Chapter 10 - Criminal law

Whistleblowing definition?

Reporting a wrongdoing in an organisation

What are the relevant statutory provisions for whistleblowing?

The relevant statutory provisions are in The Public Interest Disclosure Act 1998, as updated by the Enterprise and Regulatory Reform Act (ERRA) 2013

What do the statutory provisions protect workers from dismissal/suffering a detriment if they make a disclosure provided they make a?

A qualifying disclosure of information

In the public interest

To the appropriate person

Are the statutory provisions always able to protect workers?

Unlikely to work if reported anomalously as need to prove whistleblowing was the reason for dismissal

What is a 'qualifying disclosure'?

Any disclosure of information which, in the reasonable belief of the worker making the disclosure, showing 1 or more of the criteria

What 6 things can make a disclosure be termed 'reasonable'?

That a criminal offence has been committed, is being committed or is likely to be committed.

That a person has failed is failing or is likely to fail to comply with any legal obligation to which he or she is subject.

That a miscarriage of justice has occurred, is occurring or is likely to occur.

That the health and safety of an individual has been, is being or is likely to be endangered.

The environment has been, is being or is likely to be damaged.

That information tending to show any matter falling into the above categories has been, is being or is likely to be deliberately concealed.

Who is a wrongdoing that can requires whistleblowing usually committed by?

The wrongdoing is usually the act of the employer, but may be that of a fellow employee.

What does "reasonable belief" mean?

That there must be more than an unfounded suspicion or rumour in order for protection to be afforded to him or her.

Reasonable belief requires something more than a rumour but less than conclusive proof.

Definition of whistleblowing in the public interest?

It has not been defined by the act but it must have been made because it was in the best interests of the general public, not just the individual making the disclosure.

If a disclosure is not made in good faith what may the court or tribunal do?

Reduce compensation by up to 25%.

Did a disclosure always have to be made in the public interest?

This repealed the prior requirement for them to be made in 'good faith'.

Good faith definition?

Good faith has generally been taken to mean that the intention is honest.

Who does the ERRA encourage workers to raise concerns to? Are there provisions if they do not report to this person?

The Act aims to encourage workers to raise concerns internally, but there is provision for the disclosures to be made to other persons or bodies

How are the 5 groups of individuals that are classed as an 'appropriate person' to whistleblow to?

Internally

Legal adviser

Minister of the Crown

Prescribed person/regulator

Wider

Who is a minister of the crown? Who can only whistleblow to this individual?

MP or peer of the government

Only for those working for public bodies

Prescribed person/regulator example?

Persons such as HMRC who are prescribed as being able to receive such disclosures.

Under ERRA 2015 what do prescribed persons have a duty to do?

Prescribed persons have a duty to report annually on disclosures received

What are examples of wider individuals that count as an 'appropriate person'?

This would cover people such as the media, police, MPs and nongovernment regulator.

When is protection only given to whistleblowing to a wider individual?

Protection would only be given here if:

the disclosure is not made for personal gain

the whistle-blower reasonably felt they would be victimised if they made the disclosure internally or to the prescribed person, they believed a cover-up was likely

or had already raised the matter internally or to the prescribed person.

What 4 things are considered in deciding whether a disclosure was reasonable?

The seriousness of the matter

Whether the matter is ongoing

The person to whom disclosure has been made

Whether there were any duties of confidentiality.

Who is protection afforded to?

To a worker who has made a protected disclosure

What does afforded protection ensure for the worker?

That a worker cannot be subjected to "any detriment by any act, or any deliberate failure to act" by his or her employer as a consequence of making the disclosure.

What does afforded protection extend to cover as a consequence of the disclosure?

Being overlooked for promotion

A change in working practices, or

Changes in the training of the worker

Can an employment tribunal award damages to a worker who has suffered detriment as a consequence of making a disclosure?

An employment tribunal may award damages to a worker who has suffered detriment as a consequence of making a disclosure.

What is the limit for damages compensating the consequential detriment of making a disclosure?

There is no limit to the amount of damages; it will be whatever the tribunal considers is just and equitable.

Are confidentiality clauses that seek to limit a worker's right to make disclosures or conflict with ERRA be valid in a case of whistleblowing?

Any confidentiality clause which seeks to limit a worker's right to make disclosures, or in any way conflicts with the Act, will be void to the extent of such conflict

Who does the ERRA protection not cover?

The Act does not cover work the subject of The Official Secrets Act nor does it cover members of the armed forces.

What does committing fraud involve?

Involves dishonesty and intention to make a gain/cause a loss to another.

When was the specific offence of fraud was recognised?

Not until The Fraud Act 2006 that the specific offence of fraud was recognised.

To bring a successful action for fraud the prosecution needs to prove?

Dishonesty

Intention to make a gain or to cause a loss to another

What is the maximum penalty for fraud?

10 years' imprisonment and an unlimited fine.

What are the 3 types of fraud?

Fraud by false representation

Fraud by failing to disclose information

Fraud by abuse of position

When is Fraud by false representation committed?

