Although large-scale commercial fraud appears to have become an increasingly common feature of the modern business world, the liability of those who participate in such frauds or who receive their proceeds remains shrouded in uncertainty. This uncertainty has not been reduced by the recent decision of the Court of Appeal in Agip (Africa) Ltd. v. Jackson.1 The case raised a number of extremely interesting and difficult questions relating to the present scope of the law of restitution and the response of English civil law to commercial fraud. At first instance, the judgment of Millett, J.,2 represented a notable attempt to come to grips with these issues. Unfortunately, the same cannot be said of the judgment of the Court of Appeal. Now that the House of Lords has refused the defendants’ application for leave to appeal, the judgment of the Court of Appeal assumes much greater significance and therefore demands closer analysis than would otherwise have been the case.

The plaintiffs, Agip, were the victims of a large-scale commercial fraud. The first and second defendants were partners in a firm of chartered accountants, Jackson & Co., on the Isle of Man, while the third defendant was an employee of Jackson & Co. The plaintiffs were defrauded by their chief accountant, Zdiri. Zdiri was not an authorized signatory of Agip’s bank account but he was responsible for giving payment orders to authorized signatories of Agip, obtaining their signatures and then taking the payment orders to Agip’s bank, Banque du Sud. Unfortunately for Agip, he was also in the habit of occasionally changing the name of the payee on payment orders before taking them to the bank. One such payment order was for $518,000 and Zdiri fraudulently altered the name of the payee to Baker Oil Services Ltd., a puppet company set up to receive the money misdirected by Zdiri. The directors and only shareholders in Baker Oil were the first and third defendants. Banque du Sud, acting in accordance with the instructions which they had received, debited Agip’s account and telexed instructions to Lloyds Bank in London, where Baker Oil held their account, to pay Baker Oil $518,000. They also telexed instructions to Citibank, their correspondent bank in New York, to debit their account at Citibank and to credit Lloyds Bank or its correspondent bank in New York with the same amount. This method of proceeding exposed Lloyds Bank to a delivery risk