|Proceeds of Crime Bill
Mr. Wilshire: My understanding is that when bankruptcy proceedings are initiated, there is a pecking order that determines which creditors will get the money. It would be helpful to know where in the pecking order a particular creditor would come.
Mr. Ainsworth: Bankruptcy proceedings must be settled before any confiscation can take place. We are not changing the order of creditors within the bankruptcy proceedings.
Mr. Mark Field: I fully appreciate that, when bankruptcy proceedings have preceded a confiscation order, there should be preferred creditors—for example banks and mortgage companies—who would claim some of the assets. Is the Minister saying that non-secured creditors would hold themselves in a preferable position to the state in that regard?
Mr. Ainsworth: The clause is not changing the bankruptcy proceedings. Those that have already commenced take precedence over confiscation proceedings. After the bankruptcy proceedings have been settled, the claim for compensation can be pursued. We are not proposing to unpick bankruptcy proceedings that have already commenced.
Mr. Field: My hon. Friend's concern is that there will be a significantly diminished pool if such a view is taken. If you have bankruptcy proceedings under way, unless it is preferred that creditors should have the first bite at the cherry, should there not be some variation? Surely, under confiscation proceedings, the state will face a significantly diminished pool or will the variation be on the whole sum? Will preferred creditors receive a share that will take account of the variation or will they receive their full amount in advance?
The Chairman: Order. I assure the hon. Gentleman that, although I took my wife Christmas shopping in New York at the weekend, I do not have bankruptcy proceedings under way.
Mr. Ainsworth: I am sorry, but I am not sure on what the hon. Gentleman is inviting me to agree with. If a defendant goes bankrupt before confiscation proceedings can be taken against him, the ability to confiscate any of the proceeds of crime will be reduced. That is self-evident. I do not know what more I can say.
Mr. Wilshire: I assure the Minister that I am not spinning out the matter. A real loophole is opening up, and I should be grateful if he would concentrate carefully on whether I might be right. He said that, in the event of bankruptcy proceedings being commenced before the order is made, they would flow and the order would come into effect on what is left thereafter. If that is so, and someone thinks that he will be charged or is part way through a court case and has a nasty feeling that he is about to lose, it would pay him to file for bankruptcy in attempt to get some of the money that could be confiscated shifted to a creditor where he might have an interest.
The Chairman: Order. I have been double-checking. We are dealing with variation orders. Bankruptcy is dealt with under part 9. If the hon. Gentleman wants to debate bankruptcy in detail, he should wait until we reach that part of the Bill. I understand the linkage difficulty, but that is in relation only to a variation of the order.
Mr. Wilshire: I am grateful for your advice, Mr. McWilliam. In the circumstances, I am sure that I have given the Minister due notice of such matters and by the time we discuss that clause, no doubt he will have an answer to my questions.
Mr. Ainsworth: The hon. Gentleman is surely right that, if someone is being pursued on a charge for which there may be substantial proceeds of crime, it may be in his interests to commence bankruptcy proceedings to frustrate the confiscation. There are other ways in which to dispose of the assets before the finalisation of the charges, but that is one of the reasons why we introduced the concept of restraint to the start of the proceedings. If restraint is applied before bankruptcy proceedings have commenced, that takes precedent. I do not know how, and in what circumstances, we could justly disregard bankruptcy proceedings that had already commenced ahead of any other proceedings that had even been started against the defendant. We have done what we can to close any possible loopholes, and we cannot go further than that.
Mr. Davidson: Notwithstanding the fact that the provision goes wider than bankruptcies, I should be grateful if the Minister could clarify the circumstances in which the court has reduced the amount to be paid by the guilty person. If it were found subsequently that a scam was being worked and that assets were being concealed, surely the court or prosecutor would still be able to return again to claw back money that had been evaded the first time by false declarations about bankruptcy or limited means.
Mr. Ainsworth: As we have exposed in previous confiscations, in theory the prosecutor can return within a six-year period if he thinks that the benefit was not calculated correctly and he can convince the court that there should be a revaluation of the benefit. That would also apply to the circumstances outlined by my hon. Friend the Member for Pollok.
Mr. Hawkins: I may have solved a potential problem for the Minister. He will note that, with one significant difference, the last two lines of subsection (3) are identical to those under clause 22(7), which my hon. Friends the Members for Spelthorne and for Beaconsfield and I were worried may be ambiguous. Subsection (3) states:
Substituting the word ``smaller'' with the word ``larger'' would solve the problem to which we referred when debating clause 22. Because the same words are used in the provisions, albeit with the addition of ``smaller'', there is no reason why we should not add the word ``larger'' under clause 22(7) and thus achieve the clarification that we wanted when the Minister kindly accepted that we were not trying to water down the Bill. I hope that my suggestion has been helpful to the Minister and his officials.
Question put and agreed to.
Clause 24 ordered to stand part of the Bill.
|©Parliamentary copyright 2001||Prepared 27 November 2001|