Proceeds of Crime Bill

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Mr. Hawkins: I did not originally intend to add to my hon. Friend's cogent and powerful explanation of the reasons why we should vote on the matter, but I wish to make two points.

First, I am delighted that we have been joined by the hon. Member for Redcar, who made a powerful speech on Tuesday in support of Opposition Members' arguments.

Vera Baird (Redcar) rose—

The Chairman: Order. I was under the impression that the hon. Member for Beaconsfield was giving way. If he had in fact finished speaking, the Committee should be aware that the Chair will not normally call a speaker after the winding-up speech.

Mr. Hawkins: On a point of order, Mr. Gale. My second point is that, while my hon. Friend was speaking, I opened a detailed note from the Minister, which has been copied to all Committee members, and which has a bearing on the matter under discussion. I do not know whether my hon. Friend has seen it yet, but it contains new information, and it is dated 11 December.

The Chairman: On this occasion, I am prepared to allow the hon. Gentleman to speak. However, the Committee must understand that, in future, once the winding-up speech is concluded, I will not allow another hon. Member to be called.

Mr. Hawkins: I am very grateful, Mr. Gale. I have only one copy of the letter, but I will share it with my hon. Friend in a moment. The letter is addressed to Mr. David Williams, who is the vice-chairman of the technical committee of the Chartered Institute of Taxation.

I state at the outset that I do not wish to criticise the Minister, who has sent out every piece of relevant information to all Committee members as soon as possible. I first saw the letter in today's post—I do not know whether other Committee members have seen it yet. It foreshadows a meeting that—I understand from the covering letter—the Minister is due to have with the Chartered Institute of Taxation's technical committee on 17 December, and it addresses some of the institute's concerns about this part of Bill. Once my hon. Friend and I have had the opportunity to examine the letter fully, there will be time to return to the matter. The importance of the letter is that draft guidance is being supplied to the Chartered Institute of Taxation, which Committee members can look at, and, in particular, detailed proposed guidance by the Secretary of State to the director of the Assets Recovery Agency on the circumstances in which civil recovery will be used. Because we are concerned about the standard of proof that should be used—and, as my hon. Friend the Member for Beaconsfield rightly says, we may not get another chance to examine the issue—it is important to draw the Committee's attention to one particular aspect under the heading of civil recovery.

9.30 am

The draft guidance states:

    ''It is envisaged that the circumstances in which law enforcement agencies will refer cases to the Director for possible civil recovery action will include the following''—

the most relevant of which seems to be when—

    ''(c) a person has been acquitted of a specific offence charged in criminal proceedings, but there is compelling evidence that some of his assets were nonetheless derived from unlawful conduct by himself or others and there is no lawful explanation for their acquisition.''

We are therefore talking about circumstances in which there has been a criminal case, but, as a result of decisions, the state—I make no apology for calling it that, as that is what it is—decides that it wishes the director to move from the criminal proceedings and use the new civil recovery powers. In that context, I feel that our case that the balance of probabilities is not high enough is reinforced. It is question of the state saying ''We'll have a go on the criminal side, and if we fail, we'll use these new powers as a back-up.'' That is precisely the concern expressed by my hon. Friend the Member for Beaconsfield and I, and by other hon. Members. We do not oppose the arrangement in principle, but careful attention needs to be paid to how such a draconian power is used.

Mr. Ainsworth: I want to make a couple of points to the hon. Gentleman. First, the guidance has been shown to the Committee—there is no new and detailed guidance other than that which has been distributed to the Committee. We had this debate before the one that we are now having on the balance of probabilities. It is not a new issue that has just come to light. We had exactly this discussion in relation to the previous amendment, on which we have not yet voted.

Mr. Hawkins: I accept what the Minister says entirely. If the guidance is what we have seen before, I apologise. It was presented in the covering letter as something new that had been given to the Chartered Institute of Taxation, and I had taken it as a further development. As the Minister appreciates, I only opened the letter while my hon. Friend was speaking. It is therefore difficult for me to double check.

My point is that if, initially, there are criminal proceedings, and the state fails, and the new powers are used as a backstop, the concerns that we expressed, which are shared by the hon. Member for Redcar, would be reinforced.

Question put, That the amendment be made:—

The Committee divided: Ayes 7, Noes 12.

Division No. 15]

Baker, Norman Carmichael, Mr. Alistair Field, Mr. Mark Grieve, Mr. Dominic
Hawkins, Mr. Nick Tredinnick, Mr. David Wilshire, Mr. David

Ainsworth, Mr. Bob Baird, Vera David, Mr. Wayne Foulkes, Mr. George Harris, Mr. Tom Lazarowicz, Mr. Mark
Lucas, Ian McCabe, Mr. Stephen McGuire, Mrs. Anne Robertson, John Stinchcombe, Mr. Paul Stoate, Dr. Howard

Question accordingly negatived.

The Chairman, being of the opinion that the principle of the clause and any matters arising thereon had been adequately discussed in the course of debate on the amendment proposed thereto, forthwith put the Question, pursuant to Standing Orders Nos. 68 and 89, That the clause, as amended, stand part of the Bill.

Question agreed to.

Clause 246, as amended, ordered to stand part of the Bill.

Clause 247

''Property obtained through unlawful conduct''

Mr. Grieve: I beg to move amendment No. 380, in page 145, line 31, leave out

    '(whether his own conduct or another's)'.

