Business Law Assignment :Evaluation Of Different Corporate Fraud In The UK Corporate Sector
Task: Write a reflective journal on computer architecture assignment analysing the theoretical concepts captured from the weekly material.
Corporatefraud is illegal activities carried out by either individual or group for personal benefit in an unethical and unlawful manner. In other words, it can be said as the intentional interpretation of unlawful activities for personal benefit. The present task focuses on the evaluation of different corporate fraud in the UK corporate sector. Legislative responses against those corporate frauds are also discussed here.
Fraudulent activities and legislations
A vast range of fraudulent corporate activities is present in the UK corporate sector area. Insider dealing, money laundering, activities in operations and management process of companies, bribery and wrongful trading.
Dealing with the insiders in a business process regarding the price ¬affected securities is the most common form of fraudulent corporate activity. As stated by Bonita and McCorquodale (2017), it encourages another person to deal in the price affected securities and provide internal information of an organization. Disclosure of information is one type of fraud that might affect security provision of on an organization, as per the principle of the Criminal Justice Act 1993, section 55,acquiring fundamental security is necessary to manage the activities of insiders in the corporate sector (Gov.uk, 2020). As per section 56, it is necessary to take legal action for those insiders that are responsible for achieving vital information of an organization to an outsider.
Moneylaundering is another important unlawful and fraudulent activity which is associated with making vast numbers of money. Vast numbers of money are generated mainly by illegal activities, and it is considered as a financial crime (Ifa.org.uk, 2020). Placement, integrationand layering are the three most crucial term associated with money laundering. Proceeds of Crime Act 2002is the act implemented in the UK for confiscation and civil recovery from any type of money laundering activities in the corporate area. As per section 327 and 330, it covers the event where an accountant informs the client and submit a report on the National Crime Agency (Startupdonut.co.uk 2020).14 years’ imprisonment is the primacy punishment of such type of fraudulent activity.
Bribery is defined as the illegal activity where someone offers some lucrative item of value to others in exchange for some other facility. As per section 1, Bribery Act 2010officering money or other value affects the behaviour of the recipient. As per section 2, receiving or accepting a bribe is offensive and illegal. As mentioned by Trautmanet al. (2018), the penalty is given for an individual caught bribery is a maximum of 10 years. In the case of the commercial aspect, the fine may vary up to the unlimited time frame.
Failure to manage the account and providing misleadinginformation’s are also called fraudulent corporate activity. These two forms of activities fall under the category of criminal activity. Here the director can be prosecuted and end up with a particular form of a criminal record. As per the Criminal Act 2006, section 499, upto £5,000 fine for eachcase can be charged from the offenders. Company Directors’ Disqualification Act 1986, can also be applied for the people associatedwith the activity of providing misleading information (Du Plessis, 2017). In this aspect, up to 6-month jail is provided by the legislative body in the UK Legal System.
Fraudulent Trading and wrong trading are two forms of fraudulent activities in the UK corporate sector area. Fraudulent trading is the process of doing businessto save and defraud creditors. On the other hand, wrong trading is the dishonest way required to carry unlawful trading activities. Section 214 of the Insolvency Act 1986, is generally applied to identify the wring trading as well as fraudulent trading in the corporate sector (Cps.gov.uk, 2020). As per Directors’ Disqualification Act 1986, directors are resonated from the company and disqualified for further business activities for at least 15years. For example, Balfour Beatty the reputed construction company in the UK Thus laws for employee safety have to be incorporated within the business process. Incorporation of intellectual property act has to be given essential incorporated Health and Safety at Work Act 1974 to provide basic safety to their staff. Focus immediately after the safety legislation of staff (Legislation.gov.uk, 2020).There are vast numbers of legislative actions present in the UK that help to eradicate the misleading and Fraudulentbehaviour in the corporate sector. The Fraud Act 2006,is the most important in UK business law that prevents misleading behaviour and fraudulent activities within an organization (Gov.uk, 2020). Detection of criminal activities within a firm is easily identified with the application of this law. In the present era, fraudulent activities are typical for corporate companies. The Contracts of Employment Act 1963 introduces a reasonable dismissal between employers and employees (Legislation.gov.uk, 2020). A clear contract not only helps to identify the fault and difficulties from the end of staff, but it can also help to identify the difficulties put by the employers. Here the probationary period requires a minimum of 3 to 6 months and helps in the reduction of unethical behaviour and work practices (Gov.uk, 2020). The Criminal Finances Act 2017, under this law, the corporate organization has to be liable for the failure to prevent the action of their employees and also others that have tax evasion. In this law, firms can take any type of action for their staff irrespective of their designations.
For example, the Royal Bank of Scotland Follows the data protection act to ensure customers about the privacy and anonymity of their private data. The Intellectual Property Act 2014, came into action for maintaining the IP of a business to some extent. In addition to this, the act defines the way by which trade, operation, designs, and materials are protected in case of business.
From the overall discussion, it has been concluded that corporate fraud is common in the UK corporate sector area. Money laundering, bribery, wrong trading, dealing with insiders and unethical business operation are a common form of corporate fraud. Criminal Justice Act 1993 and The Fraud Act 2006 are generally applied to eradicate these types of fraudulent activities. Disqualification Act 1986 is also applied to manage wrong trading and fraudulent trading activities within business organizations. From fine to imprisonment are applied based on the type of fraudulent activities.
Bonita, J., and McCorquodale, R., 2017. The concept of 'due diligence' in the UN guiding principles on business and human rights.European Journal of International Law, 28(3), pp.899-919. Cps.gov.uk, 2020.Fraud Act 2006.Available at: https://www.cps.gov.uk/legal-guidance/fraud-act-2006 [Accessed on 29th April 2020]
Du Plessis, J.J., 2017. Disqualification of Company Directors: A Comparative Analysis of the Law in the UK, Australia, South Africa, the US and Germany. Taylor & Francis.
Gov.uk, 2020.Contracts of employment and working hours.Available at: https://www.gov.uk/browse/employing-people/contracts [Accessed on 29th April 2020]
Ifa.org.uk, 2020.Anti-Money Laundering. Available at: https://www.ifa.org.uk/technical-resources/aml [Accessed on 29th April 2020]
Legislation.gov.uk, 2020. Company act UK. Available at: http://www.legislation.gov.uk/ukpga/2006/46/contents [Accessed on 29th April 2020]
Startupdonut.co.uk 2020.Principle of business law in UK. Available at: https://www.startupdonut.co.uk/business-law/business-law-overview [Accessed on 29th April 2020]
Trautman, L.J. and Kimbell, J., 2018. Bribery and Corruption: The COSO Framework, FCPA, and UK Bribery Act. Fla. J. Int'l L., 30, p.191.