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Session 2001- 02
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Standing Committee Debates
Proceeds of Crime Bill

Proceeds of Crime Bill

Column Number: 465

Standing Committee B

Tuesday 4 December 2001


[Mr. Bill O'Brien in the Chair]

Proceeds of Crime Bill

Clause 76

Conduct and benefit

Amendment proposed [this day]: No. 281 in page 47, line 40, leave out from 'conduct' to end of line 2 on page 48.—[Norman Baker.]

4.30 pm

Question again proposed, That the amendment be made.

The Parliamentary Under-Secretary of State for the Home Department (Mr. Bob Ainsworth): It is good to see you in the Chair, Mr. O'Brien. I am sure that you have had withdrawal symptoms from our earlier proceedings and are pleased to be back.

The hon. Member for Lewes (Norman Baker) raised an important point. The issue should be announced with some retrospection. We must ensure that it is understood in the Bill and he may then, if he wishes, question the matter. The amendment would prevent the court from confiscating the benefits of general criminal conduct that took place before the Bill was enacted. He wants to explore the retrospective effect of part 2. To give some background, subsection (2) is based on the Drug Trafficking Act 1994. Much of that territory will be addressed in the order that commences the legislation and is not set out in detail in the Bill.

Before I turn specifically to the amendment, it may be helpful to explain how we intend to apply the relevant provisions. Article 7(1) of the European convention on human rights prohibits the imposition of a heavier penalty than the one that applied at the time when the offence was committed. That raises the question of what the heavier penalty is being applied to. The answer—which is reflected in the Strasbourg court's jurisprudence—is the offences for which the offender is being sentenced or otherwise dealt with in the present proceedings. The underlying principle of article 7 is, as the hon. Gentleman said, that an offender must know when he commits an offence what the consequences will be.

Bearing that principle in mind, we intend to provide that a confiscation order can be imposed under part 2 only when all offences that are the subject of the present proceedings have been committed after the Bill comes into force. That will include the triggering offences that determine a criminal lifestyle under clause 75(3)(a) and (b). The existing legislation will apply to offences committed before the Bill has been enacted. However, once that criterion is satisfied—that is, when the offences are committed after

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enactment—a confiscation order can be imposed in respect of the benefit from conduct, however far back that benefit was derived.

That is fully compatible with the Strasbourg court's decision in the case of Ronald J. M. Taylor to uphold the use of assumptions. The court ruled that, when Taylor committed offences after the Drug Trafficking Offences Act 1986 came into force, he was aware that he was liable to a confiscation order that could have concerned earlier proceeds. As a result, the Commission considered that there had been no violation of article 7 of the European convention on human rights.

Confusion occasionally arises in this context. The assumptions relate to property passing through the defendant's hands at any time after six years before the commencement of proceedings, and before then if the property is still held. The assumptions will go back before the commencement of part 2. However, the confiscation order in respect of which they are made will be imposed for offences committed solely after the commencement.

The amendment would have a very harmful effect and would row back from existing legislation, which is consistent with the convention and has been tested against it. It would mean that everybody who was proceeded against under the Bill would receive an amnesty for any benefit derived from conduct before commencement—there would be no confiscation for any conduct before then. Practically, it would make the legislation inoperable. For example, the assumptions as currently drafted would be meaningless. In the week after commencement, they would read as if the defendant could be assumed to have received property from criminal conduct six years ago after commencement. That is impossible. Leaving that aside, the prosecutor and director would have the impossible task of proving whether conduct fell just before, or just after, commencement. He would have not only to prove his case but to show at what time the defendant derived the benefits of the proceeds of crime.

All offences that are taken into account will be after commencement. For example, when we track back for multiple offences, they must all have occurred after commencement. We will not be able to go back and count other offences that were committed previously. The commencement will be the trigger. The only retrospection will be the assumptions of the gain. That has been tested under the convention and does not contravene it in any way. I ask the hon. Member for Lewes to consider the consequences of the amendment.

Norman Baker (Lewes): I am grateful to the Minister for that long but helpful contribution. It is useful to have on the record how he thinks the Bill will be applied. As I understand what he said, offences for the purpose that we are currently discussing will be taken into account only if they are committed following Royal Assent, but other matters then kick in retrospectively.

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Mr. Ainsworth: Let us use the six-month period as an example. We will not be able to track back the fact that criminal activity had been occurring for six months until six months after the Bill's commencement.

Norman Baker: I am very happy with that. I am grateful for the Minister's explanation and that he believes that the Bill is consistent with the European convention on human rights. That is a key element, and he explained why. Will he tell us now, or later, in addition to his helpful clarification, where the matter is implicit in this complex Bill, so that I can understand how the bits marry up and be assured that the understanding that he gave the Committee cannot subsequently be misunderstood by people who interpret the law?

I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Mr. Dominic Grieve (Beaconsfield): I beg to move amendment No. 273, in page 48, line 17, leave out subsection (6).

The amendment is, simply, probing. I read the clause, and I read and reread subsection (6). Although I think that I understand it, it makes little sense. Perhaps the Minister will be kind enough to tell me what it means. I shall read it to the Committee so that it is on the record:

    ''References to property or a pecuniary advantage obtained in connection with conduct include references to property or a pecuniary advantage obtained both in that connection and some other.''

I await clarification of the provision.

Mr. Bob Ainsworth: I can tell the hon. Gentleman that he has missed out this time. My question marks are against adjacent clauses, not the one under discussion. It may contain a little contorted language, but it is fairly clear. The amendment would prevent the court from confiscating benefit from criminal conduct when it was received partly in connection with criminal conduct and partly in some other way. I shall cite an example of how subsection (7) works. An offender who obtains money from a fraud may invest it in stocks and shares and make a healthy profit. Clearly, the profits from that investment should be confiscated as well as the benefits of the original fraud. I am sure that the hon. Gentleman does not disagree with that principle.

If we accepted the amendment, a clever lawyer would immediately be able to argue that the profits from the investments could not be confiscated because they were obtained as a result of, or in connection with, the criminal's investment skills as opposed to the original criminal conduct. That is why it is necessary to cast the net sufficiently widely to ensure that all the benefits are caught. The pecuniary measure must be used to avoid the narrowing of the definition to the actual benefits of the crime.

Mr. Grieve: I understand exactly the Minister's point. On rereading subsection (6) in the light of his remarks, however, I am slightly anxious whether the net is being cast too wide. I fully agree that, if the proceeds of crime were invested, that and the profit

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element should be confiscated. However, is there not a danger that the wording of subsection (6) could be taken to extend to any property that the defendant may have? That is not the intention, because that would defeat the whole purpose of the examination of assets to decide which were derived from criminal conduct and which were not.

Mr. Ainsworth: Let us go away and make absolutely certain that such circumstances will not occur. Clearly, associated property should not be confiscated, but the whole of the property, not only the net value of the proceeds of crime, should be. The hon. Gentleman is not demurring from that principle.

Mr. Mark Field (Cities of London and Westminster): I want to clarify my hon. Friend's point. Let us suppose that an individual who was subsequently caught under the confiscation process had put £200,000 that had been earned legally and a further £100,000 that could clearly be identified as the proceeds of a large drugs deal into a property that cost £300,000, which doubled in value. How much money would be confiscated by the state and how much would remain the person's own money?

Mr. Ainsworth: In principle, we would have to take the original proceeds of crime and any profit derived from that. If legitimate money became mixed with the proceeds of crime and was subsequently subject to a profit, it could not be considered to be the proceeds of crime. We would have to untangle that and decide what were the proceeds of crime, what gain was made with those proceeds and what was genuine money.

4.45 pm


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