Proceeds of Crime Bill

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Mr. Foulkes: I will come to some of the problems. I am saying merely that we are talking about the available amount. Anything that enables the criminal or those acting on his behalf to find ways of reducing that amount would undermine the Bill. It might be possible to prevent that by excluding from protection debts acquired after the commencement of criminal proceedings but that would not assist in cases in which the defendant had earlier begun evasive action—as he would—after becoming aware that he was under investigation. As soon as a defendant was under investigation, he would start salting away some of his money to ensure that the available amounts would be reduced.

Mr. Hawkins: The Minister must understand that the amendment is not designed to enable any drug dealer to salt away anything. As my hon. Friend the Member for Beaconsfield said, we want all the defendant's assets to be seized, but not at the expense of the entirely innocent third parties. There must be a way to do that.

Mr. Foulkes: I shall come to some of those points in a moment. As the Chairman said, we are having a clause stand part debate and covering points that are not directly relevant to the amendment.. Defendants would produce a list of phoney creditors, claiming to have prior debt outstanding against them. In reality, those individuals would be the defendant's criminal associates—the hon. Member for Surrey Heath is shaking his head, but that is exactly what happens. Such associates are the so-called straw men whom we already see deployed in attempts to frustrate the operation of legislation on the proceeds of crime. That action would be difficult to prevent and would greatly weaken the confiscation system.

Mr. Mark Field: That is arrant nonsense. It is unbelievable that the police, other regulatory authorities or the new, wonderfully powerful Assets Recovery Agency would not have the power to investigate more thoroughly. The reality is that an investigation in which confiscatory powers come into force would be an enormous operation involving the police and the director of the Assets Recovery Agency. Bank accounts of associates and all transactions going back six years would be looked at in great detail. The idea that somehow the amendment would give licence to a handful of people to salt money away into private accounts is nonsense.

4.45 pm

Mr. Foulkes: The hon. Gentleman must admit that the amendment would provide an extra opportunity to set up phoney creditors, which would make it much more difficult for the investigating authorities to find information.

On Second Reading, my right hon. Friend, the Minister for Police, Courts and Drugs touched briefly on the issue of property subject to a restraint order. He indicated that such orders could be varied to allow a builder to recover debt, for example. To avoid any doubt, I should explain the position in more detail. The legislative steer in clause 69 has the effect that the confiscation process takes precedence over unsecured debts. A restraint order prohibits the payment of any debt, secured or unsecured, without the leave of the court. It can be varied by the court to allow a secured creditor to recover an interest in property but, in the light of the legislative steer, it cannot be varied to allow the payment of an unsecured debt unless that is necessary to maintain the value of the property under restraint. I hope that that clarifies the position outlined on Second Reading.

Mr. Hawkins: It is helpful that the Minister has clarified that, but my hon. Friend the Member for Cities of London and Westminster (Mr. Field) and I understood what his colleague said on Second Reading. Our point is that we do not seek to allow conspiracies of straw men that would enable the proper target of the legislation to escape; nothing in our amendment would allow that. As my hon. Friend made clear, the powers in the Bill will stop that happening. We seek a minor change that would protect only the entirely innocent. The amendment would not protect the associates of the defendant.

Mr. Foulkes: What makes me sceptical about the amendment is that the Bill does not change the existing powers, which are sufficiently limited, to confiscate the proceeds of crime. I checked with officials and learned that we have not had any complaints from innocent sufferers; none has been made known to us. Thus, the Opposition's points are hypothetical. Problems have not developed under the existing legislation. Indeed, the Crown Prosecution Service informs us that it happens only rarely that unsecured creditors argue that they should take precedence over the satisfaction of a confiscation order. That reinforces my earlier point.

The Opposition were worried about the time that would be used in the criminal courts to deal with aspects of the Bill. They asked me to urge a Home Office investigation into how much time would be wasted by the Crown court. How much more time would be taken up if the amendment were accepted? We would have to develop a hierarchy of creditors and decide which should be dealt with first. That would take a huge amount of time and would be a huge administrative burden on the Crown court.

