparency of the financial system,
while regulatory policies are used todetect or deter criminal activities.
(iv)Steps for motivating banks andfinancial institutions to co-operatewith law enforcement agencies.
(v) Steps for improved auditing practice:
Such auditing techniques can beapplied as a part of the organisational
control framework, where they form
part of activities described as internal
audit, inspection or monitoring.
(vi)Steps for strengthening corporate
g o v e r n a n c e : We a k n e s s e s l i k edominant chief executives with
unfettered powers, insufficient
checks and balances over executive
directors, no clear role for the boardof directors and for non-executive
directors, inadequate control overlevels of executive remuneration andinsufficient disclosure of what is
actually happening to the business,
are some of the areas which must be
addressed.

110TH INTERNATIONAL TRAINING COURSEPARTICIPANTS’ PAPERS(vii)Mobilisation of public opinion: Publicawareness of the dangers involved invarious facets of economic crime has
yet to be taken up by the media andpoliticians to a level where the public
starts taking an active interest, andis willing to accept reasonable
regulatory efforts required to tackle
this crime.
B. Steps for India
In India, the concept of economic crimeis still in its initial stages of being
understood and appreciated.
Understandably, there are several
difficulties in combating economic crime,
not the least of which is lack of awarenessin government circles, media, investigating
agencies and the general public about theextent and corrosive effect of economic
crime on Indian society and its institutions.
Violent crime makes headlines, consumes
media attention and raises public furore.
However, since the early 1990s, after theliberalisation of the economy and discoveryof serious financial scandals/scams in its
wake, which adversely affected a large
number of private investors, the subject
has started receiving serious attention
from the Government and Parliament.
Existing laws have been found to be
totally inadequate in dealing with economic
crime, as they target individuals and not
the criminal groups or criminal enterprises.
It is therefore imperative to enact special
laws covering each aspect of economic
crime, i.e, the criminal group itself and its
members or associates, as has been donein many countries. At the same time, there
is a need to deprive the criminal groups
and their co-conspirators of the ill-gotten
gains of their criminal enterprises by theenactment of effective confiscation laws.
Strengthening of Criminal Laws
(i) Substantive law: India does not havespecial laws to control/suppress
organised crime, including economic
crime. However, there has been amove in this direction. The
Government has brought before theParliament draft bills for economic
offences in the field of foreignexchange and money laundering(FEMA and Money Laundering
Prevention Bills) which are soon
expected to become law. Earlier,
SEBI (Securities Exchange Board ofIndia) legislation was passed in orderto regulate the securities market
after a famous securities scam. Thus,
the Indian Government andParliament is alive to the emerging
situation in the field of economic
crime and suggestions formodification of various laws alreadyin place are also being given carefulconsideration.
(ii) Procedural Law: It is in the field ofprocedural law that considerable
improvement is required in India.
Police are a ‘State Subject’ in India,
with the result that many cases
having inter-state ramifications getstalled in legal/jurisdictional
wrangles.
Under section 167 of the Code of
Criminal Procedure, the police are
required to file charge-sheets within
90 days from the date of arrest, failingwhich the accused is liable to be freed
on bail. This often results in chargesheets being filed on the basis of ‘halfbaked’ investigations.
Bail provisions in India are quite
liberal and “bail and not the jail” isthe rule pursuant to a Supreme Court
order. Legislatures should intervene
to make the bail provisions more
stringent. The provision for
anticipatory bail (section 438 CrPC)177

RESOURCE MATERIAL SERIES No. 55
in grave crimes (i.e. punishable with
7 years or more) should be deleted.
Further, no ex-parte bail orders
should be passed by the judiciary ingrave crimes without hearing the
public prosecutor.
(iii)Evidentiary Law: The Indian police
are legally handicapped in collecting
foolproof evidence against criminals
due to certain archaic provisions ofevidentiary law. According to section
25 of the Evidence Act, a confession
made before a police officer is notadmissible in the court, resulting invaluable evidence gathered during
questioning of the accused persons
being lost. Such confessions areadmissible in most countries of theworld. Of course, the courts shouldlook for material corroboration ofsuch confessions.
There is no law in India which legallybinds an accused to give specimensof handwriting, photos, etc to thepolice, even under the orders of thecourt. The result is that valuableevidence is beyond the ambit of theinvestigating agency. A provision
should be incorporated in the
Criminal Procedure Code legallybinding the accused to give
handwriting samples etc, if requiredby the investigating agency.
Miscellaneous(i) Monitoring of Telephones andComputer Networks etc: Thesefacilities are freely used by gangs inorganising criminal activities.
Section 5 of the Indian Telegraph Act
1885 empowers the Central
Government or the State
Government to monitor telephones
and intercept calls for a period of 60days. However, the evidence thus
gathered is not admissible in the178

trial. In the USA, telephones can bemonitored by a law enforcement
agency under the order of the Federal
Court, and the evidence so gathered
can be used in the trial. The Indian
Telegraph Act and the proposed
Computer Law should haveprovisions to provide for admissibilityof evidence gathered by interceptionof telephonic conversation. Similarly,
evidence of computer print-outs oftelephone calls or fax messages sentor received on a particular telephone
terminal should be made admissible
as evidence.
(ii) Under-cover Agents/Decoys: Law
enforcement agencies use undercover agents in most countries togather information about thecriminal gangs, study their modus
operandi and evaluate their futureplans and strategies. This
information is used both forpreventive and investigative
purposes. In the USA, evidence
gathered by undercover agents is
admissible as evidence - whether it
is in the form of their oral testimony
or in recorded audio or video form.
Indian law does not permit the same.
It is suggested that the law should
be amended to provide foradmissibility of such evidence.
(iii) Witness Protection Programme: Incases of economic crime where
influential businessmen andpoliticians are involved, thewitnesses are reluctant to depose inopen court for fear of reprisal at thehands of criminal syndicates. The
cases of threat or criminal
intimidation of potential witnesses
are too many to be recounted. As thecourts use the evidence on record for
determining the guilt of the accused,
it is essential to protect the witnesses

110TH INTERNATIONAL TRAINING COURSEPARTICIPANTS’ PAPERS
from the wrath of the criminal gangs.
Hence, legal and physical protection
should be provided to crucial
witnesses in sensitive cases, so thatthey can depose fearlessly in court.
After the enactment of the Witness
Security Reform Act 1984, the USA
authorities secured convictions ofseveral notorious Mafia leaders. The
US Witness Protection Programmeessentially involves changing theidentity of the witness, relocation,
physical protection (if needed) andfinancial support until such time as
they become self-supporting, subject
to the condition that they depose
truthfully in court. It is extremely
necessary to provide protection towitnesses in India which, to begin
with, could cover cases ofInternational/National/State
importance involving criminal
syndicates.
(iv)Confiscation of Proceeds of Crime:
The main object of economic crime isthe acquisition of money/assets. It isthrough money-power that gangs
corrupt criminal justice agencies andpolitical leadership. A stage comeswhen gangs put a question mark on
the existence of the State. It has
already started happening in small
pockets of India. It is therefore,
essential to deprive the criminal
gangs of their ill-gotten wealththrough stringent legislative
measures. The laws relating toconfiscation of the proceeds of crime
are found in parts of several statutes.
Some of the important Acts relating
to this are as follows :(i) Sections 102 and 452 of CrPC;(ii) Sections 111 to 121 of the Customs
Act 1962;(iii) Section 68 of the Narcotic Drugs
and Psychotropic Substances Act

1985;(iv)The Criminal Law (Amendment)
Ordinance 1944;(v) Foreign Exchange Regulation Act
1973; and(vi)Smugglers & Foreign Exchange
Manipulations (Forfeiture of
Property) Act 1976.
Notwithstanding the existence of theaforesaid legal provisions, it is a wellknown fact that organised criminal
gangs have acquired huge assets.
The annual turnover of the Dawood
Ibrahim Gang is estimated to beabout Rs.2000 Crores a year. Several
Bombay smugglers have invested
hundreds of crores in real estate andother front businesses. This clearlyshows the inadequacy of the current
laws. Hence, consolidation andstrengthening of laws regarding
seizure/confiscation of proceeds ofcrime is essential. It must, however,be added that the provisions in the
Narcotics and Psychotropic
Substances Act 1985 are quite
stringent, but this Act is applicable
only to drug related money and not
to the money amassed through othercrimes.
(v) I m m u n i t y f r o m C r i m i n a l
Prosecution: As per section 306 of the
CrPC, on the request of a police officer
or a public prosecutor, the court may
tender pardon to an accused at theinvestigation or trial stage, subject tothe condition of them making full andtrue disclosure of facts andcircumstances concerning an offence.
This provision is applicable inoffences punishable withimprisonment of seven years or more.
The witnesses are not overly keen toturn approvers (State Witnesses), as
they have to remain in jail till theconclusion of trial. As the trials take179

RESOURCE MATERIAL SERIES No. 55
years, there is little incentive forthem to accept immunity from theState. As the evidence in conspiracy
cases is rather weak, approver
testimony helps in securingconvictions. It is suggested that thelaw should be amended to the effectthat the approver will be released onbail soon after the conclusion of their
testimony in court. This may
encourage some accused to turnapprovers.
(vi)Presumptions against the Accused:
An accused is presumed to beinnocent until proved guilty. The
entire burden is cast on theprosecution to prove the guilt of theaccused beyond reasonable doubt.
Silence of the accused in a given
crime situation, or his/her presenceat the scene of a crime at or about
the time of the crime’s commission,
is not presumed to be a circumstanceagainst which they must explain.
This casts an unfair andunreasonable burden on theprosecution.
The Prevention of Corruption Act
1988 (Section 20) provides for asituation where “if it is proved thatan accused person has accepted or
obtained or has agreed to accept or
obtain for himself or for any otherperson any gratification..... it shall be
presumed unless the contrary is
proved that he accepted or
obtained..... gratification or valuable
thing as a motive or reward.....”. Suchprovisions should also be included inother preventive and regulatory
economic legislations.
(vii)Need for Special Courts: Punishment
should visit the crime within areasonable time if it is to have any
deterrence value. The Anglo-Saxon

180

legal system prevalent in India,
although seemingly fair and equitous
jurisprudence, in practice [due tointerminable delays], has tended to
be ineffective, unfair, pro-rich andpro-influential. About 770,000
criminal cases are pending trial forover 8 years. This does not include
cases pending in the High Courts on
appeal/revision, all over the country.
The average time of trial taken ingrave offences in India is much higher
when compared to countries like
Japan, where the average time taken
is only about 3 months. Few anticorruption cases in CBI have been
pending trial for the last 20 years.
More often than not, the accused
public servant retires from service
and sometimes even dies before thetrial is completed. This has resulted
in a situation where the investigating
agencies get demoralised. It is,therefore, essential that more special
courts are set up to try important
cases of economic crime.
(viii) Setting up of National Level Coordinating Body: India has a federal
structure in which the States haveexclusive jurisdiction to investigate
and prosecute criminal cases. The
CBI comes into the picture very
sparingly in cases of national
importance. The police forces in theStates gather intelligence. The police
forces/concerned departments in theStates are supposed to gather
intelligence about criminal activities
within their jurisdiction. Generally
this is not shared by these agencies
with other States or the Central
Agencies. This insular attitude isequally true of the Central
Investigative/enforcement agencies.
It would, be advisable to setup anational level co-ordinating bodyoutside of the gamut of present

110TH INTERNATIONAL TRAINING COURSEPARTICIPANTS’ PAPERS
enforcement agencies. The mainfunction of this body should becoordination between the police
forces of the different States and theCentral Investigation Agencies in thefield of economic crime.

which transact huge amounts of businessare linked to each other via networks. Morethan a hundred million electronic messages
are transfered daily on the world’s network.
Banking networks transfer trillions ofdollars daily on computer networks.

(ix)Setting up of Economic Offences
Wings in Various State Police Forces:
Some State Police Forces in India
have separate Economic Offences
Wings. All State police forces haveseparate Vigilance/Anti-Corruption
Directorates. However, political willis needed to make these strong andeffective; lacking at the moment.

The computer revolution has a darker
side. Most of the computer applications arelikely targets for traditional crimes
including theft, fraud, vandalism, extortionand espionage. They are also susceptible
to new threats specific to computers andnetworks, such as computer viruses.

(x) Common Data Base for Enforcement
Agencies: At the moment no
mechanism or institutionalarrangement exists for the collectionof data regarding economic crime
either at the Central or State Level.
This hampers investigative efforts
and perspective planning. It issuggested that on the pattern of
FINCEN of the USA, a common
database should be built up andstored in computers in India, whichshould also be accessible to all
enforcement agencies through a
network of computers. The National
Crime Records Bureau can take up
this job.
XIII. COMPUTER CRIME
Information technology today
constitutes an integral part of daily life. In
India, as in the rest of the world, computers
have become an integral part of the fastdeveloping society. Already computers arebeing used in banking, manufacturing,
health-care, defence, insurance, scientificresearch, strategic policy making, law
enforcement etc, apart from their routine
use as office-automation and decisionsupport tools. Increasingly computers

Though computerisation in India started
25 years ago, the use of computers,
particularly in the service sector, is still
very low as compared to world standards.
The density of personal computers in the
country is only 1.8 per thousand persons,as against the world average of 25 per
thousand persons. Only 40 per cent of thecomputers are connected on LAN. There
are quite a few large databases like railway
reservation systems, airline reservation
systems, the district information system of
National Informatic Centre (NIC) etc,
which are more of closed user groups innature, with no outside and interconnectivity.
Due to low-level computer use, thesubject of computer related crime did not
gain much importance in India.
Nevertheless, as per the statistics gatheredby the National Crime Records Bureau, 45
cases of computer crime have been reported
so far. Most of the cases pertain tounauthorised copy of programmes/
software, and there are 15 cases mostly
relating to alteration of data in the banking
accounts maintained on computers.
However, this may be just the tip of theiceberg. Difficulty of detection, evidence
gathering and lack of knowledge on thepart of investigative agencies in computer
data processing are the main reasons for181

RESOURCE MATERIAL SERIES No. 55
the low number of solved computer crime
cases.
The situation in regard to the use ofcomputers in India is changing fast, and it
is expected that the usage of computers in
the country will reach 10 per thousand
persons by the turn of the century. The
Internet users in the country are also
expected to increase from the present levelof 80 thousand to about two hundred
thousand. The concept of Internet andintranet is growing. Data processing andits component will be used as a tool in many
areas such as tax administration, stock
market and capital investment.
Computer crime can be defined as crime
against an organisation or individual inwhich the perpetrator of the crime uses a
computer for whole or part of the crime.
Computer crime can be broadly divided into
computer fraud and computer abuse.
Computer fraud is any defalcation or
embezzlement accomplished by tamperingwith computer programmes, data files,
operations, equipment or media, resulting
in losses sustained by the organisation orindividual whose computer system was
manipulated. Computer abuse is the
improper use of computer resource
provided by an organisation to theindividual who misuses it.
XIX. CLASSIFICATION OFCOMPUTER CRIMESClassification of computer related crime
as defined by OECD and expanded by theCouncil of Europe as :(i) Computer-related Fraud: The input,
alteration, erasure or suppression ofcomputer data or computer
programs, or other interference withthe course of data processing that
influences the result of dataprocessing, thereby causing economic

182

or possessory loss of property of
another person, with the intent ofprocuring an unlawful economic gain
for themself or for another person(alternative draft : with the intent tounlawfully deprive that person of
their property).
(ii) Computer Forgery: The input,
alteration, erasure or suppression ofcomputer data or computer
programs, or other interference withthe course of data processing in amanner or under such conditions
which would, according to nationallaw, constitute an offence of forgery
if it had been committed with respect
to a traditional object of such an
offence.
(iii) D a m a g e t o C o m p u t e r D a t a o rComputer Programs: The erasure,damaging, deterioration or
suppression of computer data orcomputer programs without right.
(iv)Computer Sabotage: The input,
alteration, erasure or suppression ofcomputer data or computer
programs, or interference withcomputer systems, with the intent tohinder the functioning of a computeror a telecommunications system.
(v) Unauthorised Access: The accesswithout right to a computer systemor network by infringing security
measures.
(vi)Unauthorised Interception: Theinterception, made without right andby technical means, ofcommunications to, from and within
a computer system or network.
(vii)Unauthorised Reproduction of aProtected Computer Program: The
reproduction, distribution or110TH INTERNATIONAL TRAINING COURSEPARTICIPANTS’ PAPERS
communication to the public without
right, of a computer program which
is protected by law.
(viii) Unauthorised Reproduction of a
Topography: The reproduction
without right of a topography,
protected by law, of a semiconductor
product, or the commercial
exploitation or the importation forthat purpose without right, of a
topography or of a semiconductor
product manufactured by using the
topography.
Optional List(i) Alteration of Computer Data or
Computer Programs: The alterationof computer data or computer
programs without right.
(ii) Computer Espionage: The acquisition
by improper means or the disclosure,transfer or use of a trade orcommercial secret without right or
any other legal justification, withintent either to cause economic loss
to the person entitled to the secret or
to obtain an unlawful economic
advantage for oneself or a third
person.
(iii) Unauthorised Use of a Computer: The
use of a computer system or network
without right, that is either :(i) made with the intent to cause loss
to the person entitled to use thesystem, or harm to the system or
its functioning; or(ii) causes loss to the person entitled
to use the system or harm to thesystem or its functioning.
(iv)Unauthorised use of a Protected
Computer Program: The use without
right of a computer program which
is protected by law and which has

been reproduced without right, with
the intent either to procure an
unlawful economic gain for oneself orfor another person, or to cause harmto the holder of the right.
XV. COMMON TARGETS OFCOMPUTER CRIME
The most common targets of computer
crime are :• Military and intelligence computers
may be targeted by enemies.
• Business houses may be targeted bytheir competitors.
• Banks and other financial
institutions may be targeted byprofessional white collar criminals.
• Any organisation of government orservice industry may be the target of
terrorists.
• Any commercial, industrial or trading
company may be the target of
employees or ex-employees ofcompetitors.
• Universities, scientific organisations,research institutions may be thetarget of students, industrial or
business houses and other antisocial
elements.
Finally, any computer user may be thetarget of crackers/hackers who do it
sometimes for intellectual challenge, forrevenge, for gain or even for fun.
XVI. PROBABLE PENETRATIONPOINTS
In computer crimes, hardware, software,data or communications are vulnerable.
Below, some common data security
loopholes are specified:••••

Erroneous or falsified input data.
Misuse by an unauthorised end user.
Uncontrolled system access.
Ineffective security practices.

183

RESOURCE MATERIAL SERIES No. 55• Procedural errors within thecomputer EDP Cell.
• Programme errors.
• Flaws in the operating system.
• Failure of communication system.
• Lack of job definition for employees.
XVII. PREVENTION OFCOMPUTER CRIMESPreventive measures should be taken bycomputer users to make it difficult forpossible criminals to penetrate the system.
There should also be a set of detection tools
to identify instances where preventative
tools cannot safeguard the system. Firstof all, threats which are expensive andcritical should be prevented, they are :(i) Large loss threats having potential
to cause great financial distress to theorganisation.
(ii) Threats which could stop or disrupt
the effectiveness of the organisationfor extended periods.
(iii)High visibility threats which could
cause serious damage to the imageof the organisation.
(iv)Habit forming threats which maylead the criminal from smaller to highlevel crimes, if not prevented at theinitial stages.
XVIII. COUNTER-MEASURES FORPREVENTION OF COMPUTERCRIMECounter-measures should be aimed atattacking the various steps which are
generally involved in the commission ofcomputer crimes i.e. planning, execution,
concealment and conversion stages ofcomputer crime. Some of the steps are :(i) Identify the potential perpetrator andpenetration point(s).
(ii) Determine the magnitude of the risks
for each type of threat.
(iii)Identify the most probable threats.

184(iv)Select the method of prevention i.e.
internal controls, audit, security force
and surveillance.
Internal Controls
These include access control,
accountability, audit trails, error message
follow-up, anticipation controls, data
validation, output controls etc.
Audit
Auditing includes promoting a strong
audit image, performing surprise audits,
adopting audit procedures for electronic
data process, designing systems with builtin-audit-jacks, risk analysis, studies andperiodical reviews.
Security ForceThis would secure the physical safety ofthe personnel and equipment, and thesafety of the data. Some of the safetymeasures would include posting of dogs,
security of the visible area, installation ofcameras, censors, TV monitors, warning
signs and use of security software having
password protection, access control, virus
check, copyright protection etc.
SurveillanceSome methods for the most effective useof first-line supervisors to foster anticomputer crime environments include
detecting and reprimanding employees forminor policy violations, detecting breachesof control functions or security procedures,
creating an environment for which
computer crime is difficult to perform, andcounselling the staff on matters like
integrity, loyalty and conscientiousness.
XIX. THE LAW RELATING TOCOMPUTER CRIMESInterpol has identified the following as
offences or crimes which can be classified
as computer-related crimes :110TH INTERNATIONAL TRAINING COURSEPARTICIPANTS’ PAPERS(i) Unauthorised access or interception
and theft of data (hacking, theft ofdata, interception of data, time theft
and others).
(ii) Alteration of computer data (logic
bombs, Trojan horse, virus, worms
and others).
(iii) Computer-related fraud (automatic
teller machines and cash dispensers,
credit cards, computer forgery,gaming machines, input/output/
programme manipulations, means of
payment, point of sale, telephonephreaking and others).
(iv) U n a u t h o r i s e d r e p r o d u c t i o n(computer games, other software,semi-conductor topography etc).
(v) Computer sabotage (hardware,
software, etc).
(vi)Counterfeiting using computers.
(vii)Computer pornography.
(viii)Other computer-related crime(bulletin board systems, theft of trade
secrets, indictable material, etc).
XX. THE LEGAL PROVISIONS
Laws, criminal justice systems andinternational co-operation have not kept
pace with technological changes. Only a
few countries in Western Europe and theOrganisation for Economic Co-operation
and Development (OECD) have draftedlaws to address the problem. However,none of the countries have resolved alllegal, enforcement and preventive issues
arising out of technological change.
Computer crime is a new form of transnational crime and its effective treatment
requires concerted international cooperation.
Some of the important international
efforts in the direction of computer crime
legislation and its prevention have been :(i) 12th Conference of Directors of
Criminological Research Institutes

within Council of Europe (1976) andthe formation of select Committee ofCouncil of Europe on Economic
Crime.
(ii) Study by Organisation for European
Co-operation and Development in1983 and the publishing of analysisof legal policy in 1986 forinternational application andharmonisation of criminal laws in thefield of computer crimes.
(iii) Study by the Council of Europe
wherein procedural issues such as
international search and seizure of
databanks and international cooperation in the investigation andprosecution of computer crimes were
examined.
(iv)International Chamber of Commerce
published documents in July, 1988
describing international businessview on computer-related crime andcriminal law.
(v) OECD developed a set of guidelines
for security of information systems in
1992.
(vi)The issue of prevention of computer
related crime was discussed in areport entitled “Proposals forConcerted International Action
Against Forms of Crime Identified in
the Milan Plan of Action” preparedby the United Nations in 1987. In its
13th Plenary meeting, the UN
Congress adopted the resolution
calling upon the member States tointensify their efforts to combat
computer crimes by adopting a seriesof measures.
(vii)In 1994, the United Nations also
prepared a manual on the prevention
and control of computer-related crime
which presented an international
review of the criminal policy.
(viii)Many of the countries, largely
industrialised and some which are
moving towards industrialisation,
have in the past ten years reviewed

185

RESOURCE MATERIAL SERIES No. 55
their respective domestic criminal
laws from the point of view ofadaptation, further development andsupplementation so as to prevent
computer-related crime. A number ofcountries have already introduced
more or less extensive amendmentsby adding new statutes in theirsubstantive criminal law. These are
USA, Austria, Denmark, France,
Germany, Greece, Finland, Italy,
Turkey, Sweden, Switzerland,
Australia, Canada and Japan.
Countries like Spain, Portugal, UK,
Malaysia and Singapore have madeisolated efforts by enacting new laws
to prevent computer-related crimes.
There is yet no specific law in India todeal with computer crimes. The various
cases reported are dealt with under the
existing laws/offences like Copyright Act,theft, trespass, fraud, forgery, etc.
However, the Government of India is awaveof the issue and it is expected that soon a
specific law for prevention and prosecutionof computer crimes will be passed, basedon the guidelines and classificationsuggested by OECD.
It is proposed that an information
security agency will be set up at thenational level to play the role of ‘cyber-cop’
to take care of computer-related crime. The
cyber-cop provisions will take care of acts
such as hacking through Internet, anddevise ways of maintaining data privacy.
According to the action plan on the subject
drawn by the Government of India, anational policy on information security,
privacy and data protection for thehandling of computerised data shall beframed by the Government of India within
six months. It is also proposed that anational computerised records security
department shall be created within threemonths for enforcing security
requirements.

186

XXI. CONCLUSION
With the explosion in the field of
information technology, certain common
features are bound to be foundinternationaly in the field of economic andcomputer crime. As of necessity, nations
should unite in countermeasures against
these crimes. After the Cold War, there has
been a fair amount of integration world
wide in the spheres of banking, trade andcommerce.
Despite our best efforts, domestic crime
is likely to spill over into the international
arena. Hence the need for international
cooperation in suppressing it in the formof expeditious extradition of fugitive
criminals, deportation of undesirable
aliens, mutual legal assistance ininvestigations and prosecutions, and the
speedy execution of Red Corner Notices
i s s u e d b y I n t e r p o l . F u r t h e r, t h e
International Community must put theirheads together to harmonise extradition,
deportation, dual criminality andconfiscation laws to make the global society
and its financial systems sound and stable.

110TH INTERNATIONAL TRAINING COURSEPARTICIPANTS’ PAPERS
ANNEXURE A
Various Economic Offences
Economic Crimes
Tax Evasion
Illicit Trafficking inContraband
Goods (Smuggling)
Evasion of Excise Duty
Cultural Objects Theft
Money Laundering

Legislation
Income Tax Act
Customs Act, 1962
COFEPOSA, 1974

Enforcement Authorities
CBDT
Collectors of Customs

Central Excise andSalt Act, 1944
Antiquity and Art
Treasures Act, 1972
Foreign Exchange
Regulation Act, 1973
Foreign Exchange
Regulation Act, 1976
IPC

Collectors ofCentral Excise
Police/CBI
Directorate of
Enforcement
Police/CBI

Foreign Contribution
Manipulations
Land Hijacking
Police/CBI/Real Estate Fraud
Trade in Human Body Parts Transplantation of Human Police/CBIOrgans Act, 1994
Illicit Drug Trafficking
Narcotic Drugs and
NCB/Police/CBI& PIT NDPS Act, 1988
Psychotropic
Substances Act 1985
Fraudulent Bankruptcy
Banking Regulation Act,
CBI
1949
Corruption and Bribery ofPrevention of Corruption State Vigilance Bureaux/
Public ServantsAct, 1988
CBI
Bank Frauds
IPC
Police/CBIInsurance Frauds
IPC
Police/CBIRacketeering in
IPC
Police/CBIEmployment
Illegal Foreign Trade
Import & Export (Control) Directorate General ofAct, 1947
Foreign Trade/CBIRacketeering in False
Passport Act, 1920/IPC
Police/CBITravel Documents
Credit Cards Fraud
IPC
Police/CBITerrorist Activities
Terrorist and Disruptive
Police/CBIActivities (Prevention) Act,
1987
Illicit Trafficking in Arms
Arms Act, 1959
Police/CBIIllicit Trafficking in
Explosives Act, 1884 &Police/CBIExplosives
Explosive Substance Act,
1908
Theft of Intellectual
Copyright Act, 1957
Police/CBIProperty(Amendments 1984 & 1994)
Computer Crime/Software
Copy Right Act, 1957
Police/CBIPiracyStock Manipulations
IPC
Police/CBICompany
Companies Act, 1956
Civil in Nature
Frauds (Contraband)
MRTP Act, 1968
187

RESOURCE MATERIAL SERIES No. 55

ECONOMIC AND COMPUTER CRIME IN KOREA
Choi Joon-Weon*
I. INTRODUCTION
The large scale economic crimes (i. e. Lee
and Chang’s bank bill fraud case,
Myongsung case, Youngdong case) and realestate speculation crimes which took placein the early 1980’s made the Korean people
aware of the seriousness of economic crime.
Since the late 1980’s, computer crime has
rapidly increased as the users of computers
and the Internet have increased.
However economic crimes, including
computer-based crimes, are very hard forinvestigating authoritles to gather
evidence on, since such crimes are beingcommitted in an organized andintellectualized way, and the evidence canbe easily destroyed. Most investigating
authorities are not specialized enough tocope effectively with economic crime.
Therefore, it is necessary to develop
diversified countermeasures, in accordancewith each situation facing economic crimes.
II. REPRESENTATIVE TYPES OFECONOMIC CRIME AND
LEGISLATION IN KOREA
A. Tax and Tariff Evasion
The accusation of the taxation office is aprerequisite to indict for the evasion of tax
amounting to less than 50 million won (1USD $1=1300 won). Because the taxation
office punishes most evaders with
forfeiture instead of accusation, few
evaders have been indicted by prosecution.
B. Monopoly and Unfair Trade
Korea established the Act on Monopoly
Regulation and Fair Trade in 1980. In line
* Public Prosecutor, Seoul District Prosector’s Office,Republic of Korea

188

with the introduction of the Act, the Fair
Trade Commission was established. This
Commission is committed to removing anticompetitive regulations which act as astumbling block to free business activities,
and to alleviate economic concentration.
The main crimes against this law are(i) anti-competitive aspects(ii) abusive acts(iii)undue collaborate acts(iv) unfair trade acts
C. Infrigement of Intellectual
Property
Korean people are not yet familiar with
the notion that intellectual property (IP)should be protected as a kind of real
property. To spearhead Korea’s efforts toeradicate violations of IP, the Joint
Investigation Team which specificallyhandles IP infringement cases wasorganized at every District Public
Prosecutors Office in January 1993. Since
then, vigorous crackdowns have been
carried out on IP infringements such as
illegal copying of computer software andvideo game cartridges, unauthorized soundrecordings and videos, and counterfeited
footwear. The result of the nationwide
crackdown was remarkable. Publicawareness of IP has also been enhancedby the continuous reports of mass media,
which is, in some sense, the most crucial
countermeasure for effective protection ofIP.
D. Insolvent Stock Openings
The Securities Transaction Law of Korea
provides that any company, which wants
to go public in order to join the stock
market, should satisfy the requisite
financial conditions achieved by the justexamination of a certified public110TH INTERNATIONAL TRAINING COURSEPARTICIPANTS’ PAPERS
accountant (CPA).
If an insolvent enterprise disguises its
own financial condition through conspiracy
with a CPA, and places its stocks on themarket, it may cause damage to the many
innocent consumers who subscribed tothose stocks. That scheme has no purpose
but to defraud consumers. In Korea, thiskind of fraud is restrained by the Securities
Transaction Law. In 1992, the managing
staff of 15 bankrupt corporations wereindicted and sentenced because of this typeof scheme. The financial damage ofdefrauded stockholders was presumed to
exceed seveval billion won.
The manipulation of stock price is also
restrained by the Securities Transaction
Law. This is an act conducted by conspired
trades, which induces the purchase or saleby others in the stock market, misleading
consumers to believe that the trade is in aprosperous condition, and to make a wrong
decision.
E. Illegal Cheques
The Illegal Cheques Control Act wasestablish in 1961 to actively cope withillegal cheques in Korea. Under this Act,
issuing an illegal cheque intentionally or
accidentally, is one of the primary crimes
subject to punishment. On the other hand,the offender of this crime is not punishedwhen the holder does not want to charge
the offender. Other types of cheque crimes
include forged cheques, false reports,
violation of reporting obligations by banks
etc.
F. Dishonored Promissory Note
In the commercial transactions of Korea,
promissory notes are very widely used asmeans of payment for goods and services.
By issuing or falsifying (faulty) bank bills,
that will be obviously dishonored, many
offenders are frequently defrauding
enterprises of goods or service exchanged

for those bills, which causes serious
damage to the enterprises receiving thefaulty bank bills as payment. Every year,
thousands of enterprises in Korea havegone bankrupt by fraud through faulty
bank bills.
G. Credit Card Crime
In Korea, credit cards are widely used
as a means of payment. The fraud patternsof credit card crime occurring in Korea are
as follows:(i) using a stolen or lost credit card
against the card holder’s will;(ii) using a forged credit card;(iii)using credit cards excessively tosettle payments;(iv) defrauding a credit card company bydemanding money with a forgedcredit card voucher.
H. Pyramid (Multi-level) Sale
Schemes
Since the late 1980s in Korea as well asJapan, pyramid selling has negatively
impacted society because of its monetaryand mental damage to large-scaleconsumers. Previously, we had tackled thepyramid sale scheme by the provision of
fraud in the Criminal Code. However weunderwent some difficulty in sentencing
pyramid sale scheme parficipants as ‘fraud’criminals, and in catagorising theconsumer participants as victims of fraud.
Thus in June 1992, the Door-to-Door
Sales Law was enacted and came into force
to regulate multi-level marketing, namely,
pyramid sale schemes. The Law of 1992
was effective enough to curb the
proliferation of pyramid sale schemes.
Apparently since the Law came into effect,
pyramid sale schemes have subsidized in
Korea.

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RESOURCE MATERIAL SERIES No. 55
I. Fraud, Embezzlement, Breach ofTrust
In Korea, there are too many cases offraud, embezzlement or breach of trust
being reported to investigation agencies.
Almost all of these cases are reported by
the victim’s, however, few of these cases areindicted; rate of about 12% in fraud cases
and about 23% in both embezzlement andbreach of trust cases.
For reference, in 1995 the number of thecomplaints was 471,702 in Korea, while itwas 10,596 in Japan. The number ofcomplaints per 100,000 capita in Korea in
124 times as many as that of Japan. The
reason why there are such a great numberof complaint cases in Korea is explainedby:(i) The trend that a party concernedchooses to settle the dispute bycriminal investigation, even in civil
cases such as payment default, on
account of time consuming civil
procedures.
(ii) The practice of investigating agencies
to receive complaints
indiscriminately without
examinating whether they are worth
investigating as criminal cases.
Because of such an excessive number ofcomplaint cases, the problems of violating
the rights of the complained, and wasting
investigation resourses, are getting worse.
Therefore, versatile programs to solve thisproblem are under consideration.
J. Organizational Structure(1) Prosecutor’s Office(2) Police(3) Customs, Office of National Tax
Administration(4) Fair Trade Commission(5) S e c u r i t y ( I n s u r a n c e , B a n k )Supervisory Board

190

K. Money Laundering and Asset
Forfeiture
The Republic of Korea declared theSpecial Act Against Illicit Drug Trafficking
in December 1995. Only money laundering
related to drug offenses is criminalized.
Korea does not have a special act for money
laundering control, as exists in the U.S.A.
We do not criminalize money laundering
itself. Consequently, we can’t punish
money laundering if it is not related to adrug offense. Only the assets related tothe drug offense and special crimes
committed by officers can be forfeited.
In January 1993, concerned authorities
in the Korean Government jointly started
legislating a new statute for asset forfeiture
related to drug offenses. In the middle of1993, a large-scale local tax evasion casewas revealed. The officers who were in
charge of local tax collection received bribes
and falsified the collection data to disguiseand prevent the evaded tax from being
collected. In that case, the concerned
officers revealed that they accummulated
in excess of USD $2 million. However theGovernment was unable to access themoney. As a result of that case, in
December 1994 the Korean government
made a special statute for asset forfeiture
related to special crimes committed by
officers.
III. MAIN CASES OF ECONOMIC
CRIME IN KOREA
A. Lee & Chang’s Case
Lee and Chang’s bank bill fraud casetook place in May 1982. Lee and Chang
defrauded 6 business enterprises, sufferingfrom financial difficulties, of promissory
notes equivalent to 164 billion won and put
them into circulation. This kind of fraud
was possible because Lee and Chang took
advantage of their position as the relativesof the President of Korea.

110TH INTERNATIONAL TRAINING COURSEPARTICIPANTS’ PAPERS
The prosecution indicted 30 people,
including Lee and Chang, bank personnel
and the public officer involved in the case.
This was the largest fraud case during thestage of high economic growth in Korea,
and shocked the whole nation. The
prosecution suffered from many problems
such as leakage of investigation secrets,
overlapping or unnecessary investigations,which provided a good lesson for theinvestigation of large scale fraud cases
thereafter.
B. Fraud Sales in Department
StoresIn January 1989, a consumers
association made a complaint against
several department stores on the suspicion
that they deceived consumers by attachinga false previous price tag to merchandise
to make the consumers believe that thestores were selling the goods at a special
price. That is, the department storesattached tags written with “400,000/
300,000”, as if they had been selling
merchandise at a special price. The items
were scheduled to sell at the price of
300,000 won from the beginning.
Though the sales managers of the 6
department stores were indicted for the
fraudulent sale, they were given a sentenceof not guilty by both the District andAppellate Court for the reason that they
did not cause actual financial loss toconsumers. After long-term examination,
the Supreme Court reversed the sentenceof the Appellate Court, and the sales
managers were finally given a guilty
sentence.
C. A Large Scale Smuggling CaseIn April 1995, the Seoul District
Prosecutor’s Office indicted 18 people (14arrested) involved in a ring of gold
smuggling disguised as a legal enterprise.
They smuggled gold by hiding it in hollow
silver bars for camouflage. This was thelargest seisure of gold (188kg) confisticatedin a single smuggling case.
D. Fraudulent Representation of
Coporate Financial Statements
In April 1992, Seoul District Prosecutor’s
Office indicted 24 people, including the
CPAs and the directors of the enterprises,
who prepared and audited the financial
statements that were fraudulently
presented and caused investors to believe
the misrepresented financial statement.
These enterprises were bankrupt before
the investigation began. The investors whobelieved in the false financial statements
suffered huge losses that could not becompensated.
E. Tax Embezzlement Case
In September 1994, the officers who werein charge of local tax collection received
bribes for falsely processing collectible tax
not recieved from the tax-payers.
Furthermore, they embezzled the tax
received from taxpayers by forging receipts.
This embezzlement was possible because
the computer system for the collection of
local tax, such as acquisition tax andregistration tax, was not set up then. The
Inchon District Prosecutors Office indicted
135 people (92 arrested) including taxation
officers and the legal affairs officepersonnel.
F. Manipulation of Stock Price
In May 1998, the Seoul Distric
Prosecutor’s Office indicted 11 persons (7a r r e s t e d ) i n c l u d i n g M r Wo o , f u n dmanagers and investment company
personnel who helped Mr Woo with themanipulation of the price of a spinningbusiness company. The market price of thecompany’s stock doubled in 5 months after
the manipulation. The fraud was
conducted by the following methods:(1) Inducing price rise by purchaseorders at the highest price possible.
(2) Placing purchase and sales orders

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RESOURCE MATERIAL SERIES No. 55
intentionally at the same time, toshow designated stock as very
popular.
(3) Disclosure of a false information andnew technological developments
which might cause price rises inrelated stock.
(4) T h e i n s t i t u t i o n a l i n v e s t o r smaintained the purchase trend for aconsiderable period of time.
G. Credit Card Fraud Case
In May 1996, the Seoul DistrictP r o s e c u t o r ’s O f f i c e i n d i c t e d 1 3 0
entertainment businessmen and membersof a bogus credit card company (37arrested) who evaded sales tax by reporting
the sales amount as being less than it was.
This fraud was conducted by the following
methods:(1) O p e n i n g a b o g u s c r e d i t c a r dmembership store by forging businessregistration certification.
(2) Setting up a credit card identification
machine and giving ID numbers of
the bogus credit card membershipstore to an entertainment store (ie.
bars. nightclubs etc).
(3) The entertainment store then sells
sales receipts at 90% of the real sales
purchase price to the bogus credit
card company, which causes the tax
evasion.
(4) The entertainment store gives bribes
to bank managers and credit cardcompany personnel so that they don’tcancel the credit card contracts.
H. HanBo Case
This was a representative case which
took place in January 1997, showing theconnection between politics and theeconomy in Korea. Mr Jung, President ofHanbo Steel Corporation, bribed somepoliticians who forced the bank to lendmoney to his company that seemed to havea very slim chance of profitability andgrowth.

192

Unable to repay the loan amount of 3.2
trillion won (about USD $ 2.8 billion), theHanbo company went bankrupt, causing
serious damage to the Korean economy.
The Korean citizens became angry atpoliticians and businessmen. The
prosecution arrested and indicted 10
people, including Mr Jung and influential
politicians of both the ruling and opposition
parties, former ministers, and thepresident of the bank, most of whom were
found quilty and sentenced.
IV. PROBLEMS IN CONTROLLINGECONOMIC CRIME
A. Lack of Specialization
To i n v e s t i g a t e e c o n o m i c c r i m e seffectively, general investigators shouldhave some specialized knowledge
concerning the details of foreign trading
procedures, bank finance procedures, tax
calculation systems, and analyzing
techniques of account records or financial
documents, etc. Otherwise, they may often
be led astray by the explanation of asuspect.
The lack of the above makes generalinvestigators or policemen depend upon
their experience alone. In Korea, bothpublic prosecutors and generalinvestigators go through formal training
courses that teach specilized areas to help
them investigate economic crimes.
B. Difficulties in Proof-Collection
In most economic crimes, just as it iseasy for offenders to eliminate or deform
proof, it is very difficult for investigators
to detect and prove interference withevidence. Furthermore, judges in Korea
who are responsible for criminal trials
require strict specification of the content
and range of evidence in an indicted case.

110TH INTERNATIONAL TRAINING COURSEPARTICIPANTS’ PAPERS
C. Name Lending (Concealment ofReal Name)
In Korea, many offenders who caused
their creditors to be confronted withfinancial damage due to their bankruptcy
or economic offenses, frequently restart
their business under the names of theirwives or relatives quickly after being
punished for their wrongdoings.
Furthermore, they even promote chequetransactions with the bank under theirwife’s or relative’s name. Of course, any
enterprise or individual that fails to settle
a bank cheque is questioneed by the bank,and thereafter restricted from issuing bankcheques for a certain period of time by law.
However, if that enterprise or individual
tries to restart a business by stealth, under
the name of another person, it is difficult
to detect the real person. This factor plays
an important role in the recurrence ofeconomic crime.
D. Difficulty in Initiating
Investigation
The high social influence of someoffenders makes it difficult to initiate
investigation. Some offenders distribute
their illegal proceeds to politicians who
have influence or power to appoint or
dismiss criminal justice officials andprotect the offenders from being punished.
Therefore, the criminal justice officials
often initiate investigating offenders only
after having decisive evidence.
V. COMPUTER CRIME IN KOREA
A. Introduction
1. Drastic Increase of Users of Computers
and the Internet
From the late 1980’s, inexpensive
personal computers were distributed andbecame widely popular in Korea. Further,communication technology development
enabled personal computers to beconnected to each other through networks.

As a result, the average person, as well as
experts, has the opportunity to takeadvantage of computers and to have easy
access to information through computers.
2. Definition of Computer Crime
Computer crime is defined as ‘a crimein which a computer is used as a tool ofcrime or is an object of crime, or a crime
related to data or knowledge processed
through a computer’. In this context,
computers include hardware, software anddata. (Some scholars use the terminologyof ‘Information Crimes’ to refer collectively
to the crimes with respect to information
or information processing machinary;devices including computer crime andcomputer-related crime).
B. Computer Crime Under Korean
Law
1. Regulation Necessity
First, computers create new and various
tools for crime. Traditional crimes can becommitted in new ways, for example there
could be: computer-using fraud; disclosureof personal information of individual;
infringement on corporate information;diffusion of obscene materials throughcommunication networks; or defamation bymeans of commercial networks orelectronic mail.
Second, computer-based crime can cause
disorder in the basic structure of eachsector of society, including, but not limited
to, economic damage. The more dependent
on computers the society is, the more
serious the potential for damage. If afinancial network, a resident registration
network or land integrated information
network, which are already in operation,
are victimized by crime, its result will not
be limited to economic damage.
Third, computer-based crime is very
hard to uncover and prove. Because

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RESOURCE MATERIAL SERIES No. 55
computers store volumous data into small
spaces such as disks, magnetic tapes andstored data, they have many nonaccessible, confidential and invisible
characters. Especially in the case ofcomputer programs, there is a peculiar
program language and expression or
technology unique to each programmer.
Thus, even computer experts may havedifficulty in fully examining the works ofother programmers and in finding errors.
Therefore, it is necessary to recognize theimportance of the prevention andsuppression of computer crimes and todevelop competent countermeasures.
2. Korean Law(i) Criminal Law
The amendment of the Criminal Law asof December 31, 1996 added special media
records, like electronic records, as an objectof crime, into the crimes of: rendering nulland void symbols of official secrecy (§140);
untrue entry in officially authenticatedoriginal deeds (§228); utterance of falsified
public document (§229); utterance offalsified private documents (§234);
violation of secrecy (§316); obstructing
another from exercising his/her rights(§234); robbery by hostage (§336). The
amendment also created new provisions of:preparation of false public documents(§227); interference with business (§314 II);fraud by use of computer (§347-2); andadded special media records into the objectof forfeiture.
(ii) Special Laws Related to Computer
Crime• Act for Expanding Distribution andFostering Usage of Computers• Act for the Protection of Personal
Information in Public Agencies• Military Secret Protection Act• Basic Electric Communication Act• Telecommunication Business Act• Communication Secrecy Protection

194

Act
• Radio Wave Act• Election for Public Office and Election
Malpractice Prevention Act• Computer Program Protection Act• Copyright Act, Patent Act,
Trademark Act, Design Act, Utility
Model Act,• Unfair Competition Prevention Act
C. Status of Computer Crime
1. Type of Computer Crime
Computer Crime is composed of each or
combined types of computer hacking (which
is a typical type of computer crime),eavesdropping or wiretapping of computercommunications and telephones,
disturbance of telephone systems andphone phreaking, cryptanalysis or codebreaking, computer virus etc.
2. Manipulation of Electronic Records etc.
The misconduct of manipulating
computer programs or electronic records isbeing committed by way of manipulating
commercial or financial files such as pointof-sale, electronic funds transfer systems
or Trojan Horses, Superzapping Trap
Doors, Logic Bombs, and Simulations andModeling, which are expanding worldwide.
Such misconduct has been repeated for along time and is difficult to uncover.
An international counterfeit ring ofcredit cards was prosecuted at the end of
1995 in Korea. A woman working in thelocal post office was under arrest forembezzling about 4.6 billion won by meansof falsely recording deposit accounts during
the 6 years from 1988 to 1994. In July
1997, it was revealed that personnel in the
Choheung Bank conspired with a private
lender to unduly loan 65 billion won to him.
Bank personnel operated a terminal to
make a false deposit to the lender’s bankaccount. In exchange, he recieved bribes
totalling 85 million won.

110TH INTERNATIONAL TRAINING COURSEPARTICIPANTS’ PAPERS
In February 1998, a 23 years old person
working in an island post office in
Cheonnam province operated the post officeterminal to make a deposit of about 8billion won into 58 non-named or nameborrowed accounts, and withdrew 2.7
billion won in Seoul over two days anddisappeared.
3. Information Espionage
Information espionage, which includes
industrial espionage, means an act ofgathering, or transmitting illegally,
confidential information regarding thebusiness of other people, companies or thenation.
In Korea, a certain company transmitted
the production methods of high-techindustrial equipment to Eastern European
countries in July 1988, attracting publicattention. In December 1992 an
Australian, who was working (as atechnology consultant) in a Korean
manufacturing company of speakerproducts, copied the production technology
onto floppy diskettes and sold it to theUnited States.
In addition, 19 people in organizations
as industrial spies were arrested by aprosecutor after they stole, and transmitted
to a Taiwanese semi-conductor production
c o m p a n y, m a n u f a c t u r i n g p r o c e s s
information of circuit charts for 64 Mega
D-Ram of domestic semi-conductor
production companies such as Samsung
and LG.
4. Information Piracy
While information itself is intangible, amedia (device) embodying it can be
reproduced. Information piracy is an act
to make free use of valuable information
by reproducing information that has
national, social and economic value,
without authorization. Its primary target
is computer programs, i.e. software. Illegal

reproduction using Writable CD ROM, aswell as on-line distribution throughcomputer communication, is prevalent in
Korea.
Especially, the Internet is becoming
popular. The number of users having
application programs which enable multimedia production has been rapidly
increasing, and the combination of credit
card systems and electric commerce has
made possible transactions amongindividuals in cyber-space. Thus, theInternet, is an exemplary electronic market
that could be used as a huge duplicator.
5. Infringement of Privacy
As society is going toward an
information era, every organization
including national and private businesscompanies are creating databases of
personal information of people related toits business, such as residents, customers
and patients, using information processing
machines (devices). Revealing such data
to other people could cause a serious
violation of that persons rights.
In 1992, a list of employees who engaged
in labor disputes was circulated among
employers in Pusan, Korea. Those on thelist were rejected to be hired. In 1993, 25
police officers who obtained resident
references or criminal records withoutauthorization and distributed them to thedelivery service company which gave thembribes, were arrested by the Seoul District
Prosecutor’s Office. In 1994, department
store personnel sold a database about large
customers to whomever wanted suchinformation. As a result, those customers
became the target of a criminal murderorganization called Jizon-pa, causing a big
sensation nationwide.
Despite such troubles, the fact thatmaterials which are printed out frominformation processing machines (devices)

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detailing bank or business transactions arestill being used as wrapping paper in street
shops near subway stations, shows aserious problem in security for those whoare engaged in computer-related work in
Korea.
Under the Credit Information Usage andProtection Act, it is prohibited to illegallygather and investigate particular
information such as privacy. To engage ina non-licensed credit information business,and to disclose such information other thanfor the contemplated purpose, is illegal.
Further, the Public Institution’s Private
Information Protection Act prohibits
private information files, gathered andkept by public institutions, from being
disclosed without authorization, or being
taken advantage of for undue purpose.
However, from the fact that private study
institutes are sending letters or e-mail toeach house promoting out-of-school studies,
we may conclude that a lot of personal
information about subscribers of computercommunication networks are leaking out
through illegal channels. Therefore, theprotection of privacy seems to be a serious
problem in Korea.
6. Cyber-Terror
Cyber-terror is an act to make threats
to do harm to an other’s life, body or
p r o p e r t y, t h r o u g h a n i n f o r m a t i o nprocessing machine (device), or an
information communication network, or tointend to obtain money or something ofvalue by means of such threats. There were
two such cases in August 1997 in Korea
which were uncovered by the prosecutor’s
office. One case stopped the function ofInternet e-mail via “Hitel’’, a local internet
service company, by way of sending 100,000
e-mails to the same person at the sametime. Another made the Internet
connection (access) network of “Naunuri’’,a local Internet service company, out oforder by way of sending 20 people a huge196

file of 450 Mb at the same time.
7. Distribution and Exhibition of Obscene
Materials
Obscene sites on the Internet, without
any restriction to access, is a problem. In
Korea, the people who opened an obscene
site on the Internet and sold the visual
images, which were combined with picturesof an actress’ face, were arrested byprosecutors in April 1998.
Under the Korean Communication
Secrecy Protection Act, with regard to theinvestigation of obscene materials,
wiretapping with a warrant is allowed forthe investigation of certain crimes.
However, on-line wiretapping duringcommunication, which is needed to find out
the extent of violence or whether it isobscene or not, is not allowed. Such
restriction is creating trouble ininvestigation practices.
D. Actual Situation of Computer
Crime Control in Korea
The investigation results of computer
crime (have been provided in tables III and
IV of Annexure A.)
1. Main Investigation Cases• Hacking case in Seoul National
University computer system (’96.3)• Hacking case in Pohang Technology
College computer system (’96.5)• Home Banking Fraud case by meansof account transfer through hacking(’96.9)• Fraud case by manipulating
computer networks in the Office ofRailroads (’97.3)• Leaking case of Drafting List in the
Office of Military Manpower (’97.4)• Hitel Computer Businessinterference case by way of anelectronic mail bomb (’97.8)• Large Amount Withdrawal case bymanipulating a terminal in a post

110TH INTERNATIONAL TRAINING COURSEPARTICIPANTS’ PAPERS
office (’98.2)
2. Establishing Investigation Systems
The Information Crime Investigation
Center was set up in the Seoul District
Prosecutor’s Office in April 1995 and theInformation Crime Countermeasure
Headquarters was newly established in theCentral Investigation Department of theSupreme Prosecutor’s Office in June 1996.
Some prosecutors were designated to be incharge of Information Crime in each of the
20 local branches of the District
Prosecutor’s Office on December 20, 1996
and an investigation squad (team) was
created in each District Prosecutor’s Officein Seoul, Taegu, Pusan and Kwangju on
April 25, 1997. Thus a nationwide
investigation system of Information Crime
was set up.
3. Training of Investigation Experts
To date, there are 48 investigators
trained through experts training programs
and systems management education
programs. Further, it is planned to train
35 investigators each year totaling about
150 investigators by the year 2000.
4. Introduction/Operation of New HighTechnology Equipment
A full-time investigation team for
Information Crime was provided with hightechnology computer equipment for
networking, and Internet exclusive lines
for setting-up hacker chasing systems.
Further, it created its own internet
homepage and is providing Internet
connection services through a terminal
server.
5. Research/Development of Investigation
Techniques
Developing an analysis system of
evidence in computer crime wascommenced in order to gather and analyze
Information Crime-related materials.
Such a system is also required for generalcrime-related evidence that is being
inputted into electronic records orcomputer files.
6. Building up Investigation Support
Systems
In light of the trend towards a rapid
increase of setting up and using various
databases, it is planned to promptly build
up a database system for investigation ofInformation Crime and general crime, andto have a Full-time Information Crime
Investigation Team to support any selfinitiated (“sua sponte’’) investigation using
databases.
E. Measures to Cope with Computer
Crime
1. Diversification of Countermeasures
As the crime organizations impacting
national, social and economic values are
becoming more organized andsophisticated in their ability to use
information, the Information Society faces
future trouble. However, if we abopt a
policy that only channels provided by thecountry are allowed for international
information communications, and all such
communications are subject to censorshipin advance (as there is a possibility forinternational communications to damage
the nation’s interest), such passive
countermeasures will also be an obstacle
to the arrival of an Information Society
A c c o r d i n g l y, s u c h p a s s i v e
countermeasures should be the last resort
to protect out nation and society. It isnecessary to prepare various and generalcountermeasures from legal, technologicaland/or social aspects, in order to cope withthe challenge from adverse influences in
the Information Society.
2. Necessity of Unified Enactments
The Korean law to counter computer
crimes is primarily the Criminal Code. It

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is our nation’s basic law and does notfacilitate thorough practical research into
real cases of computer crimes. Therefore,
some main cases of computer crime could
be insufficiently covered by regulations orunder no regulations at all. Further, eachrelevant Ministry enacted its own special
law for each type of information crime,
which resulted in an unreasonableassessment of cases for punishment/
prosecution.

system of blocking such misconduct.
Further, we need to develop various andmultifunctional security technology andsystems e.g:(i) Abuse/misuse controlling technology
f o r S y s t e m S e c u r i t y To o l s i ncomputer communication networks;(ii) duplication protection technology;(iii) connection blocking technology;(iv) multi-user recognition systems; and(v) standardization of cryptosystems.

Typical examples are: the lack ofprovisions punishing illegal spying orillegal monitoring; lack of regulations on
attempt and conspiracy to commit an act
causing direct threat to public welfare; an
unbalance in punishment between the
Criminal Code and special laws;
jurisdictional disputes between
investigation authorities and judgement
authorities, and the warrant requirements
as a basic principle of the Criminal
Procedure Code.

4. Inter-Linked Research by Related
Institutions
In Korea, a person or an instituteinterested in computer crimes
independently research each field in theabsence of an inter-linked system forgeneral research into computer crimes.
However, an Information Society can be
secured and settled through general
research by investigating authorities,
research institutes and businessenterprises, and joint research from thenatural and social sciences.

Therefore, it is urgent to enact a generall a w, a p r o p o s e d C o m p u t e r C r i m e
Regulating Act which includes
countermeasures against all adverse
impacts of computer crime, resolution ofjurisdictional disputes and solves thewarrant requirement problem under the
Criminal Procedure Code when computer
crimes are spread out. In addition, the Act
would have to deal with new issues in the
Information Society, such as electroniccommerce, electronic funds transfer,admissibility and authenticity of electronic
evidences, and international cooperation.
3. Practical Measures
Since misconduct in communication
networks, such as hacking or phonephreaking, is likely to be directly connected
to criminal acts, it is urgently required todevelop a Realtime Intrusion Detection
System, or any immediate chasing system
for such misconduct, as well as a firewall

198

5. International Joint Research
The contemplated goals can be attained
only if computer crime research and thetraining and education of investigators areaccompanied by international cooperation.
Investigating authorities in each country
will have to gather, examine and compare
information about the extent of regulationand its impact, as well as technicalinformation on information crime in othercountries. Further, they should have a joint
discussion on the crimes committed in eachcountry and make efforts to cope together
with new crime techniques. Without such
efforts, developing countries in thecomputer industry might provide a hotbed
for computer crime when crime techniques
in developed countries are introduced.

110TH INTERNATIONAL TRAINING COURSEPARTICIPANTS’ PAPERS
VI. CONCLUSION
Economic crimes are social evils which
distort the reasonable distribution of
wealth, and harm sound economic
development. With the development oftransportation and the gradual breakingof tariff barriers, all the countries aroundthe world are now advancing to one market
in which all countries are subject to thesame economic principles. Thus somekinds of economic crime in one country may
cause other countries to be faced witheconomic damage.

From this standpoint, it is necessary to
make all efforts to develop investigation
techniques and prevention measures which
are suitable for individual countries. Whena certain economic crime may cause a bad
effect on other countries, or has somerelationship with other countries, it isnecessary for all related countries to carryout cooperative countermeasures. The
control of economic crime must be pursued
for the mutual interest of all concernedcountries.

APPENDIX ATABLE IECONOMIC CRIME OFFENDERS (NUMBER)
Types
Tax Evasion Punishment Act

Year
Reported
Indicted(Arrested)
Infringement of Intellectual Property Reported
Indicted(Arrested)
Illegal Cheques
Reported
Indicted(Arrested)
Credit Card Act
Reported
Indicted(Arrested)
Fraud
Reported
Indicted(Arrested)
Embezzlement & Beach of Trust
Reported
Indicted(Arrested)

1995
1,006
301
(61)
13,683
13,683(843)
109,719
23,224(7,099)
2,962
1,606
(569)
294,967
31,355(8,897)47,997
10,852(1,994)

1996
1,619
552
(105)
15,16615,166(1,106)
96,34725,427(7,504)
3,434
1,729
(576)
364,970
44,514(11,289)
51,324
11,815(1,990)

1997
2,756
803
(79)
13,46013,460(777)
79,82916,681(4,144)
3,565
1,614
(398)
37,52640,946(10,035)
47.023
10,938(1,652)199

RESOURCE MATERIAL SERIES No. 55

TABLE II
PC & INTERNET USERS (NUMBER)
PC units (thousands)
Internet Users (thousands)

1994
4,459
140

1995
5,349
370

1996
6,231
730

1997
7,214
1,090

1998
9,000 (Estimated)
2,190

TABLE IIIINVESTIGATION RECORDS BY YEARYear

No. of Case

1995(Apr. - Dec.)
1996
1997(Jan.-Aug.)
Total

21
72
47
140

No. of InvestigatedAllegations
45
146
72
263

(Arrested)
(12)
(24)
(39)
(75)

TABLE IVINVESTIGATION RECORDS BY TYPE
Type

Cases

Forgery/alteration of private electronic records etc.
Business interference, such as destruction ofcomputer/eletronic records
Home banking fraud
Mis-issue of ID/ID usage fraud
Terminal mis-usage fraud
Commercial communication network fraud
Credit card fraud
Computer network protection infringement (Hacking)Computer network processing information damage
Mis-usage of private information by public instituteProduction/distribution of obscene CDs etc.
Others
Total

2
6

200

3
6
10
5
4
10
3
3
9
79
140

No. of(Arrested)
Investigatedallegations
4
(2)
17
(12)
3
51
20
5
5
15
5
10
9
118
263

(3)
(5)
(12)
—
(2)
(6)
—
(6)
(6)
(21)
(75)

110TH INTERNATIONAL TRAINING COURSEPARTICIPANTS’ PAPERSEFFECTIVE COUNTERMEASURESAGAINST ECONOMIC CRIME IN NEPAL
Kedar Paudel*
I. INTRODUCTION
About a decade ago, economic crime wasrather ‘foreign’ to the Nepalese people.
However, during the past few years, theeconomic activities of different sectors of
the economy have increased tremendously,completely changing the social life of thepeople. This development has invited theopportunity for corruption and fraud
relating to finance, banking transactions,foreign currency speculation, real estatetransactions, illegal trade practices,
procurement of goods and the constructionof development projects. As a result, trends
have emerged which have contributed to
new social problems, including economic
crime. Due to the lack of understanding
and limited expertise of criminal justiceofficials in this new sphere of crime, theproblems are further aggravated. It is achallenge to the government and othercriminal justice agencies to fight against
such economic evil in society. Most
enforcement agencies in the country aremainly concerned with conventional typesof crime like murder, robbery, theft, rape,etc. Some countermeasures have also been
adopted to combat and control economic
crime, but these are seen as insufficient.
With the growth of commercial andbanking activities, and emerging newtechnologies in various fields of telecommunications, international air
ticketing, financial institutions, revenue
administration etc, computers are widely
utilized and a new problem of computer
crime has emerged. This crime is*Under Secretary (Judicial Service), Commission for
the Investigation of Abuse of Authority, Nepal

completely new to Nepal and a responsive
legal framework, including what conduct
should be criminalised, has not beendeveloped. This paper will put forward
some of the Nepalese experiences vis-a-vis
the countermeasures adopted against
economic crimes.
II. SITUATION OF ECONOMIC
CRIME IN NEPAL
Several types of economic crime arecommitted in Nepal. With few exceptions,most of these crimes seem simple anddirect, without any complication. However,with the globalization of various economic
and commercial activities and illegal crossborder operations, these crimes are being
complicated day by day. Economic crimeis becoming a major public issue in the
country, and the credibility of thegovernment in general, and theinvestigating institutions in particular, isbeing questioned.
A. Nature of Economic Crimes
The nature of economic crimes which arecommitted in Nepal, can be categorized asfollows:(i)
Corruption and Bribery(ii) Tax evasion(iii) Non payment of customs/excise
duties(iv) C r i m e s r e l a t e d t o b a n k i n gtransactions (e.g. letters of credit,
overdrafts, hypothecation, loanpledges, remittance, intrabranch/interbank suspense accounts etc.)(v) Forging of commercial documents(vi) Illicit drug trafficking(vii) Counterfeiting of legal documents

201

RESOURCE MATERIAL SERIES No. 55(viii) Foreign employment fraud(ix) Money laundering(x) Dubious real estate transactions(xi) Privatization of public owned
corporations(xii) Export of timber(xiii) Te n a n t i n G u t h i - l a n d l a n dregistration(xiv) Lottery(xv) Undue price fixing(xvi) Smuggling(xvii) Foreign currency irregularities(xviii)Revenue pilferage(xix) Other unexposed economic crimes
Some of the economic crimes experienced
in Nepal are briefly summarized as follows.
B. Corruption and Bribery
Corruption and bribery are the major
forms of economic crime in Nepal. Various
economic crimes have been included within
the meaning of corruption under thePrevention of Corruption Act, 1960.
Corruption, in the global context, hasadversely affected many societies. To
combat corruption is quite a tough taskand, therefore, corruption is spreading inall dimensions more and more rapidly. A
developing country like Nepal has to bear
the loss of a colossal percentage of its
development expenditure throughcorruption, without any fruitful return.
Reasonable investment towards
development activities are in existence, but
the level of output in terms of benefit isworsening. The people in Nepal haveclearly recognized that there is corruption
in both the government and private sectors,
involving the whole spectrum of society(though empirical evidence has never beengathered or analyzed). There are problems
in corruption investigation andprosecution. The lack of skilled manpower,
limited resources and inadequate laws area few of the major obstacles in this field.
The types of corruption that exist in Nepal
are of various forms. In the fiscal year

202

1996/97, 2019 complaints of corruption andimproper conduct were registered andinvestigated by the Commission for theInvestigation of Abuse of Authority (CIAA);
out of which 11 cases of corruption werefiled and 1 minister, 3 secretaries andvarious public officials, private individuals
and businesses were prosecuted. A portionof the Seventh Annual Report (abridged)
1996/97 of CIAA states the cases filed in
the courts as presented below:(a) The Secretary of the Ministry ofLand reforms and Management wasinvolved in making decisions on thetransactions of tenantship of Royal
Guthi land. This Guthi has an areaof 106 Ropanis in Kathmandu
Municipality, Baneshwor, andMahadevsthan. As provided by theLaw, transactions of tenantship ofsuch Guthi land is authorised to theGuthi Sansthan only. Along with therecommendation to take necessary
action for the protection andpreservation of such Guthi lands toGuthi Sansthan, charge sheets werefiled against public officials and otherindividuals, including the secretaryand his relatives.
(b) Guthi Sansthan administrator was
found to be involved in registering thetenantship of the Guthi owned landof 4-14-1 Ropani, under Shivalaya
Guthi, located at Bishnu Village
Development Committee, ward No.
3(ka), cadastral No.133. The Steering
Committee of the Guthi Sansthan isthe only authority allowed to makedecisions on the issue of registering
tenantship of such Guthi lands. So,a total of RS. 3,912,500.00 and a fineof the same amount was claimed, as
per the provision of sections 7(1), 8
and 29 of the Prevention of
Corruption Act, 1960.

110TH INTERNATIONAL TRAINING COURSEPARTICIPANTS’ PAPERS(c) One person was arrested ‘red-handed’
while carrying illegal gold weighingaround 14 kilograms. He could not
produce any certificate for his sourceof income, to verify that the gold was
produced by him.
In thatcircumstance, the gold was subject toseizure by the Customs Office.
However the Chief Customs Officer
unlawfully decided to allow theperson to import the gold. Hence, a
total claim of RS. 6,414,600.60 was
made and the Customs Officer andthe illegal gold carrier were charged
as per the provisions of thePrevention of Corruption Act, 1960.

unauthorised concession provided in
accepting the performance bond. So,a charge sheet was filed against the
Minister of Agriculture, the Secretaryof Agriculture, General Manager of
AIC, Joint Secretary of the Ministryof Finance, General Manager of theAgriculture Development Bank,
Advisor to the Governor of Nepal
Rashtra Bank, Peasant
Representative of the Board,
Procurement Officer of AIC,
President of Semi-conductor
Materials and local representative,
claiming US$ 940,625 (equivalent to
NRs. 53,897,812.50).

(d) The Commission filed suit against the
Minister of Agriculture, along with
the Secretary and members of theBoard of Directors and other officialsof the Agricultural Input Corporation(AIC), and with the suppliers andlocal agents in connection withcorruption in the procurement ofchemical fertilisers. The main
charges for the following allegations
were:(e) Cases of corruption were filed in the
court regarding the following lettersof credit issued by the Rashtriya
B a n i j y a B a n k , B i s h a l b a z a r,
Kathmandu; which were found to beagainst the provisions of thePrevention of Corruption Act, 1960.

The Minister of Agriculture
decided to open a letter of credit toprocure 50,000 MT of urea fertiliser
at the rate of US$235 per MT, subject
to the concurrence of the Board of
Directors of AIC. This was notconsistent with the regulations of the
Corporation. Moreover, the original
offer of US$ 225 per MT was amended
to US$ 235 per MT for urea fertiliser.
In addition to that, the performancebond was taken only for 12,500 MT
instead of agreed quantity of 50,000
MT.
The claimed amount thus wascalculated as the difference between
the original offer rate and theamended offer rate, and the

The concerned personnel, alongwith the Chairman of the Steering
Committee and the General Managerof the Bank, were charged for theirfailure to monitor and take necessary
actions against such irregularities,
and for creating favorable conditions
and opportunities for the escape of
the accused. Similarly, the concerned
authority was recommended to takedepartmental action against othervarious public officials for theirnegligence in signature verification,
limit checking, denoting the margins
and for the production of false
documents to support the illegal
issuance of the letters of credit. The
Nepal Rashtra Bank was suggested
to make necessary provisions fornegular monitoring and follow up.
The Department of Revenue
Investigation was also suggested totake necessary actions regarding the203

RESOURCE MATERIAL SERIES No. 55
misappopriation of foreign currency.

corporation’s objectives. So, theconveyor and members of the tender
evaluation committee were charged
as per sections 3 and 7(2) of thePrevention of Corruption Act, 1960.
Similarly, the landowner, along with
their attorney, were charged under
the provisions of the section 16(a) of
the same Act.

(f) Bid proposals from landowners or
registered companies was invited by
the Nepal Oil Corporation forpurchase of land to construct a depot.
The proposal accepted was that of aperson who was the attorney of someof the other persons. It was foundupon investigation, that the reallandowner received only RS.
3,000,000.00P, while the mediator(the attorney) illegally earned
4,639,862.50P. The purchased plot,
upon site inspection, was also found
not to complying the specifications
and the plot was not suitable for the

In all cases, the concerned
authorities were recommended totake departmental actions against
other various public officials for theirnegligence in failing to undertake anin-depth study of the issues andprevailing legal provisions before
forwarding files to the decisionmakers.

TABLE IL/C No. Amount claimed in USdollars
30/1730165,030/2355140,1
30/2356151,2
30/2715184,230/2829189,730/2830207,030/2831210,730/2832193,830/2833
215,6
Status: Guarantee limit exceeded, documents
irresponsive.

C. Tax Evasion
Tax revenue is the major source offinancing government expenditure in the
country. Tax revenue and non-tax revenue
is comprised of 80.4 percent and 19.6
percent shares respectively. However, theviolation of customs and other various tax
laws, as well as the smuggling of the goods,
has largely affected the tax revenue of thecountry. The business community andother high-income groups mostly partakein tax evasion. Businessmen often do not

TABLE II
Tax Heading

RS in Millions
1995/96

RS in Millions
1996/97

RS in Millions
1997/98(first 9 months )5921.6

Customs
Comsumption& Products
Land Revenue& Registration
Property Profit& Income
Total

7327.48309.19684.710775.2

7507.91066.61015.4681.5

3589.34324.63090.621668

24424.3

17201.6

Some cases of tax evasion were investigated but data was not published and is not available.

204110TH INTERNATIONAL TRAINING COURSEPARTICIPANTS’ PAPERS
declare goods at relevant entry points nor
maintain or show real accounts for tax
assessment. Statistics show that thevolume of business transactions, as well as
the tax base of the country is increasing;
but revenue is decreasing. This situation
worsened last year. Table II shows thestatus of the tax revenue in last three
years.
D. Letter of Credit Scandal
The opening of Letters of Credit (L/C) invarious commercial banks, and getting
payment on the basis of forged documents(without importing goods), is a common
misuse of foreign currency and a major
source of economic crime in the country. A
report submitted in 1996 by the Letter ofCredit Investigation Commission,
appointed by His Majesty’s Government
under the Inquiry Commission Act 1970,shows that when investigating misuse,
Letters of Credit to the value of US$50,000
were opened within the period between
July 1994 to October 1995. The recorded
foreign currency misuse for this period was
US$ 36,156,797. The banks involved insuch scandals, and the corresponding
amounts, are given table III.
TABLE IIIBank
Nepal S.B.I. Bank
Nepal Bangladesh Bank
Nepal Indoswez Bank
Himalayan Bank
Nepal Arab Bank
Restrain Banijya Bank
Nepal Bank Limited
Total

US $ Amount78,04,100.00
77,38,038.38
15,81,097.00
3,13,652.45
10,44,515.00
174,54,997.86
2,20,396.49
361,56,797.18

On the basis of this report, among the
92 parties involved in this scandal, theRevenue Investigation Department so far
has filed 51 cases in court. The CIAA is
also conducting investigations of the public

officials for seperate charges of corruption.
E. Money Laundering
Money Laundering is a newly emerging
economic crime in Nepal. The threat ofmoney laundering has spread and national
economic reforms such as liberalization,market economy, creation of favorable
environments for foreign investors, andcasino businesses, have provided groundfor (and have intensified the possibility of)
the commission of such crimes. However,such economic crime has yet to be
identified, investigated and addressed in
Nepal. There is still a lack of legislation
making money laundering a criminal
offence. The adoption of necessary
measures for the identification, tracking,freezing, seizing and confiscation of
instrumentalities and the proceeds of crime
are yet to be realized.
F.

Smuggling
Smuggling is another form of economic
crime in the country. Violations of the
Customs Act, the Foreign Exchange Act,and other related laws foster such crimes.
Forged Letter of Credit documentation, as
well as forged customs receipts andregistration papers, are the common waysof smuggling goods and motor vehicles into
Nepal. The illicit trafficking of narcotics,
illegal import of gold and illegal export oftimber, precious bones of scare animals likethe tiger, rhinoceros, elephant etc, are othermajor smuggling items in the country,.
G. Illicit Drug Trafficking
Extensive international air links and theadoption of a liberal visa policy to promote
tourism in the country has made it easy
for criminals to misuse this facility toengage in drug trafficking. The nature ofillicit drug trafficking in Nepal at present
is as follows;• Some of the seizures show that people
from Mizoram and Burma smuggle
drugs into Nepal via land following

205

RESOURCE MATERIAL SERIES No. 55

•

•

•

•

the route of the Golden Triangle(West Bengal of India to Kathmandu
Nepal)
Heroin has been found to be
smuggled into Nepal from Bangkok
and Pakistan by air.
A number of cases of hashish
smuggled from Nepal have beenintercepted and seized from carriers
at Kathmandu Airport, destined forHong Kong, Thailand, Singapore,
India and other countries.
Drug trafficking is also used for local
consumption. Drugs are smuggledfrom neighboring countries into
Nepal and are sold by peddlers.
Lists of the seized quantity ofnarcotics and the persons involved in
the transaction, sale and distributionof drugs, as well as the number ofarrested persons, are given inannexure A.

III. COUNTERMEASURES TO
COMBAT ECONOMIC CRIME
His Majesty’s Government of Nepal has
adopted various countermeasures toeffectively combat the growing challenges
posed by various economic crimes. To fightagainst such crime, a system based on laws
and regulations has been setforth in the
country. Various institutional efforts, aswell as a series of legislation, have been
designed and enforced. However, thecountermeasures that are being
undertaken may not prove adequate andmore is required to be done. The following
are some of the countermeasures adopted
in the country:
A. Constitutional and Statutory
Provisions• The Constitution of the Kingdom of
Nepal; Part 12 (1990)• The Commission for the Investigationof Abuse of Authority Act, 1991
• The Prevention of Corruption Act,

206

1960
• The Custom Act, 2019 (1962)• The Foreign Exchange (Regulation)
Act, 2019 (1962)• The Income Tax Act, 1975
• The Excise Duties Act, 1959
• The Value Added Tax Act, 2052 (1996)• The Revenue Leakage (Investigation
and Control) Act, 1996
• The Narcotic Drug (Control) Act,
1976
• The Nepal Rastra Bank Act, 1953
• The State Cases Act, 2049 (1993)• The Extradition Act, 2045 (1989)
B. Institutional Efforts
Anti-Corruption Institutions
1. Commission for the Investigation of
Abuse of Authority (CIAA)The CIAA is a constitutional bodyestablishied under Article 97 of theConstitution of the Kingdom of Nepal,
1990. The Commission investigatescases of abuse of authority in terms ofcorruption, or improper conduct (maladministration) by any person holding
any public office. In other words, the
CIAA functions as an Ombudsman
institution, as well as an anticorruption institution. It has been
given the power to admonish such
persons, or forward recommendations
to the concerned authorities for
departmental or any other necessary
actions, if it finds upon its inquiry or
investigation that such persons havemisused their authority by improper
conduct. In cases of coruption, the
CIAA may bring, or cause to be brought,
an action against such persons, or any
other person involved therein, in acourt with jurisdiction in accordancewith law. The Prime Minister,
Ministers, Speaker of the House ofRepresentatives, members of
Parliament, and all bureaucrats areincluded within the jurisdiction of thecommission. The CIAA is the sole body

110TH INTERNATIONAL TRAINING COURSEPARTICIPANTS’ PAPERS
that looks after cases of corruption in
the country. However, it can delegate
some of its power to other statutory or
governmental organizations. The
number of complaints received by theCommission and its disposal arepresented in Annexure B.
2. Special Police Department (SDP)The SDP was established under thePrevention of Corruption Act, 1960. It
is the statutory body which exercises
the power delegated by the CIAA for
the investigation of cases of corruption
in the three districts of Kathmandu
valley.
3. District Administration Office (DAO)The DAO is the main administrative
agency of the government in the
districts. The CIAA has delegated someof its power to the Chief District Officerof the DAO to investigate cases ofcorruption within the district.
Other Economic Crime Control Institutions
1. Revenue Investigation Department(RID)
The RID is responsible for investigating
and prosecuting cases of revenue
pilferage by any person in the sector ofcustoms, excise duties, tax
administration for non-payment ofcustoms/excise duties, forging Lettersof Credit, stealing motor vehicles andtheir illicit trafficking etc. The
statistics of such crimes investigatedand prosecuted by the RID have notbeen published in a compiled form.
2. The District Administration Office(DAO)
The DAO exercises the power to hearsome cases of economic crime, like black
marketing, undue price fixing etc, as aquasi judiciary body under various
statutes.

3. The Narcotic Drug Control
Administration Division
The Narcotic Drug Control
Administration Division wasestablished under the Ministry of Home
Affairs. To control the cultivation,
production, manufacture, sale,purchase, storage, traffic, consumption,
export and import of narcotic drugs, theNarcotic Drugs (Control) Act 1976, wasenacted in the country. This Act is inline with the Single Convention on
Narcotic Drugs 1961, and the UN
Convention Against Illicit Trafficking
in Narcotic Drugs and Psychotropic
Substances 1988, to which Nepal is aparty. In addition to this, adoption of
the SAARC Convention on Narcotic
Drugs and Psychotropic Substances
1990, and the regular exchange of
information with SAARC member
countries (India, Pakistan,
Bangladesh, Sri Lanka, Bhutan,
Maldives) through the SAARC Drugs
Offences Monitoring Desk, represent
other efforts to combat such crime.
Nepal has an extradition treaty with
India, concluded on October 2, 1953. The
Extradition Act 2045 (1989) of Nepal has
also laid down the procedures to be adopted
for requests of extradition, or for requesting
punishment in cases where an offender has
committed a crime in one country andabsconded to another. These instruments
may become useful to combat economic
crime of a transnational nature.
IX. PROBLEMS IN THE
INVESTIGATION AND
PROSECUTION OF ECONOMIC
CRIMES, AND REFORMS
The legal system of the country does notdifferentiate between economic crime andother crimes committed against the State.
It is difficult, if not impossible, tospecifically define economic crime. To

207

RESOURCE MATERIAL SERIES No. 55
gather evidence in various white collar
crimes, and to determine responsibility ina particular offense, is difficult. Moreover,to prove the intention to commit a crime,
without detailed evidence, is rather
impossible in such crimes. Most of theeconomic crimes have an international
dimension. Their transnational character
is very complex due to the methods ofcommissioning. Nepal, having opened its
borders with India and China, and being
sandwiched between these two giants, issubject to crimes that have illegal crossboarder operations. Further, lack ofpolitical commitment to combat economic
crimes, accountability in political parties,
transparency in administration, proper
education and an over-all lack of trained
and motivated investigators, is a major
problem for the combat of economic crimein Nepal. Therefore the following
countermeasures to combat economic
crimes are highly desirable in Nepal:
1.
2.
3.

4.

5.
6.
7.

8.

9.
10.

208

Establishment of a Special Court todeal with various economic crimes.
Burden of Proof should, in someinstances, be shifted to accused.
Better staffing, training andincentives for investigation
institutions.
Proper infrastructure and physicalfacilities in the investigative
agencies.
Public awareness campaigns
against economic crime activities.
Political commitment.
Code of Conduct for all public
officials, including elected
members.
Better co-ordination between
government departments andinvestigation agencies.
Free, independent and impartial
media.
International co-operation andmutual assistance.

V. CONCLUSION
With the expansion of development
activities and the advent of new technology,
the nature of the crime is changing and new
types of crimes are emerging. The
advancement of computer technology has
invited various computer crimes, but suchcrimes are new to the investigation
agencies and there are no countermeasuresdeveloped to combat them. However,various economic and computer crimes arecostly to society, and the entire country is
being penalized through inaction. The
struggle against such crimes is the struggle
against poverty, backwardness, and moral
declination. It is therefore, essential thatthe criminal justice system should givepriority to the detection and combatting ofsuch crimes. International co-operationand technical support in this field would
be highly beneficial to a developing country
like Nepal.

110TH INTERNATIONAL TRAINING COURSEPARTICIPANTS’ PAPERS
ANNEXURE A
SEIZED QUANTITY OF NARCOTIC DRUGS IN THE FISCAL YEAR 1996/97
Drug Type

Marijuana

Hashish

HeroinMorphine

Kilograms

2208

1251

10

—

Grams

867

742

794

739

Milligrams

50

252

185

—

ARRESTED PERSONS IN NARCOTIC DRUGS CASES
Foreigner
Fiscal Year

Resident/National

Male

FemaleMale

Female1994/95

641

40

104

8

1995/96

633

46

104

7

1996/97

534

18

58

—

209

REPORTS
OF THECOURSERESOURCE MATERIALSERIES
No. 55
GROUP 1ECONOMIC CRIME DAMAGING GOVERNMENT AND
THE NATIONAL ECONOMY
Chairperson
Co-Chairperson
Rapporteur
Co-Rapporteur
Members

Advisers

Mr. M. S. Bali
Mr. Jeshop Remember Shabangu
Mr. Kedar Paudel
Mr. Takahiro Maeda
Mr. Mao Borin
Ms. Wang Yabin
Mr. Shinji Iwayama
Mr. Masahiko Motoyoshi
Mr. Atsushi Tohyama
Mr. Wasana Sisaykeo
Professor Hiroshi Iitsuka
Professor Shinya Watanabe
Professor Shoji Imafuku

I. INTRODUCTION
Economic crime has become the crimeof choice; it is a crime of low risk and highgain. After economic crime became
international, it has been necessary forcriminals to legitimize the fruits of crime,
and accordingly, the mushrooming of offshore banking and bank secrecy legislation
has taken place. Tax evasion, smuggling
and money laundering have become thetools of economic criminals, with corruption
playing the part of lubricant for the smoothrunning of the crime machine. The South
Pacific and the Caribbean, far flung fromthe international financial centers of theworld, have developed off-shore banking
into an art form, where invariably, thefinancial institutions are knowingly or
unknowingly used, directly or indirectly, forthe purpose of concealing the source andexistence of the proceeds of crime. In many
instances, the laws have been designed tomake inaccessible the information requiredby investigating agencies and defrauded
victims. According to one estimate, the sizeof the global underground economy in the210(India)(South Africa)(Nepal)(Japan)(Cambodia)(China)(Japan)(Japan)(Japan)(Laos)(UNAFEI)(UNAFEI)(UNAFEI)

region was a staggering US $ 5.8 Trillion
in 1993.
In areas such as evasion of taxes andbreaches of exchange control regulations,views appear to be changing in theinternational community. It was, and is, abasic tenet of international law that one
nation is not obliged to enforce the fiscal
policy of another nation. Accordingly, fiscal
offences were not normally extraditable,
and international co-operation was rarely
extended to the investigation of suchcrimes. More recently, policy makers inmany jurisdictions are questioning therationale behind this principle. However,within the conflicting priorities, a common
conscience has also begun to emerge
amongst the nations of the world, forcing
them to make joint efforts to fight the
menace of economic crime.
Keeping in view the above, the groupstudied economic crime, particularly in theparticipating countries, with a view toassessing its volume; impact on thegovernment and the economy of the

110TH INTERNATIONAL TRAINING COURSEREPORTS OF THE COURSE
country concerned; the difficulties
encountered in its investigation;prosecution and trial; and possible
countermeasures which can be
implimented complimentary to individual
political, social, economic and legal systems
and the state of their development.
II. CORRUPTION
Economic crime is invariably associatedwith corruption, which of course represents
an even more direct attack on the integrityof the State and its institutions.
Corruption, illegal gratification, andconsiderations which are not due, involve
huge amounts of money and valuables.
Their transactions not only breed blackmoney, but also potential grounds forvested interests for the commission andexpansion of activities directed towards
economic offences.
Corruption in public and corporate life
has assumed serious dimensions.
Corruption in the global context has
adversely affected the societies of bothdeveloped as well as developing countries.
Corruption on a practical level has various
aspects. The legal definition of corruption
differs from country to country. According
to one view, corruption at the lowest levelsof administration, where money or someother consideration is paid on a small scale
to speed up the process of decision-making(Grease), does not affect the economy of acountry and therefore should not be treatedas an economic crime. At the same time,
an opposite view exists that small
corruption leads to bigger, and thecredibility of the government apparatus isdamaged by all kinds of corruption, as
ultimately conditions favourable for
economic crime are created. Therefore, noattempt has been made to give a legalistic
interpretation of corruption in this report.
However, the group considered thefollowing major areas in the field ofcorruption:• Corruption by means of bribery (asdifferentiated from ‘Grease’)• Abuse of authority• Political corruption• Embezzlement of public money
A. Actual Situation
Bangladesh
Corruption is perceived as a disease
impairing the vital elements of society.
This, in turn, has ramifications in limiting
the socio-economic development of thecountry. According to the statistics of the
Bangladesh Bureau of Anti-Corruption,from 1995 to August 1997, a total of 1378
petitions were lodged by the Bureau indifferent courts. Due to the lengthy
investigation procedure, a large number of
corruption cases are pending investigation.
Cambodia
Like other developing countries,
Cambodia is also suffering from the
problem of corruption. Most vulnerable
areas in the Cambodian administration are
high-ranking public servants (both politicaland bureaucratic), departments ofCustoms, Economic police, Immigration,and the judiciary. Laws and regulations
are not effectively implemented in the
country because of corruption, which
results in other economic crimes such as
smuggling, tax evasion, drug trafficking
etc. The fight against corruption has notreceived the seriousness it deserves in
Cambodia, and corruption has become aculture amongst public officials.
China
Corruption accounts for almost 50% of
economic crime. During the formation oft h e s o c i a l i s t m a r k e t e c o n o m y,imperfections in the economic orderprovided loopholes for some types of
economic crime. Besides, the policy of
opening up to the world has exposed theChinese people to external influences and211

RESOURCE MATERIAL SERIES No. 55
inducements. Advances in science andtechnology, as well as administration
methodology, has brought benefits to theChinese people. At the same time, some
negative elements have contributed to newcrimes, especially corruption. The criminal
law of China describes public servants as
those who work in government agencies,
State owned companies, enterprises,
institutions or peoples’ associations. Also
those public servants that are assigned towork in non-State owned companies,
enterprises, institutions, or peoples’
associations are covered by the anticorruption law. The law further stipulates
that public servants who illegally takeadvantage of their office, steal or
fraudulently appropriate public property,
are guilty of a crime. Further a public
servant who misappropriates large sumsof public funds for profitable business, ormisappropriates large public funds without
return over three months, is guilty of thecrime of embezzlement. Anti-corruption
agencies in China have been filing large
numbers of anti-corruption cases and thecourts have also disposed of most of thesecases.
India
From the early eighties, politicalcorruption has been on the increase. Many
leading political figures in India and many
political parties have been accused of
accepting illegal monetary contributions
from the business world in the matter ofarms contracts, power and fertilizer
contracts etc. Liaison agents, both ofleading Indian and foreign firms have been
operating this system in conjunction withcorrupt politicians and bureaucrats.
There has been a steady trend in theincidence of cases registered under thePrevention of Corruption Act by theCentral Bureau of Investigation (CBI)
during the years 1992 to 1996. During
1996, the CBI has taken 304 persons under212

custody for various offences under the Act.
Enforcement by the States/Union
territories on this account shows asignificant increase in the number of
persons arrested in the cases registeredunder the Act during 1995 to1996.
During 1996, the CBI made a record
seizure to the tune of Rs. 143 million. The
State/ Union territory Vigilance Officials
seized property to the tune of Rs. 262
million in various cases of corruption. In
the cases investigated by the CBI in 1996,
departmental action was taken against 544
officials, whereas in the States,
departmental action was taken only
against 168 persons. The punishment
awarded to various public servants in thecases handled by the CBI included 42
dismissals, 20 removals, 148 major and 228
minor punishments in 1996. In State
Vigilance cases, 168 persons were referredfor departmental action in 1996. There
were 9 dismissals, 2 removals from service,
27 minor and 97 major punishments
awarded to the public servants during thisyear. An analysis of the profile of the public
servants proceeded against by various
agencies in India on the charges ofcorruption shows that:(a) The number of politicians and seniorbureaucrats proceeded against isvery minor.
(b) Almost 2/3rd of the public servants
charged for corruption are at thelower levels of administration.
(c) Action taken by the State / Union
territory anti-corruption agencies isvery small as compared to the CBI.
Japan
Analysis shows that 40 percent ofcorruption cases in Japan pertain tomalafide deals between private
construction companies and local publicbodies involving big enterprise on one side,and politicians or bureaucrats on the other.

