BIG BUSINESS FRAUD BOOMING! – as workers fight for their rights

Visteon workers occupy their factory in Enfield to defend their pensions
Visteon workers occupy their factory in Enfield to defend their pensions

WHERE crime ends and business starts and vice versa has always been seen as a blurred grey area which always remains, whatever the scandals that rock the ruling class.

The Fraud Investigation and Dispute Services team at Ernst & Young has released new research revealing that the total fines issued to UK firms and executives for fraudulent activity has exceeded £1 billion in the past five years, with 68% of the fines being applied to the financial services industry (which equates to 55% of the total value).

The study collected data from over 700 cases of fraud reported since 2007 using information provided by three major UK governing bodies.

The data compared the penalties imposed on firms and individuals alongside the reasons behind the fine.

The investigation found that since 2007, UK companies have been fined a total of £976,119,238 whilst individuals have been fined a total of £45,967,462.

The study found that 68% all cases of fraud over the past five years were within the financial services industry, with cases of financial fraud highest in the mortgage industry and specialised finance sector.

Overall, the total fines for the financial services industry exceeded regulatory censure.

John Smart, Partner at Ernst & Young, said: ‘It is worrying to see that the regulators have needed to step in so frequently and issue punishments of this severity to businesses and executives.

‘Just under half of the penalties handed out in the past five years have been monetary fines and the market, for the most part, is not in a condition for businesses to be losing money due to negligence.

‘These results should serve as a stark warning to all businesses in the UK to get their houses in order.

‘Whilst the results vary across different industries, firms should be mindful that these are not isolated situations, and fraudulent actions can occur across all industries and all sizes of business.’

The study’s findings also revealed that individual prison sentences across all regulatory prosecutions ranged from eight months to ten years, with partners and directors receiving the heaviest punishments.

The research reveals that since 1997, the average prison stay of a convicted fraudster – either acting individually or on behalf of a company – is 2,000 days.

John Smart concludes: ‘The extent and variation in the level of fines and prison sentences sends a clear message to UK businesses and their employees that misconduct will not be ignored.

‘Board members will need to take a good look at what they are doing and undertake a full risk and systems review in order to identify any blind spots and identify who the fraudsters are.’

Additional findings from the research include:

• 45% of all fines in the past five years were between £10,000 and £100,000.

• The consumer staples industry, incorporating food, beverages, tobacco and household goods, had the second largest total of fines and the largest average fine at £56,342,307.75, despite making up just 2% of all cases.

Meanwhile the ruling class carries on with its war with the working class all over the planet

• The Canadian Union of Postal Workers (CUPW) has just welcomed the International Labour Organisation (ILO) decision finding that the back-to-work legislation imposed on Canadian postal workers in June 2011 was unjustified as postal services do not constitute essential services.

The ILO is the United Nations agency responsible for drawing up and overseeing international labour standards.

‘This is a wonderful victory for the CUPW and the entire Canadian labour movement,’ said CUPW National President Denis Lemelin.

The ILO decision found that the right to strike is a fundamental right as it is the ‘essential means through which workers and their organisations may promote and defend their economic and social interests’.

The ILO points out that the right to strike can only be restricted when employees are engaged in essential services and when the disruption would threaten public health or safety. It noted that postal services do not fall under the definition of ‘essential services’.

‘The ILO decision is clear,’ said Lemelin. ‘The right to strike is a fundamental right and, in the future, the Canadian government must respect the rights of workers to negotiate and, if necessary, strike.’

In its decision, the ILO also noted that CUPW and Canada Post Corporation (CPC) had agreed on a protocol developed by the union and CPC in conjunction with provincial, federal and territorial governments to allow for the processing and distribution of socio-economic cheques in the event of a disruption of service.

The ILO said that it was the lockout by Canada Post management that ‘rendered respect for the minimum service protocol impossible’.

Instead of passing back-to-work legislation, ‘the Government should have limited its intervention to guaranteeing compliance with the negotiated minimum services’ protocol according to the ILO.

• Across the border in the USA, South Carolina AFL-CIO reported: ‘On Monday, more than 50 community members from Boiling Springs and Spartanburg, S.C., participated in a “dine-in” at Copper River Grill in support of the servers, bartenders, hostesses and other workers as they fight for a voice on the job and the right to self-representation at work.

‘The community wore stickers today that read, “I Support the Workers of Copper River Grill”.’

The action coincides with the 45th anniversary of Dr Martin Luther King Jr.’s march with sanitation workers demanding union recognition in Memphis, Tennessee, where he delivered his famous ‘Promised Land’ speech before his assassination.

Ken Riley, president of the South Carolina AFL-CIO, met with the workers of Copper River Grill last weekend. Riley said, ‘We are with these workers because what Copper River is doing is undermining the fundamental pillars of the workforce in America. They are taking us back to the 1920s.’

‘I serve food to people all day, but I make barely enough to get by. I am a single mother and I have to think about the future of my 9-month-old son,’ said Victoria Ballard, who has been at the Copper River Grill for three years.

‘Is it too much to ask that a working mother gets paid enough to put food on my own table without having to rely on food stamps?’

Restaurant workers have filed more than a dozen federal charges against Copper River Grill, including harassment, coercion, surveillance, interrogation, discrimination and retaliation.

‘I joined the “dine-in” to show support for these workers’ rights and reasonable demands,’ said Spartanburg Representative Harold Mitchell, co-chair of the South Carolina Progressive Network. ‘It’s wrong for corporations to rely on taxpayers to subsidise their low-wage, high-profit policies,’ Mitchell noted.

Mitchell, who is also chair of the South Carolina Legislative Black Caucus, pledged to introduce legislation to protect often-exploited service workers.

‘It’s against federal law to fire someone for organising for better pay or working conditions,’ Mitchell said. ‘We need to require bosses to have a “just cause” to take someone’s livelihood away from them.’

However, it is clear that the world of capital cannot be regulated or reformed. It has to be abolished by a socialist revolution if low wages, long hours, unemployment and brutal exploitation are to be really made illegal.