This offence is committed where the individual makes false statements of fact or law with the intention to make a gain for him/herself or another or cause a loss to someone else.

e.g phising emails

When is Fraud by failing to disclose information committed?

This covers where the individual has a legal duty to disclose information but doesn't do so with the intention of making a gain for him/herself or another or causing a loss to another.

When is Fraud by abuse of position committed?

An individual can be prosecuted here if he or she was in the position where he or she was expected to safeguard the interests of another person and abuses that position with the intention of making a gain for him/herself or another or exposing the other person to a loss.

e.g. carer in charge of bank account

How can a person also commits an offence under fraud by abuse of position?

If they possess, make or supply any 'article' used in fraud

What is an article of fraud?

The Fraud Act states that 'articles' used in fraud include any program or data held in electronic form

Phishing definition?

Bogus emails asking for an individual's personal details

What are the 6 cyber threats identified on the National Crime Agency's website?

Phishing
Webcam manager
File hijacker
Keylogging
Screenshot manager
Ad clicker

Webcam manager definition?

involves the user's webcam being taken over,

File hijacker definition?

the individual's online files are hijacked and held to ransom

Keylogging definition?

involves a record being kept of what a user types into their keyboard

Screenshot manager definition?

screenshots are taken of the user's computer screen,

Ad clicker definition?

a user's computer is directed to click a specific link.

What does the Computer Misuse Act creates offences related to?

The unauthorised access or change to computer material.

What is the punishment for an offence under the Computer Misuse Act?

If convicted of such an offence a defendant can be handed a punishment of prison or a fine

Under the Computer Misuse Act what 5 things is it illegal to do?

Unauthorised access to computer material

Unauthorised access with the intention to commit further offences

Unauthorised access with the intent to impair online material

Unauthorised access causing damage, or risk of damage, to computer systems

Making, possessing or supplying articles to facilitate the above offences.

When was Making, possessing or supplying articles to facilitate the above offences added as an offence? Examples?

This was added by the Police and Justice Act 2005 and could, for example, include designing malware.

Unauthorised access causing damage, or risk of damage, to computer systems definition?

The Serious Crime Act 2015 introduced the offence of unauthorised access causing damage, or risk of damage to computer systems.

Unauthorised access to computer material punishment?

The maximum punishment is 12 months imprisonment and / or a fine.

Unauthorised access with the intent to impair online material definition?

The third offence is aimed at people who write and circulate a computer virus or worm.

Unauthorised access with the intention to commit further offences punishment?

This is punishable by up to 5 years imprisonment and / or a fine.

Unauthorised access with the intention to commit further offences definition?

If the person who gains access, then does something illegal (or aims to do something illegal) with that access, the case will be upgraded to the second offence - unauthorised access with the intention to commit further offences.

Unauthorised access with the intent to impair online material punishment?

punishable by up to 10 years imprisonment and / or a fine.

Unauthorised access to computer material definition?

This means attempting or achieving access to a computer or data stored on that computer, by inducing a computer to perform and function with intent to secure access. The accused must be aware that the access is unauthorised.

Unauthorised access causing damage, or risk of damage, to computer systems punishment?

This is punishable by up to 14 years' imprisonment and / or a fine.

When is fraudulent trading committed?

Where a business is carried on with the intent to defraud creditors of the company or creditors of any other person or for any fraudulent purpose.

Can fraudulent trading be committed whilst the company is a going concern? Does it matter if a company is in liquidation?

The criminal offence arises under s.993 Companies Act 2006 and the offence is committed even while the company is operating as a going concern, so that it is immaterial whether or not the company is in liquidation.

What type of offence is committed when fraudulent trading happens?

Criminal and civil offence

Who can incur civil liability when fraudulent trading happens? When does this liability only occur? Who must declare a civil liability and what can they apply for?

Any person knowingly party to it can incur civil liability, however such liability only arises where the company is in liquidation and only the liquidator can apply to court for a declaration of civil liability.

The liquidator can apply for the individual to contribute to the company's assets.

Who can commit fraudulent trading?

Any person who knowingly participates in the fraudulent trading may be guilty of the offence. Typically, this will be the directors of the company

Does knowledge of fraudulent trading mean a person has committed an offence?

A person is not 'party' merely by reason of knowledge, they must take some active role

An example of a person who might be knowingly a party would be a company secretary or financial adviser.

Who does the test for intent to defraud protect?

offers protection to future creditors in addition to existing ones.

When a court considers that a person, whether director, company secretary or some other person has been guilty of fraudulent trading what punishment can it give?

Disqualify that person for up to 15 years from acting as a director or being involved in the management of companies under the Company Directors Disqualification Act 1986

As this is a criminal offence the person can be fined an unlimited fine or imprisoned for up to 10 years.

What type of offence is fraudulent trading?

Fraudulent trading is both a criminal and a civil offence.

How many offences does the term insider dealing cover?

Insider dealing is a term covering three separate offences

What information do offences under insider trading involve?

involves information about securities which is not commonly available and which would affect the price of those securities were it commonly known.

What is the legislation governing insider dealing?

