Chapter 12Criminal liability in businessfacts. This has encouraged technical defences and long
and complex trials. The 2006 Act contains a new general
offence of fraud. There are three ways of committing the
offence as follows:
1 Fraud by false representation,as where e-mails are
sent to a large number of people on the representation that
they have been sent by a financial institution and seek-
ing information such as a bank account or credit card
number. A representation may be made in a number of
ways, e.g. orally or through a website or by conduct, as
where a fraudster uses a stolen credit card to pay for goods.
2 Fraud by failing to disclose informationwhere there
is a legal duty to do so, as where, e.g. there is a failure to
disclose an existing medical condition in an application
for life assurance or non-disclosure in a prospectus
offering shares.
3 Fraud by abuse of position.This will arise, e.g. in the
recognised fiduciary relationships such as trustee and
beneficiary, director and the company, and agent and
principal. Employer and employee will also be covered
to catch, e.g. the dishonest employee who copies cus-
tomers’ details or software for sale or use in a competing
business. It would also cover directors’ secret profits
made in conducting the company’s business.
Dishonesty is an essential ingredient in each offence
and the fact that the defendant intends a gain to himself
or herself or another, or to cause another loss or expose
another to loss, must be shown.
There is also a new offence of obtaining services dis-
honestly. Under existing law services cannot be stolen.
This would cover, e.g. obtaining access to satellite or
cable television without making payment.
In 2006, the Fraud (Trials without a Jury) Bill was
introduced in the Commons. It was intended to redress
the current imbalance between easier to prosecute ‘blue-
collar’ crimes and major ‘white-collar’ crimes involving
serious fraud which too often do not get to court or are
abandoned at a point where substantial costs have been
incurred. The reason for this is that our system of trial
requires oral explanation of documents which, in com-
plex fraud trials, can run to thousands of pages. Thus
trials can last for months, or, in some cases, for a year or
more. This imposes a significant burden on jurors, few
of whom can afford to do jury service for so long. It was
accepted that it would be appropriate in only about half-
a-dozen exceptionally long, complex and serious fraud
cases a year to have a judge-only trial.
A provision for judge-only fraud trials appeared in
s 43 of the Criminal Justice Act 2003 which, because
of opposition, was not enacted and could be enacted
only by affirmative resolution in both Houses of Par-
liament. The new Bill removed the requirement of
affirmative resolutions in both Houses. Application for
a judge-only trial was to be made to a High Court judge
who would also conduct the trial where the application
was successful.
This Bill was outvoted in the Lords in 2007. The
government plans a new Bill and has stated that it will
use the Parliament Acts 1911 and 1949 to enact it with-
out the consent of the Lords. However, no such Bill has
been introduced at the time of writing.Stock exchange frauds
This may consist of influencing the price of shares to the
fraudster’s advantage. Suppose that A plc is making a
bid to take over B plc by a share-for-share exchange plus
some cash. If the directors of A lend the company’s
money to selected individuals to buy A’s shares, this will
create a false market in the shares and increase the price
so that A need not find any or so much cash in the
takeover. The shareholders of B take shares in A at the
false price and discover later that a false market had been
created and the value of the shares in A falls. The cre-
ation of a false market is an offence under the Financial
Services and Markets Act 2000 and the loans described
above would infringe the Companies Act 2006 provi-
sions relating to public companies as being unlawful
assistance to buy A’s shares.Insider dealing
Persons may indulge in what is called insider dealing or
trading, e.g. buying or selling shares on the basis of
inside knowledge not available to others about matters
likely to influence the price of the shares.
Part V of the Criminal Justice Act 1993 applies and
Sch 2 to that Act sets out the securities covered by its
provisions. It is not necessary at this level to list all these,
but obviously shares issued by companies are covered
and examination questions will normally be set on the
basis of dealings in shares of companies. However, the
1993 Act also covers gilts, which are interest-bearing
securities as distinct from shares which pay a dividend,373