HC Deb 07 September 2004 vol 424 cc1026-7W
Mr. Wiggin

To ask the Secretary of State for Trade and Industry what research her Department has commissioned on fraud in large businesses; and what measures she has taken to prevent such fraud in the UK. [186663]

Jacqui Smith

My right hon. Friend the Secretary of State has not commissioned any research into fraud in large businesses. But the Department has engaged in a considerable range of activity post Enron as the Secretary of State announced to the House on 29 January 2003 in a speech on strengthening corporate governance.

A number of those measures are now taken forward in the Companies (Audit, Investigations and Enterprise) Bill which is currently before Parliament. The Bill amends the current regime for investigating companies. It contains provisions giving investigators a new power to get relevant information from anyone and strengthening their document-gathering powers, while retaining the existing protection for legally privileged material and banking confidentiality. There is also a provision giving investigators the power to require entry to, and remain on, a company's business premises without obtaining a warrant. This will make it easier to require documents and other information and to see the business in operation.

The Bill will also increase the independence of the regulation of the audit profession and give the independent regulator, the Financial Reporting Council, the powers and resources it needs to do its job more effectively. Further the Bill will enable company auditors to carry out their duties more effectively by entitling the auditor to require information and explanations from a wider group of people than at present, in particular from employees.

The Financial Reporting Review Panel will be given a power to require companies to provide it with the information it needs to carry out its investigations. This body currently reviews the annual accounts and reports of public and large private UK companies. The Bill will allow the Government to extend this to reviewing the interim reports of listed companies. The FRRP will also take a more proactive approach to enforcement.

I would also like to draw the hon. Member's attention to the proposal by the Home Office to establish the Serious Organised Crime Agency. This body will be part of a comprehensive strategy to target organised criminals. It will exploit hi-tech 21st century technology to uncover the new wave of crime bosses whose lucrative illegal enterprises range from drug trafficking and people smuggling through to fraud and money laundering.

The Government has recently completed a consultation on legislation to reform the law of fraud. The Government proposals for change are based mainly on the Law Commission Report on Fraud published in 2002. The main proposal is for the general offence of fraud which can be committed in three different ways: by false representation, by wrongfully failing to disclose information, or by abuse of office. In each case the behaviour must be dishonest, and must aim at securing a gain for the defendant or a loss for another.

Additionally the Government sought the views of business and other interested parties on the best means of creating and maintaining effective partnerships to reduce opportunities for crime against business and to enhance the contribution that business could make to crime reduction in England and Wales.