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Mr. Denham: Given that the Bill has more than 430 clauses, I am sure that the Standing Committee will have many opportunities to scrutinise many aspects of the Bill. However, as I shall make clear in a moment, the civil recovery of the proceeds of crime will take place by civil test, but in the courts. The civil test has degrees or scales of weight, and we expect that the recovery of the proceeds of crime will be a matter near the upper end of the civil test. We must remember that we are talking not about an executive or administrative process but about a court- based process. That process will be at the heart of what we are doing, but the Bill sets out in some detail the legal framework through which we can seek to recover the proceeds of crime.
Norman Baker (Lewes): Will the Minister explain the Government's thinking with regard to a person who has been subject to a criminal prosecution and acquitted? Will it still be permissible or appropriate for civil proceedings to be taken against the assets of a person in that situation?
Mr. Denham: Certainly, there could be circumstances in which such action could be appropriate because the action will concern the property, not the individual. Civil recovery is a matter not of finding a person guilty of a crime but of recovering the proceeds of crime, if that can be established to the satisfaction of the courts and according to the tests laid out in the Bill. It is clearly conceivable, therefore, that there could be circumstances in which a person's assets could be recovered even though his conviction on a specific offence had failed.
There is no moral right to enjoy the proceeds of crime. Given the corrosive effect that retention of such assets can have on society, and the vital importance for crime reduction and public morale of preventing their use to finance new criminal activity, the absence of any remedy represents a gap in the legislation that it is increasingly important to fill.
I shall briefly run through the Bill's main sections.
First, the Bill will establish the Assets Recovery Agency, which will share the confiscation functions of the law enforcement and prosecution authorities. In a criminal case, those authorities will be able to ask the agency to handle the financial investigation and confiscation aspects, while they concentrate on the criminal investigation and proceedings.
Secondly, the agency will have sole authority to operate the civil recovery and taxation functions that the Bill creates. I shall return to those functions in a moment.
Thirdly, the agency will train and accredit financial investigators, who will then be able to apply their skills in their own organisations.
Finally, the agency's director will advise the Secretary of State on matters relating to asset recovery. The director will play a leading role in the development and implementation of the asset recovery strategy.
The agency will operate in England, Wales and Northern Ireland, and in Scotland for its taxation functions. It will be a champion for and raise the profile of asset recovery.
The Bill will remove obstacles faced by the authorities when they try to trace or freeze a suspect's assets and to obtain a confiscation order after conviction. The power to restrain the suspect's assets will be made more accessible. Restraint orders will be available at an earlier stage, from the start of the criminal investigation, and applications will be heard by the Crown court instead of the High Court.
Confiscation powers will be extended. A single conviction for drug trafficking, money laundering or any of a list of other offences to be specified by order by the Home Secretary will trigger the assumptions procedure. Under that procedure, the court will assume that all the defendant's assets are derived from criminal activity unless he can show to the contrary. Multiple convictions and offences committed over an extended period will also attract the assumptions procedure—that is, the convicted defendant will be treated as having a criminal lifestyle.
Mr. Edward Garnier (Harborough): Under clause 11, four assumptions are set out. Am I right in assuming that all four have to be made by the court if it is to move on? I guess that they are to be based on statements of information, covered in clause 17. Does the prosecutor or the director have to give the grounds for his belief or merely make a bald statement that he believes such and such? I am puzzled as to how this mechanism will work.
Mr. Denham: The test is objective and factual, based on the nature of the offences of which the defendant has been found guilty. I do not have clause 11 in front of me, but certain offences, such as money laundering and drug trafficking, attract an automatic assumption. I think that it is a question of four offences over six years or an offence committed over an extended period of time. We have tried to make the test for the courts objective rather than subjective.
Mr. Garnier: The Minister is not doing himself justice. Perhaps he could have a look at clause 11 and come back to me later in his remarks, because I am not sure that he has answered my point. I do not expect him to know the detail of the Bill off by heart, even though it is his Bill, but perhaps he could take instructions from his officials during the afternoon and then advise the House.
Mr. Denham: I am grateful to the hon. and learned Gentleman for his advice on how to handle this part of the Bill. If there are any outstanding points, the Under-Secretary of State for the Home Department, my hon. Friend the Member for Coventry, North-East (Mr. Ainsworth) can deal with them in the winding-up speech.
