ASSET FORFEITURE

Does current UK asset forfeiture law strike the correct balance between the interests of the general public in the recovery of the proceeds of crime and the rights of the defendant?

Does current UK asset forfeiture law strike the correct balance between the interests of the general public in the recovery of the proceeds of crime and the rights of the defendant? 

It is not a matter in dispute, nor simply the rabid knee jerking of the tabloid press, that the interests of the general public dictate that crime should not pay, and that criminals should be stripped of assets obtained through their criminal conduct. The rights of defendants subject to confiscation proceedings, and indeed the basis of prosecution in the UK, that the Crown brings the case and therefore it is for the Crown to prove their case, must however be weighed against this. Asset forfeiture law in the UK, when challenged on the grounds of proportionality in the case of R v Smith¹, elicited this response at para 23 from their Lordships;

“If in some circumstances it can operate in a penal or even a draconian manner, then that may not be out of place in a scheme for stripping criminals of the benefits of their crimes. That is a matter for the judgment of the legislature, which has adopted a similar approach in enacting legislation for the confiscation of the proceeds of drug trafficking.”

Tackling financial crime has been held by the European Jurisprudence to be a legitimate aim, and the UK confiscation regime a proportionate means of achieving that aim (as in the case of Philips v United Kingdom²).

The present legislative position has its origins in the failure to recover the proceeds of crime in Operation Julie³. The findings of the parliamentary Hodgeson Committee established after the conclusion of the case (where £750,000 worth of assets although traced were not able to be recovered) were largely enacted in the Drug Trafficking Offences Act 1986. This act itself was superseded by the Drug Trafficking Act 1994, and crime other than drug trafficking came into the regime following the Criminal Justice Act 1988, superseded by the Criminal Justice Act 1993 and the Proceeds of Crime Act 1995.

UK asset forfeiture law now stems from the Proceeds of Crime Act 2002 (hereafter POCA). S6 of the Act sets out the circumstances where a confiscation order will be made, and the process is mandatory where the Crown requests it.

The principle of recovery of the proceeds of crime is given strong backing through the way the Court must calculate criminal benefit and the amount in which any order should be made.

POCA requires the Court to determine whether the defendant has a criminal lifestyle⁴ and if so whether he has benefited from his general criminal conduct prior to determining the level of benefit from his particular criminal conduct (i.e. his substantive criminal offences). The criminal lifestyle provisions⁵ represent the greatest change from the previous legislative regime. Criminal lifestyle confiscation proceedings require the Court to make the assumptions that any property transferred to the defendant during the relevant period (6 years prior to commencement of proceedings), any property obtained by the defendant within the relevant period, and any expenditure by the defendant within the relevant period shall be held to be criminal benefit unless the defendant can show the assumption is incorrect or that there would be a serious risk of injustice if the assumption were made.

It is clear that the “criminal lifestyle” provisions are the main reason as to why confiscation proceedings are often referred to as having draconian outcomes, as the assumptions can result in vast figures added to the defendant’s particular criminal benefit (i.e. what he has obtained through his substantive offending).

The value of the benefit to a defendant is defined as the value of property (or pecuniary advantage) obtained through or in connection with criminal conduct.

Of note are the recent House of Lords decisions in the cases of R v May⁶ (and the linked cases of Green⁷ and Jennings⁸ ), where it was confirmed that the value of the benefit is the total value, not the net profit to a defendant⁹, and that “obtained” means by the relevant defendant¹⁰. Perhaps most important in consideration of the question posed by this essay, where two or more defendants obtain property jointly, each is to be regarded as obtaining the whole of it¹¹. In a conspiracy, the Court should consider the facts when deciding whether a defendant has “obtained” and therefore benefited¹².

This can result in confiscation orders, particularly in the case of multiple defendants, where benefit figures from the particular criminal conduct alone dwarf the actual criminal property involved.

When applying the assumptions POCA requires the Court to make, the burden of proof is reversed. The defendant himself must account for his benefit and his available assets. In the case of Walbrook and Glasgow¹³, the dicta was established that a defendant must provide “clear and cogent evidence” to disprove assumptions in confiscation cases, and that where their evidence stood alone, unsupported but for their own word, it was to be accorded minimal credibility.

