Fraud laws weak
Police say loopholes do not act as deterrent against swindling
FORMER head of the Fraud Squad, DSP Albert Diah is contending that fraud continues to be a major problem in Jamaica because the laws under which the dastardly act is prosecuted do not act as a deterrent.
“The law is definitely too weak and, oftentimes, the police are frustrated in their efforts to investigate,” Diah told the Jamaica Observer in a telephone interview last week. He was speaking against the backdrop of the increased levels of fraud being reported in recent days, topped by the multi-billion-dollar case unfolding at Stocks and Securities Limited (SSL).
Diah, who headed the Fraud Squad between 2016 and 2019, said even the time that is served in prison for fraud shows what little regard the country has for the crime.
Fraud cases tried in the parish courts carry a maximum sentence of five years and those tried in the High Court attract more time, though sometimes not significantly more.
Diah referenced the case of former operations manager at NCB, Andrea Gordon who in 2021 was convicted for defrauding the institution of $34 million but was sentenced for only 7 years.
Another case that was referenced was that of former national football coach, Geoffrey Maxwell who in 2001 was sentenced to 12 months in prison for defrauding H.D. Hopwood, a pharmaceutical company, of $22 million between 1997 and 1999.
“In the US, for example, the laws are strong on fraud because they say fraud leads to every other crime. Fraud leads to murder and fraud can damage the economy, so a man will kill a man and get 10 years but a man who commits fraud will get 200 [years]. Now out here, a man commits fraud and he gets a slap on the wrist and him gone — mash up people life, mash up the economy, and the fraud he commits, he uses [the proceeds] to buy gun and kill people, and nothing nuh come out of that,” a current member of the Fraud Squad told Sunday Finance. He contrasted that with Bernie Madoff who operated a multi-billion-dollar fraud scheme in the US and was sentented to serve 150 years in prison in 2009.
“Now, the authorities nuh want to do nothing about it because some of them are involved in it [as well].”
However, members of the Jamaica Securities Dealers Association (JSDA) disagree with the police that the fraud laws are weak, saying regardless of the length of the sentence, going to jail itself is a deterrent.
“The headlines are there when the fraud is discovered, but what people don’t talk about is when they are convicted. They don’t talk about when a man has been charged for fraud and is on bail for ten years and he has this thing over his head. Have you ever seen those people? Have you seen how they lose weight and the whole nine yards?” Gary Peart, CEO of Mayberry Investments and a former president of the JSDA, told Sunday Finance.
“As far as I am concerned, it is very strong. Telling a man it is only three to five years, I don’t know about you [but] I don’t want to go for even a day,” Peart added.
Peart was part of a group of securities dealers who were part of a Jamaica Observer Business Forum
on Thursday, assuring investors that despite the fraud at SSL, investments remain safe in the sector.
The group said it is debatable whether there is an increased level of fraud or if it is amplified by virtue of greater reporting.
“Don’t underestimate the impact of higher levels of reporting — both formally and I go as far as to say informally to social media,” JSDA President Steven Gooden pointed out. He added that people having their names tarnished also acts as a deterrent.
“I have heard one of my fellow institutions come out and say, ‘We have zero tolerance on fraud. If you commit fraud, we’re reporting it to the police station.’ “
But the police insist that roadblocks are put in the way of investigators by some institutions because of the negative connotations that accompany a financial entity that has been hit by fraud.
“You have some institutions, and I was the head of the Fraud Squad for about four years, which don’t co-operate. The banks hide behind the Banking Act, especially the section which says the banks need to keep clients’ information secret,” Diah said. “Even where the law requires you to fully cooperate with the police, they still don’t — for the most part.
“When you write to them for them to co-operate their attorneys put roadblocks in the way which sometimes force the police to go the route of court orders. Now there is a technicality with the court order and it speaks specifically to matters that are before the court, and the investigative tool that the police have is the ministerial order because that is the one that speaks to the investigative method. Now, my personal experience is that when I write to the minister, they say they only write ministerial orders for things that are in the national interest,” the DSP continued.
However, the JSDA points out that even with incidences of fraud, most people in the industry are honest.
“This industry is not like many others. The financial sector overall is one that operates on trust. If you are found to be deficient in handling the interest of your clients, your shareholders, your company overall, you will never work in [the] industry again,” Julian Mair, chief investment officer at JMMB Investments, pointed out.
“There are people who worked in the industry 30 years ago and have been a part of an executive team that had a company failed. They themselves would’ve never been charged for anything, and they themselves will never hold another job in the financial industry, so the deterents are criminal and professional and they’re, of course, also societal,” Mair concluded.