§ 4.11 p.m.
§ The Lord Chancellor (Lord Hailsham of Saint Marylebone)
My Lords, with the leave of the House, I will repeat a Statement being made in another place by my right honourable friend the Home Secretary on the report of the Roskill Committee on fraud trials. The Statement is as follows: "With permission, Mr. Speaker, I would like to make a Statement about the report of the Fraud Trials Committee under the chairmanship of Lord Roskill which was published on 10th January. The House will recall that this committee was set up in 1983, well in advance of recent events, to consider ways of improving the conduct of criminal proceedings arising from fraud.
981 "The Government are most grateful to Lord Roskill and his colleagues for producing with such speed a readable, thorough and radical report. It deals with a serious and urgent problem. We fully share the committee's concern that the perpetrators of serious fraud should be brought effectively to book. The report shows that the legal and administrative machinery for this purpose has been creaking badly. We are determined to bring about the changes in law, practice and attitudes which are necessary.
"There are two reasons for this. First, the reputation of our financial institutions, and of the City of London in particular, needs the support of effective action against fraud. Secondly, there must be no escape for offenders simply because their offences are highly complicated or because they can employ large resources to cover them up; the enforcement of the law must be evenhanded. Accordingly the Government welcome the report as providing a basis for early legislation to achieve substantial reforms of the law in this field, and also for new administrative measures in areas where legislation is not required.
"Responsibility for the investigation and prosecution of fraud is now shared by the police, the Director of Public Prosecutions, the Department of Trade and Industry and other agencies. Co-operation has been greatly improved in recent years, and permanent fraud investigation group arrangements have been in place since last January. The Roskill Committee recommended an urgent examination of the need for a new unified organisation. We accept the recommendation for such an examination, and it will be immediately put in hand by my right honourable friend the Chief Secretary.
"The committee have called for resources devoted to the pursuit of fraud to be expanded as a matter of priority. The Government are already taking steps to that end through the strengthening of the Department of Trade and Industry (by nearly 200 new staff over the next two years) and the addition to the Director of Public Prosecution's department of nine extra lawyers with support staff. We shall be seeking to draw in more people with the necessary skill and experience from the private sector on short-service appointments. In addition, the agency and the self-regulating organisations under the Financial Services Bill will have their own resources for the investigation of fraud.
"As regards the substantive law, my noble friend the Lord Chancellor and I will be in touch with the Law Commission about their work on conspiracy to defraud. I shall seek the advice of the Criminal Law Revision Committee on early legislation to deal with the urgent problem of the limitations on the use of a charge of conspiracy to defraud to which the Roskill Committee drew attention.
"The committee make a number of recommend-dations concerning juries, including provision for certain complex fraud cases to be tried by a tribunal comprising a judge and two lay members, and for the abolition of peremptory challenges. We shall be consulting urgently about these important matters, 982 and we shall listen with interest to the views which will be expressed in this House and another place and in general public comment.
"The committee's general approach on preparations for trial, the law of evidence and other matters would lead to significant improvements in the trial of fraud cases. The feasibility of certain aspects of the committee's proposals will require further study and we shall need to give more thought to the details. Some of the recommendations may well be applicable in other areas of the criminal law besides fraud.
"To sum up, we have in this report an excellent basis for substantial and worthwhile legislation and administrative action. The report will be immensely helpful in shaping the Government's continuing fight against the insidious menace of fraud. For this we are most grateful to Lord Roskill and his colleagues. It is now for us and for Parliament to do our part in carrying forward the work they have begun. I hope that my right honourable friend the Leader of the House will be able to arrange for an early debate on the report."
My Lords, that concludes my right honourable friend's Statement.
§ Lord Elwyn-Jones
My Lords, the House will be grateful to the noble and learned Lord the Lord Chancellor for reading the Home Secretary's Statement on the Roskill Report. I should like to begin by expressing—and I think that I do so on behalf of the whole House—the gratitude we owe to the powerful and able committee which after two years of what must have been great labour has produced this tremendous report, which is a powerful and forthright statement of the nature of the problem it was set to examine and to advise upon.
