Proceeds of Crime Bill

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Mr. Ainsworth: I do not agree with the hon. Gentleman that the director and financial investigators should be identified separately. We are discussing criminal proceedings and he wants to protect the individual against risks that arise as a result of those proceedings. A person in such circumstances runs many risks. He may be put into custody, not just placed under a restraint order. When people are deprived of their liberty in such circumstances, ex gratia payments are the only redress open to them. The hon. Gentleman knows much more about how that system works than I do. A serious error or misdemeanour by the person who has been managing the individual's assets under the restraint would be a breach of care. Civil redress would then be open to that individual for compensation against the receiver. If there were not serious default by prosecuting agencies, compensation would not be paid under the clause.

I am aware of the hon. Gentleman's other amendment. We guessed the reason for it, which was to allow early restraint to take place without there being a huge worry about the potential loss by the authority that is carrying out the investigation. As he recognises, the problem is that one breaks all accountability by accepting responsibility from central funds for that sort of activity. That would throw up a whole different set of problems.

I hope that I have made myself clear to the hon. Gentleman. He may be shocked by what I say; I do not know. The point that he thinks should be covered is not. There is redress in criminal cases for other things that befall such individuals. Exactly the same would apply in this regard. There is a duty of care on the person who takes charge of the defendant's assets while he is under restraint and, of course, that can be challenged in civil law.

Norman Baker: I seek clarification on subsection (6), which nags away in my brain. I made a point earlier about ``and'' or ``or'' in the second line, and the Minister kindly said that he would come back to me. I accept that that may not be today and, indeed, mature refection may be helpful. I should like clarification about what happens to property that is confiscated and subsequently returned if the value of that property has changed during the period in which it has been held.

I would like to take the hon. Gentleman back to Second Reading, or certainly the beginning of the Bill, which is relevant to my point. I think that I asked him what would happen if someone gained, say, £100 from the proceeds of crime and they subsequently put it all on a horse and the horse came in at 50:1. Would the authorities try to secure £100 or—

The Chairman: We dealt with that this morning. The hon. Gentleman should not proceed with his point.

Norman Baker: Of course, I accept your ruling, Mr. McWilliam. I was trying to make a helpful comparison with the point that I am about to make, with which I suspect that we have not dealt, but you can tell me if we have done so. If a person has an asset confiscated and in the intervening period between it being confiscated and—

The Chairman: Order. We dealt with precisely that point this morning.

Mr. Stinchcombe: Perhaps I may seek clarification from the Minister about some of my residual concerns, which are similar to those of the hon. Member for Beaconsfield, about how the clause would work and why it does not contain certain provisions. I can readily appreciate why the people who are identified in subsection (9) are identified. That flows directly from the conditions set out in the clause. However, that seems to leave room for injustice when a prosecution or investigation is rightly brought, restraint happens, but loss is occasioned thereafter because of further serious default later in the process. Why is that not covered by this statutory code, instead of being dealt with under other civil proceedings, given that we have the opportunity to put it in the code?

Subsection (1) seems to help the Minister in that it would enable the court to reduce the compensation to a lower level in any event if the person's conduct brought those proceedings on his own head. Given that protection, would it not be worth revisiting the clause at a later stage, to consider whether other serious defaults in the process, which could lead to loss, might not also usefully be covered?

Mr. Ainsworth: My hon. Friend refers to circumstances in which further serious default takes place at a later stage. Will he clarify some of the issues about which he is concerned and when and why that serious default might occur?

Mr. Stinchcombe: If proceedings take place, reasonably and rationally—because there was just cause for a prosecution to be commenced—and restraint follows, default might occur in the handling of the goods thereafter, so that loss is occasioned. I appreciate, as my hon. Friend said earlier, that that could give rise to common law proceedings for damages and I also appreciate—at least I think I do—that there are routes within this statute for application to go to court to prevent certain goods being dealt with in certain ways. Apart from that, I wonder whether there is any room for serious default to take place when it is not also covered in a clause that bears that name.

Mr. Ainsworth: I understand my hon. Friend's argument. He is zooming in on what he calls serious default that is committed by those who hold property on the defendant's behalf, which leads to a diminution of the value of that property. As I explained to the hon. Member for Beaconsfield, there is no provision for compensation for that.

If serious default were occasioned, a breach of duty of care would most definitely have occurred, so the defendant would be capable of pursuing compensation through the courts. My hon. Friend would know about that better than I. He asks that we draw into the issue of serious default in criminal proceedings not only those who brought criminal proceedings but those who had a duty of care or who managed the assets during the process. I think that that is what he is saying.

Mr. Stinchcombe: I am not asking for that, precisely. I ask that we consider, under this compensation provision, whether the Bill excludes provisions for compensation arising from other forms of serious default. I accept the Minister's point about other forms of common law action, but it is difficult to frame a course of action for seeking damages for breach of statutory duty if the opportunity to address that presents itself and is not taken.

