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Session 2001- 02
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Standing Committee Debates
Proceeds of Crime Bill

Proceeds of Crime Bill

Standing Committee B

Thursday 29 November 2001


[Mr. John McWilliam in the Chair]

Proceeds of Crime Bill

2.30 pm

The Chairman: Good afternoon. Hon. Members may remove their jackets if it makes them more comfortable.

Clause 64

Management receivers: discharge

Amendment made: No. 49, in page 41, line 7, at end add—

    `(5) If this section applies the court may make such a consequential or incidental order as it believes is appropriate.'—[Mr. Bob Ainsworth.]

Clause 64, as amended, ordered to stand part of the Bill.

Clause 65

Appeal to Court of Appeal

Question proposed, That the clause stand part of the Bill.

Mr. Dominic Grieve (Beaconsfield) rose—

The Chairman: Before I call the hon. Gentleman to speak, I shall pass on a plea from the Committee Reporters. The Committee's proceedings are recorded via the microphones so that they can be reported, so could hon. Members please try to speak towards the microphones? That way, the Reporters might hear what is said.

Mr. Grieve: In fact, having looked more closely at the clause, I need not trouble the Minister any further on it. The wording was slightly different, but I assume that the expression used in subsection (4)(b),

    ``any person affected by the order'',

refers to the defendant.

The Parliamentary Under-Secretary of State for the Home Department (Mr. Bob Ainsworth): I am not sure that the phrase refers only to the defendant.

Mr. Grieve: But does it include the defendant?

Mr. Ainsworth: Yes.

Question put and agreed to.

Clause 65 ordered to stand part of the Bill.

Clauses 66 to 68 ordered to stand part of the Bill.

Clause 69

Powers of court and receiver

Mr. Grieve: I beg to move amendment No. 136, in page 43, line 39, at end insert—

    `(bb) must be exercised, in a case where a confiscation order has not been made, with a view to minimising so far as is reasonable and subject to the provisions of paragraph (b) any impact on the existing financial arrangements of the defendant.'.

We touched on this question before lunch, but we now have the opportunity to have a fuller debate on the point, which causes me considerable concern. The Under-Secretary now has the opportunity to set out how he thinks the regime will operate in practice. He might consider citing examples, if he can, of how he expects receivership to work. The issue is difficult, but the Committee must grapple with it.

In subsection (2) the receiver's powers are defined, and I do not take exception to the way in which those powers are set out. He must exercise his powers

    ``with a view to the value for the time being of realisable property being made available . . . for satisfying any confiscation order that has been or may be made against the defendant''


    ``in a case where a confiscation order has not been made, with a view to securing that there is no diminution in the value of realisable property''.

That makes perfect sense. The powers must also

    ``be exercised without taking account of any obligation of the defendant or a recipient of a tainted gift if the obligation conflicts with the object of satisfying any confiscation order that has been or may be made against the defendant''.

That is, perhaps, slightly more problematical. Finally, the powers

    ``may be exercised in respect of a debt owed by the Crown.''

I have tabled an amendment that states that the powers

    ``must be exercised, in a case where a confiscation order has not been made, with a view to minimising so far is reasonable and subject to the provisions of paragraph (b) any impact on the existing financial arrangements of the defendant.''

I am making an important point. The period of receivership before confiscation takes place may last for a considerable time. It is difficult to make an estimate, but if we consider the time that it sometimes takes for a major case to come to trial, there could be nine to 12 months between the date on which original restraint order was made and the date on which a trial takes place. Depending on the nature of the case and the complexity of the trial, that could be extended to 18 months or two years. Despite the fact that courts try to bring cases to trial as quickly as possible, I know from experience that there may be occasions when the defence asks legitimately for several adjournments, and finding a trial date for a matter that may last several months—in the case of drug trafficking proceedings or a conspiracy, for example—can take a considerable time.

During that time, the receiver has the task of looking after complex property issues with a view to securing that there is no diminution in the value of the realisable property. However, nothing is said about what the receiver should be doing in terms of managing the property so that it can be returned, if necessary, in a state at least partially recognisable as what it was previously to the defendant, if he is acquitted and no confiscation order is secured. I shall cite some obvious examples. As the rules stand, if a house were the subject of a restraint order it could be sold and the proceeds put into a bank account. It is all very well saying that the money could ultimately be paid back to the person concerned if he were acquitted, but the money and the house are not the same.