110TH INTERNATIONAL TRAINING COURSEREPORTS OF THE COURSE
Recently, a serious case of corruption inwhich heads of several self-governing
bodies and major construction companies
were involved, was detected in 1993. Suchcorrupt deals have been the source of illegal
profit to private firms, and illegal collusion
between the contractors has made prices
unfair by interfering with healthy
competition. The companies have beenable to keep large amounts of unaccounted
funds, which have been used in corrupt
deals.
There is no special legislation to deal
with the corruption cases in Japan, butvarious penal regulations have beenenshrined in the Criminal Code and otherlaws. In Japan, basically the police
investigate corruption cases. There is a
special investigation division thatinvestigates economic crimes including
corruption at the police headquarters ofeach prefecture. Police and publicprosecutors regard cooperation between
them as the key for successful
investigation. Public prosecutors also
investigate special corruption cases inwhich high-ranking politicians andbureaucrats are involved. Special
Investigation Departments have beenorganized in the District Public Prosecutors
Office of Tokyo, Osaka and Nagoya. These
Special Investigation Departments
investigate the corruption cases of thecategory mentioned above. These Special
Investigation Departments have beengetting good results by conducting
investigations independently, without any
political influence.
Korea
Korea, in the recent past, has been jolted
by serious cases of corruption. In 1995, theCentral Investigation Department
investigated bribery charges involving theformer President Mr. Roh Toe Woo, in
which he was awarded a heavy
punishment. In 1993, Regulations for

Enforcement of Emergency Presidential
Order on Real Name Financial
Tr a n s a c t i o n s a n d P r o t e c t i o n o f
Confidentiality was enacted. As a result,bank accounts cannot be opened insomebody else’s or false names. This has
proved to be a deterrent to the corrupt andhas helped investigators in tracking
criminals and their assets in cases wherea banking channel is used by the corrupt
in their deals.
Laos
To g e t h e r w i t h s o c i o - e c o n o m i cdevelopment, Laos has been facing
problems of various types of economic
crime. Corruption is not a serious problem
in the country, but it is still significant
enough to be taken serious note of.
Involvement of government officials invarious corrupt activities is damaging
socio-economic development and resulting
in the loss of the confidence and faith ofthe people. Corruption in Laos has beenendemic in middle and high-ranking
officials of the government working in thefields of finance, tax, customs, immigration
police, banks etc. Lack of moral values,
poor living conditions and low salary aresome of the causes of corruption amongst
public servants in Laos. The present laws
and regulations are not effective enoughto combat corruption in the country.
Nepal
There is a general realisation in Nepal
that there is corruption in both thegovernment and private sectors thatinvolves the whole spectrum of society. A
developing country like Nepal loses acolossal percentage of its development
expenditure by way of corruption.
Reasonable investment towards
development activities is allocated, but theoutput in terms of benefits is worsening.
In 1996/97 the Commission for theInvestigation of Abuse of Authority (CIAA)
started investigation of 1320 cases of213

RESOURCE MATERIAL SERIES No. 55
corruption, and completed investigation in
629 cases. Out of the completed cases, 11cases were filed in the court in which 1
Minister, 3 Secretaries and various otherpublic officials were prosecuted. The CIAA
also forwarded the recommendation for
departmental and other actions against
more than 32 public officials. Likewise in
1997/98, besides 6 cases filed in court, theCommission recommended departmental
and other action against more than 30
public officials. The departmental action
taken in the cases investigated by theSpecial Police Department in the fiscal
years 1993/ 94, 1994/ 95 and 1995/ 96 has
been against 82, 73, and 30 officials
respectively.

any other necessary action, if it finds on
inquiry or investigation that they havemisused their authority by improper
conduct. In cases of corruption, CIAA may
bring, or cause to be brought, an action
against such public servants or any otherperson involved therein in a court having
jurisdiction in accordance with law. The
Prime Minister, Ministers, Speaker of theHouse of Representatives, members of
Parliament, and all public officials areincluded within its jurisdiction. CIAA is
the sole body, which looks after cases ofcorruption and all other anti-corruption
institutions of the government function
under the delegated power of theCommission.

A system based on law has been set forth
to combat corruption in the country. The
constitution of the Kingdom of Nepal 1990,
the Commission for the Investigation of
Abuse of Authority Act 1991, thePrevention of Corruption Act 1960, containlegal provisions in this field. The
Constitution has made provision forcomplete independence and neutrality forthe investigation and trial of corruption
cases. As the rule of law is the basic featureof the Constitution and political system, theindependence of the judiciary, as well as
the Constitutional Commission for theInvestigation of Cases of Corruption, hasbeen ensured.

Pakistan
Corruption is a serious problem andpermeates all stratas of society in Pakistan.
The last three governments were dismissedon charges of corruption. Recently thegovernment has enacted new legislation
called the ‘Ehtsab’ Act (Accountability Act)to weed out corruption in the higher
echelons of bureaucracy/politics. This
enactment has produced positive results sofar.

The Constitution has made the provision
for the establishment of the Commission
for the Investigation of Abuse of Authority(CIAA). The Commission investigatescases of abuse of authority in terms ofcorruption or improper conduct (maladministration) by any person holding apublic office. The CIAA functions as an
Ombudsman institution as well as an Anticorruption institution. It has been given
the power to admonish such public servantsor forward recommendations to theconcerned authorities for departmental or214

Philippines
Corruption amongst public servants has
been a problem in the Philippines. A toughAnti-corruption law was enacted in 1991
as a result of corruption under former
President Marcos, who allegedly plunderedbillions of dollars from the government
coffers. The Anti-Graft and Corrupt
Practices Act and Anti-Malversation(Embezzlement) Revised Penal Code havealso been enacted to deal with various
aspects of corruption in the country. In thelatter law, a presumption of malversation(embezzlement) has been created whichshifts the burden of proof to the accused,on their failure to account for public funds/
property in their charge.

110TH INTERNATIONAL TRAINING COURSEREPORTS OF THE COURSE
South Africa
Achieving good governance, andovercoming the practices of profligacy andcorruption inherited from the apartheid
government and its economy, are two of themost important challenges facing South
Africa. Corruption is also rife in South
Africa’s private and public institutions.
The apartheid era was structurally
conducive to corruption as its culture of
secrecy resulted in a lack of a transparent
and accountable system.
In South Africa, corruption in thecriminal justice system is pervasive.
Particularly disturbing is the theft and/orsale of police dockets, the destruction orcontamination of exhibits, the withdrawalof criminal cases etc, with prosecutors,
court interpreters and police officials often
involved. A member of the provincial
legislature (deputy speaker) has been
removed and is facing criminal charges ofcorruption.
The current legislation to combat
corruption is inadequate and there is noprovision for the presumption of guilt.
There are various institutions involved in
the investigation of corruption. These
structures are inadequate and work in
isolation. The Anti-Corruption Unit
investigates cases of corruption within theSouth African Police Service, the Office for
Serious Economic Offences (OSEO)
investigates allegations of serious economic
offences that include corruption on a large
scale. The Commercial Crime Unit, theD’Olivera Task Unit, the Presidential Task
Unit, the Public Protector, the Independent
Complaints Directorate, the HealthCommission, the National Intelligence
Agency and other intra-departmental units
are involved in the investigation of specifictypes of corruption in the country. Thereis growing public support for coordinatedaction to be taken against corruption inSouth Africa.

B. Contributory Factors for
Corruption
Some of the factors which contribute increating an environment for corruption
identified during the discussion are as
follows:(i) Political Commitment: There seems
reluctance on the part of some of thepolitical parties and governments toseriously combat corruption. As aresult, the attitude of the governments
becomes lackadaisical in combatting
corruption.
(ii) L a c k O f Tr a n s p a r e n c y i n t h eAdministration and Management: Lackof transparency in framing policies andin taking administrative decisions of
the government in the matter of theallocation of contracts, procurement ofgoods and supplies, appointment andtransfer of officers etc, createsconditions where corruption thrives.
The climate of secrecy in government
work provides opportunity for thecorrupt to often go undetected.
(iii) Internal Auditing and Control Systems:
Lack of efficient internal auditing andcontrol systems in the governmental
set-up makes a favorable environment
for corruption. More often than not, theaudit has become a formality and lacks
effectiveness.
(iv) Lack of Ethical Standards and NonAdherence to Code of Conduct: In somecountries, a low level of ethicalstandards in the society in general, anda low regard of conduct rules amongst
public servants in particular, breeds aculture of corruption and cynicalacceptance of the same amongst the
public.
(v) Lack of Professionalism: Professional
experts such as Chartered Accountants,

215

RESOURCE MATERIAL SERIES No. 55
Income-Tax Attorneys etc go against
their professional ethics and help thecorrupt in legitimizing their ill-gotten
gains. This has in turn made the taskof the investigating agencies so much
more difficult.
(vi) Inadequate Pay Structure: In somecountries, the abnormally low pay
structures for public officials has also
led to a perverted justification ofcorrupt practices on the part of somepublic servants.
(vii)Poverty and Shortage of Essential
Supplies and Lack of Awareness: In
some countries, the vicious circle ofpoverty, and shortage or lack of proper
education amongst the populace
creates an environment for corruption
and lowers the capacity of the public toresist the same.
C. Problems in investigation,
Prosecution and Trial
This basically involves action by one
organ of the government, i.e. the criminal
justice system, against its counterparts inother organs of the government, often far
more powerful than the former. The
situation becomes even more exasperatingwhen the criminal justice system is infectedwith corruption. The fight against
corruption is a fight against wellentrenched vested-interests.
During the group discussion on thesubject, it was clear that whereas some ofthe problems and possible solutions are
identical for different countries, others are
not uniformly applicable due to differencesin their political, social, economic systems
and the state of their development.
(i) Independence and Neutrality ofInvestigating and Prosecuting Agencies:
In some of the countries it seems thatinvestigating agencies have been216

hesitant to proceed against highly
placed public servants. This has been
noticed particularly when high politicaland bureaucratic persons are suspect.
In some cases, even the judiciary has
been pressurised by the vested
interests. This has highlighted theneed to insulate the investigating/prosecuting agencies in such countries
from the political/ bureaucratic
executive, so that they can carry out
their task without fear or favour.
(ii) D i f f i c u l t y i n O b t a i n i n g t h eInformation/Clues for Starting
Investigation: Due to the ‘white-collar’nature of the crime, information is often
either not forthcoming or is imprecise.
Complicated financial transactions
have enabled the corrupt to disguisetheir illegal incomes as legal assets. In
cases of highly placed public servants,
informants are often reluctant to comeforward with information out of fear of
retribution.
(iii) Lack of Resources Including Training:
Lack of human and other physicalresources also limits the reach andefficiency of the investigating agencies.
Sometimes vested interests in thegovernment deliberately do not allow
the enforcement agencies to become
strong and capable of effective
investigation. In some countries where
the number of corruption cases is verylarge, it has been felt that investigators
are overburdened, resulting in delays,
as well as poor quality of investigation.
It has also been felt that investigationand trial of corruption cases requires
special skills and knowledge inaccounting, tax and company laws etc
on the part of investigators andprosecutors, which they often lack.
(iv) Provision of Prior-Sanction: In somecountries, prior-sanction of the

110TH INTERNATIONAL TRAINING COURSEREPORTS OF THE COURSE
government is required before starting
investigation of a case against a seniorpublic servant. This leads to motivateddelays and sometimes even leakage of
information to the advantage of thecorrupt.
(v) Shortage of Courts: In some countries,
the number of special courts to try
corruption cases are not sufficient, andin others, such cases are tried in theordinary courts which are alreadyoverburdened and also lack theexpertise to try such cases. Due tothese reasons, a long time, sometimes
extending to a number of years, is taken
in anti-corruption trials. Due to this,the witnesses, and sometimes even thecomplainants, become hostile in the
court, leading to many unsuccessfulprosecutions.
(vi) Delays In-Built in the Legal System: A
corrupt accused, due to their resources,
is able to make use of various provisionsof the legal system, like appeals andrevisions, to delay the prosecution,
thereby affecting its ultimate result.
(vii)Burden of Proof: The prosecution has
to prove the case beyond all reasonable
doubt. In most cases where a corrupt
public servant has been legitimizing
assets by a series of financial operations
over a period of time, the degree of proof
required in law for successfulprosecution becomes difficult to collect.
(viii) High Non-Guilty Judgements: Due tothe variety of factors discussed above,
the rate of not guilty judgements is
usually high, resulting in the low
morale of investigators and the spreadof cynicism in society about theeffectiveness of anti-corruption efforts.
This in turn demotivates people tolodge information against corruption.

D. Countermeasures in the Field of
Criminal JusticeCorruption can definitely be controlled,
if not eradicated altogether. With the bestof efforts, the criminal justice system canonly minimize it. Keeping in view this fact,
the group came to the conclusion that tocombat corruption, preventive measures,
as well as curative measures, are necessary.
Based on the problems analyzed above, thefollowing are some of the countermeasures,
which can be used to combat corruption inso far as they are acceptable in theindividual systems of the participating
countries.
(i) Independent and Neutral Investigating
Agencies: In order to ensure a free handto the enforcement agencies in thisfield, personnel should be given
security against abrupt transfers andother forms of retributive action on thepart of politicians and senior public
servants. Prescribing fixed tenures anda strict and impartial procedure for the
induction/appointment, as well astransfer/removal, of personnel working
in these agencies can go a long way inensuring the independence andneutrality of these agencies.
(ii) Protection of the Complainants andWitnesses: In order to encourage
complainants to come forward withinformation, and to allow the witness
to depose freely, Witness Protection
Programs should be introduced.
Invariably, the offenders in serious
cases of corruption are highly placed
politicians and/or bureaucrats, andvery often there is a collusion between
these two kinds of public servants.
Under any system of government, such
persons wield a lot of power. Informers
and witnesses are extremely reluctant
to depose against such powerfulpersons for fear of retribution. It istherefore, either difficult to start217

RESOURCE MATERIAL SERIES No. 55
investigation or it is virtually
impossible to conduct a successful
investigation and trial. Countries haveto consider this problem in their own
perspective and determine exactly
what kind of protection is to be offeredto the informers, complainants andwitnesses.
(iii) Adequate Number of Well-Trained
Investigators: Besides increasing thenumber of investigators in the anticorruption agencies, special training
programmes should be organised forthem in the fields of accounting, tax andcompany law, including practicaltraining under experienced
investigators.
(iv) Removal of Prior Sanction System: Theprovision of prior sanction before
initiating an inquiry or investigation,
prevailing in some countries, should be
removed. Instead, if felt necessary, astatutory commission could beestablished to examine grounds forstarting an inquiry or an investigation.
(v) Increase in the Number of Courts: The
number of courts dealing withcorruption cases should be increased sothat trials are not inordinately delayed.
This will increase the effectiveness ofthe fight against corruption.
(vi) Restriction on Appeal/Revision:
Procedural laws may be amended torestrict actions intending to causedelays in the ongoing trials, and thecourts should, on their part, take astrict attitude against attempts todelay the trials.
(vii) Burden of Proof: The Burden of proof
or a presumption of guilt should lie on
the accused in certain circumstances ofhighly suspicious evidence against
public officials. In a case where a link218

by way of ownership of an asset has
been proved against the accused by theprosecution, the court should make it
incumbent on them to prove that they
are not the owner of the same, to thesatisfaction of the court. Provisions for
shifting the burden of proof, in certain
circumstances, onto the accusedalready exist in some countries in anticorruption and other laws. If necessary,
substantive and procedural laws can bereviewed and amended accordingly.
Hearsay evidence is often the majorpart of evidence gathered byinvestigators in anti-corruption cases.
However, the evidentiary laws of mostcountries regard hearsay evidence as
inadmissible. It is recommended that
wherever proper foundation has beenlaid, hearsay evidence should be madeadmissible by amending theevidentiary laws.
(viii) Immunity from Prosecution: Somecountries have provisions in their laws
wherein immunity from prosecution is
granted to a co-accused by the courts
upon their confession. This can be aneffective means to strengthen evidence
against the main accused where anumber of conspirators are involved.
This step is recommended tostrengthen anti-corruption laws where
ever possible. Besides this, steps toprovide protection to state witnesses(approvers) under the witness
protection programme should also be
considered.
(ix) Freezing and Confiscation of Assets:
The provision for freezing andconfiscation of illegal assets should bemade simple, quick and effective.
(x) International Cooperation: At times,
the accused have found sanctuary inother countries out of reach of theinvestigators. The international

110TH INTERNATIONAL TRAINING COURSEREPORTS OF THE COURSE
community should recognize theoffences of corruption as an
extraditable offence and take steps toexpeditiously extradite such accused to
face legal action.
E. Other Countermeasures
To make the fight against corruption
effective, the following countermeasures in
the realm of government and legislatureare recommended by the group:(i) Transparency in Administration andEffective Management Systems to
Eliminate Situations which could Leadto Corruption: Transparency in thepolicy and administrative decisions of
the government in the matter of
acceptance and allocation of contracts,
procurement of goods, appointments
and transfer of officers should beensured. The internal management
should be made efficient and prompt.
A Single Window System ofgovernment decisions should be
introduced, obviating the need formaking contact with different public
servants by the applicant. Legislationon the Right to Information may also
prove to be a step in making the systemof government decision-making more
open.
(ii) Professional Misconduct: In case of
professional misconduct by charteredaccountants and income tax attorneys,a special provision debarring them fromtheir profession should be introducedin the relevant Acts.
(iii)Suspension from Holding Public Post:
A politician accused of corruption
should be debarred from holding apublic office until the conclusion of thelegal proceedings. Similarly, agovernment servant accused of thecrime of corruption should becompulsorily suspended from service

until the conclusion of legal
proceedings. Such a system alreadyexists in some of the participating
countries.
(iv) Public Education and Mobilization:
Public-cooperation and support play animportant role in any anti-crime
measure, and more so for the successful
campaign against corruption.
Therefore, emphasis should be given for
public education and mobilization by
governmental, as well as nongovernmental, organizations and by
campaigns through mass media.
III. TAX EVASION
Chiselled into the granite portico of theInternal Revenue Service building inWashington, DC, are the words ‘Taxes arewhat we pay to live in a free society’.
However, such egalitarian sentiments are
more often than not scoffed at by the richand wealthy, who regard taxes as ameasure of fiscal unfairness and as a
reduction of incentive to create wealth.
This situation contributes another facet tothe capitalist paradox, as those with thegreatest need to protect their wealth fromthe grasp of acquisitive chancellors are also
those with sufficient means to pay for the
expensive advice available to enable themto avoid paying more tax than is absolutely
necessary, and to minimize taxes to which
they are already subject. This ensures thatin practice they pay proportionally less tax
than the poorer members of society.
A. Actual Situation
China
In recent years, China has made reforms
in its taxation system. Cases of tax evasion
have been increasing. In 1994, theprocuratorates received 12074 cases
relating to tax evasion, and filed 6841 cases
prosecuting 7562 defendants; 7180 cases
were finalised. In 1995, the courts handled219

RESOURCE MATERIAL SERIES No. 55
491 cases relating to tax evasion, 495 cases
ended in conviction and 1354 defendants
were punished.

In the trial, almost 100% cases were foundguilty, out of which 80% or more were given
suspended sentences.

India
In India, tax evasion is the most common
illegitimate activity, which is practiced bysuppressing facts and the manipulation ofrecords by professionals and other tax
payers. Information from the Central
Board of Direct Taxes reveals that there
hase been a steady and continuous effort
to unearth income tax evasion throughsearches. The assets seized during 1996
were to the tune of Rs. 4056.3 million.
According to one estimate, as much as 70%
of taxes are evaded in India (the years
1992-96). A look into the prosecutions thatwere launched for tax evasion reveals thatthe conviction rate has been low. During
1996, out of 234 cases, which wereprosecuted under the direct taxes
enactment, 70 were compounded, 149 cases
were acquitted and only 15 cases resulted
in conviction.

Nepal
Tax revenue is the major source offinancing the Government expenditure in
the country. Tax revenue and non-tax
revenue comprise 80.4% and 19.6%
respectively of the government revenue.
However, the business community andother high-income groups mostly evadetaxes. The usual ways of tax evasion is bysubmitting false documents whereby afalse income is declared, resulting in lower
tax assessment. It is often alleged that theactual tax collection is only in a fraction of
the taxes which are due. Statistics showthat the volume of business transactions,as well as the tax base of the country, isincreasing but in comparison, revenue isdecreasing. The Revenue Investigation
Department, an administrative body, hasbeen established for the investigation of tax
evasion cases in the country. Very few casesof tax evasion are investigated andprosecuted. Where cases are prosecutedin the court, it takes a long time for them
to be disposed of. In the fiscal year 1994/
95, out of the 14 cases prosecuted, only 1case was disposed of. In 1995/96, no newcases, other than those carried forwarded
from the previous year, were prosecutedand no cases were disposed of.

Japan
Recently in Japan, on average 40 to 60
billion yen is lost every year due to tax
evasion. Most of the evasion is in the fieldof income tax, corporation tax andinheritance tax. In Japan, the police do
not investigate tax evasion cases, because
this requires expert technical knowledgeof the many tax laws and techniques of theinvestigation. Investigation of these cases
is conducted by the tax investigation
officers of the Tax Administration Bureau
and the Public Prosecutors Office. During
investigation, the public prosecutor and thetax investigation officers usually discuss
the many points of investigation, and theinvestigation is carried out under close
cooperation between them. The Tax
Investigation Bureau recently investigatedabout 230 tax evasion cases, and referred
about 75% of the cases to the publicprosecutor, most of which were prosecuted.

220South Africa
Wi t h h o l d i n g t a x w a s d e e m e d alegitimate means to fight the Government
during the apartheid regime. Businesspersons, professionals and other taxpayers
suppressed facts and manipulated records.
This culture has taken root. The current
Government is taking corrective steps tostop the above practice. Tax laws have beenenacted to deal with tax evasion.

110TH INTERNATIONAL TRAINING COURSEREPORTS OF THE COURSE
B. Contributory Factors for Tax
EvasionThe group identified some of thefollowing contributory factors for tax
evasion during its discussion:(i) Tax-Shelters: In order to encourage
private investment in socially
responsible activities, the fiscal laws
provide for tax shelters where lower
taxes are charged for making suchinvestments. This provides incentive
for manipulation of records to takeadvantage of tax shelters.
(ii) Fiscal Policies: At times, fiscal policies
are deliberately distorted and loopholes
are left by corrupt politicians and seniorbureaucrats in the tax laws for corrupt
motives, with the objective of favoring
big business houses.

lack a deterent effect.
(vi) Unprofessional and Unethical Conduct
of Tax Professionals: Large scale
unprofessional and unethical practices
by chartered accountants and income
tax attorneys, whereby for personal
gain they actively collude with richclients and private firms to create andforge records for tax-avoidance, is rife.
C. Problems of Investigation,
Prosecution and Trial(i) Corruption in Tax Administration:
There is a large scale corruption in tax
administration, where a mutually
beneficial but unholy relationshipexists between the assessed and the tax
official, with resultant loss to thetreasury.

(iii)High Rate of Taxation: In somecountries, the rate of taxation is very
high with the maximum being as highas 70%. It is felt in some quarters thata high rate of taxation is itself amotivation for evasion. In a graded tax
structure, persons with low incomes,
agriculture sector etc are either not
taxed or taxed very lightly, with theresult that there is a feeling of unfair
treatment amongst persons in higher
income levels, motivating them in turnto evade taxes.

(ii) Independent Tax Administration: In
some countries, the tax administration
lacks independence of action, as they
are subject to extraneous pressuresfrom high political and bureaucratic
quarters.

(iv) Implementation of Company Laws:
Weak implementation of companies
laws also results in companies forging
records and avoiding full disclosure ofbusiness information, leading to tax
avoidance.

(iv) Reporting of Transactions: Absence ofreporting requirement by the banks
and financial institutions fortransactions of more than a certain
value, and bank secrecy laws, help thetax-evader to hide information about
various commercial deals and incomesgenerated therefrom.

(v) Lack of Deterrence: Penalties for taxdefaulters are lenient and most of thetimes, the cases are compounded (dealt
with administratively) through thepayment of fine. Thus the penalties(iii)Lack of Professional Skills: Lack ofprofessional competence amongst the
tax-administration officials,
prosecutors and judges about modern
complex financial operations works tothe advantage of the tax-defaulter.

221

RESOURCE MATERIAL SERIES No. 55
D. Countermeasures in the Field of
Criminal JusticeThe group recommends the following
countermeasures related to the problems
as identified above.
(i) Deterrent Penalties: Exemplary
deterrent punishment should beprescribed for dishonest tax officials
and politicians colluding in tax evasion.
(ii) Neutrality of Tax-Administration: The
independence and neutrality of tax
administration agencies should beensured through constitutional/
legislative steps. In some countries, tax
administrations have been given
statutory status.
(iii)Improving Professional Skills: In order
to correctly analyze highly complex
financial deals involved in the tax
cases, tax administration officials,
prosecutors and judges dealing with tax
cases should be trained in up-to-datetax administration methodology andaccounting. Tax administration
officials have been posted as advisors
to the courts in Japan.
(iv) Reporting of Financial Transaction:
Reporting of financial transactions ofmore than a certain value should bemade mandatory for banks andfinancial institutions. This has been
made a legal requirement in many
countries including the U.S.A.
(v) Computerization of Tax Records: The
tax administration should computerize
its record keeping to make the forging
of records difficult and detectable.
(vi) Double Taxation Treaties: International
cooperation should be freely sought andgiven in getting details of bank deposits
and financial transactions
accomplished abroad. More ‘double

222

taxation’ treaties should be concluded
with countries to elicit theircooperation in this field.
(vii) Public Education: In some of thecountries, tax-payment has been
considered as a donation to thegovernment rather than a legal dutyof the citizen. Public awarenessprograms play an important role in theefforts to decrease tax evasion. The
emphasis should also be given for
public education through various
means, including mass media, in orderto motivate them to become honest
taxpayers.
E. Other Countermeasures
The group also identified the following
countermeasures which can be taken on
the part of the government to supplement
the efforts of the tax-administrators to
reduce the tax evasion.
(i) Simple Tax Laws: Tax laws should bemade simple and fair. The laws shouldbe free from escape routes in the formof ‘tax shelters’ and ‘exemption
schemes’, which provide an opportunity
for manipulations and forging ofrecords by the assessors.
(ii) Fiscal/Tax Policies: Fiscal and tax
policies should be designed andimplemented to make tax evasion a‘high risk/low profit’ business.
(iii) Overall Rate of Taxation: Someparticipants were of the opinion thatthe overall rate of tax should not bevery high and should be realistic.
Instead, efforts should be made toincrease the tax base by including more
persons, professions and businesses in
the categories eligible to pay tax.
(iv) Financial Intelligence/Data Bank
Organization: An organization on the

110TH INTERNATIONAL TRAINING COURSEREPORTS OF THE COURSE
lines of FINCEN (United States
Department of the Treasury Financial
Crimes Enforcement Network) may beformed in every country to act as thecentral repository for financial
intelligence and analysis, for providing
assistance in the investigation offinancial crimes including tax fraud.
IV. SMUGGLING
In their initial stages of development,
the developing countries had extremely
limited foreign exchange reserves andtherefore, had to conserve it for the importof essential items, defense and other crucial
requirements. Regulatory measures
including restrictions on the import ofgoods, both for the sake of protecting
indigenous industry and for conserving
scarce foreign exchange, had to be resorted
to. Further, in the absence of a strong
industrial or agricultural sector, revenue
required to undertake massive
development had to be generated by
imposing high tariffs. Evasion of duty andcircumvention of import trade control
restrictions therefore put a premium on
smuggled items and made smuggling
profitable.
Smuggling of contraband like drugs,
firearms and pornographic material etc canlead to serious social and politicalproblems. Smuggling of items protectedby copyright and intellectual property
rights can seriously upset relations
between the countries. Smuggling is atransnational crime and requires
cooperation between nations for combatingit.
A. Actual Situation
Cambodia
Cambodia has been fighting a terrorist
war at its northwestern borders for overtwo decades. Consequently, large-scale
firearms and other offensive weapons havebeen smuggled into the country. Apart from
this, large scale smuggling of gold, timber,consumer items and drugs has resulted in
the country, from its borders with Thailand
and Vietnam.
China
In 1995, 1119 cases of smuggling werefiled with 1097 cleared by public security
organs; 154 cases were convicted by the
courts and 239 defendants were punished.
In 1996, the public security organs finalised
1000 cases of smuggling involving cars,
tobacco, drugs, pornography, CDs and DVC
disks. Smuggling offences by companies
are increasing and sometimes government
officials are also involved. Most of thesmuggling in China is carried out byorganized gangs.
India
In India, apart from outright smuggling,evasion of customs duty by mis-declarationof value and description of goods also takes
place. These activities bring together
unscrupulous elements both in India andabroad. Well organized gangs, which havethe capacity to arrange funds abroad forestablishing sophisticated communication
networks, arrange the landing of goods
both by air and sea. Smuggling, involving
consequent evasion of customs duty,
generation of black money, money
laundering and evasion of taxes etc, grew
as a formidable parallel economy in the
1960’s and 1970’s.
Information in respect to the number of
seizures made and the nature ofcommodities seized for the years 1992-1996
presents the gravity of the offence and thetraffic that takes place in contraband goodsin the country. Over the years, the trend
for this type of crime has been steady,however, the type of contraband haschanged. Consequent to the ushering in of
new economic policies in 1992-93, there
was a reduction in rates of custom duties

223

RESOURCE MATERIAL SERIES No. 55
and liberalization in the economic policiesof the country. There has been a gradualfall in the quantum of goods sought to be
smuggled into the country. Compared to
1995, there has been a decrease of 11.4%
in cases of seizures made by the Customs
in 1996. The value of articles was aroundhalf of the previous years and stood at RS.
5533.7 million.
Gold, which has traditionally been themost important item of smuggling, has
yielded place to narcotics and electronic
items. Outright smuggling of gold hascome down due to the economic measuresinitiated by the government, which
includes import of gold up to 10 kg allowed
to each passenger returning from abroad
after 6 months, and the import of gold
under special license. There has been a
disturbing trend of smuggling foreign
currency in and out of the country by
various means, including payments forunder-invoiced imports, inward
remittances for over-invoiced goods orbogus exports for financing the import/
smuggling of gold and other sensitive
items. Other items seized by customs
include silver, diamonds, watches,
synthetic fibers etc.
Japan
The Japanese law enforcement agencies
are especially striving against anti-social
smuggling (illicit drugs and guns) on
account of their obvious negative effects onsociety. ‘Boryokudan’ (mafia gangs) havebeen found to organize most of this kind of
smuggling. In addition, duties are evaded
on articles like silk, pork and clothes byimporters via fraudulent declarations. In
recent times, cases involving smuggling by
tourists of illicit drugs, guns, jewellery havecome to notice. Smuggling is carried out
amongst other methods through storage inships, cargo containers and postal services.

224

Laos
In Laos, the commodities involved insmuggling include motorcycles, medicine,
fruit, cosmetics, construction equipment
etc. Since it is one of the ‘Golden Triangle’countries, Laos is also a transit route fordrug smuggling. As Laos is a land locked
country, having international borders withfive countries, smugglers find it relatively
easy to carry out their nefarious trade.
Nepal
Smuggling has a serious effect on theeconomy of the country. Though statistical
data is not available for smuggling
activities, it is accepted that the national
revenue, mostly dependant on the customs
and tax revenue, has suffered due to anincrease in smuggling activities. Illicit
trafficking of narcotics, illegal import andexport of gold, foreign currencies, andillegal export of timber are some of the
major items involved in smuggling in the
country. Violation of the Customs Act, theForeign Exchange Act and other related
laws is a consequence of smuggling
activities. Forged Letters of Credit, as well
as forged customs receipts and registration
papers, are commonly used in thesmuggling of goods and motor vehicles.
Nepal is basically a transit point for
smuggling. Due to its open borders with
India and China, most of the smuggling
activities are cross-border operations.
PakistanDespite efforts to root out the evil of
smuggling, considerable luxury items andelectrical appliances are smuggled into thecountry due to porous borders with
Afghanistan. Afghanistan has transit
rights through Pakistan and quite a few
consignments find their way into the tribal
areas of Pakistan, from where they are
distributed to different parts of the country.

110TH INTERNATIONAL TRAINING COURSEREPORTS OF THE COURSE
South Africa
The most damaging aspect of smuggling
operations is the killing of rhinos for theirhorns, and elephants for their ivory, by
poachers. These items are smuggled outof the country for sale. Stolen motor
vehicles, gold and diamonds are also
smuggled out of the country. Drugs,
firearms, counterfeit goods are smuggled
into the country.
B. Contributory Factors for
Smuggling
The group felt that following factors
contribute to an increase in smuggling:(i) Long Land and Sea Frontiers: In mostof the countries, due to long coastlines,
as well as long land frontiers, the taskof detecting smuggling and enforcing
anti-smuggling measures has become
quite daunting, involving hugefinancial and human resources.
(ii) Duty Free Export Schemes: Violation ofcertain fiscal measures designed toencourage exports in developing
countries, like the duty free exemption
schemes, is difficult to detect andinvestigate due to lack of co-operation
amongst the countries in the matter of
information sharing about the crimeand criminals.
C. Problems in Investigation,
Prosecution and Trial(i) Lack of Information: As smuggling is atransnational crime, enforcement
agencies are handicapped due to thelack of information about the activitiesof the organised gangs in othercountries affecting them. Smugglers
have been using containers,
complicated structures of the ships andeven human bodies to hide contraband,making the job of detecting the same
extremely difficult.

(ii) Conflicting Jurisdictions: Conflicting/overlapping jurisdictions amongst
Customs, tax authorities, police,
narcotics control departments etc,
delay the detection, investigation andtrial of smuggling cases to theadvantage of the offenders.
(iii)Lack of Co-operation Between the
Enforcement Agencies: Lack of cooperation between enforcement
agencies in the matters of sharing/follow-up of information, and in actual
anti-smuggling operations, works tothe advantage of the smugglers.
(iv) Lack of Manpower: Lack of sufficient
manpower in the enforcement agencies,
particularly at small local ports or
wayside border custom offices, makes
them the focus of operations by
smugglers.
(v) Corruption in Customs Department: In
most of the developing countries,
corruption amongst Customs officials
and border police further compounds
the problem of detection andinvestigation.
(vi) Involvement of Organized Gangs:
Involvement of organized crime groups
in smuggling, like the ‘Boryokudan’ inJapan and similar gangs in othercountries, makes the job of enforcement
difficult. These gangs have large
resources and are transnationalorganisations, with none of the
problems/handicaps of information,
jurisdiction etc, faced by the official
enforcement agencies. The carriers
rarely belong to the gangs, as they
operate in the background. Thus in theevent of the carrier being apprehended,
the smuggling syndicate remains
intact.
(vii) E x t r a d i t i o n : D i f f i c u l t y i n t h e

225

RESOURCE MATERIAL SERIES No. 55
extradition of smugglers, due to thehurdles in extradition processes often
experienced between countries, also
helps the smugglers. As long as theinvestigating agencies are unable toproceed against the gang behind theoperations, action against the carriers
is like treating the symptoms rather
than the disease.
D. Countermeasures in the Field of
Criminal Justice(i) International Co-operation in the Field
of Investigation and Information
Sharing: Close monitoring of theactivities of the organised gangs, andinformation sharing between the
countries affected, has proved very
effective in curbing smuggling. This
has resulted in the offenders coming
under pressure from both ends. Joint
training programmes between theenforcement agencies of various
countries, based on the one conductedunder the UNDCP in the field of drugs
smuggling, can be organised. Japanese
enforcement agencies have been
exchanging information and seeking
cooperation under the aegis of the Asia
Pacific Maritime Safety Agencies
F o r u m a n d Wo r l d C u s t o m sOrganisation, which has proved to beof immense help in their antismuggling operations.
(ii) Co-ordination and Joint Operations
B e t w e e n E n f o r c e m e n t A g e n c i e s:
Coordination, including information
sharing meetings, between senior
officers of the enforcement agencies;
joint training programs; inspections
and exchange of personnel at middle
and lower levels, will improve interagency co-operation and speedily
resolve jurisdictional problems to makejoint operations more efficient. In
Japan, officials of police, Customs and226

the Maritime Safety Agency closely cooperate and this has led to manysuccessful operations.
(iii) Strengthening Manpower at Smaller
Ports/Inlets: To supplement the
manpower shortage of the enforcement
agencies, video-monitoring, more patrol
cars, patrol vessels and air-crafts may
be used as force-multipliers.
Manpower of smaller ports and land
inlets should be strengthened.
(iv) Anti-corruption Measures in Customs
Departments: Senior supervisory
officers and anti-corruption agencies
shall keep a close watch on the conduct
and lifestyle of their subordinates, fromthe point of view of enforcing integrity.
Exemplary punishment shall follow
cases of malafide conduct.
(v) New Technology to Improve Detection
and Monitoring: Provision of the latest
gadgetry to enforcement authorities
will increase their detection andmonitoring ability. Video monitoring,fiber-scopes, x-ray machines andcomputer programs are being used inJapan, which makes the task ofmonitoring and checking more efficientfor the purpose of detecting smuggling
items ingenuously hidden, withoutslowing down the process of Customs
clearance. Detection dogs have beeneffective in anti-drug operations.
(vi) Fast Extradition: High level contacts
and improved co-operation between
countries in matters of the extraditionof suspects will act as an effective
deterrent to smugglers.
(vii) Double Taxation Treaties: Thesebilateral treaties are negotiatedbetween countries having considerable
trade between them, in order to secure
co-operation between their

110TH INTERNATIONAL TRAINING COURSEREPORTS OF THE COURSE
investigating agencies. More double
taxation treaties should be negotiatedbetween affected countries, which will
help in exchanging information andevidence about individual deals.
(viii) Controlled Delivery Operations: In
certain countries, including Japan,
controlled delivery operations by the
Customs/narcotics department have
proved very successful, particularly insmuggling through postal channels.
This enables the enforcement agencies
to apprehend the main gang behind theoperations.
V. MONEY LAUNDERING
Money laundering means conversion ofillegal and ill-gotten money into seemingly
legal money, so that it can be integrated
into the legitimate economy. Proceeds of
drug related crimes are an importantsource of money laundering world over.
Besides, tax evasion and violation of
exchange regulations play an importantrole in merging this ill-gotten money with
tax-evaded income, so as to obscure its
origin. The aim is generally achieved via
the intricate steps of placement, layeringand integration, so that offenders, without
any fear of detection, can freely use themoney so integrated in the legitimate
economy. Initial deposits are usually madein states without regulations and thentransferred to offshore centers.
In some parts of Asia, ‘illegal
underground banking’ is used bylaunderers because it leaves no paper trail.
Money never enters the formal banking
system but is instead transmitted throughalternative banking systems such as the‘hawala’ in India and Pakistan. These
parallel banking systems are based onfamily or gang alliances and reinforced
with an unspoken covenants of retributive
violence. Now, Africa is also being

increasingly used as a route by money
launderers.
A. Impact of Money Laundering
As for as the impact of money
laundering, it is well known that it
facilitates tax evasion, smuggling, drugtrafficking and terrorism. An I.M.F.
working paper concludes that money
laundering impacts financial behaviour
and macro-economic performance in avariety of ways, including policy mistakes
due to measurement errors in national
account statistics; volatility in exchange
and interest rates due to unanticipatedcross-border transfer of funds; the threatof monetary instability due to unsoundasset structures; tax collection and public
expenditure allocation due to misreportingof income; misallocation of resources due
to distortions in assets and commodity
prices; and contamination of legaltransactions due to perceived possibility of
being associated with crime.
B. Actual Situation
China
China has of late experienced the crimeof money laundering. In view of thissituation, China has criminalised thegeneral offence of money laundering by
amending its Criminal Law.
India
The Enforcement Directorate in India,
in the course of its action against money
launderers, made recoveries/seizures inmoney laundering cases during 1996 to thevalue of Rs 124 million (Indian Currencies)
and Rs 78 million (Indian equivalent offoreign currencies seized) respectively. The
value of confiscated Indian currencies by
adjudication registered a sharp rise, to thetune of 40 million as against 12 million
during 1995.
The offence of money laundering is likely
to be criminalised soon and ‘the Prevention

227

RESOURCE MATERIAL SERIES No. 55
of Money Laundering Bill 1998’ has been
introduced in the Indian Parliament. It
contains provisions for the mandatory
reporting of financial transactions above acertain value, and for the compulsory
maintenance of records of suchtransactions by the banks and financial
institutions.
Japan
In Japan, the Special Drug Law
specifically provides for regulation ofmoney laundering of ‘illicit proceeds or the
like’. Any person, ‘who disguises facts withrespect to the acquisition or disposition ofillicit proceeds or the like, or conceals illicit
proceeds or the like, shall be imprisoned for
not more than five years or fined not morethan three million yen or both’. The same
shall apply to any person who disguises
facts with respect to the source of illicit
proceeds. However, the scope of antimoney laundering legislation in Japan at
the moment is limited only to proceeds
connected with trafficking in drugs. Someof the cases have indicated the involvementof organized gangs like the ‘Yakuza’ (mafia).
So far, 8 cases of money laundering havebeen investigated in Japan. Four of thesecase were disposed of by suspension ofprosecution, whereas three cases haveresulted in convictions. The Japanese
Ministry of Justice is actively considering
a report to extend the scope of money
laundering laws to other crimes, besides
drug offences.
Nepal
Money laundering is a newly emerging
economic crime in the country. The
opportunities for money laundering haveincreased in the era of economic reforms.
Liberalization of market economy, creationof favorable environments for foreign
investors and the casino business haveprovided ground for huge financialtransactions. However, the crime of money

228

laundering in the country has yet to be
identified and investigated. There is stilla lack of legislation making money
laundering a criminal offence. The
Narcotic Drug Control Act 1976 hasprovision for the forfeiture of drug related
property and assets. Other financial
regulatory laws such as the Nepal Rasrta
Bank Act 1953 (The Central Bank Act) andthe Foreign Exchange (Regulation) Act
1962 do not cover all aspects of thesophisticated and complicated crime ofmoney laundering.
Pakistan
Principal money laundering methods
detected so far are Hawala/Hundi, Bearer
Investment Schemes, over and underinvoicing of imports and exports,
smuggling of currency, investment andspeculation in real estate. Hawala is thepreferred method of money laundering inPakistan. The Government of Pakistan has
not enacted any laws against money
laundering. However, the Control of
Narcotics Substances Act 1997 provides
punishment for laundering drugs proceeds.
Reporting of suspicious transactions by thebanks and financial institutions has been
made obligatory in this law.
South Africa
The proposed Money Laundering
Control Bill, which is supposed tocompliment the enforcement of theProceeds of Crime Act by combating themoney laundering in the country, is yet to
be promulgated. The proposed Bill
provides for the establishment of a
Financial Intelligence Centre (FIC).
C. Contributory Factors for Money
Laundering(i) Lack of International Co-Operation:
Today nearly 40 countries in all partsof the world are considered tax havens.
The situation in the Cayman Islands

110TH INTERNATIONAL TRAINING COURSEREPORTS OF THE COURSE
provides a glimpse into the offshore
industry. With the seventh largest
deposit base in the world, the Cayman
Islands has 550 banks in the territory,
only 17 of which have a physicalpresence and are subject to money
laundering laws. Total assets held by
Cayman banks in 1994 were above$USD 430 billion. Other countries
considered as being ‘major offence
centers’ are the Bahamas, Bahrain,
Hong Kong, the Netherlands Antilles,
Panama and Singapore. Some of thesecountries have been hesitant in
enforcing controls on tax havens dueto the benefits accruing to theirindividual economies.
(ii) Free Trade Zones: Trade liberalizationand free trade zones provide additional
money laundering venues. It isbelieved that these zones are shiftingfrom using the banking system to using
international trade to launder money.
Free trade zones in various parts of theworld bring economic prosperity totheir individual economies, but they
have often been manipulated by money
launderers due to an absence ofcontrols, by indulging in deals withmanipulated invoices.
(iii) Big Businesses: Billions of dollars in
drug proceeds are laundered throughmajor businesses such as stock
brokerages and insurance firms. Other
money laundering schemes involve
cash businesses such as bars, casinos
and restaurants, as well as non-bankfinancial institutions such as chequecashing stores and money exchange
houses. Such businesses have large
cash turnovers and, unless closely
monitored, are likely to and have often
been used by money launderers in theiroperations of conversion of illegal into
legal money.

D. Problems in Investigation,
Prosecution and Trial(i) Absence of Anti-Money Laundering
Legislation: Most of the countries,
particularly in the developing world,
are yet to introduce comprehensive
anti-money laundering legislation. In
some countries, this crime so far has
been dealt with under Foreign
Exchange Regulation Acts; underwhich most of the cases get
compounded and very few prosecutions
are launched. Absence of specific laws
in this field has provided a climate ofnon-deterance to criminals.
(ii) Bank Secrecy Regulations: These
regulations, which were designed togive privacy to genuine customers, arebeing used by criminal money
launderers for illegal deals. For thesake of attracting deposits, somebankers misuse these laws by opening
fictitious accounts for the money
launders.
(iii) Electronic Transfer of Funds: Wiretransfer systems allow criminalorganizations the facility of a swift andnearly risk free conduit for moving
money between countries. With theestablishment of electronic cash, it has
become virtually impossible to trace thetransfer of funds from one place toanother over the Internet or via e-mail.
Dig-Cash uses public key and digitally
blind signature techniques, whereby‘blinding’ carried out by the user’s own
device makes it impossible for anyone
to link payments to the payer.
Electronic cash has of late been
increasingly used by money launderers
due to the anonymity it provides to thesource of the funds.
(iv) Lack of Information: Professionals suchas attorneys, tax consultants etc, are229

RESOURCE MATERIAL SERIES No. 55
usually involved in money laundering
operations. Since the crime iscommitted by white-collar criminals,
information which is traditionallyreceived by the enforcement agencies
from the criminal world is lacking inthese cases. Absence of mandatory
reporting of financial transactions by
the banks also deprives theenforcement agencies of clues aboutmoney laundering rackets.
E. Countermeasures in the Field of
Criminal Justice(i) E n a c t i n g To u g h A n t i - M o n e yLaundering Legislation: This should
now be the objective of every country.
This measure should include therequirement of mandatory reporting oftransactions over a certain amount,and the keeping of documentary
records of transactions for certain
number of years.
(ii) Co-operation between Nations: As
money laundering is a transnational
crime, the nations of the world must
co-operate to relax bank secrecy laws
which should, while ensuring
legitimate customer privacy, readily
provide required information toauthorized investigators. Besides
facilitating extradition of offenders/suspects, nations should also impose
commensurate regulatory controls onbanks functioning as tax havens,
exports and imports in free trade zones,
and on the monitoring of transactions
in cash rich businesses like casinos,
non-banking financial institutions andmoney exchange stores etc, in order tomake their misuse by money
launderers counter-productive.
(iii) Use of Technology for Pre-Shipment
Inspections: In order to effectively deal
with over-invoicing as a mode for the230

transfer of funds, Florida International
University experts have developed
software to filter trade data which canbe used in developing countries as apotential compliment or substitute forpre-shipment inspection to monitor
abnormal pricing. Governments should
provide their enforcement officials withsuch technology and training to operate
the same, in order to make the use ofmanipulation of import and export
invoicing difficult by money launderers.
(iv) Creation of Financial Database
Agencies: Along the lines of FINCEN
of the U.S.A (and other such agencies
in the U.K and France), agencies may
be created in every country which havea large database on financial operations
within the country, collected fromvarious sources like banks, financial
institutions, customs, Internal
Revenue Services, narcotic control
organizations etc, to aid and help
financial investigations. The AUN
anti-money laundering program,started in 1997 by the Vienna-based
UN office for Drug Control and Crime
Prevention, the ‘Global Program
against Money Laundering’ provides
governments with legal advice andoffers training for law enforcement andjudicial officers. It also assists inestablishing national financial
intelligence units.
F. Other Countermeasures
The group has recommended thefollowing countermeasures as preventive
measures to combat the crime of money
laundering:(i) Legislation in the Area of Digital
Money: Laws are in the process of being
enacted in various countries in theworld, criminalising various computeroffences. These laws should also
attempt to include the area of digital

110TH INTERNATIONAL TRAINING COURSEREPORTS OF THE COURSE
money and virtual banking.
Organizations like FINCEN in every
country should be granted
constitutional authority to secretly
monitor all cyber-banking transactions.
(ii) Relaxation of Tough Foreign Exchange
Regulations: This measure is necessary
to allow free flow of foreign exchange,
particularly in countries where‘underground banking’ operations like
‘Hawala’ abound. This measure will,
to a large extent, put undergroundbanking out of business. As
underground banking channels are also
being used by money launderers incertain countries, this measure will
reduce avenues of money laundering insuch countries.
VI. CONCLUSION
The study of economic crime, both fromtheoretical as well as practical aspects, has
a common objective. It is the objective of
making the world safe and secure for free
trade and commerce, and for ensuring thestability of national economies. The task
requires educating the public about thedanger facing the economies from theactions of economic criminals, and thereby
ensuring international co-operation incontrolling economic crime.

231

RESOURCE MATERIAL SERIES No. 55
CORRUPTION
CHINA
Economic Criminal Cases Investigated by the People’s Procuratorates in China(1995)
Type

Disposition Cases

Total
Corruption
Bribery
Embezzlement
Tax evasion
Others126453
51340
30080
20618
13621
10794

FilingCases Defendants
63953
72601
21642
25897
16831
17763
12616
13550
8049
8912
4815
6479

Finalization
Cases Defendant
58773
67286
20281
24564
15550
16499
11650
12683
17302
8128
3990
5412

Note: 1. Finalization includes the previous year
2. Source data is from Law Yearbook of China

Corruption Cases Disposed and Finalized by the Court in China
Types
Corruption, bribery &embezzlement
Economic offences
Percentage
Numbers of defendants
punished

1994
Disposition Finalization

1995
Disposition Finalization

31223

30793

33068

39934

43065
72.5%

43013
71.5%

46614
70.9%

46386
86%

20019

26689

Note: 1. Finalization includes the previous year
2. Source data is from Law Yearbook of China

1993
1994
1995
Disposition Finalization Disposition Finalization Disposition Finalization
Economic offences
27463
27323
43605
43013
46614
46386
Total of criminal offences 403267
403177482927480914 495741
496082
Percentage
6.81%
6.77%
9.03%
8.94%
9.4%
9.35%
Types

Note: 1. Finalization includes the previous year
2. Source data is from Law Yearbook of China

232

110TH INTERNATIONAL TRAINING COURSEREPORTS OF THE COURSE
INDIADetails of Cases Registered and Persons Arrested under the Prevention of
Corruption Act (1992 - 1996)
Years
1992
1993
1994
1995
1996

No. of vigilance cases registered by
CBIStates / Uts
1231
1772
1282
1895
1106
2104
825
2064
845
2361

Persons Arrested
CBI
States / UTs
1011
1167
463
2296
297
2604
304
2922

JAPAN
Year

No. of Cases

1993
1994
1995
1996
1997

67
82
77
60
89

No. of Bribe-taker
80
102
98
82
120

No. of Offenders
No. of Bribers
139
176
138
141
172

Total
219
278
236
223
292

Note : Statistics complied by the National Police Agency
Offenders were investigated first by the police then sent to the public prosecutor

Year
1993
1994
1995
1996
1997

No. of Offenders
No. of Bribe-takers No. of Bribers
23
39
26
16
32
27
11
8
11
14

Total
62
42
59
19
25

Note : Statistics complied by the Ministry of Justice
Offenders were investigated by the public prosecutor independently

233

RESOURCE MATERIAL SERIES No. 55
NEPAL
Cases Investigated by CIAA
Fiscalyear
1996/97
1997/98

Total No. of Complaints
C/F from Registered
Total
last year this year
334
1422
1756
691
1004
1695

Investigation
started1320
1432

Investigation
completed

629
800

Cases
filed in
court
11
6

Note: Extracted from the Annual Reports of CIAA

Departmental Actions taken by SPD
Fiscal year
1993/94
1994/95
1995/96

Government servants
Personnel of Public Corporations
Gazetted Non-gazetted
Officers
Non-officers
10
44
13
15
12
37
7
17
8
4
1
17

Total
82
73
30

Note: Extracted from the Annual Report of the Attorney General of Nepal 1995/96

TAX EVASION
INDIA
Seizures by Income Tax Department (1992 - 1996)

234

Year

No. of searches conducted

Assets seized(Rs. in crores)

1992
1993
1994
1995
1996

4777
5026
4830
4612
4299

384.02396.46381.43458.14405.63

Unaccounted income
disclosed during searches(Rs. in crores)
501.05448.83577.08NANA

110TH INTERNATIONAL TRAINING COURSEREPORTS OF THE COURSE
JAPAN
Situation Regarding Criminal Investigation in Past 5 YearsYear

No. ofcommencements(case)

No. ofdismissals(case)

No. ofcomplaints
referred to
publicprosecutor

Accusation
rate
(%)

Total
amount of
tax evasion(yen mil.)

Total amountofaccused
tax evasion(yen mil.)

1993
1994
1995
1996
1997

212
215
217
221
232

215
216
223
232
225

161
155
163
177
166

75
72
73
76
74

60,10744,05041,53344,72336,31052,721 (327)37,817 (244)33,144 (203)
33,640 (190)
32,629 (197)Note: The amount of tax evasion includes the amount of additional taxes
The figure in the parenthesis is the amount of accused tax evasion per case

ANNEXTURE 6(B)No. of tax evader
Year

1990
1991
1992
1993
1994
1995
1996
1997

Referred to
public prosecutor
by TaxAdministration
Bureau

452
484
783
879
559
497
574
567

Prosecutedby Public
Prosecutor

Not
Prosecutedby Public
Prosecutor

Under
investigation

20
23
35
304
107
58
49
63

168
132
394
193
154
103
123
125

93%
94%
91%
56%
74%
86%
89%
86%

Total
16
14
13

Disposed of
51-

Outstanding
11
13
13

264
330
354
382
298
337
402
379

by Public
Prosecutor

Prosecution
Rate

NEPAL
Number of Cases Prosecuted in Court
Fiscal year
1993/94
1994/95
1995/96

C/F
11
13

Current year
16
3-

Source: Annual Report of Attorney General of Nepal 1995/96

235

RESOURCE MATERIAL SERIES No. 55
SMUGGLING
INDIA
Seizure made by Customs under Customs Act (1992 -1996)
Year
1992
1993
1994
1995
1996

Total no. of Seizures
59,27052,96349,99755,94749,580

Value of Seizures (Rs. in crores)
502.1
389.0
535.2
1,062.0
553.4

JAPAN
Year
1993
1994
1995
1996
1997

Antisocial smuggling
205
259
259
257
242

Evade duty
390
372
260
324
843

Without permission
453
438
324
301
352

Total
1,048
1,069
843
837
834

MONEY LAUNDERING
INDIA
Money Laundering 1992 -1996 (Cases under FERA)

Year

1992
1993
1994
1995
1996

236

No. ofCurrency Seized(Indian Rs. incrores)Searches/ Seizures/
IndianRaids Recoveries
1,215
738
3.9
1,234
843
6.7
1,540
1,046
9.8
1,175
832
10.2
1,164
868
12.4

Fines

Currency Confiscated(Indian Rs. in(Indian Rs. in crores)

crores)Foreign

Indian

2.5
4.5
8.1
6.5
7.8

2.4
3.1
1.8
1.2
4.0

Foreign Imposed Realized
2.2
3.0
2.2
2.3
2.0

27.8
10.6
78.0

2.3
3.2
3.4
2.2
1.6

110TH INTERNATIONAL TRAINING COURSEREPORTS OF THE COURSEGROUP 2ECONOMIC CRIME AGAINST THE PRIVATE SECTOR
Chairperson
Co-Chairperson
Rapporteur
Co-Rapporteur
Members

Advisers

Mr. Asif Nawaz(Pakistan)
Mr. Teruo Taniguchi(Japan)Mr. Patrick Ochieng Obimo(Kenya)Mr. Marino Francisco Sagot(Costa Rica)
Somarribas
Mr. Saadi Lahcene(Algeria)
Mr. Ramon Crespo Carrilho(Brazil)
MachadoMr. Tetsuo Nagakura(Japan)Mr. Tetsuo Ogura(Japan)Mr. Yoshihiro Ono(Japan)Deputy Director Masahiro Tauchi (UNAFEI)
Professor Tomoko Akane(UNAFEI)
Professor Ryosuke Kurosawa(UNAFEI)

I. INTRODUCTION
At the outset the group would wish toplace on record its gratitude and thanks tothe advisors and visiting experts for theirvaluable advice and guidance in theworkshop sessions. This group workshop
was assigned to deliberate on the issue of
economic crime against private enterprise.
It was agreed that we will consider crimes
where private enterprise is the victim.
However, it was felt that many a times,
crime against private enterprise will haveits effects on investors.
It was observed that economic crime isrampant in both developing and developed
countries, and is eating at the very roots ofsociety. It is vitiating the business
atmosphere and the public in general isloosing faith in the regulatory apparatusof the State/criminal justice system. The
gravity of the problem is highlighted by thefinding of an international survey
conducted by Earnest & Young regarding
the effect of fraud on business (May 1998).
As per its findings, more than half the
respondents (those enterprises who

responded to the questionnaire) had been
defrauded in the last 12 months; 30% had
suffered fraud more than five times in thelast five years; 84% of the worst frauds
were committed by employees (nearly halfof whom had been with the organizationfor over 5 years) and most of the worst
frauds were committed by management.
The group decided to tackle the subject
by discussing the actual situation of
economic crime in various countries. Factsand figures were gathered to appreciate thepreponderance of crime in these countries.
Case studies were undertaken to identify
problems/difficulties faced by criminal
justice officers at various stages ofinvestigation, prosecution, and trial ofoffenders. Solutions were explored andrecommendations formulated.
II. ACTUAL SITUATION OF
ECONOMIC CRIME AGAINST THE
PRIVATE SECTOR
Most of the countries represented in thecourse do not have any definition of
economic crime in their penal codes.

237

RESOURCE MATERIAL SERIES No. 55
Offenders are punished under various laws
pertaining to fraud, cheating, breach oftrust, misappropriation andembezzlement, etc. It was agreed thatcrime is a complex phenomenon and offers
no easy solutions. There are multiple socioeconomic factors affecting the state of crimein a particular society. It has to beunderstood in relation to a particular timeand social milieu. However, effort wasmade to explore commonalties and findways to manage criminality.
It was noticed that crime in general, andspecifically economic crime is beingcommitted on a larger scale and becoming
more sophisticated in member countries.
The group will discuss crime against
private enterprise under the categories
listed below:a) (i) Breach of trust by executives/staffof the enterprise(ii) Embezzlement by executives/staffof the enterprise/others(iii)Fraud/fraudulent management byexecutives/staff of the enterprise/othersb) Infringement of intellectual property
rightsc) Counterfeit credit cards/prepaid cardsd) Computer-related crime
The above categorization is not mutually
exclusive. However, ingredients of all thesecriminal acts/behavior may be present in
a particular crime. Since breach of trust,embezzlement, and fraud/fraudulent
management by executives/staff of theenterprise may include similar kinds ofelements constituting the respective
crimes, the group decided to categorize
them for the sake of convenience indiscussion.

238

III. BREACH OF TRUST,EMBEZZLEMENT, AND FRAUD/FRAUDULENT MANAGEMENT BYEXECUTIVES/STAFF OF THE
ENTERPRISE
Algeria
These crimes are dealt with under the
Penal Code of Algeria and are on theincrease due to the process of change froma government controlled economy to a freem a r k e t e c o n o m y. T h e r e g u l a t o r yapparatus to deal with such crimes is still
not firmly in place. There is a need todevelop institutions and regulations tohandle this transformation. The total
number of cases convicted during the last
three years are given below.
CRIME (ALGERIA)
Breach of trust
Embezzlement
Fraud
Total

1995 1996 1997
20 122 53
1030
72
42 336 160
72 448 285

Source: Ministry of Justice, Algeria.

The total number of cases prosecuted in1998 from January to July was 1115, muchhigher than previous years. Fraud wascommitted against private enterprise bothby insiders and outsiders.
BrazilBrazil experienced a succession of
bankruptcies since 1970. The Central
Bank decreed intervention in financial
institutions which revealed cases offraudulent management/embezzlement,
and in a few cases, breach of trust
committed by owners/executives of these
institutions. The Government of Brazil
enacted new legislation to ensure stricter
control over and inspection of financial
institutions, which resulted in a decreasein such incidents/cases. Criminal interest
has now shifted to the government sector
and consumers, against whom a significant
number of fraud cases are being

110TH INTERNATIONAL TRAINING COURSEREPORTS OF THE COURSE

Costa Rica
The Costa Rican Penal Code provides
punishment for economic offences. Fraud
in private enterprise is mostly committed
by insiders. The following chart reflects
the state of this crime in Costa Rica. The
cleared cases are as follows.

Japan
The so-called ‘bubble economy’ swelled
in 1986 to 1990, with a dramatic rise instock and land prices. With the objectiveof countering this phenomena, thegovernment of Japan switched to a belttightening policy. The bubble then burst;
stock and land prices tumbled and around1991 the economy experienced a severe
slump causing bankruptcy in various
enterprises. This contributed to revealing
misconduct done by private companies
during the bubble economy, with aresultant increase in fraud, breach of trustand embezzlement cases by executives offinancial institutions. The table below
illustrates crimes committed by executivesof financial institutions in 1997.

There was a slight increase in clearedcases but the situation in Costa Rica
regarding economic crime in private
enterprise is not very serious. The publicin general is more concerned about
corruption in government departments.

Kenya
Economic crimes against the private
sector are on the increase. Victims do notreport these offences to police for fear ofnegative business repercussions, so
statistics are not reflective of the real

perpetrated, such as off-the-book sales, tax
evasion, misappropriation of public funds,
etc. Law 7492, enacted in 1986, is the main
provision presently used in fraud/embezzlement cases. Although statistics
related to the private sector are notavailable, overall 4304 cases have beenregistered since 1986, and out of them,
1639 have been concluded at investigationlevel.

CRIME (JAPAN)
Fraudulent Management
Embezzlement
Fraud
Bankruptcy
Total

1992
149
121
2063
24
2357

1993
142
89
1878
4
2113

1994
141
122
2097
1
2361

1995
162
160
2397
2
2721

1996
194
169
2481
16
2860

Note: Fraud includes all frauds, not specifically private enterprise (source: Supreme Court of Justice of Japan).

Beach of Trust

Embezzlement

Fraud

Number of cases
Number of persons arrested
Amount of damage
Number of cases
Number of persons arrested
Amount of damage
Number of cases
Number of persons arrested
Amount of damage

6 (-3)
28 (-2)
2.6 billion yen (-78.2 billion yen)
23 (+5)25 (+6)
3.2 billion yen (-0.2 billion yen)
56 (+35)
113 (+83)
5.8 billion yen (-3 billion yen)

Note: Figures in parentheses show the increase or decrease from the previous year
(source: National Police Agency of Japan).

239

RESOURCE MATERIAL SERIES No. 55
situation. Global economic turmoil has
affected the Kenyan economy and quite afew companies have gone bankrupt.
Receivers appointed over the companies
have reported many cases of fraud/
fraudulent management. These cases aretried under the Penal Code of Kenya.
Pakistan
The Pakistan Penal Code prescribes
punishment for offences like breach oftrust, cheating, misappropriation etc. The
economic crime which impacted thenational economy, was a co-operative
scandal in which executives of financial
corporations indulged in large scale frauds/
embezzlement, resulting in the bankruptyof these corporations. Banks are also thecommon victims of fraudsters, who obtainloans under various schemes on fakesecurities. The table below indicates cases
regarding economic crime investigated andcleared by the Federal Investigation
Agency. Through statistics of one agency
are not a true reflection of the state of crimein the country, they do indicate a trend
which is on the rise.

the funds of the bank in the securities
market, causing huge losses to the bank.
No significant case of breach of trust/fraud
has been reported in Nepal. Such crimes
however, registered an increase in the
Republic of Korea, with rapid growth of theeconomy (1991-1996). There are numerous
cases in which more than ten million U.S.
dollars were embezzled or swindled by
Korean executives. These executives werelater arrested and indicted by publicprosecutors.
The Economic Crime Investigation
Bureau of the Police Department ofThailand has reported 57, 66, 64, 46, 71
and 92 cases involving financial
institutions and commercial banks in 1992,
1993, 1994, 1995, 1996 and 1997
respectively. In 1997, damage caused bythese offences was more than USD$ 233
million.

Other Countries
Crime data was not available regarding
other developing countries represented in
the course. However many private
enterprise/banks have been defrauded byexecutives/others in India. In the famoussecurities scandal in India (1992),
management of a bank of Karad misused

Case Studies
1. Fraud/Fraudulent Management in
Banco Nacional (BN) of Brasil
Facts
BN ranked 8th among Brazilian banks
and had 13,000 employees and 335
branches throughout the country. In 1986,
the Brazilian economy experienced a rapid
growth, whilst BN provided a great numberof loans to small enterprises. When highinflation struck, hundreds of suchcompanies went out of business, leaving
non-performing loans.

PAKISTANYEARCASESINVESTIGATED
1993
222
1994
224
1995
189
1996
240
1997
303

REFERRED FOR
CLOSED
DEPARTMENTAL ACTION
9
26
6
10
25
8
3
7
4
45

CLEARED
79
69
60
61
146

Note: Figures include economic crime in government organizations as well.

240

110TH INTERNATIONAL TRAINING COURSEREPORTS OF THE COURSE
Executives of the Bank managed to alter
the due dates of these loans in BN’scomputerized accounting system andapplied high interest rates to keep themlooking as good credits. Instead of writing
off bad loans, they were shown as
performing/active loans providing interest
income, generating positive results at theend of the fiscal year. Fictitious income
from interest earnings amounted to nearly
US$ 17 billion from 1988 to 1995. Whenadjusted, fiscal year positive results turned
into a loss of US$ 10 billion. A total of US$
145 million was paid as dividends from1990 to 1995. Undesirable effects weregenerated at same time, such as taxation
on profits and compulsory withdrawals
from the Central Bank.
Independent auditing of balance sheets
and financial demonstrations wereconducted by a private multinational
auditing company during this period. They
granted BN approval based on misleadingassessments from insufficient evidence,
contrary to legislation and accounting
procedure requirements. This crisisbrought problems to stockholders/investors
and to the country’s financial system,
provoking Central Bank intervention in
November 1995. The Brazilian
government created a bail-out program forthe banking system through which BN
demanded US$ 4.98 billion. Investigation
identified inside employees, at the vicepresidency level and executives heading
two other areas, as responsible forconceiving and implementing changes in
the accounting system. They were indicted
for fraudulent management, for providing
false information to the market and for
preparing false balances.
Difficulties/Problems raised by Participant
Stretched over the period 1988 to 1995,
requiring the services of police experts inthe fields of accounting and computer
technology.

Countermeasures/Solutions shown by
Participant
Investigation agencies should be staffedwith skilled investigators and allowed torequest specialist cooperation from otherinstitutions.
Discussion in the GroupThe participant from Pakistan pointed
out that, in his view, this does not qualify
as a case of fraud/fraudulent management
as the investigators have neither indicted
the president of the bank nor proved thebad intention of the executives.
Management of the bank might havemisrepresented the situation to avoid
negative business repercussions. He wasof the view that the banking industry isfacing problems in many countries due toworld-wide recession. In Indonesia,
Thailand, Pakistan and Republic of Korea,
over 30 % of loans granted by banks havegone bad.
The participant from Brazil asserted
that falsification of records amounts to
fraud and Brazilian law provides
punishment for that. The participant from
Kenya opined that management might
have been driven to misrepresent theirfinancial position due to fear of losing theconfidence of the public. Fraud/fraudulent
management involving misappropriation
may well follow in the wake ofmisrepresentation, as inhibitions which
discourage fraud have already been
overcome. In the actual case, had the
management of the bank identified overall
bad loans from good ones at the outset, andshown them in a high risk category, they
could have avoided aggravatingconsequences such as paying taxes,
dividends to share holders and compulsory
withdrawals by the Central Bank.
The participant from Japan introduced
a similar case regarding Yamaichi
Securities Corporation, in which executives

241

RESOURCE MATERIAL SERIES No. 55
of Yamaichi concealed debt of 260 billion
yen on the balance sheet in November
1991. Since the investigators required
specific expertise and knowledge tounderstand the transaction of securities
and bonds, the services of inspectors of the
Security and Exchange SurveillanceCommission were co-opted to assist theinvestigators, and the executives of
Yamaichi were indicted in this case.
The participants pointed out theimportance of establishing special
investigation agencies, and close cooperation between criminal justice officers
and executives of the regulatory bodies,such as SESC, which may provide
necessary expertise to investigate suchcases.
2. Breach of Trust in Inditex of Algeria
Facts
A case regarding breach of trust/embezzlement was detected by Algerian
Authorities in 1997, in which a manager
and two executives of the Inditex (a textile
company) manipulated the company’s
funds for their own interests. They enteredinto a partnership contract with a fictitious
off-shore company called Radco (situatedin Spain), purported to be a producer of
raw material which would provide Inditex:(a) Raw material at whole sale price.
(b) Technical know-how.
(c) Sale of goods of Inditex to othercountries.
In return, Inditex would pay 30% of its
annual profit to Radco.
During investigation, it was establishedthat the Spanish company was not the
producer of the raw materials. Inditex waspurchasing raw materials at 5 to 8 % higher
than the market price, and the profit sogained was shared among the group of
perpetrators. Similarly, 30% of the profit
being paid to the Spanish company wastransferred to various banks in

242

Switzerland, France and Algeria through“bank-drafts”. So accessing those accounts
was not possible for investigators.
Difficulties/Problems raised by Participant(a) It was difficult to gather evidence
because the proceeds of the illegal
profits were stashed away in foreignbanks.
(b) Secrecy laws of the banks made it
impossible for investigators to getmaterial evidence of accounts inforeign banks.
(c) I n v e s t i g a t i n g o f f i c e r s l a c k e dknowledge of commercial law
operations.
Countermeasures/Solutions shown by
Participant(a) Regional and international cooperation be strengthened.
(b) The rules regarding bank secrecy bereviewed.
(c) Services of specialized agencies may
be co-opted i.e. audit departments.
Discussions in the GroupThe Algerian participant explained that
it is legal in his country to hold anonymousbank accounts, and the rights of depositors
are protected by law. However this createsproblems for investigators in tracing theflow of a suspect’s transactions in the bank.
In this case, the problem was further
compounded as the profits/money was kept
in foreign banks and the accomplice was aforeign national (Spanish). So gathering
evidence required international cooperation and an extradition treaty with
Spain. He pointed out that the confessionof the accused, recorded by prosecutors,
was the main evidence in this case, and it
would not be possible to convict theoffenders if they convince the court that
confession was recorded under duress.
It was pointed out by a participant that,
ordinarily, it is very difficult and time

110TH INTERNATIONAL TRAINING COURSEREPORTS OF THE COURSE
consuming to get a person extradited or to
get information from foreign banks. He
suggested greater mutual assistance in theinternational field and informal contact
between criminal justice officers of various
countries for resolving this problem. The
Japanese participant told that it is notpossible to hold anonymous accounts inJapan and investigators can thoroughly
examine bank records.
Some of the participants expressed theview that anonymous bank accountsystems and the secrecy laws of banks
should be reviewed/changed. However it
was perceived that Algeria is keeping thissystem to attract deposits/capital so thatthe financial resources of the country will
not be drained by competing European
banks.
The participant from Brazil explainedthat many financial institutions in his
country established off-shore companies in
the Caribbean Islands to indulge in illegal
trade/money laundering. The Central
Bank of Brazil is making efforts to enter
into bilateral agreements with the Central
Bank of Caribbean Islands for allowing
inspectors of the Central Bank to carry out
audits of such affiliated companies.
3. Embezzlement in a Large Financial
Institution of Costa Rica
Facts
From July 1983 to May 1984, in Costa
Rica, four executives of a large financial
institution embezzled money from theinstitution. These executives, who wereauthorized to issue cheques, gave cheques
to fictitious companies, which in turn,through various accomplices, endorsed thecheques many times, and finally depositedthem in the bank accounts of companies
owned by these executives. The total
amount of cheques resulted in damage tothe financial institutions of $1.5 million
dollars.

Difficulties/Problems raised by Participant(a) Judges are overburdened and avoid
taking up cases of a complicatednature. They tend to postpone
hearings in economic crime cases.
(b) A lot of evidence is to be collected.
Investigators require special
knowledge of commercial laws/
operations.
(c) Cheques were endorsed many times,
therefore it was difficult to determine
offenders.
(d) Although the investigators proved
the flow of cheque transactions, illicit
profits could not be recovered.
Countermeasures/Solutions shown by
Participant(a) In Costa Rica, a new law was enacted
to prohibit endorsing cheques morethan once.
(b) Special investigators offices, one in
the judicial police and another inprosecution, have been established.
The offices specialize in economic
crimes.
Discussions in the GroupThe participant from Costa Rica
informed that the law regarding
endorsements of promissory notes/chequeshas been revised in his country, todiscourage malpractice, and now only one
endorsement is allowed.
The participant from Japan was of theview that use of promissory notes provides
ease of transaction in business and is very
common in Japan. Restricting theirendorsement can adversely affect thebusiness atmosphere. Further, the efficacyof restricting endorsements is doubtful aspromissory notes without endorsement(blank) often circulate in the businessworld.

243

RESOURCE MATERIAL SERIES No. 55
4. Breach of Trust in a Bank of Pakistan
Facts
Mr. HL, president of a bank in Pakistan,transferred USD$ 5 million to the accountof A.O.Y. via American Express in New
York. The amount was debited to the bankbranch in Karachi. This case wasregistered in 1997 for committing criminal
breach of trust. Both the president of thebank and directors of A.O.Y. were abroad.
The Federal Investigation Agency procured
warrants of arrest from the Special
Banking Court in Karachi and moved
Interpol for their arrest. Mr. H.L. went to
the High Court in Punjab, challenging thejurisdiction of the F.I.A. to investigate thiscase. The Chief Justice of the High Court
directed that the accused shall not be
arrested, pending the writ petition. No
date has been fixed for the regular hearingof the petition.
Difficulties/Problems raised by Participant(a) A f f l u e n t o f f e n d e r s i n v o l v e dinvestigators in legal cases tofrustrate the purpose of criminal
justice.
(b) Defendants, being abroad, were outof reach of the local authorities.
Countermeasures/Solutions shown by
Participant(a) Greater co-operation between variousorgans of the criminal justice system.
(b) International co-operation for
extraditing offenders.
Discussions in the GroupThe participant from Pakistan expressedthe view that economic crime offenders are
generally affluent people. They havemoney to spend on entertaining
bureaucrats and financing campaigns ofpoliticians, who in turn provide necessary
assistance when required. Further theycan engage competent lawyers to create
impediments by raising legal issues in thecourse of investigation, and such delay in

244

investigation buys them time to wriggle outof a situation.
Criminal justice officers enjoy high social
status in developing countries and wield
considerable discretion/influence, but theirsalary structure is not commensurate withthat status, making them prone tocorruption. Political systems in most ofthese countries are still struggling to sheda colonial past. Political executives try to
use the criminal justice system toperpetuate its rule, so it is necessary toprovide a better salary structure forcriminal justice officers and operational
autonomy to insulate them from politicalinfluence.
General Discussion of the GroupA participant raised the issue of theexpertise required of investigators indealing with complicated business
transactions and the plethora ofcommercial laws. Participants from Brazil
and Japan pointed out that they have asystem of auditing private enterprise by
external auditors and various regulatory
bodies, i.e. Security & Exchange
Surveillance Commission, Tax Agency,
Ministry of Finance and Central Bank etc,
all have authority to inspect banks/
companies. Such inspections sometimes
provide the beginning of a case. Better coordination between regulatory bodies andcriminal justice officers can ensure cooperation, and the experts of these bodies
can provide necessary assistance in theinvestigation.
Some participants expressed the viewthat better training of officers ininvestigation techniques will improve theirskills and arranging common training
programs will foster goodwill amongst
officers of various countries and result inbetter informal international co-operation.
The group deliberated to find effective
measures to deal with crime. It was agreed

110TH INTERNATIONAL TRAINING COURSEREPORTS OF THE COURSE
that the nature of private business is sucht h a t o v e r- r e g u l a t i o n m a y k i l l t h e
atmosphere of free enterprise and pose
problems to genuine entrepreneurs in
effectively exploiting business
opportunities.
The following
countermeasures were proposed by someof the participants:(a) Organizations should develop andrefine their fraud control systems,
and encourage a culture of integrity.
(b) Raising the awareness of the publicregarding pitfalls of the market
culture.
(c) Procedures for public disclosure of theb a s i c a s p e c t s o f a c o m p a n y ’s
operations can help safeguard
against such crime.
(d) Criminal justice officers be madeconversant with commercial laws/
operations.
(e) The agencies dealing with economic
crime may be provided with theservices of experts in the field of
accounting.
(f) Regional and international mutual
assistance in the field of criminal
justice matters.
(g) Role of regulatory bodies may bestrengthened.
(h) To prevent the emergence of shellcompanies, rules may be framed torequire them to be registered with the
Chamber of Commerce and Trade of
the host country.
(i) Operational autonomy to various
enforcement bodies to insulate themfrom political pressure/external
influence.
(j) Better service conditions for criminal
justice officers.

IV. INFRINGEMENT OFINTELLECTUAL PROPERTY
Algeria
The old Penal Code prescribed very
lenient punishment for infringement ofthese rights, which is being reviewed toenhance punishment of imprisonment from
2 months to 1 year, and fine from 5000 to
20,000 DA. Special provisions dealing withinfringements of trademark and copyright
law are included in the Competition Law.
The figures regarding these crimes were
not available, however violations of theselaws are common. Both the public and law
enforcement does not attach much
importance to these violations. Further,
the victims are reluctant to lodge
complaints due to the apathy of theregulatory bodies.
BrazilThe usual practice in the past was
related to software copying and official
support for the production of patented
computer technology and pharmaceuticalproducts. With the recent enactment ofspecific laws protecting intellectual
property rights, the previous freedom tocopy any foreign patented item ended, andenforcement was put in place, thus
significantly reducing its occurrence.
Presently, the most common infringement
relates to counterfeiting brand nameconsumer products.
Costa Rica
The Penal Code of Costa Rica provides
for punishment of offences regarding
infringements of intellectual property
rights. Special legislation provides for thesetting up of regulatory bodies to deal withissues regarding the Trademark Law,
Illegal Competition Prevention Law,
Copyright Law, Utility Model Law andPatent and Design Law. However
infringement of these rights are common,as the criminal justice system attaches low

245

RESOURCE MATERIAL SERIES No. 55
priority to these violations, and the victims
normally don’t come forward to lodge
complaints.
Japan
The products inscribed with fake brandnames are banned, but can still find theirway into the market. However a few cases
have been registered and successfullyprosecuted in the criminal courts. As mostof the cases are handled by the civil courts,
violations of intellectual property rights are
not frequently reported to the police. The
available statistics from Japan indicatethat violations of trademarks and copyrightare more common than other laws
concerning infringement of intellectual
property rights. The table below shows thecleared cases in Japan during the last five
years.
Kenya
Copyright and trademark laws are
violated with impunity, as victims do notreport these offences to law enforcement
agencies. The officers of law enforcement
agencies lack special knowledge of the laws
and expertise to deal with such violations.
Video and music cassettes are the mostaffected items, and markets abound withgarments, shoes, bags, and medicines using
fake brand names. Few reports received
originate from our local artists. These
cases are considered to be petty and arenever submitted to the statistical bureau
for record.

JAPAN
Trademark Law
Illegal Competition Prevention Law
Copyright Law
Patent Law
Design Law
Utility Model Law
Total(Source: National Police Agency of Japan)

246

1993
465
40
384
1
5
0
895

Pakistan
Pakistan has special legislation
regarding copyright, trademarks, patents
and design. The Penal Code of Pakistan
also prescribes punishments for offences
regarding infringement of intellectual
property rights. However cases regarding
infringement of these rights are rarely
lodged with the police. Society in generaldoes not attach much importance to such
infringements, which take place without
much resistance from either public or law
enforcement bodies. However people dodifferentiate between goods on the basis ofquality, and protection of these rights ismainly determined by market forces or thezeal of the aggrieved party.
Other Countries
The situation in Nepal is almost similar
to Pakistan. In India, the Copyright Act
deals with such crimes. Offences under
this Act are mainly committed in urban
areas. In 1996, the highest incidences ofviolation of this Act were reported from thecity of Bombay (100) and Delhi (55). The
Philippines has, under certain conditions,criminalized the infringement ofintellectual property rights under the newIntellectual Property Code. In Korea, ajoint investigation team was formed in1991 in every District Prosecutor’s Officeto specifically investigate this type of crime.
Figures of indicted cases during the last
three years in Korea are 13683,15166 and13460 respectively.

1994
251
34
138
1
4
0
802

1995
342
43
172
2
2
0
901

1996
517
99
348
0
0
0
964

1997
442
56
433
0
0
0
933

110TH INTERNATIONAL TRAINING COURSEREPORTS OF THE COURSE
Case Study
1. Infringement of Intellectual Property
Case in Japan
Facts
Company A was a legal producer ofvideo-game machine software, bearing the
copyright ‘Arukanoid’. B was a director of
C company, which dealt in the production,
sale or lease of video-game machine
software bearing a different copyright.
During the period between 1986 and 1987,
B was found to have sold 18 pieces ofArukanoid video game machines without
consent or permission from company A.
Company C was found guilty and fined
500,000 yen. B was also found guilty andsentenced to 8 months imprisonment with
2 year’s suspension of execution of thesentence.
Difficulties/Problems raised by Participant(a) It was difficult to gather evidence toprove that B knowingly purchased
the software violating the copyrightof Arukanoid video.
(b) The investigators had difficulty in
distinguishing the software which B
was selling from the genuine
Arukanoid product, due to thesimilarity of appearance.
Countermeasures/Solutions shown by
Participant(a) The analysis of the accounts bookseized from Company C containing
sales records showed variation in
prices between the genuine and thecopied software.
(b) The victim cooperated withinvestigators to recognize thedifference between the genuine andthe copied software.
Discussion in the GroupThe situation in member countries
clearly indicates that low priority is
attached to the infringement of intellectual
property rights by both society and thecriminal justice system. Information
technology has further facilitated thepiracy of software programs through theinternet. This is causing a huge loss to
private enterprise. The Software
Publishers Association has estimated that$ 7.4 billion worth of software was lost to
piracy in 1993, with $2 billion of that being
stolen from the Internet.
Japanese participants pointed out that
products using fake brand names aremostly smuggled into Japan from other
Asian countries. This makes it difficult forinvestigators to collect evidence, i.e
understanding the whole process of theirproduction. So international co-operationis necessary to deal with the situation.
Some of the participants proposed that
there is need to protect the businessinterests of entrepreneurs and suggested
that the regulatory apparatus should playa pro-active role, and punishments
regarding infringement may be enhanced
to deter perspective offenders.
V. COUNTERFEIT CREDIT CARDSAND PREPAID CARDS
Algeria
Credit cards are not commonly used inAlgeria, and there is no special enactment
to deal with fraud relating to credit cards.
Few cases were cleared and prosecuted
under the traditional provisions dealing
with forgery, swindling and counterfeitingof securities.
BrazilSome counterfeit credit card cases havebeen detected and investigated in Brazil,
usually connected to organized crime.
However, the prevalent form of credit card
offence is related to the use of stolen cards
and cards obtained through false
information. Prepaid cards are not yet
widely used.

247

RESOURCE MATERIAL SERIES No. 55
Costa Rica
There are various types of credit cardfraud in Costa Rica. Depending on the typeof the fraud perpetrated, the sufferer of theloss can either be the issuer, card holder,bank or merchant. Counterfeit credit cards
and prepaid card fraud are not known tohave been reported.
Japan
There are few cases of the use ofcounterfeit credit cards. Most crimes
relating to cards are cases in which regularcards issued to authorized holders wereused by unauthorized persons. There aremany cases in which used prepaid cards
are counterfeited (especially telephonecards, cards for pachinko games and so on).
Card crimes are sometimes committed byorganized groups involving foreignorganized crime group members. Statistics
of cases relating to various card frauds aretabled below.
Kenya
The use of plastic money or cards inconsumer spending has exerted
considerable influence in the growth offinancial transactions in Kenya. The major
frauds so far experienced relating to credit
cards are as follows:(i) Use of stolen and lost cards.
(ii) Use of fraudulently acquired or
issued cards.
(iii) Running of extra vouchers (i.e.

JAPAN
Number of
Cases
Detected
Number of
Cases
Cleared

1991
Total
7,740
Credit 6,195
Cash
1,452
Others
93
Total
7,544
Credit 6,270
Cash
1,178
Others96

1992
11,045
9,596
1,303
146
11,53910,205
1,177
157

merchants can bill the card company
by fraudulently preparing extra
vouchers of cards presented to them).
No case involving the use of counterfeit
credit cards or prepaid cards has beenreported.
Pakistan
Pakistan is still a cash economy and useof plastic money is still very limited. A few
large stores and hotels located in big cities
entertain credit cards. People belonging
to affluent classes normally keep credit
cards for use abroad. Prepaid cards ofsmall denominations are used at telephonebooths. There is hardly any cases reported
to police regarding counterfeit cards.
Other Countries
Credit cards are widely used as a modeof payment in Korea. In most of thecriminal cases related to credit cards,
authorized card holders made excessive useof the card with the intention to evade
payment, constituting a fraud under the
Penal Code of Korea. However sometimes
stolen or lost cards, and in a number ofcases, counterfeit cards are used.
Provisions of the Credit Card Act are
invoked to punish offenders along with thePenal Code. A number of suspects arearrested and indicted every year. In thePhilippines, credit card fraud has almost
disappeared due to the adoption of newprocedures by business establishments, i.e.

1993
8,585
7,056
1,314
215
8,268
7,216
923
129

1994
8,740
7,173
1,291
276
8,122
6,998
877
247

1995
6,671
4,951
1,514
206
6,204
5,061
948
195

1996
6,396
4,282
1,408
706
5,586
4,070
845
671

1997
11,714
8,594
1,926
1,194
11,368(31)8,860(26)1,240( 1)1,268( 4)The numbers in parenthesis indicate cases using counterfeit cards (source National Police Agency of Japan).

248

110TH INTERNATIONAL TRAINING COURSEREPORTS OF THE COURSE
verification of credit cards passed onto
them through an Omron Card Authorities
Terminal (OCAT). Credit card companies
have also introduced the system ofrequiring photographs of holder on the card
itself for easy identification.
The problem of stolen and counterfeited
cards is becoming serious in Thailand. As
per the statistics from the Economic Crime
Investigation Bureau of the Police, there
were 58, 54, 57, 71, 79, and 87 cases
regarding counterfeited credit cards in theyears 1992, 1993, 1994, 1995, 1996, and1997 respectively. In 1997 damage causedby these crimes exceeded USD$ 561,000.
Case Study
1. Counterfeit Prepaid Card Case of
Japan
Facts
In June 1995, the suspects ran acounterfeiting machine in an apartment
within Itabashi Ward in Tokyo. The
suspects used the machine to counterfeit
prepaid cards for accessing Pachinko
machines. They collected used prepaid
cards from various sources and copied themagnetic data of genuine cards, using theused prepaid cards, and the counterfeitingmachine. Within two months they had
succeeded in producing approximately
three hundred thousand counterfeit
prepaid cards, out of them one hundred
thousand cards were used by the suspects
and their agents, thereby causing the cardcompany a loss of about 500 million yen.
The suspects were indicted on allegationsof forgery of securities.
Difficulties/Problems raised by Participant
The crime was committed by anorganized gang involving a lot of suspects.
They changed their place of residence
frequently to perpetrate this crime.

Countermeasures/Solutions shown by

Participant
Co-operation of police from various
jurisdictions was solicited to arrest
members of the gang.
Discussion in the Group
Participants noted with concern that
where credit cards have provided ease oftransactions, at the same time they provide
immense opportunity for criminals to use
or appropriate cards, or the stored
information in the card. According to one
estimate, losses amounting to USD$1.3
billion were caused to credit cardcompanies in the year 1995.
The participant from Japan pointed outthat counterfeit credit card crimes are dealt
with under the normal provisions of Penal
Code in Japan, such as illegal use or
production of electromagnetic records,
using forged securities and so forth.
However it was pointed out by a participantthat certain countries have amended theirPenal Codes to provide for crimes related
to credit cards. In Canada, section 342 (1)(c) of the Criminal Code provides that it is
an offence to possess, use or traffic in aforged or falsified credit card, knowing that
it was obtained, made or altered by thecommission of an offence either in Canada
or elsewhere. The participant from
Pakistan pointed out that possession ofcounterfeit cards may be criminalized to
discourage the forgery of cards.
Participants from Japan were of the viewthat the public in general is not ready forsuch legislation in Japan.
The participant from Kenya pointed outthat this crime has a transnational natureas the card issuer, card holder, merchantand offender may be in different
jurisdictions. He suggested that laws invarious countries need to be harmonized
to facilitate trials in multiple jurisdictions.
The participant from Brazil opined thatthe best countermeasures have to come249

RESOURCE MATERIAL SERIES No. 55
from the industry itself, by streamlining
procedures regarding issuance and the useof credit cards and in improving thesecurity features of the card. The
participant from Japan stated that credit
card crime is often perpetrated byorganized gangs/ mafia. He suggested thatend users may be provided immunity fromprosecution to rope in the members of theorganized gang.
It was agreed that the challenge can be
met by a coordinated effort by industries
and governments. The credit card industry
should streamline procedures and improvesecurity features, while cardholders andmerchants should act more responsibly inhandling the cards. At the same time,governments should enact necessary laws
to keep pace with new technologicalchallenges and finally, laws may beharmonized in various jurisdictions so thatcriminals may not take advantage of thediscrepancies.
VI. COMPUTER RELATED CRIME
The use of computer technology inbusiness and governmental organizations
has created unprecedented opportunities
for the storage/dissemination of
information in all areas of human activity.
At the same time, it has createdunprecedented opportunities for crime. Itis perceived that the challenge is so greatthat the law enforcement apparatus in
itself will not be sufficient to deal with thesituation. Consequently, new forms ofcontrol and harnessing non-governmentalorganizations will become essential.
Various forms of crime have alreadysurfaced; i.e. theft of telecommunication
services where hackers get unauthorizedaccess to the telephone facilities and makemany millions in telephone calls.
Electronic funds transfer assist inconcealing and removing the proceeds of250

crime. Given the fact that computer crimetranscends national boundaries, effective
countermeasures will also require
enhanced international co-operation. It
was agreed that for the purpose of thispaper, computer crime may be defined as
crime in which computer technology has
been used to perpetrate the crimes.
Algeria
There is no special provisions dealing
with high-tech crime, so the few cases
where the computer was involved wereprosecuted and convicted under theordinary stipulations of the Penal Code.
However the draft of the new amendmentsof the Penal Code and the Code of Criminal
Procedure, submitted to the parliament,prescribe new penalties and regulations
related to computer crime and to data
seizure, and to admissibility before thecourt.
BrazilAlthough legislation still lacks specificcomputer crime law, other legal provisions
are being used to prosecute rampant
computer-related offences. Brazil has
witnessed a rapid expansion of computersconnected to the Internet. Fraudulent
purchases through this system are being
perpetrated against credit card companies
and other supplier of goods. All other formsof Internet-related offences, i.e. childpornography, hacking, etc are also being
registered in increasing numbers.
Costa Rica
Actually Costa Rica doesn’t have a
specific law to apply in respect to thesecases, but at the moment computers andthe Internet are very popular. Proliferationof computers is changing social life andbringing new forms of computer-related
crime. Child pornography and hacking areprevalent. Offences relating to computers
are punished under the Penal Code of
Costa Rica.

