Proceeds of Crime Bill

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Mr. Mark Field: Subsection (3), which relates to the director, refers in brackets to

    ``including the carrying out of investigations''.

That power seems broad, especially if it allows the director to initiate investigations or further or repeated investigations of particular individuals. Anxiety will be expressed about the breadth of the director's powers.

How does the Minister envisage that the provision will work? The clause refers to

    ``the exercise of his functions''

and specifically giving the director the power to carry out investigations. Is that envisaged? Will safeguards be provided relating to the director's duties for people who are subject to investigation or further, repeated or extended investigations?

Mr. Hawkins: I take very seriously the comments of the hon. Member for Orkney and Shetland (Mr. Carmichael) about parallel provision in Scotland. I do not claim to be an expert on Scots law, but some years ago, as a practising barrister in the midlands, I did a lot of work in Corby, where there are many people from Scotland. During that time, I had links with Scottish lawyers who dealt with cross-border cases. From that limited experience, I understand entirely his anxieties. The problem is that the bases of the Scottish and English legal systems are, as we all know, entirely different. Scots law is a Roman-law system, and English law is a common-law system.

I realise that no Government can make identical provision for north and south of the border, but both the hon. Member for Orkney and Shetland and the hon. Member for Glasgow, Pollok, who raised the matter in an earlier debate, are right to say that anxiety should be expressed if the provisions do not seem to operate in an entirely parallel way. I and my hon. Friend the Member for Beaconsfield will examine carefully more of the Scottish provisions later, and perhaps now is a good time for the Minister to deal with some of those points.

On the breadth of the director's powers, we are indebted to the Minister for the guidance that he gave us just before the Committee sat. I saw it for the first time this morning, although my hon. Friend the Member for Beaconsfield saw it late yesterday. I ask the Minister—I know that it is not his fault, and that we are only at the start of the Committee—to ensure that he gives us any further documents with a little more than 24 hours' notice, if possible. I am sure that he will respond to that if he can.

Opposition Members are concerned about the Government's proposal to give directors such broad powers because those who work in the City of London and elsewhere are bound to feel concern that such powers might be used oppressively against those who are responsible for our enormously successful financial institutions. The Government do not consciously wish to damage the important contribution that the City of London and banking institutions make to the United Kingdom economy, but, as the Minister will acknowledge when he responds, the British Bankers Association expressed concerns in its response to the consultation on the draft Bill.

My hon. Friends and I shall raise many of the concerns felt by the BBA and other City of London institutions, even though the Government took note of some of their points in the consultation.

Mr. Davidson: Does the hon. Gentleman accept that if the BBA and others had put their own house in order, the Government would not have needed to introduce the legislation?

Mr. Hawkins: I do not accept that. I take the hon. Gentleman's views on the matter seriously, but he should recognise that some City of London scandals were caused by rogue financial institutions that have never been members of reputable bodies such as the BBA. He should consider carefully the membership of such reputable organisations. I am aware of such rogue institutions because I have worked for four of the major British clearing banks in the City, and advised them not to issue a credit card to the now infamous Bank of Credit and Commerce International.

I have professional experience of trying to stop rogue banks operating. Unfortunately, the rogue BCCI succeeded in defrauding many bodies, including, as the hon. Gentleman will recall, some local authorities. I seem to recall that one of them was Orkney Islands council.

Mr. Bob Ainsworth: Western Isles.

Mr. Hawkins: The Minister rightly corrects me, and points out that the Western Isles council was one of those that suffered enormously in the BCCI scandal.

One must distinguish between reputable and disreputable financial institutions, and we are concerned that reputable organisations' views should be taken on board.

I hope that the Minister will confirm that when his officials draft further guidance, they will take advice from a range of bodies that are already involved in the investigation of fraud, including the National Criminal Intelligence Service, the Serious Fraud Office, special branch, and the fraud squad of the Metropolitan police and other police forces. I hope that he will tell us whether those bodies are being consulted by the Government and their officials on the breadth of the powers given to the director.

The director's powers should be specified clearly because he will have to confront a problem that was highlighted in today's press through the comments of Mr. Justice Scott Baker, a judge in front of whom I have appeared, and whose judgment I very much respect. The Minister will not want to comment in detail on current civil proceedings—nor will anyone else, as the proceedings are sub judice—but I refer to those matters that are in the public domain in today's papers. I do so to show the complexities of the matter.

I hope that the Minister will state that he takes seriously the concerns that many reputable bodies, as well as Opposition Members, have expressed on the subject of the breadth of the director's functions. I hope that he will say more about that later. If he can reassure us, we shall be happy for the clause to stand part of the Bill.

The Chairman: Before I call the Minister, I thank the hon. Member for Surrey Heath for reminding me of something that I should have said at the start of our proceedings and that may be helpful to hon. Members who are not familiar with the system. When selecting amendments, we do so on the basis that we have one argument on one subject. I refer to amendments the principle of which has already been disposed of. If there are attempts to readdress that principle in relation to Scotland, such amendments will not be selected.

12 noon

Mr. Ainsworth: The clause sets out the director's general functions and the underlying purpose of the Bill is the reduction of crime through the recovery of the proceeds of crime. It therefore requires the director to exercise his functions in a way that he considers best calculated to contribute to the reduction of crime. The director's five main functions are set out in other clauses. First, he will share the confiscation functions of the law enforcement and prosecution authorities. In a criminal case, those authorities will be able to ask him to handle the financial investigation and the confiscation aspects while they concentrate on the criminal investigation and proceedings.

Secondly, the director will have sole authority to operate the civil recovery function in part 5. Thirdly, he will have sole authority to operate the tax powers set out in part 6, in particular to make sourceless tax assessment. Fourthly, he will train and accredit financial investigators who will be able to apply their skills in their own organisations. Finally, he will be required to advise the Secretary of State on matters relating to asset recovery. We envisage, in particular, that he or she will play a leading role in the development and implementation of the assets recovery strategy.

The director will be required to exercise his functions efficiently and effectively. When the hon. Member for Spelthorne first referred to that, I was of the mind that I did not know what the word ``economically'' would add to those two requirements. I can remember the strictures of the three Es being thrown at me. If I thought that the word added something, I should be more than happy to see it alongside the two Es under the Bill. While I reflect on whether the word will add anything, I ask him to think about how far we can go with the language. Surely the last thing that we want is for the director not to apply his powers ``adequately'' to the problems. Let us add that to the requirements and we can have three Es and an A.

I accept the hon. Gentleman's point that we do not want people pursued at great cost to the agency for relatively small amounts of proceeds. If ``economically'' adds something to the provision, I am happy to consider it. However, I believe that the director's functions are covered by the term ``efficiently and effectively''. Perhaps the hon. Gentleman will reflect on how far we can go with the language.

Mr. Wilshire: As the Minister reflects on the matter, so shall I. There is something to be gained, however, by drawing attention to the fact that the director should take into account whether it is cost-effective to pursue a particular line of inquiry. More than anything else, taxpayers would not forgive us for spending more of their money than they received back. That is an economic argument. We can compare the different approaches of the Inland Revenue and of Customs and Excise, one of which applies more readily than the other the argument about whether it is worth while taking such action. I hope that the director will be charged with asking whether such action is worth his while.

Mr. Ainsworth: The point is well made. If that point is not covered by ``efficiently and effectively'', we should seriously consider adding another word. If it is, however, the point should be accepted as being made.

Mr. Paul Stinchcombe (Wellingborough): I wonder whether the point is well made. I thought that the principal purpose of the legislation was to stop crime being attractive, not to raise revenue.

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Prepared 13 November 2001