In practice, and speaking purely anecdotally, it could be said that where they deal with the evidence of a defendant in confiscation proceedings, Judges in practice give little weight to it. An obvious response to this would be to say that their evidence is naturally going to be given less weight as they, of course, are convicted criminals. A defendant in confiscation proceedings can face consequences far in excess of the punishment for the original offence, not least the default sentence. It is arguable his evidence should be given greater weight, particularly when consider the question of his assets.

After considering benefit, the Court considers the available amount. The defendant must satisfy the court of his current assets¹⁴.

In a PACE interview, a solicitor or legal representative present is often called upon to object to questioning by officers on the basis that their questioning is oppressive, misleading, confusing, or generally improper. One of those situations is where a defendant is asked to prove a negative. When dealing with the available amount, and in particular when faced with a court finding of “hidden assets”, the defendant is being asked to prove a negative.

The Courts have said of this matter in the past that it is not for the Crown to suffer the burden of conducting investigations into a defendant’s assets¹⁵. Yet it is the Crown that bring the proceedings, and they have far wider reaching powers. It is submitted this is an area where the balance is too far away from the rights of the defendant, as he is often faced with a finding of hidden assets which can result in an order to satisfy an artificially inflated benefit figure (as above).

A defendant, often serving a lengthy prison sentence rarely operates on an even investigative footing to the Crown. Cooperation with law enforcement by financial institutions is long established. The defendant is not always afforded the same level of cooperation.

POCA itself provides the basic safeguard that when the Court is asked to apply the assumptions by the Crown, it should not do so where to do so would create a serious risk of injustice¹⁶. The case of Dore¹⁷ sets out that injustice must result from the application of the assumptions not the hardship of the order itself. This safeguard does at least protect defendants from double counting.

A further protection exists for defendants in limited circumstances may be asking the Court to stay the confiscation proceedings as an abuse of process. This was examined recently by the Court of Appeal in the cases of Morgan and Bygrave¹⁸ and R v Shabir¹⁹. The former case concerned situations where defendants (of note, not subject to criminal lifestyle proceedings) claimed to be able to re-pay an identifiable victim. The Court found favour in the principle that confiscation in these circumstances would be an abuse of process, but neither appellant succeeded. Shabir however was successful, where in a case concerning money transfers, all but £464 was in fact owed to the appellant. The totality of the money transfers was applied as benefit however, giving a confiscation order in the sum of £212,000.

In Shabir the Court indicated their ruling was the result of the “very unusual and exceptional facts of the case”. Any action on behalf of the defendant for abuse of process will be limited to a narrow range of cases. Although the CPS has recently issued guidance for their prosecutors on situations where it would be inappropriate to proceed with confiscation²⁰, the defendant’s rights are dependant on having knowledgeable and forthright representation.

When considering whether the right balance has been struck, the application of POCA in practice should also be considered. On 3^rd August 2008, The Telegraph reported on a case where, after prosecution by the Marine and Fisheries Agency prosecuted Victor Good, Trevor Mole, and Steve Barnes, for landing 19 tons of sole for which they had no EU quota²¹. The total value of this fish was approximately £99,000. Confiscation orders were then made totalling £213,461.

A similar case in Cornwall was reported by The Times, where the trawling company W Stevenson and Sons were ordered to pay £710,000 in a confiscation order²². The skippers in this case, it was reported, argued that if EU rules had been observed, fishermen would have had to throw millions of fish back into the sea. This held no weight with the Court and following conviction, the criminal charges in this case gave rise to a criminal sentence of a two year conditional discharge, and nominal fines. The offence itself however allowed the full force of confiscation law to be engaged.