110TH INTERNATIONAL TRAINING COURSEREPORTS OF THE COURSE
Japan
In 1987, the Japanese Penal Code wasamended to enable punishment of three
types of computer-related crime. The firstis the illegal production of certain types ofelectromagnetic records. The second is theobstruction of business by destroying
computers/electromagnetic records. The
third is computer fraud, since under theformer Japanese Penal Code, the article ofthe fraud was applicable only to humanbeings. However, unauthorized access toprotected computers is not punishable
under the current Japanese Penal Code.
Computers are now indispensable tools inJapanese daily life. The following datashows the proliferation of information
technology in Japan. The number of hostcomputers connected with the Internet in
Japan was 300,000 for 1995, 700,000 for1996 and 1,150,000 for 1997. Increase inuse of computers has resulted in a
NUMBER OF HIGH-TECH CRIMESIN JAPAN
YEAR REPORTED NUMBER
1995
111
1996
178
1997
263

CLEARED
110
176
262

Note: cleared figures may contain reported cases fromprevious years (source: National Police Agency).

tremendous increase in computer-related
crimes. The following tables shows thistrend.
Kenya
Computer-related crimes are on theincrease. There is no statutory
interpretation of the term ‘computer crime’,and for the purpose of investigations andprosecutions, provisions of the Penal Codeare used to deal with these cases. So far
the most prevalent cases reported are thosethat target the computer data and thosewhich are committed using the computeras the instrument to facilitate thecommission of the crime.
The kenyan legal justice system, which
is based on common law, has difficulties inaddressing cases falling under the firstcategory. In the first category of cases, thedata exists as electric impulses which are
not tangible objects. Common law only
punish acts against property which istangible. Victims are normally advised toseek a civil remedy.
PakistanComputer technology is gaining groundin Pakistan and the use of computers is
becoming more popular. However no newlegislation has been enacted and cases, if

BREAKDOWN OF HIGH-TECH CRIME IN JAPAN 1997
CRIME TYPE
Computer fraud
Illegal production of private electromagnetic record
Illegal production of official electromagnetic record
Obstruction of business by destroying a computer, etc.
Destruction of official electromagnetic record
Destruction of private electromagnetic record
Network using crime
Others
Total

Reported
162
4
8
4
1
0
83
1
263

Cleared
163
5
7
2
1
0
83
1
262

(Source: National Police Agency of Japan)

251

RESOURCE MATERIAL SERIES No. 55
any, are tried under general penal laws. No
serious cases involving computer
technology has been reported so far.
Other Countries
Computer-related crime is increasing in
Korea. The Information Crime
Investigation Center was established in theDistrict Prosecutor’s Office of Seoul in
1995, and the Information Crime
Countermeasures Headquarters wasestablished in the Central Investigation
Office of the Supreme Prosecutor’s Officein 1996. From April 1995 to August 1997,
263 cases were investigated and 75
suspects were arrested, out of them six
suspects were arrested for hacking.
Computer technology is gaining groundin the Philippines but no cases have beenreported so far. In India, 22,000 counterfeit
share certificates of reputed companies
which were allegedly prepared by using
desk top publishing (DTP) systems wereseized. Several cases of software piracy
have been registered by Delhi police on theinitiative of NASSCOM, India. South
Africa has specific provisions in the South
African Police Services Act 1995 which
criminalizes unauthorized access or
modification of computer material
belonging to or under the control of thepolice service. However the practice of
search and seizure is based on common law.
The computer crime investigation unit of
the South African police service deals withcomputer-related crime. There is no
specific legislation regarding computerrelated crime in Thailand and if any, cases
are dealt with under normal penal laws.
Case Study
1. Online Computer Fraud in a Bank,
Nagoya, JapanFacts
A and B defrauded a bank in Nagoya byillegally using the bank’s computer system.
They pressurized C, a clerk of the bank, to252

take secret data of the host computer,including descriptions of the bankcustomers. A and B, being outsiders,
deciphered the data code and obtained
passwords and account numbers of othercompanies. Posing as customers, A and B
used their own computer to access thebank’s computer system from a hotel roomand sent false remittance information.
They acquired illicit profits by producing
false records. About 1.6 billion yen in total
was remitted to accounts, which the otheraccomplice had established in other banks.
The accomplice was able to withdraw about
140 million-yen from one bank.
However, when the other bank inquiredof the bank in Nagoya regarding paymentof the 1.5 billion yen, the fraud came to thenotice of the Nagoya bank, which prevented
payment and prompted reporting to thepolice. During police investigation, it
transpired that C had acquired data fromthe bank in Nagoya. Next, police suspected
A, since he had a close relationship with
C. A often stayed in a hotel, where thetelephone was suspected of being used toaccess the bank in Nagoya. The police
finally acquired the telephone record andfound that A, along with anotheraccomplice B, were involved in this case.
Difficulties/Problems raised byParticipant(a) Intense anonymity of offenders at theinitial stages of investigation.
Telephone records at the hotel had
already been deleted and thetelephone company did not volunteer
information due to secrecy ofcommunication.
(b) Special knowledge of computer
technology was required in gaining
and examining evidence.
Countermeasures/Solutions shown by
Participant(a) Search and seizure warrants for the

110TH INTERNATIONAL TRAINING COURSEREPORTS OF THE COURSE
bank’s telephone records were carriedout so as to identify the person who
accessed the bank in Nagoya. Thisobtained necessary information
which would not have been otherwise
available due to the secrecy ofcommunication.
(b) Investigators to be provided better
training in high technology.
(c) Improve co-ordination/co-operation
between private enterprises and law
enforcement agencies.
2. K Securities Case of Kenya
Facts
A was employed by K Securities Ltd as
a computer operator. He was sharing his
office with other employees. His duties
included entering all data relating to thebuying and selling of shares for the firm’sclients. During the period between 1996
and early 1998, A colluded with B, thefirm’s dealer at the stock exchange, to form
fictitious companies through which they
perpetrated theft of the client’s shares.
Following frequent complaints by theclients, the matter was discovered by C, theexecutive director of K securities Ltd.
However A destroyed all the data in thecomputer by invoking the delete commandon all the contents of the computer ’s
directory.
The latest backup of data was done latein 1997. The companies operations wereparalyzed as the computer system held 85%of the information required to run the day
to day operations. C enlisted the servicesof an expert who managed to recall most of
the data from the computer database.
Subsequent examination of the recalled
data revealed that A and B had defrauded
K Securities of about Ksh.5 million. They
were arrested five months later andcharged with the offence of ‘stealing byservants’.

Difficulties/Problems raised byParticipant(a) It was difficult to recall the deleted
data from the computer hard disk.
(b) B o t h t h e d i r e c t o r a n d t h einvestigators had inadequate
knowledge about the operating
systems of computer.
Countermeasures/Solutions shown by
Participant(a) Regular training of law enforcement
agencies to update their knowledgeof modern technologies.
3. Computer Fraud Targeting KDD of
Japan
Facts
A, with a view to evade telephone fees,developed software which was capable ofobstructing the KDD computer systemfrom recognizing telephone calls andcharging a fee. Later B and C shared insuch software and evaded telephone fees
individually. However KDD had an alarmsystem which was activated when asubscriber continuously engaged its line formore than two hours with more than two
minutes silence during that hour. The
suspect held the line for two hours,
resulting in detection. So by this alarmsystem the case was found out and KDD
reported it to the police in December 1993.
Police found out that A, B and C had in
total incurred a bill of 27 million yen which
was not recorded by KDD, during a periodof one year and seven months. A, B and C
were arrested on allegations of computer
fraud and all were convicted after trial.
Difficulties/Problems raised by Participant(a) Though KDD was the victim, it was
reluctant to volunteer evidence
claiming its right to secrecy ofcommunications.
(b) The exhibits included personal
computer and data which was very
difficult to preserve. The computer

253

RESOURCE MATERIAL SERIES No. 55
was special because one had to entera password before switching it off,
otherwise part of the data would be
erased.
Countermeasures/Solutions shown byparticipant(a) The evidence was secured by searchand seizure after the search warrant
was issued by a judge.
(b) Services of experts were solicited forpreserving the computer data.
Discussion in the GroupIt was generally agreed that crime
involving high technology poses difficulties
for investigators and requires special
expertise and skill to successfully prosecuteoffenders.
The participant from Japan pointed outthat under the usual interpretation of
search and seizure, the target is supposed
to be tangible, while computer data is
intangible. It is also difficult to identify
the exact location of the data in a computers y s t e m . F u r t h e r, c o m p u t e r s a r emultifunctional and hold large amounts ofdata. Seizure of entire mediums/systems
containing evidence could affect theinterest of others or obstruct the businessof the enterprise. Network computers canbe multi-jurisdictional. In most countries,
prior judicial authorization is required tocarry out searches and courts demand
particularity, i.e. the location, theequipment to be searched (hard drive,
diskettes etc ). He suggested that to solve
this problem new legislation may beconsidered making it obligatory upon thecomputer operator to cooperate withinvestigation authorities, and newinternational arrangements (bilateral andmultilateral) may be made to deal withemerging challenges.
Another participant from Japan
reported that in the KDD case, the offender254

destroyed significant evidence by one keytouch during the police search. He
proposed that investigators should beaccompanied by experts in computer
technology during search and seizure
operations, so as to ensure the preservationof data.
The member from Kenya observed thatin common law countries, the best evidence
during criminal proceedings is primaryevidence and in multi-functional
computers, seizure of the original medium
may obstruct the business operations of anenterprise. He proposed that there is needto enact new legislation that would allow
admissibility of computer generated copies
as evidence, in special circumstances.
Members from Pakistan, Kenya andCosta Rica pointed out that computerrelated crimes are dealt with under normal
penal laws in their countries. Most
common law countries prescribe
punishment in relation to mischief toproperty, and as property is defined as
something tangible, it may not be possible
to punish an offender who, by tapping
computer keys, destroys data, because data
exists as electromagnetic impulses which
are not tangible.
The participant from Japan stated thatunauthorized access to the computer is not
an offence in Japan, while some othercountries have prescribed punishment forthis offence. He opined that due to the dual
criminality principle in international law,
it may not be possible to extradite such an
offender. He proposed the harmonizing oflaw by enacting new legislation.
The participant from Brazil expressedthe view that in order to prevent computerrelated crime, it is necessary to co-operatewith industry to establish security systems,saving log data systems, and improvementof encryption. A participant pointed out

110TH INTERNATIONAL TRAINING COURSEREPORTS OF THE COURSE
the need to have informal contact between
law-enforcement agencies of various
countries to ensure better co-operation at
the international level, especially in hightech crime, as data can be destroyed very
quickly.
It was observed that it is necessary to
impart training to investigators incomputer technology and co-opt theservices of experts in these fields.
Establishing special investigation
departments for computer crime(Cyberpolice) may be considered.
Countermeasures suggested by theparticipants are summarized as follows:(i) Tr a i n i n g o f i n v e s t i g a t o r s i ncomputer technology.
(ii) Establishing special investigation
departments for computer crime(Cyberpolice).
(iii) Soliciting services of experts in therelevant fields while investigatingcases of a complicated nature.
(iv)Better co-ordination between
regulatory bodies and criminal
justice officers.
(v) N e w l e g i s l a t i o n r e g a r d i n gcomputer-related crimes, andsearch and seizure of electronic datain certain jurisdictions.
(vi) Computer generated copies madeadmissible pieces of evidence in
special circumstances.
(vii) Unauthorized access to information
made an offence.
(viii)Mutual legal assistance among
nations in the field of computer
crime.
(ix) Government and private industry to
work in close collaboration to
improve the security of information.

VII. DIFFICULTIES COMMONLY
FACED BY CRIMINAL JUSTICEOFFICERS AND SUGGESTEDCOUNTERMEASURES
A. Globalization of Crime
1. Difficulties
The advent of technology has made it
possible for a person sitting in one part of
the globe to transact business thousandso f m i l e s a w a y. T h e w o r l d i s n o w
characterized by unprecedented mobility of
information, finance, goods, services andpeople. This globalization has also
provided opportunity to criminals to
operate transnationally. They commit
crime in one country and find safe havens
elsewhere in the world, where criminal
justice officers cannot keep track.
Even if one is able to advance the law,the chances of locating the offender,
obtaining extradition and launching
successful prosecution or recovering
compensation is almost impossible. The
shear cost of sending officers from one
country to another for collection of evidence
may be prohibitive. The operation ofdifferent laws in different countries further
accentuates the problem.
2. Countermeasures
International cooperation in the field of
Criminal Justice Administration should beenhanced. Governments should enter intobilateral and multi-lateral treaties for the
extradition of offenders and to ensure
mutual legal assistance. In the absence oftreaties, governments may co-operate witheach other on the basis of reciprocity.
Informal contacts between law
enforcement officers of various countries
may be encouraged by having common
training programs. The United Nations
may assist member countries, whenrequested, by providing model treaties
which have been already developed.

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RESOURCE MATERIAL SERIES No. 55
B. Lack of Technical Know-how
1. Difficulties/Problems
Modern information systems provide aneffective means by which offenders cancommunicate in order to plan and execute
their activities. Emerging technologies ofencryption and high speed data transfer
can greatly enhance the capacity ofcriminal organization to place theircommunication outside the reach of police.
The offenders are able to disguise theiridentities through the use of complex
electronic technologies. Computer
technology calls for knowledge beyond theexpertise and skill of most investigating
officers. Further, complex commercial andfinancial transactions require special
knowledge of these laws/operations. So
criminal justice officers find it difficult tosuccessfully prosecute offenders.
2. Countermeasures/Solutions
Criminal justice officers may be trainedin the latest technologies and provision
may be made for hiring the services ofexperts in these fields to assist
investigators. Services of investigatorsfrom regulatory bodies like SESC (Security
Exchange and Surveillance Commission)
may be co-opted to assist police
investigators. Governments should
encourage research in the field of computer
technology so as to ensure the safety of dataand its retrieval, when required by criminal
justice officers.
C. External Influences in the
Criminal Justice System
1. Difficulties/Problems
Most of the developing countries haveremained under the colonial yoke. The
colonial rulers had designed the criminal
justice system to ensure their rule over the
population. The justice/rights of citizens
were secondary to their predominant desire
to rule. The political authorities in thedeveloping countries inherited that legacy
but political institutions being nascent256

were not strong enough to put the systemon its right track, i.e. ensuring the rule oflaw and democratic control of the criminal
justice system. Instead they tried to gain
control over criminal justice officers witha view to perpetuate their rule. Thus
criminal justice officers were made to act
as servants of the political executives
rather than as custodians of the rule of law.
This has bred corruption in the system andcreated a gap between the criminal justiceofficers and the public in general, resulting
in loss of support/cooperation from thecitizens.
2. Countermeasures/Solutions
Criminal justice officers should be
provided operational autonomy byinstitutional arrangements, so as toinsulate them from external interference.
In Japan, operational autonomy of thepolice is ensured by the Public Safety
Commission, where members ofcommission (five in number, not more than
two from the same party) are selected by
the Prime Minister with approval of bothhouses of Parliament. They have a fixed
tenure and can only be removed by thePrime Minister with consent of both thehouses of Parliament. This institution
appoints the Commissioner General of
Police, with approval of the Prime Minister,and also supervises the working of the
National Police Agency.
The concept of accountability of officers,
both external and internal, should be
strengthened. Review of executive actions,by having the office of Ombudsman, will
provide citizens a forum for redress of theirgrievances. This will restore publicconfidence and also help earn theircooperation in combating crime.
D. Lack of Cooperation by Victims
to Criminal Justice Officers
1. Difficulties/Problems
Business enterprises are reluctant toreport crime committed against them to the110TH INTERNATIONAL TRAINING COURSEREPORTS OF THE COURSE
police for fear of negative businessrepercussions. Employees of theseorganizations are not ready to report theircolleagues/seniors. Further, corruption in
the criminal justice system of developing
countries erodes public confidence in thesystem. Witnesses will not come forward
to depose as the inquiries by investigating
agencies take a long time and protracted
trials further tax their time and money.
High rates of acquittal in developing
countries further dampens the enthusiasmof plaintiffs and witnesses.
2. Countermeasures/Solutions
Close co-operation between government
and industry will help in building theconfidence of entrepreneurs in the criminal
justice system. Better training of officers
and operational autonomy will bringprofessionalism to criminal justice officers
and earn them the confidence of the public.
E. Poor Coordination Among
Various Agencies
1. Difficulties/Problems
It has been observed that at many times,
regulatory agencies like the Central Bank,
Corporate Law Authority, Income Tax
Bureau and other financial bodies detectfraud/crimes but they do not pass on thisinformation promptly to investigation
agencies, resulting in destruction ofevidence and losing material witnesses. At
times, investigating officers hardly
communicate with prosecutors during theinvestigation and prosecutors only learn
about cases when the file is submitted tothem. This can be detrimental to thesuccessful prosecution of offenders.
2. Countermeasures/Solutions
Common training courses consisting of
officers from various fields will promote
understanding among various organs of
the State. In Japan, various kinds oftraining courses, conferences and otherinter-action activities are organized toprovide police officers, public prosecutors,
national tax administration officers andofficers of other agencies to promote
understanding of the activities of various
agencies and to improve technicalknowledge in other fields. Such interactions also help to establish personal
contact points in the event of actual
investigation, and promote better
coordination for the future among different
organizations.
F Search and Seizure of Digital
Data
1. Difficulties/Problems
Collection of digital data from computersposes problems to investigators, as thecomputers are not just storage mediums
but are performing multiple functions inan organization and hold large amounts ofdata. The exact location of data in thecomputer system may not be known. Data
may be stored in the server, hard drive,
diskette or paper printouts. Data, at times,
may be mingled with other irrelevant
information. Courts in certain jurisdictions
require that investigators should intimate
the exact location of data for issuing searchand seizure warrants. Further, the seizureof entire mediums/systems containing
evidence could affect the interests of others
and may cause obstruction to legitimate
business. Selective retrieval of data may
damage the information contained in thecomputer system. Problems can further becompounded where cross-border searches
may be involved in the future.
2. Countermeasures/Solutions
To ensure proper search and seizure ofdata, investigation agencies may be staffedwith computer experts for identification/
safety of data. Courts should flexiblyinterpret the principle of particularity ofdata when issuing search and seizure
warrants. Criminal procedure laws should
also permit investigating authorities tosearch computer systems and seize data

257

RESOURCE MATERIAL SERIES No. 55
under similar conditions as in the
traditional powers of search and seizure.
Computer generated copies may be madeadmissible as evidence in special
circumstances.
Specific obligations should be imposedon service providers, who offer
telecommunications services to the public
either through public or private networks,
to provide information to identify the user,when so ordered by the competent
investigating authorities. International
agreements should be negotiated as to how,when and to what extent, search andseizure should be permitted. Developmentof mutual legal assistance treaties may be
encouraged.
VIII. CONCLUSION
Economic crime is a complex
phenomenon acquiring greater significancein this global era. Economic offenders do
not act on the impulse of the moment,
rather they carefully plan their crime andexecute it in a manner so as to leave no
trace. Present day technology has provided
the opportunity to act transnationally withease. It is imperative that governments,
over the world work in close cooperation
by entering into formal/informal assistancearrangements. Regulatory agencies may
be strengthened to play a proactive role incombating such crime. It is important toenhance their investigative capacities,
facilitate coordination of their tasks andencourage cooperation amongst them.
Awareness of the problem in itself is only
part of the solution.

258

110TH INTERNATIONAL TRAINING COURSEREPORTS OF THE COURSEGROUP 3
ECONOMIC CRIME AGAINST CONSUMERS AND INVESTORS
Chairperson
Co-Chairperson
Rapporteur
Co-Rapporteur
Members

Advisers

Mr. Wilfredo Vizon Lapitan
Mr. Hiroshi Narikawa
Mr. Torsak Buranaruangroj
Ms. Kiyoko Yokota
Mr. Md. Mahfuzur Rahman
Mr. Burama Dibba
Mr. Akihide Nakamura
Mr. Shuji Ohta
Mr. Choi Joon-Weon
Professor Chikara Satoh
Professor Kayo Konagai

I. INTRODUCTION
The group consisted of nine members
from all pillars of the criminal justicesystem: one police officer (Gambia), threeprosecutors (Japan, Korea and Thailand),three from the judicial branch (Bangladesh,
Japan and the Philippines), one corrections
specialist (Japan) and one rehabilitation
official (Japan). This group workshop
focused on frauds, cartels, and securities
manipulation and insider trading. These
crimes principally involve an individual ororganization skilled or knowledgeable inbusiness, taking advantage of theignorance or gullibility of consumers andinvestors in business transactions throughfraud, conspiracy, undue advantage,
manipulation, or other deceits. The
complex and sophisticated methods withwhich these crimes are being committed
pose serious problems for the criminal
justice system which require moreadvanced and appropriate
countermeasures than the traditional ones.
This study aims to (1) focus on andanalyze actual situations, (2) identify the
problems confronting the pillars of thecriminal justice system, especially in theinvestigation, prosecution and trial stages,(Philippines)(Japan)(Thailand)(Japan)(Bangladesh)(Gambia)(Japan)(Japan)(Republic of Korea)(UNAFEI)(UNAFEI)and (3) propose countermeasures that willaddress such issues, not only in the
countries represented by the group
workshop members but likewise in allparticipating countries in this 110 thInternational Training Course. For thispurpose, the group members haveconducted this study on crimes against
consumers and investors, through surveys,
interviews, examination of the individual
country reports, experts’ lectures andpapers, and library and Internet research.
II. NATURE OF CRIMES UNDERSTUDY
The group agreed to analyze the natureof the crimes under study as to the:(i) Mode of Commission: Crimes against
consumers and investors are usuallycommitted through non-violentmeans. No force or intimidation is
employed. Generally, these crimes arecommitted by means of fraud:
through deception, concealment,
manipulation, and unjust advantage.
Sometimes the organization orbusiness enterprise may appear to belegitimate but would nevertheless be
exposed eventually as illicit or fake,259

RESOURCE MATERIAL SERIES No. 55
only after the damage had become
serious and widespread.
(ii) Offender: The offender, which may be
a person, persons or organization,
usually occupies a high status or is
i n f l u e n t i a l o r w e a l t h y. T h e ycapitalize on their specialized
knowledge, skill or high position or
influence in society or connection
with politicians or businessmen.
They generally employ fraud andother deceits.
(iii)Victim: The victims, usually in large
number, belong to the common massof people like housewives, employees,
senior citizens, etc who are gullible
or ignorant about businessprocedures and/or transactions. The
victims may also be motivated bygreed to make fast money with theleast or no effort at all.
(iv)Impact or Damage: These crimes
cause damage detrimental to society,directly or indirectly. The individualloss may be small but the total
damage to the various victims isgreat.
For the purpose of discussion, the Groupdecided to classify the assigned topics tothree major categories with correspondingclassifications and sub-classifications asfollows:
A. Fraud against Consumers andInvestors(1) Large Scale Fraud(a) High Interest Investment Fraud(b) Venture Capital Fraud(c) Advance Fee Fraud(d) Commodities Future Fraud(e) Membership Fraud(f) Fraud in Insolvent Stock Sale, and(g) Misrepresentation in Advertisement(2) Pyramid Fraud

260(a) Pyramid Investment Scheme and(b) Pyramid (Multi-Level Sale) Fraud(3) C o m m o d i t y F r a u d t h r o u g hTelecommunication / Computer
Networks
B. Unjust Enrichment through Unfair
Price Fixing of Commodities (Cartel)
C. Illicit Manipulation of Stock Prices
and Insider Trading
III. ACTUAL SITUATION OF
CRIMES DISCUSSED
The group discussion on the actual
situation of the crimes under study was notconfined to the members’ individual
country experiences, but included those of
the other participants’ countries as well.
Under the three categories of fraud, cartel/monopoly, and stock manipulation, thegroup discussed specific cases andexamples detailing the modus operandi
used by the offenders. Where data isavailable, it has been cited for better
illustration.
A. Fraud against Consumers andInvestors
1. Large Scale Frauda) High Interest Investment Fraud
In this type of fraud, the criminals
deceive the general public of money by false
stories. The offender’s modus operandi is
to ask the prospective victims for a loan ormoney deposit and lure the latter with apromise of a high interest return at somefuture time. This type of fraud is becoming
serious in Japan and Korea. In Japan, thisfraudulent scheme is increasing as a resultof the low interest rates. In 1996, there
were 12 cases of high interest investment
fraud in Japan where 6,000 people suffereda loss of around 45.5 billion yen and 48
offenders were arrested. In 1997, around2,650 people similarly suffered a loss ofover 89 billion yen in a scheme called110TH INTERNATIONAL TRAINING COURSEREPORTS OF THE COURSE“Orange Mutual-Aid Association.”
A variation of high interest investment
schemes, commonly found in Thailand, iscalled a ‘chit fund’. A chit fund, or rotating
credit as it is otherwise called, is one of themost common means of fund raising amongindividuals and small business enterprises.
It is, in general, not illegal unless fraud is
involved. The operator in this scheme
promises a high interest return for loans
borrowed from the general public. Suchinterest rate return is promised despite thefraudster ’s knowledge that his/herbusiness cannot yield sufficient profits tomake such payment, or otherwise suchinterest payment is to be made throughloans from new members. This chit fundwill ultimately fail and the victims will
suffer when no more new members can be
recruited or there is a tight cash supply inthe money market.
Before 1984, there was a scheme in
Thailand called ‘oil share’ which promised
to give lenders and investors 72% interest
per year in return for deposits. It
accumulated an aggregate fund of ten
billion baht from the general public. In
1984, a tight cash supply in the money
market rendered the operator unable topay such an interest rate. The oil sharechit fund scheme collapsed in 1985 and theprincipal operator was found guilty of theoffense of contracting loans tantamount topublic cheating and fraud under theEmergency Decree on Loans Amounting to
Public Cheating and Fraud. However, thefraudsters had subsequently developed
other schemes, such as membership fraudand commodity future fraud, to circumventthe law, thus creating new problems for law
enforcers.
b) Venture Capital Fraud
Venture capital fraud is very similar tohigh interest investment fraud. However,venture capital fraud has a special featurein that the fraudsters concoct a story about
venture capital business. Usually theoffenders lure their prospective victims
with a promise of huge profits upon the
success of the business undertaking.
However, such a story is totally false
because the fraudsters really have no plan
to run their promised business at all. Thisventure capital fraud is increasing in
Bangladesh, Japan and Korea. In 1997 in
Japan, a loss of around 35 billion yen was
sustained by about 12,000 victims in the
KKC [Keizai Kakumei Club (Economic
Revolutionary Club)] case; a large-scaleventure capital fraud, where the head of
the KKC made a false story that the new
business would certainly succeed and makea lot of profit.
c) Advance Fee Fraud
The modus operandi of this fraudulent
scheme, which originated in Nigeria, is forthe fraudsters to inform the prospective
victims in another country, through lettersor faxes that the former are in possessionof, about a huge amount of money which
will be made available to the latter upon
payment of some advance fees. However,upon collection of such fees from theunsuspecting victims, the fraudsters
thereafter vanish into thin air. This typeof fraud is becoming serious in Gambia,
Japan and South Africa. It is also
spreading to Canada and the UnitedStates.
In Gambia, the advance fee fraud
scheme is structured to look as believableas possible. The fraudsters usually target
a company or a person (the victim) outside
Gambia, either by fax or mail, made to lookofficial with appropriate government seals,
stamps and signatures. They propose totransfer a huge amount of money or overbudget money, usually in American dollars,to the account of the victim. They promise
the victim a sizable percentage as acommission, sometimes between 30% and261

RESOURCE MATERIAL SERIES No. 55
35% of the money to be transferred, forusing that person’s bank account. To effectthe transfer of the money, the fraudsters
will ask the victim to forward a variety ofdata and blank forms like telephone andfax numbers, duly signed blank company
letter heads, blank invoices and especiallybank account details. Upon receipt of suchinformation, the offenders will ask thevictim to deposit money into a specifiedbank account to cover the expenses of thetransfer including money to somegovernment officials because of the large
amount of money. Once the fee is paid, they
will come up with another problem that
requires immediate payment by the victim.
Each problem is supported by official
documentation. This fraudulent scheme
may last as long as the victim stays gullibleor the victim desperately desires to recoup
losses. At some point during the fraud, thefraudsters will invite the victim to visit
them and if the victim does, they will takethe documents and force the victim to pay
more money by threatening him withphysical harm or even death.

transactions were victimized by thisfraudulent scheme. In 1994, about 3,600
people suffered a loss of over 9.1 billion yen,while 16 offenders were arrested in thiscommodities futures fraud. In somecountries, the lack of government
regulation also contributes to theoccurrence of commodities futures fraud.
This type of fraud has started to take root
in Bangladesh and Thailand.

As this type of fraud has a transnational
character, considering that in most cases
the offenders and the victims are situatedin different countries, law enforcers face
not only local investigation difficulties, butissues of jurisdiction and mutual
cooperation as well. Variations of the
Nigerian advance fee fraud have evolved.

In Japan, membership fraud cases were
often reported during the economic boom.
However, there has been a decreasing trend
in recent years as a result of the Japanese
economic downturn. In the Philippines,
variations of membership schemes had
been detected, such as membership in clubs
for time sharing of apartments orcondominiums or resort facilities, which do
not exist in reality, and fraudulent raffles
wherein facilities or services are offered as
prizes to unsuspecting individuals who
eventually end up paying membership fees
but do not get the promised prizes.

d) Commodities Futures Fraud
Generally, in commodities futures fraud
the offenders collect money from thevictims by promising the individual
investors huge profits through commodities
futures transactions they pretend to beengaged in. Commodities futurestransactions, being a business innovation,
has provided new opportunity for
fraudsters to victimize gullible customers.
In Japan, thousands of people who are notwell aware of commodities futures

262e) Membership Fraud
The felons in membership fraud usuallylure the general public into joining a clubor association requiring a membership fee,with the promise of entitlement to theprivilege of using club or association
facilities on a limited basis, or otherwise
obtain some discount on the cost of services.
However, as it will eventually turn out, themembers will not be able to take advantageof the promised privilege or service since
the fraudsters rarely provide such facilities
and services. This type of fraud exists in
India, Japan, Kenya, Korea, thePhilippines and Thailand.

In Thailand, one membership fraud caseis on trial in the criminal court. The
operator, Blissher International Co.,
advertised to the general public that it
operated a time-share business whereby,
through payment of a membership fee, the110TH INTERNATIONAL TRAINING COURSEREPORTS OF THE COURSE
members would be able to use
accommodation facilities without cost, andthat any member able to bring in newmembers would receive a commission
therefrom. At the end of the day, thecompany received a sum of 826, 266,000
baht from a large number of people who
never got any benefit from the promised
accommodation facilities.
f)

Fraud in Insolvent Stock Sale
In Korea, several nearly bankrupt
companies conspired with certified public
accountants to make it appear on official
documents that the former were in goodfinancial condition. These companies,
therefore, were able to sell their worthlessstocks to the general public who, in the end,
suffered the loss. This scheme involved
fraud in insolvent stock sale. In 1992, themanaging directors of 15 companies andfive certified public accountants wereprosecuted and convicted for such type offraud.
In Bangladesh, one decaying company
offered 135,000 shares in 1994. Out of
those shares, only 31,590 were subscribedby the shareholders and the sponsors ofthat company accepted the rest. Investingnothing, that company again offered
540,000 shares in the money market but
the shareholders subscribed only 79,570
shares in the same year. In 1996, with thehelp of stockbrokers, that company wasable to transact all of their shares without
remittance to the shareholders. The
Security and Exchange Commission (SEC)
initiated a case against that company inApril 1997, which is now under trial.
g) Misrepresentation in Advertisement
False or exaggerated advertising(misrepresentation in advertising) isdefined as an act which defrauds
consumers by means of indicating thecontents of goods and services, price,amount of supplier or competitor against

the real fact. It is difficult for consumers
to file a complaint against the fraudster
because of the low possibility ofcompensation and the vagueness of themisrepresentation. In Korea, false or
exaggerated advertising is increasing. The
fraud patterns of misrepresentation
frequently occurring in Korea are as
follows:(i) Misrepresentation of Price: This typeof fraud is often committed in thecourse of special sale periods. Some
department stores deceived
consumers by attaching a false pricetag to merchandise in order to makethe consumers believe that the stores
were selling the goods at a special
price. For example, the department
stores attached 400,000 won price tag
to the goods which they offered to sell
at a special price of 300,000 won, as
if they really offered a discount of
100,000 won on the original. In 1989,
the sales managers of six department
stores were prosecuted and foundguilty of fraudulent sale throughmisrepresentation of price.
(ii) Misrepresentation of Materials:
Falsely indicating synthetic fabric asnatural fabric, belongs to the categoryof the misrepresentation of materialsof goods.
(iii) Exaggerated Advertisement: This
type is in some sense acceptable incommercial transactions. However,according to the precedentestablished by the Supreme Court of
Korea, false information on concrete
facts related to importantcomponents of goods in transaction,
against good faith, constitutes fraud.
2. Pyramid Frauda) Pyramid Investment Scheme
Under this scheme, the general public
is induced to invest a fixed amount ofmoney with a prospect of high return byrecruiting new members through whom

263

RESOURCE MATERIAL SERIES No. 55that can earn percentage commissions. The
process is repeated as the pyramid expands
its base, as new members are recruited. No
product is involved in this type of fraud.
People invest their money in such a schemewith the prospect of earning enormous
profits because each member is expected
to recruit additional members and earn acommission in the process. The more
additional members one recruits, thegreater the profit a member makes.
However, this fraudulent pyramid
investment scheme is, of course, notsustainable indefinitely because of thelimited number of the population. The
people, particularly the bottom level
investors, eventually suffer a loss whererecruitment of new members has become
impossible. In Japan, the pyramid
investment scheme, itself, is prohibited by
the Law on Prevention of Unlimited Chain
Mutual Association (1978). Prior to thislaw, pyramid investment schemes weredetected in Japan. After the above law wasenacted, such a scheme has rarely occurred.
Recently, however, the so-called Pentagono
pyramid investment scheme, which is oftransnational character, has been detected
in Japan. Pentagono has also made its
presence felt in Bangladesh and thePhilippines where the scheme is not per seillegal, without a showing of fraud. This
scheme originated in Italy where thesupposed principals or masterminds arelocated; circumstances which create
jurisdictional problems for investigatorsand prosecutors.
b) Pyramid (Multi-Level) Sale Schemes
Pyramid (multi level) sale schemes area little bit different from pyramid
investment schemes. The operator makes
such a scheme similar to an ordinary sales
transaction where a commodity or service
is offered and purchased. In most cases,
the product or service is of inferior quality.
Nevertheless, the general public is still
induced to buy the product at a high price264

mainly because the fraudsters provide asort of guarantee that they will make a lotof profit (or commission) if they can recruit
more members or subscribers. In Japan,
the pyramid sale scheme is not, in itself,
illegal and does not correspond to fraud.
However, if the intention to defraud on thepart of the offender is demonstrated, theprosecution will be based on the Penal
Code. Otherwise, the applicable law is the
Door-to-Door Sales Law (of 1976), as
amended, which prohibits concealment ofmaterial facts in a transaction coupled withinducement and receipt of payment ofmembership fees and the price ofcommodities or services. Like the pyramid
investment scheme, the chance of successfor every member is impossible because of
the limited number of the population.
In Japan, about 0.6 million people
suffered a loss of over 126.4 billion yen, and131 offenders were arrested in 1994. In
1995, as a result of continuous efforts tocrack down on this fraudulent practice, thenumber of pyramid sale frauds has been
decreasing and only 4 cases where 27
people were arrested for the violation of the
Door-to-Door Sales Law have beenrecorded.
3. Fraud through Computer Networks/
Telecommunications
Advances in computer andtelecommunication technology brought
forth many advantages, but the same time
spawned disadvantages. From the late1980’s, inexpensive personal computerswere distributed for sale to the public andb e c a m e w i d e l y p o p u l a r. L i k e w i s e ,communication technology developments
enabled personal computers to beconnected to each other through networks.
As a result, average people, as well as
experts, had the opportunity to takeadvantage of computer technology which
afforded easy access to information.

110TH INTERNATIONAL TRAINING COURSEREPORTS OF THE COURSE
As a result of this information
technology development, fraud throughcomputer networks has increased. In
Korea the number of computer fraud cases
increased to 123 in March 1997. The
criminals often disguise themselves as a
famous company by using an Internet
address and defraud the general publicthrough Internet or local Internet service
companies such as “Hitel” and “Naunurii”.
Since computer networks allow the
fraudsters to reach a large number ofunspecified customers, they need lessmoney from each individual customer thanthey do in cases where no computer
network is involved. This in turn makes
the individual victim more reluctant toreport or cooperate with law enforcement
officials, as the loss suffered is small.
In Japan, this type of computer network
fraud is increasing. The fraudsters
advertise on the home page of the Internetthat they sell certain commodities. The
customers make purchase orders of thesecommodities via e-mail. In 1996, 1,200
people were victimized; they suffered a lossof 11 million yen where the offender madefalse advertisements for the sale of audio
equipment on a bulletin board through a
computer network. In another case, one
junior high school student committed fraud
through the computer network. He opened
his home page on the Internet andadvertised that he was selling medicine, a
tranquilizer, but he in fact had no such
medicine. He was able to defraud his
customers to send their payments to his
fictitious account through the Internet.
The student victimized 60 people whosustained a total loss of 1,200,000 yen.
B. Unjust Enrichment throughUnfair Price Fixing ofCommodities (Cartels)
Cartels are agreements among
competitors that may result in the settingof higher prices, less efficient productions,fewer innovations and less benefit to theultimate consumers. Anti-monopoly or
anti-trust legislation seeks to prohibit
cartels, which are agreements among
competitors, such as price fixing or
limitations on production designed toeliminate or restrict competition among
themselves, as these inflict damage on
consumers and the national economy. Antitrust laws exist in Algeria, Brazil, Japan,
Korea, Pakistan, the Philippines, South
Africa and Thailand. In Japan, cartels areclassified by object, such as restriction via
price cartels, volume cartels, market
allocation cartels, and bid riggings.
Likewise, the Japanese Anti-monopoly Act
has special provisions to prohibit
unreasonable restraint of trade formed bytrade associations and cartels between
domestic and foreign firms (international
cartels)1. Monopoly is not by itself illegal,
but “monopolizing” is. In some countries,
administrative bodies play an active partin regulating cartels or monopolies,
through sanctions like cancellation ofbusiness license, suspension, andimposition of fines and surcharges. In
Japan, for instance, the Fair Trade
Commission investigates about 200 cases
per year under the Anti-Monopoly Law. Of
these cases, only one or two are indicted.
In 1997, in a case involving a cartel of 26
companies concerning an order from theTokyo Metropolitan Government for water
service meters, the defendants were
imposing a surcharge, the total amounting
to 385 million yen.
In Korea, collaborative acts like cartels
are subject to the most severe
punishments, among all the different typesof unfair business practices. Even in theabsence of clear agreements amongcorporations, when they engage in acts that
substantially restrain competition, they are
deemed to be engaging in undue
collaborative acts, the most common ofwhich is predetermination of price. In the265

RESOURCE MATERIAL SERIES No. 55
Philippines, it has been reported that theoil cartel of the three big oil companies had
been overpricing products by 14 billion
pesos per year.2
C. Illegal Manipulation of Stock
Prices and Insider Trading
The essence of illegal manipulation ofstock prices is fraudulent conspiracy toaffect either the upward or downward
movements of the price of shares or othersecurities, or commodities sold on theexchange. On the other hand, insider
trading consists of engaging in purchasing
and selling securities by using information
not available to the general public.
Securities fraud undermines the publictrust in the stock market, where theinvesting public is supposed to have an
equal opportunity of profiting fromsecurities transactions. Such erosion ofconfidence in the stock market reduces
capital investment necessary to financebusiness needs and thereby affects the
economic stability of the country. Moreover,the international standing and reputationof such countries will also suffer. There is,therefore, an imperative need to preventor minimize the occurrence of anomaloustransactions in the securities and exchange
market.
In Bangladesh, during the period from
October to November 1996, a handful ofstockbrokers and some international
securities swindlers and their accomplices
filched millions of dollars by fraudulent
manipulation of the share market.
Regarding the scam, the Security andExchange Commission conductedinvestigation into the matter andsubsequently filed several cases against
many securities companies, their directors
and brokers, for the alleged commission of
offenses under the Security and Exchange
Commission Ordinance 1963. Since then,17 cases have been pending in the courts
because of delaying tactics by the266

defendants, and use of political influence.
In Korea, the Security Transaction Law(1962) prohibits the manipulation of stock
prices. In 1977, the Security Supervisory
Board (SSB) was established to perform
comprehensive surveillance of the security
market.
The problem of stock
manipulation had become very serious inrecent years especially with regard to thestock of small but promising companies.
From January to July 1998, theprosecution has indicted more than fivecases of stock manipulation and these cases
are currently on trial in the Criminal
Court. For example, in the Daehan FabricCompany case where the defendants were
found guilty of stock manipulation in the
district court, it was established that thefollowing methods were used to effectmanipulation: (i) increasing the stock priceby purchase order at the highest pricepossible; (ii) placing purchase and saleorders intentionally at the same time toshow that the transactions of Daehan stock
were in a prosperous condition; and (iii)
disseminating false information such as
merger, acquisition and new development
to increase the price of Daehan stock. Other
co-conspirators, the so-called fundmanagers, purchased certain amounts ofthe floating supply of Daehan stock tomaintain the inflated price for aconsiderable period of time during which
the defendants would sell their holdings ofDaehan stock in the market to reap the
benefit of manipulation. The fund manager
in turn received a high commission.
The number of insider trading cases has
been rapidly increasing. In 1997, theSecurity Supervisory Board (SSB) detected
12 cases, 11 of which were settled
administratively. The SSB filed only one
accusation on insider trading with theprosecutor’s office. Currently this case ison trial in the criminal court.

110TH INTERNATIONAL TRAINING COURSEREPORTS OF THE COURSE
In Japan, the securities business isregulated under the Securities Exchange
Law. In 1992, the Securities and Exchange
Surveillance Commission (SESC) wasestablished as an independent agency
charged with supervising the securities
dealings. From 1981 to 1994, there were
five stock manipulation cases, four of which
occurred before the establishment of the
SESC. Because of effective administrative
supervision after the establishment of the
SESC, only the case of “Nihon Unisys
Stock” was prosecuted. In this case, twooffenders were found guilty of stock
manipulation. One of them was sentenced
to two and a half years imprisonment withlabor (with suspension for 4 years) and theother was sentenced to 2 years
imprisonment with labor (with suspension
for 3 years).

Public Co. Ltd., Rattana Real Estate Public
Co. Ltd, and Siam City Bank. The culpritsin these cases manipulated the stock pricesof these companies by the so-called “Pool
Operation” scheme whereby they colluded
with others to conceal their collective
purchase or sale of the stock. For instance,from January to October, 1992 (before
manipulation), the total volume of tradingwas 1.7 million shares a day. In October ofthe same year, during which the defendants
manipulated the market for BBC stock
through their concerted purchases, thetotal volume of trading was 14.15 million
shares a day and the price was 40.75 bahton October 29, 1992.

Six cases of insider trading were
investigated from 1994 to 1998. Five cases
were prosecuted and one was to beprosecuted later. In fact, the offenders inthese cases were found guilty: one offender
was penalized with 6 month imprisonment
with labor (with suspension for 3 years) and38 others (including juridical persons) werefined. However, the defendants in two of
the five prosecuted cases have appealed thejudgment of the District Court.

The investigation revealed the existenceof several connections among defendants
such as “personal connection”, “financial
connection”, and other connections like theuse of same mailing address in securities
trading, some trading accounts opened by
the suggestions of others in the group, andtrading orders effected by others in thegroup. Convinced that defendants
collectively manipulated the stock of the
Bangkok Bank of Commerce, the Office ofAttorney General thus instituted criminal
prosecution. However, the court dismissed
the case for insufficiency of proof ofcomplicity among the defendants.

In Thailand, securities trading isregulated under the Securities Exchange
Act (1992). Since 1992, there have been
seven stock manipulation cases. Two ofthem were administratively settled and afine totaling one million baht was imposed.
Apart from these two relatively small-scale
manipulation cases, the other five werelarge in terms of the number of offenders,the amount of money used to manipulate
the stock price, and the number ofadversely affected investors. Each of thesecases involved the stock of the Bangkok
Bank of Commerce, Krisada Mahanakorn
Public Co. Ltd., First City Investment

Relying on the BBC decision, the Officeof the Attorney General subsequently
ordered no prosecution in the cases of First
City Investment and Rattana Real Estate.
However, criminal prosecutions have been
filed with regard to the case of Krisada
Makanakorn and Siam City Bank, andthese cases are presently on trial in thecriminal court. The SEC had so far
successfully dealt with insider trading
problems. Seven cases were investigatedand later settled in administrative
proceedings where the offenders paid a fineto the Commission. In these cases, theCommission imposed a fine totaling

267

RESOURCE MATERIAL SERIES No. 55
66,436,584.56 baht. No case has ever been
criminally investigated, prosecuted ortried.
IV. PROBLEMS RELATING TO
CRIMES UNDER STUDY
After deliberating on the actual situationof the crimes in the countries of all theTraining Course participants, the Group
Workshop members agreed to identify anddiscuss the problems that confronted thesecountries. First, the group focused thediscussion on the common problems in theinvestigation, prosecution, and trial stages.
Thereafter, the group deliberated on the
problems commonly found at every stageof the criminal proceedings.
A. Common Problems
1. Investigationa) Reluctance of the Victims to Report,
Resulting in Difficulty in Detection and
Delay of Investigation
With regard particularly to fraud cases,
the victims are generally reluctant tocooperate with the law enforcement
agencies. This problem arises on accountof disadvantages that the victims face inthe prosecution of these frauds. In mostcases, the victims are numerous and, while
the total amount of the damage may belarge, the individual damage is small. The
time, effort and expense (official andincidental) involved in filing suit andpursuing the case in court far exceeds thedamage suffered by individual victims.
Therefore, there is very little incentive forthe victims to report, or participate in, theinvestigation of fraud. This lack of interest
and/or cooperation of the victims results indifficulty in detection and delay ofinvestigation.
In the case of cartels, illegal stock
manipulation and insider trading, thevictim’s report of the crime is helpful in thedetection and investigation stages, but is268

dispensable in the prosecution thereof. In
some countries like Bangladesh, Japan,
Korea, the Philippines and Thailand, theadministrative agencies supervising suchbusiness activities, like the Fair Trade
Commission and Securities Exchange
Commission, play a far greater role in theprevention, detection and investigation ofthese crimes.
b) Difficulty in Identification of the
Offence/ Offender (Mastermind)
There exists the general problem ofidentifying the offence and/or the offender,
especially the mastermind, due to thecomplex and sophisticated nature of theeconomic crimes under study. Unless the
specific statute makes the scheme itself
illegal, such as pyramid investment
schemes in Japan, it is not easy to identify
whether the intent to defraud, necessary
for an offense of fraud, exists. Many fraudcases appear to be merely civil in nature.
Nevertheless, the fraudulent scheme inmany cases is a combination of various
kinds of fraudulent techniques, thereby
making it difficult for law enforcers todetect whether a crime has beencommitted. In a pyramid scheme, the fraud
is usually discovered only at the bottom of
the pyramid where the immediate
contracting parties are involved, as in thecase of a buyer and seller. The realmastermind is too far up the ladder or
pyramid to be identified. The difficulty ismore marked where the transaction is
initiated and consummated not on a face
to face basis, but merely through anelectronic medium such as a computer
network or telecommunication system.
As for cartels, it is clearly difficult toestablish that the offenders have agreed to
fix the price of commodities. Even if theconsumers have filed the complaint, thelaw enforcers still have to determine
whether an agreement to such effect exists.
Likewise, the case of stock manipulation,

110TH INTERNATIONAL TRAINING COURSEREPORTS OF THE COURSE
where generally several people are
involved, presents similar difficulty. In
these cases, it is not exaggerated to say that
direct evidence of agreement is next to
impossible to obtain. Circumstantial
evidence, therefore, has to be carefully
analyzed. This analysis of circumstantial
evidence in most cases is very difficult andthere is a high possibility of disagreement
among law enforcement agencies.
c) Difficulty in Evidence Collection
Evidence collection poses a problem toinvestigating authorities as regards crimes
against consumers and investors.
Considering the nature and complexitiesof the crimes under consideration, theinvestigating officers, who are usually notfamiliar with and not specially trained for
economic crimes, face great difficulty incollecting evidence to be used in theprosecution of the offender. In fraud cases,
especially where a syndicate is involved,
the lack of cooperation of the victims andwitnesses (because of threat of reprisal)
makes it even more difficult forinvestigators to gather evidence. In caseof stock manipulation and insider trading,there may be a need for monitoring and/or
surveillance for several days or weeks,
aside from the great probability that
evidence may be in possession of third
persons, such as bankers or stockbrokers,
who may not be willing to cooperate withlaw enforcement officials in gathering orproviding all available evidence.
d) Statute of Limitations
The existence of statutes of limitations
in many jurisdictions is also a common
problem encountered in the investigation
stage. Crimes against consumers andinvestors are generally complicated due tothe fraudulent schemes employed by the
felons, and usually involve large numbersof victims. Given these facts, it is to be
expected that investigation would takemore time and effort. Because of theresulting delay in the detection of the crimeand in collecting evidence, as well as thereluctance or lack of interest andcooperation of victims and witnesses, theinvestigation of criminal complaints dragon for many years without reaching
resolution. Thus, the periods prescribedunder the Statute of Limitations may
expire even before the termination of theinvestigation stage. Both the time spentand efforts made by the investigating
authorities may go to waste.
2. Prosecution and Triala) Ineffective Coordination among theAdministrative, Investigating andProsecuting Agencies
The group agreed that successfulprosecution of large-scale fraudulent
schemes, cartels, and securities fraudrequires effective coordinated effort among
the administrative, investigating andprosecuting agencies, particularly in theinvestigation stage, because of the complex
and subtle nature, and modus operandi ofsuch illegal activities. Poor coordinationin the investigation stage frequently
jeopardizes the collection of evidence thatis of utmost importance in the cases. This
problem may be more severe in countries
where there is a complete separation
between investigation and prosecution
stages. Unless effective cooperation, suchas sharing of information and technicalknow-how among administrative,
investigating and prosecuting agencies inthe early stage of investigation, is strictly
observed, the prosecuting agencies in thesecountries hardly know about the case until
receiving the investigation report. Such alack of effective cooperation in theinvestigation process will adversely affectthe prosecution.
b) Failure of Witnesses to Testify or
Change of Testimonies
At the trial stage, the witnesses mayeither fail to testify or change their269

RESOURCE MATERIAL SERIES No. 55
testimonies. This negative attitude creates
serious problems since the successfulprosecution of the offender in a criminalcase depends principally upon thetestimony of the victims and other
witnesses. It is not uncommon that variouspressures and influences are made oncomplainants and/or witnesses todiscourage them from giving testimonies
in court. If the victims and/or the witnesses
fail to testify or change their testimony, thecase of the prosecution naturally crumbles
or fails.
c) Excessive Use of Delaying Tactics by the
DefenseThe defendants in the types of crimes
under study generally employs excessively
dilatory tactics, for they know that it is totheir great advantage if they can buy moretime in the investigation, prosecution andtrial of the cases against them. If the caseis delayed, the victim and witnesses usuallylose interest due to the increased time,effort and money expended. Where thecomplainant and the witnesses do notcooperate, the inevitable outcome is thedismissal of the case. Time is of utmost
importance since justice delayed is justicedenied.
d) Difficulty in Proving Guilt beyond
Reasonable Doubt
The perpetrators of the economic crimes
under scrutiny, being more intelligent and/or technically skilled, are able to cover theirillicit tracks through elaborate and complex
schemes. This makes it even more difficult
for law enforcement and prosecution
agencies, already burdened with therequired proof beyond reasonable doubt incriminal cases. This high standard ofevidence imposed on law enforcers andprosecutors works to the great advantageof the criminal offenders; who are alreadyseveral steps ahead of their adversaries inskill and techniques in the commission of
their nefarious activities. In general, it is270

difficult to prove the intent to defraud as,
in most large-scale fraud cases, theoffenders have the tendency to makeexcuses arguing that their business could
not otherwise be profitable to investors andthat the failure of their business resultsfrom normal business risks. Likewise, thestructure of the fraudulent scheme, likepyramid investments, makes it hard forlaw enforcers to determine the intent to
defraud on the part of the lower recruits.
The burden of proof being in the hands ofthe prosecutors, they are duty-bound toprove otherwise.
With regard to cartels, illegal stock
manipulation, and insider trading, such adifficulty stems from the clandestinenature of the offences. No one but theoffenders themselves know what is goingon in the cases. Both direct andcircumstantial witnesses are rare in suchcases. The prosecution thus has to rely
much on documentary evidence such as
daily securities trading, financial
statements, bank accounts and expert
opinions. Such documentary evidence byitself, without further analysis, does notshow the illegal nature of the transactions,thus making it even more difficult for theprosecution to prove the case.
4. Sentencinga) Too Lenient Punishment
Some of the participants observed thatthe imprisonment provided by law is toolenient. It is usually within the range ofsentence suspension as, for example, thetwo-year imprisonment for stock
manipulation and insider trading in
Thailand. Similarly, a maximum of three
years for both cartel and insider trading inJapan is also within the range of sentencesuspension. Furthermore in some cases,
the criminals receive only a suspended
sentence. For instance in Japan, six insider
trading cases from 1994 to 1998 wereprosecuted and one offender drew only 6

110TH INTERNATIONAL TRAINING COURSEREPORTS OF THE COURSE
months imprisonment with labor (withsuspension for three years) and 38 others
were only fined. In one stock manipulationcase, two offenders were prosecuted andconvicted; one of them was sentenced to two
and a half years imprisonment with labor(with suspension for 4 years) while theother was sentenced to two years
imprisonment with labor (with suspension
for 3 years). In terms of fine, the maximum
amount is fixed without regard to the loss
suffered by the public and the benefit theoffender derives.
Under thesecircumstances, the offender will be
motivated to take the risk in thecommission of the offense, if the expected
benefit is greater than the expected loss.
B. Problems Commonly Found in
Every Stage of Criminal
Proceeding
1. Shortage of Competent Personnel
The economic crimes involved in thisstudy are just a few of the many crimes
being dealt with by the entire criminal
justice system. More controversial andserious cases get more attention andresources than economic crimes against
investors and consumers. There are notenough personnel to tackle the fast growing
crimes under study. The large number ofvictims and witnesses involved, as well as
the complex nature of the crimes, requires
a great deal of manpower to deal with thecrimes in terms of monitoring, surveillance
or investigation, prosecution, and trial.
Therefore, adequate manpower needed forthe successful investigation, prosecution
and trial of the offenders should be
provided, maintained and augmented toaddress the problem of the fast growing
crimes of fraud monopolies and securities
trading.
2. Lack of Expertise Among Criminal
Justice Officials
Economic crimes have become moreelaborate and complex with advances inscience and technology. The criminal
justice officials’ capability to deal with thesetypes of crime against consumers andinvestors has lagged behind those of thecriminal offenders, who are more skilled
and knowledgeable in their nefarious
trade. Fraudulent schemes, cartels andstock manipulations have grown moreelaborate, complex and sophisticated.
Therefore, there is an urgent need to train
and equip criminal justice officials with therequisite expertise to effectively combat
these new types of crime.
3. Political Influence
Because of the high status and wellplaced political connections of the economic
crime offenders under study, politicalinfluence makes significant impact on theinvestigation, prosecution and evensentencing of those criminals. Felons who
have high learning/skills or influential
status in society usually commit crimes
against consumers and investors. In many
developing countries, politicians interferewith the investigation, prosecution andeven judicial stages of a the proceedings incases involving cartels, stock manipulationand fraudulent schemes of a transnational
character, wherein connections exist
between politicians and the offenders.
Fraudsters usually come from the ranks ofpeople who are close to high government
officials; big business cartels are in manycases benefactors of high-ranking
politicians who rely on them for financial
contributions during election campaigns;
while crimes involving fraud or securities
manipulation are committed by influential
corporations or stockbrokers who derive
protection from powerful politicians in
exchange for bribes. In third world
countries, politicians usually wield so much
power and influence that subordinate
bureaucrats, like law enforcers,
prosecutors and even judges, who dependon political patronage for their careeradvancement or destruction, in several

271

RESOURCE MATERIAL SERIES No. 55
cases yield to their mischievous wishes.
Because of this situation, the offenders
often escape punishment and continue withthe commission of these types of offences.
V. COUNTERMEASURES
The modern and sophisticated methods
and means with which economic crimes
against consumers and investors are beingcommitted has outpaced the pillars of thecriminal justice system, which have been
lagging behind in terms of competence,
manpower, logistics and skill, and technicalknowledge. Therefore, it is the obligationof every country in the international
community to find appropriate ways andmeans to respond to the challenge of
combating the emergence of these new
economic scourges. The group, after
exhaustive deliberations, reached aconsensus that the following
countermeasures must be adopted,
installed and enforced to appropriately
address the corresponding issues orproblems arising from the actual situationin the participating countries.
A. Educating Consumers andInvestors
In many instances, the general public
becomes the victim of fraudulent schemes,
including illegal stock manipulation andinsider trading, because of ignorance of theexistence and modus operandi of thesetypes of crimes. Promoting publicawareness is therefore geared toward thegoal of prevention. To achieve this end, aneffective channel of communication
between law enforcement agencies and thegeneral public must be established. For
example, in Japan, there is a program
called “Dial 110 for Fraudulent Commercial
Practices” which entertains complaints andprovides counseling to consumers throughtelephone calls. Mass media should also
play an active role in exposing the nature,operation and the impact of these crimes.
However, mass media must not directly or272

indirectly induce the general public to haveinterest in such fraudulent schemes. Facedwith this dilemma, ethical standards orregulations of association must be
established, emphasized, and strictly
observed. These countermeasures seeks toprevent the general public from being
defrauded and to encourage victims toreport cases to law enforcement agencies.
B. Enactment of Adequate Laws
The advent of modern technology has
created new benefits, but at the same time
has ushered in corresponding problems
that must be addressed accordingly.
Economic crimes are being committed withmore sophistication and complexity. The
law however, has not been updated in many
countries to keep up with the criminal
mind, which has always been a step aheadof the law and law enforcers. The group
recognized the need for adequate laws thatwould address the issues brought about by
the new methods or schemes employed byfraudsters that victimize a large numberof consumers and investors. For example,
laws may be enacted to criminalize certain
fraudulent schemes under specified
conditions, to provide for extraterritorial
jurisdiction and to provide for increased
penalties sufficient to deter or discourage
the commission of the crimes.
Furthermore, the conspiracy offense(where criminal liability can be imposed
upon only an agreement to commit, not theactual commission of, the crime) should beavailable in order to immobilize thecriminals quickly, thereby effectively
preventing the general public from being
defrauded, injured or victimized. Theselaws may also provide for modification of
the law on evidence, allowing the shiftingof certain burdens of proof to the accused.
Finally, to encourage the victims to testify
in court, they should be entitled toincreased allowances to cover official andincidental expenses for their appearance
in court proceedings.

110TH INTERNATIONAL TRAINING COURSEREPORTS OF THE COURSE
1. Criminalizing New Offenses/Crafting
Long-Arm Statutes
New technology always opens up newopportunities for criminals to victimize
consumers and investors. Where certain
frauds are exposed, the offenders think andemploy new ways or schemes to swindle
unsuspecting victims. Therefore, there isnecessity for enactment of new laws thatwould criminalize such fraudulent schemesor activities of certain businessestablishments. For instance, in thePhilippines, infringement of intellectual
property rights are now punishable withimprisonment and/or fine under certain
conditions. The pyramid schemes like thePentagono, which is per se not criminal, hasbeen criminalized in Japan. Moreover, socalled “long-arm statutes” like theComputer Misuse Act of Singapore, thatwould have extraterritorial reach, may beenacted to compliment bilateral or
multilateral agreements to effectively deal
with the growing transnational nature ofthese crimes.
2. Upgrading of Criminal Penalties
The gravity of the damage inflicted byeconomic crimes requires a corresponding
increase in the penalties in order to deteror minimize the commission of suchoffenses. In many countries, at present thelaws do not adequately address the
problem of appropriate punishment to be
imposed. The laws are outmoded andimpose penalties not commensurate to theseriousness of the offense. It is therefore
timely and proper to update these laws by
increasing the penalties imposed for
economic crime, which includes thoseunder study.
3. Increased Use of Measures to Deprive
Ill-gotten Benefits
Since the common motive of theeconomic crime under study is to gain
profit, one of the effective countermeasures
is to maximize the way in which such profit

deprivation can be effected. Private civil
enforcement is one such process. Its
purpose is to recover compensation fordamage done, whether by way of therestitution of the property deprived ofthrough illegal acts, or the value thereof.
However, if the damage done to a particular
plaintiff is less than the benefit derived
from the illegal act, private civil
enforcement does not rid the offender of all
such benefit. To forfeit such benefit fromthe offender, it is necessary that the classaction concept, under which a particular
plaintiff stands for all injured by the same
illegal act, must be recognized. Where thelaw requires the public prosecutor in acriminal suit to ask for restitution orcompensation for the victim, such a civil
enforcement will provide incentive to thevictim to cooperate more with law
enforcement as s/he is entitled to such
restitution or compensation. A view was
expressed that civil asset forfeiture isanother effective method to deprive illgotten benefit. Civil asset forfeiture isdifferent from its criminal counterpart inthat it is an “in rem” instead of “inpersonam” proceeding. This means that
asset forfeiture can be effected on the
preponderance basis of evidence, andwithout regard to the conviction of theoffender. It was opined that this system of
forfeiture, would allow law enforcement toproceed against white-collar criminals
more efficiently.
C. Augmentation and Training of
Criminal Justice Officials
Except in highly developed countries,
economic crimes do not get the sameattention and resources as being focusedon crimes against persons. In mostcountries this is due to the lack ofawareness about the serious impact of suchoffences on society. The group members
agreed that the time is ripe to give serious
thought and attention to addressing theneed for more resources and adequate

273

RESOURCE MATERIAL SERIES No. 55
training in accounting, auditing, andcomputer techniques for criminal justiceofficials involved in the investigation,prosecution and trial of perpetrators ofcrimes against consumers and investors.
Specialized training of all criminal justiceofficials involved in consumer andinvestors’ crimes would address the
problems of difficulty in identification of theoffence/offender, evidence collection,shortage of competent personnel, and lackof expertise.
D. Effective Coordination among
the Administrative, Investigating
and Prosecuting Agencies
As collaborative investigation among theadministrative, investigating andprosecuting agencies is required tosuccessfully prosecute large-scalefraudulent schemes, cartels and securities
fraud; it is necessary that a system tofacilitate such cooperation be established.
Such collaboration will guarantee that theexpertise of all law enforcement agencies
will be optimally utilized in theinvestigation, that promising avenues ofinvestigation are not overlooked, thatstrategies for prosecution are fully
exploited and that legal pitfalls are
avoided.3
E. Creation of Specialized
Investigating Body
The successful prosecution of economic
crime depends largely on the investigation
stage of the proceedings. Politicalinterference in this early stage ofinvestigation, during which evidence
gathering is conducted, plays a crucial rolein the outcome of the case. Some of theparticipants expressed the view that a
specialized independent investigating bodymust be set up to deal with the politicalinterference problem in economic crimes,
including those involving consumers andinvestors. This specialized investigating
body must be truly independent, meaning

274

free from the clutches of politicians or othertypes of influence or pressure. The
investigators must have fixed and secure
tenure in accordance with the laws ofindividual countries.
F. Use of Special Investigative
Techniques
Recognizing the growing sophisticationof the schemes and technology employed
by individuals or crime syndicates in thecommission of the economic crimes understudy, the group fully agreed that law
enforcement and investigating agencies
must have the minimum capability andskills to “outfox the foxes”, so to speak.
Regular and sustained training must be
implemented to attain personnel
preparedness, proficiency and efficiency inthe fight against these crimes. Special
investigative techniques may be employed
to solve the problem of beating theprescriptive periods under the statutes oflimitation. For example, law enforcement
should be authorized to use wire-tappingand electronic eavesdropping as a means
to detect and investigate economic crimes,
and the evidence discovered therefrom
should also be made admissible in court.
However, because of its intrusive nature,such practices in some countries are inviolation of the privacy rights of theindividual. With that in mind, the groupagreed that such electronic surveillanceshould be available only with judicial
approval and in limited circumstanceswhere the economic crime under study iscommitted by an organization. Moreover,undercover operations, traditionally used
to infiltrate traditional organized crimegroups, is now being used to fight economic
fraudsters who operate under the veil ofsecrecy. For instance, in securities
agencies, brokers are sometimes bribed byother competing companies, especially ininitial public offerings, to engage in insider
trading or stock manipulation activities.
Undercover operations have a deterrent

110TH INTERNATIONAL TRAINING COURSEREPORTS OF THE COURSE
effect by keeping the criminal elements offbalance, since they can never be sure thatthe apparent collaborator may not actually
be an undercover agent who may expose
their criminal operations. 4 These
innovative techniques, together with theoffence of conspiracy, and immunity fromprosecution given to a co-conspirator
hereinafter suggested, will be a powerfularsenal for law enforcement agencies in thefight against organizational economic
crime.
These countermeasures are designed tosolve the issues regarding difficulties in
identification of offence/offender(mastermind), evidence gathering, andrestrictions of the statute of limitations,and also to detect the scope and modus
operandi of the crimes.
G. Setting-up of Witness Protection
Programs
A case is only as good as the evidence
presented before the court. The successfulprosecution of a crime depends largely on
the availability of a credible witness. It isthe natural tendency of a witness to be
reluctant, or in extreme cases to refuse, totestify in a case where their life or safety
would be placed in danger. Fear of reprisal,inconvenience and expense are among thefactors that prevent or discourage apossible witness. Such a tendency is very
likely in a case where an organization,
syndicate or a high ranking public official
is involved in the commission of an offence.
It is not uncommon that such a criminal
syndicate is behind many large-scalefraudulent schemes, cartels and securities
frauds. In some cases of cartels andsecurities fraud, the only probable witness
is themself a participant or a co-conspirator
in the crime. The covert nature of thesecrimes, together with the involvement of acriminal syndicate, makes it imperative tosecure the availability of witnesses during

investigation and trial of the case. It isthus necessary to set up a witness
protection program, the mechanics of which
would be dependent on the system that
may be adopted by each particular country,
consistent with its laws. This program
basically gives assurance of safety andsecurity to the witness and/or their family
through police protection, housing andfinancial assistance, in order to encouragethem to come forward and testify against
the principal offender or mastermind (sothat the latter may finally be accordingly
penalized for the offence). Many countries
have adopted this program and manyothers, who have felt and recognized theseriousness of these types of economic
crimes in their jurisdictions, are poised tomake the same move. Bangladesh, Gambia
and the Philippines have witness
protection programs.
H. Grant Indispensable Witnesses
Immunity from Prosecution
Some countries have adopted a system
whereby key witnesses, mostly coparticipants or co-conspirators or
accomplices, are offered and granted
immunity from prosecution so as to be able
to strengthen the evidence against, andsuccessfully prosecute, the principal
offenders or masterminds. In somecountries like Bangladesh, Gambia, and
the Philippines, such immunity of material
witnesses from prosecution is included in
the Witness Protection Program, as anecessary benefit for the co-conspirator
who turned state witness against themastermind or principal offender, to secure
the full cooperation of the witness.
I. Admission of Hearsay Evidence
In most participating countries, as a
general rule, a statement of an eyewitness
made before investigating officials pointing
to the culpability/guilt of the accused is notadmissible unless testified to by such awitness in open court. However, some of275

RESOURCE MATERIAL SERIES No. 55
the participants expressed the view thatsuch a written statement should be madeadmissible under certain circumstances
when proper foundation exists, even if sucha witness reneges on the previous
statement and does not appear in court.
Nevertheless, the court should be carefulin giving weight to such a written
statement.
J. Creation/Designation of aSpecialized Court
To complement the establishing ofspecialized investigating bodies,
specialized courts should be established/designated with specific powers to deal
exclusively with economic crimes against
consumers and investors. In thePhilippines and Thailand, some trial courts
have been established as specialized courts
to try and decide economic crimes,
particularly intellectual property crimes,
exclusively. This will promote and enhancethe expertise of the judges and court
personnel handling this type of crime. Thissystem will likewise expedite thedisposition of cases. In some countries thecreation of special courts is not allowed, butsome court divisions or branches have been
designated to handle only specific types ofserious economic crimes against consumers
and investors.
K. Shifting the Burden of Proof
In order to ease the burden ofprosecutors in proving intent to defraudand conspiracy in complex andsophisticated large-scale fraud, cartels andsecurities fraud, the group members fully
agreed that the system of shifting theburden of proof upon the accused shouldbe implemented. India, the Philippines
and Thailand have adopted shifting theburden of proof of certain elements of thecrime to the accused in some cases, like
corruption, embezzlement, cheating andfraud. For example in Thailand, section 5of the Emergency Decree on Loans

276

Amounting to Public Cheating and Fraud
shifts to the defendant the burden ofproving that s/he has no intention to
defraud, after the prosecution has
demonstrated the existence of certain facts
constituting the elements of the crime. It
provides in brief that “Whoever, inborrowing, propagates or publishes to thegeneral public or circulates news by
whatever means and pays or promises to
pay to the lender a benefit at a rate higher
than that payable by financial institutions
under the law, shall be guilty of the offenceof loan amounting to public cheating andfraud unless he can prove that his businesswill yield sufficient profits to make such apayment”.
To a c h i e v e t h i s e n d , c e r t a i n
modifications in the procedural laws ofsome countries may be undertaken in orderto keep pace with the technical skill andingenuity of the criminal offenders incovering their tracks or hiding
incriminatory evidence.
L. Private Prosecution
Some participants expressed the viewthat countermeasures against economic
crime offenders should not be limited to
public criminal prosecution, but may
likewise include private prosecution
through which alternative relief is given
to the victims. Moreover, this kind of
remedy supplements public prosecution
and thus creates a greater deterrent effectupon the offenders. Under this system, avictim, who may have been dissatisfied
with a non-prosecution order, may bring acriminal suit against the offender/s. Thissystem exists in Thailand and in
Commonwealth countries. In othercountries like Japan and the Philippines,
such private prosecution is not sanctionedby law; in these countries, a dissatisfied
victim has the opportunity of review by theProsecution Review Commission in thecase of Japan, or by the Secretary of the

110TH INTERNATIONAL TRAINING COURSEREPORTS OF THE COURSE
Department of Justice in the case of thePhilippines.
M. International Cooperation and
Coordination
The fight against economic crimes,
including those against consumers andinvestors, cannot be confined to individual
countries. Considering the transnationaland sophisticated nature of some of thesecrimes, every nation in the international
community should play an active part inpreventing, minimizing or controlling the
problems spawned by such crimes. For
instance, in large-scale fraud cases like thepyramid investment scheme and advancefee fraud, there must be effective
international cooperation and coordinationin order to combat these crimes
successfully. The Pentagono pyramid
investment scheme, which has its origin in
Italy, is a case in point. In this scheme,
the mastermind or principal, who occupies
the top of the pyramid, is apparently in
Italy and hence beyond the reach of otherjurisdictions. Therefore countries which
experience transnational fraud of this typeshould forge bilateral agreements andother forms of mutual cooperation andcoordination to control this illicit activity,and bring the principal offenders to justice.
VI. CONCLUSION
To successfully combat formidable
economic crimes, projected to reach serious
proportions in the near future as
information technology progresses, every
country, whether developed or developing,must as a first measure of defense,strengthen all the pillars of its criminal
justice system. This will ensure thatn e c e s s a r y, a d e q u a t e a n d e f f i c i e n t
manpower and mechanisms are in place todetect, investigate, prosecute, try andpenalize ingenious offenders or syndicates.
Aside from the requisite expertise, fullcooperation and close coordination among
all the pillars of the criminal justice system

is imperative to prevent, minimize, or
control the commission of economic crimes
against consumers and investors. As amatter of policy, every government mustsee to it that its law enforcement andjudicial system are a step ahead of thecriminal mind, and not the other way
around.
The transnational and complex natureof some economic crimes against consumers
a n d i n v e s t o r s , h o w e v e r, r e q u i r e sinternational cooperative action toeffectively prevent, minimize, or control thecommission of offences. One nation cannot
be a successful crusader against economic
crime offenders while others seek or allow
themselves to harbor the criminals who
spread this serious, global, economic
menace. It is the responsibility of every
country in the community of nations to playa crucial role in the global cooperative andcoordinated effort to adopt and enforce
countermeasures to effectively deal withthese economic crimes.
END NOTES
1. Antimonopoly Act Guidebook, Fair
Trade Commission, Lecture by Mamoru
Izumisawa, Director, Management andPlanning Division, Investigation
Bureau, Oct. 7, 1998.
2. Philippine Daily Inquirer, August 3,
1998, p. 9.
3. Economic Crime and The Global
Economy, Understanding The Threat
and Identifying Effective Enforcement
Strategies and Countermeasures, Paper
presented at UNAFEI by Mr. John D.
Arterberry, Deputy Chief, Fraud
Section, Criminal Division, UnitedStates Department of Justice, on
November 2, 1998, p. 11.
4. Ibid
5. USD $ 1= 116.35 yen; 37.8 pesos; 36.02
baht; 1,057.62 won; as of November 4,
1998.

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MAIN ACTIVITIESPART TWORESOURCE MATERIAL SERIES
No. 55

II. Work Product of the 111th International Seminar“THE ROLE OF POLICE, PROSECUTION AND THE JUDICIARY IN
THE CHANGING SOCIETY”

UNAFEI33

111TH INTERNATIONALSEMINAR
VISITING
EXPERTS’
PAPERSVISITING EXPERTS’ PAPERS

THE ROLE OF POLICE, PROSECUTION & JUDICIARY
IN THE CHANGING SOCIETY
M. Enamul Huq*
I. INTRODUCTION
Half a century ago, there was nosystematic, objective information available
on crime and criminal justice policies. Overthe years, the relevant institutes of social
defence in various countries havesponsored research that spurred an
evolution of understanding of crime and its
impact. Today, we recognise that the costof crime is far greater, its effects on victims
more traumatic and its corrosion more
widely spread throughout our society than
we realised, even three decades ago.
Insights provided by research have set inmotion a rethinking of how we view crimeand criminal offenders.
The United Nations Asia and Far East
Institute for the Prevention of Crime andthe Treatment of Offenders is a recently
forged link in a chain of inter-governmental
agencies concerned with the prevention ofcrime and the treatment of offenders:“ Setting aside the great need for more
knowledge of the human causes ofcrime, and their treatment outside thepenal system, one must perhaps place
foremost the need to cut off persistentcriminality at the source, first by theperfection of methods (alreadyadvanced in many countries) for therational and human treatment of young
offenders, then by the development ofmethods of treatment for early
offenders which will avoid the necessityof imprisonment”.
* President ACPF, Bangladesh, Ex- Inspector
General of Police, Bangladesh.

In the above context, the present theme
is not only quite appropriate but also time
worthy. To quote UN Secretary GeneralThant “a social defense research policy
must necessarily be shaped by continual
research if it is to be dynamic and attuned
to changing needs. There is, for example,
a particular need for evaluatory researchon crime prevention and treatment
programmes, and for devising accurate
indices of the extent and trends of crimeand delinquency.”
The concept of law changes from time totime and consequently, the concept of crimealso undergoes a transformation due to thepassage of time. With the induction of theconcept of social and economic equality inthe realm of human thought, sociologicalideas have undergone a sea change, andthe concept of law and crime have been
victim of this transformation. At the closeof this century, and before the dawn of thenext, the world is becoming more and moreinterdependent - so too is crime.
As Aldous Huxley said “never before
have conditions been so appropriate forhuman beings achievement of happinessas our present times, due to theadvancement of science, technology andother areas. But at the same time, toachieve this desideratum we have toovercome many obstacles, the main being
crime.” Increasing development appears tocreate new opportunities for new forms ofcrime too. Today it is a truism to state that
there is a relationship between crime anddevelopment. For many, crime anddevelopment are so closely interrelated
that there is nothing more logical or

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RESOURCE MATERIAL SERIES No. 55
natural than to look at them in a causative
or at least highly associative manner.
One of the most important factors thatneeds to be emphasised is the moral issue.
Economic growth should go hand-in-handwith stability of the moral standards ofpeople. Thus the issue should be integrated
in the national and economic plan; the root
causes of criminal justice are from crimecausation. The essential factors
responsible for humanity’s false views,
eventually leading people to commit crime,
as studied in Bangladesh, are mainly due
to the following:i) Poverty, Greed, Hatred, Delusion,
Frustration.
ii) Bad Companions, Crime Victim,
Inefficient Institutions.
iii) Vulnerable Places, Drugs, Weapons
or Arms Trafficking.
iv) Polluted Environment, Migrant
Forces, Jobless Educated Vagrants.
v) T r i a d s , R e c i d i v i s t , I l l e g a l
Immigrants, Underground Cadres.
vi) Political Patronage, Armed Goons,
Violence and Terrorism.
vii)Blackmoney, Bootlegging, Economic
Crime Syndicates and Scams.
viii)Political Victimization, Abuse ofPower, Corruption, Nepotism.
ix) External Interference, Smuggling,
Illegal Trafficking of Women andChildren.
II. CURRENT SITUATION,REASONS AND BACKGROUND OF
CRIMEIn the backdrop of the position statedabove, there has been research in social
defence. Some developing countries haveset apart quite a portion of their budgets
for assessing the impact of technologicaldevelopment vis-a-vis moral degradationand the degeneration of the family
structure. Unfortunately in developing

282

countries, especially in this region, notmuch importance has been attached to this
aspect. Fortunately of late, United Nations
agencies, the Asia Crime Prevention
Foundation, UNAFEI Alumni Associationand various NGOs and voluntary agencies
have come forward to give serious thoughtand due consideration to sensitize thisissue. To be specific, Bangladesh stands
as a unique example where the unusual
population boom within comparatively
lesser habitable areas on the one hand, anddire poverty and innumerable joblessvagrants coupled with routine natural
disasters on the other, have posed a serious
threat to moral life. This has not drawn asmuch attention as it deserves from those
who are concerned in perspective planning,objective law enforcement, desirable
judicial process and welfare oriented
rehabilitation of the incumbents. The
result is that today we do not have theauthority of the old guard and their moral
values, who used to lead the family withage old norms and practices. Rather, abject
poverty and avenues for abundance havemade them forgetful of these values,
making them prone to adventure, comforts
and quick riches, irrespective of ethics andhumane feelings.
From experience as a law enforcement
officer over a period of four decades, it has
been noticed generally that crimes havebeen committed comparatively more byrich and poor; whereas the middle class arerather more law abiding and respectful of
conventions and customs. To illucidiatethrough example, addiction to drugs is a
new phenomenon which was not thatprevalent a decade back. Statistics showthat wards of the very well-to-do families,
accompanied by their friends who are
extremely poor, generally use and develop
addiction unhesitatingly. This indicatesthat the “Haves” are associated with the“Have-Nots”, in other words wealth andfrustration, are mingled together to commit

111TH INTERNATIONAL SEMINAR
VISITING EXPERTS’ PAPERS
undesirable things without pricking of
their conscience. Probably in both cases,
guardians have not done much to control
their dependents. Curiously enough, theseoffenders who often show muscle power andbrandish illegal weapons, know thatthrough undue influence they will mostly
be immune of their misdeeds.
Confluence of legal justice and people’s
justice is the highway to a social justicestate. Where the legislature, executive andthe judiciary are well aware of theirrespective domain’s rights and obligations
to make the rule of law a reality of life andsociety. To keep society from falling apart,the first thing needed is law. And for law
to be operational effectively, in the interestof cohesion of society, we have to have asound system of criminal justiceadministration. Generally the members ofpolice force are supposed to be theprotectors of law. How they enforce it is
the concern of the relevant authorities of
the government. The police are one of themain functionaries for the entire criminal
justice system - which is primarily
composed of code (law), police(constabulary), courts (judiciary) and jail(corrections). The problems of criminal
justice administration demand national
action, where all the component partners
are to duly play their role. Indeed they aresupplementary and complementary to eachother.
There is a feeling amongst a section ofpeople that controlling crime is the sole
responsibility of the police. This
impression stems from the fact that thepolice occupy the front line in the efforts
of a society to protect the life and property
of its citizens. They are the people who
directly confront the criminals and to whom
the public look for personal safety. But itshould be borne in mind that crime is asocial problem and without the help andsupport of the community, the police cannot effectively check crime single handedly.
It must be understood that the police do
not keep public peace alone. Rather, an
unconscious network of voluntary controls
and standards among the people keeps it.
This convention is more effective than thecodes and law, as it is obeyed, not enforced.
Needless to say, we are in the midst ofvery trying times. Growing disrespect for
law and order is reaching intolerable
proportions. With new tension and conflictof power politics, greater responsibility has
been thrust upon the police by this everincreasing menace. We find increasing
public concern over the decline of law ando r d e r, a n d d e f i a n c e o f r u l e s a n dregulations. We also notice the declining
public attitude towards the police and thereluctance of citizens to become involvedin preserving law and order, especially togive evidence in court.
The police administration faces a
dilemma when they are increasingly
saddled with innumerable non-police jobs,
which tell upon the efficacy of the enforcer.
They are overworked, underpaid,
undermined and underestimated.
However, a certain group of people claimthat the police always seem to be aroundwhen they are not wanted, and are often
untraceable when desperately needed.
H o w e v e r, p o l i c e a r e f o u n d a l m o s teverywhere in the world. Even thoughmost parties in power support the policeon their behalf, generally the Opposition
becomes very uncharitable towards them.
The fact remains that because of someblack sheep, excess and polarization, thewhole department is often castigated andtheir image suffers a setback; reverting thegood police to moral harassment andpsychological disappointment, which isanything but desirable.

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III. RESPONSE OF THE CRIMINALJUSTICE SYSTEM
AND PROBLEMS THEREOF
Police, being the main organ ofinvestigation, require not only special skills
for their challenging job, but also public cooperation without which they cannot
unearth clues to progress further bringing
the real culprits to justice. For that, s/heneeds to be a person of integrity and any
sort of corruption is sure to mar the respect
and confidence of citizens (which is
gradually waning, even in the westerncountries). Unless the police force recovers
the ground they have lost already, and dotheir best to establish their credibility, they
will become less effective in their role as
investigators. This is a matter of grave
concern, especially in the crime control
system, as certain civil liberties are
sacrificed in order to secure the successfulprosecution and conviction of the guilty
persons - the investigator is allowed certain
latitude to go astray to collect proof. This
needs to be closely reviewed in the light ofArticle 31 of the Bangladesh Constitution“ To enjoy the protection of law and to betreated in accordance with law”- theinalienable right of every citizen and every
other person within Bangladesh. In
particular, no action detrimental to the life,
liberty, body, reputation or property of any
person shall be taken, except in accordancewith the law.
The modern criminal justice system has
evolved over the centuries to secure therights of criminals, victims and society ingeneral. Let us not forget that criminals
are also human beings and deserve somerights, unless proved guilty of the offence
charged.
As a crime is reported or suspected, it
sets in motion the wheels of the system.
Investigation is started, evidence is284collected; charge-sheets are framed forprosecution or final reports are given for
not having the grounds to prosecute. The
case may be sent to court either for trial or
accepting the final report to close the issue.
Here the police are both the investigatorand also the decision-maker for
prosecution. At the time of prosecution(generally for cases in lower court), court
police, i.e. prosecuting sub-Inspectors, areauthorized. Depending on the gravity of
the case, the Government appoints an
Assistant Public Prosecutor or Public
Prosecutor, in collaboration with theAssistant Superintendent of Police(Prosecution), to work on behalf of thepolice cases, i.e. cases registered at thepolice station, either by the complainantor by the police themselves. In some
exceptional cases, the Government hires apublic lawyer/advocate of repute to conduct
the case on behalf of the State. Similarly,
in the absence of the accused or in case of
pecuniary difficulties, the Government
arranges a lawyer for the defendant so thatno one goes unheard during trial, failingwhich may lead to a miscarriage of justicefor not providing constitutional benefits tothe aggrieved.
Presently, the picture of the criminal
justice system and its administration does
not give a very optimistic impression. The
net result after all the stages are far fromsatisfactory. Here, among many othercounts, there is a growing tendency to go
for separate cadres of prosecutors, insteadof engaging police officers for bothinvestigation and prosecution. Many
speakers, on different occasions, haveremarked that the time has come to doaway with the present system and thattrained prosecutors should be utilized toserve the public interest better, to ensurethat public money and judicial time are notwasted, and that police efforts should not
go in vain. Hence prosecutors should weighthe evidence against the accused, the111TH INTERNATIONAL SEMINAR
VISITING EXPERTS’ PAPERS
credibility, motive, character, antecedent,
substance of evidence, reliability of
witnesses and other relevant issues taken
into consideration from a practical point ofview. The Ministry of Law, Justice andParliamentary Affairs is reportedly awareof the situation and some serious thinking
is afoot on this issue.
Under the Code of Criminal Procedure,
it is worth while to mention that cases arebroadly categorized into cognizable andnon-cognizable; with their classification
effecting arrest, bail, compoundability,
courts for trial, procedure of trial incomplaint cases on First Information
Reports or through cases registereddirectly at court. Foundation of the case isbuilt during investigation, while theprosecution nurtures it thereafter; how thetrial is to be conducted is the jurisdictionof the court. To get a fair and speedy trial
is a fundamental right guaranteed in theConstitution, Article 35, protection in
respect of trial and punishment; Article 33,
safeguard’s as to arrest and detention; andArticle 31. The question of fair trial
presupposes fair investigation and fair
prosecution, and providing scope for the
defense of the accused under legal
dispensation.
In our criminal jurisprudence, a person
accused of an offence shall be presumed to
be innocent so long as he or she is notproved guilty by legal evidence beyond all
reasonable doubt. The doctrine ofreasonable doubt plays a vital role in ourlegal system as a safeguard againstconviction of the innocent. Here though, it
is expected that no crime should go
unpunished - the law zealously guards thecivil liberties of its citizenry. It insists thatthe prosecution, in order to secureconviction of an accused, must present
acceptable evidence. A judge will exclude
from consideration a piece of evidence
which has been improperly obtained or

received. In this context, it is worth
mentioning that statements made before
the police under section 161 Cr.PC are notacceptable, while those made before amagistrate under section 164 Cr.PC areadmissible in trial. This of course questions
the efficacy of the investigative agencies
performance, which deserves thoroughreconsideration.
A special mention needs be made herethat for the purpose of protecting social
order and peace, by preventing prejudicial
activities against the State, the Special
Powers Act 1974 was enacted. There aremany arguments for and against this Act,
which curtails the fundamental rights ofthe citizen. Instances are not rare when
the Government has sometimes used theprovision of the law arbitrarily - thoughsubsequently certain modifications havebeen made. Meanwhile, the Supreme
Court took a commendable stand incheckmating arbitrary arrest anddetention by granting anticipatory bail anddirecting the release of some detainees
forthwith. However people’s demand for
repeal of the law remains as before.
‘Justice delayed is justice denied’ is anoften repeated proverb. Again during
martial law, another phrase was commonly
used, ‘Justice hurried is justice buried’. The
whole drama of criminal proceedings ends
with the verdict of the court, in which thepolice/investigator, the witness, theprosecutor and the judge/magistrate playtheir respective role. The judge is thekeeper of the conscience of society, andprosecutors and defence lawyers are there
to help them to come to the correct decision
through an intricate battle of wits to thrashout the evidence and establish the truth(which may not necessarily be the wholetruth). However in passing sentence, thecourt must have regard to the nature of theoffence(s), status of accused and overallends of justice. The crux of fair justice lies

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in fair investigation, fair conduct of trial
by prosecution and defence, proper
application of law and impartial decisionin the delivery of judgement.
But certain basic difficulties are realhindrances, like inadequate manpower forinvestigation. Police who are mostly busy
with protocol duties, lack the modern
equipment to help solve crimes. Public
apathy to law enforcement, parochial
appointment of public prosecutors, backlogs of cases (both in lower and higher
courts), non-supervision of court
proceedings, unnecessary adjournment,
willful absence of the witnesses are
significant impediments. Similarly, theunusual delay in getting reports from thelone chemical laboratory for the wholecountry, magistrate’s other commitments,
court logistics, inherent deficiencies in law
and rules made during colonial regimes,
fraudulent practice in the arena of judicial
process, insufficient budget provisions andabove all, the vested interests of the party
in power and the opposition too need to be
overcome.
IV. COUNTERMEASURES TO
IMPROVE AND ENHANCEREMEDIAL ASPECTS OF THE
PROBLEMS IDENTIFIED
These days, economic crimes like bribery
and corruption are increasing at a fast rate,
being organized, deep-rooted andsystematized. In some cases, the practices
go far beyond national geographic limits.
With the expansion of foreign aid andinvestment, these groups are intent on
reaping the harvest themselves. It isneedless to say that instead of sustainablegrowth and development for the vulnerable
segments, the rich are becoming richer andthe vast majority are often deprived of thebenefits of the so-called ‘Pro-poor Agenda’.
A disproportionate burden of the misery ofpoverty falls upon women and children. As

286

a corollary, there have been innumerable
instances of illegal trafficking of womenand children across the border.
The Constitution has an explicit “social
equity” clause under Article 19 (2).
Practically, one of the difficult problems isthe very real gap between formal legal
equality between citizens, and the real
inequality in their actual conditions. Thus
UNDP in their report states that “absenceof an accountable system of democracy andgood governance” is a “major cause ofpoverty”. They also identified law andorder as one of the priorities under good
governance. Equal protection of law needs
reasonable opportunities to access thecourse of law. Otherwise justice remains amyth. “ justice is always advantageous to
the rich” is equally applicable here. Major
imbalances in progress often causes conflictamong people and thereby increase
unhappiness in the environment.
The study also noted that one of thefundamental problems was the dissonancebetween laws and their implementation.
Good laws remain rarely implemented.
Fundamental rights guaranteed by theConstitution and internationally adopted
human rights legislation are also hardlytranslated into reality. All such covenants
to which the country is a signatory must
be implemented so that society does not fall
into the grip of terrorists and political goons
who commit violence anywhere they like.
There has been growing awarenessamongst the public for improvement of the
judicial process and prevention of the cycleof crime. A good many steps are in handby government authorities for this purpose.
To highlight some of these, the following
are worth mentioning. The Ministry ofHome Affairs has given serious thought toinduct women police officers more actively
in investigations for better detection ofcases, especially in handling women

111TH INTERNATIONAL SEMINAR
VISITING EXPERTS’ PAPERS
accused of crimes.
As police personnel are mostly busy with
non-police jobs, the question of
investigating police, who will concentrateon criminal cases only is being considered.
The Ministry of Local Government has
passed a bill for setting up Village Courts
in rural areas and an Arbitration Council
in municipal areas to dispose of petty cases,
outside the formal courts. Besides this, theFamily Court has also been set up to settle
disparities between husband and wife,
which also reduces the workload in police
stations and courts.
The Local Government Institutebuilding has been geared up to strengthen
law and judicial aspects too. The Ministryof Law, Justice and Parliamentary Affairs
has set up a Law Commission and Judicial
Training Institute to update laws and toenlighten judicial officers with new laws
and conventions. Steps are being taken toincrease the number of chemicallaboratories, juvenile remand homes,
Courts for Violence Against Women andseparate courts for metropolitan areas.
The Criminal Law Amendment Bill has
been authorising District Judges to hearappeals for civil cases, which may lessen
the burden of the High Court Division.
Besides, new courts are being set up for
metropolitan cities to dispose of cases only
within the metropolitan jurisdiction.
The Ministry of Foreign Affairs has
recently been more active in persuading
regional neighbours to exchangedelinquents, and information thereof, forfacilitating the dispensation of justice.
Moreover, the border conflicts and issues
relating to illegal trafficking of women andchildren, especially unauthorized entry ofsusceptible citizens and arms dealers, arebeing taken care of.

