Does current UK asset forfeiture law strike the correct balance
between the interests of the general public in the recovery of the
proceeds of crime and the rights of the defendant?
It is not a matter in dispute, nor simply the rabid knee jerking of
the tabloid press, that the interests of the general public dictate
that crime should not pay, and that criminals should be stripped of
assets obtained through their criminal conduct. The rights of
defendants subject to confiscation proceedings, and indeed the
basis of prosecution in the UK, that the Crown brings the case and
therefore it is for the Crown to prove their case, must however be
weighed against this. Asset forfeiture law in the UK, when
challenged on the grounds of proportionality in the case of R v
Smith1, elicited this response at para 23 from
their Lordships;
"If in some circumstances it can operate in a penal or
even a draconian manner, then that may not be out of place in a
scheme for stripping criminals of the benefits of their crimes.
That is a matter for the judgment of the legislature, which has
adopted a similar approach in enacting legislation for the
confiscation of the proceeds of drug trafficking."
Tackling financial crime has been held by the European
Jurisprudence to be a legitimate aim, and the UK confiscation
regime a proportionate means of achieving that aim (as in the case
of Philips v United Kingdom2).
The present legislative position has its origins in the failure to
recover the proceeds of crime in Operation Julie3. The
findings of the parliamentary Hodgeson Committee established after
the conclusion of the case (where £750,000 worth of assets
although traced were not able to be recovered) were largely enacted
in the Drug Trafficking Offences Act 1986. This act itself was
superseded by the Drug Trafficking Act 1994, and crime other than
drug trafficking came into the regime following the Criminal
Justice Act 1988, superseded by the Criminal Justice Act 1993 and
the Proceeds of Crime Act 1995.
UK asset forfeiture law now stems from the Proceeds of Crime Act
2002 (hereafter POCA). S6 of the Act sets out the circumstances
where a confiscation order will be made, and the process is
mandatory where the Crown requests it.
The principle of recovery of the proceeds of crime is given strong
backing through the way the Court must calculate criminal benefit
and the amount in which any order should be made.
POCA requires the Court to determine whether the defendant has a
criminal lifestyle4 and if so whether he has benefited
from his general criminal conduct prior to determining the level of
benefit from his particular criminal conduct (i.e. his substantive
criminal offences). The criminal lifestyle provisions5
represent the greatest change from the previous legislative regime.
Criminal lifestyle confiscation proceedings require the Court to
make the assumptions that any property transferred to the defendant
during the relevant period (6 years prior to commencement of
proceedings), any property obtained by the defendant within the
relevant period, and any expenditure by the defendant within the
relevant period shall be held to be criminal benefit unless the
defendant can show the assumption is incorrect or that there would
be a serious risk of injustice if the assumption were made.
It is clear that the "criminal lifestyle"
provisions are the main reason as to why confiscation proceedings
are often referred to as having draconian outcomes, as the
assumptions can result in vast figures added to the defendant's
particular criminal benefit (i.e. what he has obtained through his
substantive offending).
The value of the benefit to a defendant is defined as the value of
property (or pecuniary advantage) obtained through or in connection
with criminal conduct.
Of note are the recent House of Lords decisions in the cases of
R v May6 (and the linked cases of
Green7 and Jennings8 ),
where it was confirmed that the value of the benefit is the total
value, not the net profit to a defendant9, and that
"obtained" means by the relevant defendant10.
Perhaps most important in consideration of the question posed by
this essay, where two or more defendants obtain property jointly,
each is to be regarded as obtaining the whole of it11.
In a conspiracy, the Court should consider the facts when deciding
whether a defendant has "obtained" and therefore
benefited12.
This can result in confiscation orders, particularly in the case of
multiple defendants, where benefit figures from the particular
criminal conduct alone dwarf the actual criminal property
involved.