It pulls no punches—and neither would one expect the noble and learned Lord, Lord Roskill, to be guilty of that aberration, if I may say so. At page 143, paragraph 8.37, I read:All the available evidence indicates that, in the United Kingdom, fraud is a growth industry".Then, at the end of that paragraph:Fraud is posing a threat to London as a financial centre".These are very grave allegations indeed and, without becoming in any sense party political in this matter, if I may say so it is high time that something was done about this growth of fraud.
The report itself, in the very first paragraph on page 1, says this—and it is a grave indictment of the present state of affairs:The public no longer believes that the legal system in England and Wales is capable of bringing the perpetrators of serious frauds expeditiously and effectively to book. The overwhelming weight of the evidence laid before us suggests that the public is right. In relation to such crimes, and to the skilful and determined criminals who commit them, the present legal system is archaic, cumbersome and unreliable".It pains me as a lawyer to read those words, but that is the fierce indictment in the report. They are, I fear, not idle words. It goes on:At every stage, during investigation, preparation, committal, pre-trial review and trial, the present arrangements offer an open invitation to blatant delay and abuse. While petty frauds, clumsily committed, are likely to be detected and punished, it is all too likely 983 that the largest and most cleverly executed crimes escape unpunished".Then it says:The Government has encouraged and continues to encourage ordinary families to invest their savings in the equity markets, particularly in the equities of formerly state-owned enterprises. If the Government cherishes the vision of an 'equity-owning democracy', then it also faces an inescapable duty to ensure that financial markets are honestly managed, and that transgressors in these markets are swiftly and effectively discovered, convicted and punished".My Lords, it is a sombre report. Paragraph 3 says:Much of this report, and the majority of the recommendations, are concerned with changes in the procedures to be adopted in the many different stages from the time that a fraud comes to the attention of the authorities until the verdict is given in court".Attention and public comment have been rather concentrated on some of the more controversial aspects of the report, such as the proposal to remove trial by jury in complex fraud cases—a proposal which, if I may say so, I and the members of my party do not accept. We believe that when a British subject is brought before a criminal court on a charge risking a long term of imprisonment he should have the right to trial by jury. He has had that right from time immemorial, and, speaking not only for myself but for the members of my party, at any rate, we do not think that that basic right or principle should be abandoned.
However, as I was indicating, the exciting quality of the report is its emphasis on practical measures and on the obvious need for better trained, better coordinated and larger fraud investigating services. If I may say so, the Statement itself does not take us very far but I note that an early debate is to be arranged upon this matter, when I have little doubt that the Government will be able to elaborate in more detail than is at present indicated what proposals they propose to adopt.
We certainly welcome the step which has already been taken to strengthen the Department of Trade and Industry by nearly 200 new staff over the next few years. We welcome also the addition to the Director of Public Prosecutions' department of nine extra lawyers with support staff. It is good to read that we shall be seeking to draw in more people with the necessary skill and experience from the private sector on short-service appointments. Then, in addition the self-regulatory agency is to be set up under the Financial Services Bill and will have its own resources for the investigation of fraud.
It is a good beginning, but I suspect that the noble and learned Lord himself would agree that it is only the beginning. There is a great deal more to be done. As the Statement says in its summing-up at the end, we have in this report an excellent basis for substantial and worthwhile legislation and administrative action. Indeed, reading the report itself, at page 1, paragraph 3, one sees where the emphasis is placed by the committee. It says:Much of this report, and the majority of the recommendations, are concerned with changes in the procedures to be adopted in the many different stages from the time that a fraud comes to the attention of the authorities until the verdict is given in court".The report makes some very significant proposals. Some are controversial, and with some of those it is not probable that there will be unanimous agreement 984 on several aspects of what is proposed. There is the abolition of peremptory challenge, and the duty on the defence to make early disclosure of its case.
Above all, as I have said, there is the proposal that in regard to serious fraud cases the ancient right of the inhabitants of this country to trial by jury, to trial by their peers, should be abandoned. We believe that that right is one which should not be abandoned even in the face of this grave threat of fraud, because we do not think that that course would be effective to deal with the problem. The evidence is very thin on the suggestion that the fact of jury trials is resulting in more acquittals of the guilty. However, that is a matter of controversy about which there will no doubt be different opinions.
