Should I blow the whistle? Financial Times

Published on 22 Aug 2009 under category: cubism

By Dan Hyde, Consultant at Cubism Law

As published in Financial Times 22 August 2009

I am a minority shareholding director of a property investment company and am concerned that our managing director and two other board directors are involved in activities that could be criminal in nature. I am considering reporting my suspicions to the Serious Fraud Office, but I am concerned about the impact this could have on the company and my future career prospects. What would you advise?

There are compelling reasons why you must report this. In a recent case, the Court of Appeal ruled that where a director commits fraud, his or her fellow directors are in breach of their duties to the company in allowing the fraud to happen, and cannot properly defend themselves with the claim that the director would have deceived them had they tried to prevent the fraud. In addition, a failure to report could lead to the commission of a criminal offence under the Fraud Act 2006 and also under the Proceeds of Crime Act 2002, since dealing with property (including money) obtained by criminal conduct will likely constitute a money laundering offence and the failure to disclose your suspicion will in itself be an offence. I would advise you to inform the police force nearest to your company, who may pass it to the Serious Fraud Office or other specialist unit, as well as the Serious Organised Crime Agency (SOCA). The disclosure to SOCA relates to the potential money laundering aspect and is by the way of prescribed form. You may have some protection under the Public Interest Disclosure Act 1998. This will depend on whether you qualify as a “worker” under the extended definition and whether the disclosure qualifies for protection. You would need to obtain specialist legal advice on this.