Mr. Ainsworth: This is a complicated matter. Let me reflect on the points made by my hon. Friend. We do not intend to punish those who are unreasonably pursued and experience serious default in the criminal system. Those people certainly should be compensated and the Bill allows that. Equally, we do not intend that the prosecution agencies should be placed in such financial jeopardy that they face a serious dilemma or do not use the powers that we are providing in the Bill. That is why the clause is written in that way.

I shall reflect on my conversation with my hon. Friend and come back to the Committee on the subject, but I do not want to do anything that puts such a burden on the prosecution agencies and makes us unable to pursue the proceeds of crime. From his other interventions, I feel sure that he does not want that either.

Mr. Grieve: This has been a helpful and interesting discussion. I am grateful to the hon. Member for Wellingborough for his contribution.

Some of what the Minister said about the principles of the clause is troubling. I need only look back at the restraint clauses, for example clause 43(2), to see that it is clear that during a prosecution, restraint proceedings can be brought at the request of the director or an accredited financial investigator. However, from what the hon. Gentleman said, it seems that Bill treats them as distinct and separate from the prosecuting authority. He explained that if anyone were in default because they occasioned a loss by restraining, handling or confiscating assets that subsequently had to be returned, the defendant would have to seek compensation through the ordinary civil procedure.

After I first read the clause, I consulted the notes to the Bill and they do not convey how limited the clause is in relation to the issue under discussion. That caused me to hesitate and to explore the matter. Had I understood the limitations of the clause, I would have tried to draft major amendments to bring the director and the financial investigators within its provisions.

I am not in a position to do that and I want the clause to survive, so I will not invite the Committee to vote against it. However, I will return to the matter on Report because I have identified a serious defect. Where the state is, understandably, taking such draconian action against an individual, and where the Crown court, as the Minister intends, will be fully seized of a matter, including the details of assets, it is wrong that a defendant who has lost out should subsequently have to go through a completely separate civil procedure process against the director and financial investigators. A statutory compensation system should be provided. I hope that the hon. Gentleman will forgive me for thinking that, perhaps, nobody thought things through and that the clause has reproduced the pre-existing structure, without taking account of the implications of the changes that the legislation will bring about.

I hope that, as the hon. Member for Wellingborough suggested, the Minister will reconsider the matter, so that he may be able to return on Report with a compensation structure that tackles the problem. I will not oppose the clause.

I turn to my amendments on default. In light of the Minister's remarks, I am satisfied that amendment No. 139 should not be put to the vote. I take on board his remarks about why the term ``serious default'' should remain in certain circumstances—they were the most cogent arguments that he put forward. However, with regard to restraint issues, ``serious default'' should be replaced by plain ``default''; that should be the standard in such cases. Therefore, I will be inviting the Committee to vote on amendment No. 138. I appreciate that the hon. Gentleman is unlikely to agree to accept it, but I am trying to highlight a problem that I have identified.

If the compensation regime is improved in the way that I think that it should be, amendment No. 138 may cease to be necessary. However, as matters stand, I intend to press that amendment and I urge the Minister to examine the compensation regime again because it is flawed.

Question put, That the amendment be made:—

The Committee divided: Ayes 3, Noes 13.

Division No. 11]

AYES
Field, Mr. Mark
Grieve, Mr. Dominic
Tredinnick, Mr. David

NOES
Ainsworth, Mr. Bob
Baird, Vera
Baker, Norman
David, Mr. Wayne
Davidson, Mr. Ian
Foulkes, Mr. George
Lazarowicz, Mr. Mark
McCabe, Mr. Stephen
McGuire, Mrs. Anne
Robertson, John
Stinchcombe, Mr. Paul
Stoate, Dr. Howard
Watson, Mr. Tom

Question accordingly negatived.

Clause 72 ordered to stand part of the Bill.

Clauses 73 and 74 ordered to stand part of the Bill.

        Further consideration adjourned.—[Mrs. McGuire.]

        Adjourned accordingly at twenty-five minutes to Five o'clock till Tuesday 4 December at half-past Ten o'clock.

The following Members attended the Committee:
McWilliam, Mr. John (Chairman)
Ainsworth, Mr. Bob
Baird, Vera
Baker, Norman
Clark, Mrs. Helen
David, Mr.
Davidson, Mr.
Field, Mr. Mark
Foulkes, Mr.
Grieve, Mr.
Hesford, Stephen
Johnson, Mr. Boris
Lazarowicz, Mr.
McCabe, Mr.
McGuire, Mrs.
Robertson, John
Stinchcombe, Mr.
Stoate, Dr.
Tredinnick, Mr.
Watson, Mr.
Wilshire, Mr.

 
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