Member Article

In the recent case of R v Andrewes [2022] UKSC 24, the Supreme Court considered whether stripping the Defendant of their earnings would be disproportionate when considering the financial benefit obtained by CV Fraud.

This article takes us through the facts of the case and Lauren Bowkett, a Principal Associate in the Business Crime and Compliance team, comments on the recent Supreme Court Judgement.

Facts of the Case

The case stemmed from the Defendant applying for the role of Chief Executive Officer (“CEO”) at St Margaret’s Hospice. The job description for the vacancy described a first degree as “essential” and an MBA as “desirable” qualifications for the position. The defendant applied for the role and claimed to have the educational qualifications and experience required. He secured the role in 2004 and remained in post until 2015.

Additionally, the Defendant, accepted appointments of two directorships, which were also based on false professional qualifications and employment history. In 2017 the Defendant pleaded guilty to one count of obtaining a pecuniary advantage by deception and two counts of fraud. Following his conviction, the Defendant faced confiscation proceedings.

The Recorder at the Crown Court set a confiscation order in the following amounts: benefit from his criminal conduct amounted to £643,602.91 (the “benefit figure”). This was broken down into “his earnings net of income tax and national insurance contributions” for his employment at the hospice amounting to £547,758.86, and £95,844.05 received for his two directorships. The recoverable amount was set at £96,737.24.

The Defendant appealed to the Court of Appeal on the basis that the confiscation order was disproportionate under section 6(5) of the Proceeds of Crime Act (“POCA”). He argued that he had given full value for performance of his services. His appeal was upheld, so the decision was appealed by the Prosecution to the Supreme Court.

The Supreme Court Decision

The question for the Supreme Court was where a defendant receives remuneration due to fraud resulting from obtaining employment by false representation or non-disclosure, in what circumstances (if any) will a confiscation order based on the wages earned be disproportionate?

The Supreme Court, in assessing proportionality, agreed that it would be disproportionate for the Defendant to repay the full £643,602.91 (described as the “take all” approach). This was on the basis that the qualifications and experience on the job advertisement were not a legal requirement, the Defendant had carried out his duties to the standard expected of him and using the “take all approach” would amount to double recovery.

In contrast the defendant argued in favour of a “take nothing” approach, asking for no confiscation order to be made. This was rejected by the Supreme Court on the basis that this would allow the defendant to profit from his fraudulent activity.

When considering what would be a proportionate benefit figure, the Court took what was described as the “middle way approach”. This was the difference between the higher earnings obtained through the CV fraud and the lower earnings the Defendant would have obtained if there had been no fraud at all. It was calculated by deducting the defendant’s salary in the new job obtained by fraud and the salary from his previous job. There was found to be a 38% difference, which reduced the benefit figure from £643,602.91 to £244,569. The Supreme Court decided that the available amount recoverable remained the same at £96,737.24.

Conclusion

Lauren says “the middle-way approach balances the competing interests of proportionality and the overarching objective of POCA to deny criminals of their ill-gotten gains. The Defendant was fulfilling the requirements of his job role successfully and this should have initially been taken into consideration. It was disproportionate to include the full value of his earnings and I am pleased to see the pragmatic approach taken by the Supreme Court in these proceedings”.

 

Link to article