The situation gained public profile to the extent that a petition was (and indeed is) still in place on the 10 Downing Street website, requesting that the government cease use of POCA against fishermen²³. To quote from the online petition;

“[the fishermen] have received fines … [once] imposed the authorities have pursued the families stripping assets using the Proceeds of Crime Act. The act is on the statute to strip assets from criminals who have amassed their wealth from criminal acts”

The fishermen, it would seem, would not necessarily fall into the general public’s usual definition of criminality. Legitimate assets (perhaps obtained through a lifetime of dangerous work at sea) are used to satisfy the benefit figures produced.

Further concern has been raised also more recently by The Times, as to the motivations of the prosecuting agencies tasked with enforcing the law²⁴. RCPO, it is reported, pay high level staff bonuses based on amounts realised on confiscation. It is also disclosed the agency itself receives a “cut” of the proceeds recovered. Targets for confiscations are set, with concerns raised that such targets “skew justice”, with the various criminal justice agencies standing to benefit from confiscation orders made. Conflict between competing agencies of the justice system can be seen at present through the duality that exists when the Police apply for cash forfeiture as a civil action, whilst the Crown instigate criminal confiscation proceedings.

It can often be the case that a defendant convicted of an offence finds himself subject to civil cash forfeiture prior to the conclusions of confiscation proceedings. Anecdotally one reason for this is indicated to be that the Police receive a greater share of the forfeiture in this manner, rather than waiting until the confiscation proceedings conclude in the Crown court. It is submitted that confiscation of cash via forfeiture proceedings is an easier process than confiscation for the Crown.

POCA grants powers to the Police officers to search, seize and detain amounts of cash totalling £1,000 or more suspected of being the proceeds of crime or intended for use in criminal activity²⁵. Subsequent to this seizure, the matter must be brought before the magistrates court within 48 hours, and orders may then be made for return of the cash or continued detention.

The police may make an application for the cash to be forfeited, and the Courts will order this if no satisfactory explanation for the provenance of the cash is provided²⁶. The burden rests on the applicant, to the balance of probabilities. He is also at the mercy of “case-hardened” magistrates.

One example of an applicant who failed to satisfy the court of this matter was an unnamed resident of Port Talbot, who after calling the police to report an attempted burglary subsequently found himself having £67,000 cash seized from his property, and forfeited²⁷.

Further to the civil procedures relating to cash seizures, POCA goes further than any of its preceding legislation by way of the civil recovery provisions. These provisions act against “recoverable property²⁸” rather than individuals. They therefore require no criminal conviction. Initially used by the Assets Recovery Agency (now absorbed into SOCA²⁹), the investigating authority will apply for a property freezing order in the High Court, and in the following proceedings the respondent must satisfy the court (to the civil standard of proof) that the property has not been obtained through unlawful conduct.

The effect on the respondent is that they find themselves being put in a position of undergoing civil litigation to retain their property, with the burden of proof reversed. Being a civil action, legal aid is more difficult to obtain than in criminal proceedings and limited in scope. A respondent is also prevented from using restrained or frozen assets to pay legal fees³⁰. As the matter is a civil one, costs in defending an action such as this are likely to be higher than in the criminal courts. The costs sanctions such as refusing a Part 36 offer by the investigating authority will also apply. Perhaps the most concerning aspect of this is that the investigating authorities, representing the state, have none of the potential restrictions or liabilities regarding costs that a respondent shoulders.

The aim appears to be to confiscate property from individuals who although perhaps undesirable, are guilty of no offence. The civil recovery provisions are anathema to a defendant’s rights.

Having considered the powers available and the protections for defendants, does UK law strike the correct balance? Clearly the public interest (quite rightly) demands that proceeds of crime should be recovered, but it is submitted that the law as it presently stands often places defendants in untenable positions, with little by way of safeguard.

The way that benefit is calculated, certainly at the present time following their Lordships rulings, can allow in effect for double counting. As long as multiple defendants can be said to “benefit” in the entire amount, defendants can be disadvantaged from the off, and the Crown in effect create greater criminal property than ever existed. Combined with the spectre of a hidden assets finding, defendants may find themselves trying to prove a negative, or being forced to accept an unfavourable settlement.

Civil recovery actions not only force an un-convicted individual to prove his assets are legitimate, but force them to shoulder the burden of Costs, for example in the consequences of refusing a Part 36 offer by the Crown.