As I explained, the Government regard the amendment as wrong in both principle and practice. In the light of my comments—I think that I have been very persuasive—I hope that the hon. Member for Beaconsfield sees fit to withdraw his amendment.

Norman Baker: I do not know what the Minister had to eat, but he has come back from lunch somewhat energised.

The Minister tried to address the issues, and I give him credit for that. I am the first to admit that there is a concern that, if we build exceptions and safeguards into the legislation, we run the risk of weakening it. That is a fact, but safeguards are sometimes necessary. The most efficient method would be to lock up everyone in sight, so that we are bound to catch all the criminals. You would catch lots of innocent people as well, so you have to have a system for differentiating between those whom you want to catch and those who are innocent.

The Chairman: Order. That is a ``you'' too far. The hon. Gentleman knows that if he uses the word ``you'', he refers to me. I do none of those things.

Norman Baker: I take your word that you do none of those things, Mr. McWilliam.

The Chairman: The rules are very strict. The use of the word ``you'' refers to the Chair.

Norman Baker: Forgive me for doing that, but I speak as a former English teacher. The word ``you'' is used as a modern equivalent of ``one'', and that was the sense in which I was using it.

The Chairman: Whoever said that this was a modern assembly?

Norman Baker: Its members are jacketless, I must agree.

There is genuine concern that the legislation might be weakened by safeguards, but, equally, I hope that both sides of the House share the determination not to introduce legislation that sweeps up in its wake innocent third parties. The legislation is generally good, and I hope that it leads to many people being caught who have got away with crime for a long time and may be in powerful positions. I welcome that, and I look forward to reading in the newspapers that so-and-so, who has been a respectable person in society, has been caught.

The Parliamentary Under-Secretary of State for the Home Department (Mr. Bob Ainsworth): Does the hon. Gentleman accept that a principle is involved? Confiscation will be part of the sentencing process far more extensively under the powers. Do we compensate creditors when we lock someone up and their business goes bust? We do not. Do we compensate people when we fine them and their business goes broke? Why do we not compensate the creditors if they flee abroad from the jurisdiction because the forces of law and order are after them? Does the hon. Gentleman accept that a serious principle would be at stake were we to become involved in compensating the creditors of criminals, effectively, accepting responsibility for the debts of criminals? That is what the amendment would do—confiscate both the proceeds and debts of crime.

Norman Baker: The Minister talks about compensation. We are talking about a sum of money—the ``available amount'', to use the term in the Bill—that would have already been taken by the authorities. This is not a question of compensation from the Treasury, but of how we deploy the money that is seized. We are asking what constitutes free property and what constitutes obligations. Those are terms in the Bill.

I accept that there may be drawbacks to the amendment, but it is well intentioned. Does the Minister recognise that if his legislation is effective in identifying more people who have ill-gotten proceeds of crime, more innocent third parties will be swept up in the process? That will be inadvertent and regrettable, but it will happen. As the Minister is unhappy with the amendment, I suggest a method that would allow the unsecured creditors—such as the ordinary businessmen or women whom we want to protect—to make a claim to a central pot and thereby prove their case. If we are not happy to accept their claims automatically because of the reasons given by the Minister, could a system be set up that at least gave them a chance of proving their case and securing the money owing to them?

Mr. Stephen McCabe (Birmingham, Hall Green): I understand the hon. Gentleman's point. However, what is the difference between that proposition and the case of someone who suffers a large fine and argues that he is no longer able to pay his creditors? If such a system is in place for one, surely it should be applied to the other.

Norman Baker: That is a fair point. I picked up the Minister on the word ``compensation'', which I did not agree was an accurate description. However, there is a general public policy problem that goes far beyond clause 10, and I am sure that you will tell me, Mr. McWilliam, if I stray too far. In general terms, if the state takes money from an individual, and the consequence is that an innocent third party suffers, there is a case for that money being deployed, under certain circumstances, for that innocent third party.

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Prepared 20 November 2001