The Government appreciates theendeavors of NGOs working in the relevant
fields to make the concerned agencies moresensitized to vulnerable issues.
Consequently, awareness creation andcapacity building is progressing more than
before to work hand-in-hand for a crime
free society.
V. EFFECTIVE GENERALPREVENTIVE MEASURES TO BE
IMPLEMENTED THROUGH BOTH
THE CRIMINAL JUSTICE SYSTEM
AND MORAL ENLIGHTENMENT
There are many value systems in thechanging world. Sometimes we think of
our obligation to care for the old andprovide them with social security as usefulwork. As senior citizens, they do deserve
special consideration and hence care for the
aging, elderly, infirm and handicapped
needs to be ensured. All possible modes ofco-operation between government and nongovernment organisations are explored toprovide timely services in these fields.
These days, we cannot ignore women (48%of total population).
Gendermainstreaming for national growth is amust, and more so when we have theunique position of women at the top of boththe party in power and the main opposition.
Simple slogans will not do, there must be
mental change in attitudes, to treat themwell. To cite an example, the incidents ofrape and immoral trafficking is very muchon the increase. Law is there, but perhaps
a special task force is needed to ensure thatthese laws are implemented well and thecivil society, i.e. community as a whole andthe media in particular, can do a lot toattain the goal of ‘security and freedom’.
This will help ensure the function of thelegal frameworks, sound institutionalarrangements, and capacity building for
implementation of desirable aspirations forvulnerable groups.

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The increasing mobility of the
population, the growing communications
and financial links among different
countries of the developing and developed
world, and internationalization, havecaused significant change in criminality.
For such transnational criminal activities,
all concerned agencies could put theirheads together. Lack of extradition treaties
amongst various countries have posedserious problems. If it is not possible to go
for formal treaties, at least some sort ofmutual understanding among theinternational, regional and sub-regional
areas, and cooperation through bilateraland multilateral schemes, could lead to thisultimate goal. To cite an example,
Bangladesh and Thailand have already
implemented an extradition treaty, andthere is already some sort of agreementwith Myanmar and Iran, particularly for
drug-related offenders. Questions ofrepatriation of the accused in heinous cases
is being studied and pursued vigorouslywith other countries, which may auger wellin due course.
In the light of the above, volunteer
organizations can come forward to help
each other in containing the increased
phenomenon of multi-national criminal
incidence, through motivating theirrespective governments andrepresentatives of parliament, besides the
persons actually responsible at the policy
level.
In the context of present day law
enforcement and judicial process, themajority of taxpayers do want change.
Familiar practices are disappearing and intheir place unprecedented, productive andefficient client-oriented services havebecome the need of the hour. Today, thesecurity industry is growing tremendously
fast. Many of them are actively engaged
in law enforcement responsibilities as analternate force, especially in the private

288

sector (e.g. industrial projects,
multinational organizations even in theprotection of the VIP/CIP of these
domains). Naturally, they need to beconversant with procedure and training toenlist the co-operation of public law
enforcement services, and theirrelationship should be aimed at novel social
conditions to provide maximum support tobenefactors.
The important aspect of retribution andpunishment deserves to be reconsidered.
Offenders are punished because it isunavoidable, and to eradicate evils from thesociety. Instead of ‘jail’, many countries (asin Japan) call them ‘correctional institutes’; making the inmates repentant so thatthey can join their family and contributeas normal citizens. Perhaps the phrase“hate the sin - not the sinner” needs to bereminded, so that the social stigma is notmade permanent to the inmates of prison,
lest they become recidivists and make thesituation worse.
With that end in view, the significanceof prison administration could be anecessary and healthy adjunct of crime
prevention and the treatment of offenders.
The concept of prison administration as an
institutional device for corrections andrehabilitation is gaining ground anddeserves more serious and immediate
attention from the legislature, executive
and judicial policy makers, and social
thinkers and experts thereof.

VI. CLOSING WORDS
Like most social sciences, criminology
uses knowledge and methods from many
fields, such as law, sociology, psychology,
medicine and statistics. This implies that
research on criminological problems cantake place at universities, as well as
government or non-government

111TH INTERNATIONAL SEMINAR
VISITING EXPERTS’ PAPERS
organisations and voluntary agencies. But
one thing must be kept in mind, like
medical patients, prevention is better thancure; this is particularly applicable todeviants of law, juvenile delinquents, drug
addicts or adventurers in the criminal
arena. For that, the dissemination ofknowledge though institutes like
INTERPOL is preferred. The UNO, within
its umbrella of functions, could look into
how effectively it could cooperate with aparticular country and its technical support
system.
A well coordinated system of technicalassistance needs to be evolved under the
auspices of the UN to help detect crime andensure follow-up action for bringing the
culprits to justice, for the greater good of
the nations. UNAFEI is acting as aclearing house for such methodologies andtraining in the Asian and Pacific regions,actively co-operating with the governmentof Japan and indirectly through the Asia
Crime Prevention Foundation and otherinstitutions. The community as a wholemust also be acting as a responsible
citizenry, to come forward with action
programs against all social evils.

the whole international system collapses.
This is what has been happening. In thissituation the only effective protection we
have is the will and determination ofordinary people to bring back sanity. In
this task, each profession and eachdiscipline, especially police, prosecution,
judiciary and corrections, will have to
become more involved in the process of
securing a return to the rule of law and to
the development of a greater sense of
responsibility and political commitment on
the part of the rulers and the people
themselves.
Thus in the changing society of today,
and in the future perspective, to break thecycle of crime, it is incumbent on thepeacemakers of nations to join hands withthe citizens they serve, employing their
combined strength and dedication to makepositive changes in the quality of life in ourcommunities. That needs total cooperation of all concerned in general, andp o l i t i c i a n ’s s i n c e r e a n d s e r i o u scommitment in particular, to enable theresearchers and enforcers to meet
expectations to face the challenge of the
new millenium- which is only less than ayear away.

At this critical juncture of history, weneed to get back our confidence in theessential rightness of our wisdom, toreassure ourselves that we have thecapacity to bring our material andintellectual resources to bear on finding
solutions in confronting crime. The organsof criminal justice administration shouldbe left to do their job professionally, so thatthey are made more transparent,
accountable and efficient throughmonitoring by the watchdog public (i.e.
taxpayers).
Democracy can not work unless the ruleof law is itself objectively and impartiallyobserved. If the government does notthemselves observe the rule of law, then289

RESOURCE MATERIAL SERIES No. 55
ANNEXURE I
INVESTIGATION AND PROSECUTION OF CASES (TO JUNE 1998)
Total
Cases
54704

Charge
Sheet
22846

Percentage
73.45%

Final Percentage
Report8260
26.55%

Pending

AccusedArrested

23598

15080945692

ANNEXURE IIINVESTIGATION, PROSECUTION AND TRIAL OF CASES (1997 & 1998)
Total
1997
1998

290

10261
93310

Charge
Sheet
67009
63744

%
71.68%
70.15%

Final
Report
26478
27118

%
28.32%
29.85%

Pending Conviction Acquittal%%
8674
20.05% 79.95%
2948
19.96% 80.04%

Pending
Trial
60791
49472

111TH INTERNATIONAL SEMINAR
VISITING EXPERTS’ PAPERSTOWARDS A RESPONSIVECRIMINAL JUSTICE SYSTEM IN THE PHILIPPINES
Judge Lilia C. Lopez*
The criminal justice system of any
society depends so much on the thorough,efficient and effective functioning of the all
the principal actors involved in thedispensation of justice. The efficient andeffective functioning of one component may
be hampered by the inefficiency andincompetence of the others. Thus
cooperation, and the coordinated andconcerted action of the police, prosecution,
the judiciary, as well as the correctional
institutions, and most importantly, thecommunity - the so-called pillars of thecriminal justice system - is necessary. Thatis, however, easier said than done,
especially in a country like the Philippines,
where the governmental agencies involved
are beset by financial, technological andinstitutional constraints, and where thecitizenry are increasingly becoming
alienated from each other. Though it may
be a daunting task, the Government hascontinually instituted measures to
responsibly address these problems.
The first part of this paper will deal
briefly with the five pillars of the criminal
justice system in the Philippines, under theframework of a republican government as
enshrined in the Philippine constitution.
This will involve discussion on the doctrineof separation of powers, the different
branches of government involved and thedelineation of their function. Particularemphasis will be placed of the police, theprosecutor and the judiciary. The second
part will be a discussion of the procedure
involved in law enforcement, prosecution
and trial of offenders, the current situation* Executive Judge, Regional Trial Court, Philippinesof and problems faced, respectively, by thepolice, prosecutors and the judiciary.

I. SEPARATION OF POWERS IN
THE PHILIPPINESThe Constitution of the Republic of thePhilippines divides the government into
three equal and co-ordinated branches,
namely, the legislative, executive and the
judiciary, each of which is supreme within
their respective spheres. Neither of them
may encroach upon the function or domainof the other. The law-making function islodged in the Philippine Congress,
composed of the Senate, whose members
are elected by the voters of the wholecountry, and the House of Representatives,
whose members come from districts chosen
by the voters therein. The executivefunction, the duty to enforce the laws, falls
on the President of the Republic. It is to
the Supreme Court and the other courts
created by law that the judicial function islodged.
Among these three branches, those thatare directly involved in the administrationof justice are the executive branch throughthe police and other numerous law
enforcement and prosecution agencies, aswell as the correctional institutions, andthe judiciary. The agency primarily incharge of law enforcement is the Philippine
National Police, which is under the controlof the Office of the President through the
Department of Interior and Local
Government. There are also specialized
agencies dealing with specialized casessuch as the Bureau of Internal Revenue,

291

RESOURCE MATERIAL SERIES No. 55
in charge of matters relating to taxation,and the Immigration Department, on
immigration matters. The National
Prosecution Service, under the Departmentof Justice, is the principal agency in chargeof the prosecution of offenders. There is,
h o w e v e r, a u n i q u e a g e n c y o f t h egovernment which is the Office of the
Ombudsman, charged with the prosecutionof certain crimes involving public officials
or those connected with the performanceof public functions.

II. THE FIVE PILLARS OF THE
CRIMINAL JUSTICE SYSTEM
A. The Law Enforcement
The law enforcers are at the forefront of
the criminal justice system of the country.
They are the ones that directly deal withthe citizenry and are directly exposed tothe criminal elements. There is, therefore,
the necessity for the members of these law
enforcement agencies to be well oriented
with, and trained in the ways of, the civilsociety.
Thus, the 1987 Constitution of thePhilippines mandated the creation of apolice agency that is national in scope andcivilian in character. Pursuant to thisconstitutional provision, a law was enacted
creating the Philippine National Police outof the defunct Philippine Constabulary andits civilian component, the Integrated
National Police. The said agency is charged
with the duties of crime prevention, law
enforcement, preservation of peace andorder, as well as the internal security of
the government under the control andsupervision of the Department of Interiorand Local Government. Also performing
law enforcement functions is the National
Bureau of Investigation, which is under thecontrol of the Department of Justice. These
agencies are authorized to conduct
investigations of crimes, gather evidence292with respect thereto, arrest suspects andrefer cases to the prosecuting arms of thegovernment.
Within the police organizations, there
are departments tasked with investigatingcomplaints against erring officers, andadministrative tribunals that hear anddecide the cases lodged against them. The
efficiency and effectiveness of these bodies
help polish the image of the police
organization as a body that the people canrely on. There are also specialized agencies
whose duties are to enforce special laws
relating to highly specialized matters suchas immigration, tax, land, air and watertransport, and customs.
B. The Prosecution
The prosecution function is lodged
mainly with the National Prosecution
Service, under the Department of Justice.
It is composed of the Office of the Chief
State Prosecutor, the Regional State
Prosecutor’s Office and the Provincial andCity Prosecutor’s Offices. The Office of the
Chief State Prosecutor has the following
functions:a) Investigate and prosecute crimesb) Decide appeals from decisions of theprovincial and city prosecutorsc) Investigate administrative charges
against prosecutors
The Regional Prosecutor ’s Office ischarged with the administrative task ofsupervising and coordinating theperformance of the Provincial and City
Prosecutors within the region. The
Provincial and City Prosecutor’s Office isthe lowest in the administrative hierarchy,
and is charged with the investigation andprosecution of all violations of penal laws
and penal ordinances within theirrespective territorial jurisdictions.

111TH INTERNATIONAL SEMINAR
VISITING EXPERTS’ PAPERS
There have been innovations institutedby the prosecution department with regard
to the handling of cases involving different
crimes. These innovations have been
geared towards a system of specializationin the handling of criminal cases. On thelevel of the Provincial or City Prosecutor’s
Office, a small number of prosecutors havebeen tasked with the prosecution of certain
crimes, particularly those involving
sensitive matters like rape. Task forces
have also been set up in the Office of the
Chief State Prosecutor like those involving
abuse of minors, those affecting the
economy, etc. This specialization hastens
the prosecution of cases, as the prosecutors
assigned are familiar with the intricacies
and strategies in the handling of suchcases.
There are also specialized agencies
charged with prosecuting special cases.
Among these is the Office of the
Ombudsman, created under theconstitution, and is independent of theexecutive branch of the government. This
office is mandated among others, toinvestigate and prosecute cases involving
public officials and employees who havecommitted crimes in relation to theiremployment. It is because of this functionthat its independence is of paramountimportance - the reason being to insulate
it from the political branches of thegovernment.
Another agency is the Commission on
Elections, charged with the enforcement
and prosecution of all election offenses.
This is also independent of the three mainbranches of the government. There are also
public defenders being paid by thegovernment to render legal services for
those who cannot afford to pay their own.
That agency of government is known as the
Public Attorney’s Office. There are also
institutions or individuals outside thegovernment that are offering legal

assistance to the needy, like the legal aid
programs of law schools recognized by theSupreme Court, and the legal aid offices of
Bar Associations in the country. There arealso lawyers who do pro bono work for theunderprivileged, aside from lawyers
provided by the court when a litigant
cannot afford the service of one.
These benevolent institutions andindividuals help immensely in theadministration of justice, as they facilitate
the disposition of cases before theprosecutors or the courts, not to mention
their very important function insafeguarding the constitutional rights of
their clients.
C. The Judiciary
The judiciary is the final arbiter ofcontroversies, of competing claims andinterests, including the determination of
the guilt or innocence of a person charged
with the commission of a crime. The
judiciary in this country is composed of one
Supreme Court, which is at the top of the
judicial hierarchy, and the other courts
created by law.
The independence of the judiciary has
been strengthened under the 1987
Constitution by giving it fiscal autonomy;administrative supervision and discipline
over its own personnel; and theappointment of the members thereof by the
President alone, thereby shielding theappointees from the pressure of party
politics which was prevalent in the past
selection process (requiring theconfirmation of the appointees by theCommission on Appointments, composed ofthe members of Congress). Further, thejustices of the Supreme Court are only
removable from office by impeachment andconviction of a culpable violation of theconstitution, treason, bribery, graft andcorruption, other high crimes, or betrayalof the public trust. This enumeration is293

RESOURCE MATERIAL SERIES No. 55
exclusive and the power to impeach andconvict lie with the Senate and the Houseo f R e p r e s e n t a t i v e s , r e s p e c t i v e l y.
Furthermore, the judiciary has a systemof policing its own ranks so as to rid itself
of incompetent judges and other erring
court personnel.
The other courts created by law are,amongst others, the Court of Appeals andthe constitutionally mandated
Sandiganbayan, which are collegiate courtsand exercise appellate jurisdiction over the
Regional Trial Courts; the Municipal or
Metropolitan Trial Courts; and lately, theFamily Courts in appropriate cases. The
Sandiganbayan and the Family Courts are
specialized courts that deal with offenses
involving government officials and those
involving the family and minors
respectively. These courts, due to their
specialization, expedite the proceedings
before them, because of the knowledge thatthe judges have acquired in the course of
their service, and at the same time, serving
the interests of the persons for which thosecourts were designed to protect. This iswithout prejudice, however, to theconstitutionally protected rights of theaccused.
D. The Correctional Institutions
The agencies involved in the punishmentof convicts all fall under the executive
department of the government, such as the
Bureau of Jail Management and Penology,
which is charged with the incarceration of
non-minor convicts, and the Departmento f S o c i a l We l f a r e a n d C o m m u n i t y
Development, who run correctional
institutions for youth offenders.
E. The Community
The members of the community play avery important role in the criminal justicesystem. It is from their ranks that theoffenders come and it is with them thatthey will end up. The involvement of these294

people in the programs and projects of thegovernment, even those that are notnecessarily connected with theadministration of justice, contribute to thelessening of crimes, as their efforts arediverted to more productive matters. They
can also contribute immensely in solving
crimes by assisting in police investigations,giving testimonies, providing leads and thearrest of criminals. Included as part of thecommunity are the government agencies
not involved with the administration ofjustice, as well as the members of theprivate sector.

III. PROCEDURES IN THE
ADMINISTRATION OF JUSTICE IN
THE PHILIPPINESAt present, the types of crime that havegained media prominence, and thus havebeen given particular importance, are thoseso-called heinous crimes involving theimposition of the death penalty. Included
are the crimes of rape (committed undercertain circumstance specified in the law),murder and illegal drug trafficking,amongst others. Regardless however of thetype of crimes committed, be they heinous,
serious or light, the procedure for theinvestigation, prosecution and trial of thecases is more or less the same, except for
those triable under the rules of summary
procedure, whereby no trial is conducted
and the judgment is based merely on theaffidavits submitted.
A. The Law Enforcement Process
The law enforcement process begins themoment the crime is reported or acomplaint is filed before the police. The
police then conduct an investigation of thecrime, take the testimonies of thewitnesses, collect the evidence available
and take steps to apprehend the offender.
The arrest of the perpetrator does notordinarily happen without the warrant of

111TH INTERNATIONAL SEMINAR
VISITING EXPERTS’ PAPERS
arrest, as required by the Constitution,
unless the arrest of the person suspectedof the crime falls within the exceptions fromthe necessity of a warrant recognized under
the law.
In cases where the offender is caught by
the police in the act of committing,attempting to commit or having justcommitted the crime, the suspect isdetained and is subjected to a process calledan ‘inquest’. An inquest is a procedure
whereby a prosecutor is immediately
available after the arrest of the suspect todetermine whether a crime was committed
and the person arrested is the one
responsible. This process is sometimes
called an abbreviated preliminary
investigation.
When the prosecutor finds that a crime
has been committed and the person isp r o b a b l y g u i l t y, s / h e p r e p a r e s arecommendation to the provincial or city
prosecutor for the filing of an information
against the detained person. If on the other
hand, no cause is shown to exist, or the
person detained does not appear to be theone responsible for the crime, theprosecutor directs the officer in charge ofthe detention facility to set free theprisoner.
B. The Prosecution Process
Once the police are through with theirinvestigation of the case, they forward theirfindings to the prosecutor for the proper
procedures. The prosecutor is, as a generalrule, a passive subject, with the prosecutionof the case being dependent largely on theefforts and determination of thecomplainant or the aggrieved party. The
latter may dismiss the case outright if thefacts do not warrant a prima facie case or,as is usually done, set the case forpreliminary investigation.

Preliminary investigation is defined as
the proceedings for the determination ofwhether there exists sufficient ground forbelieving that a crime, cognizable by the
Regional Trial Courts, has been committed,
and that the respondent is probably guilty
thereof. At this stage, the suspect and theprivate complainant are given theopportunity to present their case before theprosecutor. The prosecutor usually does
either of these:i) dismiss the case for lack of a prima
facie case to charge the respondent
for the alleged crime;ii) f i n d s t h a t a c r i m e h a s b e e ncommitted and that the respondent
charged with the crime is probably
the perpetrator.
When the first is done, the complainant
may seek a reconsideration of the decision,
or appeal the ruling to the Secretary ofJustice, who may direct the prosecutor to
file the case if they find merit in the petition
or affirm the decision of the prosecutor.
Under the old rules of jurisprudence, theprosecutor has much leeway in deciding tofile the case or not. The discretion lies
solely on them such that no one, not eventhe courts, can substitute their judgment
for that of the prosecutor, save on certain
occasions when the latter may have gravely
abused such discretion. This is true evenin the case of a reversal of a dismissal orderof the prosecutor by the Secretary ofJustice, where the prosecutor is of theconviction that there is insufficientevidence to warrant the filing of the casein court. What is usually done in this caseis that the Secretary of Justice appoints
another prosecutor to handle the case.
However, under the prevailing rule, as longas there is a finding of a prima facie case,the prosecutor is duty bound to prepare an
information against the accused.

295

RESOURCE MATERIAL SERIES No. 55
The action of the prosecutor on a caseis, as a matter of practice, dependent
largely on the evidence presented by thecomplainant and/or the police, and thedetermination of the latter to pursue thecase. Otherwise, as is often done, the caseis dismissed even when the evidence
warrants a finding of the commission of acrime, even though it does not appear thatthe respondent charged by the complainantis the one probably guilty. It is only on rareoccasions, and most of the time whenpressured by the media, that the prosecutor
would direct the police to collect moreevidence to establish the perpetrator of thecrime. This hesitation to, or predisposition
not to, direct the police to further
investigate the case stems from the factthat under our system, the police are notsubordinate to prosecutors; not to mention
the fact that they belong to different
departments of the executive branch.
The dismissal of the case however does
not constitute a bar to the re-filing of thesame, especially when the grounds for refiling is insufficiency of evidence. The effectof a dismissal of the case by the prosecutor
is unlike that effected by a court, which
may constitute a legal bar for the filing of
the same case against the same accused what is termed as ‘double jeopardy’.
It is also at this stage that settlement of
the case is greatly encouraged between theparties involved. Furthermore, thegovernment has set up a mechanism called
the Barangay Conciliation Panel for thesettlement of cases between parties
residing in the same town or city involving
non-serious offences; specifically thosecrimes that the punishment for which does
not exceed one year imprisonment. This
program has been devised not only to limit
the cases being filed in court, but more
importantly, to preserve the good relationsof the inhabitants within the same locality.

296

C. The Judicial Process
In the Philippines, the very title of thecriminal case is frightening. It is entitled:
People of the Philippines versus [the nameof the accused person]. The moment a
prosecutor has made a determination that
there exists a prima facie case, theinformation is then prepared and filed
before the court, after which it undergoes
a case processing system and is allocatedto the proper court. Immediatelyt h e r e a f t e r, t h e c o u r t a s s e s s e s t h e
information, the record and the evidence
submitted, and the judge then makes adetermination as to whether or not theaccused is probably guilty, warranting his/her arrest. It is therefore not the duty of
the courts to issue a warrant of arrest. The
court issues a warrant for arrest which isaddressed to a peace officer. The officer
then serves the warrant on the person
named therein, and commits the latter into
prison. In our jurisdiction, all accused
persons have the right post bail, save incases of crimes punishable by reclusion
perpetua, life imprisonment and death,
where the evidence of guilt is strong.
After the filing of the information, thecourt will, without delay, set the date forarraignment of the accused, which must bewithin thirty days from the filing thereof.
At this stage, the accusation against theaccused is read before them in open court(in a language known to them) and s/he isrequired to make a plea thereon. Whenthe accused enters a plea of guilty, the court
will painstakingly explain to the accused
the consequences of their plea. If, despite
such explanation, the accused still
maintains their plea, the court directs theprosecutor to present the evidence against
the accused, which does not require a
prolonged trial. According to recent
jurisprudence involving the death penalty,
the court is duty bound to conduct a fulltrial to determine the exact participationof the accused in the crime charged. When

111TH INTERNATIONAL SEMINAR
VISITING EXPERTS’ PAPERS
the accused pleads not guilty to the crime
charged, or refuses to enter a plea, or pleads
guilty to a lesser offence, which isequivalent to a plea of not guilty, the court
enters a plea of not guilty on the records.
Before trial of the case on its merits, it
is now mandatory that the case is set for
pre-trial conference, whereby efforts toamicably settle the dispute are exerted inorder to avert trial, or matters are agreed
upon to expedite the trial. This stage has
recently been made mandatory under the
newly enacted Speedy Trial Act of 1998
(Republic Act No. 8493). Matters forconsideration during this stage of theproceeding are:(a) Plea bargaining;(b) Stipulation of facts;(c) Marking for identification theevidence of the parties;(d) Waiver of objections to admissibilityof evidence; and(e) Such other matters that will promotea fair and expeditious trial (Sec. 2
R.A. No. 8493).
Matters agreed upon by the parties areinadmissible as evidence against theaccused, unless the same is reduced towriting and signed by the accused and theircounsel. Furthermore, non-appearance inthe pre-trial conference by the counsel forthe accused or the prosecutor will be subject
to sanctions at the discretion of the judge.
The case is then set for trial which,according to the Speedy Trial Act, must becontinuous and on a “weekly or other shortterm trial calendar at the earliest possibletime”, but within thirty days from the dateof the arraignment. There is also a time
limit for the duration of the trial which isone hundred and eighty days from the firstday of trial. These time periods have been
imposed to counter delays in thedispositions of cases. However, the said

time period is not fixed, as the law allows
certain delays that may be excluded fromthe required time limit. The circumstanceswhereby exclusions are allowed are
numerous and may ultimately defeat the
purpose of setting a time limit.
The order of trial of the case depends
upon whether the accused interposed anegative or affirmative defence. If a
negative defence is interposed, which isnormally the case, the trial begins with thepresentation by the prosecution of the caseagainst the accused. The witnesses of theprosecution, after the presentation of their
testimony, are cross-examined by the
defence. After all the evidence of theprosecution has been presented, thedefence present its case, with thepresentation of all their evidence.
When the accused interposes anaffirmative defence, the order of the trial
is slightly changed, with the defence firstpresenting their case followed by theprosecution. Such inverted procedure isnecessitated by the nature of an affirmative
defence, which essentially admits thecommission of the acts charged but
advances certain circumstances which
would serve to exculpate the accused from
criminal liability.
It is also during the trial of the case thatthe parties must present evidence which
may aggravate or mitigate the crimecommitted by the accused. Otherwise, they
are waived and may not be considered by
the judge in the sentencing of the accused.
After all the evidence has been presented,
the case is then submitted for decision,
unless the court requires the submissionof written memoranda or allows the counselof the accused and the prosecutor to present
their respective arguments orally.
It is during the trial that the rules ofevidence come into play. The rules of297

RESOURCE MATERIAL SERIES No. 55
evidence however have not yet been
adapted to the possibilities opened up bytechnological advances, particularly inthe fields of computers andtelecommunications. The use of thistechnology in the courtroom would speed
up the trial of the case as there would be
no need, for example, for the persons
testifying to appear before the court
personally. Thus, delays due to theunavailability of witnesses will be avoided,and precious resources of time and money
will be saved.
During the trial of the case, a person
included in the information may bedischarged as an accused and become awitness for the State, if the testimony of
the same is indispensable to the successfulprosecution of the case against the otheraccused. The discharge must be agreed
upon by the accused themself and approvedby the court. The discharged accused thenbecomes a State witness and qualifies
under the witness protection program of
the government if s/he applies for andmeets the qualifications set by the law. In
order to be admitted to the witness
protection program, one does necessarily
have to be an accused discharged from theinformation. They may be a witness in thecommission of the crime and theirprotection is necessitated by considerations
for their safety. Those admitted to theprogram are entitled to police protection
and are most of the time, placed in a safe
house. This arrangement facilitates andmakes available the witness when called
to testify before the court.
After the trial is finished and the case issubmitted for decision, the court where thecase is pending must render judgment
within the time directed by theConstitution. Otherwise, the judge
involved will suffer sanctions. The time
limit for rendering judgment is twenty fourmonths for the Supreme Court; twelve298

months for lower collegiate courts, like the
Court of Appeals and the Sandiganbayan;
and three months for other lower courts.
In deciding the case, the Constitution
requires that judge set forth clearly and inwriting the facts and law on which it isbased, considering only the evidence
presented in the proceedings.
D. Remedies for the Accused
When the court finds that the evidence
against the accused is insufficient toconvict, the accused is acquitted and noaccusation based on the same act(s) can be
filed against them, nor can an appeal bemade therefrom because of the principle ofdouble jeopardy.
If, on the other hand, the court convicts
the accused because, in its view, guilt of
the crime charged has been establishedbeyond reasonable doubt, the latter may
move for a new trial or reconsideration.
The motion for a new trial may be basedon either of the following grounds:(a) That errors of law or irregularities
have been committed during the trial
prejudicial to the substantial rightsof the accused;(b) That new and material evidence has
been discovered which the accused
could not, with reasonable diligence,
have discovered and produced at thetrial, and which if introduced andadmitted, would probably change thejudgment.
The motion for reconsideration may bebased on errors of law or fact in the
judgment.
The accused may, in lieu of theaforementioned remedies, or after thedenial of the motion, appeal to the Courtof Appeals or the Supreme Court within the
period set forth in the law. In cases
involving the sentence of death, however,111TH INTERNATIONAL SEMINAR
VISITING EXPERTS’ PAPERS
the law provides for automatic appeal of
the same to the Supreme Court. In casethe appeal is found to be without merit, andthe conviction is affirmed, the case will be
remanded to the court of origin for
execution of the judgment. The court oforigin will set a date for the accused toappear before the court for the enforcementof the judgment. The court will then issue
an order committing the convict to a penal
or correctional institution for serving theirsentence.
E. Other Functions of the Court
In our jurisdiction, adjudication is not
the sole function of the courts. It has otherpowers and duties as well.
The Supreme Court, under theConstitution, has administrative
supervision over all courts and thepersonnel of the said courts. It has thepower to discipline judges of lower courts
and order their dismissal by a vote of amajority of the members who actually took
part in the deliberation of the case andvoted thereon. In the same manner, theSupreme Court has the power to discipline
attorneys and may disbar, suspend or
impose such penalty as it may deem proper,
for violation of the Code of Professional
Responsibility.
The Court of Appeals and the Regional
Trial Court may suspend an attorney frompractice for any of the following acts oromissions: lie, deceit, malpractice, grossmisconduct in office, grossly immoral
conduct, conviction of a crime involving
moral turpitude, violation of the attorneyoath, wilfull disobedience of any lawfulorder of a superior court, or corruptly or
willfully appearing as an attorney for aparty to a case without authority so to do.
The Supreme Court of the Philippines,
under the Constitution, has the power topromulgate rules concerning the protectionand enforcement of constitutional rights,
pleadings, practice and procedure in all
courts, admission to the practice of law, theIntegrated Bar, and legal assistance to theunderprivileged. Such rules are intended
to simplify and render inexpensive theprocedure for speedy disposition, whichshall be uniform for all courts of the same
grade, and shall not diminish, increase, ormodify substantive rights.
Special courts and quasi-judicial bodies
have the same power to promulgate rules
governing their procedure, and such rules
shall remain effective unless dispproved by
the Supreme Court. Other Courts may also
lay down rules applicable to proceedings
before them, or in respect to their premises
and facilities.
F. Delay and Inefficiency in Court
Proceedings
The Honorable Chief Justice, Andres
Narvasa, in his handbook on courts, citedthe following causes for case delay, namely:(a) an increase in the number of cases
filed over the years due to theheigtened awareness of people oftheir rights and privileges, theenactment of new laws and rules, aswell as increased government actions
affecting private individuals;(b) the lack of courts, and slowness ordifficulty in filling up vacancies;(c) the small budget allocated to the
judiciary;(d) the complexity of the rules ofprocedure;(e) t h e i n a d e q u a c y o r f a i l u r e i ncooperation of court-related agencies
and officers.
These problems, according to the
Honorable Chief Justice, are being dealt
with. According to him, appeals to theCongress for increased funding have beenanswered favorably; “The Judicial and Bar

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Council continues to meet regularly tosubmit to the President nominations forvacancies in the judiciary. Coordination of
the courts with other pillars of the CJS ispursued and fostered. The Supreme
Court’s Standing Committee on the
Revision of the Rules of Court continuously
review the procedural law with a view toamendment and refinement, so thatprocedures will be further simplified,rendered more inexpensive, and conduciveto the speedy disposition of cases.
Significant revisions to this end have been
proposed by the Committee promulgatedby the court, and are now in force,”
particularly the Rules on Civil Procedure.
Furthermore, according to him, “In thevery nature of things, litigation takes time.
Time is needed to serve the process bywhich parties are brought within thejurisdiction of the courts; to enable theparties to fully express to the court theirbasic theories of the case; to enable themto present evidence in proof of theiraverments, for the court to consider the
proof after trial and render judgment; fora party adversely affected by a judgment
to seek modification or reversal thereof byappeal or otherwise; for the appellate
tribunal to be informed of the parties
positions and proof, study the case anddecide on it. The law sets definite periods
for the various steps and processes inlitigation; and so long as litigation moves
apace with these periods, no matter how
measured the movement, there can be no
legitimate complaint about delay.’’
G. Strategies
The courts pillars have adopted thefollowing strategies under the 5-Year
Master Plan of Action for Peace and Order:(a) The dissemination of information
regarding the working andprocedures of the courts;(b) The continuing revision, amendment300

and/or modification of the Rules of
Court for the purpose of attaining
speedy administration of justice;(c) Work for the full realization of theconstitutional autonomy of the
Judiciary, in order to achieve its true
independence; and(d) T h e g r a n t o f a w a r d s a n d / o rrecognition to deserving judges andcourt personnel through the meritsystem.
The first strategy was prioritized by the
courts pillars and a series of symposia wereconducted nationwide, which were testpiloted at the University of the Philippines
Law Center in Diliman, Quezon City.
Workshops were conducted during the
symposia to find out the perception ofparticipants of the workings of the courts
and what the public could do to help in theadministration of justice. The following
recommendations were made:(a) Expansion of the jurisdiction of theMunicipal Trial Court. The distanceand travel time of litigants/
respondents who come from far-flungareas hamper the speedy resolutionof the case;(b) Provision in every municipality for a
M u n i c i p a l Tr i a l C o u r t a n dprosecutor;(c) Translation of case decisions in adialect that will be understood by theaccused/respondents;(d) Inclusion in the school curriculum
subjects regarding the criminal
justice system, particularly theoperational system and workings ofthe courts, so as to inform the public
on how the criminal justice systemin the Philippines works;(e) Institutionalization of an indigenous
system of settling disputes in the
judicial system; and(f) Creation of a committee to monitor
and determine the performance of

111TH INTERNATIONAL SEMINAR
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judges and the number of cases
assigned to a particular sala vis-a-vis
the number of cases acted upon.
An assessment and evaluation of thesymposia was made by the participants asfollows:(a) T h e s y m p o s i a p r o v i d e d m o r e
information and familiarization on
the operational system and workingsof the judicial system;(b) Similar symposia must be conductedfrom the provincial level down to thebarangay level. Lectures should betranslated into the dialect of the area;(c) The symposia enlightened the mindsof those with negative beliefs about
the judicial system and provided
public awareness of the criminal
justice system as a whole;(d) The symposia provided clear visionon the jurisdiction of the different
courts such as the MTC, RTC, Courtof Appeals and the Supreme Court;(e) Participants gained insights on theactual situation in the courts and thecauses of delay in the disposition ofcases; and(f) Participants from different sectors
were given a chance to voice out theiropinions and problems they areencountering in the judicial system.
Regarding the revision, amendment and/or modification of the Rules of Court forthe purpose of attaining speedy
administration of justice, the Supreme
C o u r t , a f t e r p a i n s t a k i n g s t u d y,
promulgated the New Rules on Civil
Procedure April 8, 1997, made effective last
July 1, 1997.
The Committee on the Revision of Rules,
since 1997, continued its meetings fortackling the proposed amendments to theRules on Criminal Procedure. The
Committe likewise discussed the rules andguidelines in the filing and prosecution of
criminal actions under Batas Pambansa
Bilang 22, otherwise known as the
Bouncing Checks Law, and the court
approved the circular in respect thereof.
The following recently enacted laws werealso discussed by the Committee:(a) Republic Act No. 8358, “An Act
Expanding the definition of the crimeof rape, reclassifying the same as acrime against persons”.
(b) Republic Act No. 8369, “An Act
establishing Family Courts granting
new exclusive original jurisdiction
over child and family cases.”(c) Republic Act No. 8493, “An Act toensure a speedy trial in all criminalcases before the Sandiganbayan,
RTC, MTC, MCTC, appropriating
funds thereof and for other purposes.”
For the full realization of judicial
independence, the proposal of the Judicial
Department to Congress for an increase inits budget has been favorably acted uponby the latter, and other departments of thegovernment have respected the fiscal
autonomy of the judiciary. The court willcontinue to ask the legislature for greater
allocation for the Department to enable itto put in place constructive judicial
reforms; continue judicial training andeducation programs in full operation;
implement the Family Court system;
provide more incentives to present
incumbents at all levels of the court, as wellas candidates for the bench; and for thecompletion of it computerization program.
To inspire members of the bench to excel
in their chosen fields, an annual grant ofawards for outstanding trial court judges,
prosecutors and public defenders is given
by a private foundation. The objectives ofthis merit system are to give honor and due
recognition to outstanding judges, publicprosecutors and public attorneys, and to301

RESOURCE MATERIAL SERIES No. 55
encourage exemplary performance andconduct among public servants,
strengthening citizen’s faith and confidence
in the rule of law.

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THE ROLE OF POLICE, PROSECUTION AND THE JUDICIARY
IN THE CHANGING SOCIETY - THE SINGAPORE APPROACH
Judge Suriakumari Sidambaram*
I. INTRODUCTION
We live in a world of constant change.
Trade and technology interact to accelerate
the rate of change. Science and technology
of today may become history tomorrow,
while the knowledge and skills we acquire
now may fast become obsolete. As a result,the current operations in an ever-changing
environment are constantly faced with newchallenges. With the arrival of theinformation age, complex crimes such as
computer crimes, phone cloning and otherhigh-technology crimes have emerged.
White collar crimes consequently increase.
Constant training and upgrading to tie inwith the overall social and economic
advancement is the only way to adapt tochanges very quickly.
Singapore has been transformed from apoor Third World city, to a highly
industrialized economy within a short
thirty year span. Coupled with better
education and increasing influence,
Singaporeans now expect a high standardof service quality and efficiency in their
daily transactions with the public service.
They have clear expectations that public
officers will act correctly, decisively andwith confidence.
Crime prevention and rehabilitation of
criminals are two problems every society,including Singapore, has to contend with.
Although the nature of crimes and approach
to treatment of criminals may vary fromcountry to country, the urgency of preventing
crime and effectively rehabilitating
criminals are common to law enforcement* District Judge, Subordinate Courts, Singapore.

and adjudication authorities in all countries.
Singapore prevents and controls crime
through two essential means :a. a body of penal legislation whichprescribes which acts (and omissions)constitute crimes, the procedure bywhich suspected offenders may beapprehended and brought to justice,and the forms of punishment which
may be imposed on proven offenders;andb. c r i m i n a l j u s t i c e s y s t e m w h i c hadministers and enforces thislegislation, seeking to ensure its
compliance. This system includes the
public prosecutor, the police (and otherlaw enforcement agencies), thejudiciary and the prisons (and othercorrectional apparatus).
The aim of the Singapore criminal justicesystem is to reduce crime and encourage
respect for and compliance with thecriminal law through three basic
approaches, namely, individual prevention,
general prevention and incapacitation.
The crime rate in Singapore fell for the
ninth consecutive year in 1997. Crime
statistics for the period January December 1998 indicate a slight increasein the overall crime rate. Seizable offences,
however, decreased in the fourth quartercompared to the third quarter. It has
however been pointed out that the slightincrease should be viewed against thesteady decrease of crime rates over the lastnine consecutive years and against theintensified and effective enforcement action
by the Singapore Police Force (SPF) on all

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fronts. Further, this slight increase could
be likely be associated with the economiccrisis and increasing retrenchment andunemployment rates in Singapore. It has
also been noted that the number of arrestsand cases solved had also risen, and that
Singapore’s crime rate still continues to beamong the lowest in the world. The major
proportion of crime in Singapore consistsof housebreaking, theft of and from motor
vehicles, snatch theft, molestation androbbery. Analysis shows that the majorityof these crimes are committed in a random
and opportunistic way.
II. ROLE OF THE POLICE
The mission of the Singapore Police
Force (SPF) is to uphold the law, maintainorder and keep the peace in Singapore byworking in partnership with thecommunity to protect life and property,
prevent crime and disorder, detect andapprehend offenders and preserve a senseof security in society.
In the turbulent years of the 1950s to
the early 1970s, the SPF played a criticalrole in the quelling of labour, racial andpolitical unrests that marked the era. The
SPF has built in this sense of history ofservice and loyalty to Singapore in each andevery individual officer. As such, in May
1996, the Hong Kong based company,
Political and Economic Risk Consultancy(PERC) Limited, rated Singapore as thesafest country in Asia. PERC attributed
Singapore’s enviable position as “one of the
few cities in the world where it is possible
for foreigners and locals alike to walk justabout anywhere, at any time of the day ornight, with little fear of being mugged bygangsters”, to “a professional and well-paid
police force”. It attributed the politicalstability, high economic growth andaffluence of Singapore in no small part toa competent and impartial police force
which has the full confidence of the304

community it serves. In the light of thistrend, efforts to contain crimes have been
stepped up.
The Singapore police are making great
and tireless efforts to adapt to the changing
society. In addition to their duties toeradicate crime in Singapore, the police
also make people realize that they are coproducers of public safety. The days when
the police were viewed as oppressors or
persecutors are gone. Police-community
relationships have been enhanced throughcommunity policing. About one-third of thearrests of major crimes are made with theassistance of members of public.
A. Community Policing
The Neighbourhood Police Posts (NPPs)
in Singapore, set up in densely populated
housing estates since 1983, have served
round-the-clock as bases for activities ofpatrol policemen and as a contact point
between the police and the public. The aimof the NPP system is two-fold: to improvepolice-community relations in Singapore,and to prevent and suppress crime throughthe co-operation and support from thecommunity. These police officers at the
NPP are on constant alert to handle any
emergency, thereby living up to thedemands and expectations of local
residents.
The NPP system has been successful andwell received by the public since its
inception in 1983. However, under the NPP
system, the complainant or victim of crime
who comes to the police has to be referredfrom one party to another. He or shesometimes may have to repeat his or her
story to 4 different groups of officers, forinstance, the officers who first respond tothe case; the officers who guard the scene;
the officers who collate the evidence, andthe investigatorial officers who conduct theinvestigation. The system therefore hassome drawbacks in that the best use is not

111TH INTERNATIONAL SEMINAR
VISITING EXPERTS’ PAPERS
made of the NPP officers and the strengthof their local knowledge. The police havetherefore come up with the revamped
Neighbourhood Police Centre (NPC)
system where the officers will be rotatedamong a wider and more challenging rangeof duties, with increased pro-activefunctions, so that the process is integrated
into a single service delivery process. Each
NPC will have about 100 to 150 police
officers and will be in charge of 3 to 4 NPPs.
Eventually, by June 200l, 32 NPCs will be
set up island-wide. Each NPC will be
responsible for about 10,000 residents.
With this change, the new NPC will
become a one-stop total policing centre,
carrying out the full range of front-line
policing duties and providing quality onestop service for the public. Among otherthings, officers from an NPC will man the
counters at the NPPs, conduct patrols,
respond to calls of distress, investigate
crime, and make house visits.
The NPC system will also optimize thevalue contributed by police officers andplaces a lot of emphasis on proactive
community policing. NPPOs will no longer
perform mundane tasks. Instead, they will
now be totally responsible for the safety
and security of the neighbourhoods thatthey are in charge of. The NPCO isrequired to conduct an on-scene
investigation for all cases he or she attends
to. This reduces the time spent by thecomplainant at the scene, thus minimizing
the trauma the complainant has to endure.
The NPCO is competent in his/her job
through comprehensive training, and manyof the NPC work processes are ITsupported to provide the NPCOs with upto-date information so as to enable themto carry out their tasks more efficiently.
Under the NPC system, the challenge is
to work hand-in-hand with the grass-roots
leaders and other voluntary agencies, tomobilize the community to take on greater
responsibility and leadership to ensure its
own safety and security. The formation on
27 April 1997 of Neighbourhood Watch
Zones (NWZs), a volunteer citizenorganization formed by local residents forpromoting crime prevention activities in
the neighbourhood, is a big step towards
this aim. It is intended that with the NWZs
and the new NPC system, the communitypolice bond will be further strengthened.
The police and the community, including
the NWZs, therefore have strived toprovide total solutions to root problems byworking closely in the joint planning andcreation of Community Focus Plans(CFPs). The CFPs outline the joint
initiatives, programmes and projects which
will re-focus the police efforts to address
specific safety and security needs of thecommunity, and to nurture a strong bond
between the police and the community.
Grassroots liaison meetings are now
characterised by open dialogue anddiscussion as opposed to the traditional
reporting of cases. One of the steps
involved in the creation of the CFPs is
profiling the community’s characteristics,
and this is where their extensive networkin the neighbourhood can be fully utilized.
Being leaders, the NWZs can mobilize
residents to take part in activities andprogrammes recommended in the CFP.
Singapore also has a Voluntary Special
Constabulary (VSC) with part-timevolunteer police officers who hold full-timejobs in other fields. The VSC officers often
carry out patrols independently or inpartnership with their counterparts in theregular and national service components.
They execute their duties with a high levelof professionalism, discipline andenthusiasm.
B. Juvenile Delinquencv
One of the challenges facing Singapore

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is the rise in juvenile delinquency. The
police hold frequent talks to students inschools and to juvenile delinquents in the
courts regarding crime prevention, secretsociety activities, drug prevention andproblems of juvenile delinquency. In orderto help schools counter juvenile
delinquency, the latest innovative measuretaken by the SPF is the appointment of
selected secondary school teachers as
Honorary Volunteer Special Constabulary(VSC) officers. This is a system where someof the teachers in each school are given
enhanced authority in their managementof student behaviour, especially withregard to serious disciplinary cases. This
scheme was launched on 16 July 1997.
These “Hon VSCs”, trained by the police,
wear police uniforms and exercise certain
police powers, such as powers of arrest.
The teachers, who are also the Discipline
Masters/Mistresses or National Police
Cadet Corp instructors of their respective
schools, attend a 2-week course where they
are taught elementary law and defence
tactics, the way to fill out police reports,
call for backup (via PR sets), make arrestsand organise crime prevention talks. In
addition to being advisors and liaison
officers between the school and the police,
they are also advisors on all police mattersin the schools.
The Ministry of Education conducted asurvey on the scheme after 51/2 months
which showed some very positive results.
The presence of police authority had
deterred both recalcitrant and potential
offenders from committing crimes in andaround the school compound. The students
were aware of the presence of police
authority and tended to behave better.
They were also aware that any breach of
the law could result in immediate action
from the Hon VSCs. The Hon VSCs werecompetent in dealing with difficult cases,
parents and unsavoury strangers. They
also displayed more confidence in advising306

students, parents and teachers on policematters. This has resulted in Hon VSCs
commanding greater respect and thus
being able to perform their disciplinary role
more effectively. The Hon VSCs also
received better support from the NPPs suchas in increased patrols around the school
after school hours. It is expected that by
the year 2000, this scheme will be extended
with two Hon VSCs in each of the 147
Secondary schools and 11 institutes oftechnical education in Singapore.
C. Social Services
The Singapore police have been
providing the public with many kinds ofservices which are of benefit to thecommunity in making and keeping good
relationship between the public and thepolice. The “999” call is one of the mostimportant facilities of the police social
service. It is very useful for the detectionof crime, as well as for the quick preventionof crime. The police also give the public
the opportunity to see what the police aredoing by organizing public exhibitions on
crime prevention and distributing leaflets
which give local residents very useful
information on crime preventive measuresand the services provided by the NPP.
The police are also engaged in social
service work such as handling reports onlost and found articles, dealing withgrievances and troubles of the local
residents and running the Boys Club,
where activities (including sports) areconducted for the youth. The police also
disseminate information on crimes andseek the assistance of the public to solvethese crimes through the media of the local
newspapers as well as the production of a
local television programme, Crime Watch.
The police also provide such information
via the Internet at <http://
www.spinet.gov.sg.>
The SPF also places great emphasis on

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victims by providing necessary
psychological support and care. It
collaborates with voluntary welfareorganizations such as the Samaritans ofSingapore (SOS), Pertapis Home,
Marymount Centre, Singapore Council of
Women’s Organizations (SCWO) and the
Association of Women for Action andResearch (AWARE).
1. Foreigners
Foreigners joining the Singapore
workforce often arrive with little or no
crime prevention knowledge, creating
opportunities for crime to take place. For
example, some foreign nationals working
in Singapore are known to have left theirfront doors, grille gates and windows open
at times when most Singaporeans would
have had them locked. The NPP therefore
decided to make its foreign worker
community more aware of the need forsensible crime prevention measures, forthem to work peacefully in Singapore.
House visits were maintained to project
police presence, convey a sense of security
to the residents, deter potential criminals
and also to enhance crime prevention
awareness among locals and foreigners.
Crime prevention talks were organized forthe foreign workers and newsletters weredisplayed at both their factory premises
and on the notice boards of their apartment
blocks.
On the other hand, although the vast
majority of foreign workers in Singapore
try to make an honest living, there are also
those who seem to think that a life of crime
is more profitable. Illegal immigration also
continues to pose a threat to the security
and social stability of Singapore. Lured byhigher wages in Singapore, and affected by
the deteriorating economic conditions in
the region, many foreigners will continue
to enter Singapore illegally, or enter legallyand subsequently overstay.

Many of the illegal workers andoverstayers have also contributed to therise in foreigner crimes. An area of concern
highlighted by the police is where foreign
criminals, who targeted affluent
Singaporeans, would commit crimes andflee the island immediately after,
frustrating police attempts to capture
them. The police have also stepped up
operations against illegal immigrants.
Careful panning and swift action by thepolice have resulted in highly successful
rates of arrests. Those found without valid
identification papers are cuffed andbrought back to the station. Those unable
to prove lawful entry and stay in Singapore
are appropriately punished andrepatriated. Harbourers and employers ofillegal immigrants and overstayers, as wellas those who facilitate or encourage theseimmigrants to enter and unlawfully remainin Singapore, are swiftly dealt with andupon their conviction, deterrent sentences
are handed down to them.
Preventive measures such as frequentpatrols of our territorial waters to intercept
illegal entry into Singapore and spot
checks, gathering intelligence,
investigating and prosecuting offenders aresome of the ways these criminals could be
prevented from operating. Stronger
international ties and collaboration withneighbouring countries are also requiredin order to track down and arrest suchcross-border criminals and to solve crimes
committed by foreign nationals.
D. Case Management
The emphasis of the SPF has shiftedfrom individual investigation to teambased investigation and case management.
Police officers can thus look forward to amore supportive working environment,
besides benefiting from the cumulativeknowledge and experience of the team. A
new specialist CID unit, the Rape
Investigation Squad, was launched in

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RESOURCE MATERIAL SERIES No. 55
September 1997. As part of the Major
Crime Division of CID, the formation of theRape Investigation Squad has resulted in
all rape investigations being centralized at
CID. This move is aimed at providing
greater convenience and better service tothe public, by having better-trained officers
more sensitive to the trauma of rape
victims and a more conducive environment
to interview rape victims. Another new
specialist CID unit launched in January
1997 was the Computer Crime Branch,
officially under the Commercial Crime
Branch of the CID. It is responsible for
initiating computer crime and major
telecommunications fraud investigations.
Officers of the branch are also trained to
conduct computer forensic examinations,in order to retrieve evidence contained incomputers, to support the prosecution of
offenders in police investigations. To-date,
the Computer Crime Branch has handledcases of hacking, unauthorized access/modification of computer materials,
computer fraud and pager/handphonecloning.
E. Dedicated Service
The Singapore police force also has
dedicated police officers who are willing to
make personal sacrifices to solve crimes in
Singapore. A recent example is the case of
murder of a Bulgarian, Iordanka
Apostolova, whose bloated body was
discovered in a canal in Tanah Merah on
12 January 1998. With the full attentionof a group of CID officers to the case,catching little sleep during the period, they
managed to solve the case within just 36
hours of discovery of the body. The casewas brought to trial and the murderers
were sentenced to death on 14 August 1998.
The accused appealed but the appeal was
dismissed by the Court of Appeal on 11
January 1999, just a year from the day thevictim was killed. On 30 January 1999,
an abettor in the murder, the wife of one of
the accused who helped to cause the308

evidence of the murder to disappear invarious ways, was swiftly brought to justiceand sentenced to 6 years imprisonment.
The Singapore Police Force has provenits mettle by providing incident-free
security for international events such as
the WTO Conference in 1996. Regionally,
the SPF has taken the lead to enhanceinter-police co-operation among theASEAN countries. Internationally, the
SPF men in blue have taken part inoverseas United Nations peacekeeping
missions, such as policing the former
killing fields of Cambodia and ensuring fairelections at Namibia. The key factors fort h e S P F ’s s u c c e s s a r e e n h a n c i n ginvestigative and crime-solving ability,community policing and the developing ofa problem-solving approach; manpowerplanning and development; discipline,
professionalism and rigorous training tomaximize the full potential of the officers.
F. Technological Improvements
With the introduction of the NPC,
selected NPPs will be closed during certain
hours of the day where the demand forpolice services are low (eg. 11 pm to 8 am).
The public will however continue to receive
essential services and police assistancethrough the use of information technology
from a “Virtual Cop”. By leveraging ontechnology, the police have developed theEmergency Communication (EC) System
and Police Kiosks to ensure that no cry forhelp will go unheard. A console called theEC is situated in a conspicuous, brightly
lit spot outside each NPP which otherpassers-by can clearly see. A touch of abutton puts the complainant in touch with
an officer in an NPC. The console allows
two-way interaction so the officer canquickly advise you on what to do while thenearest patrol officers are informed of thecomplainant’s location and problem. The
officer at the other end is even able toactivate flashing emergency lights around111TH INTERNATIONAL SEMINAR
VISITING EXPERTS’ PAPERS
the complainant (for instance where thecomplainant is being pursued) as well as aloud alarm to draw the attention of passersby and to deter the pursuer from further
action. The EC is easy to use, and a simple
instruction panel in all four official
languages of Singapore ensures that the
instructions will be clear to most people.
The console is designed to be vandal proof,
and installed at a height to prevent misuseby young children. The NPC officer
deactivates the EC when the NPP is open.
To prevent the significant reduction of
the service level of the NPPs when they areclosed, the police have developed the Police
Kiosk. These kiosks have videoconferencing capabilities and are linked toa manned service point. If the physicalpresence of a police officer is required, an
officer from the patrol team will bedispatched to attend to the caller. Even
when the NPPs are closed, members of the
public will still have access to police
services via the video conferencing kiosks.
These police kiosks will provide facilities
such as enquiry services for members of the
public who wish to inquire on police-related
procedures and policies. With the touchscreen capability of the kiosks, the public
will be able to obtain directory services
such as legal services and counselling
services, locality maps to show the nearest
NPP and information on operating hours.
The kiosks will also provide advice andanswer queries on police procedures andmatters. The user will also be able to holdvideo conferences with the officer at the
NPC if s/he needs further clarification or
additional information that is not provided
by the kiosk.
Besides enquiry services, the kiosks also
provide reporting services. Members of the
public can lodge police reports on crime,
routine cases and traffic accidents without,the physical presence of a police officer. The
kiosks can provide computerized lodging ofpolice reports and automatically generatereport numbers. They can capture digital
signatures, fingerprints and photographs,
and store and retrieve all captured
information. Above all, the system allows
the user to hold a video conference with an
officer at the NPC if s/he chooses to report
the incident or cases, as in a “999” call.
The police have made successful use of
new technology in their sophisticatedComputerized Investigation Management
System (CRIMES) - an electronic IP systemgoing the way of a paperless work
environment. Following the success of thepilot implementaton, the system was
implemented Force-wide on 1 July 1997.
The SPF introduced the Case Property
System (CASPROS) which aims to replace
the manual system for tracking case
exhibits and found property, which is basedon register books. CASPROS would be set
up for the various divisional headquarters
and will provide an electronic database tomonitor case exhibits and found property,
in order for all divisional headquarters toshare this information, so that a better
service can be provided to members of the
public in locating their lost items.
The Automated Vehicle Screening
System (AVSS) and the Optical Character
Recognition (OCR) System were
implemented at Singapore’s Second linkwith West Malaysia. These two systems
greatly enhance the capability of the SPF
to detect vehicles wanted for HDB/URA
summonses, road traffic offences, and othercriminal cases.
In January 1998, the SPF commissioned
the first computerized ticketing system, theSingapore On-The-Spot-Ticketing System(SPOTS) for the Traffic Police, and thereby
displaced the manual issue of summonses.
This greatly minimizes the data entry
errors in the Traffic Computer System due

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to illegible handwriting on the summonsforms and also increases the efficiency of
the Traffic Police Department.
The SPF Intranet launched in October
1997 provides an essential boost to theinternal communications efforts of thepolice. Not only does the Intranet provide
officers with up-to-date information andknowledge, it also serves as a depositoryof crucial information and best practices,making it an invaluable leaning tool.
G. Other Improvements
In 1998, SPF procured a fleet of new
generation riot control vehicles comprisingof two new command vehicles and seven
new riot buses for the Special Operations
Command. These new vehicles are
improved versions of the current vehicles.
Painted an aggressive red, and with theirwindows protected with wire mesh, thesevehicles arriving at a riot scene
automatically will instil awe in even themost unruly mobs, and establish a
psychological edge and impress on riotersthat the police mean business. In the eventof an emergency, the command vehicle
serves as the forward command post andhighly trained officers can quickly plan riot
control strategies using the staff-aid
provided in the vehicle, which includes
detailed sector maps of Singapore. The
turret on top of the command vehicle
permits trained sharpshooters to station
themselves at an advantageous elevatedposition to neutralize any foreseeable
threats. The turret gives a better view of
the riot scene, which enhances tacticaldecision making. The turret also carries
the public address system which enables
the police troop to warn troublemakers todisperse before action is taken to dispersethem.
The Police Coast Guard of the SPF has
also been relentless in its efforts toconstantly upgrade and modernize its fleet

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of patrol vessels to meet new challenges
and to respond to the changing
circumstances. It has acquired a fleet of
18 high speed patrol boats and 2 command
boats at a total cost of $58 million toapprehend and deter sea robbers, illegal
immigrants and smugglers. These patrol
vessels are propelled by water jets which
are well-known for their propulsion power
and low noise and less prone to damage bysubmerged objects as compared toconventional propellers. Apart from theirhigh speed capabilities, these boats alsocome equipped with the latest technology
such as the Integrated Command, Control
and Surveillance (C2S) System and the
Navigational, Communication andcomputerized Engine Monitoring Control
System. These new boats, which replace
the PX class boats that were commissioned
in the early 1980s, will enhance the Police
Coast Guard’s ability to fight crime in
Singapore waters, as well as help greatly
in search and rescue operations.
Fast Response Cars (FRCs) ensure thatthe police arrive on the scene of a crime
quickly in urgent cases, but like all cars,
their arrival can be delayed if they arecaught in heavy traffic. The SPF has comeup with an effective solution to that
contingency - Fast Response Motorcycles(FRMs) that can weave through traffic, andin emergencies, even hop onto pavements
or take short cuts through alleys and anyother available routes. On 1 December
1997, this programme was launched andit was found that the response time was
faster compared to the FRCs. The FRMs
are intended for urgent cases only anddeployed during peak periods and at
certain patrol sectors where traffic flow isheavy. They will conduct patrols andattend to urgent messages in pairs. FRM
officers patrol with standard equipment
including bullet-proof vests, breathanalyzers, fire extinguishers and first aid
boxes. They are not bogged down by bulky

111TH INTERNATIONAL SEMINAR
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equipment such as road block signs andshields.

the pitfalls of and the avoidance ofcorruption.

III. CORRUPT PRACTICESINVESTIGATION BUREAU

IV. CENTRAL NARCOTICSBUREAU

It is also apt to mention here the Corrupt
Practices Investigation Bureau (CPIB),
which is an independent body whichinvestigates and aims to prevent corruption
in the public and private sectors in
Singapore. Established in 1952, it derives
its powers of investigation from thePrevention of Corruption Act (Cap 241).
The bureau is headed by a director who isdirectly responsible to the Prime Minister.

In 1971, the Central Narcotics Bureau(CNB) was formed as a result of increasing
drug abuse among youths. The Misuse ofDrugs Act (1973) provides executive power
to detain a drug consumer for compulsory
treatment and rehabilitation. In 1975, an
amendment to the Misuse of Drugs Act
provides the death penalty for traffickingof more than 15 grams of pure morphine.
It was, however, with the mounting ofOperation Ferret, on 1 April 1977, in which
concerted efforts were directed against
drug trafficking and consuming by the
CNB, police and customs that successagainst the drug menace was clearly seen.
Punishment meted out for drug offences
are severe in Singapore.

The CPIB is responsible for safeguarding
the integrity of the public service andencouraging corruption-free transactionsin the private sector. It is also charged withthe responsibility of checking on
malpractices by public officers andreporting such cases to the appropriate
govemment departments and public bodies
for disciplinary action. Although theprimary function of the Bureau is toinvestigate corruption under thePrevention of Corruption Act, it isempowered to investigate any otherseizable offence under any written law
which is disclosed in the course of acorruption investigation.
Besides bringing corruption offenders tobook, the Bureau carries out corruption
prevention by reviewing the work methods
and procedures of corruption - prone
departments and public bodies to identify
administrative weaknesses in the existing
systems which could facilitate corruption
and malpractice, and recommends
remedial and preventative measure to theheads of the departments concerned. Alsoin this regard, officers of the bureau
regularly conduct lectures and seminars to
educate public officers, especially those
who come into contact with the public, on

The Singapore police are empowered toinvestigate into all kinds of criminal
offences, and when they complete theirinvestigation, they are required to refer theoffences to public prosecutors who enjoy theexclusive right to prosecute offenders. On
12 April 1997, the Attorney General ofSingapore, Mr Chan Sek Keong, during the
opening of the newly renovated office of the
Senior DPP Courts, paid tribute to police
officers whose good investigative work had
led to successful prosecution. The efficiency
and effectiveness of the police in criminal
trials are reflected specifically in thenumber of convictions obtained from guilty
pleas or trials, and generally in theprevailing low crime rate.
V. ROLE OF THE PROSECUTOR
The control and direction of mostcriminal prosecutions and proceedings in
Singapore rests with the Attorney-General
as the Public Prosecutor (Section 336 of theSingapore Criminal Procedure Code). His

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RESOURCE MATERIAL SERIES No. 55
power, exercisable at his discretion, “toinstitute, conduct or discontinue roceedings
for any offence”, has been given
constitutional status by Article 35(8) of theSingapore Constitution. The Attorney
General is independent in this role, and not
subject to the control of the government.
He is assisted by Deputy Public
Prosecutors (DPPs) who conduct
prosecutions in Subordinate and High
Court trials, and Magistrate’s and Criminal
Appeals, as well as appear in the Coroner’s
Court and at Preliminary Inquiries. The
Crime Division delegates certain matters,such as criminal trials in the Magistrate
Courts, to the Police Prosecution Branch(PPB). Although not administratively partof the Crime Division, the PPB isfunctionally linked to the Crime Division.
The DPPs work includes prosecuting
criminal matters in the courts, directing
law enforcement agencies in theirinvestigations, evaluating and giving
directions on their investigation papers
from the police and other enforcement
agencies, replying to representations fromaccused persons, giving advice on criminal
justice matters to other departments andagencies, and processing applications forprivate prosecution.
In addition, the Commercial Affairs
Department (CAD) was established in 1984
under the Ministry of Finance (Revenue
Division) to combat complex commercial
fraud and white collar crimes in Singapore.
DPPs in CAD carry out the role of the
public prosecutor in respect of mattersdealt with by CAD. The work of the CAD
includes investigating and prosecutingcommercial offences under the Securities
Industry Act, the Companies Act,
particularly in relation to financial
institutions and providing advice on interagency projects, making applications forthe production, confiscation and restraint
orders under the Drug Trafficking

312(Confiscation of Benefits) Act, and otheroffences disclosed in the course ofinvestigation.
The role of the public prosecutor in crime
prevention and control must therefore beviewed within the context of this criminal
justice system, to be as follows:
A . The discretion to Prosecute or
Not
The Constitution of the Republic ofSingapore vests in the Attorney-Generalthe “powers, exercisable at his discretion,
to institute, conduct or discontinue any
proceedings for any offence’’ [Article 35(8)].
Section 336(1) of the Criminal Procedure
Code (Cap 68) states that “the AttorneyGeneral shall be the public prosecutor andshall have the control and direction of allprosecutions and proceedings under thisCode.”
B. Advising the Police
The police and other law enforcement
agencies responsible for investigating
crimes refer their cases whenevernecessary and practicable to the publicprosecutor and DPPs for their instruction
as whether to charge and, if so, underwhich provision of the law the charge
should be made. The police are also advisedon matters concerning their investigation,
to ensure that procedures set by the law
are properly followed. Where the needarises, suitable instructions and guidelines
are also issued by the DPPs to the police inregard to particular types of offences.
C.

Bail Applications
The objective of bail is to secure theaccused person’s attendance at court
proceedings, and at the same time, to set
them at liberty before the trial or appeal.
It is often a difficult question whether bailshould be allowed. The prosecution takes
a stand in each case where the accused
person applies to the court for bail, whether

111TH INTERNATIONAL SEMINAR
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before trial or pending appeal, opposing
such applications or agreeing to them(subject to a suitable quantum of bail being
offered), according to the facts of theparticular case and to the legal provisions
and principles that govern bail.
D. Trials
Prosecution in court is a crucial stage ofbringing an offender to justice, for it is at
the trial that the evidence relevant to thealleged offence is presented and tested, thatthe charge must be proved and, if proved,
the sentence pronounced. Singapore
adheres to the principle that every person
is presumed innocent until proven guilty,
and the onus is on the prosecution to provethe charge beyond a reasonable doubt.
The public prosecutor and the DPP
conduct all criminal prosecutions before theHigh Court. The DPPs also conduct anumber of criminal prosecutions before theSubordinate Courts, which includes
prosecutions for offences under the Penal
Code, the Prevention of Corruption Act(Cap 241) and various commercial andfinancial crimes. A majority of Subordinate
C o u r t p r o s e c u t i o n s , h o w e v e r, a r e
undertaken by the police and government
departments. The DPP’s role here is to
direct and advise these prosecutors.
E. Sentencing
Before sentence is passed on a particularoffender, the defence mitigates on theirbehalf. The prosecution, in suitable cases,
also addresses the court on sentence. Thisoccurs when, in the prosecution’s opinion,
a deterrent sentence is necessary; often
such a deterrence is required because of
the prevalence and increasing rate of thetype of crime for which the offender has
been found guilty.
In deciding on the charge to be preferred,
the DPPs also plays a role in regard tosentencing because a more serious charge

generally results in a more severe sentence,
and a reduced charge in a lesser one. In
the case of an offender facing multiple
charges, the DPPs may also decide toproceed on only one count or a number ofcounts, applying to the court either to take
into consideration, for the purposes ofsentencing the remainder of the charges
or to withdraw them. In cases where theaccused person pleads guilty, the gravityof the offence (as reflected in thep r o s e c u t i o n ’s s t a t e m e n t o f f a c t s )constitutes a factor in the sentencing
process.
F. Appeals
The prosecution process does not always
end with the conclusion of a trial, for an
appeal to a higher court may be lodged
against the decision of the trial court. In
Singapore, the prosecution has the rightto appeal against an order of acquittal, justas the defence has the right to appeal
against a conviction. Both sides may also
appeal against the sentence imposed.
Appeals from decisions of theSubordinate Courts, or “Magistrate’s
Appeals”, are heard by the High Court
exercising its appellate jurisdiction. Under
Section 60(1) of the Supreme Court of
Judicature Act (Cap 322), where in thecourse of such an appeal any question oflaw of public interest arises, any party may
apply to the court for the question to bereserved for the decision of the Court of
Criminal Appeal. Where the publicprosecutor so applies, such an application
shall be granted. Appeals from decisionsof the High Court exercising its original
jurisdiction in criminal cases are heard in
the Court of Crimninal Appeal.
All appeals filed by the prosecution in
the High Court or the Court of Criminal
Appeal are argued by the DPPs. They also
appear to respond to appeals lodged by the
defence. To succeed in an appeal against

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RESOURCE MATERIAL SERIES No. 55
acquittal, the DPP bears the onerous
burden of persuading the appeal court that,on the basis of the evidence presented at
the trial and on principles of law, an orderof conviction should be substituted. Wheres/he appeals against the sentence, theDPPs must establish that the sentence wasmanifestly inadequate and should beenhanced.
G. lnitiatives
To keep apace with the fast-changing
world and the speedy progress of work
processes in the SPF and in the courts, theCrime Division of the Attorney-General’sChambers has also set up a number ofSpecialized Committees to respond to theneed for specialization in various aspectsof their work. Officers in these specialist
teams do in-depth research into, and serveas core personnel, in their respective areasof law. These committees also organize
visits, seminars and training sessions.
Among these are the CyberCrime
Committee, which comprises of officers
conversant with IT and serves as the inhouse specialist team on Computer andInternet Crimes; the Extradition/Mutual
Assistance Committee, which deals withinternational co-operation over crime
related matters; and a Special Task Forceon Immigration to deal with the increasing
number of illegal immigrants.
ACES or “Advisor for Case Sentencing”
was developed in 1996 with assistance fromthe Information Technology Institute. Thissystem was introduced to assist DPPs inmaking submissions on sentences and to
determine if appeals should be lodged
where the sentences are inappropriate.
The Formalized Accelerated System for
Trial-or “FAST” - was also introduced. This
scheme works by identifying cases which
can be dealt with expeditiously at theearliest possible stage, placing them on the“FAST” track. Co-operation between thepolice and DPPs in the subordinate courts

314

ensures that cases on the “FAST” track arepromptly resolved. This saves time andensures more efficient case management.
A special Mentor Scheme was also
introduced to ensure closer monitoring of
junior officers, upkeeping the continuity
and accountability for decisions taken, andto foster better rapport between junior andsenior officers. All officers at Grade 16 orwith 2 years or less legal service experience
are now paired with a senior officer who
will be responsible for ensuring theirproper training, and will guide andsupervise their work.
Likewise, the CAD has also used IT toenhance efficiency. The CAD has devised
an on-line procedural manual or Aide
Memoire. A database of relevant case law
and legal resource materials was also
created. Further, a computerized Case
Tracking System was introduced tofacilitate tracking of cases assigned to
DPPs. This enabled efficient monitoringof the progress of the cases. The CAD also
formed a committee to deal with mattersrelating to the security, storage andretrieval of critical operational informationin its Department. In July 1997, the CAD
had started an in-house, bi-monthly
publication which contain write-ups on
legal issues, investigative procedures andreports on social welfare issues.
The public prosector and the DPPs
occupy an essential position in the criminal
justice system and actively participate inevery stage of the criminal prosecution
process. Their vital role within the system
serves the overall aim of controlling andreducing crime in society, and promoting
respect for the criminal law.
VI. ROLE OF THE COURTS
The judiciary is one of the three pillarsof the State. It administers the law

111TH INTERNATIONAL SEMINAR
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independently of the executive. The
judiciary is a vital part of Singapore’s legal
and judicial system. In order to meet theneeds of the changing demographic, social,political, economic and technologicaltrends, the judiciary has engaged in future
strategic planning for the 21st century.
In the administration of justice, thecourts have focused on instituting a set oftimeless values which include accessibility,
expedition and timeliness; equality,
fairness and integrity; independence andaccountability; and public trust andconfidence. These values serve as beacons
for the administration of justice inSingapore. In line with their core values,
the judiciary recognises the importance ofobtaining feedback from the public toprovide relevant performance benchmarks
for the courts’ strategic planning and policy
development initiatives.
Recent surveys conducted by variousorganizations, such as the Singapore-based
Forbes Research Pty Ltd (Forbes), theHong Kong-based Political and Economic
Risk Consultancy (PERC), and the
Switzerland-based International Institutefor Management Development (IMD), haveall confirmed a high level of confidence in
the Singapore judiciary by both local andinternational communities. The Singapore
judiciary has scored top marks for the fairadministration of justice and is perceived
to contribute significantly to the public’ss e n s e o f s e c u r i t y, a n d t o t h ecompetitiveness of the economy.
The main finding of a recent survey
conducted by Forbes Research during May
to July 1998, covering 1,519 households,
showed that the Singapore public has fullconfidence in the fair administration ofjustice in Singapore. An impressive 97%of survey respondents agreed strongly thatthe courts administer justice fairly to all.
The courts have also fared well in the public

perception of crime levels and theeffectiveness of sentencing. A high 99% of
respondents felt safe living in Singapore
and affirmed that the judiciary has
contributed much to their sense of security;
while 93% felt that sentences meted by the
courts are effective as a deterrent topotential offenders. The survey alsoaffirmed that the Singapore judiciarymeets the public’s expectations of theeffective administration of justice.
PERC is an international consulting
firm specializing in strategic businessinformation and analysis for companies
doing business in East and South East
Asia. In the August 1998 issue of its
fortnightly newsletter, “Asian intelligence”,
PERC published the findings of its recent
survey of over 400 senior businessexecutives on the perceived quality of key
institutions in certain countries. Singapore
was rated as having the best national
institutions in Asia. In the ranking of the
judiciary and the police, Singapore topped
again with a score of 2.87, improving from3.07 in 1997. PERC also commented that
“The Singapore courts are also effcient in
dispatching both civil and criminal cases,
using a legal system modeled on the British
system of justice.”
The core of Singapore’s criminal justicesystem is its judicial system. The
administration of justice is vested in:(i) The Supreme Court is a superior courtof record, It consists of the the High
Court; the Court of Appeal; and the
Court of Criminal Appeal. The
Honourable Chief Justice, the Judgesof Appeals, the Judges of the High
Court and the Judicial Commissioners,
dispense and superintend theadministration of justice in Singapore.
The Supreme Court is supported by theSupreme Court Registry headed by theRegistrar who, assisted by the Deputy,315

RESOURCE MATERIAL SERIES No. 55
Senior Assistant and Assistant
Registrars, engages in the day to day
running of the Registry and perform
judicial functions such as hearings ofinterlocutory applications as well as
administrative functions. The Justices’
Law Clerk, who works directly under
the charge of the Chief Justice, assists
the judges and judicial commissioners
by carrying out research on the law,particularly for appeals before the
Court of Appeal.
In criminal cases, the High Court
generally tries cases where the offences
are punishable with death or
imprisonment for a term which exceeds
10 years. It also hears appeals fromthe Subordinate Courts Registrars,
Magistrates and District Judges, aswell as the Registrars of the Supreme
Court. Proceedings in the High Court
are normally heard and disposed of bya single judge. The Court of Appeal is
the final appellate court in Singapore
and the highest court in the land. The
Court of Appeal consists of the Chief
Justice and the Judges of Appeal. The
Court of Appeal hears appeals fromdecisions of High Court in both civil andcriminal matters.
(ii) The subordinate courts consist ofDistrict Courts, Magistrates Courts,
the Juvenile Court, the Coroner ’s
Court, the Family Court and the Small
Claims Tribunal. There are presently
27 criminal trial courts (including theTraffic Court) in the subordinate courts,
apart from two Criminal Mentions
Courts, one Centralized Sentencing
Court and a Court handling
Magistrates Complaints. The
subordinate courts are headed by the
Senior District Judge, and he isassisted by District Judges,
Magistrates, Coroners, Small Claims
Tribunals Referees, Registrars and

316

Deputy Registrars in the disposal ofcivil and criminal cases within thejurisdiction of the subordinate courts.
In 1998, 53 District Judges and 14
Magistrates served in the subordinate
courts. Some of the judicial officers
concurrently hold appointments as
Deputy Registrars, dealing with civil
and criminal matters in chambers;
Coroners and Referees of Small Claims
Tribunals.
The subordinate courts introduced
and formalized its four justice models in
its 1997/1998 workplan, namely:
1. Criminal justice - protecting the
public2. Juvenile justice - restorative
justice
3. Civil justice - effective and fairdispute resolution
4. Family justice - protecting family
obligations
These justice models serve as
reference points in the formulation of
judicial policies.
Criminal cases make up about 70% of
the cases that are dealt with in thesubordinate courts. These include cases
commenced by the public prosecutor, cases
prosecuted by the various government
agencies, and private prosecutions.
(a) In criminal cases, the District Court
has jurisdiction to hear most offences
other than those which are punishable
with life imprisonment or death. In
general, it may impose a term of
imprisonment not exceeding 7 years, afine of up to $10,000, caning of up to 12
strokes (for male offenders) or any
lawful combination of thesepunishments. It may also impose
probation. In cases of recalcitrant
offenders, it may also impose

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reformative or corrective training.
(b) As compared with the District Court, aMagistrate’s Court can try offences ofa less serious nature where themaximum jail sentence does not exceed
3 years, or where only a fine can be
imposed. In general, it may impose
imprisonment for a term not exceedig
2 years, a fine not exceeding $2,000,
caning of up to 6 strokes (for maleoffenders) or any lawful combination ofthese punishments. It may also impose
probation.
(c) There are currently two Criminal
Mentions Courts, which respectively
exercise the jurisdiction of a District
Court and of a Magistrate’s Court. The
Criminal Mentions Courts are involvedin the initial management of criminalcases and ensure the smooth runningof the criminal justice system. Whenaccused persons are first charged, theircases are mentioned in one of the
Criminal Mentions Courts. The
Criminal Mentions Courts deal with awide variety of applications including
applications for bail, remand andadjournments.
(d) If an accused person decides to plead
guilty, their case will be dealt withimmediately in the Criminal Mentions
Courts. More serious cases will be sent
to the Sentencing Courts. However, if
the accused person claims trial, theMentions Court will either fix a date
for trial or for pre-trial conference. A
video-conferencing facility for bailmatters and remand of prisoners has
been set up between the Mentions
Court and the remand prison.
(e) The Traffic Court manages the conductof traffic cases, except in cases where
death has been caused by a road traffic
accident. One significant technologicalinnovation is the use of an AutomatedTraffic Offence Management System(ATOMS), which was launched on 1
November 1996 to enhance theefficiency and accessibility of thesubordinate courts. This system allows
first time offenders in many minor
traffic offences to settle traffic tickets
containing an offer of a composition fine
at automated kiosks which are locatedthroughout Singapore. In cases where
the period for payment of thecomposition fine has expired, offenders
may now plead guilty to the offence atan ATOMS kiosk, instead of having toappear in court. ATOMS is unique inthat it is the first automated payment
system in the world which allows thepayment of court fines. It is unlike
other similar systems in the UnitedStates, such as the one in the Long
Beach Municipal Court which only
handles payment of composition fines
imposed by non-court agencies. The
launch of ATOMS is the actualizationof the subordinate courts’ vision of avirtual courthouse. Since its launch,
the service has been well received andutilized by members of the public.
(f) The Coroner’s Court is presided overby the State Coroner. The Coroner’s
main duty is to ascertain the cause andcircumstances under which a deceased
person came to their death, in cases
where there is reason to suspect that aperson died in a sudden or an unaturalmanner, or by violence or where thecause of death is not known. The
Coroner will also determine whether
any person was criminally involved in
the deceased person’s death.
(g) The criminal courts are supported by aCrime Registry which manages all
criminal processes in the subordinate
courts and monitors the progress ofcases until final disposition (including

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RESOURCE MATERIAL SERIES No. 55
appeals). The Crime Registry also
provides information on the status andprogress of cases, crime trends andstatistics.
(h) Mediation has been introduced in
private prosecutions, instituted by wayof Magistrates Complaints. These
cases relate mainly to neighbourhoodand relational disputes, where parties
are known to each other. Such cases
include simple assaults and threats,
nuisance and causing mischief. Manycases have been successfully concluded
through mediation.
(i) The Juvenile Court was created withthe passing of the Children and Young
Persons Ordinance in 1949. This court
deals with all types of criminal offencesby young offenders under the age of 16,
and focuses not only on punishment,
but also on the correction, counselling
and rehabilitation of the juvenile
offender. The Juvenile Court deals
with three categories of cases, namely:- juvenile offenders;- children and young persons
beyond parental control;- children and young persons inneed of protection.
The Juvenile Court’s approach is basedon a restorative model of justice. In dealing
with juveniles, the Court works closely withthe offender, their parents, peers, teachersand principals, and the various care giving
agencies. The paramount concern of theJuvenile Court is that of rehabilitation andreformation. Essentially, this means it has
to consider how best to use its powers andavailable programmes to rehabilitate orsocially reintegrate the juvenile
constructively back into society. In
choosing the appropriate “instruments ofreform’’, the Juvenile Court has to be
mindful of the individual strengths andlimitations of the offender who appear

318

before it. To this end, the Juvenile Court
has introduced innovative measures which
involve the active participation of thecommunity in the justice process, such as
Family Conferencing, Family Care
Conferencing and Bootcamp Training.
A. Family Conferencing
Family conferencing has its
underpinnings in the phenomenon of“shame” and “re-integrative shaming”. The
conference brings together the offender andtheir family, and the victim and theirfamily, the offender ’s schoolteacher or
employer, the prosecution, the probation
officer and any other significant person.
The judge is assisted by a facilitator, who,
through skilled interview techniques,facilitate the session in a manner to havethe offender realize the impact of theiroffending behaviour on those near and dearto them. The facilitator explores reasonsfor the negative behaviour and for theparent’s lack of control. The facilitator will
also formulate concrete steps, through the
input of participants, which the offender
can take to make good their offending act
to those affected by it. After the conference,
the offender and their parents appear incourt for the judge to make an order on thecase. The most common order following afamily conference is a probation order for
12 to 36 months with or without residency.
A family conference is convened forselected offenders who have supportive andconcerned parents. Furthermore, theseoffenders must not be hard coredelinquents and must be remorseful. Since
its implementation in June 1998, a total of
130 family conferences have been
conducted. Only 6 out of the 130 (5%)
offenders who underwent family
conferencing have re-offended. This showsthat the programme also helps to minimize
the likelihood of juvenile re-offending. The
Juvenile Court of Singapore has beenreferred to as the only jurisdiction in the

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common law world that makes reintegration of the child offender an integral
part of the juvenile justice system.
B. Family Care Conferencing
The family care conference is also
another integral component of the Juvenile
Court programmes. Its philosophy issimilar to that of the family conference,
except that it is targeted at juveniles whoare beyond parental control. These may
include instances where parents haveexhausted all means of disciplining them,like seeking professional help from a social
service agency, liaising with school
authorities, etc. The aims of the family care
conference include the need:
-

-

-

-

To strengthen family units andempower parents and thecommunity to regain control of thejuvenile;
To encourage the juvenile to takeresponsibility for the delinquent
behaviour:
To reduce the placement of such ajuvenile in institutions
accommodating offenders;
To reduce the likelihood of thejuvenile committing an offence.

C. Youth Family Care Programme
The Juvenile Court, in liaison with
TOUCH Community Services, runs the
youth family care programme where
volunteer families are matched with
dysfunctional young persons placed on
probation or statutory supervision. Thesefamilies act as positive role models for thejuvenile and their families. A volunteer
family will meet the assigned young person
to befriend and encourage them for as longas the probation of statutory supervisionorder subsists, or until the court otherwiseorders. The programme is targeted at
helping juvenile offenders and children
beyond parental control, but who are
remorseful and do not have ingraineddelinquent traits.
D. Community Service Orders
A Community Service Order (“CSO”) isan order of the court compelling theoffender to perform unpaid work for a
specified number of hours. This is
implemented as a term of the probation
order. Through such an order, the offenderis given an opportunity to make amends
for the offending behaviour by performing
services for the community or its lessfortunate members. Over and above
depriving the offender of leisure time, theCSO also aims to develop a sense of
empathy and respect in the offender
towards people and property, as well as
broaden their perspective of the world
around them.
A survey was conducted in August 1998
to obtain feedback on the CSO placement.
On the whole, the probationers found the
CSO placement a worthwhile andenriching experience, while all the parents
expressed the view that the CSO scheme
was beneficial for their child. The CSO has
also been effective as a rehabilitative
measure, as the responses showed that the
CSO experience had helped theprobationers to develop empathy andconsideration for others, while gaining
meaningful social experiences. Most
probationers felt that their CSO placement
had a positive impact on their relationshipwith their families and have helped them
personally in the development of theirpersonality and character, and that they
have acquired new skills/knowledge/traits.
All the agencies were also satisfied withthe performance of the probationers. The
CSO scheme as a condition of probation has
been effective and has provided theprobationer with a different perspective on
life. They did not encounter any major
problems when assigning work to them.
The Community Service Unit (CSU) was

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RESOURCE MATERIAL SERIES No. 55
set up on 7 December 1996 to implement
the CSO scheme in close consultation withthe subordinate courts, participating
agencies on the CSO scheme, andinvestigating probation officers. The
Juvenile Court imposed its first CSO on
17 December 1996. The first CSO for an
adult probationer was imposed by asubordinate court on 22 June 1997.
E. Peer Advisors Programme
In this programme, students fromselected secondary schools are given achance to sit in court proceedings, as well
as take part in discussions with a Juvenile
Court judge in chambers before judgement
is passed. The aims of the programme are
to give the Juvenile Court a contemporary
peer group perspective of the offending
criminal act. The peer advisors’
participation, together with the teachers,
will also benefit them through a better
understanding of the justice process andthe consequences of involvement incriminal activities.
F. Teen Development ProgrammeThis is a 16 week “After School Care”
programme which the court can
incorporate into a community-based option
for certain offenders. It aims at nonhardcore offenders who have been
experiencing problems at home and at
school. It targets youths residing in thewestern part of Singapore. This is a nonresidential programme aimed at providing
an alternative to institutional care for teenswith delinquent traits at home and at
school, and who may have committed
offences. The programme aims to provide
an environment that is safe, structured andconducive for the development of positiveand socially acceptable attitudes andbehaviours like perseverance, self-control,
respect, trust and honesty. It also serves
as a platform to counsel the juvenile andhis/her family.

