The decision in the appeal of Mark Conway v HM Advocate was published on 28 October 2020. The case highlights the importance of anti-fraud and anti-money laundering procedures and the connection between the two. It contains lessons for the public and commercial sectors.
On 2 August 2017, Mr Conway pled guilty to forming a fraudulent scheme to obtain money from Dundee City Council over the period of 2009 to 2016. He was employed as an IT Officer for the Council and on various occasions accessed the computerised payment ledger and created entries purporting to represent sums due to genuine suppliers, when actually the payment instructions meant payments were being made to his own bank accounts. Over the life of the scheme, Mr Conway defrauded the Council of £1,065,085.32.
In pleading guilty to fraud Mr Conway had explained to the Court that the underlying reason for his offending was a long-standing gambling addiction. He was sentenced to 5 years' and 4 months' imprisonment, which would have been 8 years' imprisonment but for his early guilty plea.
Mr Conway's appeal against sentence relied on new information that had become available since the sentence was passed. Namely:
- A Dundee City Council Scrutiny Committee Report into his conduct, dated December 2017; and
- A letter to the Scottish Criminal Cases Review Commission Referral ("SCCRC") from the Gambling Commission regarding the the outcome of an investigation into the conduct of William Hill which had been concerned with, amongst other matters, Mr Conway's gambling activities, dated 6 March 2018.
These documents showed that the Council had recouped the full value of the fraud through payments from Mr Conway himself, William Hill and their insurers.
The Appeal Court quashed the original sentence and substituted a sentence of 4 years' imprisonment, discounted from 6 years on account of Mr Conway's early guilty plea.
This case is a timely reminder, if one were needed, of the high risk of fraud faced by public sector organisations, and the importance of implementing policies and procedures to protect against that risk.
However, it also highlights the need to have robust procedures in place to prevent money laundering and the approach that regulators will take with organisations failing to implement effective procedures. In this case, the Gambling Commission's investigation revealed systemic failings in William Hill's anti-money laundering procedures. As a result it found that the bookmaker had failed to comply with its operating licence which required compliance with the Money Laundering Regulations. It was ordered by the Gambling Commission to "reimburse the identifiable victims who had suffered due to its customer's frauds". William Hill paid Dundee City Council £500,000 in recognition of the fact that it had gained from Mr Conway's illegal activity.
The Conway appeal "doubles down" on the importance to the public and private sector of having robust procedures in place to manage financial crime risks. It reminds us that failing to meet the necessary standards not only leaves an organisation open to fraud risk (Dundee City Council) but also enforcement action by its regulator (William Hill).