When applying the assumptions POCA requires the Court to make, the
burden of proof is reversed. The defendant himself must account for
his benefit and his available assets. In the case of Walbrook
and Glasgow13, the dicta was established that a
defendant must provide "clear and cogent evidence" to
disprove assumptions in confiscation cases, and that where their
evidence stood alone, unsupported but for their own word, it was to
be accorded minimal credibility.
In practice, and speaking purely anecdotally, it could be said that
where they deal with the evidence of a defendant in confiscation
proceedings, Judges in practice give little weight to it. An
obvious response to this would be to say that their evidence is
naturally going to be given less weight as they, of course, are
convicted criminals. A defendant in confiscation proceedings can
face consequences far in excess of the punishment for the original
offence, not least the default sentence. It is arguable his
evidence should be given greater weight, particularly when consider
the question of his assets.
After considering benefit, the Court considers the available
amount. The defendant must satisfy the court of his current
assets14.
In a PACE interview, a solicitor or legal representative present is
often called upon to object to questioning by officers on the basis
that their questioning is oppressive, misleading, confusing, or
generally improper. One of those situations is where a defendant is
asked to prove a negative. When dealing with the available amount,
and in particular when faced with a court finding of "hidden
assets", the defendant is being asked to prove a
negative.
The Courts have said of this matter in the past that it is not for
the Crown to suffer the burden of conducting investigations into a
defendant's assets15. Yet it is the Crown that bring
the proceedings, and they have far wider reaching powers. It is
submitted this is an area where the balance is too far away from
the rights of the defendant, as he is often faced with a finding of
hidden assets which can result in an order to satisfy an
artificially inflated benefit figure (as above).
A defendant, often serving a lengthy prison sentence rarely
operates on an even investigative footing to the Crown. Cooperation
with law enforcement by financial institutions is long established.
The defendant is not always afforded the same level of
cooperation.
POCA itself provides the basic safeguard that when the Court is
asked to apply the assumptions by the Crown, it should not do so
where to do so would create a serious risk of
injustice16. The case of Dore17 sets
out that injustice must result from the application of the
assumptions not the hardship of the order itself. This safeguard
does at least protect defendants from double counting.
A further protection exists for defendants in limited circumstances
may be asking the Court to stay the confiscation proceedings as an
abuse of process. This was examined recently by the Court of Appeal
in the cases of Morgan and Bygrave18 and R
v Shabir19. The former case concerned situations
where defendants (of note, not subject to criminal lifestyle
proceedings) claimed to be able to re-pay an identifiable victim.
The Court found favour in the principle that confiscation in these
circumstances would be an abuse of process, but neither appellant
succeeded. Shabir however was successful, where in a case
concerning money transfers, all but £464 was in fact owed to
the appellant. The totality of the money transfers was applied as
benefit however, giving a confiscation order in the sum of
£212,000.
In Shabir the Court indicated their ruling was the result
of the "very unusual and exceptional facts of the case".
Any action on behalf of the defendant for abuse of process will be
limited to a narrow range of cases. Although the CPS has recently
issued guidance for their prosecutors on situations where it would
be inappropriate to proceed with confiscation20, the
defendant's rights are dependant on having knowledgeable and
forthright representation.
When considering whether the right balance has been struck, the
application of POCA in practice should also be considered. On
3rd August 2008, The Telegraph reported on a case where,
after prosecution by the Marine and Fisheries Agency prosecuted
Victor Good, Trevor Mole, and Steve Barnes, for landing 19 tons of
sole for which they had no EU quota21. The total value
of this fish was approximately £99,000. Confiscation orders
were then made totalling £213,461.
A similar case in Cornwall was reported by The Times, where the
trawling company W Stevenson and Sons were ordered to pay
£710,000 in a confiscation order22. The skippers
in this case, it was reported, argued that if EU rules had been
observed, fishermen would have had to throw millions of fish back
into the sea. This held no weight with the Court and following
conviction, the criminal charges in this case gave rise to a
criminal sentence of a two year conditional discharge, and nominal
fines. The offence itself however allowed the full force of
confiscation law to be engaged.