We have clearly set out the tests that we wish to be applied. Their application will be mandatory, on application from the director of the Assets Recovery
Agency. If any further ambiguity remains, I will ask my hon. Friend to return to it during the winding-up speech. It may, of course, come up during the debate.
Mr. Oliver Letwin (West Dorset): I apologise for detaining the Minister, but I hope that he will ask the Under-Secretary to take advice on this point. It seems clear from subsections (1) and (7) of clause 11 that all four assumptions must be made except where an exception is specifically registered by the court. They are not tests but wide-ranging assumptions about what has gone on or is purported to have gone on. This is not a detail; it is highly material and we need an explicit answer.
Mr. Denham: I should be happy to clarify the point if necessary in the course of the debate, although I believe that the hon. Gentleman and I may be slightly at cross-purposes about the nature of the tests that then require the courts to apply the assumptions. Perhaps I may make progress, but if the opportunity arises to develop the point further I shall be happy to do so.
In the circumstances that I have set out—multiple applications, offences committed over an extended period, convictions for drug trafficking or money laundering or any of a list of other offences to be specified by the Home Secretary—the convicted defendant will be treated as having a criminal lifestyle. The assumption will then be that all the defendant's assets are derived from criminal activity unless he can show to the contrary. I believe that the use of assumptions in such cases is justified and a vital ingredient of the legislation. Their use has been upheld by the European Court of Human Rights as well as the Court of Appeal and Privy Council.
The procedure will not be available if the court considers that applying the assumption would give rise to a serious risk of injustice and the assumption will of course be rebuttable by the convicted defendant's demonstrating the legitimate origin of his assets.
Part 5 empowers the director of the agency to sue people in the High Court for the recovery of property that is derived from unlawful activity. That is a civil action to which civil rules and procedures will apply. In Scotland, Scottish Ministers will be responsible for civil recovery.
Civil recovery gets to the heart of the problem of criminal assets which currently remain beyond reach when criminal proceedings are not available.
Mr. Ian Davidson (Glasgow, Pollok): I seek clarification of the way in which the process will operate. As I understand it, the Government wish to seize the assets of criminals, and lawyers wish to help the criminals to keep those assets. Let us assume that there is a process of search and certain assets are recovered, identified and seized. What will happen if other assets, which have successfully been hidden by lawyers and accountants on behalf of the criminal, are subsequently discovered? Will the Government be able to pursue those also or is it a one-shot gun, which gives only one chance to identify and seize the assets?
Mr. Denham: With the safeguard that assets must be the proceeds of crime, it will be possible to revisit, should further assets be identified as proceeds of crime. However, there is a distinction between the confiscation
procedure on conviction and civil recovery. In the conviction-based approach, the assumption could be said to be that the assets are the product of criminal activity. On the civil side, the search is for those assets that are the proceeds of crime, which of course would include property that had been bought using cash that had been obtained by converting the proceeds of crime into cash. However, the broad answer to my hon. Friend's question is yes.The director will have access to civil investigation powers. Where necessary, and if the court is satisfied that he has a good arguable case, he will be able to seek an interim receiving order that freezes the property pending the outcome of the case and places it under the control of a court-appointed receiver.
Civil recovery will not seek to establish guilt or innocence but will focus on whether particular property is or represents the proceeds of crime. Civil recovery will not be an alternative to prosecution, which will remain the preferred course wherever possible. The law enforcement and prosecution authorities will apply their normal evidential and public interest tests in deciding whether to pursue criminal proceedings. They will refer cases to the director for possible civil recovery only where prosecution is not available.
The scheme contains substantial safeguards. The burden of proof will be on the director. The civil standard of proof will apply, but the court will be able to require a high standard in practice, as is usual where allegations of unlawful conduct are made in civil proceedings. There will be a financial threshold below which proceedings will not be initiated and we expect to set that at not less than £10,000. Civil legal aid will be available, subject to appropriate tests, and where the director loses the court will be able to order him to compensate respondents for any financial loss that they have incurred. Any victim who has been unlawfully deprived of the property will be able to join the proceedings and the court will give their claim priority over the director's. There is substantial and detailed protection for people who show that they purchased property in good faith for full value and without notice of its tainted origins, and for other innocent interests. Similar schemes operate successfully in Ireland and the USA, and the Australian Government have recently introduced a Bill that includes such a scheme.
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