|Proceeds of Crime Bill
Mr. Mark Field: An alternative view is that that is deliberate. Does my hon. Friend agree that that might be the casethat, to retrieve the assets, there might be an intention to target the recipient of a gift?
The hon. Member for Wellingborough (Mr. Stinchcombe) should be reassured that we are not talking about anything other than a bona fide transaction having taken place between the initial defendant and a subsequent purchaser. However, the clause might be intended to sweep up someone else, who may have deep pockets, into the confiscation procedure, so that those pockets can compensate the state, in view of the fact that there has been a reduction in value between the time when the defendant obtained an asset and when it was transferred to a third party.
Mr. Grieve: My hon. Friend may be right. The Government have attempted rigorously to plug every conceivable loophole.
I wish to mention, in passing, that it is remarkable that, in the explanatory notes, clauses 77 and 78 are lumped together, and that nothing is really said about clause 78. That makes me think that, at the time when the explanatory notes were composed, the full implications of what was seen as a follow-on clause to clause 77 were not fully examined. I do not know whether that is the case, but it is a possibility.
I wish to flag up another issue, if only to dismiss it from my own mind: the provision is also fairly draconian with regard to the defendant. Someone might obtain £1 million as the proceeds of crime, which he then invests unwisely so that he loses it, but under the terms of the legislation, if he transfers the asset, he is still liable to repay the original amount. That illustrates the rigour of the legislation that the Minister has introduced, and I do not wish to stand in his way. However, it means that there will be occasions, particularly if new clause 5 is adopted, when somebody who might have obtained £1 million through tainted money could find, at the time of the restraint order and the confiscation, that the money has hugely diminished in value, through no deliberate action on his part, but that he would, nevertheless, stand to pay the original amount valued at the date that he obtained it.
Column Number: 480
Mr. Ainsworth: Let us try to be clear about the issue before we move on from it. I do not wish to speak for long, but the hon. Gentleman said that the amendments were a blunderbuss, because he did not like what he saw in the Bill. I accept that he felt that he had to use that weapon to deal with that.
However, we should not allow for the depreciation of the value of a tainted gift after it has been transferred, nor should we preclude the appreciation of the value of a tainted gift after it has been transferred or introduce a difficult mechanism that requires the prosecution to prove the date of the transfer. I fully accept the point about the value changes that occurred before the transfer. The hon. Gentleman has a genuine issue there that we need to address. However, I do not agree with his other points.
Mr. Grieve: I understand what the Minister said, and his point that the argument should be widened. The Committee needs to be aware of what is being proposed. Let us take the example of a tainted gift. A criminal obtains a large amount of money and buys a painting that he believes, at the time, is worth £1 million. He gives the painting to his daughter. However, it transpires that he has made a bad investment and at the time of the confiscation proceedings the painting is valued at only £100,000. How will the shortfall be made up? Is the painting handed to the director so that he can sell it, or do we say to the daughter, ''Terribly sorry, when your father gave you that painting it was reckoned to be worth £1 million. Please stump up £900,000''? I apologise for not touching on the matter previously, but the wording of clause 77 could produce such a result. No doubt the use of discretion would prevent a person from being unjustly penalised, although the Minister may say that, if a person accepts a tainted gift, it is that person's problem. Unless the burden falls back on the defendant, the provision could be unfair.
Mr. Ainsworth: In the case of a tainted gift, we should not allow the recipient not to be liable for its value and for any subsequent appreciation in price, nor should we allow the recipient an argument about any depreciation. The defendant should not be able effectively to remove from his assets the full value of his criminal gain. The full value should fall on the defendant. If the hon. Gentleman thinks that draconian, I have to disagree with him.
Mr. Grieve: Providing that the burden does fall on the defendant, I see the logic of the Minister's argument. Indeed, when addressing the matter of gifts, their recipients and the bona fide purchaser under amendments to clause 78, I drafted new clause 5 specifically to allow the difference to be recovered from the defendant.
The issue is wider than simply a transfer made for full value. There is also an impact on the valuation of a tainted gift. That brings me back to amendments Nos. 276 and 277, which I tabled to clause 81. I did not develop my argument, which is to offer the court an either/or option when the gift is valued. I want to leave aside for one moment a sale because that has a slightly different dimension.