The situation gained public profile to the extent that a petition
was (and indeed is) still in place on the 10 Downing Street
website, requesting that the government cease use of POCA against
fishermen23. To quote from the online petition;
"[the fishermen] have received fines ... [once] imposed
the authorities have pursued the families stripping assets using
the Proceeds of Crime Act. The act is on the statute to strip
assets from criminals who have amassed their wealth from criminal
acts"
The fishermen, it would seem, would not necessarily fall into the
general public's usual definition of criminality. Legitimate
assets (perhaps obtained through a lifetime of dangerous work at
sea) are used to satisfy the benefit figures produced.
Further concern has been raised also more recently by The Times, as
to the motivations of the prosecuting agencies tasked with
enforcing the law24. RCPO, it is reported, pay high
level staff bonuses based on amounts realised on confiscation. It
is also disclosed the agency itself receives a "cut" of
the proceeds recovered. Targets for confiscations are set, with
concerns raised that such targets "skew justice", with
the various criminal justice agencies standing to benefit from
confiscation orders made. Conflict between competing agencies of
the justice system can be seen at present through the duality that
exists when the Police apply for cash forfeiture as a civil action,
whilst the Crown instigate criminal confiscation proceedings.
It can often be the case that a defendant convicted of an offence
finds himself subject to civil cash forfeiture prior to the
conclusions of confiscation proceedings. Anecdotally one reason for
this is indicated to be that the Police receive a greater share of
the forfeiture in this manner, rather than waiting until the
confiscation proceedings conclude in the Crown court. It is
submitted that confiscation of cash via forfeiture proceedings is
an easier process than confiscation for the Crown.
POCA grants powers to the Police officers to search, seize and
detain amounts of cash totalling £1,000 or more suspected of
being the proceeds of crime or intended for use in criminal
activity25. Subsequent to this seizure, the matter must
be brought before the magistrates court within 48 hours, and orders
may then be made for return of the cash or continued
detention.
The police may make an application for the cash to be forfeited,
and the Courts will order this if no satisfactory explanation for
the provenance of the cash is provided26. The burden
rests on the applicant, to the balance of probabilities. He is also
at the mercy of "case-hardened" magistrates.
One example of an applicant who failed to satisfy the court of this
matter was an unnamed resident of Port Talbot, who after calling
the police to report an attempted burglary subsequently found
himself having £67,000 cash seized from his property, and
forfeited27.
Further to the civil procedures relating to cash seizures, POCA
goes further than any of its preceding legislation by way of the
civil recovery provisions. These provisions act against
"recoverable property28" rather than
individuals. They therefore require no criminal conviction.
Initially used by the Assets Recovery Agency (now absorbed into
SOCA29), the investigating authority will apply for a
property freezing order in the High Court, and in the following
proceedings the respondent must satisfy the court (to the civil
standard of proof) that the property has not been obtained through
unlawful conduct.
The effect on the respondent is that they find themselves being put
in a position of undergoing civil litigation to retain their
property, with the burden of proof reversed. Being a civil action,
legal aid is more difficult to obtain than in criminal proceedings
and limited in scope. A respondent is also prevented from using
restrained or frozen assets to pay legal fees30. As the
matter is a civil one, costs in defending an action such as this
are likely to be higher than in the criminal courts. The costs
sanctions such as refusing a Part 36 offer by the investigating
authority will also apply. Perhaps the most concerning aspect of
this is that the investigating authorities, representing the state,
have none of the potential restrictions or liabilities regarding
costs that a respondent shoulders.
The aim appears to be to confiscate property from individuals who
although perhaps undesirable, are guilty of no offence. The civil
recovery provisions are anathema to a defendant's rights.
Having considered the powers available and the protections for
defendants, does UK law strike the correct balance? Clearly the
public interest (quite rightly) demands that proceeds of crime
should be recovered, but it is submitted that the law as it
presently stands often places defendants in untenable positions,
with little by way of safeguard.