Confiscation proceedings are driven by targets, and the range of protection afforded via judicial discretion is narrow.

The reverse burden of proof, particularly in criminal lifestyle and cash forfeiture cases, combined with difficulties that can be faced in providing the requisite “clear and cogent” evidence, prejudice proceedings against defendants. If they give evidence themselves, they are scarcely believed.

Interviewed on the BBC’s Panorama programme “Crime Pays”³¹, former home secretary David Blunkett states that he is disappointed in the outcomes of the legislation that he helped to put into practice. Although Mr. Blunkett no longer speaks for the government, it is submitted his opinion will be far from rare.

Any government (or prospective government) seeking votes will always do so on the pretext of cracking down on crime. Their rhetoric panders to the general public opinion that crime should not pay. What is concerning is that this should always be done so at the expense of the defendant’s rights, and with regard to asset forfeiture law, the decades since Operation Julie have seen a steady increase in the powers available to the Crown, at the expense of the accused.

Whether the current UK law regarding asset forfeiture does in fact strike the correct balance between the public interest and defendant’s rights may end up an irrelevant question, as it is almost inconceivable that future politicians will seek to win votes by way of strengthening protection for defendants.

In short, it seems unlikely that any future government will seek to withdraw powers introduced by their predecessors.

Olliers
Castlefield Chambers,
Manchester,
M34NF.
0161 827 7010
www.olliers.com
thomascawley@olliers.com

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¹[2001] UKHL 68
²[2001] Crim LR 817
³Police investigation into LSD production conducted during the 1970s – http://wikicrimeline.co.uk/index.php?title=Operation_Julie
⁴s8 of POCA
⁵set out at s75 of the Act
⁶[2008] UKHL 28
⁷[2008] UKHL 30
⁸[2008] UKHL 29
⁹May, para 48(1)
¹⁰Jennings para 14
¹¹Green para 15
¹²This was the opinion of the Court of Appeal in the more recent case of R v Sivaraman [2008] EWCA Crim 1736
¹³[1994] 15 Cr App R (S) 783
¹⁴In the case of R v Barwick [2001] 1 CAR (S) it was noted by the Court that “Clearly the onus of proving or establishing the benefit is on the prosecution. In our view, certain provisions of the Act, principle and decided authority all clearly indicate that if the defendant then wishes to contend that the amount that might be realised is less, the burden is then on him to do so.”
¹⁵See footnote 14
¹⁶s10(2) of POCA
¹⁷[1997] 2 Cr App R(S) 152
¹⁸[2008] EWCA Crim 1323
¹⁹[2008] EWCA Crim 1809
²⁰Following the case of R v Paulet [2009] EWCA Crim 288
²¹http://www.telegraph.co.uk/comment/columnists/christopherbooker/3561174/Thames-fishermen-get-gangsters-sentences.html
²²http://www.timesonline.co.uk/tol/comment/columnists/guest_contributors/article6590688.ece
²³http://petitions.number10.gov.uk/FishermenPOCA
²⁴http://www.timesonline.co.uk/tol/news/uk/crime/article6861046.ece
²⁵ss289, 294, 295 POCA
²⁶s298 POCA and The Magistrates’ Courts (Detention and Forfeiture of Cash) Rules 2002
²⁷http://www.walesonline.co.uk/news/wales-news/2009/05/05/police-find-67-000-stash-in-burglary-victim-s-home-91466-23547359/
²⁸As defined in Part 5 of POCA
²⁹It was reported in January 2007 that the ARA had recovered only £8million despite costing £60million to establish; http://news.bbc.co.uk/1/hi/uk/6251339.stm
³⁰s252(4) POCA
³¹First broadcast 16^th March 2009

Bibliography
Mitchell Taylor &: Talbot – Confiscation and the Proceeds of Crime?
“Civil Recovery – Who Needs A Conviction?” – Jeremy Pinson, Ivan Pearce
Case Law
Internet sources (www.wikicrimeline.co.uk) / News media websites
Bailli
Lawtel