Column Number: 481
Let us suppose that we are dealing with the matter of a tainted gift in a straightforward way. The defendant transfers a block of shares worth £1 million to his son, daughter or wife, but by the time the recovery procedure is complete, the shares are valueless. As the regulations stand, it is not a matter of the shares being handed to the director. It is a matter, potentially, of the value of the shares being reclaimable not from the defendant but from the person who received them. That is draconian legislation. It may be fair, it may be what the Committee wants, but it could have an enormous impact. I suggest to the Minister that, in circumstances where it could be argued that the recipient of the gift is innocent of knowledge, it could be suggested that people are being treated with hideous unfairness. Rather than handing back what they have, in reality, been given, they are being asked to compensate the director for the loss in value of the share, chattel or item between the date when they were given it innocently, and the date when they have to return it. The Minister and the Committee may wish to look carefully at that area, and consider whether that is what the Government think is necessary to deter criminals. Innocent victims will be ruined by this procedure.
The Chairman: Order. We are going around the same course on this debate. In all fairness to other business, we should try to conclude it.
Mr. Davidson: The hon. Member for Beaconsfield spoke movingly about the problems faced by those who hand over £1 million of shares to members of their family. That is a dilemma that many of us have mercifully been spared. However, I am prepared to accept that the Conservatives live in another world. The amount of time that they have spent on this matter shows that they recognise that many of their people are likely to be affected.
May I spell out the effects of what has already been described as a Grieve but can also be described as doing a Dominic? If one does a Dominic, one gets £1 million, makes a bad business decision and loses £750,000 in value, so only £250,000 is left. There seems to be a suggestion that, in some way, that might be written off, and the criminal would not be responsible for repaying the full £1 million. The hon. Member for Beaconsfield seemed to be singularly exercised by that, and we should clarify whether he is more concerned about the victims of the crime in the initial instance or about the loss of value to those who committed the crime. It was especially noticeable that he chose to refer to Sotheby's, which, as I recall, is currently in court because of various crimes that it committed in conjunction with Christie'smarket rigging and rigging of charges, if I remember correctly.
The hon. Gentleman and I move in disparate circles, so I am prepared to accept his word on such matters. I am reminded of the words of Woody Guthrie:
Column Number: 482
The loss of value has a great deal to do with the value that people put on a particular good. As I understand it, the whole business of the Cities of London and Westminster is based on selling people things that are only worth what the person buying them thinks that they are worth, in order to turn a profit, so once we start unscrambling the question of knowledge at the time of purchaser's sale
Mr. David Wilshire (Spelthorne): On a point of order, Mr. O'Brien. Is it in order to wander off into what the City of London may or may not be doing, which has nothing to do with the proceeds of crime?
The Chairman: I am just looking at the clause. The debate is being widened tremendously. Will the hon. Gentleman conclude his remarks?
Mr. Davidson: If I was committing a Spelthorne, I apologise. Lectures on diversionary tactics are more appropriate from some hon. Members than from others. However, it seems to me that the whole question of price, value and millions of pounds purchased in shares plays a key part in the City of London's relationship to the matter. With your agreement, Mr. O'Brien, I shall rest on that point. I hope that those who do a Dominic in future will bear it in mind that if they make bad business decisions, and there is a loss of value in their £1 million of shares, they, and not the taxpayer, will be required to meet the loss.
Mr. Ainsworth: You were absolutely right, Mr. O'Brien, to say that we are making heavy weather of this issue, and it is becoming increasingly complicated. It is an important issue, and I shall try to do as you ask. I accepted that the hon. Member for Beaconsfield had a point with his first two amendments, and I agreed to consider them. I also said that I had no desire to provide a loophole whereby the proceeds of a criminal act, whether in the hands of the defendant or in those of the recipient of a tainted gift, would escape confiscation. I am sure that members of the Committee are aware that the most widely used method of putting the proceeds of crime beyond the reach of the forces of law is that seemingly innocent persons have the moneys transferred to them.
That issue must be covered thoroughly, so as not to provide a gaping great hole in the Bill that will put much of the value of the proceeds of crime beyond confiscation. I shall consider the points that the hon. Gentleman raised on his first two amendments, but I shall not open the way for such abuse, because that is almost always the first direction in which a criminal looks to hide his proceeds. His wife, daughter or son can clearly be categorised as innocent.
|©Parliamentary copyright 2001||Prepared 4 December 2001|