THE STRUCTURE OF THIS MONOGRAPH

Money laundering is a murky affair. Those indulging in it do not easily volunteer information and the truth is often elusive. Therefore, the onus is on regulators to investigate matters. This monograph examines the regulatory dynamics of the fight against money laundering by focusing on the UK government's response to allegations of money laundering against accountants. Our case study is based upon the High Court case of AGIP (Africa) Limited ⁶ v Jackson & Others (1990) 1 Ch. 265 in which a partner and an employee of a small accounting firm were judged to have 'knowingly' laundered money and assisted in the misapplication of the funds. The case study illustrates how money laundering activity is undertaken. It also draws attention to the fact that the court judgement also referred to the possible involvement of a larger firm. More importantly, the monograph highlights the operations of the regulatory apparatus in the UK in addressing cases of money laundering. Despite the court judgement, the reluctance of regulatory authorities to investigate evidence and allegations brought out in this case indicates an alarming degree of inertia and buck-passing within the UK regulatory process. The evidence of this case suggests the existence of a deeply ingrained indifference to the apparent involvement of major accounting firms in money laundering activity or, at least, an institutionalised disinclination to undertake vigorous and open investigation of such cases.

The monograph is organised into seven further chapters. The first of these (chapter two) focuses on the attempts to combat money laundering. It is noted that accountants claim to have the necessary expertise to detect and report money laundering, but it appears that this expertise is more often used to facilitate money laundering. The government's statistics show that accountants are least likely to report suspicious transactions to the regulators. Chapter three is based upon the `facts' which transpired from the evidence given in open court and from a review and summary of the judgement read out by Mr. Justice Millett in the case of AGIP (Africa) Limited v Jackson & Others (1990) 1 Ch. 265. In this case, an accountancy firm (Jackson & Co.) was judged to have used a series of shell companies to launder money (also see Mansell, 1991a; Robinson 1994, p. 293). By drawing upon the court judgement, the monograph details the way in which very large sums of money passed through the offices of this firm, though the only benefit derived by those involved took the form of standard fee income. As the High Court judgement stated that a number of contacts and schemes were provided to Jackson & Co. by a Grant Thornton partner, the fourth chapter examines this link. It also poses some questions about the efficiency of external audits. The clarity of the High Court judgement and the many unanswered questions surrounding the comparatively high-profile AGIP case should have attracted the attention of UK regulators. More specifically, allegations made during the course of the court case should have prompted an investigation of the involvement of the larger accountancy firm in the AGIP affair. This apparent lack of action prompted a dialogue with the regulators. Through a series of questions raised in Parliament and numerous letters to regulators and Ministers, including the Prime Minister, attempts were made to discover how the regulatory apparatus was responding to the revelations of the AGIP case. This correspondence is reported in the fifth chapter. In this chapter, we also note the Ministers parried all questions and responsibilities by referring to an ICAEW report that no outsider had seen. We eventually obtained a copy of the ICAEW report and our evaluation is given in chapter six. The ICAEW report is a whitewash. The serious matters raised by the High Court judgement had not been investigated. On the basis of the findings derived from our investigation of the response of the regulators and Ministers, chapter seven argues that regulatory indifference and inaction is indicative of the close and indulgent relationship between the UK accountancy industry and the state. It suggests that the UK government is more concerned with creating an impression of combating money laundering rather than taking action which would inconvenience accountants Chapter eight concludes the monograph by outlining some proposals for reform.

CHAPTER 2
ACCOUNTING FOR MONEY LAUNDERING

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