320

G. Boot Camp
The subordinate courts conducted theirfirst “boot camp’’ in 1996. Unlike the bootcamps in other jurisdictions (that are court
sentences), this boot camp was deliberately
conducted as a pre-sentence evaluation
process. Apart from the strict physicalregime of the boot camp, counsellingsessions are held for the juveniles and theirparents. Programmes at the boot camp aredesigned to bring about behaviour changes
under a controlled environment, so that thesupervised behavioural changes willremain with the participants once they arereferred back to society.
An integral aspect of this programme is
the intensive post-camp follow-up
component designed to address theoffending behaviour of the participants andto prevent them from committing offencesin the future. This aftercare component
also aims to develop self-esteem,
responsibility, discipline and good work
ethics in participants, and to increase theiracademic and job related skills throughpersonalized supervision by counsellors.
H. Streetwise Programme
The Streetwise Programme commenced
in 1997. This is a government funded
project and is a developmental programme
aimed at changing the behaviour of youths
who have unwittingly drifted into gangs.
It is an intensive 6 month structured
programme which incorporates elements ofcounselling, family conferencing, peer
support, recreation and academic
activities. The programme aims to help
these youths “turn around” and gain a fresh
start in life.
I.

Pre-complaint Counselling: Early
Intervention
The Juvenile Court recognizes that thefamily unit has the primary responsibilityof disciplining the child. At the same time,
the Children and Young Persons Act allows

111TH INTERNATIONAL SEMINAR
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parents to seek the Court’s intervention
where their children are beyond theircontrol. In fulfilling its restorative role ofpromoting parental responsibility, theJuvenile Court has successfully utilized
community resources to intervene infamilies with children who are beyond
parental control, as an intermediate step
before the matter is brought into thejuvenile justice system. This is to avoid
the situation of having parents lodging
complaints against their children in
moments of desperation without firstseeking the help of the extended family or
the resources within the community. This
also seeks to ameliorate the undesirable
impact on the “pre-delinquent” child, as thelatter will likely be remanded in the Boys/
Girls Home, pending the social report, after
the complaint is laid by their parents. This
is to ensure that parents have exhausted
all available avenues to help their children
before they are brought into the juvenile
justice system as a last resort.
Pre-complaint counselling is an
initiative devised by the Juvenile Court asa diversionary measure to keep borderline‘beyond parental control cases’ away fromthe court system. Essentially, the Court
utilizes community intervention at the precomplaint stage. The Court will referborderline BPC cases to the Family Service
Centres when the complaint is laid by theirparents. The Family Service Centres will
do a preliminary assessment of the case todecide if they can work with the family tohelp them with the child. In the meantime,
the case will be adjourned. If the Family
Service Centre is able to work with thefamily, the case will be closed in theJuvenile Court when the family returns on
the adjourned date. If the Family Service
Centre is unable to help the family, thematter proceeds on in the juvenile justicesystem.

J. Peer Mediation
On 14 April 1997, the Juvenile Court
introduced the Peer Mediation programme
in selected secondary schools, as part of its
preventive and restorative measures. Peer
mediation encourages the use of nonadversarial conflict resolution as aneffective alternative to violence and otherforms of anti-social behaviour, peer
mediation aims to undercut disciplinary
problems in schools before they start, by
imputing practical skills to manage andresolve conflict before it escalates into abehaviour which requires intervention by
the schools, police or the courts. In the peer
mediation programme, the students receive
special training to enable them to act as
third party mediators between two or moreof their peers in the same school who are
involved in petty quarrels and want to see
it resolved constructively. The results of
the inaugural peer mediation scheme havebeen very encouraging.
K. Typology of Youth Rioters
Besides a number of preventive
measures undertaken by various
government and voluntary organizations
to deal with this problelm, the courts havealso been getting tough with rioting cases.
To gain further insight into the profile ofjuvenile delinquents, the Research andStatistics Unit conducted a study in 1998
on the profile of youth rioters. The mean
age of a young rioter was 16.9 years.
Studies show that in Singapore’s case, thelack of positive parental guidance, senseof alienalion, powerlessness and low selfesteem because of a lack of traditional
support structures such as the family andschool, and built up feelings of frustration
and anger, and a desire to obtain support
outside the traditional institutions, lack ofcommon ground between the offenders andtheir parents, and negative peer influence,seem to be the risk factors for the youths’
violent, delinquent behaviour. While
spending time with negative peers, the321

RESOURCE MATERIAL SERIES No. 55
youth picks up bad habits like smoking,alcohol consumption and drugs. Casestudies show that the family structure andsocio-economic status of the family havelittle impact on the youths’ moral values
and delinquent behaviour. The study
revealed that in general, the sentences
meted out by the courts were mainly
rehabilitative in nature. In most cases,
youth rioters were remorseful of theiroffending acts. Tougher sentences had been
meted out to hard core offenders. To-date,the breach rate of these youth riotersremains low.

summonses issued by the various
government departments such as the
Housing and Development Board, theUrban Redevelopment Authority, Central
Provident Fund Board, the Registry ofCompanies and Businesses, and the Inland
Revenue Authority of Singapore. The other(Court 23N) deals with road traffic offences
brought by the Traffic Police and regulatory
offences brought by the Land Transport
Authority.

The Juvenile Court, with its restorative
justice philosophy, has made deep inroadsin the management of juvenile offenders.
It has been, and will continue to be, thecatalyst in the development andimplementation of innovative juvenile
justice measures. It seeks to forge effective
links with community resources to address
juvenile crime and delinquent behaviour
both in the present and as we move into
the next millenium.

Section 137(2) of the CPC also provides
that in any case relating to an offence
punishable by fine only or by imprisonment
not exceeding three months, and in which
the presence of the accused has beenrequired by a summons issued by aMagistrate, such an accused desiring toplead guilty to the offence and be sentenced
in their absence may, by letter addressedto the court, plead guilty and submit to pay
any fine which may be imposed in respectof such offences. Public awareness of thisprovision would result in less caseloads andunnecessary attendance.

One of the objectives of the subordinate
courts is the enhancement of access tojustice for the public through improved
court services. A large majority of the casesthat come before the subordinate courts arefor offences like littering in public, offences
against environmental public health andminor traffic violations. For mostSingaporeans, it is in the subordinate
courts that they come into direct contact
with the various processes of the law. For
example, Night Courts were established in
April 1992 to deal with the huge volume of
regulatory and traffic offences. These
courts function for the convenience of theworking public who would otherwise haveto take time off from work in order to attend
court. These courts function from 6 pm toabout 9 pm, Mondays to Fridays. There
are two Night Courts, each with its own
profile of cases. One (Court 13N) deals with

A Multi-door Courthouse (MDC), thefirst such courthouse in the
Commonwealth and Asia-Pacific region,
was established on 2 May 1998. The MDC
is a one-stop service centre for thescreening and channelling of cases. Thus,
it seeks to increase public awareness ofdispute resolution processes, offer and coordinate a selection of high quality dispute
resolution programmes, and assist parties
in selecting the most suitable dispute
resolution process. The MDC pairs a
dispute within the jurisdiction of thesubordinate courts, with an appropriate
solution forum. It renders information to
enable members of the public to makeinformed decisions in respect of theirjustice needs in the area of civil, criminal,
family and juvenile law, etc. It aims to bea centralized intake and diagnostic centre
to screen cases to the most appropriate type322

111TH INTERNATIONAL SEMINAR
VISITING EXPERTS’ PAPERS
of dispute resolution process. It serves toenhance a paradigm shift from thetraditional adversarial adjudication of
disputes to management of disputes
through the use of alternative dispute
resolution mechanisms.
The MDC launched the Vulnerable
Witness Support Programme in August
1998. This programme provides support
to vulnerable witnesses who have to testify
in public prosecution of criminal cases.
“Vulnerable Witness” refers to victims ofcrimes, such victims of rape or molestation
or family violence cases, or witnesses under
the age of 16 or those having intellectual
capacity below the age of 16 years.
Amendments have also been made to theSingapore Criminal Procedure Code (Cap68) for the evidence of vulnerable
witnesses, in certain types of offences, tobe heard through video or television links.
With the assistance of the Singapore
Children’s Society, a support group is being
put into place. In each instance, a support
person will help the vulnerable witness
walk-through the court environment before
the trial, to allow him/her to understandcourt procedures so as to alleviate thestress levels of such witnesses. This will
cut down the anxieties of the vulnerable
witness. Volunteers will not discuss any
matter of the case with the witness or his/her parents or guardians. Referrals under
the programme are from two sources,
namely, the Attorney-General’s Chambers
and/or the police. Referrals to the MDC
are also made by the counsellors in the
Family Court of victims in family violence
cases.
As part of the sentencing process, Victim
Impact Statements for sexual offences havenow become a feature of the criminal justiceprocess in the courts. A victim impact
statement is a statement made by thevictim of a crime detailing how the crime
has affected the victim physically,

emotionally and financially. This has
effectively introduced into our criminal
jurisprudence a balance between the rightsof the accused and the victim. The
statements are used judiciously, and as
part of the mitigation process. The first
victim impact statement was presented incourt on 30 June 1997.
In order to assist the community inaccessing justice easily, the subordinate
courts, in collaboration with the Ministryof Law, the National Council of Social
Service, People’s Association and Singapore
Police Force, launched the “Strengthening
Community Links Project”. The primaryobjective of the project is to institutionalize
and operationalize various communitybased programmes and initiatives in orderto strengthen community links. This isdone via the integration of the respective
primary roles of the various participating
agencies, and through the provision of aco-ordinated service package to membersof the public to enhance their welfare,security and community bonds.
L. Problems Relating to Court Congestion
and Trial Delays
Aside from improving court services, aprime objective of the courts has been to
maintain a responsive justice system, as
measured by the timely and effective
disposition of cases. In his speech at theSingapore Legal Opening 1999, theHonourable the Chief Justice said “In 1998
alone, the subordinate courts dealt with,in round numbers, a total of 364,000 casesand other matters. Compared to the 1997
caseload, there is an increase by 28.1%...
Strict case disposition and judgement
timelines continued to be maintained for
all cases. The subordinate courts have nobacklog.” His Honour also added that “Thesubordinate courts went further in 1998 tooffer, what they called a “Hotwash”; anopportunity to members of the Bar, thepublic prosecutor and the other prosecuting

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and enforcement agencies to have theircivil or criminal cases heard before the endof the year and expedited earlier than theprescribed timelines. This invitation was
initiated along with other pro-active
measures as part of the subordinate courts’desire and commitment to keep ahead of
the flow of cases and work, and tocommence 1999 afresh and on top of things.
It was also an attempt by the courts to meetthe special needs of the parties.”
Court congestion, trial delays, protracted
hearings and rigid trial procedures areailments which afflict most judicial
systems. The resulting impression is thatthe machinery of justice is mismanaged
and inefficiently run. Singapore is mindfulof such pitfalls and solutions are constantly
sought and reforms introduced to
streamline the court administration toensure continued fair and speedy trials.
In the years 1992 to 1993, the courts
focused on the problems of clearing thebacklog of cases awaiting hearing dates andon improving the waiting periods for the
disposal of cases. In 1993 and the years
following, the focus shifted from problem
solving to overhauling the organizational
structure and work systems of the courts
to guide judicial officers in theadministration of justice and the finetuning of the justice system. In March
1997, the Chief Justice of Singapore in his
Keynote Address during the Introductionof the Subordinate Courts Sixth Workplan
for 1997 and 1998 said : “... our vision
should be for the subordinate courts tobecome world-class; among the best in theworld. This vision will further strengthen
public confidence in the justice system. On
a broader front, it will enhance Singapore’s
reputation for the rule of law.”
The courts have a duty to the State andall persons involved in legal proceedings
to facilitate the timely and expeditious

324

disposition of cases. Justice delayed isjustice denied. As such, the stand taken
has been that the pace of litigation and casedisposition must be set by the courts.
Reforms have been instituted in thesubordinate courts on the premise thatjudges have a major role to play in thetimely and expeditious disposition of thecases before the courts.
Unlike in the past, where judges were
expected to play a non-interventionist role,case management is now a legitimate
judicial function. The challenge facing all
courts is to dispose of their cases efficiently
and expeditiously, without affecting thequality of justice. This is of primary
importance in the area of criminal casemanagement, where there is a constanttension between the aim of preventing an
unnecessary waste of time in the hearing
and determination of criminal cases andthe need to keep intact the basic rights ofan accused person which ensure that s/heis given a fair trial.
In April 1993, a group management ofcases (“GMC”) system for criminal cases
was introduced in the subordinate courts.
Under this system, trial courts are divided
into four groups and a senior judge isappointed group manager for a number ofjudges, with the task of managing a court
calendar for their group, to expeditiously
dispose the criminal cases allotted to thatgroup. The disposal of the assigned
number of cases within specified time
periods is the responsibility of the groupmanager and the judges in that group. At
the time of its inception, its first aim wasto clear the backlog of cases which had
accumulated. Since then, the GMC scheme
has proven to be a success in clearing thebacklog of cases and making it a thing of
the past. The disposition rate attained by
the GMC groups has been consistently
high.

111TH INTERNATIONAL SEMINAR
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The introduction of Pre-trial
Conferences (PTCs) in 1993 coincided with
the implementation of the GMC scheme
and marked a paradigm shift in thephilosophy of the courts towards casemanagement. The courts now play anactive role in the management of cases, byascertaining the status of the case anddefining and clarifying the contentious
issues of the trial. At PTCs, parties are
urged to disclose the nature and extent of
their case, their lists of witnesses andphysical evidence. Where parties can agree
on facts which are not in dispute, the court
will direct for the preparation of statementsof agreed facts, so that the trial will focus
only on contentious issues. Parties areencouraged to tender conditioned
statements (these are statements prepared
under conditions that will enable thestatements to be admitted during the trial,to the same extent as oral evidence). This
cuts down on the time for hearing and saves
witnesses the inconvenience of attending
court, when their evidence will not be
disputed by the other party. Issues andareas of dispute are identified andreasonably accurate assessments, inrespect of the time required for the trial,
can then be made.
In May 1997, a Differentiated CaseManagement (DCM) Scheme has been
instituted for two categories of criminalcases in the subordinate courts, to ensure
effective, efficient and expeditious
management and disposal of such cases.
The first is for cases initiated by the CPIB,
and the second relates to immigration cases
involving foreign witnesses. A special court
has been set up to manage each of thesecategories of cases. After these cases are
mentioned in the Criminal Mentions Court(Court 26), where the accused claims trial
in such cases, they are fixed for a PTC in
their respective special court within one to
two weeks from the date of first mention
in Court 26. Where the accused elects toplead guilty, these cases would betransferred immediately to the Centralized
Sentencing Court (Court 24) for sentencing.
In both civil and criminal matters, astrict “no adjournment” policy is adopted.
Applications for the adjournment or
vacation of hearing dates are scrutinizedcarefully, and these applications would be
refused unless there are good grounds.
Strict control is exercised for even those
applications for adjournments made on
medical grounds. With effect from 15
February 1997, only medical certificates,
which state certain prescribed details suchas the diagnosis, full name and designationof the medical practitioner, and a statementthat the patient is to be excused from court
attendance and not merely from workattendance, are accepted. Lawyers andlitigants are now aware that they will haveto be prepared for the trial to proceed at
the assigned hearing dates. In addition,
efforts are taken to ensure that part-heard
cases are kept to a minimum. The Court’s
policy is that cases should be heard anddisposed of within the hearing periods
allotted for the trial. Judges are also
vigilant in ensuring that there is no misuseof the legal process through unnecessary
and prolonged questioning by counsel,
resulting in protracted trials.
Besides ensuring that waiting periods
for trial dates are favourable, the pace ofcase disposition is monitored by the courts
from the time a case is commenced in court.
In criminal cases, the progress anddisposition of a case is monitored from thetime the accused is first charged in court
through the mechanism of pre-trial
conferences leading up to the trial. As ofJanuary 1999, the following waiting
periods for trials were maintained:325

RESOURCE MATERIAL SERIES No. 55
Criminal Trial Cases
District Arrest Cases
Magistrate’s Arrest Cases
Police and Private Summonses
Traffic Cases:
GeneralDrink and Drive
Coroner’s Cases:
GeneralSpecialCrime Registry
Magistrate’s Complaints
Juvenile Court
Juvenile Arrest Cases (Hearing)
Juvenile Arrest Cases(Sentence Report)
Family Conferencing
Family Care Conferencing

M. Harnessing of Technology
In his keynote address at the Technology
Renaissance Courts Conference on 24
September 1996, the Honourable Chief
Justice of Singapore, Mr Yong Pung How,
said:“As the technology revolution unfolds,
there will be implications for the judicial
system. Judges will have to deal withcountless new ways to acquire, receive andprocess data, contend with old informationthat is being expanded by the new, andadjust to changing expectations. And associety changes, so will conflict. The
judiciary must take the lead in assessing
technological and scientific advancements
to ensure that the law can address the legal
issues of tomorrow. The judiciary must be
the first to understand advancements inbiotechnology, molecular biology, robotics,
and artificial intelligence and assess the
new legal issues which these changes willbring. The rapid rate of innovation and326

2 to 4 weeks from last Pre-trial
Conference (PTC)
1 to 4 weeks from last mention of PTC
1 to 4 weeks from last mention
1 week from last PTC
2 weeks from last PTC
8 weeks from date of death
4 to 6 weeks from date of death

2 weeks from filing of Notice

2 weeks from last mention
4 to 6 weeks from order of sentence
report2 weeks from submission of sentence
report2 weeks from submission of social
reportdiffusion of technology will also mean thatjudges and court administrators will haveto conduct on-going technology
assessments of the vast opportunities
offered by technology to the administrationof justice. For example, the subordinate
courts are already using video conferencing
technology to conduct remote bail hearings
from prisons. And through a video link,
vulnerable witnesses are able to give
evidence away from the courtroom, thereby
avoiding direct confrontation with theaccused person....”The Chief Justice also said at that
conference: “Whatever changes the future
brings, we must always remember thatjustice must be assisted, not dominated, by
technology. Technology alone does not
improve the system. It is people, assisted
by technology, who make the justice system
work. We must be careful not to blindly

111TH INTERNATIONAL SEMINAR
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substitute technology or become slaves oftechnology. Neither should technology be
used to avoid human contact for what is
technically feasible, may not always bedesirable. Efficiency, as an objective,
should never replace thoughtfulconsideration. Instead, improvements
generated by technology should
complement tested and proven methods ofadministering justice. Justice should never
be on the “cutting-edge” of technology, fordignity and due process are too importantto jeopardise through potential systems
failure or malfunction.”
In its efforts to enhance the efficiency ofthe courts and to improve standards ofservice to the public, the subordinate courts
have attempted to harness the rapid
advances of cutting-edge technology. The
courts have made extensive use oftechnological advances to improve court
services for lawyers and court users, andto enhance the efficiency of the courts.
Technology will enable the subordinate
courts to offer new and more convenientservices to the public. Court services could
progressively be made available without
the public having to physically come tocourt. Over time, with information
technology it would be possible for theoperation of “virtual” courts, which would
allow businesses and individuals totransact court matters from their offices
and homes. The subordinate courts havecertainly come a long way since the days
when it struggled to put a computer on thedesktop of every officer.
The courts have adapted suchtechnological advances for use in the justicesystem to further enhance the court’s
productivity, and these have had a major
impact on the justice process and work
systems. For instance, the ATOMS
launched by the subordinate courts in
November 1996, allows the payment offines for minor traffic offences through themore than 100 automated teller machines
located at convenient public locations. Thisdispenses with the need for defendants toappear personally in court to answer the
charges against them.
In the Criminal Mention Courts (inCourt 26), we have utilized video-link
technologies to connect the courtroom to
the remand prisons, so that applications
for bail can be made through a Bail VideoLink without the need for the prisoner tobe brought physically to the courtroom. A
Witness Video-Link (in Court 16) enables
vulnerable witnesses, such as childwitnesses or victims of sexual offences, togive their evidence without being
physically present in the courtroom to face
the accused. Similarly, video conferencing
has also been introduced to hear family
violence cases (in Court 46). These cases
can be heard with the witness testifying
through video-link instead of in the
courtroom. By testifying through videoconferencing, the trauma of the family
violence victims can be reduced.
Technological innovations have also beenused to improve the work systems within
the courts to assist the judicial officers. In
addition to being able to carry out legal
research from their personal computers, a
judicial officers’ database was launched inearly 1998. Judicial officers are now able
to access through their personal computersbench manuals and other papers in the
courts database. This has enhanced thedissemination and sharing of resource
materials among judicial officers.
The Technology Court was launched in
1995 in the Supreme Court. Various
technologies to facilitate the presentationof evidence and other information havebeen installed. Within this Court, there
are video conferencing facilities, anintegrated audio-visual system together
with a litigation support system. Evidence

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RESOURCE MATERIAL SERIES No. 55
is recorded digitally as computer files. This
enables transcription to be done much
faster than previously with audio tapes.
Almost all judges and judicial
commissioners have presided over hearingsin the Technology Court and it has been inconsiderable demand. Likewise, a criminal
trial court in the subordinate courts has
been converted into a Technology Court.
The subordinate courts also has 10 Digital
Recording Courts and a Technology
Chamber. In lengthy trials, the judges may
use the digital recording machines to record
the evidence of witnesses. All these courts
are linked up by a computer network which
in turn are linked to the subordinate courts
network with security protection.
In August 1998, the Chief Justice and
the Judges of Appeal spearheaded thetransition into the age of the paperlesscourt with the introduction of the electronic
hearing of all Magistrates’ Appeals andAppeals to the Court of Appeal in both civil
and criminal matters. This year, it isplanned for electronic hearing to beextended to trials in both civil and criminal
matters also. The conduct of appeals in
the electronic environment has been foundto be much faster and more efficient thanin a non-electronic environment, as
documents referred to in the appeal
hearings could be retrieved and projected
over the monitor screens instantaneously
and effortlessly for all present in the
courtroom.
The subordinate courts are currently
working on the Singapore Case Recording
Information Management System(SCRIMS), a fully computerized file
tracking and information management
system for criminal cases. The system willhouse databases containing all vital
information concerning criminal cases
dealt with in the subordinate courts. Alsoin the pipeline is the Integrated Criminal
Justice Information Management System

328(ICJS) which essentially involves thesetting up of an integrated networking
between the subordinate courts andagencies such as the Attorney-General’sChambers, Prisons Department and the
Police Criminal Records Office. The
network will enable these organizations toshare information and common operationaldata.
The Supreme Court Internet website isa t < h t t p : / / w w w. g o v. s g / j u d i c i a r y /supremect.>. All significant speeches of the
Honourable Chief Justice delivered since
31 July 1996 are now posted there. The
subordinate courts launched its Internet
website located at <http://gov.sg/judiciary/
subct.> on 1 March 1997 which accords
with the subordinate courts’ strategic plan
to maximize the use of information
technology to enhance its services to the
public. A highlight of the website using“photobubble” technology, is a virtual “walkthrough the courts”. This segment takes
the viewer on a visual 360 degrees walkthrough of the subordinate courts.
N. Family Violence
The amendments to the Women’sCharter took effect from 1 May 1997.
Pursuant to the amendments, applications
for Personal Protection Orders (PPO) at the
Family Court can be made not only for
spousal or domestic violence involving
children, but also by family members suchas parents, siblings and other family
members as deemed fit by the court. The
amendment has therefore resulted in achange in the profile of persons seeking
protection from family violence at the
Family Court. The scope of family violence
was expanded to include causing hurt
knowingly, restraining a family member
against their will, placing a person in fearof hurt and continual harassment.
Further, “family violence” now includes
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to abuse of the complainant. The powersof the Family Court have also been
increased such that parties can be ordered
to attend counselling. Breach of a PPO is
also a criminal offence. These changes give
greater protection to all members of thefamily.
The time taken for the issuance of a PPO
is of utmost importance to a victim of family
violence. Once an application for a PPO is
received by the Court, the Court will takecognizance of the complaint. In cases
where there is imminent danger of family
violence being committed against theapplicant, the Court will issue an expedited
protection order immediately after thelodgement of the complaint. In otherwords, the victim will have the benefit of aprotection order on the very day when an
application for protection is made. Such a
protection order is effective from the dateof service and is valid for 28 days or until
the hearing or mention date.
With regard to the application for a PPO,
the application is fixed for mention within
one week. Where parties wish to instructcounsel, the case may be fixed for further
mention. PPOs may be granted on themention date in suitable cases. Where atrial is necessary to ascertain the veracityof a complaint, the trial will be fixed within
one to two weeks. In the interim,
counselling sessions may be fixed insuitable cases. Unlike an expedited
protection order, there is no fixed duration
for a PPO which is granted on the mention
date or after trial. The PPO remains valid
until the order is rescinded or set aside.
Since 1 November 1997, the Family
Court has set up the Family Protection
Unit, which is a dedicated and specialized
unit to handle applications for protection
orders. Professional court counsellors areattached to the Unit. They conduct intake
interviews of victims of family violence,carry out risk evaluation (including
assessment of the severity of the acts ofviolence), and offer support and advice tovictims on safety measures. Victims offamily violence who require long-term
emotional support will be referred towelfare agencies or crisis shelters in thecommunity for counselling support, shelterand other assistance. They may also referparties requiring legal advice to the Family
Court Legal Clinic, which is manned byvolunteer lawyers who offer legal advice at
no charge. Since December 1998, the Uniteven houses a medical clinic operated byvolunteer doctors working on roster fromthe Association of Women Doctors(Singapore) to provide free medical
examination to applicants for PPOs. This
service enables applicants to procure
medical evidence for the hearing when
applying for PPOs. Previously, suchapplicants were referred to designatedhospitals for expeditious medical
examination, after which, the medical
examination form would be forwarded to
the Court before the next hearing.
With the setting up of the FamilyProtection Unit, the Family Court also
processes applications for PPOs within ashorter timeframe. In cases where thereis imminent danger of family violence beingcommitted against the applicant, the Court
will issue an expedited order upon
application. The expedited order is servedon the same day or by the next working
day. All applications for PPOs are also fixed
for mention in the Court within one week.
In other words, parties are brought before
the Court expeditiously so that theapplication can be dealt with at the earliest
opportunity. Thereafter, the Court willclosely monitor the progress of a case toensure that the necessary orders are madequickly. All these add up to a system
whereby protection is afforded to a victim
without undue delay.

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RESOURCE MATERIAL SERIES No. 55
VII. PLANNING FOR THE FUTURE
The Singapore court system iscontinually evolving to meet the needs ofsociety. To ensure that the Supreme Court
is well prepared for the challenges ahead,departmental workplans have been set out
annually since 1992 and presented to all
staff at the Supreme Court andSubordinate Courts Workplan Seminars,
respectively. The departmental work plansset out our specific work targets, strategies
for achieving these goals, and theindicators or checklist of tasks that we will
use to benchmark our performance in thework year. The Seminar serves as acompass in our continuing journey towards
higher levels of excellence and to guide us
with greater precision and accuracy. As theworkplans are conceptualized annually,
they enable the courts to reset and map
out immediate goals and targets against
the courts’ long term strategic direction andpolicies. These workplans are not justmandatory, but fundamental to our goal ofbeing a world-class judiciary. In fact, in
his speech at the Opening of the Legal Year
1999, the Chief Justice of Singapore
remarked that “the subordinate courts
have realised their vision of becomingworld class.”values and principles for the discharge of
judicial duties. This Justice Statement
serves as a constant reminder to judicial
officers of their duties, and a written
commitment by the courts of their duties
to the public.
“Vision without action is merely adream. Action without vision just passes
the time. Vision with action can change
the world”, Joel Arthur Baker. Mere target
setting is not enough to inspire true passion
and commitment. It is big goals andchallenges, and a common purpose, thatbrings on excitement and the sense offulfillment which makes life worthwhile.
The core values determine the means ofreaching the destination and are the soulthat guide and align our actions. They are
the compass by which we navigate throughchallenges and rapid changes, and advancetowards our ultimate goal. With the corevalues as our faithful commandments, thecourts will be serving the public good withconscience. Faithful adherence to theseprinciples is therefore necessary for the
courts to become Dignus Honore, or worthyof honour, of the public trust which thenation and community have bestowed upon
the institution and its officers.

VIII. THE JUSTICE STATEMENT

IX. CODE OF ETHICS FOR
JUDICIAL OFFICERS

The vision of the Sixth Workplan
Seminar of the Subordinate Courts 1997/
1998, held on 1 March 1997, was to become
world-class in the 21st Century. Moreemphasis was placed on enhancing
Singapore’s reputation for the rule of law
and strengthening public confidence in thejustice system. To provide a framework ofvalues for the judges of the subordinate
courts bench, it is necessary that timelesscore values are established to guide thejudiciary in the administration of justice.
At the Seminar, the Justice Statement of
the Subordinate Courts was also unveiled.
It sets out the mission, objectives, core

Another management challenge is theinculcation of judicial ethics in judicial
officers. It is crucial to any justice systemthat the judicial officers are committed tohonour the spirit and letter of their judicial
oath. A Code of Ethics for Judicial Officers
has been prepared and will provide
guidance and a framework for regulating
the conduct of judicial officers, and will alsoenhance the public accountability of the
judiciary. The areas covered range frompersonal propriety to judicial duties, as well
as extra-judicial activities. The provisions
in the Code reflect the values of judicial

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111TH INTERNATIONAL SEMINAR
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oaths of office and allegiance. The Codedoes not seek to govern but to guide judicial
officers, and as such, it does not impingeon independence in judicial decision
making.
A. The Strategic Framework
To ensure that the subordinate courts
remain focused on achieving their missionof administering justice faithfully in the
evolving environment of the next
millenium, the courts established astrategic framework. In his Keynote
Address at the Introduction of the Seventh
Workplan Seminar of the Subordinate
Courts 1998/1999, the Honourable Chief
Justice, Mr Yong Pung How, set out theelements of such a framework to be as
follows:(a) T h e p u b l i c p e r c e p t i o n o f t h e
Singapore justice system must be oneof confidence in and respect forSingapore courts and the rule of law.
(b) The justice system must maintainhuman dignity, uphold the rule of law,and enhance access to justice;(c) All persons will have ready access tojustice in the subordinate courts,
which will provide a range of effective
and expeditious means of dispute
resolution, without undue cost,inconvenience or delay;(d) The subordinate courts will ensure
independent, fair and equal
application of the judicial process andadminister justice in accordance withthe law;(e) The subordinate courts will beadministered in accordance withsound court governance principles
which foster the efficient use of publicresources and enhance performance;(f) Technology will be strategically
employed to increase access,convenience and ease of use of court
services, and to assist the courts inenhancing the quality of justice;(g) The impact of socio-economic andlegal forces will be closely monitored
in order that the subordinate courts
can effectively lead and managechange amidst a rapidly changing
national and global environment;(h) The subordinate courts will beadequately staffed by the best judges
and court personnel, who will besupported by continuing educationand performance evaluations.
This framework, together with the
Subordinate Courts Justice Statement,
provides a reference or benchmark against
which future activities should be assessed.
B. The Courts CharterOn 15 February 1997, the judiciarylaunched a charter for court users (“TheCourts Charter”) in an effort to further
increase public understanding of our court
system and to enhance its accessibility.
Copies of the Charter are distributed freeto the public at the various service
counters. There is overwhelming demandfor copies of it. The Charter is alsoavailable on the Supreme Court’s website.
The Charter sets out the mission of thecourts as professionalism and excellence inthe expeditious and efficient dispensing ofjustice in accordance with the law. It alsolays out our values to be accessibility,
expedition, equality, fairness and integrity,
independence and accountability, andpublic trust and confidence. The Charter
describes the range of services and the
response or processing time for these
services. It will serve as a usefulperformance indicator of the effectivenessand efficiency of the judicial system. As
the Chief Justice of Singapore, Mr Yong
Pung How, said at the Opening of the Legal
Year 1997, “For without public trust andconfidence in the justice system, the ruleof law will not have any practical meaning.”
The Courts Charter was also includedin the Creativity 27, by the US-based “The331

RESOURCE MATERIAL SERIES No. 55
Creativity Annual”, a publication which
records outstanding international creative
works. The Charter was chosen among 77
entries from the United States andcountries around the world.
X. THE JUSTICE POLICY GROUPThe Singapore judiciary recognizes thatas one of the institutions in the justicesystem, it must remain relevant to thesociety which it operates within. The
courts must be prepared to deal with thechallenges resulting from changes in theconditions and environment within which
it operates. The anticipation of futurechallenges, and the measures to be taken,
are important components in the long-term
strategic planning and direction of thecourts, and the formulation of judicial
policies. The courts have taken a pro-active
approach in this respect. Future planningfor the century ahead has commenced anda Justice Policy Group (JPG), serving as athink-tank, has been formed. The JPG willadvise on and assist in the formation of
judicial policies. It is also concerned withthe charting of strategic directions for thesubordinate courts. The JPG’s chief role is
to facilitate research and development invarious disciplines. It also sources
pertinent ideas from eminent foreign
experts in this respect. The results of thisresearch will then form a credible basis
from which informed policy decisions
emanate.
XI. ANNUAL REPORTS
The Supreme Court and the subordinate
courts jointly issue a report annually. The
annual reports set out all the developments
and achivements for the past year, together
with the milestones for future activities.
The annual reports not only enhance theefforts of the courts towards public
accountability and commitment, but also
shape and mould the perception of ourconstituents and the public.

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XII. THE CENTRE FOR JUDICIALEDUCATION AND LEARNING(CJEL)The Centre for Judicial Education andLearning (CJEL) was established in mid1996. Programmes and lectures during theyear focused on enhancing bench skills,
professional knowledge, case management,
ethics and good practice, and social context
education. Some of these courses were also
extended to court administrators.
The criminal justice system embodies
and secures the rule of law and protects
the public. The openness of our economy
cannot prevent us from insulating against
regional crime trends. The range of crimes
is becoming increasingly broad andcomplex. The subordinate courts continue
to anticipate the changing trends of crime.
Sentences and sentencing philosophy arereviewed. Effective deterrent and severe
punishments are imposed on offenders who
commit crimes of particular concern to the
public, as well as dangerous and chronic
offenders.
The courts will adopt appropriate
measures to further enhance and extend
the quality and scope of their services tothe public. More attention and resources
will also be focused on public awarenessprogrammes to reach out to the public. The
level of public awareness of the
programmes implemented by theSingapore courts is relatively high. The
main sources of information for suchprogrammes were gathered through themedia of newspapers and the television.
The feedback obtained will also be relevant
for setting performance benchmarks for the
judiciary.
XIII. CONCLUSION
In the face of news of countries where
drugs, crime and violence seem commonplace, Singapore has been able through the

111TH INTERNATIONAL SEMINAR
VISITING EXPERTS’ PAPERS
efforts of the police, the prosecutors andthe courts, managed to keep its crime rates
down for nine successive years. As the
Chinese saying goes, “To develop a businessis difficult, to keep the business going iseven more difficult.” Success management
is therefore a challenge for our community.
The police, the prosecutors and the courts
can constantly survey their service quality
and public perception of and confidence intheir organizations. The officers in theseorganizations should uphold their corevalues, mission, goals, objectives and key
priorities. Management in theseorganizations should be effectively engaged
in strategic planning and, at the same time,
work with their subordinates to discoverways to provide quality service to the
public. If an organization’s structure fails
to serve its purpose, it needs to be changed.
The future depends on initiative. It
depends on people taking action, reflecting
on the consequences, and finding ways of
doing it better next time. Learning fastenough to survive is becoming an essential
requirement for success. This requires thepolice, prosecutors and the courts to be ina position to change its services andprocesses to reflect what is learned.
Creating the future, which once lay in thehands of others, has become theresponsibility of all. Therefore, thepotential of all officers, be it the police,prosecutors or judges, should be developed
and utilized, so that instead of being
passive observers of events unfolding
before them, they may be active
participants in exploring and finding betterways in the future, so that the country andits people can really benefit from theirenergies and capabilities.
The most important task is to anticipate
crisis. To wait until crisis hits is alreadyabdication. Management in the police andpublic prosecutor’s offices, as well as in the
courts, are engaged in strategic planning

to anticipate and plan ahead for any crisis.
In this respect, the subordinate courts placestrategic goals and milestones into theirannual workplans. As the Honourable
Chief Justice, Mr Yong Pung How, said at
the Asia - Pacific Courts Conference inAugust 1997: “As leaders, there are threeerrors which I think we must avoid at all
cost. They are the failure to learn fromthe past, the failure to adapt to the present,
and the failure to anticipate the future.”With fast changing techology, the natureof crime, especially in the commercial
world, will become complex andsophisticated. We must be alert to harness
such advances in technologies to help us
in achieving better performance to benefit
our society. By constantly applying andtesting such advances in our work
environment, we can explore the greatest
value of technological advancement.
Officers will therefore need to have theknowledge to deal with high-tech crime as
the new century unfolds. Moreover, thenature of crime usually involves the police,prosecutors and the courts, it may benecessary to harness the knowledge ofthese strategic partners with the aid ofmodern technology.
Combating crime is not only the
responsibility of the police, but the publicprosecutor and the courts as well. Crime
will continue to occur and evolve in moresophisticated and complex ways. Criminal
minds manoeuvre within the loopholes ofthe law and policies, using their expertiseand positions. The competency of thepolice, the prosecutors and the judges isvital to handle sophisticated crimes.
Training is fundamental to gain theexpertise and resources to be in a position
to battle complex and especially, whitecollar and computer crimes.
As Singapore becomes an even moreglobal, cosmopolitan city in the 21st333

RESOURCE MATERIAL SERIES No. 55
century, drawing talents from around theworld, the social composition and structureof the country will inevitably change. To
add fuel to the engine of our economic
growth, Singapore has to compete to attract
foreign talents to its shores. The public
will therefore no longer remain
homogeneously local.
Foreign
professionals and workers alike will bringwith them their different expectations andculture. In turn, Singaporeans might
follow this new benchmark. To meet thechallenges ahead, the Singapore police,prosecutors and the courts should betrained to better relate to and communicate
with the public.
International ties with police forces allover the world are essential as crime goesinternational; a result of the growing
affluence and information age.
International ties could be in the form ofinter-forces games, liaison meetings,
training work attachments, joint
operations and criminal arrests. As a resultof such close ties, more exchange ofintelligence, networking of liaison officersof direct contact and shared databasesystems can be made possible. In the sameway, closer ties with other departments of
the home team can also be established.
The widespread unemployment andrising prices in South East Asia will havea ripple effect on the crime situation in
Singapore, with the threat of illegal
immigrants entering Singapore andcommitting crimes. Being a mere citystate, Singapore’s margin for error isextremely small and therefore there is aconstant need to improve and upgrade
services for its people, who are its mostimportant asset, in whatever they do andto continue to enhance their capability tomeet the challenges that lie ahead. The
ability of its people to change quickly isessential.

334

The Singapore Prime Minister, Mr Goh
Chok Tons, has said that “We, cannot afforda mindset that instinctively shuts off
challenges to the existing status quo. We
must always be willing to look at issues
afresh. From time to time, when aparticular strategy or policy has served its
usefulness, we must dare to break the
mould and start anew. ”
I n t o d a y ’s f a s t c h a n g i n g w o r l d ,yesterday’s successfull practices may nolonger be effective today. Our organizations
must not be complacent about their past
successes and start to rest on its laurels.
As the saying goes, “Success is a journey,
and not a destination.” The path is neverending; human competitive nature tobetter yesterday’s achievements and toreign supreme in the rat-race provides
strong impetus to continually raise thestandards of performance, and to reach forthat pot of gold at the further end of therainbow. Besides valuing the past, theleadership must keep challenging existing
assumptions and existing ways of thinking
and acting.
Scenario planning, which is not trying
to predict the future but perceiving thefuture in the present for each organization,i.e., on what to do if a certain event takes
place, may be useful to better prepare forthe future. To operate in an uncertain
world, we need to question the assumptions
about the way the world works, so as tohave a clear view of the world and how theworld may impact on the police force. The
end result for scenario planning is not topresent an accurate picture of tomorrow,
but to provide better decisions about the
future and how worldwide events affect us.
The challenges ahead for the police, theprosecution and the courts as they moveinto the 21st century, with their impressive
and successful track records so far, perhaps
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our government on how the three arms ofjustice can continue to attract the best andoptimize the development of our officers as
a vibrant organization. The future seems
to be pointing towards the trend of global
learning. Therefore, a much wider
perspective than the past is required andemphasis on organizational learning andservice excellence will propel us to greater
heights of success and achievement.
Organizational learning is where theorganization continually enhances its
capabilities, and through innovative
thinking on different ideas and approaches,
discover how to create results it truly
desires for its future. In reality, learningand training are the two sides of the samecoin. The purpose of training is to help
someone to learn, and to learn how to learn.
Learning is said to have taken place whena person acquires new skills, knowledge
and behaviour. Gandhi once said “we must
become the change we want to see. ”••

The Singapore Judiciary Annual
Reports 1997 & 1998.
The Singapore Police Force Annual
Report 1997/1998.

Therefore, as we prepare for the dawnof the new millenium, the three arms ofcriminal justice should be spurred by theirachievements and milestones to continue
their hard work and effort in the journey
towards an even brighter and better
tomorrow.
Sources••••Keynote Address of the Chief Justiceat the Introduction of the Subordinate
Courts Workplan for the years 1997/
1998 and 1998/1999.
The Chief Justice’s Speech at theOpening of the Legal Year 1997, 1998
and 1999.
Keynote Address of the Chief Justiceat the 1997 and 1998 AIJA/APIC
Conference.
Keynote Address of the Chief Justiceat the Technology Renaissance Courts
Conference on 24 September 1996.

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RESOURCE MATERIAL SERIES No. 55

PUBLIC PROSECUTORS IN THE CHANGING SOCIETY
Suchart Traiprasit*
I. INTRODUCTION
We are in a changing world, with theadvent of the 21st century only a year
ahead. The new era will witness many
substantial changes which have alreadybeen experienced by the passing decade.
Apart from some scientific andtechnological complexities, such as the
problems of Y2K and environmental
protection, to cope effectively with therising rate of modern crime is anotherchallenge to be addressed by the changing
society. The advance of technology andcommunications between countries during
the 20th century not only introduced
development in terms of expanding
commerce, cultural exchange, and othercooperation, but also brought with it some
negative results such as the rising of crime,
which has become more complex both in
the form and mode of commission.
Under the free trade liberalization of thecurrent society, competition seems to beunmerciful and inevitable. For the loser
of this contest, it means no employment,
which in turn gives rise to an increase ofproperty crime, as well as other related
criminality. The economic crisis recently
undergone by several countries in the Asian
region, is more than an illustration in thisregard. In Thailand alone, the rate of crime
has been shockingly rising during thisdecade.
Technological advances, while bringing
much progress to the world, have become
an advantage for criminals in committing
certain complex or innovative crimes.
These are very difficult to prevent or* Attorney General, Thailand.

336

suppress, due to legal loopholes or inferior
technology on the part of the law
enforcement officials. Computer crime,
economic crime, and crime related tofinancial institutions are included in thiscontext.
Convenience in travelling abroad,perhaps by the expansion of the tourist
industry and international business
investment, not only provides morepotential for transnational organized crime
to be committed, but also allows theoffender to flee conveniently from one
jurisdiction to another. This, of course,
directly affects domestic justiceadministration and calls for thestrengthening of international cooperation.
Another phenomenon prevalent in thechanging society of today is the worldwide
recognition of human rights promotion andprotection, which has also generated newconcept towards the rights and obligationsof people, and thereby gives rise to review
and restructure of criminal justice in many
countries.
Amidst the various changes of thistransitional period, criminal justice willcertainly be even more influenced in the
future, since it is correlated to all factorsof alteration. Many problems regarding
criminal justice already exist underglobalisation, either in the field of technicalquestions (such as legal loopholes indealing with the complexity of the newly
emerged crime) or in the administrative
area (such as the determination of the newroles and direction of law enforcement
officials). These are believed to continue
at least into the early stages of the next
century.

111TH INTERNATIONAL SEMINAR
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As one component of law enforcement
and criminal justice, the public prosecutor
plays a crucial and active role in controllingand suppressing crime, both at thedomestic and international level.
Prosecution services, like other things, can
not ignore the trend of the changing society.
To encounter the phenomenon of challenges
under the new dimension of crime and its
steering, the public prosecutors have toreappraise and adjust their roles anddirection to cope with the forthcoming
situation. To this end, many changes in
the prosecutorial service have alreadyoccurred in some countries, while in othercountries the tendency of adjustment is
becoming more and more apparent.
The public prosecution service inThailand has been developed for more thana half millennium. The first restructuringof the Thai public prosecutor institution
took place around a hundred years ago, andthe most recent one occurred in 1993. Like
its counterparts in many countries, Thai
public prosecution has experienced manychanges to date. Development of its role,
function, and attitude regarding criminal
justice and crime control usually responds
to the dynamic changes of Thai society.
II. GENERAL OBSERVATIONS ON
THE PUBLIC PROSECUTOR
A. Traditional Characteristics of the
Public Prosecutor
Perhaps the most striking description of
the public prosecutor is as Prince
Sakolwannakorn Worawan, a famous Thai
scholar, defined long ago in his lecture atThammasart University:“If the criminal proceeding is a play,then the public prosecutor is the hero
because the accomplice of the case iscompleted by his part. In somecountries, the public prosecutor takes
an even more crucial role than thejudge. He is the one required by thelaw to shoulder the exercising of
discretion as to proceed with thecriminal case or to halt it. Prosecutorial
function should, therefore, bedischarged with a high spirit and great
pride. Responsibility and prestige ofthe public prosecutor should be
respected as no less crucial than thatof the judge in terms of remuneration,d i g n i t y, a n d t r u s t o f i n t e g r i t y.
Particularly in the jury system,
whether the defendant will be guilty or
not is up to the performance of the
public prosecutor rather than the
judiciary. Integrity of the publicprosecutor is, therefore, more crucial
than other elements.”
To view the public prosecutor as the heroof criminal proceeding is not an
overestimation. The public prosecutor is aunique figure in criminal justice uponwhom is the important task of acting as
the principal representative of the State incriminal litigation. They are answerable
to the success or failure of the case, fromthe outset until finalisation. In somecountries, such as Korea, the publicprosecutor is viewed as a quasi-judicial
official 1 , while in France s/he is even
deemed as a judicial member (magistrat debout)2. The public prosecutor is the one who
exercises quasi-judicial power at the initialstage to prosecute or release the suspect,and eventually to check the court’s decision
and appeal or uphold it. Discretion of the
public prosecutor as to instituting or
dropping criminal cases is recognized
everywhere, and in any legal system, as
exclusive and independent.
1. “Criminal Prosecution System in Korea”, Supreme
Public Prosecutor’s Office, p.32, printed in 1997.
2. David & de Vries, “The French Legal System(1938)”, p.21, as cited by Jitti Tingsabhat in “The
Legal Profession”, Thammasart University, 1986,
p.155.

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RESOURCE MATERIAL SERIES No. 55

In Thailand, the public prosecutor is a
career-oriented official belonging to the
Office of the Attorney General. After the
restructuring of the former Public
Prosecution Department into anindependent public body known as the
Office of the Attorney General in 1993, thepublic prosecutor is also called the State
Attorney. According to the Public
Prosecutor Act B.E. 2498(1955), theCriminal Procedure Code, and various
legislation concerned, the Thai publicprosecutor is regarded as the State Counsel
or the Public Lawyer who represents theState in criminal proceeding to regulate
criminality and give effect to its sanctions.1
Significance of the public prosecutor isderived from their function andresponsibility, which may take many forms.
In addition to criminal justice steering, thepublic prosecutors in many countries are
entrusted with keeping the public interestin civil matters, namely; to represent theState in civil and commercial litigation, as
well as to give legal advice.
In the United States, the prosecuting
attorney is also charged with some otherfunctions, as Joan E. Jacoby pointed out:
“Although the general focus of theprosecuting attorney is on criminal caseprocessings, he is not simply a criminal
litigator. More and more the prosecutor
has been assigned other duties by thelegislature. Three out of four
prosecutors have civil responsibility for
representation of the county Board ofCommissioners or for the local
governing agency. The prosecutor’s
1. “Thai State Attorney”, introductory document of theThai State Attorney Museum, 1998, Office of the
Attorney General.
2. “The American Prosecutor : A Search for Identity”,
Lexington Books, 1980, p.xx.

338

duties have been extended to include
involvement in juvenile matters, infamily and domestic relations court, inanswering or responding to citizen
complaints, in conducting non-support
programs, in handling traffic,
consumer, or environmental protection
projects, and in pursuing appeals.
Their interests and jurisdiction havebeen extended to cover a wider avenueof community problems.”2
In Thailand, the public prosecutor is also
designated to review draft commercial
contracts of the government agencies, aswell as to revise or propose some new laws.
The tendency of the Thai public prosecutor
to participate more actively and directly
than before, in other fields such as theprotection and promotion of human rights,
is also on the rise. Yet, as the chief legal
official, the public prosecutor is normallyregarded as the legal figure to fight against
crime, to maintain peace and order, and tosecure social justice and fairness.
In the technologically advanced andg l o b a l i s a t i o n a g e o f t o d a y, w h e r einternational cooperation to combat
transnational organized crime is urgently
called for, it seems unavoidable for the
public prosecutors to internationalize theirroles and functions in all respects beyond
that once traditionally practiced at thedomestic level. This is also apparent withprosecutors in Thailand.
From general survey, it may be said thatthe traditional characterising of the publicprosecutor is as a government official who
is entrusted to institute prosecution incriminal cases. However, under dynamicchanges in society, the public prosecutor
may have been or will be designated todischarge other functions as well. This may
set the public prosecutor on a new path ofwider responsibility in the future.

111TH INTERNATIONAL SEMINAR
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B. Functions of the Public
Prosecutor
Taking the model of Thailand as an
example, the traditional functions of the
public prosecutor are threefold. These
functions are: (1) to provide criminal
justice; (2) to protect public interest; and(3) to protect civil rights and provide legal
aid.
1. To Provide Criminal Justice
The main objective of crime prevention
and suppression is to bring the offender tojustice. Bringing the offender to justice, inthe broad sense, means to put them underinvestigation, prosecution, adjudication,
punishment, correction, or rehabilitation.
In other words, the suspect must be testedof their guilt or innocence by the process ofcriminal justice administration or the caseproceeding. Once a person has beenprosecuted, it means their freedom islimited. Prosecution is, therefore, adifficult task requiring high responsibility.
The law and public entrust the publicprosecutor to assume this function.
The prosecutorial function includes allprocesses related to the criminal
proceeding, such as;(i) to review the evidence derived frominvestigation;(ii) to exercise discretion regarding theadmissibility and adequacy of theevidence, as well as other reasons andappropriateness so as to instituteprosecution or not to prosecute thesuspect;(iii)to pursue the trial in the court;(iv) to adduce evidence and question
witnesses; and(v) to review judgment of the court andappeal or drop the case.
As for the investigation, in Korea, Japan,
and the United States, the publicprosecutor is entitled to conduct

investigation either in cooperation with thepolice or on their own initiative. In
Thailand, this is not currently practiced.
According to the Criminal Procedure Code,the investigation is conducted by theinvestigation officials; commonly, seniorpolice and some high-ranking
administrative officials. The only publicprosecutor vested with the investigation
powers in regard to criminal cases whichhave been committed outside the territoryof Thailand is the Attorney General or the
Acting Attorney General. However, theseparation of the prosecution process fromthe initial stage of fact finding orinvestigation has become an impediment
to the effective proceeding of somecomplicated cases. In particular, with new
dimensions of criminality, alteration in
investigation process is now apparent.
Participation of the public prosecutor at theinitial stage of investigation has been
mentioned during the drafting of the new
Criminal Procedure Code, which is now
under consideration of the drafting
committee.
Apart from conducting prosecution on
behalf of the State, the public prosecutor
may also take charge as the defending
attorney for an official who has beenprosecuted by a private individual inconnection with the performance of theirduty. This Thai public prosecutor isrequired by the Public Prosecutor Act
B.E.2498 to defend the government official
in criminal cases instituted by private
individuals, however, it is the sole
discretion of the public prosecutor to takeaction or not.
2. To Keep the Public Interest
In many countries, the idea of using
public prosecutors for purposes beyond thescope of criminal proceedings may be
uncommon. Yet in some countries, like theUnited States and Thailand, the publicprosecutor is also entrusted to assume

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RESOURCE MATERIAL SERIES No. 55
responsibility of protecting the interests ofsociety. As regards this function, the publicprosecutor performs their work in threeways:(i) By representing the government
agencies, state enterprises and somespecific public entities in civil andcommercial litigation of all kinds, as thestate lawyer;(ii) By reviewing draft contracts to beentered between government agencies,
state enterprises or some specific public
entities on the one hand and the private
sector on the other;(iii)By giving legal views, rendering advice
and performing other duties as thelegal consultant for the government,
state enterprises and some other public
entities in accordance with the law.
3. To Protect Civil Rights and Provide
Legal Aid
Generally speaking, the publicprosecutor in any system has responsibility
to protect the public in terms of crime
control and criminal proceedings. Under
the changing society of today, he or she may
be warranted to go far beyond this
responsibility. In Thailand, for instance,
the public prosecutor also directly
participates in the protection of civil rights
and providing legal aid. This function was
initiated around 16 years ago. At that time,
there was a dramatically high rate oflitigation where poor people, in particular
the farmers, had fallen victim to fraud bysome more powerful merchants (whosnatched the opportunity of legal illiteracy
and incapability to afford lawyers on thepart of the poor, to cheat them). Realizing
its responsibility to keep social peace andfairness, the then Public Prosecution
Department launched a project to rectify
the situation. Three categories of services
were rendered, namely:(i) Dissemination of legal knowledge to the
public in order to make them aware of
their rights and duties, and to decrease340

the possibility of disadvantage due tolegal blindness;(ii) Giving legal advice to the poor free ofcharge;(iii)Providing legal aid to the poor andneedy people who have no capacity toafford their own lawyers in litigation,
free of charge.
III. PHENOMENON OF THE
CHANGING SOCIETY
Change in society is not a newphenomenon. In fact, it occurs anddevelops at all times. Since criminal
justice, in particular the role of the publicprosecutor, is influenced by the changing
society, it is appropriate to overview thisphenomenon as a general background tobetter understand developments in the
public prosecution service. Perhaps anincident that took place in Thailand sometime ago might be a good illustration in thisregard.
Thailand was influenced by Westernculture, which brought in many
rudimentary changes in the society for the
first time, during the colonization age.
Although saved from being colonized,
Thailand had to give away many parts ofher territory as well as to conclude unfair
agreements with various European
countries to establish “Extra Territoriality”;
the practice whereby the Thai court had
no power to try the subjects of foreigncountries who committed crimes within the
territory of Thailand. Consequently, many
aspects of Thai tradition, in particularjustice administration, were reformed andmodernized to cope with the westernrequirements in order to prevent
accusations of “unsatisfied standard” by
the western nations. In this regard, theformer practice of the public prosecution
service in Thailand was restructured andsystematized to establish the Public
Prosecution Department for the first time

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during the reign of King Chulalongkorn in1893.
During these decades, drastic changes
in society again occured. With the arrivalof globalisation, the transfer of technology,
movement of information, andcommunications between people, newinfluences were brought from aboard. Thisis, of course, the main factor that forces
nations to adjust themselves in compliancewith the global situation. For those who
can keep pace with the sweep of changes,
it means development and more benefit; yetfor those who can not, it means being left
behind and getting hurt. Keeping pacewith change may be accessed by different
avenues and styles, depending on national
assessment and the decision of particularcountries; the outcome of which may be thepros and cons. However, the undeniable
truth in this regard is that countries canno longer ignore the phenomenon of thechanging world and society.
Therefore, under the contemporary
period, all states have no other option but
learn how to adjust their national policy
and practice to conform to the influx ofchanges as best as possible. Experiencesfrom the past may be understood as good
lessons, however this is not totally true,
even there might be some truthfulness
behind this presumption. The policy topromote a more open and freer society,although appearing to deteriorate thevitality of the economic and financial
systems of many developing countries, has
somehow encouraged the public to beaware of their rights and positive values,
such as the maintenance of democracy andthe significance of international
cooperation. Despite the recent economic
retreat, the promising tendency towards
political reform is still bright. In Thailand,
for instance, the passage of the newConstitution in October 1998 has induced
many developments regarding theadministration of justice, which in turn
related to the prosecution service. Besideindirectly setting the grounds for publicprosecutors to reassess their roles, theConstitution also imposes upon them more
responsibility to guarantee the rights andfreedom of the people and to take part in
the process of review of the integrity ofpoliticians and high-ranking officials.
With regard to the role and function of
the public prosecutor in the context of thechanging society, there are many topics ofparticular interest. However, this paper
will limit its scope to the following:(i) Public prosecutors and their increasingrole in the protection of human rights;(ii) Public prosecutors and a new role
regarding suppression of corruption;(iii)Public prosecutors and international
cooperation.
IV. PUBLIC PROSECUTORS AND
THEIR INCREASING ROLE IN THE
PROTECTION OF HUMAN RIGHTS
It is no doubt that in the daily handlingof criminal cases, the public prosecutor isrequired by the law, as well as theirinherent realization, to regard thefundamental rights of every party
concerned. The requirement for the publicprosecutor to protect human rights is either
clearly enshrined or indirectly implied invarious provisions of the Criminal
Procedure Law and other related
legislation. In most countries, thefundamental human rights of the suspect
and the accused is recognized by theirconstitutions. Under the changing societyof today, the current constitutions ofvarious countries not only confirm such
recognition, but also stresses it as thecornerstone for the development of criminal
justice. In Thailand, provisions regarding
the recognition of human dignity, equality
u n d e r t h e l a w, p r o h i b i t i o n o f
discrimination, protection of life, body,341

RESOURCE MATERIAL SERIES No. 55
liberty and encouragement of freedom, areclearly spelled out in Chapter 3 of thepresent Thai constitution. Essentially, the
Human Rights Commission is required by
the Constitution to be established within
two years. The necessity and profitabilityof having the public prosecutor in theprotection and promotion of human rights
has been increasingly recognized. Thechanging trend that places the publicprosecutor in closer and greater
involvement in this regard may beillustrated from the recent phenomena in
Thailand.
A. Protection of Civil Rights
With regard to the protection of the civilrights of an individual in general, and thevictims of the crime in particular, theprovisions concerned are as follows:(i) Section 31 of the current constitution
clearly provides in the first paragraphthat:“A person shall have the right andliberty in his or her life and person...A
torture, brutal act, or punishment by
cruel or inhumane means shall not be
permitted; provided, however, thatpunishment by death penalty as
provided by law shall not be deemedpunishment by cruel or inhumanemeans under this paragraph. No
arrest, detention or search of person or
any acts affecting the right and liberty
under paragraph one shall be madeexcept by virtue of the law.”(ii) Section 34 provides that:“A person’s family rights, dignity,
reputation or the right of privacy shallbe protected. The assertion or
circulation of a statement or picture,in any manner whatsoever to the
public, which violates or affects aperson’s family rights, dignity,
reputation or the right of privacy, shallnot be made except for the case which342

is beneficial to the public.”(iii)Section 35 provides that:“A person shall enjoy the liberty ofdwelling. A person is protected for hisor her peaceful habitation and forpossession of his or her dwelling place.
The entry into a dwelling place without
consent of its possessor or the search
thereof shall not be made except for thecase which is beneficial to the public.”
These provisions have been operated by
the Penal Code, which embraces in its
content similar provisions, but together
with the imposition of penalty for those who
violate them. Upon these provisions,whenever the right of any person is violated
in one way or another, an offence is said tohave been committed, and to institute a
criminal case against the offender by the
public prosecutor is somehow consideredas the discharge of the function to protect
the human rights of the victim.
B. Protection of the Rights ofSuspects and the Accused
As for the suspect and the accused,various rights are recognized by theprovisions of the constitution, as follows:(i)

The right not to be arrested without
judicial warrant in accordance with
Section 237, which provides that “Ina criminal case, no arrest anddetention of a person may be madeexcept where an order or a warrantof the Court is obtained, or wheresuch person commits a flagrant
offence, or where there is such othernecessity for an arrest without
warrant as provided by law. The
arrested person shall, without delay,
be notified of the charge and detailsof such arrest, and shall be given an
opportunity to inform, at the earliest
convenience, his or her relative, or
the person of his or her confidence,of the arrest. The arrested person

111TH INTERNATIONAL SEMINAR
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being kept in custody shall be sent
to the court within forty eight hours
from the time of his or her arrival at
the office of the inquiry official, inorder for the court to consider
whether there is a reasonable groundunder the law for the detention of thearrested person or not, except for thecase of force majeure or any otherunavoidable necessity as provided bylaw.”;(ii)

The right to be released on bail inaccordance with Section 239 which
provides that “An application for bailof the alleged offender or the accusedin a criminal case must be accepted
for consideration without delay, andan excessive bail shall not be
demanded. The refusal of bail must
be based upon the grounds
specifically provided by law, and thealleged offender or the accused must
be informed of such grounds without
delay... The right to appeal against
the refusal of bail is protected asprovided by law... A person beingk e p t i n c u s t o d y, d e t a i n e d o r
imprisoned has the right to see andconsult his or her advocate in private
and receive a visit as may beappropriate.”;(iii)

The right not to be subjected toarbitrary detention in accordancewith Section 240 which provides that
“In the case of the detention of aperson in a criminal case or any
other case, the detainee, the publicprosecutor or other person acting in
the interest of the detainee has theright to lodge with the court having
criminal jurisdiction a complaintthat the detention is unlawful. Upon
receipt of such complaint, the court
shall conduct forthwith an exparteexamination. If, in the opinion of thecourt, the complaint presents a

prima facie case, the court shall havethe power to order the person
responsible for the detention to
produce the detainee promptly
before the court, and if the person
responsible for the detention can notsatisfy the court that the detention
is lawful, the court shall order an
immediate release of the detainee.”;(iv)

The right to speedy investigation andtrial under Section 241 which
provides that “In criminal cases, analleged offender or an accused has
the right to a speedy, continuous andfair inquiry or trial... At the inquiry
stage, an alleged offender has theright to have his or her advocate or
person of his or her confidence attend
and listen to interrogations against
such person... An injured person oran accused in a criminal case has theright to inspect or require a copy ofhis statements made during theinquiry, or documents pertaining
thereto when the public prosecutor
issues a final non-prosecution order,
an injured person, an accused or aninterested person has the right toknow a summary of the evidence,
together with the opinion of theinquiry official and the publicprosecutor, with respect to themaking of the order for the case, as
provided by law.”;(v)

The right to access to legal aid under
Section 242 which provides that “Ina criminal case, an alleged offenderor an accused has the right to receive
aid from the State by providing an
advocate without delay. In a civil
case, a person has the right to receivea legal aid from the State, as
provided by law.”;(vi)

The right not to give statements or
testify against themself under343

RESOURCE MATERIAL SERIES No. 55
Section 243 which provides that “Aperson has the right not to make astatement incriminating himself or
herself which may result in criminal
prosecution being taken against him
or her. Any statement of a person
obtained from inducement, apromise, threat, deceit, torture,physical force, or any other unlawful
act shall be inadmissible inevidence.”;(vii) The right to be presumed innocent
according to Section 33 which
provides that “An alleged offender oran accused in a criminal case shallbe presumed innocent... Before thepassing of a final judgment
convicting a person of having
committed an offence, such persons
shall not be treated as convicts.”(viii) The right to apply for review of thecase after conviction and to becompensated in the case of
misleading adjudication pursuant to
Section 247 which provides that “Inthe case where any person was
inflicted with a criminal punishmentby final judgment, such person, aninterested person, or the publicprosecutor may submit a motion forreview of the case. If it appears in
the judgment of the court reviewing
the case that he or she did notcommit the offence, such persons or
their heir shall be entitled toappropriate compensation, expenses
and the recovery of any right lost by
virtue of the judgement, upon theconditions and in the manner
provided by law.”
Upon recognition of those rights of thesuspect and the accused, various provisionsof the Criminal Procedure Code are
grounded in correspondance to theConstitution. It is remarked also that the344

new Constitution has emphasized evenmore strongly the rights and liberty of thesuspect who might have been abusively
arrested and detained by the police. The
Constitution puts an end to the authorityof the senior administrative or police officer
in arresting any suspect without a judicial
arrest warrant formerly permitted by the
Criminal Procedure Code. It requires
future arrests to be conducted under the
warrant of the court, which is issued upon
the application of the public prosecutor.
This means that the public prosecutor, fromnow on, will take part more directly inchecking the reasonableness of the grounds
to apply for the judicial warrant.
In the case of abusive detention, where
the Constitution has slightly changed theprinciple under Section 90 of the Criminal
Procedure Code, the public prosecutor isrequired by law to inspect and apply to thecourt for the release of the victim of theabuse. Far beyond the provisions of the
Criminal Procedure Code, the Constitution
guarantees non-conviction for the innocent
through review of the case after a final
judgment inflicting penalty upon theaccused, and to compensate the injured if
there is such misleading judgment. In thisregard, the public prosecutor is designatedby the Constitution to be the publicauthority to initiate the process bysubmitting a motion to the court. This, ofcourse, is a new dimension to the role ofthe public prosecutors, to cope with therising trend of stressing fundamental
human rights protection.
C. Participation in the Drafting of
Human Rights Protection Laws
Apart from developments in daily
practice regarding the fundamental rights
of individuals, as well as those directly
concerned in criminal case proceedings, therecent Government’s designation of the
Attorney General to chair the Drafting
Committee for the “Act on the Promotion

111TH INTERNATIONAL SEMINAR
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and Protection of Human Rights”, and the
Office of the Attorney General to facilitate
the drafting process, is another example ofthe increasing role of the public prosecutor
regarding human rights in modern society.
V. PUBLIC PROSECUTORS AND
THE SUPPRESSION OF
CORRUPTION
Experience from the past always tell us
about the tragedy of developing countries
as regards the adjustment of their economic
settings to cope with the contemporary
world. Disintegration of the social
structures of these countries, mostly fromagricultural to industrial or commercial,usually results in the unfair distributionof wealth and eventually encourages anextreme materialism preference, instead of
ethnic or religious. Consequently, thepractice of corruption, in particular bypoliticians and high-ranking officials, has
become fashion and has undoubtedly
undermined the stability and progress ofthe community. In this globalisation age,the problem of corruption has spread allover the world and become an issue ofcommon concern in the international
community. Yet, the question still awaiting
answer is in what way and how the publicprosecutor can contribute in tackling thissocial disease. In this context, again,
perhaps the recent efforts of Thailand in
the campaign against corruption may be agood example.
Like other developing countries,
Thailand has for long been weakened by
the practice of corruption among politicians
and some high-ranking officials. For eachyear, the national interests have beencheated far beyond estimation. It is very
difficult to detect the crime or trace
misappropriated property because corrupt
3. Pasuk Ponpaichit, “Resolution of Corruption in theThai Bureaucracy”, Thai Post newspaper, 15
December, 1998.

criminals are very shrewd and never leave
any clues. Just recently, research on“Corruption and Democracy in Thailand”,
conducted by the Faculty of Economic
Study of Chulalongkorn University 3 ,revealed that corruption in the Thaibureaucracy includes four aspects, namely:(1)Syndicate corruption; (2)Procurement
kickbacks; (3)Bribery for monopolytransactions; (4)Corruption related tobidding. The key factor of corruption,according to the research, is the lack of“good governance” and integrity uponwhich the line between the personal andpublic interest is drawn. One suggestion
made by the research is to install effective“integrity tests” for politicians and highranking bureaucrats.
In this regard, the former Counter
Corruption Board, a body set up under thePrime Minister Office to examine andforfeit unclearly obtained assets of highranking officials alleged of being unusuallyrich, can do little of its job due to its limited
authority and independence. With therising awareness of the public regard totheir rights, the need to check and review
the integrity of politicians and highranking officials has been responded to by
the new Constitution. The Counter
Corruption Board has been restructured
and changed to the National Counter
Corruption Commission, an autonomous
public body with more power andindependence by virtue of Section 297,
Section 301, and Section 302. In addition,a specific means to control the integrity andethics of politicians has been establishedby virtue of Section 308 which provides
that:“In the case where the Prime Minister,a minister, member of the House ofRepresentatives, senator or other political
official has been accused of becoming
unusually wealthy, or of the commission of
malfeasance in office according to the Penal

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RESOURCE MATERIAL SERIES No. 55
Code, or malfeasance in duties, or
corruption according to other laws, theSupreme Court’s Criminal Division for
Persons Holding Political Positions shallhave the competent jurisdiction to try andadjudicate the case... The provision ofparagraph one shall apply to the casewhere the said person or other person is aprincipal, an instigator or a supporter.”
To put these provisions into effect, again,
the public prosecutor is designated to takepart. Section 305 clearly mentions this inparagraph 4 and paragraph 5 as follows:“If the National Counter Corruption
Commission passes a resolution that theaccusation has a prima facie case, theholder of the position against whom theaccusation has been made shall not, asfrom the date of such resolution, perform
his or her duties until the Senate has
passed its resolution. The President of the
National Counter Corruption Commission
shall submit the report, existing documents
and its opinion to the Attorney General for
instituting prosecution in the Supreme
Court’s Criminal Division for Persons
Holding Political Positions. If the National
Counter Corruption Commission is of theopinion that the accusation has no prima
facie case, such accusation shall lapse... In
the case where the Attorney General is of
the opinion that the report, documents andopinion submitted by the National Counter
Corruption Commission, under paragraph
4, are not so complete as to instituteprosecution, the Attorney General shallnotify the National Counter Corruption
Commission for further proceedings and,for this purpose, the incomplete items shallbe specified on the same occasion. In suchcase, the National Counter Corruption
Commission and the Attorney Generalshall appoint a working committee,
consisting of their representatives in an
equal number, for collecting complete
evidence and submit it to the Attorney

346

General for further prosecution. In the casewhere the working committee is unable toreach a decision as to prosecution, theNational Counter Corruption Commission
shall have power to prosecute by itself or
appoint a lawyer to prosecute on its behalf.”
To institute prosecution of a criminalcase and to handle it may be considered as
the traditional function of the publicprosecutor. However, to institute a
criminal case against a corrupt politician
under an exclusive machinery and process
is somehow viewed as recent. The role andresponsibility of the Thai public prosecutor
has extended to cover functions as a public
body to participate in the checking andreview of politician’s ethics and integrity.
VI. PUBLIC PROSECUTORS AND
INTERNATIONAL COOPERATIONThe necessity of states to renderassistance to foreign nations in theprevention and suppression of crime wasattested long ago. Today, when crime has
become an excessively complicatedtransaction, committed by transnational
criminal organizations, international
cooperation between and among countries
to regulate world peace and order seems
to be even more significant.
In a broad sense, international
cooperation means all assistance regarding
the criminal proceedings one state provides
to an other state upon request. Assistance
may take many forms, such as collecting
evidence, providing documents, taking
statements of persons, testimony of
witnesses, initiating criminal cases, andforfeiting properties, etc. It also includes
extraditing a fugitive to a foreign country
for prosecution, trial, conviction, or to serve
punishment. International cooperation has
been viewed as conforming to the era ofchange, as it includes technical cooperation
between or among states either on the

111TH INTERNATIONAL SEMINAR
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bilateral or multilateral basis. At the levelof the United Nations, the effort toencourage international cooperation has
culminated in the form of various
international instruments such as the UN
Model Treaty on Extradition, UN Model
Treaty on Mutual Assistance in Criminal
Matters, UN Model Treaty on the Transfer
of Proceedings in Criminal Matters, etc. In
spite of the non-mandatory character atpresent, all international guidelines forma good basis for member states of theUnited Nations to make their laws conformto the model. This may give clear light on
the changing norms and standards indomestic practice regarding international
cooperation in the future.
In Thailand, international cooperationis conducted in two directions; one throughmutual assistance in criminal matters, theother through extradition. In both
directions, the public prosecutor takes verybroad roles and responsibility. Of course,
the role played by the Thai publicprosecutor is more or less similar to thatof their counterparts in many countries.
Observation of the development in function
and responsibility of the Thai publicprosecutor in the area of international
cooperation is, therefore, deemed a good
illustration in this regard.
A. Mutual Assistance in Criminal
Matters
The main legislation concerning mutual
assistance in criminal matters in Thailand
is the Act on Mutual Assistance in Criminal
Matters B.E.2535(1992). Those parts notcovered by the Act are governed by the
Criminal Procedure Code. According to
Section 6 of the Act, the Attorney Generalor the person designated by him is the“Central Authority” who, by virtue ofSection 7, is charged with the following
functions:(i) To receive the request for assistancefrom the requesting state and transmit
it to the Competent Authorities;(ii) To r e c e i v e t h e r e q u e s t s e e k i n g
assistance presented by the agency of
the Royal Thai Government and deliver
it to the requested state;(iii)To consider and determine whether toprovide or seek assistance;(iv) To follow and expedite the performanceof the Competent Authorities inproviding assistance to a foreign state
for the purpose of expeditious
conclusion;(v) To issue regulations or announcement
for the implementation of this Act;(vi) To carry out other acts necessary forthe success of providing or seeking
assistance under the Act.
The request for assistance from thecountry having a mutual assistance treaty
with Thailand shall be submitted directly
to the Central Authority, while the requestfrom those who have no treaty shall be
submitted through diplomatic channels.
Affirmation of reciprocity is theprerequisite for execution of the requestfrom non-treaty requesting states. All
requests are reviewed and executed by theCentral Authority, empowered to exercise
discretion to refuse execution of requests
which are ineligible.
In practice, the public prosecutors of theInternational Affairs Department, Office of
the Attorney General, are the task force for
the Central Authority in this regard. The
increase in number of the requests fromabroad, as well as the complexity of legal
issues, is a time consuming factor which
renders problems to the whole process ingeneral, and to the public prosecutor (asthe practitioner) in particular. This isrelated, of course, to the question of manpower and technical arrangements the
public prosecutor has to cope with.

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B. Extradition
Extradition in Thailand is conducted ona dual basis, that is to comply with theExtradition Act B.E. 2472, as well as theprovisions of the treaty. Unlike thosetreaty prerequisite countries, Thailand has
no difficulty in surrenderring the fugitive
upon request from the requesting state
which has no treaty with Thailand.
However, in the case of no treaty, an official
confirmation of reciprocity is required.
Execution of extradition requests fromforeign countries are also subject to general
requirements such as non-contradiction of
the principle of “dual criminality”, “nonbis in idem (double jeopardy)”, “rules of
speciality”, and so forth.
The role and function of the publicprosecuter in extradition is clearlyenvisaged. According to Section 141 of the
Criminal Procedure Code, the publicprosecutor is charged with the duty torequest extradition from a foreign country
where the offender fled abroad. As regards
extradition requets from foreign countries,
the Extradition Act B.E. 2472 provides itis the responsibility of the public prosecutor
to litigate extradition cases in the court.
Although the final decision whether toextradite the fugitive or not belongs to thegovernment, which in practice means the
Cabinet, the public prosecutor exercises
discretionary power on behalf of the State,including the government, for technicalmatters, while the Ministry of Foreign
Affairs deals with foreign relations policy.
Va r i o u s p r o b l e m s c o n n e c t e d t oextradition have emerged. Awareness ofthe necessity to cooperate with each otherin the suppression of the fast-growing
transnational organized crime has induced
states to endeavor to eradicate all barriersin extradition between countries, inparticular those arising from discrepancy
between legal systems, a serious problem
until now. To harmonize diversity,348

attempts have been made on several
occasions either at the global or regional
level by international organizations,associations and NGOs. The adoption of
the United Nations Model Treaty on
Extradition in 1990, as the uniform
guidelines to facilitate conclusion of
extradition treaties between states, is an
explicit illustration of these efforts. It is
expected therefore that in the future,
extraditon, in responding to the changing
society, will be more convenient than now.
In Thailand, perhaps the mostconspicuous response in regard to
extradition is the overhaul of theExtradition Act B.E. 2472. The Act has
been in use for nearly 70 years since its
passage in 1929, thus it could not cope withmodern concepts and new forms ofproblems, and eventually required revision.
So far, the new Act is under drafting by the
Drafting Commission appointed by the
Cabinet and chaired by the Attorney
General. The new extradition law is
expected to be capable of answering various
questions arising from uncertainty inpractice among the authorities concerned,
such as those related to political offences,
extradition of Thai nationals, capital
punishment, prima facie cases, simplified
procedure, etc.
One of the new concepts which directly
involves the role of the public prosecutoris the trend to establish a “Central
Authority for Extradition”. Presently,
extradition in Thailand is commonly
handled by various authorities, namely, theMinistry of Foreign Affairs, the Ministryof Interior, the Office of National Police, theOffice of the Attorney General, and thecourt. This often brings some difficulty interms of delay, inconvenience, disharmonyof interpretation and different practices
among the authorities concerned. The
introduction of a “Central Authority” istherefore, based on the need to settle these111TH INTERNATIONAL SEMINAR
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problems. According to the new draft of
the “Extradition Act”, the Attorney Generalis proposed to be the “Central Authority”,
which means that the role and function of
the public prosecutor in extradition will be
more concentrated in the future.

ignoring the tendency of change.
Adjustment of the prosecution service forthe effective control of crime is expected tobe established and continued in theforthcoming century.

VII. CONCLUSION
Upon general survey of the current
situation, it is undeniable that the worldis undergoing a great change in all aspects.
Globalisation has brought with it positive
and negative results in terms ofdevelopment. For many countries, theinflux of modern concepts and new formsof economic settings has become the causeof an increasing rate of both traditional andinnovative crimes. Advancement oftechnology has been exploited often bycriminals to commit complex or high-tech
crime. The effect of these crimes is evenmore serious when committed acrossborders, becoming transnational incharacter.
To cope with these circumstances,criminal justice administration must be
reviewed and adjusted to conform to thetrend of change in society nowadays. This,of course, includes the role and function of
the public prosecutor.
Traditionally, the public prosecutor isdeemed as a state official who renders
prosecutorial functions, i.e, to prosecute theoffender or to drop the criminal case. The
future public prosecutor may be set on a
new direction, i.e more responsible for awider scope of function such as checking
and investigating the integrity ofpoliticians and high-ranking officials(against corruption), protecting humanrights, and encouraging international
cooperation, etc.
One thing for sure is that under thechanging society of today, no publicprosecutor of any country can stand alone

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AN OVERVIEW OF THE RIGHT TO SPEEDY TRIAL IN
CRIMINAL CASES IN THE UNITED STATES
Rya W. Zobel*
I. CONSTITUTIONAL MANDATE
Article 37 of the Constitution of Japanand the Sixth Amendment to theConstitution of the United Statesguarantee to all criminal defendants theright to a speedy and public trial. It is inboth documents a right granted to thedefendant; it cannot be invoked by theprosecution. In neither is the right in any
way detailed or defined. That is, theConstitutions do not explain what
constitutes “speedy’’or rather, what periodof time is too long, nor do they describe theconsequences for exceeding that undefinedtime.
In the United States, relatively few
Supreme Court cases have interpreted thisConstitutional provision. However, in 1967
the Court established that the right to a
speedy trial is “fundamental”, Klopfer v.
North Carolina, U. S. 213. 223 (1967), andin 1972, it set out the criteria by which theassertion of the right is to be judged, Barker
v. Wingo, 407 U. S. 514 (1972). It isinteresting to review the facts of the Wingocase as they explain the diifficulties
inherent in fashioning a rule for all cases.
On July 20, 1958, an elderly couple wasbeaten to death in a rural county in
Kentucky. Two suspects, Silas Manningand Willie Barker, ultimately the petitioner
in the Supreme Court, were arrested
shortly thereafter and were indicted on
September 15, 1958. Two days later,counsel was appointed for Barker. For* U.S. District Court judge for the District ofMassachusetts; Director, Federal Judicial Centre,
United States of America.

350

reasons not clear in the record,theCommonwealth did not try the defendants
jointly and chose to proceed first against
Manning on the theory that once convicted,
he could be required to testify against
Barker. The theory encountered numerous
difficulties in practice. Manning’s first trial
ended in a hung jury; the second resulted
in conviction, but reversal on appeal; thethird, again conviction and again reversal
on appeal; the fourth once more a hung jury.
Finally, on the fifth try, in March 1962, theCommonwealth succeeded in convicting
Manning of murdering one victim, and on
the sixth attempt, the second. It was
December 1962. In the meantime Barker’s
trial, which had initially been scheduled
to start in September 1958, was continued
again and again. Although he had been
held in jail after his arrest, he was releasedon bail in June 1959, ten months after his
arrest and he remained at large until his
conviction and sentence.
Barker’s counsel did not object to thefirst eleven continuances; his objection to
the twelfth and his motion to dismiss theindictment were overruled; he again failed
to object to numbers 13 and 14, but did
assert his right when the Commonwealthsought twice more thereafter to postpone
his trial in March and June 1963. He was
finally tried and convicted in October 1963,
more than five years after the murder andthe filing of the indictment against him.
On appeal from that conviction heargued, among other things, that his rightto a speedy trial had been violated and thatthe conviction should therefore be set aside
and the indictment, dismissed. He lost the111TH INTERNATIONAL SEMINAR
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argument in the courts of Kentucky and in
the lower federal courts. The Supreme
Court agreed to consider his case.
Incidentally, the delay from conviction to
the hearing and decision of the case in theSupreme Court was due entirely to
Barker’s delay in requesting review by theSupreme Court - nearly eight years.
Justice Powell, writing for a umanimouscourt, pointed out that the right to a speedy
trial, although a fundamental right, isnevertheless different from the others in
the Constitution. It is, of course, a right ofthe defendant, but, unlike the others, it also
protects a societal interest in the swift
disposition of criminal cases. Backlogs in
the court’s docket enable defendants tomanipulate the system by, for example,
negotiating more lenient plea. From thestandpoint of the trial itself, time plays
tricks with witness’ memories. Defendants
released on bail for long periods of time may
pose a danger to the community if they
commit additional crimes. On the other
hand, lengthy pretrial detention is not only
unfair to the defendant, but also very
expensive.
Finally, the Supreme Court points out,“the right to a speedy trial is a more vague
concept than other procedural rights” (atp.521). It is vague because there exists nofixed time after which the right has beendenied. The violation of the right also
necessarily, that is, for lack of alternative
remedies, leads to an unsatisfactory andsevere remedy, namely dismissal of theindictment. Given the inherent lack ofclarity, the Supreme Court declines toprescribe any rules of thumb, but rather
instructs that trial courts are to balance
the conduct of the prosecution and defence,case by case. In so doing, they are toconsider the length of the delay (one monthclearly not enough, five years too long), thereason for the delay (the convenience of theprosecutor does not justify delay, the illnessof a crucial witness might), the defendant’s
assertion of their right (Barker failed toprotest the postponements of his trial for
more than three years), and prejudice tothe defendant from the delay (thedisappearance of crucial defence witnesses
may so hobble the defence that relief isappropriate). Barker, however, was not so
fortunate. The delay was, in the Court’s
words, “extraordinary”, but Barker had not
only failed to object to the postponementsof his trials over a very long time, he clearly
did not want a speedy trial. When he
finally did object, the delay was excusable
in that it was caused by the illness of animportant witness. Finally, Barker could
show no harm from the long wait. Suchwas the law until Congress passed the
Speedy Trial Act of 1974.
II. STATUTE AND LEGISLATIVEHISTORY
The Speedy Trial Act of 1974 wasprompted by a number of concerns, someoverlapping, some conflicting. The Eighth
Amendment to our Constitution prohibits
the imposition of “excessive” bail. As apractical matter, most persons accused of
an offence are released pending their trial.
As the United States experienced an evergreater increase in violent crimes and drug
offences, the criminal justice systembecame overburdened, the courts’ dockets
became overcrowded and, given the rightto bail, large numbers of persons accusedof crimes remained on the street. The
crowded dockets in the courts not only
delayed trials, but the delay, in turn, often
hampered the efforts of the prosecution.
Wi t n e s s e s ’ m e m o r i e s d i m i n i s h e d ,witnesses disappeared, evidence was lost.
This allowed defendants to negotiate more
effectively for pleas of guilty to lesser
offences and to lower sentences. At thesame time, defendants awaiting trial
demonstrably often continued theirantisocial activities. Thus the defendant’s

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right to a speedy trial also became thepublic’s right. The Supreme Court in the
Barker case referred to the “societal
interest in providing a speedy trial which
exists separate from, and at times in
opposition to, the interests of the accused”(at p.519).
Congress was clearly aware of all ofthese cross-currents as it began to address
what had become very real problems forthe society and the criminal justice system.
The first Speedy Trial Bill was introduced
into to the United States Senate in 1970
by Senator Sam Ervin Jr., the Chairmanof the Senate Judiciary Committee’s
Subcommittee on Constitutional Rights.
Many state legislatures had alreadyadopted their own versions of speedy trial
mandates. While early federal efforts
failed, in 1973, Senator Ervin reintroduced
a bill, S. 754,93d Cong., 2d Sess., 120 Cong.
Rec. 24668 (1974), that eventually was
negotiated, with some changes, to become
the Speedy Trial Act of 1974. Echoing theSupreme Court’s view, Senator Ervindescribed the bill as a balance between theneeds of society and the Sixth Amendment
right to a speedy and fair trial. He
summarized the purpose of the bill as
follows:
Unfortunately, while it is in the public
interest to have speedy trials, theparties involved in the criminal process
do not feel any pressure to go to trial.
The court, defendant, his attorney, andthe prosecutor may have different
reasons not to push for trial, but they
all have some reason. The overworked
courts, prosecutors, and defence
attorneys depend on delay in order tocope with their heavy caseloads. The
end of one trial only means the start ofanother. To them, there is little
incentive to move quickly in what they
see as an unending series of cases. The
defendant, of course, is in no hurry for352

trial, because he wishes to delay his dayof reckoning as long as possible. 120
Cong. Rec. 41618 (1974).
Congress, when considering the bill,was
confronted by several major policy choices.
The first was what the time limit should
be for bringing a criminal matter to trial.
Should there be one timeline - from arrest
to trial - or a multifaceted system thatmight take into account the way in which
the process normally proceeds, from arrestt o i n d i c t m e n t b y a g r a n d j u r y, t oarraignment, pretrial motion practice, trial
and, upon conviction, sentence? That is,should the statute fix one period or a seriesof separate periods for each part of theprocess? Should the time periods be fixed
irrevocably by statute or should the courts
be given a measure of flexibility? Finally,
one of the most contentious issues was
sanctions. It was well recognized that the
only effective sanction for violating speedy
trial constraints is the dismissal of theindictment, indeed dismissal withprejudice. That means, of course, that adefendant, no matter how guilty, would
truly get off on a technicality. The
defendant could not be tried then, or ever,for the offence for which s/he had been
indicted, simply because the system had
failed to bring him/her to trial on time.
From the point of view of a trial judge,
who has to work with the limitations
imposed by the statute, the Congress did amasterful job of resolving these, at thetime, highly contentious matters. It chosea series of time limits for the several partsof a criminal case, beginning the count withthe arrest and indictment. It fixed ultimate
limits for each period, and ultimately forthe entire case, but it added flexibility bya device called “excludable time”. Certain
time periods did not count toward the totalof 70 days from arrest to conviction. It gave
full discretion to the trial judge to impose
the ultimate sanction of dismissal, with or111TH INTERNATIONAL SEMINAR
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without prejudice, depending on thecircumstances of the case and the reasonsfor the violation of the Act. Finally, theCongress allowed for a lengthy period oftransition before the statute would takeeffect to allow the courts, the litigants andthe lawyers ample time to plan and adapt
to the new regime.
III. SUMMARY OF PROVISIONS OFSTATUTE
It is important to remember that theS p e e d y Tr i a l A c t w a s d e s i g n e d t oimplement, enforce and define theConstitution’s Sixth Amendment right toa speedy trial. It provides specificity where
none existed before. It does not, however,supplant or diminish the requirements of
the Sixth Amendment. Thus one canimagine a situation where compliance with
the Act is achieved while the Constitution
is nevertheless violated, as might happen
if excessive excludable time orders areentered over the defendant’s objections.
The following is a brief outline of the Act.
First, the Speedy Trial Act specifies that
any information or grand jury indictment
must be filed within thirty days of an arrestor service of a summons (see 18 U.S.C.
§3161(b)). Note that this requirement, andindeed the entire statute, apply only tofederal prosecutions. Subject only to thesame Sixth Amendment constraints
applicable in the federal courts, the states
retain sovereignty over their judicial
processes. In fact, a defendant arrested byfederal authorities is not subject to the Act
if turned over to state authorities. Only if
the defendant is held in federal custody, oris served a federal arrest warrant, does the
Act take over (see United States v. Beede,
974 F.2d 948, 949 (8th Cir. 1992)).
Conversely, a defendant held in federal
custody while awaiting state charges is not
subject to the time clock of the federal
Speedy Trial Act (see United States v.