I repeat my welcome to the report. It is appalling that at this time, in 1986, we should be facing the situation that, for instance, London, whose reputation has depended upon its integrity and honesty, is rapidly losing that reputation. Urgent action must be taken to save it.
§ Lord Wigoder
My Lords, we, too, should like to thank the noble and learned Lord the Lord Chancellor for repeating the Statement, even though it led him at one point to be forced to say that he was looking forward to consulting his noble friend the Lord Chancellor at an early stage!
May I join in the expressions of congratulation to the noble and learned Lord, Lord Roskill, and the members of his committee for producing so very quickly such a constructive, stimulating and in some cases provocative, but always highly readable, report? Much of it one can agree with in principle, and I think that today is a time for dealing only with matters of principle and not with matters of detail, which can be dealt with in due course during a full debate.
I welcome in principle what is said in the report about making more effective the investigative procedures into alleged fraud cases. I would welcome as being urgently necessary what is said in principle about making more effective the pre-trial procedures, which would help to simplify and clarify the issues that are going to be raised. I would certainly welcome in principle what is suggested in order to make documentary evidence more freely admissible without technical objections. I would welcome—indeed, I have been saying this for many years past—the proposal that complicated fraud cases should be dealt with by judges, barristers and solicitors who at least know which way up to hold a balance sheet.
I would be prepared to consider in principle—and I would go no further than that at this stage—that in cases where the prosecution do not have a right of jury vetting (and that of course means, for this purpose, fraud cases) one should look at the proposal that both the prosecution and the defence should take the jury as they find them and should be able to object only on grounds of cause or grounds of good reason, and not by the use of arbitrary and peremptory challenges. I would be prepared to consider that.
The one area of this report which I think all of us on these Benches find it difficult to accept is the proposal that there should be a diminution in the right of trial 985 by jury. We do not find this case made out. Indeed, the figures in the report disclose the very contrary because, tucked away at the back of the report, on page 243, there is the rather oddly expressed sentence:Of those brought before the Crown Court for all offences in 1984, nearly 15 per cent, were acquitted".It is oddly expressed because what it means is that more than 85 per cent. were convicted. I appreciate, of course, that that includes the people who had pleaded guilty. But the same paragraph goes on to say that in 1984, of those who were brought before the Crown Court for offences of fraud, an even higher percentage, some 86.8 per cent., were convicted. So I do not believe the case is made out on recent history for saying that juries in fraud cases are more likely to acquit than they are in any other class of case.
I know of course that the argument can be put forward that because of the existence of trial by jury prosecutions are disinclined to be launched in cases of extreme complexity. On the other hand, I wonder whether the committee has given full weight to the argument that it is because of the existence of a jury as the potential adjudicators on a case that the prosecution is under pressure at all times to simplify its case so that a jury can understand it. I have a horrible feeling that if in fact juries are abolished in complicated fraud cases such cases will simply become more and more complicated, and as a result longer and longer and more and more expensive.
In a much quoted sentence at the beginning of the report the committee says:Some of our proposals may shock traditionalists. The same was probably true of the proposal to abolish the mediaeval practice of trial by combatI cannot help wondering whether in the long run it will not turn out that trial by combat was a more efficient, a quicker and fairer method of trying cases than trial by a professional lawyer and two chartered accountants.
§ 4.32 p.m.
§ The Lord Chancellor
My Lords, I am extremely grateful to both the noble Lords who have welcomed this report. I personally think—and this is the first time I have been in a position to give a personal opinion about it at all—that this is one of the most masterly, important and well written public documents I have read in recent years. I hope that it will be very carefully read, marked, learned and inwardly digested before fixed attitudes upon it are taken.
