Following on from our latest newsletter, many people have asked for some guidance on what constitutes criminality or dishonesty. I felt co-director Andy would be the best person to answer this as he is an ex police officer who now investigates fraud and banking issues on a regular basis. He has kindly sent the following guide lines:
The standard common law test of criminal liability is usually expressed in the Latin phrase, ‘actus reus’ non facit reum nisi mens sit rea, which means "the act is not culpable unless the mind is guilty".
The intention or knowledge of wrongdoing that constitutes part of a crime is known as ‘Mens Rae’.
‘Mens Rea’ in criminal law is concerned with the state of mind of the defendant. Crimes will ordinarily require proof of ‘Mens Rea’.
The above may sound like double-dutch, but dishonestly is something that has to be tested to establish whether a crime has been committed.
Testing for dishonesty:
For example: If a person took your bicycle from outside of your home and rode off, would that be a crime? The answer is, perhaps! – It all depends why they took your bike? i.e. their state of mind (Mens Rae) in doing so.
It may be that they had a good reason to borrow your bike and would be bring it back later. i.e. a friend that thought you would not mind. It may be someone with some mental incapacity who saw the shiny bike and did not realise they should not take it. However, the person may also be a criminal who dishonestly intended to take your bike, without your consent with the intention of selling it and keeping the money, in which case dishonesty / their dishonesty makes it a crime.
Determining the dishonesty proof could be that later the person is caught selling your bike to someone else.
English law uses the 1982 Regina V Gosh case to create a test now called the ‘Gosh test’ where a persons Mens Rae is tested for dishonesty. The dishonesty test must be both subjective and objective.
1. Was the act one that an ordinary decent person (normally considered to be the ‘The man on the Clapham omnibus’) would consider to be dishonest? (the objective test) If so :
2. Must the accused have realised that what he was doing was, by those standards, dishonest? (the subjective test)
Note that it is not essential for a person to admit that they acted in a way that they knew to be dishonest, it is probably enough that they knew others would think their behaviour was dishonest, or that they thought that what they were doing was ‘wrong’.
For example: if you used money from the church collection box to buy your lunch, the jury at court would be asked if ordinary people regarded that to be dishonest, and if so, did you know that ordinary people thought that way.
Practical examples - honest error or dishonest behaviour:
Once again this all sounds complex, but in practical terms, looking at bank Manager behaviours it all begins to make sense:
Assume that the following are provable:
1) A signature on a Personal Guarantee document has been falsified by a bank manager, making the person falsely named, liable for the amount on the PG – Banker honest error or dishonest?
2) A Credit Team Manager writes a false risk and financial status report about a business, claiming it is insolvent when he knows it is healthy. Honest error or dishonest?
3) A property valuation instruction from the banker that a property must be valued as a distressed property, when in reality the property is not distressed. – Honest or dishonest?
4) A bank manager does a loan presentation to a customer which is deliberately misleading after which the customer agrees to something he would not have agreed to had he known the truth. Honest or dishonest?
5) A bank manager lies in court or in statements to the court. Honest or dishonest?
6) A customer record is falsified and provided to the IRHP Review team which prevents the customer from obtaining their due compensation. Honest or dishonest?
The basis of deciding dishonestly in these cases is relatively simple as the fact speak for themselves. The Bank manager is an ‘expert banker’ and therefore knows the difference between what is right and what is wrong. The above examples are all dishonest, almost by definition.
However in the above cases, to prove the dishonesty – evidence of what is stated is clearly required:
1) The signature is tested and found to be false, - ink dating / handwriting expert the customer was out of the country on that date etc.
2) There is evidence of the business solvency and that the manager knew it. E.g. accounts provided to the Manager, an email from the manager stating that he is pleased with the business performance.
3) The Manager knows the business is solvent, repaying its loans, the property is sound and similar properties are valued higher, and or the property in question had been recently valued with provably no deterioration which would cause a large drop in value.
4) The loan presentation omits or includes vital information which the bank manager knows he should have stated or should not have stated e.g. That interest rates were in decline but he says they were about to increase dramatically when he knew this not to be the case. OR that some caveat will be introduced later in the process when the customer cannot obtain alternative finance.
5) The manager lies about facts, evidence of which he fails to disclose at the time and or which later become known by the customer / court.
6) The customer may have their original customer record. The customer may be able to prove the falsity of what was provided to the IRHP team by the banker.
So when looking at your cases for dishonestly ask yourselves the following questions:
· Gut instinct - Was what happened mere mistake(s) or something worse?
· Was it deliberate?
§ Can I prove it was deliberate by reference to written materials or recorded conversations?
· If it was deliberate, what did the bank gain or stand to gain?
· Did I lose anything, or was the banker behaviour reckless in that I could or would be likely to suffer financial loss?
o Would the banker have realised this?
o What evidence do I have of this?
· Is there anything I have which pinpoints dishonest behaviour that the banker would know was dishonest, whether by deliberate overt action or omission?
o For example in a live case, the banker was told by bank credit that in order for the customer to receive the proposed loan, the banker must obtain the customers agreement that his overdraft would be cost from £70K to £20K. The banker did not inform the customer of the proviso. The banker told credit that the customer understood and agreed to the proviso which was false. The loan was granted on the false assumption by bank credit that the customer had agreed to the provision. The customer went under after the bank cut their overdraft to £20K leaving them with no working capital. Had the customer known of the proviso to the loan, they would not have agreed to it and the loan would not have been advanced, but the customer’s business would have survived.
· Can I pinpoint who actually did these things to me or was it just – the bank?
In determining dishonestly, you must not rely on logical conclusion unless you have some real proof to back up the logic. I.e. You cannot add a series of events together and just assume that there was dishonesty involved without some tangible evidence on which to attach your logical conclusions. Mere supposition is not enough, because if there is any doubt whatsoever, they will get away with it.
Dishonesty has to be ‘individual’ responsibility in the end. i.e. a named banker!
To encourage you all, we have seen many instances of criminality which are documented so well by the bank (which does not bother to cover these things up) that there can be no doubt whatsoever that crimes have taken place.