Johnson, 815 F.2d 309, 312 (5th Cir. 1987)).
It is also the case that a formal arrest or
summons is necessary to trigger the Act.
The temporary seizure of a person, without
formal charges, does not trigger the time
limitations under the provisions of the Act(see United States v. Sayers, 698 F.2d 1128,
1131 (11th Cir. 1983): temporarily taking
a defendant into custody or control while
photographing or fingerprinting, and thenreleasing to defendant, does not trigger the
Act’s time clock; see also United States v.
Davis, 785 F.2d 610, 614-15 (8th Cir. 1986);
United States v. Walker, 856 F.2d 26, 27 (5thCir. 1985)).
Second, after being charged with acrime, the defendant must be brought totrial within seventy days from the filingdate of the indictment or information, or
the date the defendant first appears before
a judicial officer, whichever is later (see 18
U.S.C. § 3161(C)(1)). Within that timeframe, the statute nevertheless provides
the defendant with a guaranteed time ofthirty days to prepare. Thus, the trial may
not commence less than thirty days after
the defendant first appears in court
through his or her attorney (see 18 U.S.C.
§ 3161(C)(2)). The beginning of the trial
means the start of the jury selection process
in a given trial (see United States v. A-A-A
Electronic. Co., Inc., 788 F.2d 242, 246 (4thCir. 1986); United States v. Howell, 719 F.2d
1258, 1262 (5th Cir. 1983)). As noted
earlier, these exceedingly rigid and shorttime periods are much tempered by thedevice of excludable time, which in practice,provides great flexibility.
Third, “excludable time” means nothing
more than time that is not counted. The
statute is specific and clear about thecontingencies that stop the count and thelength of the time out (see 18 U.S.C. §3161(h)). It lists four basic categories ofdelays that stop the clock: 1) delays frompretrial motions and interlocutory appeals;

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RESOURCE MATERIAL SERIES No. 552) delays relating to the defendant’scondition or actions, 3) delays caused by
the unavailability of witnesses ordefendants; and 4) delays granted “in theinterest of justice”, when the court
determines that the ends of justiceoutweigh the interest of the defendant or
the public in a speedy trial.
Virtually every case calls for counsel toseek infomation, challenge the indictment
or shape the case to his/her client’s
advantage. Thus counsel will file motions
for discovery, to dismiss, to sever and thelike. These motions are generally
necessary and not trivial. They take time
to consider and therefore give rise to
excludable time. Interestingly, the statuteseemingly allows unlimited time from filingto hearing, but limits the time for deciding
to 30 days. The case law has, however, built
into the unlimited portion a requirementof reasonableness (see Henderson v, UnitedStates, 476 U.S. 321, 326 (1986)).
Several provisions toll the time fordelays that relate to the defendant,
including an agreement by the defendant
to defer prosecution or delays resulting
from a mental examination of the
defendant. So also a delay due to thedefendant’s mental incompetence or
physical ailment is deemed reasonable andconsequently excludable. Time may evenbe excludable if needed by one defendant
over the objection of another.
Delays caused by the absence of an
essential witness to the trial should, anddo, give rise to excludable time. However,
the government must always exercise “duediligence” in making the witness available(see United States v. Barragan, 793 F.2d
1255 (11th Cir. 1986)). This provisionapplies with equal force to the defence.
Finally, the Court is empowered to grantdelays as the “ends of justice” require.

354

Because this provision grants broad
discretion to the judge, s/he is required to
explain their reasons for any orders under
this section (see United States v. Jordan,
915 F.2d 563, 565 (9th Cir. 1990); UnitedStates v. Vasser, 916 F.2d 624 (11th Cir.
1990)). The Act sets forth four factors forcourts to consider when determining
whether to grant a continuance to serve theends of justice: 1) whether to grant acontinuance would make the continuationof the proceedings impossible or result ina miscarriage of justice; 2) whether the caseis so unusual or complex that the parties
could not reasonably prepare for trial
within the Act’s time limitation; 3) whether
the delay in filing an indictment is because
it was difficult for a grand jury to indictwith the time limits, including whether agrand jury is in session when the defendant
was arrested; and 4) the failure to grant acontinuance would deny the defendantreasonable time to obtain counsel, or time
for counsel to properly prepare for trial,
which may occur in very large complex
criminal cases.
Violations of any of the provisions of thestatute may lead to sanctions. As
mentioned earlier, the only possible andrealistic sanction is dismissal of the case.
The serious question then remaining iswhether the dismissal is to be with orwithout prejudice. Since the right to a
speedy trial is the defendant’s right, thestatute assumes implicitly that a defendantcannot violate the Act, and it provides noremedy against a defendant other thancontinuation of the criminal proceeding
against them. In deciding the severity ofthe sanction, the judge is to evaluate thematter according to three enumerated
factors: 1) the seriousness of the offence;2) the facts and circumstances of the casewhich led to the dismissal; and 3) the
impact of a reprosecution on the Act andthe administration of justice. As a matterof practical reality, the trial court has great

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discretion to dismiss a case with or without
prejudice, as the factors are fairly openended for the trial judge to use to determine
this.
The Act also requires that District
Courts adopt plans for prompt dispositionof criminal cases, including the formationof a working group consisting of the Chief
Judge, United States Attorney, the Federal
Public Defender, and other skilledindividuals from the criminal justicecommunity (see 18 U.S.C. § 3165). The
purpose of the group is not to develop its
own Speedy Trial Act, but to provide local
procedures to implemet an efficient court
system, taking into consideration the needsof the individual district court region. Since
the federal judicial system has 94 district
courts, and since each has a unique culture
and tradition, the working groups weremost useful in facilitating the transition to
the new system of counting in the several
courts. They enabled those who had to
implement this system to buy into it, andto gain a stake in making it succeed.
IV. SOME CONCLUSIONS
Several aspects of the Act are worth
noting specially. First, as described above,
Congress showed a concern for the trial
courts, not always present in legislation,that prescribe and proscribe the mannerin which the courts do their work. Bothhouses of Congress acknowledged that they
did not know the reasons for pretrial delay
in criminal cases, and both recognized thata speedy trial mandate, if it were to have
any teeth, would have a serious impact on
the courts and would severely test theirability to achieve compliance with theproposed statutory provisions. The Act as
passed, and all earlier versions, would
effectively give preferential treatment tocriminal cases by putting them always at
the head of the queue of a judge’s or a
court’s docket. Courts had to devise

mechanisms, perhaps change rules, toaccommodate this now expedited criminal
docket without delaying the disposition ofcivil cases. Congress was not alone in its
ignorance. Little research had been doneon these questions within or without the
judiciary.
Two responses emerged. First, full
implementation of the statute was delayed,
ultimately by nearly four years, to allow
the courts, indeed the criminal justicesystem as a whole, to prepare for theimpending change. Second, Congress tried
to foster knowledge and understanding of
the criminal justice process. Thus the Act
includes several provisions that require the
Courts to develop plans not only for
implementation, but also for the collectionof a wide range of information and statistics
about the administration of criminal justice
within each court. Much of the data to becollected was to inform the courts and, bymeans of periodic reports, Congress, about
the causes of pretrial delay, the cost ofcompliance with the Act, and the effects ofthe speedy trial provisions on the
management of the courts’ entire docket,
criminal and civil.
The courts did collect vast amounts ofdata and they did report to Congress.
However, not much use was made of thedata. The studies and insights to be
derived therefrom simply did notmaterialize. It is the case that
implementation of the Speedy Trial Act
requirements was, in the end, remarkably
uneventful. Perhaps because of the longtransition period, or because the courts had
to plan for implementation, trial judges,
prosecutors and defence counsels werequite ready to accept these newrequirements and to make the statutework. Indeed, the most interesting fact
about this piece of legislation is how quickly
and totally it was accepted by those mostaffected by it, and how well it has worked.

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One of the areas of concern and contention
had been the matter of sanctions. Yet
dismissals, particularly dismissals withprejudice, have been rare and with few
exceptions, the courts have managed todispose of criminal cases within the timeframes established by the Act,without
unduly delaying the civil docket. The
lesson I would draw from this experienceis that the judicial system, bound as it may
be to custom and unwilling to change, isnevertheless able to accommodate evenmajor adjustments if they are properly
managed and the goal is one the judges andlawyers accept.

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111TH INTERNATIONAL SEMINAR
VISITING EXPERTS’ PAPERSAN OVERVIEW OF THE UNITED STATES SENTENCINGGUIDELINES*
Rya W. Zobel**
I. INTRODUCTION
In the United States, sentencing rules
have historically been influenced by four
objectives: punishment, incapacitation,
rehabilitation, and deterrence. Over time,
one or another of these objectives has
gained or diminished in importance. The
Sentencing Reform Act of 1984 created theUnited States Sentencing Commission andauthorized it to promulgate sentencing
guidelines for the federal courts. With one
stroke, the U.S. Congress replaced anindeterminate sentencing system - basedon the goal of rehabilitation andimplemented through parole release - witha determinate system emphasizing
deterrence and just deserts. This new
guidelines system was the result of morethan a decade of reform efforts, and theunlikely coalition of liberals andconservatives in the United States
Congress. When he introduced thelegislation in 1983 that ultimately resulted
in the 1984 Sentencing Reform Act, Senator
Edward Kennedy stated:“Federal criminal sentencing is indesperate need of reform. ...The
current system is actually a nonsystem. It is unfair to the defendant,
the victim, and society. It defeats thereasonable expectation of the public* I wish to acknowledge the significant contribution
to this paper of David E. Rauma, Senior Research
Associate at the Federal Judicial Centre,
Washington D.C..
**U.S. District Court judge for the District ofMassachusetts; Director, Federal Judical Centre,
United States of America.

that a reasonable penalty will be
imposed at the time of the defendant’s
conviction, and that a reasonablesentence actually will be served.1”
This was not the first time that Congress
had turned its attention to federal
sentencing, nor would it be the last. The
legislation introduced by Senator Kennedy
in 1983 was substantially the same as thelegislation that the Senate had agreed toin 1979, which in turn was based on earlier
Senate bills, one introduced in 1974 andanother by Senator Kennedy in 1975, tocreate a judicial commission to promulgate
sentencing guidelines. This round offederal sentencing reform can be traced
back to 1966 when, upon therecommendation of President Johnson,
Congress created the National Commission
on Reform of Federal Criminal Laws. This
commission, commonly known as the
Brown Commission, after its chair,
Edmund G. Brown Sr., former governor of
California, issued its final report in 1968
and Congress began hearings on the reportin early 1971.2 Legislation based upon the
Brown Commission’s recommendations fora model criminal code was introduced in
1973, but was not passed by Congress.
Not long after Congress began its
hearings on the Brown Commission report,
Judge Marvin E. Frankel3 gave a series of1

129 Congressional Record p. S2090 (Mar. 3, 1983)(daily ed.).
2 National Commission on Reform of Federal
Criminal Law, Final Report (1968).
3 U.S. District Judge for the Southern District of New
York (since retired).

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lectures, later published, in which heproposed the creation of a sentencing
commission to develop rules forsentencing.4 In Judge Frankel’s proposal,
these sentencing rules would bepresumptively applied, but could be
appealed to higher courts. This proposal
became arguably the most influential
concept in sentencing reform for the next
decade or more. In the 1970’s, Minnesota
and Pennsylvania created sentencing
commissions and several other states,
California for example, replaced theirindeterminate sentencing systems withstatutorily specified sentencing rules. By
1996, 20 states had sentencing guidelines
and new sentencing commissions were atwork in three more.
Judge Frankel’s proposals, following
soon after the Brown Commission and theCongressional hearings on its report,
helped form the basis for the legislation
introduced in Congress during the mid1970s that would eventually result in the
Sentencing Reform Act of 1984. Along theway, this idea of a sentencing commission
gained adherents, each with different goals
who viewed the concept of an
administrative sentencing agency as asolution to the problems each saw in federal
sentencing. Early proponents, such as
Senator Kennedy, were concerned about
sentencing from a civil rights perspective.
They were troubled by the potential for
discrimination and disparity in sentencing
within an indeterminate sentencing
system. Sentencing guidelines would
eliminate the possibility of discriminationin sentencing by the application ofsentencing rules. Later proponents wereconcerned about rising crime rates andwhat they viewed as the leniency of thefederal courts. A sentencing commission
could address this problem by crafting
sentences designed specifically to deter
crime and deliver punishment withc e r t a i n t y. B y 1 9 7 9 , l i b e r a l s a n d

358

conservatives in the Senate, led by
Senators Kennedy and Thurmondrespectively, had agreed to the reform
package, but it was not until 1984 that theHouse of Representatives passed thelegislation and President Reagan signed it
into law.
The remainder of this paper will discuss
federal sentencing before and after thefederal sentencing guidelines that went
into effect on November 1, 1987. The next
section will examine pre-guidelines
sentencing and how it became an impetus
for reform. Following that will be a sectionthat examines how the federal sentencing
guidelines operate in practice. The next
section will discuss some real and potential
impacts of the federal sentencing
guidelines. The final section will looktoward the future and what might be instore for federal sentencing.
II. FEDERAL SENTENCING PRIORTO THE GUIDELINES
Before the introduction of the sentencing
guidelines in 1987, sentencing in federal
district courts was based on anindeterminate sentencing system. Federal
judges had the discretion to sentence
within, sometimes very broad, statutory
ranges. An offence such as bank robbery
had a statutory maximum sentence of 20
years, with no minimum sentence.5 If theoffender assaulted someone in the courseof the robbery, or jeopardized someone’s lifeby the use of a dangerous weapon, themaximum sentence was increased to 25
years.6 The judge thus had the discretion
to impose on the bank robbery defendants
4

Marvin E. Frankel, Lawlessness in Sentencing, 41
U. Cinn, L. Rev. 1 (1972). See also: Marvin E.
Frankel, Criminal Sentences: Law Without Order(1972).
5 18 USC § 2113(a) (1984).
6 18 USC § 2113(d) (1984).

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any sentence from straight probation to 20
and 25 years incarceration, respectively.
Very few offences carried minimum
sentences, and those that did were often
specified as “any term of years.” Thesentence imposed by the court could not be
appealed, nor did the court have to specify
the reasons for the sentence.
The heart of this indeterminate system
was parole release, created in the federal
system in 1910. Offenders sentenced toprison could be released on parole
supervision before the expiration of theirterm. The parole release date was set by
the U.S. Parole Commission according to
the imposed sentence and the Parole
Commission’s assessment of the offender’sreadiness for release. By statute, anoffender sentenced to prison for a fixed
term greater than one year would be
eligible for release on parole after serving
either one-third of the sentence, or ten
years of a life sentence or a sentence
greater than 30 years. 7 However, atsentencing, the court could also specify aminimum sentence to be served before
parole eligibility, if that minimum was onethird or less of the maximum also specified
by the court.8 The court could also specify
a maximum term and leave thedetermination of parole release entirely to
the Parole Commission. 9 In 1974, theParole Commission began to use its own
parole decision-making guidelines forrelease decisions, and the Parole
Commission and Reorganization Act of1976 required that parole guidelines beused for all parole release decisions.10
It is in this context that the Congress
began to consider an alternate system ofdeterminate sentencing. The report of the
Senate Judiciary Committee on theoriginal 1983 legislation described theprevailing view in Congress of federal
sentencing:“In the Federal system today, criminal
sentencing is based largely on an
outmoded rehabilitation model. The
judge is supposed to set the maximum
term of imprisonment and the Parole
Commission is to determine when to
release the prisoner because he is“rehabilitated.” Yet almost everyone
involved in the criminal justice system
now doubts that rehabilitation can be
induced reliably in a prison setting, and
it is now quite certain that no one canreally determine whether or when aprisoner is rehabilitated. Since thesentencing laws have not been revised
to take this into account, each judge isleft to apply his own notions of the
purposes of sentencing. As a result,every day federal judges mete out anunjustifiably wide range of sentences
to offenders with similar histories,
convicted of similar crimes, committed
under similar circumstances.11 ”
Although rehabilitation would remain astated goal of federal sentencing after the
introduction of sentencing guidelines andthe abolition of parole,12 the view remainedthat the rehabilitative model underlying
American criminal justice efforts, since theearly part of this century, was wrong. By
the late 1970’s, many criminal justiceexperts in the United States had come tothe conclusion that the rehabilitation of
offenders was uncertain at best. An
influential review of the research on
rehabilitation programs in the federal andstate criminal justice systems, publishedin 1975, concluded that “nothing works.”13
The authors of this review found no7

18 USC § 4205(a) (1984).
18 USC § 4205(b) (1984).
9 Ibid.
10 Pub. L. No. 94-233, 90 Stat. 219 (May 14, 1976).
11 Senate Commission on the Judiciary, Sentencing
Reform Act of 1983, S. Rep. No. 98-223, at 34.
12 18 USC § 3553(a)(2) (1998).
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RESOURCE MATERIAL SERIES No. 55
systematic evidence that specific types ofcorrectional treatments reduced
recidivism.
An equal or greater skepticism existed
about the indeterminate sentence practices
that typically were used to implement thismodel. Indeterminate sentencing decisions
and parole release decisions were, many
experts felt, too often abused or were too
often poorly made. Judges and paroleboards had wide latitude to make decisions
about imprisonment. The end result, many
felt, was a tremendous potential for
discrimination and disparity in sentencing
practices, and uncertainty for allconcerned, including prosecution anddefence attorneys, judges, and offenders.
As Senator Kennedy stated, there could be
no reasonable expectations about thecertainty and length of punishments.
How serious was the problem ofsentencing disparity? A Special Panel on
Sentencing Research, created in 1980 at
the request of the National Institute ofJustice and the National Academy of
Sciences, assessed the quality of existing
sentencing research. With regard tosentencing disparity and discrimination,
the Panel found that the research findings
on discrimination in sentencing weremixed.14 Some studies showed evidence of
racial, socio-economic, and/or gender
discrimination, although most studies tothat point had one or more methodologicalproblems that cast doubt on theirconclusions. In contrast, the research on
disparity in sentencing decisions could
systematically account for only a small
amount of the variation in judicial
decisions. This result is not surprising,since an indeterminate system addresses
unique aspects of each offender’s situation.
The Panel noted that, stripped of its
justification for rehabilitative purposes,
this variation in sentencing had become arationale for reform efforts.

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III. THE SENTENCING REFORMACT OF 1984
A. The Structure of the UnitedStates Sentencing Commission
The Sentencing Reform Act of 1984
established the United States Sentencing
Commission, a panel of sentencing experts
appointed by the President of the UnitedStates. Judge Frankel’s original proposal
called for a judicial commission to set
sentencing rules. The Sentencing Reform
Act specified that the Commission would
have seven voting members, one of whomwould be the chair of the Commission. The
Attorney General of the United States, or
his/her designee would be an ex officio, nonvoting member of the Commission. The
voting members would be appointed for sixyear terms. At least three of the voting
members had to be federal judges
recommended to the President by the
Judicial Conference of the United States.
No more than four of the voting members
could be members of the same politicalparty.
The original set of Commissioners
consisted of one district court judge, also
designated as the chair; two circuit court
judges, a former member of the UnitedStates Parole Commission; and threeacademics. The original Commissioners
were appointed for staggered terms of two,four, and six years, in order to promote
continuity by preventing complete turnoverin membership every six years. As theoriginal Commissioners left or their terms
expired, the number of judges on the panel
has been maintained.
13 Douglas Lipton, Robert Martinson, & Judith Wilks,

The Effectiveness of Correctional Treatment: A
Survey of Treatment Evaluation Studies (1975).
14 Alfred Blumstein, Jacqueline Cohen, Susan E.
Martin, and Michael H. Tonry (eds.), Research on
Sentencing: The Search for Reform (1983) at 64.

111TH INTERNATIONAL SEMINAR
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B. Directives to the Sentencing
Commission
When the Sentencing Commission began
its work in 1985, its task was to promulgate
guidelines that meet the purposes ofsentencing outlined in 18 USC § 3553(a)(2):just punishment, deterrence,incapacitation, and rehabilitation. In
outlining the tasks of the Commission,
Congress had three goals: honesty,
uniformity, and proportionality. Honesty
in sentencing would be achieved by the
specification of the sentence at the time ofsentencing. The indeterminate sentencing
system that guidelines had replaced gave
the authority for determining the time
served in prison to the United States Parole
Commission. An offender sentenced toprison would not know the exact length of
his/her incarceration until after a parole
hearing, and that hearing might not occur
until the offender had served a third of thesentencing imposed by the court. The
Sentencing Reform Act specified that thefull term of imprisonment imposed by the
court would be served, minus up to 15
percent of the sentence that could be
subtracted for good behavior, in prison.15
Uniformity would be achieved by the
avoidance of unwarranted sentencing
disparity among offenders with similar
criminal records convicted of similar
criminal offences.16 Although there wasscant empirical evidence on which to baseit, there was a widespread belief thatfederal sentencing practices varied widely
between judges and that these practices
were sometimes based on illegitimate
factors such as gender and race. 17 To
achieve this goal of uniformity, Congress
gave the Sentencing Commission a numberof directives. For one, Congress directed
the Commission to ensure that theguidelines and their policy statements beentirely neutral with regard to race,
gender, national origin, creed, and socioe c o n o m i c s t a t u s . 1 8 F u r t h e r, t h eCommission was instructed to at leastconsider whether certain offences andoffender characteristics are relevant tosentencing. The Commission’s response tothis directive is discussed in a later section.
Congress specified, however, that theguidelines should reflect the “general
inappropriateness” of considering an
offender’s education, vocational skills,
employment record, family ties andresponsibilities, and community ties whenrecommending a prison term or its length.19
Proportionality would be achieved by asystem of guideline sentences thatrecognized and incorporated differences inboth an offender’s criminal behavior andhis/her criminal background. In otherwords, punishment should be proportional
to the real or potential harm of an offence
and to the offender’s history of criminal
behavior. Congress gave no detailed
instructions as to types of sentences nor
their lengths, but did give the Commission
guidance as to what it should consider
during the development of the guidelines.
Consistent with the goal of proportionality,
Congress directed that the guidelines
should: (1) specify “substantial” terms of
15 18 USC § 3624(b) (1998).
16 28 USC § 991(b)(1) (1998).
17 One of the studies most frequently cited as evidence

for sentencing disparity is a study done by theFederal Judicial Center: Anthony Partridge andWilliam B. Eldridge, The Second Circuit Sentencing
Study, A Report to the Judges (1974). Fifty judges
in the second circuit were given the same 20 offence/
offender scenarios and asked to impose a sentence
for each. The study showed quite a bit of variation,
particularly for the most serious offences. For
example, the range for bank robbery was 5 years
to 18 years in prison, with a median sentence of 10
years. The study did not examine the possible roleof illegitimate factors in these judges’ sentencing
decisions.
18 28 USC § 994(d) (1998).
19 28 USC § 994(e) (1998).

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RESOURCE MATERIAL SERIES No. 55
imprisonment for certain offenders, suchas those with prior convictions or who
committed the offence while on pretrial
release20; (2) reflect the “appropriateness”
of imposing incremental penalties for
multiple offences, whether committed at
different times or as part of the same course
o f c o n d u c t 21; a n d ( 3 ) r e f l e c t t h e“inappropriateness” of imposing
consecutive penalties for conspiracy tocommit an offence and the actual offence.22
At the same, the Commission was
instructed to take into account the capacityof the penal facilities and other services in
the federal system and makerecommendations, if necessary, for changes
or expansion needed as a result of theguidelines. Congress tempered thissomewhat by also directing that theguidelines be formulated to minimize thepossibility that the federal prison
population will exceed the capacity of thefederal prison system.23
C. The Development of Empirical
Guidelines
In the absence of any prior sentencing
rules, the development of a sentencing
guideline system is a daunting task,
particularly for a criminal code as diverseas the Federal Code. Congress stated thatthe starting point for guidelines
development should be the averagesentences imposed before the creation of
the Commission, including the averagetime served for offenders sentenced toprison.24 Congress prefaced this instruction
with the directive that the Commission
should ensure that the guidelines reflect
the fact that, in many cases, thesesentences do not accurately reflect theseriousness of the offender’s crime.25 As aresult, the Commission’s starting point wasan assessment of then-current sentencing
practices in the federal courts, including
release decisions by the United States
Parole Commission. As part of thisassessment, the Commission collected data362

on a sample of 10,500 cases sentenced in
the federal courts between October 1, 1984
and September 30, 1985. From theAdministrative Office of the U.S. Courts,
the Commission obtained automated datathat included offence descriptions,i n f o r m a t i o n a b o u t e a c h o f f e n d e r ’s
background and criminal history, themethod of disposition (i.e., guilty plea,
conviction after trial), and the sentenced
imposed. To augment this data with more
complete offence and offender information,
the Commission requested and received
information from the Probation Division of
the U.S. Courts that included thepresentence investigation reports preparedfor judges by U.S. Probation Officers.26
Finally, the Commission obtained thisinformation from the Bureau of Prisons on
offenders in the sample who had beensentenced to a term of imprisonment:(1) Time actually served in prison, or(2) Time scheduled to be served inprison if a parole date had been set,or(3) An estimate of the time to be servedin prison if no parole date had beenset.
In order to have an empirical basis fordeveloping the guidelines, the Commission
analyzed this data to answer thesequestions:(1) How much time is served on average
20 28 USC § 994(i) (1998).
21 28 USC § 994(l)(1) (1998).
22 28 USC § 994(l)(2) (1998).
23 28 USC § 994(g) (1998).
24 28 USC § 994(m) (1998).
25 Ibid.
26 U.S. Probation Officers are employees of the federal

courts. Their duties include the supervision of
offenders on probation and the preparation of
investigative reports for use by judges at
sentencing.

111TH INTERNATIONAL SEMINAR
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by convicted federal offenders?
(2) How does this average vary withcharacteristics of the offence, theoffender’s background and criminal
history, and method of disposition?
(3) How much of this variation cannot
be attributed to the offence and theoffender ’s background (i.e., howmuch disparity exists)?
The goal of this analysis was not toreplicate judicial decision-making, but toobtain information about the range ofjudges’ sentencing practices, on an offenceby-offence basis. In particular, theCommission would have information about
the relationship between offence, offendercharacteristics and sentences imposed on
one hand, and time served on the other. At
the very least, it was expected that thisanalysis would provide material for policy
deliberations.
At the same time the Commission was
analyzing the sentencing data, it collected
information and input from a wide variety
of other sources. During the guidelines
development period, the Commission
conducted public hearings in Washington
D.C. and in other regions of the UnitedStates, solicited written comments fromhundreds of criminal justice practitioners
and other interested parties, andestablished advisory groups of federal
judges, U.S. attorneys, federal publicdefenders, U.S. probation officers, state
district attorneys, private defence
attorneys, and academics. The
Commission’s goal was to involve as many
interested parties as possible, so as tobetter inform its policy deliberations.
D. The Commission’s Policy
Decisions
1. The Relevance of Offence and OffenderCharacteristics
Congress gave the Sentencing
Commission broad authority to develop a

guideline system, although, as notede a r l i e r, i t a l s o g a v e a g o o d m a n y
instructions as to how those guidelines
should function. Among otherconsiderations, the Commission was todecide the relevance of certain offences andoffender characteristics for sentencing:
Offence Characteristics27(1) Grade of the offence (e.g., misdemeanoror felony);(2) A g g r a v a t i n g a n d m i t i g a t i n gcircumstances;(3) The nature and degree of harm causedby the offence;(4) The community view of the gravity ofthe offence;(5) The public concern generated by theoffence;(6) The potential deterrent effect of aparticular sentence for the offence; and(7) The current incidence of the offence inthe community and in the nation as awhole.
Offender Characteristics28(1) Age;(2) Education;(3) Vocational skills;(4) Mental and emotional condition as a
mitigating factor or as otherwise
relevant;(5) Physical condition, including drug
dependence;(6) Employment record;(7) Family ties and responsibilities;(8) Community ties;(9) Role in the offence;(10)Criminal history; and(11)Dependence upon criminal activity fora livelihood.
The Sentencing Commission decided
that, with the exception of the role in theoffence, criminal history, and dependence
27 28 USC § 994(c) (1998).
28 28 USC § 994(d) (1998).

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RESOURCE MATERIAL SERIES No. 55
upon criminal activity for a livelihood, noneof the offender characteristics listed above
are relevant to the purposes of sentencing.
The offence characteristics were, however,incorporated in various ways into thestructure and substance of the sentencing
guidelines ultimately issued by theCommission.
2. Real vs. Charged Offence Sentencing
The guidelines issued by theCommission in 1987 are described as amodified real-offence sentencing system,
modified by incorporating some elementsof a charge-based sentencing system. A
pure charge-based system would tie thesentence directly to the charges on which
the offender was convicted. To the extent
that these charges captured features of theoffence (e.g., assault with a deadly weapon),these features would be reflected in
gradations in the sentence. In contrast, apure real-offence system would catalog theharms caused by the offence conduct, andthe offender’s sentence would be based on
those harms and aspects of the offence
conduct regardless of the specific conviction
charges.29 One benefit of such a system,compared to a charge-based system, would
be its potential effect on prosecutorial
discretion. Prosecutors would not be able
to shape sentences directly through theircharging practices. Rather, the court wouldbase the sentence on the offence as it
occurred.
A drawback of the real-offence system isthe level of complexity and detail it canrequire to represent a set of offences withan inventory of generic harms, particularlyin the federal system’s very diverse
criminal code. Before issuing guidelines
in 1987, the Sentencing Commission
considered a real-offence system but
concluded that it was too complex; that itrisked reintroducing the sentencing
disparity Congress sought to eliminate;that it jeopardized the certainty of364

punishment; and that it might mute theguidelines’ deterrent effects. The modified
real-offence system that the Commission
did adopt is organized around statutorilydefined offences, just as a charge-based
system would be, but catalogs on an
offence-by-offence basis the harms that are
the most common for each offence. This
guideline system goes on to address a setof more generic features of criminal
offences, such as the offender’s role in theoffence, the nature of the victim,
obstruction of justice, and multiple countsof conviction. For example, robbery is a
category in the sentencing guidelines, as
defined by statute, and the robbery
guidelines enable the sentencing judge totake account of the most common featuresof robbery. A more detailed example will
be described later, including the moregeneric features, such as the role in theoffence, but here are some of thecharacteristics of a robbery that areincorporated into the robbery guideline:(1) Did the offender have a weapon?
(2) How was that weapon used?
(3) Was a victim injured?
(4) Was a victim taken hostage or
abducted?
(5) What was the value of the property
taken in the robbery?
One of the more controversial aspects ofthis modified real-offence system is theconcept of relevant conduct. Relevant
conduct is what makes this a real-offence
rather than a charge-based system. Here
29 Offence conduct may be incorporated into a real-

offence system in several ways. For example, afraud of $1,000 could be treated as a more serious
offence if the victim was considered especiallyvulnerable because of age or infirmity. Alternatively,
the offence conduct could increase the potential
harm, such as in a sophisticated scheme that, before
it was detected, was intended to defraud large
numbers of victims.

111TH INTERNATIONAL SEMINAR
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is the definition of relevant conduct in the1998 Sentencing Guideline Manual:30(1) (a) all acts and omissions committed,
aided, abetted, counselled,commanded, induced, procured, or
willfully caused by the defendant;and(b) in the case of a jointly undertaken
criminal activity (a criminal plan,
scheme, endeavor, or enterprise
undertaken by the defendant inconcert with others, whether or not
charged as a conspiracy), allreasonably foreseeable acts andomissions of others in furtheranceof the jointly undertaken criminal
activity, that occurred during thecommission of the offence ofconviction, in preparation for that
offence, or in the course of
attempting to avoid detection or
responsibility for that offence;(2) solely with respect to offences of acharacter for which §3D1.2(d) would
require grouping of multiple counts, allacts and omissions described in
subdivisions (1)(a) and (1)(b) above thatwere part of the same course of conduct
or common scheme or plan as theoffence of conviction;(3) all harm that resulted from the acts
and omissions specified in subsections(a)(1) and (a)(2) above, and all harmthat was the object of such acts andomissions; and(4) any other information specified in theapplicable guideline.
Relevant conduct, as defined in thesentencing guidelines, takes the offender’saccountable behavior beyond that
represented by the conviction charges, toinclude for example, the behavior of others
in jointly undertaken criminal activity andthe criminal behavior for which theoffender was neither charged nor convicted.
For example, an offender could be charged

with multiple counts of larceny, totalling
several thousand dollars but plead guilty
to a single count of larceny involving lessthan $500. At sentencing, the relevant
conduct standard would have the judge
total all of the losses, including those for
dropped counts, and use that total amountto determine the sentence. The guidelines
for other offences such as drug trafficking
also total the harm for convicted, dropped
and uncharged counts, to arrive at a totalharm.
3. Uniformity and Proportionality
The tension between the goals of
uniformity and proportionality is one of thekeys to understanding the choices made by
the United States Sentencing Commission
concerning the structure and content of thesentencing guidelines. Too much of either
uniformity or proportionality would be at
the expense of the other. In a system of
uniform sentences where, all offenders
convicted of bank robbery receive a fiveyear sentence and all offenders convictedof fraud receive a three-year sentence,
could avoid sentencing disparity andeliminate many or most differences
between judges. But that uniformity could
undermine proportionality by, for example,
ignoring gradations in the harm caused by
the offence, the offender’s criminal history,or aggravating and mitigating factors suchthe offender’s role in the offence. While asystem of proportional sentences would be
important for the purposes of deterring
more serious criminal behavior andrepetitive criminal behavior, too muchvariation could undermine the effort to
reduce disparity in sentencing.
The analysis of the 10,500 cases provided
one basis for negotiating between these twogoals. The Commission used the empirical
data to: (1) set narrow sentence ranges that
centered on the average current sentencing
30 USSG §1B1.3 (1998).

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RESOURCE MATERIAL SERIES No. 55
practices for individual offences; and (2)identify relevant aggravating factors, suchas monetary loss or injuries to victims, andtheir relationship to the sentence. Where
the data for individual offences wasinconclusive, the Commission readpresentence investigation reports andconsulted with practitioners and U.S.
probation officers to develop a rationale forsetting sentencing ranges. In some otherinstances, such as for white-collar and drug
offences, the Commission had received
directives from Congress to increase
penalties over current practice, but theCommission still used data analyses to
identify relevant aggravating factors forthese offences.
4. Probation and Supervised Release
Before the guidelines, judges had broad
authority to sentence offenders toprobation as a means of controlling andsupervising their conduct, without
confinement. The Sentencing Commission,
through the guidelines, curtailed the useof probation. This was a response by theCommission to the Congressional directive
to ensure that the guidelines reflect the factthat pre-guideline sentences do not always
accurately reflect the seriousness of theoffence. The Commission accomplishedthis through the structure of the guideline
sentencing table, which will be describedin more detail in a later section. The result
was that fewer offenders would be eligible
for probation. During the statistical year
1987,31 just prior to the effective date of theguidelines, 36.5 percent of the 43,942
offenders convicted in federal courts
received probation as part of theirsentence.32 A decade later, during fiscal
year 1997, 21.2 percent of the 55,648
convicted offenders received a probation
sentence.33
The Sentencing Reform Act of 1984
abolished parole release from prison, andtherefore parole supervision after release,366

but Congress directed the Sentencing
Commission to consider whether a term of
imprisonment should include a term ofsupervised release.34 The Commission
decided that a term of supervised releaseshould be imposed in all cases with asentence of one or more years of
imprisonment and in all other cases at the
court’s discretion.35 The length of the termof supervised release can vary from one to
five years, depending on the seriousnessof the conviction offence.36 Unlike parole
release, the term of supervised release isserved after the completion of the full termof imprisonment, less good time credits.
The released offender is subject to anumber of mandatory conditions37 and issupervised by a U.S. Probation Officer who
reports to the sentencing judge.
5. Mandatory Minimum Sentences
While the Sentencing Commission was
creating the sentencing guidelines,
Congress passed the Firearm Owner’s
Protection Act38 and the Anti-Drug Abuse
Act of 1986.39 The former instituted a new,mandatory 5-year penalty for the use of a
firearm during the commission of a drug
felony; the latter added mandatory
31 Until 1991, the Administrative Office of the U.S.

Courts compiled data on a statistical year basis,from July 1 to June 30 of the following year.
Statistical year 1987 refers to the period July 1,
1986 to June 30, 1987. In 1992, the Administrative
Office switched to fiscal year reporting. Fiscal year
1997 refers to the period October 1, 1996 to
September 30, 1997.
32 Administrative Office of the United States Courts,
Annual Report of the Director (1987) at 282.
33 Administrative Office of the United States Courts,
Annual Report of the Director (1997) at 217.
34 28 USC § 994(a)(1)(C) (1998).
35 USSG §5D1.1 (1998).
36 USSC §5D1.2 (1998).
37 USSG §5D1.3.
38 Pub. L. No. 99-308, 100 Stat. 449 (1986).
39 Pub. L. No. 99-570, 100 Stat. 3207 (1986).

111TH INTERNATIONAL SEMINAR
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minimum penalties that tied the minimum
penalty for certain drug offences to theamount of drugs involved in the offence.
Two years later, in the Omnibus Anti-Drug
Abuse Act of 1988, Congress enacted
additional penalties for drug offences,including a five-mandatory minimum
sentence for possession of 5 grams of crack
cocaine.40
This was not the first time thatmandatory minimum penalties for drug
offences had existed in the federal system.
The Narcotic Control Act of 195641 createdmandatory ranges for most drug
importation and distribution offences.
Judges were required to select a specificsentence within the range, and parole
release was prohibited for the covered
offences. Congress repealed most of thesemandatory minimum sentences after
finding that the sentence increases had notbeen shown to reduce the number of druglaw violations.42
The creation of mandatory minimum
sentences so soon after the Sentencing
Reform Act clearly conflicts with the goalof the guidelines created by a panel ofexperts. The Commission’s response
during the guideline development process
was to incorporate the mandatory
minimum penalties as baselines in the
drug guidelines. The drug guidelines tie
penalties to drug amounts as a measure ofharm, and the drug amounts that trigger
mandatory minimum penalties (e.g., 5
grams of crack cocaine) result in an
identical or greater guideline sentence.
6. Just Deserts vs. Crime Control
As noted earlier, the 1984 Sentencing
Reform Act elevated the notion ofpunishment over the then prevalent
objective of rehabilitation. Still, one
philosophical dispute the Sentencing
Commission had to address involved the
purposes of punishment. Some observers

argue that punishment should follow a“just deserts” model, in which punishment
is keyed to the harm caused by the offence
and the offender’s culpability. Others argue
that the goals of deterrence andincapacitation should take precedence insentencing, that the primary purpose ofpunishment is the control of crime andsentences should be designed to achieve
this purpose. The Commission’s solution
to this debate was to declare that theapplication of either model would achieve
the same results in most sentencing
decisions.
IV. THE FEDERAL SENTENCINGGUIDELINES
A. Structure
The guidelines are structured according
to broad offence categories such as offences
against the person, property offences, drug
offences, fraud, and a variety of otheroffences that are unique to the federal
system (e.g., immigration and national
defence). Most of these categories arebroken down further into major
subcategories such as homicide, robbery,and drug trafficking. These sub-categories
are linked to specific criminal statutes andutilize a scoring system for determining theharm caused by the offence and, ultimately,
the sentence the convicted offender will
receive. Under this scoring system,
offences are assigned levels based on
specific offence characteristics such bodily
harm to victims, financial loss, and themethods used to commit the offence.
B. An Example: Bank Robbery
1. The Adjusted Offence Level
Consider this example: an offenderconvicted of one count of bank robbery (1840 Pub. L. No. 100-690, 102 Stat. 4377 (1988).
41 Pub. L. No. 84-728, Title I, Sec. 103. 70 Stat. 651,

653-55 (1956).
42 S. Rep. No. 613, 91st Cong., 1st Sess. 2 (1969).

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RESOURCE MATERIAL SERIES No. 55
USC § 2113) would be sentenced under therobbery guidelines (USSG §2B3.1). The
guideline calculation begins with a baseoffence level of 20. An unarmed robbery ofa person, with no harm to the victim and aloss of no more than $10,000, is assigned
an adjusted offence level of 20. No
enhancements are made to the base offence
level. Because the example is a bankrobbery, 2 levels are added for robbery of afinancial institution. If the offender had aweapon, 3 to 7 levels are added dependingon the nature of the weapon and its use
during the robbery. Three levels are added
if a dangerous weapon (e.g., a firearm or aknife) was possessed, displayed, orbrandished. More levels are added torepresent greater levels of threat, up to 7
levels if the weapon was a firearm and it
was discharged during the robbery. Bodily
harm to victims adds 2 to 6 levels
depending on the degree of harm, but the
combined adjustment for weapon use andharm to victims is capped at 11 levels in
the robbery guideline. Financial loss adds
0 to 7 levels, again depending on theamount of loss. If a victim was taken
hostage to facilitate escape, another 4
levels are added to the total. Thus, a bankrobbery in which the offender fired a gun,wounded a victim, stole $500,000 and tooka hostage will have an adjusted offence
level of 41.
Other categories of offences are
structured similarly, with a base offence
level and adjustments to that levelaccording to specific offence behaviors.
Most of these adjustments are increases,
because the base offence level is intended
to describe a basic or unsophisticated formof an offence, with minimal harm.
Occasionally, an adjustment will bestatutory and not related directly to theoffence behavior, or the base offence level
will itself be scaled. The drug trafficking
guideline assigns a base offence levelaccording to the amount of drugs involvedin the offence. Multiple counts of368

convictions are handled by “grouping”
related counts, selecting the group with thegreatest adjusted offence level, and making
adjustments to that level based on the
additional groups of counts.
Once the conviction offence has beenscored according to its specific features,
further adjustments are made for moregeneral offence features. These
adjustments, which may result in increases
or decreases in the adjusted offence level,
and which may be applied to any offence,are for the nature of the victim (e.g., wasthe victim vulnerable?), the offender’s rolein the offence (e.g., organizer as opposed
to a minimal participant), obstruction ofjustice, and the offender’s acceptance of
responsibility for the criminal behavior.
Further adjustments are made to theoffence level for offenders defined bystatute as career offenders 43 or whose
livelihood is derived from criminal conduct.
For example, an offender with two priorfelony convictions for drug offences orcrimes of violence may have his or her
adjusted offence level increased if that levelis below levels specified in the guidelines.44
2. The Criminal History Score
The next step is the scoring of theoffender’s criminal history. The calculationof the criminal history score is done on thebasis of the length of prior sentences ofimprisonment (not the amount of time
actually served) in any jurisdiction, local,
state or federal. For example, 3 points areadded for each prior sentence exceeding one
year and one month; 2 points are added foreach shorter sentence of imprisonment thatis of at least 60 days; and 1 point is added
for each sentence of imprisonment that did
not receive 2 or 3 points. A sentence is
43 21 USC § 841 (1998). See also 28 USC § 994(h) for

directives to the Commission regarding thesentencing of career offenders.
44 USSG §4B1.1 (1998).

111TH INTERNATIONAL SEMINAR
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counted only if that sentence was imposed
no more than fifteen years prior to thebeginning of the offence of conviction.
Points are also added if :(1) the offence wascommitted while the offender was under
any type of criminal justice sentence,
including not only imprisonment but also
any form of community supervision; (2) if
the offence was committed within two years
after release from imprisonment on asentence worth 2 or 3 points; or (3) if theoffender was convicted of a crime of violence
whose sentence did not receive any points
as described above.
C. The Sentencing Table
The calculation of the adjusted offence
level and of the criminal history score are
outlined in a presentence report prepared
for the sentencing judge by a U.S. probation
officer. This report is typically shared with
the U.S. Attorney’s Office and defense
counsel, both of whom may dispute theprobation officer’s recitation of facts andapplication of the guidelines. These
objections, if not resolved prior tosentencing, are included as appendices tothe report. The sentencing judge will,
either in a separate hearing or during thesentencing hearing, rule on any disputes.
After determining in court the final offence
level and criminal history score, the judge
uses the sentencing table in Annexure 1 todetermine the type of sentence possible andits length.
The sentencing table has twodimensions: offence levels are listed on thevertical axis and criminal history
categories (i.e., groupings of criminal
history scores) are listed across thehorizontal axis. Within each of the table’s
cell is a range of months of imprisonment.
When formulating the table, theSentencing Commission followed threeprinciples. First, the ranges in adjacentcells overlap. The goal was to reduce thepotential for litigation over the exact

guideline application. If the same sentence
could be have been imposed whether theoffender received one or two fewer (oradditional) levels, there is no ready basis
for appealing the sentence. Second, thelower ends (and the upper ends) of thesentencing ranges were designed toincrease at an increasing rate. 45 Thisfeature produces wider ranges as offence
levels and/or criminal history categories
increase. However, the width of theseranges is bound by the third, statutory
principle: the maximum of a sentencing
range cannot exceed the minimum of that
range by more than 25 percent of theminimum range or six months, whicheveris greater.46 The exception is that ranges
with minimum sentences of 30 years ormore may have a maximum sentence of life
imprisonment.47
The sentencing table specifies months ofimprisonment, but depending on the regionof table, some form of probation may be apossible sentence. The table is divided into
four zones, A to D. Zone A consists of all
ranges for which zero is the minimum
sentence, allowing the sentencing judge toimpose a sentence of probation rather thanimprisonment for offenders whose
combined offence level and criminal history
score places them in one of these ranges.
Offenders in Zone B (minimum sentenceof 1 - 6 months) or Zone C (minimum
sentence of 8 - 10 months) may, with certain
restrictions, be sentenced to somecombination of imprisonment andsupervision, referred to as a “split
sentence.” Offenders in Zone D have aminimum sentence of 12 months and mustreceive a sentence of imprisonment.

45 With some exceptions,the lower and upper endsof the ranges increase logarithmically.
46 28 USC § 994(b)(2) (1998).
47 Ibid.

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At sentencing, after determining theapplicable sentencing range, defined by theintersection of the adjusted offence level
and the criminal history score, the judge
must impose a specific sentence within that
range. If the sentence is probation, or
includes a term of probation, the judge can
impose a term of 1 to 5 years, depending
upon the adjusted offence level. 48 A
defendant serving a sentence of 12 months
or greater is entitled to a credit of up to 15
percent of the sentence for good behavior
in prison.49
D. Departures from the Sentencing
Range
One of the features of this sentencing
system that sets it apart from the previous,
indeterminate system is the ability of bothoffenders and the government to appeal
sentences that do not fall within theapplicable sentencing range or which theappellant claims are based on an erroneousinterpretation of the guidelines.
Presupposing sentences outside theprescribed range is the power of the judges
to depart from that range. Judges may
depart from that range under either of two
circumstances: (1) if the offender has
provided assistance to the government,50
or (2) if there are characteristics of theoffender or the offence that were not, in theopinion of the judge, adequately consideredby the Sentencing Commission in thecreation of the guidelines.51 In the case of
assistance to the government, this type of
departure can only be made after a motion
by the government (i.e., the U.S. Attorney).
Once the motion is made, the judge may
sentence anywhere below the specified
sentencing range, even below statutory
minimum sentences. If the judge
determines that there is somecharacteristic of the offender or the offence
that was not adequately considered by the
Sentencing Commission, the judge may
sentence above or below the applicablerange, although not below the statutory

370

minimum. A judge may never exceed thestatutory maximum sentence.
As noted above, the Commission decided
that most of the factors Congress asked it
to consider are not relevant to sentencing,
and therefore, there may not be very many
characteristics the Commission has notconsidered. However, the guidelines do
include instructions that describe
circumstances in which judges may
consider a departure. For example, theguidelines include a policy statement that
if an offender’s criminal history score does
not adequately represent the seriousness
offender’s criminal history, the judge may
consider departing from the specified
sentencing range.52 The theft guideline
includes an instruction that if the monetaryloss to victims underrepresents theharmfulness of the crime, particularly thenonmonetary loss, the sentencing judge
may consider an upward departure.53 Caselaw developed since 1987 has further
broadened the discretion of sentencing
judges. During fiscal year 1997, 19.2
percent of guideline sentences weredepartures for substantial assistance, 12.1
percent were downward departures forreasons other than substantial assistance,and 0.8 percent were upward departures.54
V. THE IMPACT OF THE FEDERALSENTENCING GUIDELINES
After more than ten years of sentencing
guidelines in the federal courts, theirimpact can be seen in a number of changes
48 USSG §5B1.2 (1998).
49 18 USC §3624(b) (1998).
50 USSG §5K1.1 (1998).
51 USSG §5K2.0 (1998).
52 USSG §4A1.2 (1998).
53 USSG §2B1.1, comment (n. 15) (1998).
54 United States Sentencing Commission, 1997

Sourcebook of Federal Sentencing Statistics (1997)at 53.

111TH INTERNATIONAL SEMINAR
VISITING EXPERTS’ PAPERS
throughout the federal criminal justicesystem. The federal prison population has
more than doubled since the guidelines’
introduction. Under the guidelines,
offenders are being sent to prison more
often and to serve longer sentences.
Criminal appeals have also doubled. As
offenders sentenced to terms of supervised
release are released from prison,particularly after long sentences, thenumber of supervised released revocation
hearings has increased.
A. The Federal Prison Population
During the period from 1986 to 1997, thefederal prison population grew from 40,505
to 101,845. 55 In 1986, drug offenders
accounted for 38.1 percent of newly
sentenced offenders. By 1997 this figure
had grown to 59.5 percent. The majorityof these drug offender are first-timeoffenders who have been sentenced toprison under the mandatory minimum
statutes.56
As noted earlier, the use of probation has
declined from 36.5 percent of all sentencesin 1987 to 21.2 percent in 1997. This meansthat a greater proportion of convicted
offenders are going to prison under theguideline system, some of them forconsiderably longer periods of time. The
average time served in prison increase from
15.6 months in 198657 to 26.5 months in1995 58 . Drug offenders released fromfederal prison in 1986 had served anaverage of 19.5 months. Time served bydrug offenders increased to an average of
37.6 months by 1995. The effect of
mandatory minimum sentences and theguidelines has been to double the averagetime served by drug offenders. This is themost dramatic increase in average time
served, but average time served may mask
the equally important change in the
proportion of offenders sentenced to prison.
Offenders who once received probation may
now be serving short prison terms. For

example, the average time served for fraud
increased only slightly from 13.6 months
in 1986 to 15.6 months in 1995, but thepercentage of fraud offenders sentenced toprison during this period increased fromless than 50 percent to about 60 percent.
B. Appeals
During statistical year 1987, there werea total of 5,260 criminal appeals
commenced in the U.S. Courts of Appeals.59
During this same year, 41,087 criminalcases were terminated in the U.S. District
Courts. 60 During fiscal year 1997, thenumber of criminal appeals commenced
had increase to a total of 10.521.61 During
this year, 46,887 criminal cases were
terminated.62 Thus, while there was a 100
percent in criminal appeals commenced
from 1987 to 1997, the number of criminalcases terminated increased by only 14
percent. Although we have no data
showing the nature of these appeals, thebulk of this increase is almost certainly
attributable to appeals of guideline
sentences.63
C. Supervised Release Revocations
An impact of the sentencing guidelinesthat is only now beginning to show is theincrease in the numbers of persons under
supervised release and the concomitantrevocations of supervised release. On
55 Ibid. at 506.
56 Miles D. Harer, Do Guideline Sentences for Low-

Risk Drug Traffickers Achieve Their StatedPurposes? 7 Fed. Sent. Rep.22 (1994).
57 Bureau of Justice Statistics, Sourcebook of Criminal
Justice Statistics-1988 (1988) at 647.
58 Bureau of Justice Statistics, Sourcebook of Criminal
Justice Statistics-1997 (1997) at 507.
59 Administrative Office of the United States Courts,
supra note 32 at 142.
60 Ibid. at 234.
61 Administrative Office of the United States Courts,
supra note 33 at 81.
62 Ibid. at 178.

371

RESOURCE MATERIAL SERIES No. 55
September 30, 1997, 51,036 persons wereserving a supervised release term,compared to 33,006 persons on probation.64
Supervised release is now the largest
supervision category, but it did not evenexist prior to the guidelines. Persons under
supervised release are subject tomandatory conditions such as reportingand maintaining employment, and may besubject to additional, court-imposed
conditions such as drug testing andtreatment. Violations of those conditions
could result in a return to prison, much as
violations of probation conditions can resultin a prison sentence. During fiscal year
1997, 5,455 persons were removed fromsupervised release for violations ofconditions. 65 This figure represents
approximately one-third of all individuals
removed from supervised release duringthat period (e.g., their term expired). In
contrast, only about one-sixth of persons
removed from probation supervision were
removed for violations of probation.
An examination of violations ofsupervised release and of probation showsthat the proportion of major violations was
2-3 times higher among the supervised
release population compared to theprobation population. Defendants released
after lengthy terms of confinement often
emerge from prison to a hostileenvironment without support of family andthe ability to maintain employment andnavigate a greatly changed social
environment.
Supervised release is intended to keep
offenders who have committed serious
offences under some type of control after
release from prison. But this is also a
population with, on average, more
extensive and more serious criminal
histories than offenders serving a term of
probation. As a result, supervised release
gives additional responsibilities to bothprobation officers and to the courts. These372

responsibilities are certain to increase
because an ever-growing prison population
has to result in an ever-growing population
on supervised release.
D. The Purposes of Punishment
What has been the impact of thesentencing guidelines in terms of the
purposes of sentencing - just punishment,
deterrence, incapacitation, rehabilitation?
Certainly, the sentencing guidelinesachieve incapacitation. The use ofprobation has been reduced and prison
terms have been increased for many or
most of the offences under federal
jurisdiction. Deterrent effects are difficult
to measure and will probably remain so.
Offences prosecuted in federal courts
represent a very small and, in someinstances, a unique portion of all offences
prosecuted in the courts of the UnitedStates. Deterrent effects of the guidelines
are likely to be masked by the much large
state criminal justice systems.
Rehabilitation, although a stated purposeof sentencing, is not vigorously pursued ateither the state or the federal level.
Just punishment has been, from thestart, a major goal of the reform efforts that
led to the Sentencing Reform Act of 1984.
If one defines just punishment narrowly interms of the process by which sentences are
imposed, the guideline system is closer, ingeneral, to fulfilling this purpose of
sentencing than was the indeterminate
system it replaced. Convicted offenders can
63 The Sentencing Commission’s 1997 Annual Reportcontains data on 3,691 sentencing appeals during
1997. This is almost certainly an undercountbecause the Commission collects only opinions andorders issued by the courts of appeal. United States
Sentencing Commission, 1997 Sourcebook ofFederal Sentencing Statistics (1997) at 103, A-1.
64 Administrative Office of the United States Courts,
supra note 33 at 243.
65 Ibid. at 256.

111TH INTERNATIONAL SEMINAR
VISITING EXPERTS’ PAPERS
know before sentencing the type ofsentence they will receive and will havesome idea of its approximate length. If aterm of imprisonment is imposed, theoffender can expect to serve at least 85
percent of it. However, a broader view ofjust punishment might lead to questions
about other factors outside the narrow
scope of guideline application.
For one, many observers argue that the
mandatory minimum sentences for drugtrafficking, specifically those for crack
cocaine, have a disproportionate impact onBlack offenders. For example, the five-year
mandatory minimum sentence for cocaine
trafficking is triggered by 500 grams of
powder cocaine but only by 5 grams of crack
cocaine. Since Blacks are more likely to be
charged with trafficking crack cocaine thanare Whites, they receive a mandatory
sentence for much smaller amounts ofc o c a i n e . 66 E v e n t h e S e n t e n c i n g
Commission has found that Blacks are
disproportionately affected by thism a n d a t o r y m i n i m u m s e n t e n c e . 67
Nevertheless, Congress rejected theCommission’s recommendation for greater
parity between crack and powder cocaine
for triggering a mandatory minimum
penalty. If the statutory penalties that the
Sentencing Commission is required to
implement are perceived as unjust, noamount of procedural fairness in theapplication of the guidelines cancompensate.
At the other end of the process, judges
are able to depart from the guidelines
under circumstances described in theguidelines and noted earlier. One of thosecircumstances is substantial assistance tothe government in the prosecution ofothers. If an offender has provided suchassistance, and the government makes amotion for a departure, the court may
depart downward, even below mandatory
minimum penalties. A potential forsentencing disparity clear exists is these
instances, and it is of two sorts. For one,the guidelines do not define what
constitutes substantial assistance, and astudy by Sentencing Commission staff
shows that definitions of substantial
assistance and prosecutorial practices varyacross U.S. Attorney offices. 68 Two
offenders convicted in different districts ofthe same offence, with similar
backgrounds, who provided the sameassistance to the government, can receive
very different sentences depending on how
the U.S. Attorney’s office in each district
defines assistance. Once the motion for a
substantial assistance departure is made,no guidelines define for judges the limitsof a reasonable departure, nor are judges
required to explain their reasons in thiscontext. Although the limits on otherdepartures are also undefined, except bystatutory minima and maxima, they dorequire justification by the sentencing
judge. In these instances, as required bystatute, the judge will have a rationale forthe departure that can form the basis forthe degree of departure. No such rationale
is needed for substantial assistancedepartures. This again raises the question
whether the process invariably leads to ajust punishment. Since substantial
assistance departures were made inapproximately 19 percent of cases
sentenced during fiscal year 1997, this is
not an issue limited to a few cases.
Finally, the issue of variation across U.S.
Attorney Offices, with respect tosubstantial assistance, raises a larger
66 United States Sentencing Commission, Special

Report to Congress: Cocaine and Federal Sentencing
Policy (1995) at 156.
67 Ibid at xii.
68 Linda Drazga Maxfield and John H. Kramer,
Substantial Assistance: An Empirical YardstickGauging Equity in Current Federal Policy andPractice (1997).

373

RESOURCE MATERIAL SERIES No. 55
issue: how variation in definitions,procedures, and practices across federal
court districts, as well as the courts ofappeals, may produce sentencing disparity.
At present, the extent of such variation andhow it interacts with the application of theguideline system is unknown. The
guideline system is designed to accept acertain amount of disparity, hence theoverlapping and increasingly wider
sentencing ranges in the sentencing table.
The extent of disparity due to inter-district
or inter-circuit differences in guideline
application, the precursor to the sentencing
table, is unmeasured. Even if it were
known, the Sentencing Commission has
limited authority to make adjustments to
reduce disparity of this sort. For example,
the Commission can amend the guidelines,
perhaps to resolve conflicts in case law
between circuits over guideline application.
When the amendment results in a
reduction in a term of imprisonment andit deems it necessary, the Commission canapply the result retroactively to reduce theterms of imprisonment of offenders alreadysentenced.69
VI. THE FUTURE OF FEDERALSENTENCING
What does the future hold for federal
sentencing? Reform efforts tend to be
cyclical, as problems with the current
system are recognized and there emerges
a consensus that something must be done.
These cycles seem to take 15-20 years tocomplete. The federal sentencing
guidelines may be in the middle of theircycle. Issues concerning the growing prison
population, the increased number of
appeals, and the increasing numbers of
persons on supervised release haveapparently not reached a crisis point, atleast not in the U.S. Congress. One aspectof the picture that has changed in the last
decade is the increasing politicization of thereform process. The politicization of crime374

probably began 30 years ago when national
political campaigns began to emphasize
rising crime rates and the dangers they
posed to the average citizen. The politics
of crime have become increasingly
sophisticated, to the point of focusing onmuch narrower issues such as school
uniforms as a means to combat juvenile
gang violence.
Another change is the greater hands-on
nature of Congress’ efforts at reform.
Congress now typically issues directives to
the Sentencing Commission to study or
adjust specific offence levels. Congress has
also considered federalizing offences thathave traditionally been prosecuted in state
courts, and the prospect of more rather
than fewer mandatory minimum sentences
for drug offences is a real one.
Whatever the future may hold, judges
have clearly found ways to work with theguidelines. One measure of comfort might
be the departure rate. During fiscal year
1997, 12.1 percent of imposed sentenceswere downward departures for reasons
other than substantial assistance and 0.8
percent were upward departures.70 During
fiscal year 1991, these figures were 5.8
percent and 1.7 percent, respectively.71 The
downward departure rate has doubled in
six years, indicating that judges are finding
ways to craft sentences they feel areappropriate but are not provided by thesentencing guidelines. To put this resultin a slightly different context, the 12.1
percent downward departure rate for 1997
represents 5,574 cases. With slightly lessthan 900 active and senior district court
judges in the federal system, the odds arehigh that all or most district court judges
69 USSG §1B1.10 (1998).
70 United States Sentencing Commission, supra note

63 at 53.
71 United States Sentencing Commission, Annual

Report (1991) at 139.

111TH INTERNATIONAL SEMINAR
VISITING EXPERTS’ PAPERS
who sentenced criminal cases that year
departed downward in at least one case.
The departure rate may indicate somedissatisfaction with mandatory sentencing
rules if not with the idea of guidelines
generally. A 1996 survey of federal judges
and others by the Federal Judicial Centeryielded this result: 73% of district judges
who responded to the survey said that they
thought mandatory guidelines were notnecessary.72 When asked what they would
prefer in their place, two-thirds preferredadvisory guidelines.73
While the Congress has shown no
inclination to abolish the sentencing
guidelines, or make them advisory, theSentencing Commission has shown
interest in guideline reform. In 1995,
Commission staff began a study of theguidelines, aimed at considering how theymight be refined and simplified. To focus
staff attention and facilitate this review,
the Commission declared a one-year
moratorium on guideline amendments.
Hearings were held in Washington, D.C.
and Denver, Colorado, and Commission
staff prepared a series of working papers
to examine relevant conduct, the level ofdetail in specific offence guidelines,
sentencing options, departures, and theSentencing Reform Act itself. Due toturnover in Sentencing Commissioners,
this review effort has stalled. But its
initiation suggests that the most likely
source of incremental sentencing reform is
the Sentencing Commission. Refinement
and simplification do not constitute
revolutionary change, but they may help
deal with critical issues such as the prison
population, until the next round ofsentencing reform.
72 Molly Treadwell Johnson and Scott A. Gilbert, The

U.S. Sentencing Guidelines: Results of the Federal
Judicial Center’s 196 Survey (1997) at 3.
73 Ibid at 4.

375

RESOURCE MATERIAL SERIES No. 55
ANNEXURE I
UNITED STATES SENTENCING COMMISSIONSENTENCING TABLE

Offence
Level
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
376

I
(0 or 1)
0-6
0-6
0-6
0-6
0-6
0-6
0-6
0-6
4-10
6-12
8-14
10-16
12-18
15-21
18-24
21-27
24-30
27-33
30-37
33-41
37-46
41-51
46-57
51-63
57-71
63-78
70-87
78-97
87-10897-121
108-135
121-151
135-168
151-188168-210188-235
210-262235-293262-327292-365324-405
360-LifeLife

Criminal History Category(Criminal History Points)
II
III
IV
(2 or 3)
(4,5,6)(7,8,9)
0-6
0-6
0-6
0-6
0-6
0-6
0-6
0-6
0-6
0-6
0-6
2-8
0-6
1-7
4-10
1-7
2-8
6-12
2-8
4-10
8-14
4-10
6-12
10-16
6-12
8-14
12-18
8-14
10-16
15-21
10-16
12-18
18-24
12-18
15-21
21-27
15-21
18-24
24-30
18-24
21-27
27-33
21-27
24-30
30-37
24-30
27-33
33-41
27-33
30-37
37-46
30-37
33-41
41-51
33-41
37-46
46-57
37-46
41-51
51-63
41-51
46-57
57-71
46-57
51-63
63-78
51-63
57-71
70-87
57-71
63-78
77-96
63-78
70-87
84-105
70-87
78-97
92-115
78-97
87-108100-125
87-10897-121
110-137
97-121
108-135
120-150
108-135
121-151
135-168
121-151
135-168
151-188135-168
151-188168-210151-188168-210188-235
168-210188-235
210-262
188-235
210-262235-293210-262235-293262-327235-293262-327292-365262-327292-365324-405292-365324-405
360-Life
324-405
360-Life
360-Life
360-Life
360-Life
360-Life
360-Life
360-Life
360-Life
Life
Life
Life

V
VI
(10,11,12) (13 or more)
0-6
0-6
0-6
1-7
2-8
3-9
4-10
6-12
6-12
9-15
9-15
12-18
12-18
15-21
15-21
18-24
18-24
21-27
21-27
24-30
24-30
27-33
27-33
30-37
30-37
33-41
33-41
37-46
37-46
41-51
41-51
46-57
46-57
51-63
51-63
57-71
57-71
63-78
63-78
70-87
70-87
77-96
77-96
84-10584-105
92-115
92-115100-125100-125
110-137
110-137
120-150
120-150130-162130-162140-175
140-175
151-188151-188168-210168-210188-235
188-235
210-262210-262235-293235-293262-327262-327292-365292-365324-405
324-405
360-Life
360-Life
360-Life
360-Life
360-Life
360-Life
360-Life
360-Life
360-Life
360-Life
360-Life
Life
Life

111TH INTERNATIONALPAPERSSEMINARPARTICIPANTS’PARTICIPANTS’ PAPERS

THE ROLE OF POLICE, PROSECUTION AND THE JUDICIARY
IN THE CHANGING SOCIETY
Rebeka Sultana*
I. INTRODUCTION
Crime prevention means the eliminationof criminal activity before it occurs.
Prevention of crime is being effected/
enforced with the help of preventive
prosecution, arrest, surveillance of bad
characters etc by the law enforcing
agencies of the country concerned. Crime,
and the control of crime throughout theworld, has been changing its features
rapidly. Critical conditions are taking placewhen there is change. Nowdays, causes ofcrime are more complex and criminals are
becoming more sophisticated. With theincrease of social sensitivity to crime, more
and more a changing social attitude,
particularly towards the responsibility of
the citizenry to law enforcement, arises.
Existing legal systems and preventative
measures for controling crime have to bechanged correspondingly. There should be
an attempt to devise the ways and means
to equip the older system of crime
prevention and criminal justice to facethese new challenges.
II. GENERAL FEATURES OF CRIME
IN BANGLADESH
Crime throughout the world has beenchanging its feature rapidly. The causesof crime in Bangladesh may be generally
attributed to some of the inherent socioe c o n o m i c f e a t u r e s o f t h e c o u n t r y.
Sociologists and criminologists consider thehigh level of social deprivation; increase of
population at a rate incompatible withbasic human needs; socio-economic* Senior Assistant Secretary, Ministry of Home
Affairs, Bangladesh.

resentment due to uneven economic
prosperity; unstable public orderi n t e n s i f i e d b y f e u d , i l l i t e r a c y,unemployment etc, as the fundamental
causes of the high escalation of crime in
Bangladesh.
Due to radical changes taking place inthe livelihood of people in the recent past,criminals have also brought remarkablechanges in their style of operation incommitting crimes. The crime preventive/prosecution systems are not equipped
accordingly. As the existing prosecution
cannot render appropriate support to thelaw enforcing agencies in controlling
crimes, the criminals are indulged andconsequently, crime trends increase insociety. Besides, due to insufficient
preventive intelligence, crime prevention,
particularly preventive prosecution, does
not achieve much.
It has been noticed that the younger
generation in this part of the world is being
influenced at an alarming rate by crimemovies, films showing the commission ofcrimes, and magazines and other literature
containing such material. 67.54% of thearrests made by the police in connection
with different crimes during the last five
years fall within the age group of 18 to 30
years.
Unemployment, particularly of theyoung people, provides ample opportunity
for an idle mind to think about ways andmeans not only of getting something legallyor illegally, but of doing something exciting.
The commission of a crime may provide
satisfaction to the youth who find in it a377

RESOURCE MATERIAL SERIES No. 55
means of expressing their personality.
However, national catastrophes, family
feuds and the relatively easy availabilityof firearms are also a factor responsible formany crimes. Acts of terrorism, armsdacoity, extortion, rape, murder, illegal
export of manpower, smuggling, traffickingof drugs, economic crimes etc are occurring
very frequently, raising alarm in the publicmind. The crimes are planned andexecuted by experts, and ordinary
preventive systems are increasingly foundinadequate to halt the trend.

Year

Dacoity

Robbery

1993
1994
1995
1996
1997
Jan-Nov
1998

889
834
907
924
933
949

1125
1118
1399
1660
1765
1603

Year
1993
1994
1995
1996
1997
Jan-Nov
1998

The crime trend in Bangladesh may beseen from a review of the last quanquinial
criminal statistics (1993-97) and for theperiod from January to November. 1998of the country, is shown in the table below.
This reveals that major crimes inconnection with property and the humanbody have shown an upward trend. This
upward trend is attributed tounderstandable socio-economic factors, andis in the line with world crime scenario.

Murder(including riot
with murder)
2596
2567
2991
3131
3084
3240

Cruelty Kidnapping Burglary
to children /abducting
4
1503
5169
18
1629
4938
79
1705
5110
202
1050
5177
453
1025
5425
635
1112
5044

Year
1993
1994
1995
1996
1997
Jan-Nov 1998

378

III. CRIME TREND OFBANGLADESH

Drugs Act
1824
2784
3024
3586
4431
4818

Smuggling
2433
2198
2430
3146
2763
2770

Rioting

Rape

Cruelty to
Women

8651
5044
4827
5988
4967
3858

501
499
556
525
1336
2728

1234
1206
1688
3121
4507
4072

Theft

Arms Act

9123
8652
9807
10273
10041
9871

1229
1200
1635
2519
1969
1972

Explosive
Act
304
443
832
748
550
667

Other
37284
42179
45941
51262
58912
60932

Total
72069
75306
82931
93310
102161104271

111TH INTERNATIONAL SEMINARPARTICIPANTS’ PAPERS
It would appear that there is aconsiderable decrease in crimes, relating
to rioting during the last five years,
whereas for other crimes, the trends
display an increase. The number of cases
regarding cruelty to women and children
has increased, which indicate a conscious
community grappling with a social
problem. The increase in the number ofcases relating to abuse of drugs has two
aspects. On the one hand, it indicatesincreased abuse of drugs. On the other
hand, greater number of cases indicate
more efforts directed towards arresting thetrend. As compared to 1993, the percentage
of increase in crime was 4.5% in 1994,
15.07% in 1995, 29.47% in 1996 and 41.75%
in 1997. In 1997 the crime rate per
1,00,000 population was 81.04%.
IV. CRIMINAL JUSTICE SYSTEM
The criminal justice system comprisesof the police, prosecution and the judiciary,
who are vested with crime control of thesociety. The role of the criminal justicesystem is twofold: control and prevention.
It is needless to say that issues of crime
control include identifying the commissionof crimes; clearing of cases; conducting
prompt and appropriate investigations;collection of sufficient evidence; ensuring
fair and efficient judicial proceedings; andpunishing offenders.
The criminal justice system of
Bangladesh is also exerting effort tocounter crime. But the statistics reveal a
low clearance rate of offenders. There are
difficulties in the collection of evidence, andthereby preventing exhaustive
investigations and trial delays; which
contribute to low conviction rates. Overthe past few years, crime such as violenceagainst women, rape, trafficking of women,acid throwing, cruelty to children,
trafficking of children and abuse of drugs
is very alarming. Another matter that isinternational co-operation regarding
mutual assistance, such as the transfer ofoffenders, is not implemented in a timely
manner. So it could be said that thecriminal justice system of Bangladesh is
not fully meeting its expected functions.
V. ROLE OF THE POLICE
The general function performed by thepolice can be divided into three maincategories; law enforcement, ordermaintenance, and service. Law
enforcement is the police mission of seeingthat there is compliance with the provisionsof the law, detecting breaches of the laws,
and apprehending alleged violators. Ordermaintenance, on the other hand, is the taskof preserving peace and security. Service
functions consist of the services for the
public. Bangladesh police porform avariety of roles; the role ascribed by law;
the role desired by their superiors,
including the government, the role
expected by the people, particularly thevictim; and the role which they think theyought to perform. These roles may be
categorised as(i) Maintenance of law and order; and(ii) Non police jobs (which change withsocial attitudes and moral values).
The police population ratio does notcompare favourably with other countries
of Asia. In 1997 the total population of
Bangladesh was 120.49 million and police
strength was 98033. The police population
ratio is 1:1274. So with this limited
strength, the prime function of prevention
and detection of crime is difficult. The
police personnel are unevenly distributedwith the need and priority of the task.
Nearly 65% of the total police power iscommitted to maintenance of law andorder, only 19% to investigation, 3.47% totraffic management, 0.85% to prosecution,and 0.8% to training. There are only

379

RESOURCE MATERIAL SERIES No. 55
around 929 officers at supervising level for
a force of about one hundred thousand,which seems to be disproportionate (seeTable 3).
The police have a professional
responsibility to maintain the highest
standard of conduct, particularly honesty,
i m p a r t i a l i t y a n d i n t e g r i t y. I t i s
unfortunate that the police in modern
society are looked upon with fear, suspicion
and distrust by the people. Public apathy
towards the police demoralises them andultimately they lose self-confidence,
making them hesitant to take firm steps
to prevent violations of the law. Politicalinterference is another cause which makethem corrupt, dishonest and inefficient. So
the presence of these impediments in asociety can not create fearlessadministration of law and justice. It is not
an exaggeration that the present
deterioration in law and order is due tothese forces which have demoralised thepolice force. Serious violation of law occur
right under the nose of the police and they(police) take the role of silent spectator.

conviction for cases brought to trial by the
courts. The decision to arrest a person may
not always be on the bonafide belief ofsuspicion and many arrests may be madeto shield inefficiency. Conviction may notalways based solely upon the merit of theprosecution, since appreciation of evidenceby the presiding judge is based on otherfactors also, such as the changing ofstatements by witnesses or witnesses
turning hostile and so on.

The development of modern techniques
has created new challenges. Modern
scientific devices have made law-breakers
more successful. The police should have athrough knowledge and should be
conversant with the new techniques ofcrime control. Use of computer systems
and augmentation of the existing
communication system would be useful forboosting police efficiency.

The preventive function of the police is
to arrest law-breakers and suspectedcriminals, and take them into custody inorder to prevent crime. The legal limits ofarrest and detention of suspects are clearly
defined in the Criminal Procedure Code.
Statistical analysis reveals that preventive
measures can not create the desired impact
on offences. The punishment of preventive
prosecution is only limited to the executingof a security bond, which could not
successfully prevent the crime. In thechanging society and with theadvancement of humanity, it could be said
that society is approaching anotherdimension where to arrest anyone, it may
be reasonably required by the law that thebasis of arrest should be intimated, so thatnecessary arrangements for release on bailmay be made by the person concerned. For
investigation, police may seek an order for
remand of the accused or arrest of theperson. Here again, the law prevents thefunction of the police, and an order ofremand is conditional upon satisfaction of
a judicial magistrate.

Public apathy towards the police is also
due to the fact that quite a large numberof cases prosecuted by the police result inacquittal of the accused, due to proceduralor technical flaws, defects, or omission by
the police officials. The efficiency of police
function is generally measured on the basisof legal functions, i.e. either on the basis of
the number of arrests or on the rate of

The police may arrest a person on awarrant issued by the court, and also on
observation of the commission of a crime,
or where there is reason to believe that acrime has been committed by the suspected
person. Here, the direction of the law isthat the arrested person must be taken
promptly before a magistrate without any
loss of time.

380

111TH INTERNATIONAL SEMINARPARTICIPANTS’ PAPERS
Interrogation of criminals or suspects is
an important legal process for collecting
evidence against the offender. But there
is a question on the limitation ofinterrogation. The police must observe
certain civilities while interrogating asuspect. The questioning must not be‘coercive’ or too intimidating. They should
not extract admission or confession bycoercive or “third degree” methods, so thatno sad incidents happen in the custody ofpolice, and so that the real offenders canbe prosecuted.
Besides making arrests, the police mustalso actively assist the prosecutor to
conduct prosecution of cases in law courts.
The success of prosecution largely depends
on the promptness and ability with which
the investigation is conducted by the police.
It is therefore, necessary that the police andthe prosecutor should have a thoroughknowledge of substantive and proceduralcriminal law. The legal requirement fortrial of an accused is that the prosecution
must come forward with all material
evidence, complete in all respects, to provethe charge against the accused. The
witnesses should be appraised of the points
on which the prosecutor desires to examine
them, before they are actually brought into
the witness stand.
To meet the needs of developing society,the role of the police is no longer confinedto the maintenance of law and order, andthe prevention and detection of crime. It
is required to play a significant role indevelopment activities by providing basic
security and control of economic crimes forsustained economic growth of the country.
The police have a vital role in dealing withinsurgency, women and child trafficking
and smuggling, which impedes
development activities and threatens the
security of society.

VI. PROSECUTION
Under the criminal administration ofjustice, offences are broadly categorised
into cognizable and non-cognizable with
their classification as to arrest, bail,compoundability, courts by which to betried, procedure of trial etc. Criminal
proceedings are usually initiated either bycomplaint of the complainant or by theFirst Information report by the police. In
cognizable cases, police can arrest thealleged offenders without warrant from thecourt. Prosecution in cognizable cases is
the State’s responsibility, and in thecomplaint case, responsibility lies with thecomplainant. A criminal proceeding
comprises of investigation and trial ending
either in conviction or acquittal of theoffenders. In cases of cognizable offences,the police are entrusted with theinvestigation of the offence and detectionof offenders, collection of evidence, and thenthe case will be ready for trial. The
foundation of the case is built during
investigation. Success of the prosecution
depends up on the efficient handling of thecase by the investigators. Detection of thereal criminals and collection of proper
evidence is the foundation of theprosecution. Ensuring fair and efficientjudicial proceedings and punishing real
offenders enables the criminal justicesystem to strongly counter crime.
The success of prosecution largely
depends on prompt and correctinvestigation, and speedy trial. So time
limits for investigation and trial play a vitalrole here. Another point is the relationshipbetween the police and magistracy, andbetween the bench and the bar. Lack ofthese relationships is noticed in developing
countries. Needless to say, there is a needfor these groups/agencies of the criminal
justice system to work in close harmony
a n d t o t r u s t e a c h o t h e r. L a c k o faccountability towards the people of these381

RESOURCE MATERIAL SERIES No. 55
agencies, creates concern about thecriminal justice system of the society, which
will ultimately reflect on the clearing ofcases, fair and speedy trial, and thepunishing real offenders.
VII. THE JUDICIARY
The present day civilization is largely
founded on law and justice. To seek and to
get justice is the birth right of every humanbeing, without discrimination, like otherfundamental rights. For administering
justice, the system of judiciary has
developed in various forms in different
countries; the standard of perfection beingat varying degrees, depending on various
factors such as socio-economic andreligious-political conditions etc.
Nevertheless, a sound and independent
judiciary is the sine-quanon of a healthysociety. The more the judiciary is
independent and sound, the more thepeople of the nation will reap the benefitsof safety, liberty and prosperity. The
judiciary is the guardian of law, protectorof individual rights and medium for social
equilibrium. So remarks could be drawnthat the judiciary is the barometer ofcivilization. With the march of civilizationand more improved technology and ideas,closer co-operation between various nations
and their legal systems may also beenriched, thereby benefitting by providing
justice for all.
VIII. LEGAL SYSTEM OFBANGLADESH
The Constitution of the Peoples Republicof Bangladesh, adopted in 1972, contains
a separate part (part VI articles 94-117)
dealing with the judiciary. The hierarchyof the judiciary comprises of the Supreme
Court of Bangladesh and the subordinate
courts below. The Supreme Court is thehighest court of the country and comprisesof the Appellate Division and the High
Court Division headed by a Chief Justice.

382

Besides appellate and revisional
jurisdiction on civil and criminal matters,
the High Court Division has extraordinary
jurisdiction commonly known as “writjurisdiction” under article 102 of theConstitution for enforcement offundamantal rights. The Appellate
Division of the Supreme Court is the apex
court which, besides having jurisdiction of
appeals arising out of the decisions of theHigh Court Division under article 103, hasbeen vested with the jurisdiction ofoverseeing complete justice under article
104 of the Constitution, to prevent
miscarriages or failures of justice. The
Appellate Division also has advisory
jurisdiction on legal matters of public
importance, under article 106 of theConstitution, whenever sought by the
President. The Supreme Court has thejurisdiction to decide the constitutionalityof any law and also can strike down any
law which is ultra vires or inconsistent withany provision of the Constitution. The
decisions of the Appellate Division arebinding upon the High Court Division, as
well as on the subordinate courts, and thedecisions of the High Court Division on all
courts, subordinate to it.
The subordinate judiciary consists of thecourts of the District Judges, Additional
Judges, Subordinate Judges, AssistantJudges and Magistrates. The District,
Additional and Subordinate judges, apartfrom their civil jurisdiction, are also vested
with criminal jurisdiction for trying cases
and are classified as Courts of Session
Judges, Additional Session Judges andAssistant Sessions Judges. Magistrates
have exclusive and original criminal
jurisdiction classified as Magistrate classI, class-II and class-III, having power to try
cases which are not triable by the Courtsof Sessions. In the metropolitan area, theMagistrates Courts are classified as Courtsof Metropolitan Magistrates, headed by the
Chief Metropolital Magistrate who is

111TH INTERNATIONAL SEMINARPARTICIPANTS’ PAPERS
appointed by the Government. Besides themetropolitan area, the District Magistrateis the Chief of the Magistracy under which
trial magistrates work. District
Magistrates and other magistrates, besides
their judicial jurisdiction, also haveexecutive functions. The Chief
Metropolitan Magistrate, and themagistrates below, have exclusive judicial
function. Against the judgements ofconviction and sentence passed bymagistrates there lies appeal to the Courtof Sessions and to the High Court Division
against the judgement by the session
judges.
Under the criminal administration ofjustice, offences are broadly categorised
into cognizable and non-congnizable with
their classification as to arrest, bail,compoundability, courts by which to betried, procedure of trial etc. Criminal
proceedings are usually initiated either bycomplaint or First Information Report. In
cognizable cases, police can arrest thealleged offenders without warrant from thecourt. Prosecution in cognizable cases is
the State responsibility. A criminal
proceeding comprises of investigation andtrial, ending either in conviction or
acquittal of the offenders. Mainly the police
are entrusted with the investigation during
which offenders are detected andapprehended, evidence is collected and thecase is made ready for trial. The foundationof the case is built during investigation.
Detection of the real criminals andcollection of proper evidence lay thefoundation of a criminal case, because thesuccess of the prosecution depends on theefficient handling of the case by theinvestigators. How investigations are to
be conducted, statements of witnesses,
confessional statements of accused, dying
declarations are to be recorded, are all
regulated by specific provisions of law.

A. Independence and Separation of
the Judiciary
According to the provision of article 94(4)of the Constitution, the Chief Justice andother judges of the Supreme Court are
independent in the exercise of their judicial
functions. Similarly, all persons employedin the judicial service and all magistrates
are independent in the exercise of their
judicial functions, as provided under article
11 6 A o f t h e C o n s t i t u t i o n . T h e
independence of the judiciary is the precondition of fair trial and justice. Anotherpre-requisite of a sound and independent
judiciary is the separation of the judiciaryfrom the executive organs of the State.
Article 22 of the Constitution contains
fundamental principles of State policy tothe effect that “the State shall ensure theseparation of the judiciary from theexecutives organs”.
At present, the judges of the subordinate
courts are under the administrative controlof the Ministry of Law, Justice andParliamentary Affairs which, according toarticle 116 of the Constitution, exercises
this control in consultation with theSupreme Court. However, the magistrates
are under the administrative control of the
Ministry of Establishment. The
magistrates perform both executive andjudicial functions. The dual administrative
control over the judges and magistrates
have some adverse effects on the
independence of the judiciary, sometimes
affecting fair trial.
B. Constitutional Provisions for
Fair Trial
To get a fair and speedy trial is afundamental right guaranteed in theConstitution. Article 35 reads as follows:“35. Protection in respect of trial andpunishment(1) No person shall be convicted of any
offence except for violation of a law

383

RESOURCE MATERIAL SERIES No. 55
in force at the time of thecommission of the act charged as
an offence, nor be subjected to apenalty greater than, or different
from, that which might have been
inflicted under the law in force atthe time of the commission of theoffence.
(2) No person shall be prosecuted andpunished for the same offence morethan once.
(3) Every person accused of a criminal
offence shall have the right to a
speedy and public trial by anindependent and impartial court or
tribunal established by law.
(4) No person accused of any offence
shall be compelled to be a witness
against himself.
(5) No person shall be subjected totorture or to cruel, inhuman, or
degrading punishment or
treatment.
(6) Nothing in clause (3) or clause (5)shall affect the operation of any
existing law which prescribes any
punishment or procedure for trial.”
The question of fair trial presupposesfair investigation, fair prosecution andfairly providing scope for the defence of theaccused under legal dispensation. In ourcriminal jurisprudence, a person accusedof an offence shall be presumed innocent
so long he or she is not proved guilty bylegal evidence beyond all reasonable doubt.
The doctrine of reasonable doubt plays avital role in our legal system as a safeguard
against conviction of innocent persons,meaning thereby that even ten accusedmay be acquitted but not a single innocent
person should be convicted. That a person
shall have the protection of law is aninalienable right guaranteed in theConstitution, articles 31 and 33 which readas follows:

384“Article 31, Right to Protection of LawTo enjoy the protection of law, and to
be treated in accordance with law, andonly in accordance with law, is theinalienable right of every citizen,
wherever he may be, and of every
other person for the time being within
Bangladesh, and in particular no
action detrimental to the life, liberty
body, reputation or property of any
person shall be taken execpt inaccordance with law.”“Article 33, Safeguards as to Arrest and
Detention(1)No person who is arrested shall be
detained in custody without being
informed, as soon as may be, of thegrounds for such arrest, nor shall bedenied the right to consult and be
defended by a legal practitioner of his
choice.
(2)Every person who is arrested anddetained in custody shall be produced
before the nearest magistrate withina period of twety four hours of sucharrest, excluding the time necessary
for the journey from the place of arrest
to the court of the magistrate, and nosuch person shall be detained incustody beyond the said period
without the authority of amagistrate.”
For the purpose of protecting social orderand peace by preventing prejudicial
activities against the State, the Special
Powers Act 1974 was enacted. Meanwhile,
this law has been largely modified. There
are a lot of argument and criticism for andagainst this law, which curtails thefundamental rights of the citizen.
Instances are not rare where concerned
agencies of the government sometimes use
the provision of this law arbitraritly.
However, continuing demand persists forthe repeal of the Special Powers Act 1974,
from the conscious section of the people.