I am, as a matter of fact, in a rather peculiar position. Not only did I share responsibility with my right honourable and learned friend the then Home Secretary for setting up this body but it is something which has been very much on my mind for a very long time indeed. The only difference between myself and the two noble Lords who have contributed is that I find myself far more radical than they are and far more concerned than they have shown themselves with the seriousness of the position. What they said was eminently sensible, if they will allow me to say so, but a lot of nonsense is sometimes talked about these cases.
986 The truth of the matter, which led my right honourable and learned friend and myself to set up this body, is that we are trying to operate an 18th century ramshackle machine drawn by oxen in order to catch modern fraudsters. That really is not a very good way of setting about things. The report brings this out even before you come to examine what might be called its more controversial proposals.
I should like the House and those outside the House to look at the real nature of our trial process in fraud cases and consider whether really it is achieving the purpose of criminal justice. The purpose of criminal justice, as I have said to this House before in other connections, is to convict the guilty and to acquit the innocent—with this coda, which must be added, that it is much more important for the respect and confidence in which the system is held that you should never if possible convict the innocent because that undermines confidence in the whole system. In fact, we all know that there are a certain number of convictions of innocent people. We do not like to admit it but there are such convictions. I am not myself as completely convinced as have been the two noble Lords who have spoken that the jury is an adequate safeguard in complicated cases for the acquittal of the innocent. I shall read one sentence of the report—the noble and learned Lord is speaking of the point:We have no doubt that most ordinary jurors experience grave difficulties in following the arguments and retaining in their minds all the essential points at issue, particularly in a long hearing of a complex character. This creates the serious risk either that the jury will acquit a defendant because they have not understood the evidence or will convict him because they mistakenly think they have understood it when they have in fact done little more than apply the maxim 'there's no smoke without fire' ".I think we have to examine our whole list of sacred cows and consider which of them in fraud cases we are going to retain for all purposes.
To my mind, one of the most important things in the report—perhaps the House will accept from me that I have read the report from cover to cover but not the appendices—is that fraud of the kind which the report discusses is different in character from, let us say, rape, burglary, shoplifting or murder. These other cases of common crimes emerge in overt acts. The whole nature of fraud consists in concealment and deception and is hidden away. We must think in terms of that. We must also think in terms of an international dimension to this problem because some of the most important recommendations in the report relate to that point.
How do you start a prosecution when the law of Switzerland will allow you to see a banker's book only if you have evidence of fraud, when you can only find evidence of fraud if you look at the banker's book, and when the two or three suspects in the case are living in some country which I will not name with which we have no extradition treaty and so they cannot be asked questions? These are things we have to take very seriously and the only criticism I have of the two noble Lords who have spoken so far is that I find myself a great deal more radical then they. If I may say so, I was very grateful to the noble and learned Lord, Lord Elwyn-Jones, for reading out paragraph 8.37 and paragraph 1. I had intended to do so myself and now the noble and learned Lord has taken the wind out of my sails.
§ Lord Denning
My Lords, perhaps I may say a word. I, too, have read this report. I should like to congratulate my noble and learned friend Lord Roskill and his colleagues on a most excellent report. I should like to endorse every word of it and support every single recommendation, despite what my noble and learned friend Lord Elwyn-Jones and the noble Lord, Lord Wigoder, have said.
I tried a complicated fraud case nearly 40 years ago at the Old Bailey, and I can tell your Lordships how much better the jury system was then than it is now. In those days the jury was not taken from the voting list. There had to be a householder's qualification. The result was, as Lord Devlin once said, that the juries we had in those days were male, middle class and middle aged. Furthermore, in getting out the panel the clerk knew the occupation of each person. That has been done away with. At the trial of which I made mention, I had on the jury bank clerks, insurance clerks and accounting clerks. I had a first-rate body of jurors who understood what the case was about. After a six-week trial, I summed up in three hours and the accused were duly convicted after two hours. That was nearly 40 years ago.
I will tell your Lordships about the change in the jury system since that time. Any person on the voting list is entitled to be and will be a member of the panel, taken at random. They may be between the ages of 18 and 65. When the panel is made up, there is no statement made of the jurors' occupations. The clerk can only tell from what district a juror comes, by his address. One does not know what the juror is like at all. When a person is asked to serve on a jury, the counsel for the defence may say to himself, "I want to get as many ignorant people as I can on the jury. Then they will not understand the evidence. They will be left in a position of doubt, and so they will give my client the benefit of the doubt and acquit him".
