Proceeds of Crime Bill

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Mr. Stinchcombe: I am grateful for the Minister's clarification, which accords with my recollection of the law on damages for wrongful imprisonment. Subsection (1) states that the court may award

    ``such compensation as it believes is just.''

Does that give the court discretion to give less compensation than the amount of loss suffered if it thinks that the defendant brought the prosecution or proceedings on himself through his own behaviour?

Mr. Ainsworth: My reading of subsection (1) is precisely that. It would be up to the court to decide what was just, which would not necessarily be the exact equivalent of the loss that had been incurred. In doing so, it would take into account the circumstances involved.

The hon. Member for Beaconsfield has been working up to this and has referred to it in previous conversations. If we lower the threshold, we shall provide a considerable deterrent to law enforcement agencies against the use of early restraint. The amendment would render the measures next to useless. It would mean that we might as well not have them at all. If he wants the Bill to be effective, he should think seriously whether that is a line that should be pursued.

Mr. Grieve: I sense that the Minister may be coming to the end of his remarks. Will he deal with where the financial investigators' actions fit into the picture? The explanatory notes state:

    ``Clause 72 provides for compensation to be paid to a person whose property has been affected by the enforcement of the confiscation legislation.''

Therefore, I would expect that a financial investigator's actions that cause a serious default would be susceptible to compensation. As I discussed with the hon. Member for Wellingborough (Mr. Stinchcombe), I was not 100 per cent. sure where such actions fitted into the law enforcement agencies that are listed. Will the Minister clarify the matter?

Mr. Ainsworth: The serious default case must be against those who pursued the case against the defendant. If the financial investigator investigated the size of the assets, he could not commit serious default. We are discussing not serious default cases against the director who conducts the investigation to confiscate assets and round up all that is potentially forfeit or against a financial investigator acting on behalf of the director, but against authorities that are shown to have been unjustifiable in their action against the defendant. If the defendant is acquitted, he is entitled to pursue compensation for serious default, which must be against the authorities that brought the action.

Mr. Grieve: I still lack clarity about the matter. Perhaps I lack understanding about the different role of a financial investigator used by the prosecutor and a financial investigator used by the director. In reality, perhaps the director employs the financial investigator only at the time of confiscation and not during the restraint proceedings of the criminal investigation. However, the fact that the financial investigator is not a member of a police force should not mean that if he commits a fault during his handling of the restraint proceedings that leads to loss and the defendant is subsequently acquitted, the exonerated defendant would not have the right to recover a sum beyond the mere repayment of the value seized. That is a critical issue. From the explanatory notes, I understood that the clause provided a compensation mechanism for a person in such a situation. If it does not, we need to know.

Mr. Ainsworth: We are trying to provide compensation for people who should not have been subjected to restraint or confiscation. We are providing compensation not because there was an error in the assessment of the assets, but because the case should not have been brought. A person's entitlement to compensation must be triggered by proof of serious default by those who brought the action that led to the issue of the restraint order and the pursuit of a compensation order that caused the person's loss.

Mr. Grieve: I assume that the Minister has concluded his remarks. I continue to be anxious about the matter. May I give the Committee an example? Let us assume that the prosecutor wrongly prosecutes. A criminal investigation occurs and assets are restrained. The person is later acquitted and there is no question of him having a criminal lifestyle. He is entitled to recover his assets. Let us further assume that the prosecution was brought maliciously. In such circumstances, the defendant may be entitled to compensation for malicious prosecution. However, he may be handed back the full value of his assets and have no justification to claim compensation for the way in which they were seized because he has not lost a bean. Although the prosecutor might have committed serious default, after reading the explanatory notes and clause 72, I did not think that a compensation claim under the clause would be made at all because I understood the basis of the clause to be property that was affected by the enforcement of the confiscation legislation.

Mr. Ainsworth: Is the hon. Gentleman asking for compensation to be considered where there has been no loss?

Mr. Grieve: No, quite the reverse. I was illustrating that there could be circumstances in which there was serious default in the conduct of the criminal investigation by a prosecutor but, at the end of the day, there was no financial loss. Although there may be an entitlement to compensation for malicious prosecution under separate provisions, that would not concern clause 72 which, according to the explanatory notes, is about

    ``compensation to be paid to a person whose property has been affected by the enforcement of the confiscation legislation.''

A further example relates to circumstances in which there is not an acquittal, but a conviction that is subsequently quashed on appeal. Again, it may turn out that the prosecution was brought wrongly, that there was malice and serious default and that material was concealed from the defence. However, if there was no loss of property and its value had not diminished, there would not be a claim under clause 72. I would not expect such a claim.

My worry concerns a second example. A prosecution may be brought that is, within the standards of malicious prosecutions, fairly conducted. Proper investigation will have occurred, but the defendant will be prosecuted and acquitted, or convicted with the conviction overturned on appeal—such things happen. In those circumstances, the police or other authorities stated in subsection (9) may not have committed default. However, during the prosecution, a restraining order may have been brought into operation. The person who carried that out—for the sake of this discussion—could have committed a serious default by concealing the value of an asset, undervaluing it deliberately, or committing an act that meant that when the amounts administered were returned to the defendant, they were greatly diminished.

Alternatively, the defendant could be convicted, in which case the asset realisation process would have occurred before the conviction was quashed on appeal. During that process, the financial investigator, who, I think, would have been appointed by the director, could commit a misfeasance by deliberately selling assets at an undervalue or tinkering around with the assets in a manner that was open to criticism. In such circumstances, it could be argued—this is why I seek clarity—that no member of the police force, the Crown Prosecution Service, the Serious Fraud Office, the commissioners of Customs and Excise or the commissioners of the Inland Revenue committed serious default. However, the financial investigator, who is either the creature of the director or the creature of the prosecutor, could have committed serious default.

When I first read clause 72, I expected that that contingency would be covered. Having listened to the Minister's comments, I am not reassured that that is the case, although I may have misunderstood him. However, I assume that it has to be because, if it were not, it is difficult to understand why the provisions under clause 72 are in the Bill at all, although there could be a default by the prosecuting authority and a default by the financial investigator that are wrapped up in one. The matter hinges on the relationship between the financial investigator and the director and the bodies specified under subsection (9).

4.15 pm

I hope that the Minister will have the opportunity to return to my next question. I tabled an amendment that would replace the provision concerning costs from the agency with costs out of central funds. It was not selected for debate, but I tabled it because of my anxiety that, once the burden had been removed from ``serious default'' to ``default'', large amounts of money would be taken from the coffers of the police service.

Two arguments must be taken on board. First, it is good that law enforcement agencies should pay out of their own pockets when matters go wrong and that people are not deterred from bringing the confiscation and restraint proceedings in the first place. Secondly, if serious default does emerge, there is a tendency to conceal it because the person is afraid that substantial chunks of the allocation of money that he receives will be used to pay the compensation rather than the money coming from central funds. That second issue was linked in my mind to the removal of the word ``serious''.

Will the Minister explain where the financial investigators and the director fit in? Is it the case that under clause 72, in a criminal investigation, the director and financial investigator are immediately ancillary to those categories of individuals identified in subsection (9)? If they are not, they must be identified separately. Their serious default is more likely to cause loss to the defendant who is subsequently acquitted than the actual conduct of the prosecution and criminal investigation itself. That is my point.

 
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Prepared 29 November 2001