What Contribution Can The Private Sector Make In Preventing Financial Crime?
There is a perception amongst many that financial crimes can be sufficiently regulated by the government forces such as the police and tax inspectors
. This is wrong because the scale of fraud in all sectors is massive and outweighs the scale of the official defences paid by our taxes. Spending even more on the problem is not the solution unless the effectiveness of the anti fraud resopurces can be improved.The most non-partisan stance on fraud cases can be enjoyed by the independant and objective fraud specialist forensic accountant. He or she will see a range of different cases from both the regulator's position and that of the criminal including money laundering and proceeds of crime cases. This leads to an understanding of the scale and variety of the problem, which includes cases of mortgage fraud and criminal defence.
It is often realised that there is massive opportunity for finanlcial wrongdoing on a large scale. This is both within the public and the private sector. What is even more astonishing is that the malpractice is being carried out not only within the criminal elements but often within the regulatory bodies themselves. Such is the scale of the white collar crime problem that tenacious regulators do not care if they throw the book at those that do and do not deserve the punishment alike.
This sometimes reckless approach to fraud regulation is the foundation of the adversarial criminal defence system. This is where just because a person is accused of a crime or having a criminal lifestyle they are presumed innocent until proven guilty. This is by the criminal courts at least - not by the prosecutors. This is why the person accused is entitled to substantial public funding in order to mount a defence and why he will often need the services of a forensic accounting expert to help prove his innocence.
Ensuring fraud does not take place in the first place would effectively minimise the need for public sector fraud regulation. The best place to start preventing fraud is within the private companies and public organisations themselves. This is where the lack of effectiveness often means that the problem of fraud can even be fuelled by the often inadequate fraud defences that many large concerns put in place. Lip service is often played to fraud prevention, putting a form filling solution in place and hoping the fraudster will look elsewhere.
One possible solution is to make available more public funds for the employment of private sector specialised anti-fraud resources. When the public sector absorb their own funding dealing with a problem, the cost is often greater and the results worse than when outsourcing to private sector individuals. If a consutant is paid three or four times the hourly rate of a policeman or tax inspector, this can still result in cheaper results in the long term. For each day that is remunerated, a day of quality service is provided, which will exclude time for training, sickness and administration which swallows huge tracts of time within the public sector. Qualified and capable policemen, tax investigators and other fraud regulators may agree with this, but many will lack the confidence to brave the normally uncertain career path associated with the private sector!
Within the private sector any business or person delivering some form of fraud regulation service must work efficiently and give good results. They must succeed in their promised outcomes so that the public funder is confident they have received the same or more value for their expenditure as when using directly employed staff. Encouraging private input in this way can improve the economy, reducing the dependence on the private sector and creating a culture of entrepreneurship and industry.
The publicly funded criminal defence system is one area of public funding that is failing to deliver an adequate service. For the government this is a huge area of expense, but it does not work. The system is a good example of an overly heavy public organisation being utilised to outsource private sector lawyers, barristers and experts used in criminal cases within the defence team. Placed next to the wasteful prosecutors, it is no wonder that so many massive fraud trials fail, or cost millions and never get to court. There must be a better way of balancing public and private sector resources that at the root level both contain so many skilled and experienced persons capable of dealing effectively with much more economic crime than they currently do.
The solution may be to not only increase the utilisation of privately funded resources for the various tasks they are currently used for by encouraging existing public servants to "go it alone" but also to extend private sector involvement to the management of the different resource areas also?
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