Proceeds of Crime Bill

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Mr. Foulkes: A lot more.

Mr. Grieve: Why would it be so difficult for a court to extrapolate and identify bona fide creditors? To put it in its most straightforward fashion, if a local grocer down the road has supplied groceries and is owed £5,000—it could be the balance between his own bankruptcy and business failure, and survival—a person who was not a preferential creditor would surely be readily identifiable and readily assessable as completely innocent. In those circumstances, are we to say, ``We're terribly sorry, but all that money will have to come to the state. You won't see a penny, even though we have just collected £5 million''? I find that odd. Why does the Minister believe that it would be so difficult to make such an assessment?

I am asking only for an equitable system that has regard to the fact that the state, which is in receipt of the money, has never been in a creditor's position—except insofar as the circumstances relate to tax provisions later in the Bill. There I see no reason why ordinary tax rules should not apply. Otherwise, however, the state is taking money from someone on the grounds that it was obtained unlawfully. In those circumstances, why should the state be the preferential beneficiary, as against people who have become victims?

I asked the Minister earlier who the victims in this category were. I suspect that the direct victims are those for whom a compensation order has been ordered by the judge on conviction. It is an important issue, and just because no one has thought about it, or because that has been the practice in the past, it does not mean that we should not think about it today.

Norman Baker: The hon. Gentleman has raised an important issue, to which I hope the Minister will respond. One of the Bill's underlying philosophies, which my colleagues and I support, is to catch criminals who have so far escaped justice—even if, as stated on Second Reading, they are the ``pillars of society''. We are talking about people who are respected and who appear to have committed no illegal activities, but people about whom there is evidence to disprove that. The Government want to ensure that such people are brought to justice or their assets seized. They are right to do so. Those people will not necessarily stand out as having a criminal lifestyle. The ordinary shopkeeper whom the hon. Member for Beaconsfield described, or the ordinary supplier of goods and services, may be caught up by these arrangements in a situation that is to their great disbenefit.

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I am thinking of a case in my constituency that related to a different Bill, but it could equally apply here. A one-man builder secured a big contract for a seemingly respectable person. He then spent six to nine months on the job and got in subcontractors to help. The person went bankrupt, with the result that the builder went bankrupt too, owing the subcontractor lots of money. I would not want that situation to be repeated here unnecessarily. This is not about how much money is taken from the person who has illegally obtained proceeds from crime. The amount will stay the same. The question is what happens to it. It is wrong if innocent people such as small shopkeepers, one-man businesses or whatever will suffer as a consequence.

The Minister will tell us that there would be problems in saying who was a legitimate beneficiary and who had a legitimate contract with the person who was deemed to have the illegal proceeds of crime. I accept that. But we must find a way to protect ordinary people who can have no way of knowing that the person with whom they have an agreement has been involved in crime. They have entered a legitimate contract to provide something in return for money, yet before they know where they are, this person has been swept up in the criminal or civil proceedings and they cannot receive the money to which they are duly entitled. None of us wants to weaken the legislation and make it easier for someone to get off the hook or to keep money to which they are not entitled, but if we can find a way to ensure that innocent third parties do not suffer, that must be to the benefit of everyone.

Mr. Hawkins: I want to add to the excellent speeches of my hon. Friend the Member for Beaconsfield and the hon. Member for Lewes (Norman Baker). I share their concerns. I want to make a further point to emphasise why the amendment is wholly different from amendments about which Labour Members have been suspicious in the past. I doubt whether any of them will leap to their feet to suggest that we are trying to undermine the primary purpose of the Bill. We are clearly not talking about the defendants. We are trying to protect those who everyone accepts are wholly innocent people. They are innocent third parties such as the Lewes builder and the Beaconsfield grocer, who are conducting their normal business. They have no way of knowing that the person with whom they are doing business may be involved in nefarious activities that may subsequently lead them to be subject to the Bill's provisions.

