Posts Categorized: criminal justice
Hiding in plain sight
July 11 2021
There is always a clue. Sometimes more than one. Often hiding in plain sight, if only others used their eyes.
On Friday, Wayne Couzens, a former Metropolitan Police officer and member of the Parliamentary and Diplomatic Protection Squad, authorised to carry a firearm, pleaded guilty to the murder of Sarah Everard earlier this year. He had earlier pleaded guilty to her kidnap and rape. The story of what he did to her is harrowing.
Despite his planning and attempts to cover his tracks, he gave his police mobile number to the firm from which he hired the car he used for the kidnap. That mistake (or arrogance) was what caught him. The number plate was caught on CCTV next to where Sarah was last seen and the telephone numbers were run through the police database. One can only imagine the reaction and shock of those doing that search when they realised that their prime suspect was a serving police officer, moreover one who would have had to go through an enhanced level of vetting for his role and his authority to carry firearms.
Perhaps they should not have been so shocked. Following his arrest, we learnt that a few days earlier he had been caught indecently exposing himself elsewhere in South London. No action was taken and the reasons for this are the subject of a separate police investigation.
This weekend we also learnt that:-
1. He had been accused of indecent exposure six years ago, again with no action being taken.
2. When in the Civil Nuclear Constabulary protecting Sellafield, his nickname among colleagues was “The Rapist” because his behaviour towards women colleagues was so creepy.
It would not be surprising if more were to come out about his behaviour and attitudes. As of now there are 12 police officers in at least two police forces under investigation with regard to what they did or did not do re the investigation and the Everard murder.
There are a number of points worth making, even on the basis of this limited information.
1. It is usually best to avoid hiring wrong’uns into your organization. Or at least try to. An obvious point perhaps but one which is not in practice always taken as seriously as it should be. Keeping someone out is a whole load easier and less time-consuming than trying to get them out later. The refusal to admit a mistake was made, the belief in HR development and appraisals are powerful forces favouring inertia.
2. Checking CVs, due diligence, vetting really matter. Small inconsistencies, missing information, stories which do not add up, which do not correspond with what was said in interview, which are changed are warning signs and should never be ignored. They too often are. Vetting is too often outsourced to juniors far away, too often treated as an administrative step to be completed rather than as a key part of the decision-making process. If someone warns you about a person’s reputation (as happened with a notorious fraudster) don’t ignore it just because you don’t have a procedure to deal with with it. Due diligence is not a paper exercise: it is trying to find out about a person’s character, what they are like when they are not shiny faced and trying to impress you.
Bluntly, if the Met’s enhanced vetting allowed someone like this to hold a firearm and guard Parliamentarians, what is the point of it? Or was it the case that it simply was not done well – or at all?
3. Remember that, whatever sector you are in, you are managing risk. If someone dubious gets past your first line of defence, they’ve learnt that your defences are not great. They’ve learnt how to fool you and get away with it. How seriously do you think they’re going to take your training and your other defence systems? How are you going to manage a risk you don’t even know you have?
4. Don’t ignore the small stuff. Not every person indecently exposing themself goes on to rape and murder. Not every person telling a lie on a CV becomes a fraudster. But can you tell the difference between those who will and those who won’t? And do you want to take the risk of getting it wrong?
Perhaps indecent exposure (a crime) was seen as a bit of a joke? Perhaps creepy behaviour towards women was seen as him simply being a bit of a lad? Maybe the women were seen as unduly sensitive and their concerns downplayed? The police investigations may reveal answers.
But what about the much more common small lie – often handwaved away as “small” and so unimportant, forgetting that it is the fact of lying which matters not what the lie is about? Most of the major fraudsters in recent history lied about seemingly unimportant things at an early stage in their career. Their lies were ignored. They learnt they could lie and get away with it. They did not stop there.
There are always clues. They tell a story. It’s one we should read with care.
July 30 2020
Last week Parliament’s Intelligence and Security Committee wrote about how Russian oligarchs and their money had been welcomed by the UK from the mid-1990’s onwards, with Britain’s “light touch … regulation” (where have we heard that before?). The UK’s rule of law and judicial system were seen as a particular draw. But, as the report says: “few questions – if any – were asked about the provenance of this considerable wealth.” Oh dear.
The report says that, rather than the encouragement of ethical practices and transparency amongst the Russian investors as hoped, Britain’s institutions provided “ideal mechanisms by which illicit finance could be recycled through what has been referred to as the London ‘laundromat’”. The patronage and influence this money brought to “willing beneficiaries” helped the reputation laundering process. And then there are the enablers, described with some asperity, as those who “on occasion help launder money through offshore shell companies and fabricate ‘due diligence’ reports”. Dear oh dear.
The authorities do have some ways of countering this: Unexplained Wealth Orders, for instance and seizure of assets. How well these work is another matter, of course. The Court of Appeal recently overturned three UWO’s obtained against the family of the former president of Kazakhstan, now subject to appeal by the National Crime Agency. The NCA may win its appeal but, as stated in the report, there is an imbalance of resources between the NCA and those with the wealth to fight back. And the longer the money is around and channelled through companies, property, trusts, charities and the rest, the easier it is to disguise its original smell and explain it away – enough to fight off the UWO, anyway.
There have been some successes: in relation to the spending (£11 million on a townhouse, £16 million spent in Harrods over a decade) by the wife of a former chairman (and convicted fraudster) of a state-owned bank in Azerbaijan, for instance. Or the seizure by the City of London police of £2 million in cash held in British banks by a professional money launderer acting for the Calabrian mafia, the ‘Ndrangheta, after a two-year investigation.
