Proceeds of Crime Bill

[back to previous text]

Mr. Field: Under my rough and ready example, my adversary the hon. Member for Glasgow, Pollok (Mr. Davidson) could reasonably argue that the state would be entitled to £400,000—in other words, the £100,000 that was put in initially, and the entirety of the increase in asset value. On the other hand, if one took the view that two thirds of the upfront money was paid legitimately, two thirds of the increased value could be thought of as legitimate money. That would amount to a £200,000 pot that the state could confiscate. The subsection does not make that clear, and that is why I wanted guidance on how it will operate.

Mr. Ainsworth: Surely, it comes back to one of the two basic safeguards in the Bill. Property cannot be confiscated if it is shown not to be the proceeds of crime. It is for the courts to decide whether property is the proceeds of crime. If the defendant can show that assets are not the proceeds of crime, they are not confiscatable, but if they are, they most certainly are. Those are matters for the court to decide on hearing the case. The hon. Gentleman is reversing his previous position and saying that we should deprive the court of its discretion.

Mr. Field: I entirely accept that it is a matter for the court. That is why, at this juncture, we want to provide the correct guidance to the courts, and why it would be useful to clarify the situation. As the Minister is unable

Column Number: 469

to come to a decision on a relatively straightforward example, it would be unfair to put such a burden on the courts unless we know how the spoils will be split. I accept that the matter is difficult.

If the Minister had eyes in the back of his head he would know that the hon. Member for Glasgow, Pollok has been trying to attract his attention. He, no doubt, will have his own view, which I shall be interested to hear.

Mr. Ainsworth: I rise fairly confident that my hon. Friend is provoked by the hon. Gentleman, and not by me.

We must bear it in mind that this interpretation is used in existing legislation. We have no desire—nor, I think, do Opposition Members—to narrow the current interpretation.

Mr. Ian Davidson (Glasgow, Pollok): This is an important issue because, as the hon. Member for Cities of London and Westminster (Mr. Field) will appreciate, inside dealers and other villains and nefarious ne'er-do-wells in the Cities of London and Westminster are wondering how they will use their ill-gotten gains. If they mix those gains with legitimate money, will that penalise their financial well-being?

In the case of the Cities of London and Westminster, let us say that £1 million of relatively honest money and £2 million of corrupt money were invested together, and doubled in value. It seems fair to me that the investor should get back only £1 million, as that person would not have made any gain if the dishonest money had not been available to invest jointly with the honest money. When considering whether someone should get a proportion of the gain back, we should be as unhelpful as possible to those who, for the sake of argument, we could refer to as Fields. Those Fields, who have been investing—

The Chairman: Order. This is too long an intervention.

Mr. Ainsworth: I did say to the hon. Member for Cities of London and Westminster that he, and not I, had provoked my hon. Friend. That was shown to be the case. Although I am on my hon. Friend's side on the matter, it would be for the individual to show that the assets in question were not the proceeds of crime. I noticed the hon. Member for Lewes disagreeing as my hon. Friend spoke, but when a business has been set up, established and in part funded by the proceeds of crime, to what extent—even if legitimate money was going into it—do we want to render the profits of that business beyond the reach of confiscation? None of us wants to do that. We want to stick to the safeguard in the Bill, whereby if the defendant can show that the assets in question are not the proceeds of crime, they are not confiscatable.

Despite the contorted language, that is the interpretation in the current legislation, which appears to have been operated successfully by the courts up to now, and removing it would narrow the definition. The hon. Member for Beaconsfield (Mr. Grieve) knows better than I do how these things work, but I am advised that the criminal courts often use very narrow

Column Number: 470

definitions. If we went down that route, we would find ourselves rendering large sums beyond the reach of confiscation.

Norman Baker: I agree with the Minister's analysis that it is a question of applying the general test in each case. It may be that a critical mass of money is required for an investment, in which case the hon. Member for Glasgow, Pollok is correct. On the other hand, if one invests £3 million in shares, the return may be no different from, or three times as much as what one would get if one invested £1 million in shares. Therefore, there is no advantage to having the extra money for that investment. It depends on the circumstances.