111TH INTERNATIONAL SEMINARPARTICIPANTS’ PAPERS
C. Provisions for Bail
Bail of the accused in a criminal
proceeding, either during investigation ortrial, occupies an important chapter. In thecase of a bailable offence, bail may be
granted as of right. In the case of nonbailable offences, grant of bail is at thediscretion of the court. In the traditional
concept of our jurisprudence, grant of bailis a rule, and refusal is an exception. As
the question of bail involves curtailmentof freedom of movement, this should be
dealt with judiciously and in accordancewith consistent norms and standards. In
the case of grave offences such as murder;
dacoity with murder; rape with murder;
high treason; grievous hurt causing
permanent disfiguration of face and vital
parts of body of corrosive substance; drugtrafficking and the like involving capital
punishment; the accused are refused theprivilege of bail. Even in such cases, bailmay be granted to an accused who is a
women, or a sick or infirm person, or aminor below 16 years of age, under section
497 of the Code of Criminal Procedure.
Unless there is anything which may cause
prejudice to the prosecution, the accusedmay be granted bail in usual practice.
D. Exclusion of Evidence made in
Police CustodyExclusionary provisions in the evidence
law is of great significance. In criminal
trials, statements made to the police are
not admissible in evidence. Similarly,
confessional statements of the accused,made in police custody or under threat,duress or coercion, are not evidence andcannot be used against the accused for the
purpose of conviction. Only the statements
made to the magistrate, in pursuance of
which incriminating materials arerecovered, are admissible in evidence under
section 27 of the Evidence Act 1872. Inorder to prove the charge in a criminal trial,
there must be direct and reliable evidence.
Hearsay evidence of reliable and impartial

witnesses carries weight towards proving
the guilt of accused. Circumstantial
evidence of a strong nature, leading
unerringly to the irresistible exclusion of
any other hypothesis as to the guilt of theaccused, may well form the basis ofconviction.
E. Public Prosecutor and Legal Aid
Prosecution on behalf of the State isconducted by the public prosecutor before
the Court of Session and by the Court
Police Inspector before the magistrate. The
police are entrusted with the task ofinvestigation and are responsible toproduce witnesses before the court during
trial. The accused may plead guilty or not
guilty of the charge. In the event ofpleading guilty, the accused may beconvicted accordingly. The prosecution is
fully liable to prove the charge with cogent
and reliable evidence beyond all reasonable
doubt. Only in the case of criminal breachof trust and misappropriation, can an
accused offer themself as a witness, to givean account of the money or things given tothem in trust.
The accused is entitled under law tofreely consult and be defended by a lawyerof their choice. Where the accused cannot
provide for their defence by engaging alawyer due to poverty, s/he can have legal
aid at the expense of the State. In every
district a Legal Aid Committee, constituted
at the behest of the Government, has been
providing legal aid to the poor anddistressed.
F. Forensic Department
The Forensic Department have an
important role in relation to criminal
justice involving murder, rape, grievous
hurt, kidnapping and abduction. As birth
registration of childen is not made in mostcases, the determination of the age ofvictim frequently becomes a subject ofcontroversy. In the face of growing socio-

385

RESOURCE MATERIAL SERIES No. 55
economic complexities, crime of the above
nature has increased manifold. The lackof adequate forensic facilities results in the
delay of forensic examination in manycases, which adversely reflects on fair andspeedy trial.
G. Juvenile Justice
Juvenile justice has, of late been a global
concern. For the purpose of securing thebest interest of the child, the United
Nations adopted the Convention on the
Rights of the Child (CRC). Children below
seven years are exempted from criminal
liability under section 82 of the Penal Code1860. The age between 7 and 12 years, withregard to the criminal liability of a child,depends on the nature of understanding,
to be determined by the judge. The joint
trial of a child with an adult accused isprohibited. In the Children Act 1974, theupper limit age of a child has been fixed at
16 years. Juvenile offenders below the ageof 16 must be tried by the Juvenile Court
under the procedure laid down in theChildren Act 1974. This Act mostly
confirms the norms and standards set forthin the CRC. Besides the magistrates,
District Judges are performing thefunctions of juvenile courts as additional
duties. In the whole country there are only
two reformatory schools - one at Tongi andthe other recently established at Jessore.
Although there is strict provisions forkeeping the child offender in segregation,very frequently they are kept in ordinary
jail custody with adult offenders. Sufficientremand homes and separate juvenile courts
need be established in every district so thatchild offenders are humanely dealt withduring trial, with focus on reform and social
re-integration to lead a dignified life in themainstream of society as worthy citizens.
H. Sentencing Process
Sentencing, being the final andconcluding part of trial in a criminal case,occupies an important position in relation386

to fair trial and fair justice. Generally oursentencing system is deterrent andretributive in nature. The whole drama ofa criminal proceeding ends with the verdictof the court in which the police/
investigators, witnesses, prosecutors andjudges/magistrates play their respectiveroles. Apparently, a criminal charge
against a person in society carries a certain
stigma, and for that, people generally try
to avoid criminal charges or otherwise
being entangled in criminal proceedings.
Sentence of death, imprisonment for life,
imprisonment rigorous or simple, forfeitureof property and fine are prescribed bysection 53 of the Penal Code, which may
be awarded to offenders according to thenature of the charges. By Ordinance XLIof 1985, the term “transportation for life”
has been substituted by the words“imprisonment for life”, equivalent to thirty
years rigorous imprisonment under section
57, which the Government may commute
into imprisonment not exceeding twenty
years, as provided under section 55 of thePenal Code (Ordinance XLI of 1985).
Sentences of death passed by the Court ofSessions have to be confirmed by the High
Court Division under section 374 of theCode of Criminal Procedure. Within the
prerogative of the President is the grant ofpardons, reprieves, respites, remit,
suspend or commute any sentence passedby any court, tribunal or other authority,
under article 49 of the Constitution.
Under no circumstances can a person beawarded punishment in excess of what isprescribed by law. Except in cases
involving the sentence of death andimprisonment for life, the courts are given
wide discretion in passing sentences ofvarious terms. The cardinal principle isthat the sentence must not be excessive or
disproportionate to the nature and gravityof the offence. In practical experience it isfound that different courts pass different

111TH INTERNATIONAL SEMINARPARTICIPANTS’ PAPERS
terms of sentences in similar types of cases,
which prick the conscience. The judicial
norms must not be at unreasonablevariance, which would shake the people’s
confidence in the judiciary. The purpose of
the law is that the real offenders must be
punished according to the degree of theoffence, and the law must not be
instrumental or tainted with personal
motive or otherwise, which may servecriminals in the proliferation of crimes atthe cost of social security and peace.
Accountability in such a situation must be
ensured for all who are engaged in the taskof administering justice, no matter whether
they are investigators, prosecutors, judges
or magistrates.
IX. CONTROL AND PREVENTIVEMEASURES
With the 21st century knocking at thedoor, and with modernization andadvancement of society, social values arechanging. New ideas and dimensions
should be considered for administering thecriminal justice system of the society
concerned. “Justice delayed is justicedenied” is a very well known term which
speaks for speedy and prompt trial. The
current situation of Bangladesh is that, due
to heavy caseloads on the judges andmagistrates, and the non-appearance ofdefendants and witness, an inumerable
number of cases remain pending year afteryear. Criminal cases investigated and triedin the years 1996 and in 1997 (Table 1 and
2) show that 49472 cases under trial werepending at the end of 1996, and in 1997
this was raised to 60791 cases.
Countermeasures may be considered as:• Increase in the number of judges/
magistrates.
• Separate investigating andprosecuting agencies.
• Simplification of the judicial trial
system.
• Improvement of case management,

information systems should be
simplified. Adoption of computerised
systems and computerised record
keeping systems.
• Modification of Evidence Act. Strict
rules for taking witness evidence
could be a positive step.
• Time limits for adjournment anddisposal/trial of cases.
• Emphasis on co-operation andharmony between bench and bar.
• Accountability for all concern.
• Fullfillment of extradition agreement
and international co-operation
towards control of crime.
From the perspective of the wholecriminal justice system, the rate ofconviction should be scrutinised toguarantee the effectiveness and efficiencyof the system. A high conviction rate isindicative of successful investigation andprosecution. If we see the statistics ofconviction and acquittal for the years 1996
and 1997, they reveal that the acquittal
rate is 4 times greater than that ofconviction. The excessively low rate ofconviction reflects that there are someunderlying problems in criminal justiceproceedings.
Reasons andcountermeasures may be:• Separate set of investigators trainedin accordance with the law for quality
investigation.
• Separate set of prosecutors.
• Supervision by the higher judiciary.
• Escalation from power, influence,money, for all concerned.
• Speedy trial.
• Accountability of all concerned.
The Code of Criminal Procedureprovides the legal framework for runningthe criminal administration, including
court procedures, police functioning etc. It
also contains certain legal provisions forpreventive actions of the police inmaintaining law, order peace, and387

RESOURCE MATERIAL SERIES No. 55
tranquillity in society. Besides this, thefollowing are the preventive laws:(a) Section 106 Criminal Procedure
Code: security for keeping the peaceon conviction.
(b) Section 107 Criminal Procedure
Code: security for keeping the peacein other cases and security for good
behaviour.
(c) Section 108 Criminal Procedure
Code: security for good behaviour
from persons disseminating seditious
matters.
(d) Section 109 Criminal Procedure
Code: security for good behaviour
from vagrant and suspected persons.
(e) Section 110 Criminal Procedure
Code: security for good behaviour
from habitual offenders.
Section 149 of the Criminal Procedure
Code reads: “Every policy officer may
interpose for the purpose of preventing
crime and shall to the best of his ability
prevent the commission of any offence”.
Section 54 and 151 Criminal Procedure
Code has given police officers the power toarrest any person without a warrant, only
to prevent cognizable offences. The Police
Act 1861 also has similar provisions thatemphasizes the preventive role of police.
Nowdays, in preventing crime, the police
enforce the authority of preventive
detention as per the provisions of section 3(2) of the Special Powers Act 1974.
It appears from the legal provisions
mentioned above that the police haveenough scope to deal with the preventionof crime in society. From statisticalanalysis however it appears thatpreventive prosecutions are not creating
the desired impact on the mainstream ofoffences in the country. The punishmentof preventive protection is only limited tothe execution of a security bond. As such,it can not successfully prevent thecommission of crime. Due to the radical

388

changes taking place in the livelihood ofpeople in the recent past, criminals havedeveloped remarkable systems, becoming
absolutely impractical for police controllingthe crimes. Besides this, due to insufficient
preventive intelligence, crime prevention,
particularly preventive prosecution, does
not achieve much.
X. CONCLUSION
There is no society in the world without
the problem of crime and criminals. In
Bangladesh, the combating of crimes andadministration of the criminal justicesystem is the shared responsibility of thepolice, the prison and the judiciary. Witha view to overcoming the deficiencies of
preventive measures, it is essential toframe some deterrent provisions of the law
incorporating punishment of imprisonment
and fine for preventive prosecutions.
Prevention of crime is the collective
responsibility of the society. It should not
be left to the police or judiciary alone. Only
the concerted effort of police and the people
can combat this social crisis. Awarenessand knowledge by the people of the law isnecessary.

111TH INTERNATIONAL SEMINARPARTICIPANTS’ PAPERSTABLE 1CRIMINAL CASES INVESTIGATED AND TRIED 1996
Crime

No. ofCases

CHARGE SHEETEDFINAL REPORT

No. ofCases

No. ofAccused%No. ofCases%

INVESTIGATIONNOT COMPLETED

Dacoity

924

425

3532

49.88%

427

50.12%

72

Robbery

1660

796

2128

51.29%

756

48.71%

108

Murder

3131

2102

12339

----

829

----

200

Rioting

5986

4612

53678

78.08%

1295

21.92%

79

Rape

525

400

1064

76.19%

125

23.81%

0

Cruelty to
Women

3121

2178

7320

----

849

----

44

Cruelty toChildren

202

173

551

86.07%

28

13.93%

1

Kidnapping/Abduction

1050

626

2453

65.21%

334

34.79%

90

Burglary

5177

1728

4101

33.63%

3410

66.37%

39

Theft

10273

4112

9708

----

5677

----

484

Arms Act

2519

2276

3960

92.07%

196

7.93%

47

Explosive Act

748

493

1709

72.18%

190

27.82%

65

Drugs Act

3586

3050

4314

94.52%

177

5.48%

359

Smuggling

3146

2828

4866

90.99%

280

9.01%

38

Other

51262

37895

190015

...

12545

----

822

Total

93310

63744

30173870.15%

27118

29.85%

2448

CRIMINAL CASES INVESTIGATED AND TRIED 1996
PUNISHMENTACQUITTAL%

No. of Cases No. of Accd.

CASE UNDER TRIAL

No. Cases

No. of Accd.

%

No. of Cases No. of Accd.

7

28

25%

21

86

75%

397

2371

23

49

22.33%

80

177

77.67%

693

1846
60151

53

136

----

147

700

----

1902

62

444

5.37%

1093

10153

94.63%

3457

5766

26

45

18.57%

114

339

81.43%

260

1073

120

241

----

536

1825

----

1572

7346

8

9

----

26

86

----

139

526

12

26

9.30%

117

461

90.70%

497

2603

143

255

28.95%

351

799

71.05%

1234

3394

235

459

----

721

1807

----

3156

8723

123

201

35.76%

221

399

64.24%

1932

3703

11

21

25.00%

33

157

75.00%

449

2232

158

230

40.20%

235

374

59.80%

2657

4260

271

458

34.61%

512852

65.39%

2045

4643

1596

5117

----

7217

35748

----

29082

1694212848

7719

19.96%

11424

54153

80.04%

49472

278058389

RESOURCE MATERIAL SERIES No. 55
TABLE 2CRIMINAL CASES INVESTIGATED AND TRIED 1997
Crime

No. ofCases

CHARGE SHEETEDFINAL REPORTINVESTIGATIONNOT COMPLETED

No. ofCases

No. ofAccused%No. ofCases%

Dacoity

933

338

2376

57.00%

255

43.00%

Robbery

1765

706

1828

50.28%

698

49.72%

361

Murder

3084

1683

10213

----

581

----

820

Rioting

4967

3685

40098

83.90%

707

16.10%

575

Rape

1336

901

2500

69.90%

388

30.10%

47

Cruelty to
Women

4507

2834

9244

----

1073

----

600

Cruelty toChildren

453

346

858

83.17%

70

16.83%

37

Kidnapping/
Abduction

1025

494

2105

61.44%

310

38.56%

221
505

341

Burglary

5425

1656

4145

33.66%

3264

66.34%

Theft

10041

4133

10539

----

4978

----

930

Arms Act

1969

1709

2969

95.58%

79

4.42%

181

Explosive Act

550

280

1051

79.32%

73

20.68%

197

Drugs Act

4431

3075

4248

94.41%

182

5.59%

1174

Smuggling

2763

2274

3835

92.25%

191

7.75%

298

Other

58912

42895

193812

----

13629

----

2388

Total

10216167009

28982171.68%

26478

28.32%8674

CRIMINAL CASES INVESTIGATED AND TRIED 1997
PUNISHMENTACQUITTALUNDER TRIAL CASE

No. Cases

NO. of Accd.

%

No. of Cases

No. of Accd.

%

No. of Case1

6

33.33%

2

7

66.67%

335

2400

1

2

12.50%

720

87.50%

698

2197

390

No. of Accd

4

5

----

12

59

----

1667

11252

12

95

4.17%

276

2453

95.83%

3397

41998

17

30

21.25%

63

157

78.75%

821

2894

43

93

----

237

1040

----

2554

6641

5

11

27.78%

1336

72.22%

328

934

2

10

11.76%

1558

88.24%

477

2723

42

83

27.10%

113

283

72.90%

1501

4162

88

166

----

262

706

----

3783

9508

11

18

30.56%

25

40

69.44%

1673

3568

0

0

0.00%

3

19

100.00%

277

1883

70

101

56.45%

54

94

43.55%

2951

4945

51

109

39.84%

77118

60.16%

2146

4201

900

3255

----

3812

20007

----

38183

2054461247

3967

20.05%

4971

25096

79.95%

60791

304752

111TH INTERNATIONAL SEMINARPARTICIPANTS’ PAPERSTABLE 3TOTAL STRENGTH OF BANGLADESH POLICE
Rank
I.G.P
Addil. I.G.P
DIG
Addil DIG
S.P
Addil. S.P
Sr. A.S.P
A.S.P
Inspector (Unarmed)
Inspector (Armed)
Sub-Inspector (Unarmed)
Sub-Inspector (Armed)
Sergeant
T.S.I
A.S.I
Head Constable (Unarmed)
Head Constable (Armed)
NaikConstable (Unarmed)
Constable (Armed)

Number
1
10
21
15
154
136
144
490
1131
459
4843
1502
963
70
3493
1399
4608
4668
36136
37992

Total

98,236391

RESOURCE MATERIAL SERIES No. 55

THE ROLE OF THE POLICE, PROSECUTION AND
THE JUDICIARY IN THE CHANGING SOCIETY
So Chit-Kwan, Isabel*
I. INTRODUCTION
In the 1960’s, Hong Kong was still an
entrepôt, with a population of 2.2 million.
Nowadays, it has grown into a modern cityof over 6.5 million population. During theyears, the society has undergone rapidchanges in terms of social, economic,
technological and also political changes. As
part of these changes, crimes of concern
arised from time to time, at different
periods. The government, including
legislators, policy makers, the judiciary andlaw enforcement agencies, have responded
to such changes for the effective control andprevention of crime.
This paper will briefly outline the recentchanges in society and crimes of concern
brought about by it in Hong Kong. Detailed
discussion of the current situation ofparticular crime, responses of thegovernment; in particular the police,
judiciary and legislative changes, to combat
and prevent such crimes. Some problems
encountered, and the success brought
about in the process of controlling andpreventing such crimes, are also discussed.
II. THE DIFFERENT ROLES OF
THE POLICE, PROSECUTION AND
JUDICIARY IN HONG KONG
The roles of the police, prosecution andjudiciary in Hong Kong are separate. To
ensure fairness and justice, they work
independent of each other. The judiciaryis independent from the executive andlegislative branches of government. The*

Chief Inspector of Police, Commercial Crime
Bureau, Hong Kong Police, Hong Kong.

392

courts make their own judgements,
whether disputes before them involve
private citizens, corporate bodies or thegovernment itself. Judges make decisions
and findings on their own judgement,
according to the laws which are mostly
written down in ordinances.
The Department of Justice is the legal
adviser of the Hong Kong government. All
government departments seek legal advice
from it, for all legal actions. It is
responsible for the drafting of all
legislation, representing the government incourt to institute and conduct prosecutions.
The Hong Kong police are the only police
force in Hong Kong. It has operational
responsibility for crime prevention anddetection, the maintenance of public orderand traffic matters.
III. CHANGE OF SOCIETY IN
HONG KONG AND RESULTANTCRIME
As the population rapidly grew, thegovernment tried to build cities in the suburban areas to diverge the population fromthe centre of the city to less populatedareas. The family structure also changed
from large extended families to small
nuclear families, mostly with a husband,wife and two children. Most of the young
families in Hong Kong have both parents
working, leaving children unattended after
school. The education system is also a
problem. There is free education provided
by the government until Form 3, i.e.
children around 15 years. The curriculum
emphasizes mainly academic subjects.
Technical schools are not welcomed by

111TH INTERNATIONAL SEMINARPARTICIPANTS’ PAPERS
parents. Students who are under-achieversin school do not go to work, but just wander
the streets with peer groups. The
possibility of association with bad
characters and committing crime becomes
higher. Juvenile crimes relating to shop
theft and drug abuse are matters of concern
in the 1990s.
Economically, since post World War II,
Hong Kong grew from a small light plastic
and textile industrial city to a service
trading centre in South East Asia, andbecame one of the world’s financial centres.
Servicing trade between China and the restof the world has traditionally been thefundamental reasons for Hong Kong’s
growth and prosperity. Since the adoptionof open door policies by China in the late1970’s, economic relations with mainland
China have undergone rapid growth anddevelopment. In line with its wellestablished trade, Hong Kong has a welldeveloped banking system. The
government also adopted a laissez-faire
approach to the economy. International
money flows in and out of Hong Kong freely.
The convenience and low tax policy attracts
investment in Hong Kong or through HongKong. All these are elements of Hong
Kong’s success in maintaining good
economic growth. However, the freeeconomy (with minimum government
intervention) created problems for law
enforcement, prosecution and the judiciary.
Commercial crime is always on the upsurge
and causes the most loss in terms of money.
Hong Kong went through the mostprominent political change in July 1997;
the change of sovereignty from Britian to
China. Before the handover, people would
expect an increase in cross-border crimeand corruption because people believed
mainland Chinese are more inclinded tocorrupt cultures. However, the statistics
do not support this hypothesis and there
is no record of crime increases. In fact, thecommon cross-border crimes, such as stolen
vehicles and violent crime with the use of
firearms, are decreasing.
New technology emerges everyday andchanges rapidly, giving convenience tosociety as well as criminals. This also
brings about problems for law enforcement,
prosecution and the judiciary, as the law
and knowledge of technology of thegovernment officials concerned is always
behind the latest development oftechnology. Computer crime is one of theprominent crimes which is expected tocreate huge losses and trouble in the near
future.
IV. JUVENILE CRIME
A. Present Situation
Similar to most of the urban cities in theworld, juvenile crime is always a problem,
but is not serious in Hong Kong. However,
it is a priority of concern to the Hong Kong
government and community. In Hong
Kong, there are two ordinances to deal withand to protect juveniles :(i) Juvenile Offenders Ordinance CAP 226
This ordinance is particularly
important as it allows juveniles under
16 years to be tried in juvenile court,
which restricts the presence of people
in court and the extent of matters to bereported in the news media.
(ii) Protection of Women & Juveniles
Ordinance CAP 213
The importance of this ordinance isthat it makes provisions for a juvenile
court to issue ‘Care and Protection
Orders’. On the application of thepolice or Social Welfare Department,
the court may consider a juvenile under
the age of 18 years in need of care andguardianship. This includes protection
if his/her parent/guardian is unfit or
unable to exercise care and

393

RESOURCE MATERIAL SERIES No. 55
guardianship, and he/she is beyond
control, falling into bad associations or
exposed to moral or physical danger.
The court may appoint the Director ofSocial Welfare Department as legal
guardian, commit the child to the careof any person or institution, order theparents/guardian to enter into a
recognisance to exercise proper care or
make an order for supervision by aprobation officer (a professional social
worker).
During 1997, there were 5964 juvenile
offenders aged between 7 and 15 arrested
for crime. In comparison to the totalarrests of 41714 persons, juveniles only
contributed 14.3% of the arrested persons
for the year. A comparatively large
proportion of them were arrested foroffences such as shop theft, miscellaneousthefts, wounding and serious assault.
82.5% of juvenile offenders were students
involved in minor offences.
The overall crime reported in the last ten
years in Hong Kong is quite constant andthere has been a decrease since 1996. The
decrease in crime was mainly attributableto drops in burglary, minor thefts (includingshop theft), serious narcotics offences androbberies. The statistics do not imply that
more juveniles were arrested for crime inthe last ten years, but rather there was an
upsurge in committing minor offences suchas ‘shop theft’ by them.
Narcotic activities involving juveniles isof concern in recent years. Between 1983
and 1991, juveniles arrested for drug
offences was quite constant. However,since 1992 there has been a significant
increase. In 1992, 14.1% of the total
number of drug arrests were juvenile
offenders. It increased to 17.5% in 1995.
On the type of drugs abused, there is an
upsurge of abuse of soft drugs such as ‘ice’and cough medicine.

394

B. Control and Preventive
Initiatives
The Hong Kong government isdetermined to fight against narcotic
offences, especially regarding young people.
In 1995, the government took the initiativeof opening the first Governor’s Summit
meeting, followed with further meetings in
1996, to co-ordinate the relevant
government departments in solving the
problem by a multi-agency approach.
Subsequently, the Action Committee
Against Narcotics was set up to tackle theproblem. Action plans were formulated tocombat drug abuse by juveniles, as well as
juvenile crime, at three levels.
1. Law Enforcement Levels(i) Amendments to Legislation• Amendment to the Drug Trafficking(Recovery of Proceeds) Ordinance in
September 1995 makes it even moredifficult for drug traffickers tolaunder and retain their illicit profits
from drug trafficking. Heavier
sentences can be imposed on adults
who are found to involve juveniles in
the illegal drug trade.
• Amendment to the Pharmacy andPoisons Ordinance to increase themaximum penalties for offences ofillegal or improper sale of drugs.
(ii) Control of Drugs by Law Enforcement
Agencies• Extend statutory licensing controls to
21 more chemicals used in the illicit
manufacture of drugs. The newcontrol system commenced operationfrom early 1996 by the Customs andExcise Department.
• The Department of Health increased
inspection of pharmacies from 560 to
700 per month since September 1995,
to clamp down on the illegal sale ofprescription drugs. A special task
force was set up to help theprosecution of offending drug

111TH INTERNATIONAL SEMINARPARTICIPANTS’ PAPERS
retailers.
• Additional manpower and resourceswere given to the police to increase
surveillance activities.
(iii) Police Initiatives to Combat Juvenile
Crime and Drug Abuse• Police regions make their own actionplans to step up proactive
enforcement actions at drug
blackspots (such as housing estates),and youth gang blackspots (e.g.
amusement game centres, billiard
halls, parks etc). Special attention
is paid to cases in which youth areemployed by adults as drug couriers;
every effort is made to gather
sufficient evidence to prosecute theadults involved.
• School teams of police continue tovisit schools, arranged talks in theschools to deliver messages that are
anti-triad and anti-drug abuse.
• Police Missing Persons Units
contribute more effort to make followup enquiries on the associates ofyoung persons, with a view to locate
them earlier. Care and Protection
Orders under the Juvenile Protection
Ordinance will be applied for in every
suitable case, for proper follow-up byprofessional social workers on the
problem youth.
• The police extended theSuperintendent’s Discretion Scheme
to allow police officers of or above therank of Superintendent to issue a
caution to a juvenile rather thantaking criminal prosecution. The
caution is given to those who have notyet reached the age of eighteen andhave only committed minor offences.
Close supervision and an aftercare
program will be followed by social
workers and police after the caution.
2. Prevention and Education Level• Publicity through news media andexhibitions to increase the awarenessof the drug problem and to warn thejuvenile to keep away from drugs or
any criminal offences, such as shop
theft.
• Through schools and teachers, toeducate students as well as theirparents to steer the juveniles awayfrom crime.
• All police regions and different
government departments formulate
their own programs, which are in linewith the action plans of thegovernment, to fit the local situationof different areas.
• Apart from enforcing the law, thepolice have to involve themselves incommunity activities. The police will
present and arrange community
activities involving youth or schools
in order to send out messages ofcombating and preventing crimes.
3. Treatment and Rehabilitation Level• The government has allocatedgreater resources to establish more
residential treatment centres anddrug abuse clinics for young drug
abusers.
• Involvement in criminal proceedings
can be a very distressing experience
for a juvenile, and criminal conviction
and the consequent sentence may
constitute the destruction of his or
her future.
The police
Superintendent’s Discretion Scheme
is an alternative to criminal
proceedings and an effective
rehabilitation program for young
offenders. In 1997, 35% of juvenile
offenders under the age of 18 werecautioned under this scheme, rather
than criminal proceedings being
instituted.
• The Juvenile Offender’s Ordinancealso allows the young person’s
criminal record be removed by thepolice after a certain period of time395

RESOURCE MATERIAL SERIES No. 55
after the sentence.
C. Multi-agency Approach
The multi-agency approach to control
and prevent juvenile crime and drug abusehas proved to be a success. In less than
three years, the overall crime rate dropped
by 14.8% between 1996 and 1997. Juvenile
offenders arrested for crime dropped by
9.1% and there was a drop of almost 11%of drug addicts in Hong Kong.
The efforts of police officers inc o m m u n i t y e d u c a t i o n , p u b l i c i t y,
enforcement, and rehabilitation, together
with the effort of the legislators to amend
the relevant legislation, as well as theefforts of other government agencies, suchas social welfare and the Department of
Health, combine together in forming
effective interdiction to stop the upsurge
trend of juvenile crime, especially inconnection with drug abuse.
V. COMMERCIAL CRIME
A. Present Situation
Hong Kong was an entrepot in the 1980’s
and transformed into an international
financial centre in 1990’s. Money can bothcome into and out of Hong Kong freely.
Investment comes from all over the world.
Together with a highly efficient banking
and financial system, Hong Kong is a havenfor the money laundering of crime proceeds.
Commercial crimes committed have
involved international criminals anddifferent kinds of investment tools.
In the past years, the total number ofreports of deception, fraud and forgery
cases is on the upsurge, but the number offraud reports to the Commercial Crime
Bureau has remained relatively steady.
This may be explained by the change incharter by the Commercial Crime Bureau
in 1995, to take up more complex cases
involving loss over HK$5 million. Although396

the number of fraud reports remains quite
steady, investigations have become
increasingly more complex andinternational.
B. Problems in Investigation andProsecution
Unlike violent crime, most victims ofcommercial crime reported their casemerely with a view to recover their money/
loss. Many of them are not willing toappear in criminal court to punish thesuspect(s) with imprisonment or fine. Mostof the commercial crime cases are very
complicated, involving voluminous
documents. Usually, it takes a much longer
time to complete these investigations thanother crimes. Always, by the time theinvestigation has been completed and isready for prosecution, the suspect(s) havealready disappeared. For prosecution, it
is also very difficult as the voluminous
documentary exhibits are to be presented
in court one by one by witnesses standing
in the box, thus it is a time consuming
process. Not all the judges and juries canfully understand and remember thecontents of each document after a long trial.
Moreover, many commercial crime cases
were committed internationally. These
involved a number of different jurisdictions
and different judicial systems. This makes
the investigation and prosecution very
difficult. To gain a conviction is even moredifficult and takes a very long time.
C. Solutions
1. Legislation
The Organised and Serious Crimes
Ordinance, which was enacted in April
1995, widens the police and judiciary’s
power to investigate and combat organised
crime, including organised commercial
crime and money laundering. The
following are the aims of the law:(i) assist police to investigate organised
crimes and to trace the proceeds of

111TH INTERNATIONAL SEMINARPARTICIPANTS’ PAPERS
crime. Restraining orders can be
drawn out from the court to safeguard
the crime proceeds before any
prosecution can be instigated in court;(ii) impose heavy penalties and enhance
sentences for members of syndicates ifthey do not return the proceeds ofcrime;(iii) disintegrate syndicates by the use ofstrong forfeiture provisions and impose
punishment for those who assist inmoney laundering; and(iv) financial institutes have the duty toreport suspicious money laundering
activities.
The Complex Commercial Crime
Ordinance, which was enacted in 1988, canassist in reducing the length of trial incomplex commercial cases. The importantfeature of the ordinance is that the judge
has the power to order a preparatory
hearing before the jury is empanelled, forthe purpose of:(i) identifying issues which are likely to
be material to the verdict of the jury;(ii) assisting the jury’s comprehension of
any such issues;(iii) expediting the proceedings before thejury, by making legal argument andadmissibility of evidence before thetrial; or(iv) assisting the judge’s management of
trial.
The Hong Kong police are heading
towards computerisation. Advenced
technology can assist the documantation
and analysis of a large number of
documantary exhibits during theinvestigation, and the presentation of
exhibits in court.
2. International Liaison and Mutual
Legal AssistanceStrengthening liaisons with overseas
law enforcement agencies and the judiciary

can greatly improve the efficiency ofinvestigation. Being a sub-bureau of the
China National Central Bureau, the Hong
Kong police are a member of theInternational Criminal Police Organisation(ICPO) - Interpol, performing the same
duties as before the transfer of sovereignty.
Through the Interpol Channel, the police
can make requests for assistance from law
enforcement agencies overseas, to assist
enquiries on overseas witnesses, locatingsuspects and dealing with criminal
information. The Hong Kong police also
maintain close contact with the overseas
liaison offices of foriegn law enforcement
agencies in Hong Kong, and liaison offices
in mainland China. The speedy assistanceprovided by our overseas counterparts isinvaluable in police investigation.
In order to present overseas evidence incourt, mere liaison is not enough. The
Evidence Ordinance (Cap. 8) of the law inHong Kong allows evidence taken by theSupreme Court, and exhibits tendered toit, to be provided to foreign courts in certain
circumstances. The Ordinance also enables
Hong Kong to seek evidence from abroad,and admit it in legal proceedings in HongKong. This ordinance is only suitable forcases with a view to prosecution.
In addition to the mentioned
international assistance on investigationand prosecution, the Mutual Legal
Assistance in Criminal Matters Ordinance(Cap. 525), law of Hong Kong enacted in
February 1998, enables Hong Kong to
make and respond to requests to and fromother jurisdictions in relation to criminal
matters which are serious enough towarrant a sentence of 12 months or morein prison in the country in which they occur.
The followings are such requests, which
may cover :(i) Taking of evidence and production of
documents before a magistrate;

397

RESOURCE MATERIAL SERIES No. 55(ii) Application for the service of thesummons;(iii) The search for and seizure of exhibits;(iv) T h e p r o d u c t i o n o f r e l e v a n t
documentary evidence;(v) The service of documents by a bailiff;(vi) Matters pertaining to the confiscationof the proceeds of crime;(vii)The transfer of persons (including
prisoners) to other jurisdictions toprovide assistance.
With the power given under thisordinance, it can reduce the physical caseenquiries made overseas, and theinvestigations made by overseas agencies
can be admissible as evidence in future
court proceedings, to reduce the duplicationof work by the police and judiciary. The
assistance provided to overseas
jurisdictions is a reciprocal assistance.
There are many different types ofcommercial fraud in Hong Kong. The
common ones are Long Firm Fraud, letterof credit (documentary credit) fraud,
employee fraud and Forex/Loco-London
Gold Leveraged Trading Fraud. Forex
Leveraged Trading is a good example thatthe change of legislation and vigorous
enforcement actions can almost completely
remove this crime. The enactment of newlegislation in September 1994 to control
leveraged foreign exchange trading (Forex),
forced unethical companies out of the Forexbusiness in Hong Kong. Unfortunately,
many of the fraudsters who previously
operated Forex companies have now
targeted the new and currently
unregulated areas of gold and silver
trading. Therefore, consideration is being
given to controlling the unregulated goldand silver trading to prevent fraud being
perpetrated by this type of investment tool.
Proper legislative change, responding tocertain ways of committing crime, can bevery effective.

398

VI. COMPUTER CRIME
A. Present Situation
The use of computers is very common
nowadays. As technology advances, it is
no longer used as a wordprocessor or astorage tool for information, but as acommunication tool. Communication
between computers using the Internet hascreated ‘cyberspace’, in which people cantalk, exchange information, trade andprovide services. Within cyberspace there
are no geographic or jurisdictionalboundaries. The information, electronicmoney or goods can be transferred from one
jurisdiction to another within seconds,
leaving no trace.
The efficiency and convenience ofcomputers has been used to commit crimes.
Hacking into others computers to obtain
information or cause damage; and within
the Internet, gambling and publishingobscene articles, are common computerrelated crimes in Hong Kong. As the useof computers and the magnitude ofcyberspace is expanding by multiples,computer-related crime, in terms of thenumber of reports and losses, has also
expanded at the same pace. The numberof reports on computer-related crime
increased by eight times, whilst the amountof losses increased by more than 3 times
since 1993. At present, the loss of HK$2
million this year is minimum in comparison
with the total amount of loss of HK$2377
million in commercial crime cases.
However, the growth is of concern to thelaw enforcement and judicial system inHong Kong. The magnitude of cyberspace
has expanded tremendously in the last few
years and is expected to grow at a faster
speed in the near future. Police records
show that most computer-related crimes
were committed by students who were
mostly doing it for mischief. However, withthe growing popularity of E-commerce inHong Kong, such as shopping on the

111TH INTERNATIONAL SEMINARPARTICIPANTS’ PAPERS
Internet and Internet Banking, it isexpected that more crime will be committed
by sophisticated criminals throughcomputers and internet communication
networks. The loss and damage can be verysignificant. Therefore, pro-active actions
are required to prevent this.
B. Legislation
To cope with the new problems arisingfrom new technology, the law also needs tokeep abreast of the development of newtechnology. In Hong Kong, the Computer
Crimes Ordinance was enacted on 23 April
1993 in order to clarify and amend the law
relating to the misuse of computers. Apartfrom creating some offences to address new
problems, this new legislation consists ofa number of amendments to the existinglegislation at that time; namely the
Telecommunication Ordinance, the Crimes
Ordinance and the Theft Ordinance. In
fact, at that time, most of the computerrelated offences could be addressed by theexisting law, but it is unable to interpretthe latest technology. The computer
ordinance bestows on the judiciary asystem to cope with changes in technology.
C. Control and Preventive
Initiatives
In 1993, the Hong Kong Police took the
initiative to respond to the change oftechnology. The Computer Crime Sectionof the Commercial Crime Bureau of theHong Kong police was established in 1993
to enforce the Computer Crime Ordinance.
The Section is responsible for the following:(i) making investigations into all reported
computer crime;(ii) examining and retrieving data forevidential value from computers;(iii) studying new developments with aview to highlighting problem areas and;(iv) identifying potential solutions toprevent the occurrence crime.

In 1997, the Hong Kong government
started to see the risk and opportunity
given by the computer-related technology.
The government also takes the initiative
to open the market as well as preventing
any fault. There is a vision for Hong Kong
to become a digital city in the 21st century.
HK$173 million was allocated from thebudget in 1997 to research and set up a
program on Electronic Service Delivery.
The purpose is to provide an environment,
infrastructure, security and control ondeveloping electronic commerce. The
following are the initiatives of thegovernment:• By 1999, new legislation on ECommerce will be drafted for‘Certification Authority’ to beestablished. The authorised users
will be required to register and obtain
digital keys to ensure theconfidentially and trustworthiness of
information;• Set a requirement of encryption
security.
Academics in the educational institutesof Hong Kong are at the forefront oftechnology. Seeing the rapid growth ofcyberspace and its possible risks, they took
the initiative to form informal working
groups with members from government
law enforcement agencies, government
policy makers and legislators, hoping findeffective ways to identify problems, control
and prevent them.
D. Problems and Preventive
Measures
Most of the law enforcement officers andthe general public have very little
knowledge of this new area of technology.
On the side of law enforcement agencies,
we ask how can we capture or retrieve datain cyberspace, which can be destroyed
within a second? As a member of the public,
we ask how can we secure information and

399

RESOURCE MATERIAL SERIES No. 55
prevent damage? The following measures
should be considered or continued:(i) We all need to be educated on newtechnology.
(ii) The law which is always behindtechnology, needs to be amended or
created to keep abreast of the problem.
(iii) T h e r e a r e n o g e o g r a p h i c o r
jurisdictional boundaries withincyberspace. Local legislation, as wellas international resolutions, are neededto address this problem.
VII. POLITICAL CHANGE
The change of sovereignty of Hong Kongfrom the United Kingdom to China in July
1997 was a prominent political change.
Long before the handover, people in Hong
Kong and overseas worried about theincrease in crime prior to and after thehandover. Fortunately, the statistics do notsupport this. In fact, the overall crime rate
for 1997 reached the lowest level in 24
years. The decrease of overall crime isattributed to a decrease of violent crime,
robbery, burglary and missing vehicles.
After the handover, without the hurdleof different jurisdictions (i.e. between
China and Britain), as part of China, there
is continuous improvement in co-ordination
between Hong Kong and mainland law
enforcement agencies on intelligenceexchange, assistance on case investigations
and joint efforts in combating cross bordercrimes. As a result, the tight control on
smuggling firearms into Hong Kong fromthe mainland, and the smuggling of stolen
vehicles into the mainland, attributed tothe obvious drop in robberies connectedwith firearms, and 24% reduction in thetheft of vehicles.
VIII. CONCLUSION
Our role as the police is to respond tothe changes which are brought about by

400

the change of society, and to find a way tocombat crime. Because the judicial system
in Hong Kong is independent, the roles ofprosecutors and the judiciary are very
passive. They can only react to the changesof law and make decisions according to thelaw.
The changes in politics, economics, social
structure and technology in society can giverise to particular crimes. The change inthe economic environment can also giverise to commercial crime which is moreglobalized; committing greater loss interms of money in Hong Kong. Betterinternational liaisons, streamlining court
procedures for complex commercial cases,
and change of legislation, can improve
investigation, and enhance the chance toapprehend and convict the offenders, so as
to suppress crime.
The social change gives rise to juvenile
crime on minor offences. It is the role ofthe police to identify the trend of crime,
jointly with other government
departments; the role of legislators to
identify the causes of these crimes
committed by juveniles, and to assist in thereform of offenders by involving all parties
in rehabilitation programs, rather thanmerely in prosecution. The society is now
much more vocal and has higher demands
for quality service. The police have to
involve themselves in the community andlisten to the demands of the public in order
to combat crimes, as well as providing abetter service.
The police, prosecutors and judges haveto keep themselves abreast of advances int e c h n o l o g y, a s c o m p u t e r c r i m e i ncyberspace will be a problem in theforeseeable future. To cope with change,
the efforts of the police cannot be alone.
The government should provide theinfrastructure, environment and education
to control the possible rise of computer

111TH INTERNATIONAL SEMINARPARTICIPANTS’ PAPERS
crime; such as amendments to legislation
to keep abreast of new technology and thelaunching of the Electronic Delivery
Service program.
During political change, the mostimportant role of the police is to maintainpublic order and control any rise of crime.
The roles of the prosecutor and the
judiciary are to maintain justice andexercise the power bestowed to them inordinances. In Hong Kong, during thetransition and after the transfer ofsovereignty, the police, prosecutors andjudiciary have done their utmost to
successfully maintain law and order, witha declining trend in overall crime.

401

RESOURCE MATERIAL SERIES No. 55

THE ROLE OF POLICE, PROSECUTION AND THE JUDICIARY
IN THE CHANGING SOCIETY
Muhammad Arif Chaudhry*
I. INTRODUCTION
Pakistan is a South Asian country withan area of 796,095 square kilometers. It
came into being as an independent state
on 14th August 1947, and its population isestimated at over 130 million. Pakistan isa Federal State consisting of 4 provinces(Punjab, Sind, North West Frontier
Province and Baluchistan) and 3 federally
controlled territories (Islamabad Capital
Territory, Northern Areas, and Tribal
Areas). The Constitution stipulates thatin the provinces, the responsibility forcrime prevention and control, and theadministration of justice, primarily rests
with the respective provincial
governments. The Federal Government,
however, has jurisdiction over matters suchas the enactment of criminal laws, thetraining of certain categories of criminal
justice personnel, and research, apart fromthe direct law and order responsibility it
has for the federally controlled territories.
II. CURRENT CRIME SITUATIONIN PAKISTAN
Like other third world countries, only aminority of incidents which are recognisedas ‘crimes’ by their ‘victims’ end up in theofficial statistics. It has been observed thatthe present picture presents a considerably
different pattern of crime. This is quite
striking, even among officially recorded
offences: for example, crimes involving
motor vehicles, relatively rare in the 1950s
when there were few cars on the roads, now
make up a substantial part; offences of*

Additional Director General, Federal Investigation
Agency, Pakistan.

402

criminal damage to property, then an
almost negligible category, were over
52,313 in 1997. Crimes of violence against
persons, although still one of the smaller
categories, has greatly outgrown in
number. It is important to note that, while
numerical representation of criminal
behaviour has a considerable impact on our
perceptions of crime, it is by no means theonly, or necessarily the most influential,
source of information or insight about
crime. In fact, systematic data collection
often follows, rather than generates, newinsights and perspectives. Figure I (below)
will help to understand the amount of allreported crime.
FIGURE I
Crime Figures of Pakistan
YEAR

1995

1996

1997

CRIMES REPORTED
TO POLICE(in million)

0.33

0.32

0.48

CRIMES AGAINSTPERSONS

13.23% 14.09%

9.91%

CRIMES AGAINSTPROPERTY

14.20% 13.88%

10.78%REGULATORYOFFENCES

18.70% 21.20%

20%

OTHERS(PETTY OFFENCES)

53.87% 50.87%

57%

The official figures do not include
offences recorded by other forces for which
the police are not responsible, notably, theMinistry of Defence Constabulary. Thesefigures also do not include the numerous
cases of tax and loan fraud known toagencies such as the Revenue Department,
Customs and Excise, Sales Taxation, and111TH INTERNATIONAL SEMINARPARTICIPANTS’ PAPERS
the Department of Forestry, which haveinvestigative and prosecutional functions,but which deal with the vast majority ofcases by using their administrative powers
to impose financial penalties. Suchagencies keep internal records of thenumber of people dealt with in these ways,
or of the total amount of revenue saved,
but not of the total number of ‘offences’coming to their notice. The crime figuresof the Federal Investigation Agency and theAnti-Narcotics Force have been discussed
separately.
FIGURE II
Police/Population Ratio& Literacy Rate
Country

Population

Police /Population Ratio

Literacy
Rate

Pakistan

130m

1.517

40%

U.K.

51.75m

1.386

99.9%

Sri Lanka

18.34m1.564

96%

Figure II (above) shows the comparative
population, police-population ratio andliteracy rate of different countries. This
will reflect how much each part of thesefactors can play in understanding criminal
behaviour. Insufficient strength of thepolice force creates opportunities foroffenders, which are further aggravated
due to lack of education; which is indeed
the biggest factor in offending behaviour,
because most offenders are unaware of thedamage they are causing to society.
Illiterate people often never know theirrights and responsibilities towards thecommunity.
III. BACKGROUND OF CRIME IN
PAKISTAN
A. Drugs
Illicit drugs and proliferation of arms aremajor problems, besides others, which posea serious threat to our society. The former
is damaging the social fibre of the nation,

while the latter has resulted in a setback
to law and order, which in turn hampers
economic activity (adding to the existing
financial crunch). Both problems are
relatively new, but in a short time haveassumed alarming proportions. In fact, in
more than one way, both problems areinter-linked. They mostly originate fromthe same region, i.e. the tribal belt
separating Pakistan and Afghanistan, andboth result in an up-surge in violent crime.
The illicit trade in drugs certainly needs
gun-totting protectors and thus sponsors
trafficking in arms. Heroin was unknown
in Pakistan in 1979, but it has spread
alarmingly. The number of known heroin
users rose from 5000 in 1980 to 365,000 in
1985, and crossed the million mark in 1988.
The number stands at over 1.92 million
approximately in 1993. It is the mostpopular drug used by 51% of the drug users.
B. Proliferation of Arms
It is generally believed that crime
increase correlates to the proliferation ofarms. This fact is now emphaticallygaining rapid and wide acceptance in theminds of public, since we witness, almost
daily, either through electronic or print
media, recurring violent and brutal crimein which all kinds of arms are brandishedopenly and brazenly.
The proliferation of arms in Pakistan
has its legal and illegal roots. The problemof the legal proliferation of arms is theresult of the generous arms policy of
successive governments. The other aspectof this proliferation, the illegal one, is theresult of mass smuggling by underworld
racketeers of weapons freely available in
the Tribal Belt of Pakistan, because of the
Afghan War. As in the case of drugs, theweapons also originate from the same
region.

403

RESOURCE MATERIAL SERIES No. 55
C. Low Literacy Rate
Apart from drugs and the proliferationof arms, the low literacy rate, which is just
40%, is also one of the main reasons forthe soaring crime in Pakistan. We are
lagging behind many nations of the worldin this aspect, multiplied by a rapid growthin population, which is consuming most of
our resources.
D. Slow Court Procedures
There is a universally accepted principalof law that “Justice delayed is Justicedenied”. Unfortunately, the court
proceedings in Pakistan often go at a snail’space. The victim has to wait a long time toget justice. As a result, people try to settle
their disputes on their own, because the slow
process of the courts normally does notproduce any result and is deemed as awastage of time. On the other hand, thisencourages the offenders and results inviolent crime. Figure III (below) shows thepercentage of the disposal of cases in courts.
E. Urbanisation
The overall urban population at thenational level has increased from 28.3% in1981 to 32.5% in 1998 which shows thatevery third person now lives in a city or
town. There are 23 major urban centres
having a population of 0.2 million andabove. The biggest city in Pakistan is
Karachi, with a population of 9.269 million,
followed by Lahore (5.063 million). Almost

half of the total urban population lives inthe seven big cities of Pakistan.
Urbanisation leads to an extraordinary
pace of transformation of human society,affecting almost every form of humanorganisation and behaviour. It leads to avariety of complex problems, not least ofwhich is urban crime. As more and more
dwellers confront the bitter reality of a
sharp and widening disparity between
their life styles and the standard of life
enjoyed by some individuals; the resultant
frustrations leads to tension, at times
resulting in all sorts of deviant behaviour.
The problem is further exacerbated due tothe limited availability of legitimate
opportunities for social advancement. Not
only is there an acute scarcity of jobs, evenbare shelter is often hard to get. Indeed
the dysfunctional and unplanned
urbanisation, leading to a myriad growthof slums and services, results in an ideal
setting for breeding a criminogenic
environment.
The pattern of urban crime is also very
complex. This includes organised criminal
gangs, drug trafficking, armed robberies,
frauds or land grabbing. Existence of large
scale racketeering in liquor, gambling,
prostitution, illicit arms, terrorism, black
marketing and other corrupt practices is
an inevitable concomitant of unregulated
or inadequately regulated urbanisation.

FIGURE III
Duration of Trial in the Courts (1992-96)
YEAR

AT FIRSTHEARINGWITHIN
15 DAYSWITHIN1MONTH

WITHIN
3
MONTHSWITHIN
6
MONTHSWITHIN
9MONTHSOVER 9MONTHS

1992

1.5

4.8

8.1

18.3

19.2

21.0

27.1

1993

1.7

4.9

8.3

18.6

19.8

20.7

26.0

1994

1.9

5.1

8.6

18.7

20.1

21.5

24.1

1995

2.1

5.7

9.3

18.9

21.2

22.4

20.4

1996

2.2

6.1

9.8

17.6

22.1

23.1

19.1

404

111TH INTERNATIONAL SEMINARPARTICIPANTS’ PAPERS
Moreover, urban industrialisation also
results in contamination of air, water andsoil, causing environmental pollution.
IV. THE CRIMINAL JUSTICESYSTEM OF PAKISTAN
The criminal justice system of Pakistan,like most countries, consists of 4 subsystems: police, prosecutors, courts, andcorrections. In the following paragraphs,
I will briefly discuss the main features ofeach sub-system.
(i) Police• Investigating crime.
• Preventing crime.
• Arresting and detaining suspects.
• Maintaining public order.
• Traffic control.
• Responding to criminal and noncriminal emergencies.
• Some of these tasks are also carriedout by private and other public law
enforcement agencies, such as
Customs & Excise, Anti-narcotics
Force, Forest Department anddepartments of local authorities.
(ii) Prosecution• Preparing cases for prosecution.
• Prosecuting cases in the high courts.
• Preparing cases for trial in theSupreme Court, through liaison withadvocates for the prosecution before
and throughout the trial.
(iii) Courts• Handling and processing cases
efficiently.
• Deciding on bail, remands and modeof trial.
• Protecting the rights of the
defendant.
• Deciding on guilt.
• Passing sentence.
• Hearing appeals against conviction
and sentence.
• Providing a public arena so thatjustice can be seen to be done.

(iv) Prisons• Holding persons remanded in custodyby the courts.
• Holding sentenced offenders.
• Maintaining proper conditions for
those held in custody.
• Preparing inmates for release.
• Attempting to rehabilitate offenders.
A. Police
In each province, in the Islamabad
Capital Territory, and in the Northern
Areas, the Inspector General of Police (IGP)
is responsible for the command and controlof the police force under him (there is no
regular police force in the federally
administrated Tribal Areas). The Inspector
General is also responsible for advising thefederal and provincial governments on all
matters concerning the police. In the
discharge of his duties, the Inspector
General is assisted by Additional
Inspectors General, Deputy Inspectors
General (DIG), and Assistant Inspectors
General (AIG), as the government may
from time to time appoint. The
organisation of the police department isshown at Annexure A.
For operational purposes, every IGP’s
area of responsibility is divided into ranges,
districts, sub-divisions, and police stations,each headed by a Deputy Inspector Generalof Police, a District Superintendent of
Police, a Sub-Divisional Police Officer(Assistant Superintendent or Deputy
Superintendent of Police) and a Station
House Officer (Inspector or Sub Inspector), respectively. The total area ofPakistan has been divided into 23 ranges,
107 districts, 356 sub-divisions and 1218
police stations. In addition, in each IGP’s
jurisdiction, there is a Special Branch, aCrime Branch, a Training College and/or
Police Training School(s).
B. Prosecution
Unlike many other countries, there is as

405

RESOURCE MATERIAL SERIES No. 55
yet no separate prosecution service inPakistan, nor do prosecutors have any rolein the investigation of criminal cases as
they do in Japan. However, prosecutors
do offer advice to the police on defects, ifany, in the State’s cases.
The Chief Prosecutor in the Federal
Government is the Attorney General of
Pakistan, who is assisted by a number of
Deputy Attorney Generals. Similarly, eachprovince is represented by an Advocate
General, assisted by a number of Deputy
Advocates General and Assistant
Advocates General.
Criminal cases in the high courts are
generally presented on behalf of the Stateby the office of the Advocate General, while
the office of the Attorney General
represents the State in the Supreme Court
or in the special courts and tribunals set
up by the Federal Government. In district
and sessions courts, the prosecution of
criminal cases is conducted by District
Attorneys and Deputy District Attorneys.
They belong to the law department of theirrespective provincial or federal
government.
In the lower courts (i.e. magistrates’
courts), prosecution of criminal cases isconducted by the prosecuting inspectors,
who are employees of the Police
Department. In other words, whereas
those who prosecute cases in the district
and session courts function under theprovincial law departments, theprosecuting inspectors at the level of themagisterial courts are subject to theadministrative control of the District
Superintendent of Police.
In Pakistan, there are presently 70
District Attorneys, 168 Deputy District
Attorneys, 392 Assistant District
Attorneys, 299 Prosecuting Inspectors, and
144 Prosecuting Sub-Inspectors. The

406

Prosecuting Deputy Superintendents of
Police act primarily as legal advisers to theDistrict Superintendents of Police.
C. Courts
Besides the Supreme Court, the Federal
Appellate Court, the Federal Shariat(Islamic) Court, and the High Court, there
are four other classes of criminal courts
known as Courts of Sessions and Courts ofMagistrates 1st, 2nd and 3rd class. The
Supreme Court acts as the ultimate
appellate court, while the Federal Shariat
Court and the High Court both haveoriginal and appellate jurisdictions. The
structure of criminal justice courts is shownat Annexure B.
Courts of Sessions are working in every
district and sessions’ judges can pass any
sentence authorised by law. In every
district, judicial magistrates are appointed
and they are subordinate to sessions’ judges
and may try all offences not punishable
with death. A number of special courts
have also been constituted from time totime to deal with specific offences liketerrorism, banking offences, smuggling,evasion of taxes, corruption and so on.
D. Prisons
The Federal Government hasestablished a Central Prison Training
Institute, while the provincial governments
are responsible for the maintenance anddevelopment of prisons. The prison system
has a total of 76 jails, consisting of 19
central jails, 48 district jails, 4 special jails,
and 5 open/sub-jails. Central jails canaccommodate more than 500 prisoners andprisoners with more than two years
imprisonment are normally detained inthese jails, while those sentenced to
imprisonment of up to two years are
confined in district jails. Special jails aredesigned for the purpose of confining such
prisoners as the government may order.
Sub-jails and judicial lock-ups are meant

111TH INTERNATIONAL SEMINARPARTICIPANTS’ PAPERS
for prisoners under trial.
Pakistan is in the category of a large
number of countries, where neither theprison facilities were expanded, nor
diversionary measures were adopted, in theface of increasing crime and population
rates. The present situation is grave. At
many places, the number of inmates isthree times greater than the available,authorised prison accommodation. Double
the number of prisoners than the capacity
to house is common. Given below in Figure
IV is the situation of jails in the mostdensely populated province of Pakistan.
V. RESPONSE OF THE CRIMINALJUSTICE SYSTEM
Following are the existing laws
regulating our criminal justice institutions
to control crime in Pakistan.
A. Pakistan Penal Code of 1860
The Indian Law Commission in 1837,
transplanting Anglo-Saxon legal concepts
in our socio-cultural milieu, framed the
Pakistan Penal Code, 1860. By this Code,the colonial masters curbed crime. It has
been kept updated with many subsequent
amendments. Major categories of offences
include:(a) Offences against the State;(b) Offences against public tranquillity;(c) Offences by or relating to public
servants;(d) Offences relating to elections;(e) Offences affecting the human body;and(f) Offences against property.

Following the process of Islamization,
the penal laws that have been added overthe past 15 years are as follows:(a) O f f e n c e s a g a i n s t P r o p e r t y(Enforcement of Hadood) Ordinance,
1979;(b) Offence of Zina (Enforcement ofHadood) Ordinance, 1979;(c) Offence of Qazf (Enforcement ofHadood) Ordinance, 1979;(d) Prohibition (Enforcement of Hadood)
Order, 1979;(e) Qisas and Diyat Ordinance, 1992.
In addition to the Penal Code andIslamic Law offences, there are also many
offences covered under “local and speciallaws”. These include drug offences,
gambling offences, and minor traffic
offences.
B. Criminal Procedure CodeThe main law of criminal procedure is
the Code of Criminal Procedure of 1898.
The Code classifies offences into two
categories: Cognizable Offences and NonCognizable Offences. A police officer is
empowered to arrest the accused without
warrant only where the allegation concerns
the commission of a cognizable offence. The
Criminal Procedure Code also categorizes
some offences as bailable and other as nonbailable, depending on the seriousness ofthe offence. Likewise, some offences arecompoundable and other noncompoundable. Under the Qisas and Diyat
Ordinance of 1992, all offences affecting thehuman body, which were earlier covered by
the Pakistan Penal Code, has been madecompoundable.

FIGURE IV
Jail Population & Literacy Rate of Prisoners in Punjab
1997
No. of Jails
Authorised
Present
Illiterateaccommodation
population
prisoners
28
17271
59492
63.5%

407

RESOURCE MATERIAL SERIES No. 55
C. Law of Evidence
The issue of admissibility and relevanceof evidence in criminal cases are governedby the Qanun-e-Shahadat (Law of
Evidence) Order of 1984. A peculiar featureof the Law of Evidence is that any
statement made before a police officer is
not admissible as evidence (except that
portion which leads to the discovery of amaterial fact).
VI. COUNTERMEASURES TO
ENHANCE THE CRIMINALJUSTICE SYSTEM
Crime impairs the overall developmentof nations, undermines people’s spiritualand material wellbeing, compromises
human dignity and creates a climate of fear
and violence that erodes the quality of life.
Therefore, all crime prevention policies
should be co-ordinated with strategies forthe social, economic, political and culturaldevelopment of a nation.
Criminal justice systems in many partsof the world are increasingly lagging
behind. More sophisticated and efficient
ways of committing crimes, evolved bycriminals, are on the increase as a resultof technological developments andmodernization. Rapid advances andmodernisation in communication, travel,
trade, and technology have spurred thegrowth and internationalisation of crimes.
Piecemeal approaches are insufficient todeal with the full scope of the problem.
Furthermore, criminal justice processes
often suffer from obsolescence and are notsufficiently flexible to cope with the newforms and ever-widening dimensions ofcrime.
Along with traditional crimes, we areconcentrating on tackling crimes
committed on the national andinternational level, such as drugtrafficking, economic crimes, bribery andcorruption, terrorism, abuse of power,
408

violations of human rights, and other
detrimental practices which may severely
damage an economy or cause widespreadsocial disruption. Such crimes often
victimise large segments of the populationand create a climate of fear and insecurity
which impairs the quality of life, impedes
harmonious development, and diminishes
the possibility of increasinglyinterdependent nations living together inpeace.
Some of the important special crimes
include terrorism, banking frauds, drugtrafficking and white-collar crimes/
corruption. The Government hasestablished many agencies and courts totackle such problems, and these strategies
have not only achieved positive results, buthave also been appreciated by othercountries, particularly in tackling drugtrafficking.
A. Legislative Measures
1. Control of Narcotics Substances Act“Drugs are the most profitablecommodity in the world today”, affecting
the health of international markets andeven local economies. Drug trafficking isan evil acknowledged by all nations. Like
many countries and international bodies,
Pakistan has declared ‘a war on drugs’ bypassing laws providing severe
punishments, including capital
punishment. A number of measures havebeen adopted to fight this multidimensional problem. Simultaneous
efforts on the legislative, administrativeand enforcement side have yielded positive
results. Briefly these measures are:(i)
Control of Narcotics Substances
Ordinance promulgated on 5th
January 1995, and it was made an
Act in 1997.
(ii)
Progressive punishment from two
years to death have been prescribed.
(iii) Money laundering declared as a
distinct crime.

111TH INTERNATIONAL SEMINARPARTICIPANTS’ PAPERS(iv)

Comprehensive provisions for civil
and criminal forfeiture of assets.
(v)
Creation of special courts for speedy
disposal.
(vi) Provision for registration of drug
addicts.
(vii) First time detoxification andtreatment made a statutory
obligation of government.
(viii) National fund for drug abuse control
set up.
(ix) Extension of drug laws to Tribal
Areas.
(x)
Special Courts of Magistrates to try
petty offences. Higher Special
Courts would therefore focus moreon important cases.
(xi) Compulsion to include public
witnesses in narcotics seizures
dispensed with.
(xii) No bail for offences punishable withfive years or more. For otheroffences, no bail if public prosecutor
so certifies.
(xiii) Anti-money laundering provisions
reinforced.
(xiv) Controlled delivery operations
legalised.
(xv) C o m p r e h e n s i v e p r o v i s i o n s t oenhance international co-operation
added.
2. Anti-Terrorism Act 1997(i)Armed/civil forces may be called forthe prevention/punishment ofterrorist activities.
(ii)
Progressive punishment from sevenyears imprisonment, life
imprisonment and the death penalty.
(iii) Protection of witnesses by the court.
(iv) Two years conviction and fine after
summary procedure for threatening
witnesses.
(v)
Special courts to decide cases withinseven days (day to day hearings).
(vi) Adjournment up to two working
days, only if required in the interestof justice.

(vii) Transfer of cases beyond territorial
jurisdiction in the interest of justiceor for the protection of witnesses.
(viii) C o n f e s s i o n b e f o r e D e p u t ySuperintendent of Police and above
are admissible before the court.
Court may call for video tape,
together with devices used for therecording of the confession.
(ix) Punishment up to two years fordefective investigation.
(x)
Appeal to the appellate tribunal of
two judges, in each High Court.
B. Administrative Measures(i) Constitution of Policy Review Board
and Narcotics Interdiction Committee.
(ii) Establishment of Anti-Narcotics Forcewith the following charter of duties:• Inquire/investigate and prosecute
drug offences.
• Inquire/investigate into assets ofdrug barons.
• Co-ordinate activities of all
enforcement agencies in the fieldof interdiction.
• Ta k e o v e r i m p o r t a n t d r u g
trafficking cases from otheragencies.
• Liaison with the international
drug control related agencies.
• Train own staff and other allied
agencies.
• Assist in elimination of the meansof production.
(iii)The area for poppy cultivation has been
reduced from 32,2100 hectares in 1978
to 5215 hectares, and poppy production
from about 800 metric tons in 1978-79
to 109 metric tons in 1996; which has
now been reduced to 28 metric tons.
Pakistan is thus no longer a producer
country of opium.
C. Enforcement Measures
1. Federal Investigation Agency
The Federal Investigation Agency wasconstituted with the promulgation of the409

RESOURCE MATERIAL SERIES No. 55
F.I.A. Act 1974(Act VIII of 1975) “forinvestigation of certain offences committed
in connection with matters concerning theFederal Government, and for mattersconnected therewith”. It mainly deals withcorruption cases of federally administrated
departments, white-collar crime, economic
crimes and illegal immigration offences. It
also performs duties of an immigration
agency and INTERPOL in Pakistan. The
performance of FIA and NCB-INTERPOL
is shown at Annexures C and D
respectively.
2. Anti-Narcotics Force
The Anti-Narcotics Force is dealing
particularly with offences relating to drug
production, manufacturing, offering forsale or delivery on any terms, organising,trafficking in or financing the traffickingof narcotic drugs, psychotropic substancesor controlled substances. The performanceof the Anti-Narcotics Force, as shown at
Annexure E, would indicate the quality ofoutput of this agency.
D. Judicial Measures
1. Anti-Terrorist Courts and Banking
Tribunals
The Government has set up antiterrorist courts for speedy trial of offenders,to punish and convict them and to save thecommunity from the fear of re-offending.
These courts normally hold trials without
any breaks. These courts also include thecourts for speedy trials of narco-barons.
Banking tribunals have also been set up
to deal with banking frauds and money
laundering cases.
E. Correctional Measures
The main step towards correctional
measures is the establishment of a
National Fund for Control of Drug Abuse.
The fund will depend on grants from theFederal Government or provincial
governments, the sale proceeds of any
assets forfeited, the sale proceeds of410

unserviceable commodities and vehicles
provided by the donors for narcotics control
purposes, any grants made by any person
or institution, and any income from theinvestment of the amount credited to theFund. The Fund shall meet theexpenditure incurred in connection withthe control and eradication of trafficking,or in the treatment of drug addicts, andfor all or any of the related purposes, as
may be specified by the Federal
Government.
VII. PROPOSED PREVENTIVEMEASURES
Anyone who has put any thought topolicing will be aware that the policedischarge a complex variety of interlocking
functions. Most elements of police work
have a preventive function. Contrasts areoften made between crime prevention andenforcement - though the strategy of thedeterrent threat which underlines theenforcement process is obviously only oneof several modes of prevention.
Investigative work is no less preventive in
intent than patrolling, for example.
Another commonly made distinction is
between the prevention of crime and themaintenance of order. Despite its long
historical pedigree, this contrast seems to
be unhelpful. Thus I have taken a broad
definition of ‘crime’ in this report, toembrace not only crime against persons
and property, but also all those forms ofdisorder for which the police have powers
to arrest - excluding motoring offences andregulatory offences. There are different
types of prevention. None is completely
satisfactory. Some crime prevention
techniques have offender based measuresand a few aimed at the situation, whilesome measures are targeted at criminal
motivation and some are known to reduce
criminal opportunity. One only needs ameasure which is good enough for the111TH INTERNATIONAL SEMINARPARTICIPANTS’ PAPERS
current purpose, rather than one that will
fit for all time.
Now we must distinguish between crime
prevention and criminality prevention.
The former includes enforcement activities,
which are designed to deter or incapacitate
offenders, and situational measures toreduce opportunities for crime; while thelater, which are community or social
prevention measures, are intended to blockthe development of criminal motivation,and rehabilitation. So the proposed crime
prevention programme includes:(a) Crime prevention
1. Enforcement
2. Situational prevention

behaviour. Preventive action takes a vastarray of differing physical and social forms:
from architectural design to zoning
differing land uses, and of course, zerotolerance. The aim of any strategy is totarget preventive activities where they will
be effective. Crime prevention strategies
can be put into four categories enforcement, situational prevention,community/social prevention, andrehabilitation - these are sometimes not
implemented in isolation, but as a package.
The summary of the proposed preventive
measures package is shown at Annexure
F. Similarly, Figure V shows the role/
functions of various organs in proposed
crime prevention programme.

(b) Criminality prevention
1. Community/Social/Developmental
prevention
2. Rehabilitation
Crime prevention is not the soleprerogative of the police. Other key‘preventers’ include local authorities,
centrally or locally funded bodies from thevoluntary sector, private security firms,
other commercial organisations andmembers of the public. Whilst prevention
increasingly involves joint working amongst
these groups, the police are involved (todifferent degrees) in all four forms of
prevention. They have a near monopoly on
enforcement; though others also have a role,most obviously local authorities and private
security companies. They also have an
important role in situational prevention; in
identifying problems and solutions, andimplementing these or in persuading others
to take action. They have tended to be
involved to a much lesser degree incriminality prevention.
A crime prevention strategy describes
the provisions made for systematicallyassigning action to pre-empt criminal

411

RESOURCE MATERIAL SERIES No. 55
FIGURE V
Local Crime Prevention Strategies
Who does what?
Strategy
Enforcement

Situational
prevention

Community/Social/
Developmental
prevention

PoliceRoutine patrol
Zero tolerance
Detective work
Intelligence-led
TargetingTargeted patrol

Police operated
Youth schemes
Cautioning

Rehabilitation

412

Partnership
Security guards

Non-police
Town guards

Public CCTV scheme
Architectural design
AdviceNeighbourhood watch
Community action
Group youth work
Drug education
School liaison
Arrest referral

Private CCTV
Improving car security
Architectural design
Land use decisions
Diversion schemes
Citizenship schemes
Mediation schemes
Drug treatment
Mentoring schemes

111TH INTERNATIONAL SEMINARPARTICIPANTS’ PAPERS
ANNEXURE A
ORGANIZATION CHART OF THE POLICEFEDERAL/PROVINCIAL GOVERNMENTINSPECTOR GENERAL OF POLICE
ADDL. INSPECTOR GENERAL OF POLICE
DEPUTY INSPECTOR GENERAL OF POLICE
DISTRICT SUPERINTENDENT OF POLICEASSISTANT/DEPUTY SUPERINTENDENT OF POLICEINSPECTOR
SUB-INSPECTORASSISTANT SUB-INSPECTORHEAD CONSTABLECONSTABLE

ANNEXURE B
STRUCTURE OF CRIMINAL JUSTICE COURTS
SUPREME COURTOF
PAKISTAN

SPECIAL COURTSBANKINGHIGH COURTHIGH COURTHIGH COURTHIGH COURTFEDERAL

SINDH

PUNJABBALUCHISTAN

N.W.F.P.

SHARIAT COURTSESSIONSESSIONSESSIONSESSION

COURTS

COURTS

COURTS

COURTSMAGISTRATESMAGISTRATESMAGISTRATESMAGISTRATES

1ST, 2ND AND

1ST, 2ND AND

1ST, 2ND AND

1ST, 2ND AND

3RD CLASS

3RD CLASS

3RD CLASS

3RD CLASSTRIBUNALS

413

RESOURCE MATERIAL SERIES No. 55
ANNEXURE C
ACTIVITIES AND ACHIEVEMENTS OF FIA
Break up of Cases
Brought forward
Registered
Total(1+2)
Challenged
ClosedReferred to other departments
Referred for departmental action
Total cases finalized
Cases pending at the end of year
Recoveries (Rupees in million)
Loss avoided (Rupees in million)

Cases Registered(1995-97)
1995
1996
1997
2326
2541
4090
1751
2742
2057
4077
5283
6147
1272
930
1339
100
97
219
112
136
306
52
36
57
1536
1199
1921
2541
4090
4226
71.33
58.93
128.6712.15
07.26
251.70ANNEXURE D

PROGRESS OF INTERPOL (1995-97)
YEAR REFERENCES REFERENCES DEPORTEES OFFENDERSRECEIVEDISSUEDARRIVED EXTRADITED
1995
1996
1997

414

4673
4565
4370

5674
5439
4554

139
185
334

02
02
-

RED
NOTICESISSUED17

111TH INTERNATIONAL SEMINARPARTICIPANTS’ PAPERS
ANNEXURE E
ACHIEVEMENTS AGAINST DRUGS
Seizure of Narcotics
Year
1996
1997
1998

Opium (Kgs)7385.598358.66
3123.84

Heroin (Kgs)5797.205069.39
1619.76

Hashish (Kgs)
192447108841
32866.4

Freezing of Assets of Narco-Barons
No. of cases: ............................................................................ 50
Value of assets: ............................................. Rs. 3539.6 million

Extradition of Drug Barons
Extradited ............................................................................... 14
Pending in court ..................................................................... 11
To be arrested ......................................................................... 02
Total ........................................................................................ 27

415

REPORTS OF THE SEMINARRESOURCE MATERIAL SERIES No. 55

TOPIC 1
EFFECTIVE MEASURES FOR BETTER DETECTION OF
CRIME AND MORE THOROUGH INVESTIGATIONS
Chairperson
Co-Chairperson
Rapporteur
Co-Rapporteur
Other Boar Members
Advisers

Mr. Muhammad Arif Chaudhry
Mr. Maurice Benoit Tyte Morin
Mr. Paramvir Singh
Ms. (Isabel) So Chit-Kwan
Mr. Shigeru Kawarazuka
Ms Rebeka Sultana
Professor Tomoko Akane
Professor Kayo Konagai
Professor Ryosuke Kurosawa

I. INTRODUCTION
Effective measures for better detectionof crime and more thorough investigations
was taken up as the topic of this General
Discussion group. Irrespective of thedifferences in social, cultural and politicalsystems, an upsurge in criminality isevident among all the societies in the world,at the various stages of their development.
The fast pace of urbanization andindustrialization; greater and more
efficient means of communication;internationalization of certain crimes like
drug-trafficking and terrorism; emergenceof white-collar criminality; also organised
crime, computer crimes, environmental
crimes and the evasive nature of somecrimes, are some of the factors/hallmarksof the crime scernrio today, which most law
enforcement agencies have to contend with.
Crime prevention is a much larger/wider
subject of police specialization/
professionalism than mere detection/
investigation of crimes, their prosecution
and trial. The real success of the law
enforcement machinery lies in preventing
crime before it takes place, which many
police forces have developed into an art.
These are skills they successfully practice
day-in and day-out, and are largely
responsible for the maintenance of law and416(Pakistan)(Seychelles)(India)(Hong Kong)(Japan)(Bangladesh)(UNAFEI)(UNAFEI)(UNAFEI)

order in society. It is only when crimes havealready taken place that the police areconfronted with the problems ofinvestigation, either in terms of inadequate
systems, skills or equipment, to which this
topic is addressed. No doubt however,thorough investigations and successfulprosecution of cases also have a preventive
impact on the crime situation in society;since this results in not only putting
offenders behind bars and preventing themfrom committing further crimes, but also
acts as a deterrent to other potential
criminals.
Problems in detection and investigationof crimes were identified in the following
two broad areas:(a) Enhancing investigative systems;and(b) Enhancing better detection of crimeand more thorough investigation.
II. ENHANCING INVESTIGATIVESYSTEMS
Investigation in any country is done
within the framework of the related
systems that have evolved in that country
over the years, as a response to thechallenges posed by crimes and criminals.
No investigative system can be deemed tobe perfect, and there has to be constant111TH INTERNATIONAL SEMINARREPORTS OF THE SEMINAR
effort to improve the systems or to
institutionalize new systems as effective
countermeasures to neutralize and control
the ever growing threat of crime,
endangering the peace of society. Keeping
these ends in view, and the ultimate
objective of enhancing investigativecompetency, the following general problems
hindering effective investigation wereselected for study and discussion, in orderto recommend suitable countermeasures.
A. General Problems of Police
Investigation
1. Political and Administrative Influences
One of the most serious problems of thepolice in most developing countries ispolitical interference with their work.
Often, political bosses bring pressure on thepolice to drop proceedings against accused
persons. Oral orders to the police and theirtransfer from one place to another, are themost common instruments of pressure
exerted by politicians and government
executives/administrators. Some typicalsituations where pressure is brought tobear on the police in the detection andinvestigation of crimes by political or
executive sources are as below:(i) The arrest or non-arrest of a person
against whom investigation incarried out by the police.
(ii) Release or non-release on bail afterarrest.
(iii) Suppression of material evidence that
becomes available during searches.
(iv)Inclusion or non-inclusion of various
items in the charge-sheet placed incourt on conclusion of investigation.
(v) Foisting false criminal cases against
political functionaries for achieving
political ends.
(vi)Managing political intervention by
exaggerating a non-cognizableoffence or engineering a false
complaint to gain advantage overanother party in a situation which
will be outside the domain of police

action in the normal course.
(vii) Not detecting and registering cases
against criminals having a clandestine
nexus with political bosses in power.
Interference with the statutory duties ofthe police has to be deprecated at all times,
and more so perhaps in the performance of
their duties in the investigation of crimes.
This is not to suggest that there exists nosafe-guards already in the legal systemsof different countries to prevent illegal
interventions by political or administrative
bosses. However, the fact remains thatmost police officers are not able towithstand the fierce political andadministrative pressure due to theircareers being at the mercy of political/
administrative bosses, often due to the low
calibre of police personnel. Hence, there
exists a dire need in most countries toinstitutionalize further safe-guards so thatthe framework within which the police
operate and investigate crimes is madeimmune to illegal political/administrativeinterventions. There is a crying need for
this, since the forces of organized crime,
terrorism of different hues and othermultifarious crime syndicates are
threatening to destablize society. There isa pressing need to meet the challenge ofsuch forces by professional police work in
the fields of investigation and other related
fields.
2. Sub-standard Investigative Personnel(a) Sub-standard Investigative Personnel
In most countries, the quality of police
personnel leaves much to be desired. Apartfrom other duties, the police personnel haveto detect and investigate complex/difficult
crimes, investigate cases thoroughly, collect
the right type of evidence and ensure
successful prosecutions in court. To
accomplish these tasks successfully, and tomatch the menace of the modern/sophisticated crime of today, a goodknowledge of law, procedures, forensic

417

RESOURCE MATERIAL SERIES No. 55
science and psychology is required for theinvestigators, apart from a multiple ofother skills. The investigating officer must
be a person of stature, educated,
intelligent, alert, truly interested in work,
possessing good judgement, initiative andcourage. In many countries, unattractive
conditions of service, low requirements ofeligibility qualifications, poor recruitment
procedures, substandard training, absenceof in-service training etc, all contribute to
sub-standard police service personnel.
Suitable countermeasures are required to
improve the quality of investigative
personnel.
(b) Inadequate Investigative Personnel
While crimes are generally increasing involume and complexity, most countries areafflicted with the problem of inadequate
investigative personnel. While thisadversely affects the quality ofinvestigations, it also leads to delay incompletion of investigations, both of whichhave an adverse impact on the crime
situation.
Hence, suitablecountermeasures need to be adopted toensure that the number of investigative
personnel are increased periodically, tomatch the growing crimes.
3. Lack of Equipment and Scientific Aids
to Investigation
Investigations in most developing
countries are badly handicapped by a lackof basic equipment. Adequate numbers of
forensic science laboratories are notavailable, police stations are not equippedwith fingerprint kits or cameras to takephotographs. Even typewriters are notavailable in police stations, apart fromcomputers, photocopiers, fax machines,
communication equipment and vehicles
etc, which are all so necessary these days
to ensure expeditious and effective
investigations. Hence, suitablecountermeasures need to be adopted toequip the police/investigating officers with418

the required minimum equipment andfacilities for ensuring adequate scientificaids to investigation.
4. Lack of Cooperation and Coordination
among Investigative Agencies
Apart from the investigating officers inpolice stations, a number of otherinvestigating agencies also exist in every
country to investigate specialized crimes
such as drug-trafficking, terrorism,
smuggling etc. Further, the police havebecome a large agency and consequently
consist of several departments or sections
within it. Since all such investigative
agencies and departments come to possess
considerable data on crimes and criminals,
and there is a lack of close co-operation
amongst all such investigative agencies,
duplication of work takes place and theinformation/data available within one
agency is not always made available to theother. It is felt that systems need to bestrengthened or created to enhance cooperation and co-ordination on a regularbasis.
B. Recommended Solutions
1. Political and Administrative Influence
In several countries, there areinsufficient structural safeguards to makethe police/investigative machinery immune
from political and administrative
influences, and to ensure that the police
function strictly as per the law. Due to
direct control over the police by the politicalexecutive, many investigations can just not
see the light of the day, as potentially gravecases involving political or other high-ups
are never allowed to be detected orproceeded with. This can have extremely
adverse implications to the crime situation
in a country, as many organized crime kingpins or drug mafia etc, having politicalconnections, can be shielded from the law.
The police in some countries are also
subject to control by Executive Magistrates
at the district level, which also thwarts

111TH INTERNATIONAL SEMINARREPORTS OF THE SEMINAR
independent/professional functioning andmakes them vulnerable to extraneous
influences. The political/administrative
executive can abuse its powers to arm-twist
the law enforcement agencies to yield to
its will, as the power to transfer, promote
and punish rest with it. There is, therefore,
an emergent need to establish foolproof
systems to ensure that the police areanswerable only to the law of the land,through the judiciary, i.e., the courts, andthat the administrative/political control
over the police is exercised so that it cannot
deflect it from functioning in accordance
w i t h t h e l a w.
The following
countermeasures are therefore
recommended:(a) Adoption of such a police model
whereby the political executive does nothave unhindered/direct control over thepolice organization, wherein,
institutionalized safeguards exist to
insulate the police organization fromundue political/administrative
influence. The central idea of therecommendation is that the politicalexecutive exercise control over thepolice organization through a suitably
constituted body, which can ensure its
political neutrality and independent/
professional functioning. In thisconnection, the Japanese police model
is suggested for serious consideration
and adoption with suitable
modifications to suit local conditions,wherever required. The salientfeatures of the Japanese police model
are as below:• In Japan, there is a National
Public Safety Commission andNational Police Agency at thenational level, to oversee/monitor
the functioning of the police, andPrefectural Public Safety
Commissions for every prefecture.
The National Public Safety
Commission and the National

Police Agency constitute Japan’snational police organization. The
National Public Safety
Commission exercises
administrative supervision over
the National Police Agency, within
its authority.
• While the Commission is under
the jurisdiction of the prime
minister, the prime minister is not
empowered to directly commandor control it. This guarantees theCommission’s independence andensures its political neutrality.
• The Commission formulates basic
policy and regulations, coordinates police administration onmatters of national concern, andauthorizes general standards fortraining, communications,criminal identification, criminal
statistics, and equipment. The
Commission appoints theN a t i o n a l P o l i c e A g e n c y ’s
Commissioner General and senior
officials of prefectural police
organizations. The Commission
indirectly supervises prefectural
police organizations through the
National Police Agency.
• The Commission consists of a
Chairman and five members. The
Chairman is a state minister who
presides over Commission
meetings. Members, who serve
five year terms, are appointed by
the prime minister with theconsent of both Houses of the Diet.
They must be persons who havenot served within five years of
appointment as police officers or
public prosecutors. To ensure
political neutrality, no more than
two members may belong to thesame political party.
(b) The police chiefs of a state/province
should have fixed tenures so that they419

RESOURCE MATERIAL SERIES No. 55
don’t always have to work under the
threat of transfer.
(c) Promotions and disciplinary mattersrelating to the higher ranking police
officers should be under the control ofsuch bodies as recommended in subpara (a) above, so that the same
introduces the required confidence inthem to ensure the fair andindependent functioning of the police
organization, which ultimately will
ensure that the investigations arecarried out without fear or favour.
(d) E s t a b l i s h m e n t o f s p e c i a l i z e d
independent or autonomous
investigative organisations which may
investigate complex crimes of a more
important nature, including
corruption, terrorism, serious
commercial fraud etc. It is felt thatsuch specialized and independent
investigative organizations, which havestrong procedural sub-systems withinthem to ensure their free and fairfunctioning in strict conformity withlaw, have the effect of insulating theinvestigative machinery from political/
administrative influences, at least in
the investigation of the more
important/sensitive cases which they
deal with. Such specialized
investigative organizations could
function within the overall police
organization, or outside the same, as
already exists in some countries. In
case they function outside the purview
of the overall police organization,
control by the political executive overthem should again be through suchbodies as recommended in subparagraph (a) above, in order toinsulate them from any extra-legal
interventions. The Independent
Commission Against Corruption(ICAC) in Hong Kong is a successful
example of combatting corruption by an420

independent investigative agency.
2. S u b - s t a n d a r d a n d I n a d e q u a t e
Investigative Personnel(a) Sub-standard Investigative Personnel
The following countermeasures arerecommended to improve the quality ofinvestigative personnel:(i) Attactive conditions of service andsalaries must be ensured for police
personnel, so that better quality
candidates are induced into theorganization.
(ii) Recruitment at many levels in thepolice hierarchy reduces promotion
chances, demoralizes the service anddegrades service conditions. In the
United Kingdom, recruitment is only
at one level, i.e. the police constable,
who can aspire to the highest police
post. This not only attracts candidatesof better quality to the police service,
but also keeps them in a high state ofmotivation, as there is a great incentive
to excel in their job and to maintainh i g h s t a n d a r d s o f i n t e g r i t y.
Recruitment at only one level may not
be possible in developing countries in
the near future. Hence, endeavours
should be made to achieve two levelsof recruitment for the police, i.e., one
at the police constable level and theother for higher police functionaries.
The minimum educational
qualifications could be graduallyenhanced to graduation, even for police
constables, as they will have higher
positions in due course and handle
intricate investigations and othersensitive police functions.
(iii)Suitable systems must be establishedto ensure that recruitment of the police
is fair and strictly on merit, without any
political or other influence, to ensurethat candidates with the right111TH INTERNATIONAL SEMINARREPORTS OF THE SEMINAR
qualifications are selected. For this,independent/autonomous Police
Recruitment Boards should beestablished, which must specialize inmaking quality recruitment and must
constantly evolve more modern
methods of selection, so that suitable
candidates with the right aptitude
enter the police service. The
recruitment/selection process by such
Boards must be so systematized, withfoolproof checks/controls, so that the
chance of tampering with the process
becomes extremely remote. The
recruitment must also be done as per
fixed annual schedules, and ad hoc bulk
recruitments, which severely upset
promotional avenues and training
standards, must not be allowed.
(iv) After the right recruitment of police
personnel, their training, both at thetime of joining service and later
through in-service training/refresher
courses and on-the-job training, can goa long way in making available better
quality police personnel/investigators.
To ensure this, modern training
institutions must be established in
sufficient numbers, which canadequately cater to the needs oftraining in multifarious disciplines, tomeet the complex challenges of modern
crimes. Attractive training allowances
must be granted so that better quality
personnel man such training
institutions. Training methods in
different countries should be studied bysuch training institutions, so that thebest methods/systems are adopted tosuit local conditions. For specialized
crimes requiring intricate handling,
special courses must be devised andconstantly upgraded to keep pace withchanging situations/times. The
services of specialists from otherdepartments, insights into whosefunctioning can aid police investigators,

must be obtained to enrich the training
process.
(b) Inadequate Investigative Personnel
The following countermeasures arerecommended to tackle the problem of
inadequate investigative personnel:(i) Police-public ratio in such countries
where it is low, must be constantly
upgraded through periodic sanctions of
new posts and through systematicannual recruitment, so that adequate
manpower is available for the different
police functions, including
investigations. Realistic assessment of
the requirements of annual recuitment
must be made and systematic
initiatives taken to ensure thatnecessary funds are made available forthis purpose.
(ii) Separate crime investigative wings
must be established at every police
station level, district level etc, so thatinvestigating officers and other staff
are earmarked for concentrated/
specialized investigations and they are
not disturbed and diverted for otherpolice duties relating to themaintenance of law and order.
(iii)The services of civilian volunteers forassisting in police duties must be
harnessed, so that the police can besaved for and diverted to investigative
functions. The examples of Crime
Prevention Volunteers in Korea,
Auxiliary Police Force in Hong Kong,
Home Guards in India, and Qaumi
Razakars in Pakistan are cited in thisconnection. Such institutions must be
strengthened and put to optimum use.
(iv) Workloads of investigating officers
must be constantly assessed andyardsticks evolved regarding theworkload an investigating officer can

421

RESOURCE MATERIAL SERIES No. 55
really shoulder. Constant endeavors
must be made to ensure that theworkloads of investigating officers arein accord with the yardsticks, so thatthey can pay adequate attention to thecases and to ensure better quality and
expeditious investigation.
3. Lack of Equipment and Scientific Aids
to Investigation
In modern times, proper equipment andscientific aids to investigation are vital to
the success of investigations. Since mostdeveloping countries are badly lacking inthis aspect, the following countermeasures
are recommended:(a) The system of Annual Modernization
Schemes, as in India, must be
introduced and strengthened so thatcomprehensive assessments of therequirements for different types ofequipment by the police force aresystematically made every year, andearmarked funds released for the sameannually. Endeavors must be made tohave the release of such modernization
grants increased every year to meet thegrowing needs. Under such amodernization scheme, vehicles,
communication equipment, computers,
fax machines, photocopiers, bomb
detection and disposal equipment,
document scanners, video cameras
cameras, fingerprint kits etc, should beacquired and equitably distributed tomeet the requirements of police/
investigating officers. Necessary
equipment for digital/computerizedstorage of fingerprints could also be
acquired. Modern Interrogation
Centres, equipped with the latest
equipment, should also be establishedin a phased manner through suchmodernizatioon schemes.
(b) Adequate number of forensic sciencelaboratories must be established as the422

workload of such laboratories isgenerally very heavy, which contributes
to delay in investigations. The
workloads of such laboratories must be
assessed and proposals initiated forestablishing more laboratories.
Further, such laboratories must be
constantly modernized with the latest
equipment. Endeavours should also bemade to improve the quality ofscientists manning such laboratories
and to ensure that such laboratories
function independently and fairly.
(c) Adequate number of mobile forensic
science laboratories, suitably equipped,
as available in every district of somestates in India, must be acquired foron-the-spot assistance to theinvestigators as scientific aids at thescenes of crime.
(d) Adequate number of Bomb Detection
and Disposal Squads must be
established in cities and field areas for
immediate assistance to theinvestigators in defusing/disposing ofbombs, and for safe-guarding valuableevidence at the scenes of crime.
(e) Advanced scientific testing facilities,
such as for DNA testing, are notavailable in many countries. Suchcountries which don’t find it economical
to establish such facilities should be
able to make use of the facilities
available in this regard in neighboring
countries. For this, necessary bi-lateralagreements could be worked out
between the concerned countries.
4. Lack of Cooperation and Coordination
among Investigative Agencies
In order to promote co-operation and coordination amongst different investigative
agencies, the following measures arerecommended:111TH INTERNATIONAL SEMINARREPORTS OF THE SEMINAR(a) Establishment of Co-ordination
Committees, in which all investigating
agencies are represented, that meet atregular intervals. This will enhanceknowledge of the different investigative
agencies, their personnel, the work
being turned out by them, and resultin an exchange of information/
intelligence, which would be helpful tothe investigating officers of different
agencies. Many problems amongst
different agencies can be sorted out
during such meetings/conferences.
Separate Co-ordination Committees
can be set up to deal with such subjects
as drug trafficking and terrorism.
Regional Co-ordination Committees
could also be set up to promote coordination amongst adjacent regions/provinces/States, since criminals nolonger stick to one area. Joint
investigation teams could also be set
up for particcular cases, wheneverrequired. Joint operations could also
be organized by the members of such
Co-ordination Committees, wheneverrequired. In Japan, the Public
Prosecutors Office leads andcoordinates different perfectural police
jurisdictions and different specialized
investigation units on joint
investigations.
(b) Establishment of joint training
programs amongst different
investigative agencies can be a useful
exercise in not only promoting
investigative skills, but also in
educating each other about the roles ofthe different agencies, and promoting
harmonious relations andunderstanding. These should improvethe efficiency of investigating officers
and result is better detection andimprovement in the quality ofinvestigations. Such pooling ofresources is particularly required indeveloping countries which face aresources crunch.
(c) Exchange of data on crimes andcriminals amongst the different
investigating agencies should regularly
take place by sharing periodical
reviews/hand-outs etc. These will bevaluable aids to investigation.
III. ENHANCING BETTER
DETECTION OF CRIME AND MORE
THOROUGH INVESTIGATIONS
A. General Problems on Better
Detection and Investigation of
Crimes
1. Insufficient Development/Use of
Available Data/Measures(a) Lack of Systematically Organized
Data/Records and Intelligence on
Crimes and Criminals
When a crime takes place, theimmediate guide available to theinvestigator is the data/records regarding
similar earlier crimes, criminals andcriminal organizations involved in them.
These can be extremely useful tools to theinvestigator for detection of the crime,
provided the data on previous crimes andcriminals is readily available in asystematically organized form; whereby
vital clues to the present crime in question
can be obtained and the line ofinvestigation decided. Further, there is avast and dark area of unexposed crimes
a n d c r i m i n a l i t y, w h i c h i s o f t e n ,nevertheless, quite active, for which norecords/data may exist, since these areundetected crimes and criminals. For suchvast and dark areas of unexposed crimes
and criminality, the only guide can be‘Intelligence’, and systematized/readily
available data/information on that.
However, most police agencies lacksystematically organized data/records on
exposed crimes, criminals and criminalorganizations, and also intelligence on
unexposed crimes and criminality. These