That is what happens now in the case of peremptory challenges. A potential juror who appears to be a businessman, perhaps because he carries a copy of the Financial Times under his arm, wears a pin-stripe suit and generally looks smart, will be objected to by the defence counsel. Then there will be the young ladies of 18 years of age who cannot calculate anything except on the computer; who cannot add up or subtract and who do not understand figures. It is those 18-year-olds, or older persons who may be able to use a shovel but who cannot read a book or make up any accounts, who will be the persons chosen to serve on such a jury. That is entirely contrary to principle.
The jury in a fraud case ought to be composed of people who are capable of understanding and following the evidence. How glad I am to see in the report this recommendation:No-one should sit on a jury in a fraud case who cannot read, write, speak and understand English without difficulty"—and, I might add, who cannot understand accounts without difficulty. In the case I told your Lordships about, those bank clerks of mine could understand the evidence and they made their notes. That is a fundamental principle that should be observed in a fraud case.
988 What is the answer? We cannot go back to the old days of qualification. We must still have, apparently, an unlettered jury. What is the answer? It seems to me that the noble and learned Lord, Lord Roskill, and his committee have put forward a radical but most important solution. They would deal with the matter rather as Lloyd's do now. They would have a judge and two lay experts who know all about accounts appointed from a panel by the Lord Chancellor. Those three persons would constitute an infinitely better tribunal. They would understand the evidence and decide the matter properly. That is the recommend-dation.
Furthermore, a defendant's right of peremptory challenge in any fraud case should be abolished. Certainly it should. There is no reason whatsoever why the defence counsel should be able to say, "I do not like the look of that man" simply because the person concerned wears a collar, or whatever. There is no possible justification for such a challenge. A further point I would make, which is hinted at in the report, is that some of the recommendations are just as appropriate for ordinary cases as they are for fraud cases. That is a matter for other consideration. In all events, I thought it would be interesting, in the light of everything that has been said from some Benches, to state that I myself wholeheartedly support every one of the report's proposals, and I hope that the Government will go ahead with them.
§ 4.45 p.m.
§ Lord Mishcon
My Lords, upon one matter the House will be agreed: the recommendation made by my noble and learned friend that the noble and learned Lord, Lord Roskill, as well as the members of his committee, should have the grateful thanks of this House for the report we are now considering very briefly and in principle.
If I may say so with great respect, I believe that we have the emphasis a little wrong in the speeches of the noble and learned Lords the Lord Chancellor and Lord Denning. I want to return to the emphasis in the report that when dealing with the present critical situation created for the City of London by Lloyd's, Johnson Matthey and similar cases, it is necessary to take urgent action. But when the committee came to consider the nature of the urgent action that has to be taken—which many people, in a preliminary view, took to be the abolition of a jury in the case of a complex fraud trial (a matter that was given such emphasis by the noble and learned Lord, Lord Denning)—it reached the conclusion, in paragraph 1.3 on page 5, that:At the outset of our inquiry it was felt that the main part of our work would be concerned with the question of jury trials for fraud cases. It soon became evident, from the volume of evidence we received, that although witnesses were concerned about the retention or otherwise of jury trials, their main criticisms and suggestions related to the administrative and legal procedures presently in force in fraud cases which were thought to be out of date and unrealistic".As my noble and learned friend Lord Elwyn-Jones emphasised, some of those administrative recommendations are accepted wholeheartedly and very warmly by those who are concerned with the situation that now prevails in regard to fraud cases.
989 I want to emphasise that part of the report and that part of the Statement that dealt with the improvement that will be made in the staffing of the office of the Director of Public Prosecutions and of the Department of Trade and Industry. I am hoping that the announced increase is sufficient. I remember, as the noble and learned Lord the Lord Chancellor may remember, the letter that appeared in The Times of 30th November written by the controller of the fraud investigation group at the DPP. His letter described-as monstrous the caseload that the DPP's office had at that time. I hope that the noble and learned Lord the Lord Chancellor and the Home Secretary are both satisfied that the increase of nine staff they have announced and the short-term service contracts with barristers and solicitors who may be available really will reduce a caseload that has been described as monstrous to one that can be described by the word "tolerable".