I have been wrestling with the subsection and trying to understand what it means—I also declare an interest in that I am not a lawyer and therefore look at things in plain English. Some of the Bill is in plain English: clause 79(2), for instance, is a clear statement. Clause 76(6), however, is not a clear statement. Will the Minister explain the relevance of the phrase ''and some other'' at the end of subsection (6)? What would be the implication if that phrase were not included?

Mr. Ainsworth: It clearly relates to ''connection''. The subsection refers to proceeds obtained

    ''in that connection and some other''.

It is designed to give the court the ability to confiscate proceeds that were gained in connection with criminal activity. We discussed that under a previous clause and we are effectively having the same discussion now. The hon. Gentleman is right that the individual circumstances are relevant, and I would have thought that the whole Committee would be able to unite behind the concept that some businesses are funded in part or in whole by the proceeds of crime and are in a position to compete unfairly with other businesses—and effectively put them out of business in many cases.

We do not want to encourage that, and we want to be able to remove a pecuniary interest when it was clearly gained in connection with criminality. We need to give the courts the discretion to be able to decide what is the proceeds of crime, what was gained in connection with the proceeds of crime, and what is clearly not the proceeds of crime. If we deprive them of that ability, we narrow their capacity to deprive the criminal not only of what he gained in the first place but of what he has managed to make of it as a result.

Norman Baker: The Minister and I are not at odds in any way in respect of the objectives that we want to be achieved. I agree with giving the courts discretion, and I have consistently argued for that throughout our proceedings. However, if subsection (6) were to finish with the words ''in that connection''—removing the word ''both'' before those words—that would refer back neatly to subsection (5). The two subsections would then seem to be self-contained. I do not understand the purpose of the phrase ''and some other'', which seems to be hanging loose.

Mr. Ainsworth: I do not know whether the hon. Gentleman is hanging loose, or I am, or the words ''and some other''. I have tried to explain to him how

Column Number: 471

the words work, the reasons for them, and their origin in existing legislation. I agreed—and I will check it out—that they do not result in a widening, in response to what the hon. Member for Beaconsfield said. I do not think that I can satisfy the hon. Gentleman further at this point.

Mr. Grieve: I am grateful to the Minister, whose comments have been enlightening.

Before I ask leave of the Committee to withdraw the amendment, I wish to make two pleas. My first plea concerns plain English. The Minister has explained that the phrase ''some other'' is intended to refer to some other connection. With regard to plain English, the clause would not be spoiled—indeed, it would be greatly enhanced, despite the appearance of the word ''connection'' twice in one line—if the word ''other'' did not end the sentence and it referred to an

    ''advantage obtained both in that connection and some other connection.''

That is merely a matter of drafting practice. That form of words would be much clearer. I accept that the present wording has been inherited from a previous statute, which presumably nobody bothered to scrutinise properly.

My second plea is of more import, as the Minister is aware. I am reassured by what he has said, because I fully support the intention—we have no disagreement about the aim, which is to allow the court to look at pools of money that include mixed funds. He has also made it clear that mixed funds must be disentangled: I have no quarrel with that, although there are clear rules about how to approach mixed fund money—but that is not an area with which I am particularly familiar. I do not wish to go back over old ground, by saying that that is a matter that the Crown court will have to play around with—although I suspect that the Crown court is not very familiar with it either, and that the High Court, in its jurisdiction, would be much more familiar with how one deals with mixed fund moneys.

The intention is not that mixed funds should be confiscated in a quick and simple manner but that they should be disentangled. However, as it reads at present, the clause—even though it may always have been applied in ways that effect that disentanglement—gives the courts the power to confiscate mixed funds, including the proportion of them that did not come from the proceeds of crime and the criminal conduct. I do not think that that is what the Minister or the Department intended to achieve. I would be grateful if he would confer with his drafters and officials to see whether that cannot be more clearly spelled out without leading to the creation of a new loophole.

Previous Contents Continue

House of Commons home page Parliament home page House of Lords home page search page enquiries ordering index

©Parliamentary copyright 2001
Prepared 4 December 2001