423

RESOURCE MATERIAL SERIES No. 55
handicap the investigators, as they arecompelled to grope in the dark since thebenefit of organized records systems, sovital in today’s crime scenario, are notavailable to them. Hence, we need suitablecountermeasures to meet this major
problem.
(b) I n s u f f i c i e n t U s e o f A v a i l a b l e
Investigative Methods/Measures
Another related problem area in thedetection and investigation of crimes is thatcertain investigative methods/measures,
which are available to the investigators, arenot being put to adequate use as tools for
effective detection/investigation. Theseavailable investigative methods/measures,
which are not put to sufficient use are:fingerprint identification systems; blood/semen tests; DNA testing; surveillancetechniques through physical covert
shadowing, through sources, wiretapping,undercover operations; computerized
portrait buliding/identification systems;
controlled delivery; timely searches etc.
Suitable countermeasures need to be
adopted to ensure that such available
methods/measures are put to optimum use.
2. Problems Related to Interrogation,
Elicting Confessions and Unearthing
Leads for Investigation(a) Difficulties with Regard to Eliciting
Confessions(i) L a c k o f s k i l l s a m o n g s t
investigative officers.
(ii) Lack of safeguards to ensurevoluntariness of confessions.
(iii)Failure to obtain corroborative
evidence.
(b) Lack of Interrogation Skills amongst
Investigators for Eliciting Leads fromAccused/Suspects/Witnesses for
Further Investigation
Lack of interrogation and related skills
amongst investigating officers is a major
handicap in the detection and investigation424

of crimes, with regard to eliciting leads forfurther investigations from the accused/suspects/witnesses. Skillful interrogations
by the investigating officers can make all
the difference in solving a case and instrengthening it with suitable evidence forsuccessful prosecution. Hence, this areaof investigative work requires special
attention for evolving suitablecountermeasures for enhancing detectionof crime and for achieving more thoroughinvestigations.
3. Lack of Co-operation from the General
Public and Witnesses(a) Lack of trust in the police and alack of a helpful attitude by thepolice.
(b) Fear of revenge from the accused.
(c) Inconvenience to witnesses andindifference of witnesses.
Should active public co-operation beavailable to the police/investigating
officers, the whole investigative effort
becomes much easier. Not only can
information about crimes and criminals be
passed promptly to the police by membersof the public (which they generally fail todo) but they can also come forward todepose as witnesses, for which they are
deterred by factors as indicated in subparagraphs (a) to (c) above, for which weneed to look for countermeasures.
4. Internationalization of Crime as a
Hindrance to Investigation(a) D i f f i c u l t i e s i n g a t h e r i n g
information/background datafrom overseas on criminals andcrimes.
(b) Difficulties in collecting evidence
from overseas.
(c) Difficulties in securing extraditionof the accused.
In modern times, due to the great
increase in communications,

111TH INTERNATIONAL SEMINARREPORTS OF THE SEMINAR
transportation facilities, mobility, and thetrend towards the globalization of
economies, crimes are increasingly
assuming international ramifications. A
criminal/terrorist/drug trafficker may
quickly escape to a foreign land aftercommitting a heinous crime, and go out ofview. Conspiracies for major organizedcrimes or terrorist acts may be hatched in
one country, firearms/explosives procured
from another country, funding done by coconspirators from yet another country andthe criminal/terrorist acts committed in a
fourth country. Detailed directions can begiven for conducting such crimes over the
telephone, sitting in distant lands. Though
Interpol is available for co-ordinated police
action, in practice, there are manydifficulties in ensuring this, which ismaking things very easy for criminals,
especially for international crime
syndicates/druglords/terrorists. The
problems faced by the law enforcement/
investigative agencies, in this regard, arealready grave, and are likely to assume still
more serious dimensions in the near future.
Utter lack of co-operation and co-ordination
amongst most countries of the world resultsin failure to get information/backgrounddata from overseas on criminals andcrimes, failure to collect evidence in foreign
lands and failure in securing extraditionof the accused. Hence, suitablecountermeasures are called for to meet thechallenges posed by the globalization ofcrime.
B. Recommended Solutions
1. Insufficient Development/Use of
Available Data/Measures(a) Lack of Systematically Organized
Data/Records and Intelligence on
Crimes and Criminals
The following countermeasures arerecommended to develop the record
systems relating to crimes and criminals,
and to improve their quality, so that they
become a effective aids for investigation:(i) To prescribe carefully devised record
systems, including photographs ofcriminals whenever available, or
improve their quality so that they areavailable in easily retrievable form fordifferent types of crimes, for different
modus operandi of crimes, for different
criminal gangs/organisations.
Alphabetical indexes of criminals, theirareas of operation, their descriptive
rolls, their associates/relatives etc.
(ii) Drives for exhaustive classified
documentation of crimes and criminals(which have come to notice in theprevious ten years) at the district, state/province and national level. The
criminals who have been active in theprevious ten years are likely to be
active now.
(iii)To have suitable computer software
designed for sub-paragraphs (i) and (ii)above, and launch drives for
simultaneous computerisation of all
crimes and criminals for the previous
ten years.
(iv) To s t r e n g t h e n t h e i n t e l l i g e n c eorganizations so that they are able toprovide well organised information
about important criminals, criminalorganisations and their activities,
especially in the areas of unexposed
crimes and criminals, and to have suchinformation/data constantly
computerised, for ready retrieval andup-dating. Such well-organised
inteligence should be available at the
local, state/province and national level.
(b) I n s u f f i c i e n t U s e o f A v a i l a b l e
Investigative Methods/Measures
With regard to the problems areas
detailed above, the following
countermeasures are recommended:

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RESOURCE MATERIAL SERIES No. 55(i) To have suitable inservice refresher
courses devised with regard to thesuitability/usefulness of the existing
investigative methods/systems/
measures, which are not being put to
optimum use by the investigators dueto their inadequate knowledge/
appreciation about them.
(ii) To associate the investigators with such
expert investigators/investigatingorganisations as are making optimum
use of the existing investigating
methods/techniques, for periodical
technical training.
(iii)To have comprehensive handouts ofvarious investigative methods/
techniques/systems available
circulated amongst the investigating
officers and read-out by superior
officers periodically, so that they aresuitably sensitised to put suchmethods/techniques to optimum use.
(iv) To have periodic lectures delivered byexperts in the different areas
mentioned above, to the investigating
officers to sensitise them about
different up-to-date systems/
techniques available to theinvestigating officers.
2. Problems Related to Interrogation
Skills in Eliciting Admissible
Confessions and Unearthing Leads for
Investigation(a) Difficulties with Regard to Eliciting
Confessions Admissible as Evidence
The difficulties of eliciting confessions
admissable as evidence fall under three
primary areas:(i) Lack of skill amongst Investigative
Officers
Lack of skill amongst investigating
officers in effective interrogation andsensitive/psychological handling of the426

accused is major obstacle to investigations,solving cases and unearthirng their full
ramifications. Lack of those skills also
results in the use of third degree methods/
torture by the police, which apart from
causing serious human rights violations
and complicating problems, also have thepotential of derailing investigations forconsiderable lengths of time, as these could
cause admissions of some facts due to fear.
These could also result in deaths in police
custody, which frustrate and upset
investigations almost completely. Hence,developing/sharpening skills forinterrogation and sensitive/psychologicalhandling of the accused amongst theinvestigating officers is of utmost
importance, as any resultant confession
can be admissible in evidence only if itmeets the test of voluntariness andc r e d i b i l i t y. H e n c e , t h e f o l l o w i n g
countermeasures are recommended in thisregard:(a) To have regular refresher courses ininterrogation skills organised forinvestigating officers where they
could be exposed to the most skillful
successful interrogators, and to well
prepared videos, films anddocumentation in this regard.
(b) Interrogation skills can only develop
if it is clear that third degree
methods/torture of the accused will
not be allowed, at any cost. Hence,the superior officers must takecriminal/disciplinary action if any
instance of the use of third degree
methods/torture is reported.
(c) Since interrogation skills are more an
art than a science, and often difficult
to impart through conventinal
teaching/training, investigating
officers should be attached toacknowledged experts ininterrogation, so that they also

111TH INTERNATIONAL SEMINARREPORTS OF THE SEMINAR
imbibe the same and gradually cometo practice it.
(ii) L a c k o f S a f e g u a r d s t o E n s u r eVoluntariness of Confessions
Confession made by an accused to apolice officer is inadmissible in evidence insome countries like India, Pakistan and
Bangladesh; though any part of suchconfession, as relates to any fact discovered
in consequence of the information provided
during such confession, is admissible inevidence in such countries. In mostcountries like Japan, Korea, Hong Kongand Malaysia, confessions made to police
officers are admissible under someconditions. However, all such confessions,
whether made to police officers or others,
have to meet the test of voluntatiness andcredibility/trustworthiness. The confession
should not appear to the court to have beencaused by any inducement, threat orpromise. There are various safeguards
already instituted in the systems orpractices of different countries in thisregard. Keeping all those in view, thefollowing recommendations are made inthis regard, which may be adopted, keeping
in view the local conditions and local
provisions of law:(a) As regards confessions made by anaccused on the spot, soon after thecommission of a crime: clear anddetailed instructions should beavailable to the investigating officers
as to how such a confession must berecorded on the spot, and suchconfessions must be corroborated byentries in the notebooks of the police
officers concerned.
(b) Detailed and clear instructions must
exist and be available to theinvestigating officers regarding the
precautions to be taken while
recording the confession of an
accused, such as regarding theadministering of a caution, regarding
entries on the spot in lockup
registers, general diary of the police
station etc.
(c) Presence of independent witnesses
during the interrogation/recording ofa confession is required in somecountries, while in some othercountries, like Malaysia, the presenceof independent witnesses has beendispensed with. It is felt that should
the witnesses be respectable and of
credible stature, their evidence will
enhance the credibility of confessions.
(d) Videotaping of a confession can be avery good safeguard to prove thevoluntariness of a confession.
Regarding the methodology of such
videotaping, detailed standing
instructions need to beinstitutionalized, as already exist in
Hong Kong.
(iii) Failure to Obtain Corroborative
Evidence
In order to make the confession
meaningful as evidence, sincere andexhaustive efforts must be made to provethe contents of the confession wherever
possible. For example, if an accused has
stated in the confession thats s/hepurchased a particular item, having
bearing with the offence, from a particular
shop and a particular person; the shop
must be traced, as also the person, and thestatement of the bills/records seized.
Broadly, the following countermeasures aresuggested:(a) To identify and list all the verifiable
points in the confessions, regarding
which, there is the possibility ofletting in corroborative evidence.
(b) Without delay, investigators should
be dispatched to verify the aforesaid

427

RESOURCE MATERIAL SERIES No. 55
listed points and to collect evidencewith regard thereto.
(c) The aforesaid exercise should be
enforced in a strict manner so thatinvestigative officers get into thehabit of doing the same without fail,in every case.
(b) Lack of Interrogation Skills amongst
Investigators for Eliciting Leads fromAccused/Suspects/Witnesses
The lack of interrogation skill amongst
investigating officers may result in failure
to elicit leads, not only from the accused
but also from suspects and witnesses. The
following countermeasures are suggested
in addition to the aforementioned
recommendations:(i) Systematic identification of thepoints on which the investigative
officers should raise questions toelicit more leads for further
investigation.
(ii) Every new lead unearthed during
such interrogations must be
immediately followed up with therequired steps for further
investigations, such as conducting
further searches, apprehending new
suspects etc.
3. Lack of Co-operation from the General
Public/Witnesses(a) Lack of Trust in the Police and Lack of
a Helpful Attitude of the Police
In order to improve the attitude andimage of the police with the public, andthereby inspire trust so that the publiccomes forward to actively assist ininvestigations, the following
recommendations are made:(i) Every effort must be made to
institutionalize measures that canensure fair and impartial

428

functioning. The countermeasuressuggested in this report regarding the
problem of undue political andadministrative influence can go along way in ensuring theindependent, fair and impartial
functioning of the police, thereby
inspiring confidence in the public.
(ii) Every effort must be made to improve
the quality of police personnel andtheir performance, and to
institutionalize systems/measures inthis regard. The recommendations
made in this report with regard to the
problem of sub-standard police
personnel and with regard todeveloping interrogation skills aresome of the measures which can
improve the police image. Developing
interrogation skills, will also help inpreventing custodial deaths which
badly mar the police image.
(iii) An attitudinal change must be
brought about in the police throughperiodic, specially designed, refresher
courses and through constant on-thejob instruction. Effective supervision/leadership by the superior officers
will also help to adopt a humane/helpful attitude towards the public.
(iv)The electronic media and the press
must be effectively used to highlightthe good deeds/achievements of thepolice, so that the public graduallycomes to acquire greater confidence
in the police.
(v) Enhanced contact of the police withpeople at different levels will inspire
confidence in the police.
Establishment of Police-Public Cooperation Committees, in whichheads of educational institutions,representatives from prominent
service organisations, respectable

111TH INTERNATIONAL SEMINARREPORTS OF THE SEMINAR
members of the public and the press/
electronic media could be
represented, would go a long way ininspiring confidence in the police.
Such Police-Public Co-operation
Committees could lead to the effective
enforcement of Community Policing
measures, including assistance byvolunteers in traffic enforcement etc,
all of which can enhance the police
image. The Police Box (Koban)
system in Japan is also a goodmeasure in community policing, asalso the Neighbourhood Police Posts
in Singapore, which should also be
considered.
(vi)S y s t e m s m u s t b e e s t a b l i s h e dwhereby complaints against police
personnel must be effectively heardby superior officers and acted upon.
Strong disciplinary or criminal action
against instances of abuse of power,
corruption etc, must be ensured. For
this, it is necessary that superior
officers must be highly accessible tothe public. For example, in Hong
Kong, the Complaints Against Police
Office is a delegated police unit toinvestigate all the complaints against
the police, and the results ofinvestigations are scrutinized by nonpolice officials.
(vii)Fair administration of the police must
be ensured whereby, while the wrongdoers are not spared frompunishment, those who excel in theirwork, especially in eliciting public cooperation through their humane/helpful attitude, are suitably
rewarded.
(b) Fear of Revenge from the Accused
Since witnesses often do not comeforward to depose against criminals due tofear of revenge, the following
countermeasures are recommended in thisregard:(i) Witness Protection Programs such asin Brazil, Colombia, Hong Kong,
must be established whereby suitable
protection is provided to thewitnesses, according to requirements,
at the expense of the State.
(ii) Victim Assistance Committees may
be set up to extend psychological/
other support to victims of crime, who
also will happen to be the prime
witnesses in a case. For sexual
crimes, women police officers can be
assigned as detectives, as in Japan,
so that victims of sexual crimes feel
comfortable in reporting to the policeand during investigations. The
Vu l n e r a b l e Wi t n e s s S u p p o r t
Programme, as in Singapore,
whereby support to vulnerable
witnesses who have to testify incriminal cases is extended, is also
recommended for adaptation as per
local conditions. Amendments havealso been made to the Singapore
Criminal Procedure Code (Cap 68) forthe evidence of vulnerable witnesses
in certain types of offences to be heard
through live video or television links.
(iii)In case of any attack on a witness bya criminal, it must be ensured thatexemplary punishment is imparted.
(c) Inconvenience to Witnesses andIndifference of Witnesses
Witnesses are also reluctant to comeforward to assist the police in detecting/investigating a crime, and to depose as
witnesses, as it can cause considerable
inconvenience and harassment to them andresult in a wastage of time. Consequently,
they are indifferent towards the police. To
meet ths problem, the following
countermeasures are suggested:429

RESOURCE MATERIAL SERIES No. 55(i) Adequate conveyance, boarding andlodging monies must be provided towitnesses, for which necessary
provisions must be made.
(ii) It must be ensured that witnesses aretreated by the police with sensitivity,
so that they do not have to faceharassment in terms of being called
to police stations frequently, or
having to visit courts frequently, due
to avoidable adjournments, keeping
in view the time constraints which awitness may have. Every witness
must be made to feel important, as
the minimum reward for their effort/
sacrifice. Any other reward may not
be legally acceptable.
(iii)Mass media must be effectively used
to raise awareness amongst the
public that without their cooperation, it is very difficult for thepolice to fight crime; and that the
public, themselves are the coproducers of public safety.
4. Internationalization of Crime as a
Hindrance to Investigations(a) Difficulties in Gathering Information/
Background Data from Overseas on
Criminals and Crimes
In view of the problems posed by theinternationalisation of crime, as indicatedabove, the following countermeasures arerecommended with regard to gathering
information/background data fromoverseas on criminals and crimes:(i) Interpol, of which most countries are
members, must be put to effective usefor obtaining data on crimes andcriminals from foreign countries. For
Interpol to be effective, the message/queries received from it must receive
adequate attention, so that prompt
replies can be assured.

(ii) Liaison officers posted abroad may bemade optimum use of to collect therequired bona fide information on
crimes and criminals, and to keep thepolice agencies of the concernedcountries suitably informed.
(iii)To maximize participation of police
officers in international conferenceson crimes/criminals so that allconcerned are suitably sensitised,mutual apprehensions (if any)
dispelled, and harmonious workings
towards common objectives
facilitated.
(b) Difficulties in Collecting Evidence from
Overseas
Since investigations are often required
to be carried out in foreign countries andevidence is required to be collecteed, thisprocess is fraught with acute difficulties.
The following countermeasures arerecommended:(i) The available treaties on Mutual
Assistane in criminal matters mustbe put to optimum use, as also theavailable diplomatic channels.
(ii) Active efforts must be made by police
agencies to have necessary
diplomatic or legislative initiatives
taken by their governments toconclude bilateral/multilateraltreaties with different countries
regarding mutual assistance incriminal matters. Pending theconclusion of such treaties, mostcountries may enact legislation
whereby a country that has no treaty
with it, can also request assistanceunder the principle of reciprocity. In
this connection, the Act on Mutual
Assistance in Criminal Matterspassed by Thailand in 1992 is cited.
(iii)To constantly endeavour to extend

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111TH INTERNATIONAL SEMINARREPORTS OF THE SEMINAR
maximum co-operation to the
execution of “Letters Rogatory”
received from different countries, toidentify the recurring problems facedin this regard, and to seek lasting
solutions.

(iii)All countries facing the problem ofinternationalisation of crime must
conclude extradition treaties with all
such countries with which they havefrequent problems of extradition.
IV. CONCLUSION(iv) To utilise the personal rapport
achievced with officers of othercountries during conferences/seminars to smooth matters, and toelicit co-operation to solve knotty
problems in investigations abroad.
(v) Necessary amendments in the law ofevidence, wherever necessary, should
be considered, in order to makeadmissible the evidence collected byforeign officials, without the foreign
witnesses having to depose in court.

It is hoped that with the aforesaid
countermeasures recommended for better
detection of crime and more thoroughinvestigations, a definite impact on thecrime situations in different countries canbe made for the ultimate objective ofeffectively preventing crimes in ourchanging societies.

(c) Difficulties in Securing Extradition of
the Accused
Since in many countries, the trial of an
offender in the requesting State cannnot
proceed without the presence of theoffender in the court of criminal trial,
extradition is a vital legal mechanism.
However, in many countries, for want of
the required provisions in their extradition
Acts, or if enacted, for want of mutual
extradition treaties, the extradition of
offenders wanted by a country is often amajor problem. In this connection, thefollowing countermeasures arerecommended:(i) The available extradition laws,
treaties and diplomatic channels
must be made optimum use of toachieve extradition of offenders.
(ii) Necessary extradition Acts must be
enacted by most countries so that theconcerned country can extradite an
offender to the requesting State, even
if the requesting State does not havea treaty with it.

431

RESOURCE MATERIAL SERIES No. 55

TOPIC 2
THE ROLE OF PROSECUTION IN THE CHANGING SOCIETY
Chairperson
Co-Chairperson
Rapporteur
Co-Rapporteur
Members

Advisers

Mr. Morio Kubota(Japan)Ms. Ana Maria Fuentes Rivera(Peru)
Mr. Selvanathan Shanmugham(Malaysia)
Mr. Hong-Hoon Lee(Republic of Korea)
Mr. Mangasi Situmeang(Indonesia)
Mr. Mohan Bahadur Karki(Nepal)Mr. Kazunori Nakada(Japan)Deputy Director Masahiro Tauchi (UNAFEI)
Professor Chikara Satou(UNAFEI)
Professor Shinya Watanabe(UNAFEI)

I. INTRODUCTION
The criminal justice system comprisingof the police, prosecution, judiciary,
probation officers and the prison
authorities are important in administering
justice to the society. Amongst the above
named components of the criminal justicesystem, the prosecution is the backbone ofa successful system. It would not be an
exaggeration to state that the prosecution
is pivotal to the practical functioning of thecriminal justice system. The prosecution
plays a balancing act between theapprehension of criminals by the police andthe finding of guilt as well as punishment
by the judiciary.
In many jurisdictions, the police, apartfrom maintaining law and order, also
conduct investigations as provided by law.
Upon completion of the investigation, thepolice then turn to the prosecution. The
prosecution at this juncture, in many
countries, advises further investigation or
makes a decision on whether to proceed tothe trial stage or not. The prosecution
ought to play a major role in ascertainingthat justice is done not only for the society
but also for the accused, as the case may
be. In any jurisdiction, the prosecution fails
to play its role in the criminal justice432

system if the prosecutor does not maintaincontrol of prosecutions. In order tomaintain equilibrium, the prosecution
must ascertain whether a particularcriminal case should be proceeded with toprosecution, or whether some otheralternative steps should be taken. The
prosecution at all times should consider thenecessity and effect of a prosecution or nonprosecution.
In the changing society where new typesof crime, such as organized transnational
crimes, large scale economic crimes, money
laundering, etc, are emerging andprevailing, we should think about whether
the prosecution can cope with these newphenomena and, if not, effective tools
should be provided for the prosecution tocope with these new type of offences.
Furthermore, the quality of publicprosecutors is an issue of our discussion.
Whether the high quality of publicprosecutors is maintained or not is theforemost question in order for them to fulfill
their important duties.
This report will discuss and identify
problems faced by the prosecution in thechanging society. It will also propose
solutions to the problems raised.

111TH INTERNATIONAL SEMINARREPORTS OF THE SEMINAR
II. INEFFECTIVE AND
INEFFICIENT PROSECUTION
A. General Observations
In practice, there are many causes of
ineffective and inefficient prosecution.
However, all these causes may be grouped
into two main problems namely:(a) Low conviction rate; and(b) O v e r l o a d i n g o f c o u r t s a n dprosecution.
In dealing with the issues of low
conviction rates and the overloading of thecourts, it is inevitable that the publicprosecutor plays a major role in mostjurisdictions. Amongst the participant
countries in this seminar, varying methods
to commence prosecution are adopted.
In countries such as Bangladesh, Hong
Kong, Pakistan, India and Sri Lanka thedecision to prosecute at the lower courts
rests with the police. Meanwhile in allother countries, the decision to prosecuteat lower courts lies with the publicprosecutor. The other main practical issue
in prosecution is the basis of initiation of
criminal prosecution. In practice, publicprosecutors, apart from satisfying that
there is sufficient evidence to prosecute,would also consider the issue of thestandard of evidence for thecommencement of prosecution. In thisregard, countries such as Algeria,
Bangladesh, Japan, China, Colombia,
Pakistan and Republic of Korea require
evidence which is beyond reasonable doubt
as a basis to commence prosecution.
Meanwhile, in Malaysia, Indonesia, Laos,
Peru and Viet Nam there must be 80%
chance for conviction in order to commenceprosecution. Public Prosecutors in Hong
Kong, Mozambique, Nepal and the
Seychelles would commence prosecution if
there exist more than 50% chance to obtainconviction. Lastly, in Brazil and Sri Lanka

prosecution is initiated even if there is lessthan 50% chance for conviction.
B. Low Conviction Rate
One of the measurements of theeffectiveness and efficiency of any
prosecution system is the conviction rate.
If the prosecution system of any country
produces too low a rate of conviction it could
be seen as a symptom of a serious problem
within. It must be stressed at the outsetthat low conviction rates per se might not
be the only objective of prosecution.
However, since this report is mainlyinterested in the quality of prosecution,then naturally the rate of conviction should
be considered as one of the measurementsof the quality of prosecution. In this regard,in some countries the prosecution isconducted by either the police or theprosecution under the direction and controlof the Attorney General/Prosecutor
General. The conduct of prosecution byboth these arms of the criminal justicesystem depends upon the nature of theoffence, and the jurisdiction within which
the case would be tried. In countries like
Japan and the Republic of Korea, allprosecutions, irrespective of thejurisdiction of the courts and the nature of
the offence, are prosecuted by the publicprosecutors. However, in countries like
India, Sri Lanka, Hong Kong, andBangladesh, cases at the lower courts,
which carries lighter punishment of
imprisonment, are conducted by the police
prosecutors. In this regard the police
prosecutors are under the directsupervision of the Superintendent of Policeor the senior police officer of each district.
As such, the public prosecutor does not playa major role in the conduct and directionof prosecutions in these jurisdictions.
Meanwhile, in Hong Kong, the prosecution
is conducted by lay prosecutors.
For the purpose of this report, a survey
was conducted among the participants of433

RESOURCE MATERIAL SERIES No. 55
each country as to their respective
conviction rates in recent years. Countries
such as Japan (99.9%), China, Republic ofKorea (99.6%), Indonesia, Malaysia andVietnam obtained a conviction rate of above
80%. Meanwhile, India (77.6%), Thailand,
Nepal, Peru (65%) and Pakistan obtained
a conviction rate of between 80% and 40%.
Bangladesh, Laos and Sri Lanka obtained
a conviction rate below 40%, and in somecountries, the conviction rate is becoming
lower. It is to be noted that these are therates of conviction upon completion of
trials. As such, the rate of percentage as
above does not include cases concluded
with a conviction summarily or upon a pleaof guilt.

criminal justice system, i.e. the police andthe prosecution. The result of the low rateof conviction reflects unwarranted
prosecution; a waste of judicial time andmoney; unnecessary expense incurred by
the defendant or accused in preparing fortrial; the mental agony suffered by theaccused; possibility that the wrong person
was charged or indicted; possibility that thetrue culprit of the offence was not brought
to justice; ineffective investigation;ineffective prosecution; and that justicewas not attained for the benefit of thevictim. As such, in any criminal justicesystem, the prosecution, in order to beeffective and efficient, should strive toattain a high rate of conviction.

It is evident that countries attaining low
rates of conviction would face serious
difficulty in the changing society. In
countries where there is a low conviction
rate, the problems are manifold. There arequestions on the integrity of theprosecution, the cost of maintaining theIII. LOW CONVICTION RATE:COUNTERMEASURES
A. Screening
The participants in general propose
screening as a method to solve the problems
stated above. For the purposes of thisDiagram 1

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111TH INTERNATIONAL SEMINARREPORTS OF THE SEMINAR
report, screening is defined as a process
where available evidence in the cases isevaluated from the viewpoint of whether
there is a reasonable chance of conviction;
if not, the case is dropped (before filingcharges) or withdrawn during trial. The
application of a screening process is further
shown as in diagram1 (below).
The process of screening is applied only
where there is the insufficient evidence toprosecute. Screening can be done before
indictictment or charge, or even during
trial but before the court delivers its
judgment. It has come to light thatscreening is done by the public prosecutor
in all participant countries except
Bangladesh, Pakistan and Sri Lanka.
However in Bangladesh, Colombia,
Mozambique, Nepal, Peru, Sri Lanka andThailand, screening is done by theinquiring magistrate.
It must be noted that even thoughscreening is done in most countries in one
way or another, there still exists a low
conviction rate in most countries such as
Thailand, Mozambique, Pakistan, Nepal,
Peru, Bangladesh, Laos and Sri Lanka.
The inevitable conclusion is that there are
weaknesses in the screening process.
The participant from India expressed an
opinion that dropping too many cases byscreening does not realize justice, even if
the conviction rate becomes higher. In his
view, the charges should be sheeted for the
maximum cases, and conviction should beobtained for the maximum cases. It wasalso stated that the percentage of cases
charged, and the conviction rate, shouldboth be the criteria to ascertain theefficiency of prosecution. However, ingeneral, the participant’s of this seminaracknowledge the importance of screening
as a solution for low conviction rates. In
general they agreed on the need forscreening, for the following reasons,namely:(a) as a tool to overcome the existing
problem of low conviction rates;(b) as a tool to avoid unwarranted
prosecution in the courts;(c) to ensure that society’s trust in thecriminal justice system is notdiminished by acquittals; and(d) to ensure convictions.
B. Practical Approach to Screening
Screening, being acknowledged as asolution, is not sufficient. There is a needfor a practical approach to screening. The
participant from Indonesia informed thisseminar that in Indonesia, the publicprosecutor, upon receiving the dossier orinvestigation paper from the police, has tofill out two types of checklists, namely;(a) formal- dealing with the Criminal
Procedure Code ; and(b) material- dealing with the Penal
Code.
It was informed that upon completingthe said checklist, the public prosecutor
must ensure that there is 90% sufficientevidence before prosecution can beinitiated. It was also to be noted that the
public prosecutor, in screening, should
study the following factors:(a) statement of the relevant witnesses.
(b) age of the witnesses.
(c) the need for corroboration (if any).
(d) the requirement of the evidentiary
rule for admissibility.
(e) existence of the relevant exhibits
recovered by the police.
(f) a l l i n v e s t i g a t i o n s h a v e b e e ncompleted by the investigation officer.
(g) the value to be attached to each pieceof evidence.
(h) the value of the confession orstatement of the suspect (whereapplicable) ; and435

RESOURCE MATERIAL SERIES No. 55(i) whether investigation has been
conducted towards the possible
defence of the suspect.
The above list is not exhaustive.
C. Safeguards of Screening
The participants agree that there must
be a method to avoid abuse of the screening
process. In dealing with the safeguards, itis accepted that the superior officers in the
Public Prosecutors Office can play a role
as a safety valve to ensure non-abuse.
An independent review body of thescreening process, such as the Committee
for the Inquest of Prosecution in Japan, canalso be a safeguard. The Committee, on
receiving a complaint from the victim about
the decision of prosecution, reviews thecase and if necessary, recommends
prosecution to the Public Prosecutors
Office. Further, in Japan, where offences
are committed by public officials, if notprosecuted, the victims have otherrecourse. The victim can complain to thecourt. The court, based upon the complaint,
would ascertain whether there is sufficientevidence for trial. Apart from this recourse,
the victim can also lodge a complaint at theHigh Public Prosecutors Office. Possible
abuse may also be dealt with by usage ofprivate prosecutions as is currently being
used in many countries.
D. Advice to Investigators
It is acknowledged that in the majorityof the participant countries, the mannerand method of investigation rests solely inthe domain of the police. The police officers
are trained and possess sufficientknowledge as regards how to investigate.
However, it cannot be disputed that laws
constantly change, especially certain
special legislation or the law of evidence.
The problem arises that despite
investigation, the task is to adduce theinvestigated evidence without

436

infringement of the law of evidence. The
public prosecutor is in a position to knowwhat is lacking or necessary, based on thesituation of the trial court and what is
admissible as evidence in the court. In such
regard, the necessity arises where thepublic prosecutors might have to advise theinvestigator of the need for further
investigation.
It has been acknowledged byparticipants from India, the Seychelles,
Japan, Republic of Korea, Thailand andHong Kong that advice from publicprosecutors is needed and appreciated by
the police. However, it was cautioned thatsuch advice should not be in a manner
which would be construed as direction or
instruction. The feeling amongst theparticipant countries is that the police andpublic prosecutors should work hand inhand and show a high degree ofcooperation. The aim of both these bodies
is to combat crime. However, the feelings
and office of one another should be
respected.
E. Admissibility of Confessions
Confession is important for the following
purposes:(a) to overcome the low conviction rate;(b) to reduce unnecessary prosecution in
the courts; and(c) to know the possible defence, or thesuspect’s version, which would assistin screening.
In Algeria, Bangladesh, Colombia, Peru,
India, Indonesia, Pakistan and Sri Lankaconfession or statement given by thesuspect or accused is not admissible if it
was made to a police officer. However, in
all other participant countries, a confession
or statement is admissible even if made topolice officer, provided certain conditions
are met. The prosecution must prove thatthe confession or statement was made

111TH INTERNATIONAL SEMINARREPORTS OF THE SEMINAR
without any inducement, threat or promise,
as a condition for admissibility.
In Algeria, Colombia and Peru, a
confession or statement is only admissible
if it is made before a public prosecutor. In
the Republic of Korea, in order to ensure
admissibility of the confession, it must havebeen made to the prosecutor and must havebeen made voluntarily. In the Republic ofKorea, confessions may also be made to thepolice. However, such a confession is only
admissible if the accused admits to thecontents of the said confession.
In India and Bangladesh, a confession
or statement is only admissible if it wasmade before a magistrate. However, in
Malaysia, Thailand and Hong Kong, aconfession or statement is admissible if it
was made before a police officer, provided
it was voluntary. Meanwhile, in Pakistan
and Sri Lanka, a confession made to apolice officer above the rank of Deputy
Superintendent is admissible only in casesof terrorism.
Most participants were concerned withthe use of force by police officers in somecountries, and this is the first and foremost
problem to be solved before the confession
is made admissible. As a safeguerd toensure voluntariness of a confession orstatement, certain measures can be put inplace. For instance, in Hong Kong, video
recording is done while the confession orstatement is being made. In othercountries, members of the public arepresent when the confessions are being
recorded.
However, the particimants in generalagreed that legislation should be amended
so that a confession or statement can bemade to a police officer above the rank ofInspector. However, as a safety measure,
such a confession should only be madeadmissible if it is proved at the trial to havebeen made voluntarily. It is generally
accepted that admissibility of a confession
or statement of the suspect or accused
would be a tool to overcome the problem of
low conviction rates. All participant
countries agreed that it would be good toallow for admissibility of a confession orstatement, so long as it was madevoluntarily.
F. Securing Appearance Before the
Court and Testimony of Witnesses
One of the main causes for the low
conviction rate and overloading of thecourts and prosecutors is the problem of
witnesses. In most countries, the courts
have to postpone trials due to theunavailability of witnesses, thus causing
delays. In other countries, courts acquit
the accused persons since the witnesses are
missing and cannot be found, in order toprove the charge.
In all participant countries, except
Mozambique, there seems to be a problem
in securing witnesses for trial. Amongst
the reasons are:(a) witnesses refuse to attend trial to
avoid enmity.
(b) no protection for witnesses who
testify.
(c) no allowances or transportation costs
paid to witnesses.
(d) f r e q u e n t a d j o u r n m e n t s c a u s ewitnesses to lose interest in trials.
(e) hesitation to testify in front of theaccused.
(f) witnesses don’t understand the ruleof law.
(g) mobility of witnesses and difficulty in
tracing them.
(h) witnesses regard testifying as a wasteof time; and(i) no trust in the police and unfriendly
environment of the court.
Due to the reasons mentioned above,
there is a need to educate society about the437

RESOURCE MATERIAL SERIES No. 55
legal system. Futher, in most countries
except Brazil, Colombia, Hong Kong, Laos,
Nepal, Pakistan, Republic of Korea andViet Nam, there does not exist a witness
protection program. A witness protection
program would enable the State to place
the witness in a safe house and this would
ensure that the witness is present in courtin order to testify. In Colombia, the witness
protection program is very effective and theState plays a major role to ensure that thewitness is equally safe after testifying. In
countries where there is no witness
protection program, such as Algeria,
Bangladesh, Japan, China, Indonesia,
Mozambique, Peru, Sri Lanka andThailand, they support the creation of suchprograms in their jurisdiction. However,the participants from Malaysia and the
Seychelles find that the need does not arise
for the creation of witness protection
programs in their country.
G. Immunity
The provision of immunity would be
useful to ensure an increase in theconviction rate. In crimes involving two or
more persons, the prosecution may provide
immunity against prosecution for theaccomplice. In the United States ofAmerica, immunity is being accorded to coaccuseds where there is no independent
witness, in order to obtain conviction. In
the United States, immunity is being given
formally and informally. Formal immunity
must obtain the sanction of the Attorney
General. However, this is a long and time
consuming process. On the other hand, theprosecutors in the United States also apply
informal immunity whereby the sanctionof the Attorney General is not required.
Once the prospective witness is prepared
and willing to reveal the truth as a witness,a formal document is executed.
In Sri Lanka, a similar system is used
and known as a conditional pardon. Thisis only done with the sanction of the438

Attorney General. However, a person isconditionally pardoned on the condition
that s/he testifies against the co-accused.
It is to be noted that this is only used invery rare cases involving heinous crimes.
In Pakistan, the principle of immunity isequally applied, but it is known as an
approver system. Meanwhile in Hong
Kong, immunity is given to the co-accused
depending on whether the co-accused’s
prospective evidence is worthy of credit.
However, it is only done if there is sufficientcorroborative evidence. On the other hand,in Malaysia and Hong Kong, the principlesof this system are used but the publicprosecutors would prefer the co-accused toplead guilty and later be used as a witness.
In Thailand, there is no specific law asregards immunity, but in practice theprosecution applies the immunity
principle. However, it is hoped that usageof an immunity system and witness
protection program would ensure that the
problem of low conviction rates could be
solved.
IV. OVERLOADING OF COURTS
AND PROSECUTORSIt has been noticed that in somejurisdictions there is a principle ofmandatory or compulsory prosecution.
This is a situation where as long as there
is sufficient evidence, the publicprosecutors should or are compelled to
institute criminal proceeding without any
discretion. On the other hand, there aresome countries such as Thailand,
Indonesia, Malaysia and Peru, which allow
the public prosecutor discretionary powersof non-prosecution of certain categories ofcases. However, this discretionary power
is not exercised as a rule but rather as an
exception.
Apart from these two categories, there
are some countries which allow for
discretionary prosecution such as in Japan

111TH INTERNATIONAL SEMINARREPORTS OF THE SEMINAR
and the Republic of Korea. Even though
this discretionary power is exercised, it isdone with stringent conditions and counterchecks, so as not to be abused.
Against the background of theabovementioned prosecutorial system,
there exist a severe problem of overloadingof the courts and the prosecutors with
m i n o r, p e t t y a n d u n w a r r a n t e dprosecutions. Where prosecutions are
instituted without exercising discretionary
powers, inevitably the result would beoverloading of the courts. When the courts
are overloaded with criminal cases, theconsequential effect would be delayed
trials. This would lead to unhappy victims
who would further suffer the agony ofwaiting for justice to be meted out. It is ofutmost importance that the publicprosecutor should, at all times, ensure thatthe interest of society or the public, forwhom s/he acts, is their main priority.
V. OVERLOADING:
COUNTERMEASURES
A. Alternative Measures
In the changing society it isacknowledged that the criminal justicesystem needs some overhaul. Most of thecases in our courts, at the present time,
which end up with fines could be disposedof in a much speedier manner. As such,
this could reduce the biggest problem ofoverloading of the courts and prosecutors.
In this regard, we propose two solutions
namely;(a) Summary procedure; and(b) Administrative measures.
1. Summary Procedure
At present, this mode is being practiced
in the Republic of Korea and Japan. Whenthe public prosecutor examines the dossier
or investigation paper, s/he would be able
to form an opinion as to whether such an

offence is suitable to be dealt with by fineor formal trial. When the prosecutor forms
the opinion that the criminal case could be
disposed of with a fine, then the proceeding
is conducted as a summary procedure. In
cases where summary procedure isfollowed, the documents involving the caseare sent to the judge. The judge examines
the documents and issues an order to theaccused or the defendant as to the amountof fine imposed. If the accused or defendant
is not satisfied with the fine imposed, theaccused may request a formal trial; only
then is a formal trial held. In the Republicof Korea, a total of more than 1 million
cases are registered, out of which 85% aredisposed of by the courts through summary
procedure. This percentage reflects thatabout 900,000 cases are dealt withsummarily. As such, the adoption ofsummary procedures can and does, to agreat extent, reduce the overloading of thecourts and prosecutors.
2. Administrative Measures
In Japan for instance, about 2.1 million
cases involve offences of traffic violations.
These offences are: driving beyond the
speed limit, marginal overloading of trucks
and cars, and other minor traffic violations.
Such cases are disposed of with offenders
being allowed to pay an administrative
fine. If such an administrative fine is paid,
then the matter ends. However, where theadministrative fine is not paid within the
stipulated time, or without reasonablecause, the matter is then taken up as acriminal case to the court. Such a system
is also being used in Malaysia, India,
Indonesia and Sri Lanka.
B. Plea Bargaining
Plea bargaining is an effective method
to obtain conviction rather than acquittal.
In this system, counsel for the accused
would correspond with the publicprosecutor for the charge to be reduced on
certain cogent grounds, such as the439

RESOURCE MATERIAL SERIES No. 55
problem of adducing evidence and theexistence of strong mitigating factors.
Upon examination of the written request,
and studying the investigation paper, thepublic prosecutor might agree to reduce thecharge or alternatively withdraw somecharges and merely proceed on one charge,
on the condition that the accused pleads
guilty. This process contributes in reducing
the problem of overloading and to ensurethat justice is done. This process is being
applied, for example, in Malaysia, theUnited States, the Seychelles and Sri
Lanka. However in Malaysia and theUnited States, plea bargaining is done
between the prosecution and the defence,
without any role of the judge, so as not toprejudice the mind of the court insentencing. On the other hand in Sri
Lanka, plea bargaining is conducted
between the prosecution and the defence,
however they must obtain the approval of
the judge. It must be admitted that only asmall number of cases are disposed ofthrough plea bargaining. However, there
is room for prosecutors and defence
counsel’s to utilise plea bargaining for theinterest of justice to all. In dealing withthis issue, participants did not raise
objection to the usage of plea bargaining.
C. Discretionary Suspension
Discretionary suspension is being
practiced in Japan and the Republic ofKorea. Discretionary suspension is appliedin cases where there is sufficient evidence,
however the prosecutor might prefer not
to charge a suspect (please refer to diagram1). In the application of this system,
despite sufficient evidence for conviction,a charge is not preferred or instituted
against the suspect when considering thefollowing instances:(a) minor offence/less serious crime;(b) first offender;(c) age- whether young or old;(d) little criminal tendency of thesuspect;

440(e) restitution has been made to thevictim;(f) the suspect has repented; and(g) contributive factor of victim, eg.
provocation.
This system has proven to be useful tocorrect criminals, to protect society, toreduce overloading of the courts and also
to prevent overloading of the prisons.
However, if the same suspect commits
another crime then, as in Japan, s/he would
face prosecution for the offence which s/he
was not prosecuted for before. The same
system is also being practiced in Hong
Kong in relation only to juvenile offenders,
as compared to Japan and the Republic ofKorea, where it is being applied for adultoffenders. In the Republic of Korea, about
10% of the total number of cases end up
with suspended prosecution, whichamounts to about 199,000 cases.
Meanwhile in Japan, about 30% of cases
are classified as suspended prosecution. In
Hong Kong, about 35% of the total numberof juvenile offenders are not prosecuted
under this system, and rehabilitation ofjuvenile offenders is done through theSuperintendent Discretion Scheme. As asafeguard against possible abuse, thevictims can lodge an appeal with the High
Public Prosecutors Office or the High Courtor the Constitutional Court against thedecision of the public prosecutor, as in the
Republic of Korea. In Japan, theCommittee for the Inquest of Prosecution
in Japan acts as a safeguard. The
Committee, on receiving a complaint fromthe victim about the decision of nonprosecution, reviews the case and, if
necessary, recommends prosecution to the
Public Prosecutors Office.
D. Discretionary Withdrawal
Discretionary withdrawal is an instance
where there exists sufficient evidence forprosecution and the accused is indicted or
charged for an offence. However, between

111TH INTERNATIONAL SEMINARREPORTS OF THE SEMINAR
the indictment period and the judgment orsentence, the charge is withdrawn by theprosecution in the exercise of its
discretionary power. The application of
discretionary withdrawal is shown indiagram 1.
However, participants from Brazil, Sri
Lanka and Hong Kong raised muchreservation about the usage of
discretionary suspension and withdrawal,
on the grounds that it would lead to
impunity and corruption. The participantfrom Hong Kong feels that all adultoffenders must be punished and that theprosecution must uphold justice.
Meanwhile, the participant from Sri Lanka
stated that the public would lose confidence
in the criminal justice system if this
proposal is applied.
On the other hand, the participant fromIndonesia suggested this proposal is very
useful to avoid overloading of the courts.
However, he suggested that there must
exist some form of countermeasure in order
to avoid abuse, this was eventually
supported by the participants from Hong
Kong and Malaysia. However, it is agreed
that there might exist some form of
probable abuse, but countermeasureswould help the application of this system.
Victims of crime may lodge an appeal with
the Attorney General or the Public
Complaints Bureau, as in Malaysia.
The main aim of this system is to prevent
overloading of the courts and to correct firsttime offenders. This system has been
proven to be successful in the Republic ofKorea and Japan. Currently, all countries
except Algeria, Bangladesh, Brazil, China,
Indonesia and Mozambique apply
discretionary withdrawal. Meanwhile, as
regards discretionary suspension, it is only
being used in Japan, the Republic of Korea,
the Seychelles, Viet Nam and Hong Kong
(only for juvenile cases).

VI. LACK OF EFFECTIVE
COUNTERMEASURES AGAINSTNEWLY EMERGING OR
PREVAILING CRIMES IN THE
CHANGING SOCIETY
In most countries, the current laws wereenacted between the 1880’s and 1970’s. The
society then and now has changed. Thus
the types of crime has changed, together
with the changing society. As we approachthe 21st century, newly emerging crimes
are seen to be prevalent. In some countries,
with the opening of multi-media supercorridors related to high technology, there
emerge new crimes relating to computers.
Sadly, the criminal justice system cannot
keep pace with the newly emerging andprevailing crimes. The members involved
with the criminal justice system are notequipped either technologically or withknowledge as to how to combat theseemerging crimes. Society now sees itself
facing crimes such as organized crime,
economic crime and computer crime.
A. Organized Crime
As the name speaks for itself, this typeof crime is organized in nature. Various
types of crimes are committed by membersof an organized group. These crimes range
from theft, robbery, kidnapping to murder.
The members of these organizations use
violence and collect protection money frombusinesses. In Japan, these organizedgroups are known as ‘boryokudan’. In othercountries, there are various triad groups
carrying out criminal activities with theirown trademarks.
In Japan for instance, the Japanese
government, realizing this growing
problem, enacted the Anti-boryokudan Law
in 1991, aimed at combatting crimes
committed by these organized criminalgroups. The main objective of this law is
to maintain peace and order within society.
The mere fact of such a specific law being

441

RESOURCE MATERIAL SERIES No. 55
enacted clearly shows the seriousness of
this crime. In Colombia, these organizedgroups of criminals involve themselveswith crimes relating to drugs, kidnappingand murder. Realizing the seriousness ofthese crimes, the Attorney General ofColombia has set up a group of special
officers to investigate offences such as
drugs, kidnapping and murder involvingorganized groups. There have been
instances where public prosecutors have
had to flee Colombia due to threats by theseorganized groups.
The characteristics of these organizedgroups impede proper and thoroughinvestigation. It would be difficult forinvestigators to obtain detailed information
about these groups. The members oforganized crime are always bound bys e c r e c y. T h i s i s u s u a l l y d o n e b yboryokudan members by cutting off theirfingers to show alligence to the said group.
More often than not, the activities of theorganized groups are only within their own
knowledge. Therefore, it is important tocombat this type of crime in new way.
B. Economic Crime
Economic crime has exisred for a longtime in many jurisdictions. However, themanner and seriousness of this crime in
the past years have been different
compared to the 1980’s. Thus since the1980’s, the authorities noticed newcomplexity in investigation this type ofcrime. Economic crimes range fromdeception to fraud, forgery, using false
document as genuine, and criminal
misappropriation of property. As regards
Hong Kong, in 1990 there was a total ofreported cases of deception, business fraud
and forgery amounting to 2,017 cases; 637
cases of fraud and 448 cases of counterfeit/
forgery. The total amount involved (in1990) was HK$348 million. However in
1997, the total reported cases of deception,business fraud and forgery was 3,240 cases.

442

Meanwhile, 313 cases of fraud and a totalof 668 cases of counterfeit and forgery werereported to the Commercial Crime Bureau.
The total amount involved was HK$1,165
million. This clearly shows the growing
trend of these cases. However, thecomplicated nature of these offences andthe voluminous documents involved,
causes great problems not only toinvestigators, but also to public prosecutors
and judges. Apart from this, economic
crimes are committed internationally andinvolve different jurisdictions. Thus, legal
issues arise, namely, jurisdiction, which
law is to be applied etc. Therefore asolution needs to be found for these issues.
C. Computer Crime
Crime involving the usage of computers
has been a recent problem not only forinvestigators, but also prosecutors. The
invention of the computer in the early days
was merely as a word processor. However
in recent years, every home in mostcountries has not only a computer, but also
the Internet. Most countries are expanding
the usage of computers into Internet andE-commerce. Society can use the computerfor business transactions between one partof world and another. Electronic money
and goods can be transferred from one
jurisdiction to another within seconds,
leaving no trace to track. Further, there
are no documents being used in thesetransactions. In recent years, somecountries such as Hong Kong have beenplanning for the implementation ofbanking, purchase of goods and related
activities through the computer.
H o w e v e r, p r o b l e m s w i l l a r i s e i fcomputers are not used for the correct
purpose. In the changing society there isbound to exist some who will misusecomputers, such as by hacking, Internet
gambling and publishing obscene articles.
In Hong Kong, there were only 4 reported
cases relating to computer crimes in 1993.

111TH INTERNATIONAL SEMINARREPORTS OF THE SEMINAR
However in 1998, this figure rose to 32
cases. Meanwhile, the total value of loss
in 1993 was HK$600,000 and in 1998 it hadrisen to HK$2 million. Even though thenumber of cases in 1998 is not big in termsof figures, it clearly shows a large increase
from the 4 cases in 1993 to the 32 cases in
1998. As such, time is ripe for countries toaddress this issue and find practicalsolutions to overcome and curb this crime.
D. Special Legislation
As regards organized crime, there is aneed for the enactment of special
legislation. This special legislation should
enact provisions for the criminalization oforganized crime groups and theirmembership.
In Japan, the Anti Boryokudan Act has
been legislated to combat and suppress
criminal organizations known as‘Boryokudans’. This Act designates certain
groups as mobster groups or boryokudan.
A special procedure has been devised forhearings to be conducted by the police inorder to inform the group that such a grouphas been designated as an organized group.
The police, by using this Act, can regulatethese organizations by giving them a time
period of three months and a further
extension of one month. This Act forbids
the groups from expanding and theimposition of tattooing among juveniles.
The police are permitted to issue asuspension order. This suspension orderwould, in effect, order the groups to stop
its activities. If such order is ignored, thenthe police may issue a re-occurance order,
failing which the criminal justice system
would be activated and the group or
members would be detected. In Tokyo,
between January and November 1998, thepolice issued 268 suspension orders, 7 reoccurance orders and 1 case of detection.
In other jurisdictions, such as Malaysia,
legislation has been used to prevent

organized criminal groups frommushrooming. The Emergency (Public
Order and Prevention of Crime) Ordinance1969 was enacted for suppression ofviolence or prevention of crimes involving
violence. This law provides for themembers of organized crime to be detained
for a period not exceeding two years.
However, such detained persons may makerepresentations for a review of detention
by the Advisory Board. The members of
the Advisory Board are appointed by His
Majesty, the King. As far as Malaysia isconcerned, the enactment of this legislation
has proven to be successful in curbing not
only the spread of organized crime, but also
the activities of its members.
In some jurisdictions such, as Colombia,
laws have been legislated providing severe
punishments for criminal activities
conducted by organized criminal groups
and their members. The Penal Code has
been amended for increased imprisonment
from 25 to 40 years for the offence ofkidnapping. Meanwhile, the same applies
in cases of homicide involving organizedgroups and their members. It is hoped thatlegislation, such as in Japan, Malaysia andColombia, would be effective in curbing theactivities of organized criminal groups andthe members thereof.
E. Anti-Money Laundering
Legislation
Anti-money laundering legislation isfound to be an effective tool in fighting
against organized and economic crime.
This type of legislation has been enacted
in Hong Kong. However in Japan,
Malaysia, the Seychelles, Pakistan and
Thailand, such legislation has been enacted
to seize ill-gotten proceeds of criminal
activities connected to drugs. Suchlegislation proposes to seize all ill-gotten
proceeds and property acquired by persons
involved with certain crime, as envisagedby the specific legislation. In Hong Kong,

443

RESOURCE MATERIAL SERIES No. 55
the Organized Serious Crime Ordinanceprovides the mechanism for investigating
and seizing all ill-gotten proceeds ofcriminal activities. This Ordinance plays
the role of anti-money laundering
legislation. The said law in Hong Kongprescribes a transaction reporting system,
where the banks are duty bound to reporttransactions. Such a system would alert
the authorities and thereby cause an
immediate response.
However, this legislation would not beof much assistance without mutual
assistance from other countries. In
practice, a criminal organization would
operate its criminal activities in one
country and transfer the proceeds thereof
to another country, or even in some cases,
acquire property in a third country. In suchcases it involves the question ofjurisdictional and national sovereignty of
the individual country. Therefore,
countries should enact legislation formutual legal assistance such as in Hong
Kong and Thailand. In Hong Kong, such
legislation has been enacted in 1998 toenable authorities in Hong Kong to makeand respond to requests to and from otherjurisdictions in relation to criminal
matters. However, such provisions havebeen enacted in Malaysian law only as
regards drug-related offences. The mutual
legal assistance ranges from the taking ofevidence, search and seizure, confiscationof the proceeds of crime and transfer ofsuspects.
The time is ripe for all countries tonegotiate and enact provisions such as antimoney laundering legislation and for theprovision of mutual legal assistance,
bearing in mind the primary goal of theprevention of crime.
F. Confiscation of Illicit Proceeds
Provision for confiscation of illicit
proceeds would be applicable for offences444

related to organized and economic crime.
Many jurisdictions such as Japan,
Malaysia, Pakistan, the Seychelles andThailand have already enacted provisions
within their laws in relation to theconfiscation of illicit proceeds connectedwith drug-related crime. However, suchprovisions should be extended to a
multitude of crimes committed byorganized groups.
Laws should make it possible for all illgotten proceeds of crime to be confiscatedor forfeited. This is to ensure that criminals
should not be able to enjoy the fruits of theircrime after being punished by way of
imprisonment. However, the only problem
faced by countries is the difficulty inproving the hidden assets. Anotherhindrance is the banking secrecy laws inmany countries. Participants from
Malaysia, Thailand and the Seychelles
argued that banking secrecy should not be
invoked during forfeiture proceedings by
the authorities. These jurisdictions havelegislated for the non-applicability ofbanking secrecy laws for forfeitureproceedings involving ill-gotten proceedsfrom criminal activities.
G. Presumption Against the
Accused: Shift of the Burden of
Proof
Offences in relation to organized crime,
such as the trafficking of drugs andeconomic crime such as deception andcorruption, are difficult to prove. In many
jurisdictions, the relevant laws require theprosecution to prove the mental element
or mens rea. This causes many problems
for the prosecution in proving the mental
element. In the commission of crimes suchas the trafficking of dangerous drugs,
deception and corruption, only theoffenders would be able to reveal themental element. As such, the need arosein certain jurisdictions like Malaysia, Viet
Nam and Bangladesh for enacting the111TH INTERNATIONAL SEMINARREPORTS OF THE SEMINAR
provision of presumption. For instance, foroffences such as trafficking in dangerous
drugs, in Malaysia the prosecution would
have to prove:(i) it was a dangerous drug; and(ii) the accused was in custody thereof,
as well as the weight of the drug.
Automatically, the law presumes thatthe accused was trafficking the said drug.
It would be incumbent upon the accusedto rebut the said presumption on thebalance of probabilities. Similarly,
provisions for shifting of the burden of proof
can be applied to offences relating toorganized crime and economic crime. Thus,
this would assist the prosecution in
obtaining convictions. Provisions likeshifting of the burden of proof can also be
useful for proceedings involving forfeiture.
Such provisions are being applied in the
Malaysian Dangerous Drugs (Forfeiture of
Property) Act 1988. Participants generally
agreed that such provisions be incorporated
in existing legislation, as this would enable
them to combat this problem.
H. Admissibility of Evidence
Gathered by Electronic
Surveillance
It is to be noted that in many countries,
surveillance is being used by theinvestigative agencies. However, in somecountries it is not being utilized due toconstitutional constraints. There are somecountries where electronic surveillance isbeing done in a discreet manner. In suchjurisdictions, any evidence obtained
through electronic surveillance is notproduced in court as evidence in the eventthat the suspect is indicated or charged.
Meanwhile in some countries, electronic
surveillance is provided for in certain
specific legislation.
Electronic surveillance can take the formof telephone tapping, bugging and also

other visual aids. The need for electronic
surveillance arises because of thecomplexity and secrecy in the commissionof such crimes. In countries such as
Malaysia, Brazil, the Seychelles andMozambique, electronic surveillance isallowed. However, in the Seychelles andBrazil evidence of electronic surveillanceis only allowed with the permission of thejudge. Meanwhile in Malaysia, electronic
surveillance is only allowed with theapproval of the public prosecutor.
Nevertheless, the underlying reason forsuch usage is to fight against crime. In
this regard, countries should balance theright of the particular individual as against
the right of the society. Even though laws
might allow for electronic surveillance, weshould also address our mind as to whether
such evidence can be admitted by virtue ofthe relevant evidence laws. For instance,
when telephone tapping is done, more often
than not such conversations would betapped. The practical problems for theprosecutor is to ensure that such evidence
would be ruled admissible in a trial. As
such, question arises as to whether such atape could be construed as a document. In
this aspect, the definition as provided forin the respective evidence laws must be
looked into. Therefore, where the needarises, all penal and evidentiary laws mustbe amended accordingly to keep abreast
with the complexity of crime.
I. Admissibility of Evidence
Gatherd by UndercoverOperations
In dealing with crime committed byorganized groups in particular, it is very
difficult to obtain inside information orevidence of such movements. As such, theauthorities would need to conduct
undercover operations or use agent
provocateurs. When such operations inapprehending the criminals are successful,the next problem would be for successfulprosecution. In the majority of cases, the445

RESOURCE MATERIAL SERIES No. 55
prosecution is faced with the task ofproving its case beyond reasonable doubt.
In dealing with this issue, the courts either:(i) refuse to admit evidence of agent
provocateurs on the grounds that it
was illegally obtained evidence; or(ii) require corroboration or independent
evidence to support the evidence of
the agent provocateur.
In dealing with the first problem of
inadmissibility, the legal position in the
United States and the commonwealthjurisdictions were the same until thedecision of the Privy Council in R v
Kuruma. This landmark decision allowed
for illegally obtained evidence to be
admitted. In recent years, the courts in
the United States are moving closer to the
Privy Council decision. As regards thesecond problem, the need for corroboration,some jurisdictions such as Malaysia andSingapore have enacted specific provisions
in some legislation, such as corruption
laws, doing away with the need forcorroborative evidence.
If countries fail to enact specific laws as
regards the admissibility of evidence, there
would arise a situation of unfairness in thecriminal justice system. This is mainly
because the authorities might apprehend
criminals who would either not be
prosecuted or, if prosecuted, they would beacquitted by the courts. As such, laws must
be enacted that keep abreast with thenature of the crime being committed.
VII. LOW QUALITY OF
PROSECUTORS
In many jurisdictions, prosecutors areeither the police or public prosecutors. In
such situations where the prosecutors arefrom the police, they are known as police
prosecutors. Police prosecutors in general
do not possess legal qualifications. In some446

cases, even if they possess legal
qualification, this is not reflected in theirwork. This can also be the same with somepublic prosecutors. In some jurisdictions,public prosecutors are appointed amongst
fresh law graduates. The problem of low
quality of prosecutor leads to the main
problem of low rates of conviction. This
problem leads to other consequential
problems such as:(i) i n s u f f i c i e n t s c r e e n i n g b e f o r ecommencement of prosecution;(ii) not knowing how to draft a propercharge or indictment;(iii)insufficient preparation for a criminal
prosecution ; and(iv)ultimately not being independent but
being controlled by the police.
It is to be noted that the issue of the low
quality of prosecutors is serious. If thisproblem is left unchecked, it would
inevitably cause other issues namely :(i) s o c i e t y w o u l d l o s e f a i t h i nprosecutors;(ii) the dignity of prosecutors would bequestioned;(iii)time, money and hard work of theinvestigators would be wasted;(iv)would result in a lot of acquittals;(v) actual criminals would be out insociety; and(vi) failure to obtain justice for thevictim.
Realizing the seriousness of thisproblem, we propose the following.
A. Recruitment
Countries should formulate atransparent system of recruitment. This
is to ensure that fit and proper individuals
are appointed as prosecutors. Apart fromthe system of recruitment, persons of highcalibre should be appointed as prosecutors.
Further, countries should stop the practice111TH INTERNATIONAL SEMINARREPORTS OF THE SEMINAR
of recruiting fresh law graduates asprosecutors but require further specifictraining, as being practiced in Peru.

legislators and policy makers.

B. Training
Relevant authorities should establish
legal and/or judicial training institutes
such as in Japan, the Republic of Korea,
Malaysia, Indonesia and Peru for providing
courses during the employment of suchprosecutors. This would enable theprosecutors to keep abreast of the changes
in law, as well as to learn and understandnewly emerging crimes.
C. Increase in Salary and Benefits
The most important solution is toincrease salaries and to provide otherbenefits to prosecutors. This would surely
motivate qualified people to join theprosecution service. This is important inorder to recruit the best people to join theservice. It must be realized that mostlegally qualified persons would rather
venture into private legal practice, whichbrings higher remuneration. Prosecutors
should also be provided with benefits suchas interest free loans for housing, medical
services and so on. This would ensure
quality prosecutors for the wellbeing ofsociety.
VIII. CONCLUSION
The main problem at hand, being the low
rate of conviction and overloading of thecourts and prosecutors, must be addressed
immediately. Undivided commitment must
be shown by governments and prosecutors
to ensure that justice is done, and is seen
to be done. Prosecutors should keep
themselves abreast of the constant changes
in law. They must also be sensitive to theneeds of society. Prosecutors should regard
themselves as the custodians of thecriminal justice system. Prosecutors
should initiate changes in outdated laws
and not merely leave it in the hands of447

RESOURCE MATERIAL SERIES No. 55

TOPIC 3
EFFECTIVE COUNTERMEASURES FOR SPEEDY TRIAL
Chairperson
Co-Chairperson
Rapporteur
Co-Rapporteur
Members
Advisers

Mr. Thabrew Mahadura
Thilak Ravindra
Mr. Yoshihisa Denda
Ms. Rebeka Sultana
Mr. Chalermsak Pattarasumantg
Mr. Hideharu Arimitsu
Ms. Takako Naomoto
Prof. Hiroshi Iitsuka
Prof. Shoji Imafuku

I. INTRODUCTION
Speedy administration of justice is thetheme of many seminars held these days
in most of the countries. In some countries,
trial delays have reached alarming
proportions and this phenomenon has far
reaching consequences. The consequencesof a delayed trial are numerous. If the trial
is delayed, there is a danger that the real
culprit may escape justice due to scatteredevidence, and that the innocent must suffer
unnecessary pains. If the defendant isunder detention, the damage is more
irrecoverable. Furthermore, delayed trial
will deprive the deterrent effects ofcriminal judgment on the offender. The
sense of retribution loses its significancewhen the judgment is delivered after a long
passage of time. Additionally, trial delay
will increase the number of remandprisoners and cause overcrowding.
Therefore it is in the public interest to
encourage speedy trial.
Speedy trial is considered a fair process
conducted within a reasonable period oftime. It is difficult to determine a precise
time frame for a speedy trial, since it
depends on the nature of the case, the legal
framework and infrastructure related
factors. However, speedy trial means not
only the commencement of trial within a

448(Sri Lanka)(Japan)(Bangladesh)(Thailand)(Japan)(Japan)(UNAFEI)(UNAFEI)

statutory prescribed time frame from thetime the suspect is arrested, it also
encompasses the completion of the trial
within a reasonable time frame.
The reasons and causes of delay are
manifold. Various parties are responsible
for the delay: the court, prosecution,
defence counsel or the criminal justicesystem itself. These factors areinterrelated. To achieve speedy trial, thepolice, prosecutor, defence counsel andcourt must do their duty properly. The
police play a pivotal role in ensuring speedy
justice by completing investigations
expeditiously. Similarly, the prosecution
would have to do the screening of cases andfile charges or indictment in court without
delay. At the trial stage, the prosecutor andthe defence counsel should refrain frommoving for frequent adjournments. Finally,
there is a duty cast upon the judge toensure that the trial is concluded without
delay and deliver judgement as early as
possible.
In this paper we have identified somecommon problems faced by theparticipating countries, with regard to trial
delay. We have also proposed somerecommendations to these problems.

111TH INTERNATIONAL SEMINARREPORTS OF THE SEMINAR
II. HEAVY CASELOAD ON JUDGES/MAGISTRATES
A. Problem
With the increasing mobility of the
population and with the advancement ofcommunication and financial links, themodern world is facing significant change
in criminality. An increasing number of
economic crimes like bribery, corruption
and computer crimes have led to aconsiderable number of new cases in the
courts at all levels, in addition to thealready overcrowded cases of the courts.
Too many cases are fixed for a given trial
date and it is impossible for the trial judge
to hear them all, so only a few cases areheard on one trial date. Others result in
postponement and are re-scheduled forhearing on other dates.
An insufficient number of judges tohandle so many cases, and also the dualrole of the judges in dealing both in civil
and criminal cases, leads the court to divide
the days for both criminal and civil cases.
Besides this, some judges have to doadministrative work too. In addition, due
to heavy caseloads, judges have little time
to write and deliver judgments. It is foundthat in some countries, because of ashortage of time or the dual role of judges
hearing trials of both civil and criminalcases, delay in writing and delivering
judgments has become a serious problem
in practice.
B. Overview of the Current
Situation in Some Countries
1. Bangladesh
Statistics of trial cases show that 49,472
cases were pending in 1996 and 60,791 in
1997. An insufficient number of judges/
magistrates is one of the main causes oftrial delay. All reported cases go for trial,
and there is no screening methods at theinvestigation level.

2. India
Statistics reveal that in 1996, 6,296,562
cognizable crimes were reported in the
country, which is an increase of 43.3% over
the year 1986, with a compound growthrate of 2.55% per annum. Among thereported cases, 76.9% were sent for trial.
Another report indicates that thepercentage of trials completed in a year isgoing down steadily. While about 30% of
trials were completed in 1971, thepercentage came down to 23.9% in 1981
and to 16.8% in 1991. This percentage has
further come down to 15.5% in 1994. The
number of pending trial cases under the
Indian Penal Code was 5,280,000 in 1995,
which increased to 5,620,000 in 1996. Outof these, 21.6% cases have been pending
for more than 8 years. The number of cases
pending trial for more than 8 years
increased from 1,070,000 in 1995 to
1,211,000 in 1996, showing an increase of
13.3%.
3. Japan
Statistics of 1997 show that 74.3% of
district court cases were disposed of within
three months, and 93.5% within six months
after institution of the prosecution. Insummary courts, 88.1% were adjudicatedwithin three months and 97.5% within six
months.
4. Malaysia
With regard to the total number ofcriminal cases at each court until themonth of October 1998, statistics show that4169 cases were registered, 2247 cases
were closed. 1922 cases were pending inhigh courts, 7061 cases were registered,
4174 cases were closed. 2887 cases wereactive in sessions courts, 1,197,778 cases
were registered, 636,563 cases were closed.
561,215 cases were active in magistrate’s
courts.
In most cases, high courts andsubordinate courts deal both in civil and

449

RESOURCE MATERIAL SERIES No. 55
criminal cases. Thus, the courts have to
divide the days to handle both civil andcriminal cases. In some cases, subordinate
courts allocate only two days in a week to
conduct criminal matters, and within those
two days the court has to dispose of cases
where the accused pleads guilty, call the
probation officers and conduct criminal
trials. Despite these constraints,
subordinate courts still fix about two cases
for hearing on a given criminal list day.
5. Pakistan
The court proceedings often go at asnail’s pace. As to the percentage ofdisposal of cases in courts, statistics showthat in 1996, 35.7% cases were disposed ofwithin three months and 80.9% cases were
disposed of within nine months.
C. Countermeasures
1. Increase of Judges and Courts
In order to reduce the heavy caseload on
judges, the number of judges and courts
should be increased. In addition, a
specialized court may be established inorder to effectively handle particular typesof cases like tax evasion and banking
offences, which require judges to haveexpertise. However this solution is easier
said than done. Budgetary constraints may
prevent a nation from establishing new
courts or increasing the number of judges.
Additionally, there was opinion expressedin the general discussion sessions that thisis a only short-term solution, and it will
not function well in the future. Someparticipants suggested that civil andcriminal cases should be handled byseparate courts to avoid the dual role ofjudges.
2. Reduction of Cases - Diversion
The judges’ caseload will decrease if thenumber of cases is reduced. Diversion,
such as traffic infractions and suspensionof prosecution before the trial stage, aresome of the effective measures to be taken

450

in order to reduce caseload. In addition,
proper consideration should be given toutilize conciliation or mediation in criminal
proceedings. In fact, various forms ofconciliation or mediation are applied indifferent countries, either before the cases
are filed in the court or even when they
are pending in court. For example, inSingapore, Bangladesh and Sri Lanka,
relatively minor offences are listed ascompoundable in the Criminal Procedure
Code. Such offences may be compoundedby the victim with the consent of the court,
only after the defendant has been indicted.
Compounding has the effect of an acquittal,
and the defendant is discharged from thecourt proceedings.
3. Introduction of Arraignment
Some countries like Britain and theUnited States have an arraignment
system. Under this system, if the accused
pleads guilty in the opening proceedings,
fact-finding can be omitted and thesentence can be rendered immediately. We
all agreed that this would save a lot of thecourt’s time. However, at the same time,
as expressed by some Japaneseparticipants, the court wishes to besatisfied that the accused has reallycommitted the offence charged.
III. LACK OF KNOWLEDGE AND
EXPERIENCE OF JUDGES
A. Problem
Incompetence and ignorance of law, andlack of experience of some judges/
magistrates were considered as factors in
the delay of trial. Judges exercise theirdiscretion, in respect of law, in various
ways. The scope and methods of examining
witnesses, prolonged and irrelevant crossexamination, determination of theadmissibility and probative value of theevidence, the extent of admissibility ofhearsay evidence, the degree of proof
required for applicability of conflicting

111TH INTERNATIONAL SEMINARREPORTS OF THE SEMINAR
rules, requires a high degree ofprofessionalism. Failure to keep abreastof the law and jurisprudence, and lack ofexpertise and training of the judges/
magistrates may cause delays in trial.
B. Countermeasures
1. High Qualifications and Standards for
Appointment
Various matters should be taken into
consideration at the appointment level toimprove the quality of judges. We all
agreed that mere graduation from a law
university is not enough for theappointment of judges. The candidate
judge should pass a qualifying
examination, and the qualifying standards
should be set fairly high. For instance, inJapan, a person being qualified in thenational bar examination has to receive twoyears intensive training in the Legal
Training and Research Institute of theSupreme Court, and has to undergo 16
months of practical training in the courts,
prosecutors office and private law offices.
After completion of all those requirements,
the legal apprentice has to qualify by final
examination for appointment as an
assistant judge. The Republic of Korea also
has a similar appointment system.
2. Training
Basic training is essential to induct all
persons appointed as judges into theprofession, including those selected fromthe Bar. Additionally, to keep judges
abreast of the trends in jurisprudence, theyshould undergo periodical training
programmes. In this connection, theJapanese training system may be one of
the models. The assistant judge system inJapan is aimed at providing professional
experience through on-the-job training foran assistant judge, before qualifying as afully-fledged judge. For the first five years,
the judicial authority of an assistant judge
is restricted. He or she can be an associate
judge of a three-judge court, but as a single

judge, s/he can decide only limited matterssuch as detention at the investigation
stage. After five years experience, anassistant judge is qualified as a seniorassistant judge to preside over a trial in asingle-judge court. Joint seminars of police,prosecutors and judges should also be held
periodically for better cooperation andmutual understanding
IV. LACK OF RESOURCES IN
THE COURT
A. Problem
Because of the tremendous increase ofcrime and backlog of cases, there has beenan enormous rise in the number of criminalcases, but court personnel have not been
expanded to meet this demand. Lack ofprofessional and technical skills, and low
salary for court personnel, are also serious
problems. For example, the shortage ofcourt interpreters is one problem which thecourt is facing in many countries. Also, thelack of equipment may lead to trial delay.
For instance, the method of recording
evidence in some counties is slow andtedious, because they do not use taperecorders to record the testimony of
witnesses. This may delay the completionof recording of witnesses examination orproceedings. Besides this, limited financial
resources are also a grave problem.
B. Overview of the Current
Situation in Some Countries
1. Algeria
Cases are registered manually and thiscreates a serious problem in casemanagement. Court personnel sometimes
intentionally do not register the cases
properly and parties face problems infinding the case schedule.
2. Malaysia
Courts are experiencing an acuteshortage of Chinese interpreters. The
Chinese prefer to speak in their mother451

RESOURCE MATERIAL SERIES No. 55
tongue during trials. Low salary is themain reason why Malaysian Chinese are
not interested in the job as interpreters,
since they can obtain better pay in theprivate sector.
C. Countermeasures
1. Adequate Support Services
Adequate support services to judges bycourt clerks, court stenographers, court
interpreters and research officials should
be provided. Judges should closely
supervise them to ensure that they performtheir functions in an appropriate manner.
2. Modern Office Equipment
As well as human resources, modern
office equipment such as tape recorders,
computers, faxes and copy machines shouldbe also provided in the court. For example,
the use of tape recorders to record court
proceedings could save the courts’ time,
instead of laboriously recording thetestimony of witnesses testifying before
court.
In most advanced systems, such asSingapore’s, the courts have madeextensive use of technological advances toenhance the efficiency of the courts. A
Witness Video-Link enables vulnerable
witnesses, such as child witnesses or
victims of sexual offences, to give theirevidence without physically being present
in the courtroom to face the accused. The
Technology Court was launched in 1995 in
the Supreme Court to facilitate thepresentation of evidence and otherinformation. Within this court, there arevideo conferencing facilities, an integrated
audio-visual system together with alitigation support system. Evidence isrecorded digitally as computer files. This
enables transcription to be done much
faster than previously done withaudiotapes.

452

V. TRIAL PROCESS - FREQUENTADJOURNMENTS
A. Problem
In most of the participating countries,
cases are generally tried on a piecemeal
basis. This means that the trial
proceedings are conducted in sessions
spread out over a period of time. Hearing
is set on one day and continued or
postponed to another day until each party
completes the presentation of evidence. For
instance, one witness testifies for an houror two for direct-examination in one
hearing, and then continues at the next
hearing for cross-examination.
Consequently, particularly in complicatedcases in which many witnesses are
examined, it takes a long time to complete
the trial.
B. Overview of the Current
Situation in Japan
It is evident that in Japan the difficulties
lie not in designating the first public trial
date, but in scheduling subsequent trial
dates. The courts are constantly grapplingwith problems created by the continuoustrial requirement. The court cannot always
schedule continuous trial dates whenconfronted with complicated cases, such as
those requiring the examination of many
witnesses or defendants.
One of the obstacles to theimplementation of continuous trial is thelack of cooperation between the Bench andthe Bar. The court faces great difficulty
persuading defence counsels to accept
continuous trial dates. Although thepresiding judge has sole authority
regarding the designation of public trial
dates, the court cannot proceed realisticallyand smoothly without the cooperation of
all parties. The court must consider adefence counsel’s heavy schedule andopinion when fixing a case for trial.

111TH INTERNATIONAL SEMINARREPORTS OF THE SEMINAR
Defence counsel argue that continuoustrial dates prevent them from handlingother cases, especially civil cases, and may
cause them to lose work. In addition tothis workload problem, counsel always
claim that it is almost impossible for themto prepare adequately for trial if the court
opens trial continuously. As a result, thepractice of intermittent trial hearings has
not changed.
C. Countermeasures
1. Continuous Trial
The court should make appropriate
schedules for trials by seeking thecooperation of the parties concerned. Morethan one court session should be allocatedin advance, and most desirably on
consecutive trial dates. On the other hand,
there is another view on this point.
Intermittent hearings will bring about
equal treatment among cases, while
continuous or concentrated hearing willbring about more speedy disposition of acase once its trial has begun. However, if
the latter is selected, it will inevitably delay
the other cases pending in the trial roll.
In this regard, it may be recommended thatcases of special importance should be
handled as fast as possible. For example,
cases where many witnesses will be
anticipated to be examined at trial should
be handled as fast as possible.
2. Strict Non-adjournment Policy
A party might request the adjournmentof a hearing based on improper reasons,such as insufficient preparation.
Ordinarily, the court assumes a party
makes a motion in good faith.
Consequently, the court should carefully
examine motions and should not easily
grant adjournment of a trial date without
strong grounds.
In Singapore, a strict “no adjournment”
policy is adopted. Applications for the
adjournment or vacation of hearing dates

are scrutinized carefully, and theseapplications would be refused unless there
are good grounds. Strict control is
exercised for even those applications foradjournment made on medical grounds.
With effect from 15 February 1997, only
medical certificates, which state certain
prescribed details such as the diagnosis,
full name and designation of the medical
practitioner, and a statement that thepatient is to be excused from court
attendance and not merely from workattendance, are accepted.
3. Time Limits for Completing Trial
Providing a time limit for completing
trial is a more straightforward method forspeedy trial. However, difficulty lies in thefact that not all cases have the same levelof complexity. Some cases are extremelycomplicated and need a longer period oftime to examine witnesses. In the Republicof Korea, for example, there is a provision
which limits the time period for the
pronouncement of judgment. It stipulates
that the pronouncement of judgment incases where the defendants are in custody
must be delivered within two months. If
the court fails to follow the time limit, thedefendant in custody has to be released,though non-completion of trial in the above
time frame does not prejudice the trial.
VI. LENGTHY PRELIMINARYHEARINGS
A. Problem
In some countries, there is a preliminary
hearing or preliminary inquiry by amagistrate before the case is referred to thetrial court. Its purpose is to see whether
there are grounds for the accused being put
to trial. However, some problems can bepointed out. The hearing takes a long
period of time, amounting to about one to
two years, to complete. The preliminary
hearing creates a lot of unnecessary work,
which is a duplication of the trial. These453

RESOURCE MATERIAL SERIES No. 55
problems should also be within the scopeof the issue “speedy trial”.
B. Overview of the Current
Situation in Some Countries
1. Sri Lanka
Magistrates hold preliminary hearingsin all cases, which are triable exclusively
by the High Court, and in some other caseson request of the Attorney General. In the
preliminary hearing, witnesses are
examined and cross-examined relating tothe offence, and evidence is recorded by themagistrate. This preliminary hearing
takes a long period of time, sometimes two
years. It is noted that in Sri Lanka,
preliminary hearings were abolished oncein the past, but revived again subsequently.
2. Thailand
After institution of a criminal case by the
injured party, the court must order apreliminary hearing to see whether or notthere is prima facie case. In preliminary
hearings, the accused are not allowed topresent their own witnesses. Thus
preliminary hearings results in a long
delay in certain cases.
C. Countermeasures
Some participants expressed the viewthat preliminary inquiries are not held in
most countries. However, our group wasview that the preliminary hearing could act
as a method of screening. It also serves as
an additional check by the courts on theprosecution. Consequently, in order toovercome some of these problems, some
improvements should be made to theexisting procedures.
1. Disallowing Cross-examination at theStage of Preliminary Hearing
In the general discussion sessions, someparticipants argued on this point. If the
defence is not given a chance to crossexamine the witness at the time of thepreliminary hearing, it will be an injustice.

454

Since the prosecution will support the
prima facie value of the case, crossexamination is necessary for ‘check andbalance’. In Singapore, the defence counsel
does not cross-examine the witness. But
in order to counter-check, the defence isallowed to clarify some points.
2. Restricted to Complicated orControversial Cases
Some participants stated in the general
discussion sessions that this method iscontradictory to the judicial system of someof the participating countries, as most ofthese cases are tried by High Courts. In
other words, if a preliminary hearing is
conducted in these cases, it takes evenlonger to conclude the hearing since thesecases are difficult to handle.
3. Abolition
Some participants expressed that the
preliminary hearing should be abolished.
This has been done in Malaysia. However,others are of the view that preliminary
hearings should not be abolished totally,
but could be limited in certain ways toreduce delay. In this regard, limiting thecross-examination of witnesses to material
points was suggested by some participants.
VII. INADEQUATE PREPARATIONBY THE PROSECUTOR AND
DEFENCE COUNSEL
A. Problem
Heavy caseloads of prosecutors will leadto inadequate preparation for trial. Thus
inadequate preparation or non-preparation
would lead to postponement, which causes
delay in disposition of cases. Similarly, inmany countries, heavy volume of cases
handled by defence counsels lead toscheduling conflicts, and inadequate
preparation results in adjournments.
Moreover, failure by prosecutors to show aclear outline with regard to how they
intend to present their cases, make it

111TH INTERNATIONAL SEMINARREPORTS OF THE SEMINAR
difficult for the court to allocate sufficient
time to hear and determine cases.
B. Countermeasures - Pre-trial
Conference
The pre-trial process in criminal
proceedings has drawn much attention
recently. At pre-trial conferences, theprosecution and defence are urged todisclose their respective cases andevidence, and are urged to agree on facts
which are not in dispute. By conducting
the conferences, the courts, as well as bothparties, can identify real factual and legal
issues, and will have reasonable prospects
for the trial. There is also a likelihood thatin the course of this process, the accused
will plead guilty when faced with theprosecution’s case and evidence. Moreover,last minute proposals for witness
examination can be avoided, and witness
examination can be made concentrating on
the necessary issues of the case. The court
should:(i) require, when it deems proper, bothparties to attend a pre-trial
conference to determine trial dates,
allocation of time to both parties, etc;(ii) designate trial dates necessary
beforehand, based on a plan madeduring the pre-trial conference, andshorten the interval between trial
dates;(iii)encourage the parties to discuss as
many problems as possible
beforehand, in order to prevent
unnecessary disputes at trial; and(iv)exclude improper questions andstatements by the parties.
For instance, in Singapore, pre-trial
conferences were introduced in 1993. The
courts now play an active role in the
management of cases, by ascertaining thestatus of the case and defining andclarifying the contentious issues for trial.
This cuts down on the time for hearing andsaves witnesses the inconvenience ofattending court, when their evidence will
not be disputed by the other party. Issues
and areas of dispute are identified, andreasonably accurate assessments in respectof the time required for the trial can thenbe made.
VIII. DILATORY TACTICS OF
DEFENCE COUNSELS
A. Problem
In many countries, some defence
counsels use dilatory tactics by filing
unnecessary motions for the review of court
orders, and prolonging the crossexamination of a material witness,presentation of corroborative witnesses toprove matters that have already been
established, etc. By these dilatory tactics,
the defence counsel hopes that the victim’s
feelings will decline, the public will lose
interest in the case, and the witnesses will
become tired and disappear. Moreover, thedefendant has to come before the court solong as the trial continues, and on each trial
date the defence counsel takes money fromthe defendant. So for financial gain also,
defence counsels desire postponement of
the trial.
B. Countermeasures - Sanctions
against Defence Counsels
In addition to the utilization of the above
mentioned pre-trial conference, sanctions
against defence counsels should beconsidered. For dilatory tactics, the court
can award costs against the defence counsel
and the court can take steps to report thedefence counsel to the Bar Council. Article
303 of the Rules of Criminal Procedure ofJapan states the measures available
against an act of a defence counsel causing
delay of a trial. It says that the court, if it
deems necessary, shall notify the Bar
Association to which the defence counsel
concerned belongs, or the Japan Federationof Bar Associations, requesting appropriate
steps be taken.
455

RESOURCE MATERIAL SERIES No. 55
IX. DELAY OF EXPERT REPORTS

X. CONCLUSION

A. Problem
In cases where a trial is based on
chemical or medical reports, a trial can bedelayed if it takes time for these reports tobe supplied. Delay of these experts reports
occurs quite often in some countries.

The role of judges in dispensing justiceis a sacred one, which demands that justiceis meted out to everyone concerned in thelegal process as speedily as possible. It is
often said that “justice delayed is justicedenied”. However for the sake of achieving
speedy justice, the quality of justice should
not be sacrificed. There is a need tomaintain a balance between speedy trial
and fair trial. Public confidence in the fairadministration of justice is very important.

B. Overview of the Current
Situation in Some Countries
In Sri Lanka, submission of chemical
and medical reports in connection withcriminal cases before the court is always
delayed, which is a strong cause of trial
delay. Waiting for these reports, most ofthe ‘heinous offence’ cases remain pendingfor years before the court. Someparticipants pointed out in the general
discussion sessions that expert reports are
submitted at the time of investigation, forwhich often investigation is delayed. Invery controversial and complicated cases,
the court may ask for a second opinion of
the expert report, which has been
submitted by the investigating officer. Thatmay cause trial delay. Additionally,
forensic reports are often not submitted by
the expected time, since most of thedeveloping countries do not have facilities
for forensic laboratories etc.
C. Countermeasures - Time Limits
for Submitting Reports
On this point, some participants
expressed that, in reality, it is almost
impossible to provide time limits forexperts, since experts are very limited intheir countries. Additionally, there was anegative view on this point, since theaccuracy of reports is more important thanmere early submission. One participant
recommended that meetings with experts
should be conducted from time to time inorder to see progress, and the format of theexpert report should be provided to easily
respond to questions.

456

It is our considered view that causes fordelay in concluding trials are common to
many countries. We fully understand thatsome of the issues which have been
discussed in this paper are interrelated.
Consequently, the countermeasures
discussed are also interrelated. For
instance, time frames for trials could not
be implemented unless the problem ofoverloading is solved. The investigating
officers, public prosecutors, defence counsel
and the judiciary should all do their best
to ensure that trials commence as soon as
possible, and once commenced, every caseshould be disposed of impartially andwithout undue delay.
The recommendations proposed may not
be acceptable to all the participating
countries, due to the social and economic
conditions prevailing in those countries.
Our intention has only been to suggest
some effective countermeasures for the
problems discussed in this paper.

APPENDIXCOMMEMORATIVE PHOTOGRAPHS• 110th International Training Course• 111th International Seminar

UNAFEI

THE 110th International Training Course

Left to Right:
Above:
Redo (Course Counsellor), Lee (Visiting Expert), Soh (Visiting Expert), Arterberry(Visiting Expert)
4th Row:
Takagi (Chef), Imai (Staff), Kai (Staff), Matsuda (Staff), Sisaykeo (Laos), Mao(Cambodia), Bali (India), Ogura (Japan), Ueta (Staff), Tezuka (Staff), Satoh (Staff),
Kanai (Staff), Okeya (Staff), Komatsu (Staff)
3rd Row:
Miyamoto (Staff), Todaka (Staff), Gohda (Staff), Saitoh (Staff), Nakamura (Japan),
Iwayama (Japan), Nagakura (Japan), Narikawa (Japan), Maeda (Japan), Tohyama(Japan), Shabangu (South Africa), Matsushita (Staff), Mitsui (Staff), Choi (Republicof Korea), Tatsumi (Staff)
2nd Row:
Mahfuzur (Bangladesh), Saadi (Algeria), Machado (Brazil), Taniguchi (Japan),
Motoyoshi (Japan), Ono (Japan), Lepitan (Philippines), Obimo (Kenya), Torsak(Thailand), Paudel (Nepal), Dibba (Gambia), Nawaz (Pakistan), Wang (China), Sagot(Costa Rica), Ohta (Japan), Yokota (Japan), Aratani (JICA Coordinator)
1st Row:
Imafuku (Professor), Kurosawa (Chief of Research, Professor), Akane (Professor),
Iitsuka (Chief of Training, Professor), Mrs. Amarnathan, Amarnathan (Course
Counsellor), Piragoff (Visiting Expert), Fujiwara (Director), Grabosky (Course
Counsellor), Kaspersen (Expert), Tauchi (Deputy Director), Satoh (Professor), Konagai(Chief of Information and Library Service, Professor), Ferrazzi (Linguistic Adviser)

THE 111th International Seminar

Left to Right:
Above:
Sidambaram (Visiting Expert)
4th Row:
Takagi (Chef), Komatsu (Staff), Kai (Staff), Imai (Staff), Okeya (Staff), Matsuda (Staff),
Tezuka (Staff), Matsushita (Staff), Todaka (Staff), Kanai (Staff)
3rd Row:
Saitoh (Staff), Tatsumi (Staff), Satoh (Staff), Arimitsu (Japan), Kawarazuka (Japan),Gohda (Staff), Balate (Mozambique), Chalermsak (Thailand), Situmeang (Indonesia),
Kaneda (JICA Coordinator), Sequeira (Brazil), Takeda (Staff), Miyamoto (Staff)
2nd Row:
Denda (Japan), Fuentes (Peru), Deng (Laos), Naomoto (Japan), Chen (China), Kubota(Japan), Ocampo Eljaiek (Colombia), Nakada (Japan), Trong Ngu (Viet Nam), Lee(Republic of Korea), Chaudhry (Pakistan), Selvanathan (Malaysia), So (Hong Kong),
Singh (India), Thabrew (Sri Lanka), Karki (Nepal), Morin (Seychelles), Rebeka(Bangladesh), Mansouri (Algeria)
1st Row:
Itoh (Chief of Secretariat, Staff), Watanabe (Professor), Konagai (Chief of Informationand Library Service, Professor), Akane (Professor), Tauchi (Deputy Director), Zobel(Visiting Expert), Mrs. Huq, Huq (Visiting Expert), Fujiwara (Director), Suchart(Visiting Expert), Mrs. Traiprasit, Lopez (Visiting Expert), Iitsuka (Chief of Training,
Professor), Satoh (Professor), Kurosawa (Chief of Research, Professor), Imafuku(Professor), Ferrazzi (Linguistic Adviser)