Fraud and the law

When fraud occurs, there are 2 legal areas to consider -

• Criminal law and
• Civil Law.

Criminal law is essentially within the control of the state which seeks to punish those involved. The fraudsters and their accomplices are investigated by the Commercial Affairs Department. If enough evidence is found against them, they are charged in court. The court will then sentence these culprits if they are found guilty. In cases of serious fraud, the guilty parties can expect long prison terms.

Civil law is more concerned with compensation for loss. The parties who have suffered as a result of the fraud will sue the fraudsters and their accomplices for their loss. In many cases however, these parties will be declared bankrupt as they will have few resources to compensate the victims. The victims will often seeks to sue any other parties with "deep pockets". In some cases, these will turn out to be the auditors. Other parties who may be dragged into the matter are those who have received the proceeds of the fraud innocently. Depending on the facts, they may be recovered to return the monies received.