Contained in the Criminal Justice Act 1993.

What are the 3 offences under insider dealing?

He or she deals in securities on which he or she has inside information

He or she encourages someone else to deal in securities on which he or she has inside information

He or she discloses inside information.

Primary and secondary insider definition?

primary insider = employee or officer of the company

secondary insider = gets information from the primary insider

What 3 things must be proven for someone to be convicted of insider dealing?

They are an insider
They have insider information
They have committed one of the three offences: dealing, encouraging others to deal or improper disclosure (only if not in proper disclosure of employment)

Dealing definition?

Dealing is acquiring or disposing of, or agreeing to acquire or dispose of relevant securities whether directly or through an agent or nominee or a person acting according to direction

Encouraging another to deal definition?

If someone with information encourages another to deal in price affected shares knowing or having reasonable cause to believe the dealing will take place

Securities definition?

Shares, debts securities and warrants traded on a regulated market, such as the Stock Exchange.

What 4 things make information inside?

Relates to particular securities or to a particular issuer of securities

Is specific or precise

Has not been made public

If made public would be likely to have a significant effect on the price

Insider definition?

An insider is someone who has information which is (and they know it is) inside information and they have (and know they have) it through being is an employee, shareholder or officer of the company (primary insider) or have access to it because of their employment, office or profession (e.g. as auditor) or is someone who gains information from such a person.

What are the 4 defences to insider trading?

Didn't expect to lead to a profit or avoid of a loss given the information was price-sensitive

Thought information was widely disclosed

Would have done it anyway even if they did not have the information

Believed the third party would not act on the information

If the information is disclosed in the course of an employment or profession, is an offence committed?

If the information is disclosed in the course of an employment or profession, no offence is committed.

For example, if an auditor passes information to a review partner and the partner then acts upon it, no offence has been committed by the auditor. (However, the partner may have committed an offence).

When can the defence of believing the third party would not act on the information be used and against which offence?

This is a defense to the 3rd offence where the defendant has disclosed inside information.

If they can prove reasonable grounds for believing that the disclosure of inside information would not lead to the other person trading in shares, they would be able to use this defence.

What are the maximum penalties for insider trading?

The maximum penalties imposed by the statute are seven years' imprisonment and/or an unlimited fine.

Is an insider trading transaction still valid and enforceable?

The transaction itself remains valid and enforceable.

What can be an additional punishment for a director if they commit insider trading? Why?

If the individual is a director, he or she is in breach of his or her statutory duties under CA06 and may be liable to account to the company for any profit made.

What act is bribery covered by and when did this come into effect?

Bribery is covered by the Bribery Act 2010 which came into force in July 2011

What are the 3 offences under bribery?

Bribing another person

Being bribed

Bribing a foreign public official.

Who does the bribery act give corporate liability to?

The Act gives corporate liability for an organisation which fails to prevent bribery.

When is an offence committed under bribing another person?

This offence is committed when one person gives or offers a financial or other inducement to a person to perform a relevant function improperly.

When a another person is bribed is it relevant whether the person offered the inducement is the same person who performs the function?

It is irrelevant whether the person offered the inducement is the same person who performs the function.

When is an offence committed under being bribed?

The offence by which a person accepts or requests a financial or other advantage to perform a relevant function improperly.

When a person is bribed is it relevant if the inducement is received directly or indirectly?

It is irrelevant if the inducement is received directly or indirectly (THIRD PARTY)

Relevant function definition?

A function of a public nature, or any function of a business nature where the person performing it is in a position of trust or is expected to perform it in good faith or impartially

When is an offence committed under Bribing a foreign public official?

This offence is committed where a person offers or promises to give a financial or other inducement to a foreign official with the intention that this will influence the official in his or her professional capacity and allow the individual a business advantage.

Foreign official definition?

Someone who holds a legislative, administrative or judicial role in a country outside of the UK

OR someone who performs public functions in any branch of an overseas government

What defence can be used if a person is charged with bribery?

They may have a defence if he or she can prove that his or her conduct was necessary for proper exercise of an intelligence service or of any function of the armed forces when engaged on active service.

What is the maximum penalty for bribery?

The maximum penalty is ten years' imprisonment and/or an unlimited fine

What can a commercial organisation be sued for in relation to bribery? When can this action be taken?

Any commercial organisation can be sued for failure to prevent bribery

This action can be taken against an organisation when a person within the business has committed a bribery offence.

Who is a commercial organisation?

Company or LLP

What defence can be used if a commercial organisation is charged with bribery?

If it can prove that it had in place 'adequate procedures' to prevent bribery.

What should be considered when deciding if the procedures taken by a commercial organisation were adequate?

It should be considered what the potential risks of bribery are before deciding if the procedures taken are adequate.

What is the maximum penalty for bribery for a commercial organisation?

can be subject to an unlimited fine if found guilty

Money laundering definition?

Any activity by which the apparent source and ownership of the proceeds of crime are changed in such a way that the cash or other assets appear to have been obtained legitimately.

being involved in concealing criminal property within a legitimate business.