The UK needs stronger measures to encourage whistleblowing on corporate fraud, according to a think tank.
The Institute of Economic Affairs (IEA) said that fraud accounted for 41% of all recorded crimes in the year ending September 2022 – and that deferred prosecution agreements (DPA), used by prosecutors to suspend criminal charges against a company in exchange for co-operation, disclosure of wrongdoing and payment of fines, are increasingly inadequate.
Its study, Fixing Fraud: Flaws in the Economic Crime and Corporate Transparency Act and the current enforcement approach, said companies used DPAs to mitigate reputational damage, with fraud seen as a business expense rather than a crime.
The IEA has said the UK should adopt initiatives similar to the US’s False Claims Act, which has led to more than 59.15bn in sanctions, with whistleblowers contributing to around 70% of fraud recoveries. Financial rewards for whistleblowers would also be a cost-effective way to reduce fraud, it argued.
“The most efficient way to obtain evidence is to buy it from those with easiest access to it, and the UK should incentivise corporate whistleblowers,” said report author and Bournemouth University principal academic in law Alison Cronin.
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