It seems to me that it is on those matters that we ought to lay emphasis in order to see at least whether the reforms in procedure contained in this report and the staffing of the DPP's office and the Department of Trade and Industry will be successful in dealing with the matter that is the scandal now before us, and which was the reason for this report, before we start interfering with what is so vital in our tradition—the trial by jury.
I saw that the minority member of the committee wrote an article in today's Times. I imagine that most Members of the House will have read it. In terms which I believe are acceptable he said how extraordinary it was that a robber, armed with a shotgun, stealing £1 million from a bank in the City of London would have the right to trial by jury but somebody who by fraud managed to extract that amount from a bank would not have that privilege.
In conclusion, may I make mention of one point that I believe has not been made so far? What is going to be done—or is this under consideration; and, if so, I am perfectly content—with the strengthening of the careers structure which was recommended in the report for the fraud investigation branch of the police? What is being done there about the increase in staff? It is apparent—is it not?—that before any fraud matter, or certainly any complex fraud matter, can reach the DPP's office the necessary qualified police officers have to investigate and present the case to it.
§ The Lord Chancellor
My Lords, I think we must remember that this is only a Statement that we are debating. However, I should like to thank both my noble and learned friend Lord Denning and the noble Lord, Lord Mishcon, for the valuable contributions they have made. I think I enjoyed the contribution of my noble and learned friend almost as much as he did himself.
To this extent only I venture a criticism. It is this. I hope that nobody will make up a final mind about these matters, even when they are controversial. What we want is prolonged and intelligent discussion without pre-emption. I realise that Mr. Merricks is in a special position because he wrote a minority report but I was sorry that he contributed to The Times. I 990 think that Lord Roskill and the majority were entitled to a fair go too. We do not want to take up preconceived positions.
Of course, the noble Lord, Lord Mishcon, is perfectly right, as was the committee, in pointing out that the great majority of the recommendations do not depend on the so-called FTT. To that extent they are clearly quite right, but I do not think that we ought to take up too firm a position on these matters before we have thought them through and found out what it is that people are going to say and think about it. My own view, for what it is worth, is that the committee, both the minority and the majority, were right in saying that one must apply to fraud cases, particularly long fraud cases, a different state of mind from that applied to what I might call ordinary crime; for reasons I have already given and, therefore, will not repeat.
On the question of peremptory challenge and jury trial, I would only say that we should not make up our minds in a hurry. I would say, either by way of supplement, or otherwise, to my noble and learned friend Lord Denning, that it is idle to suppose that in a case which is to last for six months one can get a random jury. One of the aspects which the report does not mention, but which ought to be borne in mind from the start, is that jury trial is compulsory. The people who cannot get excused from six months of their life being taken away from them compulsorily except on weekends—de die in diem—are certainly not a random sample of the population. Certainly the absence of a random sample is not created by peremptory challenge or standing by from the Crown but from the mere fact that the trial is going to take six months. That is yet another reason for thinking this through as a very serious matter. If we do find that there is a case for experiment, let us go wholeheartedly for it. If we find, as a result of experience, that there are lessons to be learned in the general field of crime let us not be too slow to apply them. At the moment we are just dealing with fraud and I simply make the plea for an open mind on the controversial matters.
As regards the non-controversial matters to which the noble Lord, Lord Mishcon, referred, I can assure him that, in me at least, he has an ardent supporter of action. Of course, we have to build on the FIG because that is the foundation which we happen to have and which is the point from which we start. It is very difficult to find, train and develop qualified staff.
I think I can tell the House that, having discussed this with colleagues, I found nobody who was not absolutely convinced that wholehearted support of the broad thrust of the report was an urgent necessity. I am glad to note that this was the general theme of the views expressed so far in debate and I am sorry that we have not had proper time, but perhaps it will come.