This morning the Telegraph reports on an expenses claim by Elliot Morley for mortgage interest he never owed; and for the first time, this report mentions potential offences, with a quote from solicitor Steven Barker, quite rightly saying that any offence that an MP might have committed in these circumstances would be under the Fraud Act 2006, or else under section 17 of the Theft Act 1968.

Under the 2006 Act, there are three ways of committing fraud. Under section 2, you commit the offence of fraud by false representation if you dishonestly make a false representation intending to make a gain; a representation is false if the person making it knows that it is, or might be, untrue or misleading, and includes any representation as to fact or law, including a representation as to your state of mind.

Note, therefore, that it’s enough to know something might be misleading; and you can commit the offence by saying something you know might mislead people as to your intention, say about where you will spend most of your time. Critically, though, to be guilty of this offence you must act dishonestly, which under the two-limbed test in R v Ghosh means

– what you did was dishonest by the ordinary standards of reasonable and honest people, and
– you knew it would be regarded as dishonest by reasonable and honest people.

Under section 3, you commit fraud by failing to disclose information if you dishonestly fail to disclose to another person information which you are under a legal duty to disclose, intending to make a gain. And under section 4, you commit fraud by abuse of position if occupy a position in which you are expected to safeguard, or not to act against, the financial interests of another person and dishonestly abuse that position, even by omission, with intent to make a gain.

Fraud carries a maximum sentence of 10 years imprisonment and/or an unlimited fine.

It seems to me section 2 is the only realistic potential fraud offence here; while section 4 seems at first blush apt to cover an MP acting fraudulently against the taxpayer’s financial interest, I think it’s intended to cover the kind of situation where a trustee, say, misappropriates money, without necessarily saying anything false. In the scandal over MPs expense, my feeling is that if any offence is committed, it’ll be because an MP has made a misleading claim. In those circumstances, section 2 looks like the right one to charge.

The most likely alternative would be false accounting under section 17 of the Theft Act 1968. You are guilty of false account if dishonestly, with a view to gain, you falsify any account, record or document made or required for any accounting purpose; or if in furnishing information for any purpose you produce or make use of any such document which you know is or may be misleading in a material particular. Section 17 is a classic white collar fraud offence, very apt to catch gaining money dishonestly by making a dodgy expense claim.

The maximum sentence for that offence is seven years in prison.

It’s also important to bust a myth that seems to have spread at Westminster and in the blogosphere: the old offence of obtaining a pecuniary advantage by deception is a complete red herring. That was under section 16 of the Theft Act 1968; but if you followed that link, you’ll see it’s been expunged from the statute book, having been repealed in January 2007 by the Fraud Act 2006. If that weren’t enough, it wouldn’t apply to any MP’s expense claim even before 2007 because the offence was limited to very specific circumstances, the best example of which was getting a job by lying on your CV. This book by Catherine Elliott and Frances Quinn explains pretty well what section 16 used to cover.

2009-05-14T07:17:00+00:00Tags: , |