Time will tell just how this person was able to do this – and what gains were made from the fraudulent behaviour. It’s an incident that underlines the opportunist nature of those who seek to commit investment fraud.It may sound like obvious advice but anyone looking to invest in a product, scheme or company would be strongly advised to carry out thorough checks on whoever or whatever is seeking their finances. The background of those seeking your investment must be examined. Making checks on their track record, querying why they are seeking investment now and seeking explanations about why they are seeking it from you specifically are all essential actions. Anyone looking to sign a deal has to provide proof that what is proposed is a worthy investment and give a detailed breakdown of who is set to benefit – and how. Many may feel that such an approach is beyond them and shy away from it, believing they lack the necessary expertise. This is understandable. After all, they are in business to do deals rather than play the role of investigator. But often business requires investigation. If such investigations seem beyond the abilities of a company or an individual, they should seek legal advice. If investment fraud is identified, those who recognise it have a number of options. They can report it to the authorities and let them investigate and decide whether to bring a criminal prosecution. Alternatively, they can bring civil proceedings against those they believe have committed the fraud. They could even bring a private prosecution against those they are accusing of fraud. It is important to remember that it is possible to report the matter while also pursuing a private prosecution or civil action.
In the case of Arsenal and the BYD, little information has been divulged about how this person was able to convince the people he was looking to defraud that he was a bona fide representative.No doubt the car maker and all those that were defrauded will be looking to see how it was allowed to happen. As the investigation unfolds, it may discover that due diligence was not carried out by some or all of the companies involved. This could be because individuals failed to make the proper checks that they were required to do in accordance with their position within a company. It could, however, be because the company had no such system in place. This is another area where companies have to take the necessary steps to “fraud proof’’ their operations. Yes, checks need to be carried out. But they need to be part of a wider, systematic approach to fraud prevention. Such an approach involves making sure staff are aware of the risks (and the signs) of fraud. This can involve staff training. The right approach also requires a clear whistle blowing and investigations procedure, so that any of the company’s staff, representatives or trading partners know they can report any suspicions of fraudulent activity in the knowledge that they will be taken seriously. BYD’s promotional push may have stalled in the wake of this problem. Arsenal – and any other BYD trading partners affected by this – may feel they have suffered a public relations own goal or even a damaging loss. But there are many other players in the business world who could learn from this…and toughen up their fraud defences. Neil Williams is senior associate solicitor at Rahman Ravelli.
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