The Chairman: With this it will be convenient to take amendment No. 381, in page 145, line 32, at end insert

    '(1A) No person who is a bona fide purchaser for value of property without notice that such property was obtained through unlawful conduct, shall he held to have obtained property through unlawful conduct.'.

Mr. Grieve: The clauses are closely linked. We are considering property that is obtained through unlawful conduct. During our debate on Tuesday, I told the Minister that I was a little puzzled by the impression conveyed in the explanatory notes, which is also reflected in his letter to David Williams, the vice-chairman of the technical committee of the Chartered Institute of Taxation. There is an underlying assumption that the person against whom proceedings will be brought will be the person who has obtained property through unlawful conduct. I am trying to find the particular place in the Minister's letter to which I want to refer.

The Chairman: Order. While the hon. Gentleman is finding the part of the letter to which he wants to refer, I want to bring a matter to the attention of the Committee. I appreciate that the Minister made every effort to ensure that members of the Committee received a copy of his letter. The hon. Gentleman is about to quote from an official document, in the sense that it is a letter from the Minister, and I am worried that, given the present postal situation, not all members of the Committee may have received it. If such documents are to be circulated at relatively short notice and likely to be debated in Committee, copies should be available in the Room.

Mr. Grieve: I am grateful to you, Mr. Gale. I apologise for delaying our proceedings.

Paragraph 14(c) of the Home Office note says:

    ''a person has been acquitted of a specific offence charged in criminal proceedings, but there is compelling evidence that some of his assets were nonetheless derived from unlawful conduct by himself or others and there is no lawful explanation for their acquisition. The law enforcement and prosecution authorities would consider carefully before making a referral to the Director following an acquittal. Were they to do so, institution of civil proceedings would not constitute a breach of the prohibition on subjecting defendants to double jeopardy, because civil recovery will not be a penalty but a means of recovering from a respondent property that has been unlawfully acquired (or property representing property that has been unlawfully acquired) and to which they are not entitled.''

That reinforces the impression conveyed by the explanatory notes, but the nub of the civil recovery procedure is to be aimed at individuals who have unlawfully acquired such property. The Minister's letter of 12 December, which I received yesterday, and a careful reading of part 5, show that the nature of the power being given to the state goes wider than that. It also includes the recovery of assets that may have been acquired innocently by the individual against whom the action is being brought. The Minister made that clear in his letter to me, in which he discussed the relationship between confiscation and civil recovery.

The Minister's letter of 12 December explained that the two powers of confiscation and civil recovery are not identical and that the powers of civil recovery go further because they include the category of taking assets away from a person who has done nothing wrong but possesses assets that were previous acquired through unlawful conduct. That category would not involve confiscation proceedings.

I quote the nub of the passage, which is paragraph 10:

    ''In these circumstances, we have a sum of money which is in the possession of the respondent, which has been excluded from the confiscation order but which can nevertheless be shown to constitute the proceeds of unlawful conduct—namely, unlawful conduct by the third party. Such property ought in our view to be recoverable. As I explained yesterday, and as the explanatory notes make clear (eg the note on clause 302), the enforcement authority will be able to follow recoverable property as it passes from hand to hand. Civil recovery will not be restricted to respondents alleged to have committed the unlawful conduct through which property was originally obtained. This tracing process is perfectly normal in civil property law and is essential for the effectiveness of civil recovery.''

The letter continues:

    ''The respondent may seek to take advantage of the civil defences provided in Part 5, but the High Court may decide that the defences do not apply. In particular, the civil recovery scheme prevents recovery of property from bona fide purchasers for value, but the respondent may have received the money from the third party otherwise than for value. There is also a 'bona fide change of position' safeguard in clause 267(3)(b), under which a person who receives proceeds of crime in good faith otherwise than for value may be allowed to retain some or all of the property if the court is satisfied that he has taken steps on the basis of his possession of the money as a result of which a recovery order would cause him to suffer disadvantage and that it would be unjust for the order to be made. But if the respondent has not taken any such steps''—

this is quite interesting—

    ''and there are no ECHR reasons to prevent recovery, the court will see no reason why the money should not be recovered by the Director.

    Your amendment would have the effect of excluding the possibility of civil recovery in cases of this kind, where it seems to me that civil recovery would in principle be justifiable.''

The Minister wrote the letter to me in the context of the debate that we had about amendment No. 356. It certainly influences my view of what we should do about that amendment. However, the helpful letter highlights the contrast between civil recovery and confiscation and the surprising nature of the civil recovery powers. That is what I wanted to examine by tabling my amendments to clause 247, to which I turn.

Clause 247 defines what constitutes property that is obtained through unlawful conduct. I do not want to read the clause out—it is not that easy to read, which is why I may have misunderstood it when I first examined it, especially when I linked it to the explanatory notes. I understand that the clause provides that property shall be held to be property obtained through unlawful conduct if it was unlawfully obtained by any person, and not only the person against whom the proceedings are being brought.

I am aware that later in part 5 reservations and protections are provided, particularly in clause 306, which relates to the bona fide purchaser for value without notice, and in clause 267, which relates to the person who has innocently come into possession of property. However, I worry that the definition of

    ''property obtained through unlawful conduct''

is much too wide.

9.45 am

It never crossed my mind that one could say that a bona fide purchaser for value without notice was in possession of property obtained through unlawful conduct. I had always taken the view, applying my experience of the law of tort, that, notwithstanding the property's origins, once it was in the hands of a bona fide purchaser for value without notice, it changed its complexion and became legal property.

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