A central function of Parliament, particularly of scrutiny in Committee, is to try to ensure that legislation does not, because of a side wind, have adverse consequences for the entirely innocent who were never intended to be the targets of the legislation. Even though the Minister will probably tell us that it will make the assessments more complicated, that is not a sufficient excuse. We must make sure, in every law that we pass, that we do not accidentally hit the little people. That is our concern.

Mr. Foulkes: I understand that concern—and I am not going to say what the hon. Gentleman thinks that I was going to say.

The clause allows us to calculate the defendant's available amount, but it does not wipe out any debts that he or she may owe to the little trader that Opposition Members mention. The defendant would still owe all those debts.

Mr. Hawkins: I understand what the Minister says, and I appreciate that he says that he has never dealt with such matters professionally, but he has misunderstood—albeit genuinely—the effect of the Bill. In my experience, and that of my hon. Friend the Member for Beaconsfield, the innocent little person will lose out because the state's rights will take preference over all creditors. We do not challenge the fact that outstanding debts will still count in law, but there will be no money left to pay them.

Although the hon. Member for Lewes was describing an ordinary civil bankruptcy, the consequences that befell the builder that he mentioned will recur as a result of the Bill. Perhaps the Government are prepared to introduce their own amendment to prevent such consequences. We hope so, even if they do not accept our amendment. As a consequence, all the money will be taken under subsection (1)(b) and subsection (3), and there will be no money left to pay ordinary civil debts.

Norman Baker: Is not the key provision subsection (1)(a), which mentions ``free property'' and ``obligations''? What constitutes an obligation? Debts that are legitimately owed to third parties should constitute obligations. That would reduce the amount available to the state.

Mr. Hawkins: Yes. In order to satisfy us, the Minister and his officials would have to show that they had taken much advice from expert full-time insolvency practitioners. My hon. Friend the Member for Beaconsfield and I have said that those who specialise in insolvency work should advise us on how to determine the available amount, but we have not yet received a response. Both of us did some insolvency work when we practised at the Bar, and our reading is that the Bill will cause the little people to lose out. It will take a lot to convince us, and even the Minister will concede that the provisions are not clear. I hope that he at least concedes to look again at the issue.

There is a serious danger that the Bill could give rise to something almost as bad as the Crichel Down case, a major case that set out the principles of the relationship between Parliament and the citizen. The Minister smiles, because he has heard it referred to on many occasions over the years, but some hon. Members may not have come across it. It involved land that was appropriated for military purposes during the second world war and not given back. Some citizens undoubtedly suffered gross injustice. It came to public prominence because it was a major case that led the way on the subject. The late father of the well known actress Susannah York was one of those who lost out in the case.

We are concerned that many innocent, legitimate traders who are unlucky enough to do business with someone who becomes a target under the Bill will be unable to continue in business. They will be plunged into bankruptcy in the manner that the hon. Member for Lewes described. That would be an unintended consequence of the Bill; no hon. Member would wish it to happen, but there is a serious danger that it will. I hope that the Minister will say that he will look again at the matter in detail.

Mr. Davidson: I wonder whether the Minister will respond to that point with caution, because it seems an example of what may be characterised as the Devizes defence, in which offenders or their relatives point to someone else, and say that he or she has committed a bigger offence. When taxed with the iniquities of his relatives, the hon. Member for Beaconsfield attempted a diversion by offering to give up the right hon. Member for Devizes, saying that he was a bigger offender. That is reminiscent of the defence along the lines of ``a big boy did it and then ran away''—a defence that many of us have heard in the past.

Although we might have sympathy for people who are bankrupted in such circumstances, am I right in thinking that that would have an adverse effect on small traders only if all the assets of the criminal involved were seized? Is that likely to happen frequently? If such a measure is introduced, what steps would the Government or the courts take to avoid the creation of fraudulent debts? It is possible that a set of villains who knew that they were under suspicion would create a web or a network of interlocking debts between themselves for services rendered—or not rendered—in an effort to decrease the amount of money that they had available?

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Prepared 20 November 2001