The house might be a property to which the person was particularly attached, because it had been in his family for generations, yet he might not necessarily recover it even if he were acquitted. Moreover, he will not have any formal means of redress or complaint about such action, save under the serious default provisions, which we shall examine later. The items may be chattels, although the receiver would have little reason to sell them unless he felt that their property value was declining rapidly and he had to secure it.

The property may be a business, and the question of whether it could be managed over the period is difficult. I am anxious about the rules because they do not even attempt to recognise the catastrophic consequences for an individual of being put through such a process. His assets are placed under restraint, but even on being exonerated he will recover only a pale shadow of what they were when they were seized—not necessarily in value, but practically, and in terms of how they were to sustain him and his family for the future. My amendment does not contain the best wording, but it concentrates on something that the Government should consider carefully.

We are dealing not with a bankrupt, but with an individual against whom nothing has been proved. He may be wealthy—although the amount of wealth is perhaps irrelevant. Arguably, a person with huge wealth might be less affected, because at least the huge wealth would be given back to him and he could start again. However, a person with moderate wealth, perhaps with a small business, may be completely ruined by the consequences of a restraint order.

As I said to the Minister, this is linked to compensation. If within the Bill there were a formula for compensation that included taking account of, for instance, economic loss—I put that at its absolute highest—I would not worry about the existing provisions under clause 69. On the face of it, that would be of little consequence. Understandably, however, there will not be provision for a compensation formula that covers every aspect of a person's loss if a restraint order is made and he subsequently receives back much less than the package that he put in. We ought to spell out what the receiver should be doing.

I accept the possibility of returning to the court for guidelines or directions, but the receiver's discretion is particularly wide. The clause is worrying. In the past—as I think the Minister will agree—similar powers have existed in respect of confiscation orders and the surrounding restraint orders. The hon. Gentleman may tell me that I am wrong about that, but I expect them to be similar. They were, however, being targeted at a much smaller area. We are now extending those powers widely. Far more people will, we hope, be caught in the net. Equally, the risk of not proving the criminal lifestyle and the other things that would lead to confiscation may be greater. I am eager to hear what the Minister has to say, but this is a serious issue and I am worried about how the restraint provisions will work in practice.

The Chairman: Before I propose the amendment formally, I must tell hon. Members that there is a possibility of a Division. If that happens, I will suspend the sitting for 15 minutes. If we continue until the end of business in the House, there is a possibility of two Divisions, and in that case I shall suspend the sitting for half an hour.

Mr. Mark Field (Cities of London and Westminster): I support the amendment so eloquently moved by my hon. Friend the Member for Beaconsfield (Mr. Grieve). It is incumbent upon the Government at this juncture either to draw up some detailed guidelines, or at least provide some guidance from the Minister as to an effective compensation programme for those who would otherwise lose out as a result of the provisions and extensive powers of the court and the receiver. In particular, there needs to be some consideration about effective—as opposed to simply the legal minimum—compensation for those who are found innocent in the longer term.

As my hon. Friend rightly pointed out, such new and extensive powers could affect the innocent, not just the guilty. As has rightly been said, they go considerably beyond any other similar set-up, although, as I said earlier, there is at least some analogy with insolvency provisions. Clearly, however, we are not talking about an insolvency case, but about someone who may be innocent.

I have two worries. The first is in relation to the general rule that economic loss is not usually considered. A possible scenario is that over a period of two or three years—following the restraint order coming into place and while the investigation carries on, leading finally to acquittal—an individual's business may be entirely ruined. The goodwill is lost, and the person is in no fit state, mentally or physically, to carry on the business. As such, he finds himself at a massive loss. Indeed, assets that are restrained and subsequently sold off may be somewhat undervalued. I appreciate that it is extremely difficult to quantify the exact value. However, surely it is incumbent on any governing body or authority to give us guidelines to ensure that there is effective and correct compensation.

A second aspect worries me deeply, because I have never supported this country's signing up to the European convention on human rights. However, our nation could encounter great problems as a result of a claim under that convention by an individual who felt that his rights were being infringed, not least by a long-standing case that had resulted in neither conviction nor acquittal—or, indeed, by a fully-fledged acquittal.

This is in part a probing amendment, and I would be interested to know about the thought mechanism behind it. The procedure is new, so we need the Minister to say more than, ``Well, there are legal guidelines in place for existing procedures,'' because this procedure goes more than a few steps further forward. It would be difficult to draw up subsections on the hoof, but I would like to know what the Government are thinking both specifically about clause 69, and about such cases in general, because I suspect that such a procedure will appear in many future Acts dealing with the proceeds of crime or other criminality.

2.45 pm


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Prepared 29 November 2001