The way that benefit is calculated, certainly at the present time
following their Lordships rulings, can allow in effect for double
counting. As long as multiple defendants can be said to
"benefit" in the entire amount, defendants can be
disadvantaged from the off, and the Crown in effect create greater
criminal property than ever existed. Combined with the spectre of a
hidden assets finding, defendants may find themselves trying to
prove a negative, or being forced to accept an unfavourable
settlement.
Civil recovery actions not only force an un-convicted individual to
prove his assets are legitimate, but force them to shoulder the
burden of Costs, for example in the consequences of refusing a Part
36 offer by the Crown.
Confiscation proceedings are driven by targets, and the range of
protection afforded via judicial discretion is narrow.
The reverse burden of proof, particularly in criminal lifestyle and
cash forfeiture cases, combined with difficulties that can be faced
in providing the requisite "clear and cogent" evidence,
prejudice proceedings against defendants. If they give evidence
themselves, they are scarcely believed.
Interviewed on the BBC's Panorama programme "Crime
Pays"31, former home secretary David Blunkett
states that he is disappointed in the outcomes of the legislation
that he helped to put into practice. Although Mr. Blunkett no
longer speaks for the government, it is submitted his opinion will
be far from rare.
Any government (or prospective government) seeking votes will
always do so on the pretext of cracking down on crime. Their
rhetoric panders to the general public opinion that crime should
not pay. What is concerning is that this should always be done so
at the expense of the defendant's rights, and with regard to
asset forfeiture law, the decades since Operation Julie have seen a
steady increase in the powers available to the Crown, at the
expense of the accused.
Whether the current UK law regarding asset forfeiture does in fact
strike the correct balance between the public interest and
defendant's rights may end up an irrelevant question, as it is
almost inconceivable that future politicians will seek to win votes
by way of strengthening protection for defendants.
In short, it seems unlikely that any future government will seek to
withdraw powers introduced by their predecessors.
Footnotes
1. 2001] UKHL 68
2. 2001] Crim LR 817
3. Police investigation into LSD production conducted during the 1970s – http://wikicrimeline.co.uk/index.php?title=Operation_Julie
4. s8 of POCA
5. set out at s75 of the Act
6. [2008] UKHL 28
7. [2008] UKHL 30
8. [2008] UKHL 29
9. May, para 48(1)
10. Jennings para 14
11. Green para 15
12. This was the opinion of the Court of Appeal in the more recent case of R v Sivaraman [2008] EWCA Crim 1736
13. [1994] 15 Cr App R (S) 783
14. In the case of R v Barwick [2001] 1 CAR (S) it was noted by the Court that "Clearly the onus of proving or establishing the benefit is on the prosecution. In our view, certain provisions of the Act, principle and decided authority all clearly indicate that if the defendant then wishes to contend that the amount that might be realised is less, the burden is then on him to do so."
15. See footnote 14
16. s10(2) of POCA
17. [1997] 2 Cr App R(S) 152
18. [2008] EWCA Crim 1323
19. [2008] EWCA Crim 1809
20. Following the case of R v Paulet [2009] EWCA Crim 288
22. http://www.timesonline.co.uk/tol/comment/columnists/guest_contributors/article6590688.ece
23. http://petitions.number10.gov.uk/FishermenPOCA
24. http://www.timesonline.co.uk/tol/news/uk/crime/article6861046.ece
25. ss289, 294, 295 POCA
26. s298 POCA and The Magistrates' Courts (Detention and Forfeiture of Cash) Rules 2002
28. As defined in Part 5 of POCA
29. It was reported in January 2007 that the ARA had recovered only £8million despite costing £60million to establish; http://news.bbc.co.uk/1/hi/uk/6251339.stm
30. s252(4) POCA
31.First broadcast 16th March 2009.
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