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June 21, 2009

Will MPs face charges?

The brief announcement from Scotland Yard on Friday evening that the police had “decided to launch an investigation into the alleged misuse of expenses by a small number of MPs and peers” took some news organisations by surprise.

Surely the Metropolitan Police and Crown Prosecution Service had said it was “highly unlikely that there could be a successful prosecution”?

That was certainly how most news organisations read the confusingly worded statement put out by the two organisations two weeks earlier.

In fact, that statement said it was unlikely there could be a successful prosecution “unless evidence is available which shows individuals deliberately misled the fees office”. And this seems to be what the police now think they may have.

The point seems clear enough: if you claimed for a duck island or for cleaning your moat — and that is what you spent the money on — you have not misled the fees office. Your claims may have been outrageous but they were not unlawful.

But what if you claimed for a mortgage that you had already paid off? What, indeed, if you claimed more for council tax than you owed the council?

Then, assuming your claim was made on or after January 15, 2007, you might have a case to answer under the Fraud Act 2006.

That provides three different ways of committing the new offence of fraud. The first of these seems most appropriate for a phantom mortgage but the other two might fit as well. It doesn’t really matter because it’s a single offence, with a maximum penalty of 10 years whichever way you do it.

The first way of committing the offence is by dishonestly making a false representation with the intention of making a gain. The crucial word here is “dishonestly”; ultimately, a jury would have to decide whether or not an MP had made an honest mistake.

A representation is false if it is untrue or misleading and the person making it knows it is, or might be, untrue or misleading. And an MP who claims for a phantom mortgage would be caught by the law even if he never said he had a mortgage at the time. A claim for repayment is treated as an implied representation that the claimant has a mortgage, just as a customer who eats in a restaurant is making an implied representation that he will pay the bill.

You are also committing fraud if you dishonestly fail to disclose information that you are under a legal duty to disclose and you intend to make a gain for yourself as a result. Again, “dishonestly” is the key word. “Legal duty” seems broad enough to cover an MP’s duty not to mislead the fees office.

Finally, fraud can be committed by someone who occupies a position in which he is expected to safeguard the financial interests of another person and dishonestly abuses that position with the intention of making a gain.

It might just be possible to stretch that to cover the position of an MP who is expected to safeguard the financial interests of taxpayers. But there would be no need if the CPS could get home on one of the other routes.

Offences committed before January 2007 are covered by the Theft Acts. Again, though, dishonesty is the crucial factor.

If I were one of the MPs alleged to have claimed for a non-existent mortgage, I’d be quite worried. Unlike the cash-for-honours case, this investigation is based on clear, modern legislation. If the evidence stands up, I have no doubt that the Director of Public Prosecutions would regard a prosecution as being in the public interest.

Posted at June 21, 2009 08:14 PM