Three points are worth noting:
- One of the weakest points of any system is the point of entry. Much easier to keep “dirty” money out than to try and get rid of it once it is in and, over time, made to appear respectable or, at least, explained. Ditto re dodgy individuals.
- Once in, getting rid of the dodgy individuals and money risks becoming a game of Whack-a-Mole, one which tests the patience and resources of the authorities and requires their relentless and sustained focus.
- Be wary of those seeking to use the credit and reputation you have built up over years. That applies to professionals as much as it does to countries. It is flattering to think you will teach and improve them. The grubby reality may be that it is your reputation which is tarnished. It’s an old problem: some well-established banks and professionals learnt this the hard way – with one Robert Maxwell back in the early 1990’s. It’s a lesson worth remembering rather than relearning.
One thing is puzzling though. For years – since at least 1994 – there have been money laundering regulations, with the latest iteration brought in last year. The level of information needed is onerous and extensive. The principle underlying all these rules and regulations and the concept of due diligence is that banks and lawyers and estate agents and the myriad of intermediaries should really know and understand their customers and where their money comes from. So how is it that, even now, a couple of Calabrian Mafiosi are able to set up a company that does nothing, give an address where they do not live and deposit £2 million in an English bank account?
Surely it is not because, as reportedly attributed to Anarchasis, a Scythian visitor to 6th century Athens: “Written laws are like spiders’ webs; they catch the weak and poor but are torn in pieces by the rich and powerful.”
On juries and experts
June 29 2020
The right to a jury trial has been described, most recently this May, as “a fundamental right. It goes back centuries in our history, and it will never be removed at all.” (For the U.K. government’s latest proposals attacking this right and why they are not a good idea see here.)
Despite this, juries have not always been loved, especially by some in the legal establishment, including some judges, those who think that the law is far too important and complicated an issue for ordinary persons, who are simply not clever enough to understand. It uses the complexity beloved by lawyers to justify keeping the whole process within this charmed, closed circle, a legal elite. It is an argument often heard in relation to fraud trials, conveniently forgetting that sniffing out dishonesty does not need a degree, that it is often some of the apparently cleverest people – formally anyway – who fall for some of the biggest conmen around.
If you need convincing, look no further than the story of Wirecard, summarised by the Financial Times here. It is a cautionary tale, one we have seen before, time and again. Remember Enron?Or Polly Peck? Or Theranos? It makes it all the more baffling why clever people fall for it over and over again.
The essential elements are usually the same:-
- A new, often disruptive, entrant into the market or the repackaging of a boring staid company.
- A charismatic CEO with ambitious expansion plans, an attractive story to tell and a talent for PR.
- A novel way of providing a basic service, presented as a simplification, and which could be categorised into the “too good to be true” category. No-one is able to explain why, if it is so simple, others have not done this.
- The use of some wonderful new technology. Everyone wants to be associated with this, even if the number of people keen on it is vastly greater than those who really understand it.
- The use of complicated corporate structures and inter-company transactions, often in a variety of offshore jurisdictions, making scrutiny of the individual transactions and the company’s overall position much more difficult.
- When critical or difficult questions are raised, responding aggressively with action from lawyers and PR specialists. Protection of reputation is apparently more important than responding to the substance of any criticism.
- Rapid high growth, sustained year after year.
- Becoming the latest “darling” of the stock market, investors and governments.
In all these cases, any number of highly expert advisors: analysts, accountants, auditors, bankers, lawyers and others seemed oblivious to what was going on. Did they choose to turn a blind eye? Or were their critical faculties simply dazzled by the fees to be earned?
What is perhaps different – and troubling – about the Wirecard story is the way regulators, in this case, the BaFin, seem to have abandoned its critical faculties, its willingness to probe behind the facade (surely an essential task for any regulator) and the need to listen to those voices who raised questions (from as far back as 2008) about the company.
Worse: not only did the BaFin not listen to those voices (investors, hedge funds, whistleblowers and journalists), it tried to take action against them, to shut them down, to prosecute them. The regulator abandoned its role as a disinterested supervisor and acted as if its interests were no different than that of the company.
How could so many apparently clever people be taken in? For the oldest reason of all: they believed what they wanted to be true, what they hoped was true. They formed an opinion then ignored any facts that did not fit. They ignored troubling messages or concerns because they came from the “wrong” sort of people: hedge funds and short sellers (boo! hiss!), foreign journalists doing down a national champion (double boo!) and so on. Shooting the messenger is so much easier than listening to an uncomfortable message.
Clever people are not immune from making these basic mistakes. Being clever does not necessarily make you clear-sighted. It does not necessarily make you courageous. Nor does it automatically make you curious.
There is an inestimable value in having an ordinary person’s view, in having people prepared to ask obvious, even stupid questions, in benefiting from the collective experiences, perspectives and opinions of a random group of 12 strangers, the wisdom of a small crowd, unencumbered by the sort of “groupthink” which can afflict those working closely together with the same types of people with largely similar perspectives.
Remember this when the lack of expertise of jurors is cited as a reason why they should not be involved in fraud trials. If expert and experienced people are so easily taken in, perhaps that expertise is not that valuable at assessing dishonesty and bluster and spin. If experts fail to ask obvious questions or fail to follow up on concerns raised, what value – really – does their expertise have?