Proceeds of Crime Bill

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Mr. Stinchcombe: I thank the Minister. I understand his explanation of the clause, but I do not understand the clause itself. Perhaps he can take up my argument with his officials. I do not understand how someone can obtain property by the conduct of someone else, nor how someone can obtain property through the unlawful conduct of someone else.

Mr. Ainsworth: We will have to discuss the policy implications, and I shall explain what is and what is not recoverable. Notwithstanding whether my hon. Friend accepts the thrust of the policy, we shall consider whether the wording could be improved without changing the meaning.

Removing the phrase would remove the certainty currently provided about the application of the definition of property acquired by a person by, or in return for, another's unlawful conduct. Although the exclusion of those words would not of itself mean that the benefit of another's unlawful conduct would necessarily be excluded from the definition, the fact that the phrase had been removed would be taken as a clear signal as to interpretation by the courts.

Mr. Hawkins: The Minister used the central and crucial phrase, ''acquired in return for another's unlawful conduct''. That gives us a clue to the draftsman's intention. We are talking about an exchange and obtaining property in return for someone else's unlawful conduct. That is not what the clause states, which underlines how helpful it was that the Minister said to the hon. Member for Wellingborough that he would consider with his officials whether the clause needed redrafting. The clause would not do what the Minister said.

Mr. Ainsworth: I actually said, ''by, or in return for, another's unlawful conduct''. However, that point having been accepted, I do not know to what extent the Committee wants to labour it.

The hon. Member for Beaconsfield rightly referred to the width of the policy, and asked whether it should be that wide. Amendment No. 381 would add a new subsection to clause 247 to make it clear that a bona fide purchaser for value cannot be held to have obtained their property through unlawful conduct. The effect of that is unclear. As I mentioned in an intervention, a bona fide purchaser for value cannot come within the terms of clause 247(1). Therefore, the amendment proposes a redundant provision, unless the hon. Gentleman is suggesting—as I thought he was, at one point—that we should not even be allowed to contemplate taking action in such circumstances. That would mean that there could not even be an examination of whether the property was obtained for full value.

Mr. Grieve: I want to restate that the legislation was not intended to have in its sights, in any way, the bona fide purchaser for value without notice. With regard to that, although I accept that clause 306 is a let-out clause, I want the Minister to state that such a purchaser is not the target. That would not disallow an examination of whether someone was a bona fide purchaser: an allegation of theft can be made against someone who is subsequently acquitted, but that does not mean that the decision to prosecute him was fundamentally flawed or wrong.

The amendment would highlight at an early stage of part 5—rather than at the end of it—the fact that bona fide purchasers cannot be targeted. Such people should not be held to have obtained property through unlawful conduct.

Mr. Ainsworth: The hon. Gentleman is suggesting that we should not be allowed to explore such matters—unless he is making a minor point about where in the Bill the reassurance should be placed. I draw his attention to clause 302, which states:

    (1) Property obtained through unlawful conduct is recoverable property.

    (2) But if property obtained through unlawful conduct has been disposed of (since it was so obtained), it is recoverable property only if it is held by a person into whose hands it may be followed.

    (3) Property may be followed into the hands of a person obtaining it on a disposal by—

    (a) the person who through the conduct obtained the property, or

    (b) a person into whose hands it may (by virtue of this subsection) be followed.

The intention of that is clear. Power will be given to follow the trail of the unlawful property. I shall offer an example. After a big gold bullion robbery, the nature of the recoverable property might change many times, and it might pass through many different hands. The director will have to be able to follow the trail of that property as it changes from gold, to cash, to property—and, perhaps, back to cash. If he comes across a bona fide purchaser for value, the trail will end. However, the transaction that passed the property to that purchaser might have produced profits, and they are the proceeds of crime. Those profits might remain in the hands of the seller, or they might have been passed on to someone else. In that case, although one trail has ended, another will have opened up.

Mr. Grieve: I understand that, but we are dealing with an action against an individual. Ascertaining that the individual is a bona fide purchaser for value without notice may flag up for the director the fact that another person should be the target of his activities. I do not disagree with that. However, if he has brought full proceedings for recovery, he will have been aiming at the wrong target.

Mr. Ainsworth: The director will not bring full proceedings. It will become apparent in the course of his investigations if the person is a bona fide purchaser for value—unless the person involved is hell-bent on ensuring that that does not come to light, in which case it is possible that full proceedings may follow, in which the defendant reveals in court how he obtained the property and embarrasses the director.

It would be in the director's interests for the issue not to go to court, but quickly to discover whether there is a defence and to try to trace the proceeds of crime through other avenues. The proceedings will involve individuals, but the question is how many individuals and what proportion of the profits is involved, in what form the property now exists and whether it is worth pursuing through the civil recovery procedures. That is what the director must find out. Ultimately, having traced all the roots and branches of the tree relating to the original criminal offence, the director must decide whether to take action, how many individuals are involved and how many individuals it is worth taking through the civil procedures in order to acquire the various proportions of the profits of that criminality.

Mr. Mark Field (Cities of London and Westminster) rose—

The Chairman: Order. I have taken note of the fact that the hon. Member for Cities of London and Westminster (Mr. Field) wants to intervene, but I hope that now is an appropriate time to suspend the Committee. The letters quoted at the start of the debate have arrived, and the other letters referred to are on their way. I am not so worried about those, but I am worried that hon. Members may not have had the opportunity to read the letter from which the hon. Member for Beaconsfield quoted. I therefore propose to suspend the Committee until 10.50, to give every hon. Member an opportunity to have a look at the letters.

10.42 am

Sitting suspended.

10.50 am

On resuming—

Mr. Ainsworth: I was about to respond to the point made by the hon. Member for Lewes, but as he is not here now, I shall leave that until later.

Mr. Carmichael: Go on.

Mr. Ainsworth: All right. The hon. Member for Lewes wanted me to talk about how clause 267(4) works. He originally had the impression, suggested by the hon. Member for Beaconsfield, that clause 267 included a widely cast safeguard, but he picked the fact up that that was not so. In order to explain the safeguard that clause 267 provides, we must continue to talk about how the investigation chases the property throughout its various transformations.

A person may receive property, albeit not at full value, and be innocent of its origins. As a result of receiving that property, he may take actions that he would not otherwise have taken. He might make commitments or investments, or decide to go on a world tour that he could not otherwise have afforded. In those circumstances, an evaluation should be made, and the person should be protected to some degree, because he took action that he would not have taken if he had not received the property.

Real injustices might arise if an innocent recipient of criminal property were told, ''You have to give it back. We don't care what you did in the meanwhile, or what effect it may have on your life.'' I hope that that answers the question raised by the hon. Member for Lewes, and explains the reason for clause 267 and the safeguards that it provides.

Mr. Grieve: The Minister may agree that clause 267 provides, in the case of civil recovery, the protection that the Glasgow granny did not have under the confiscation proceedings for tainted gifts.

Mr. Ainsworth: There are, as the hon. Gentleman knows, safeguards in part 2 that guard against serious injustice.

We think that clause 267 is appropriate. Someone may be able to present his circumstances to the court as I have outlined, and the court should be allowed to consider whether it is right to continue to pursue the property.

I have tried to pick up on the main issues, which are important because of the centrality of the clause to part 5. I shall explain clause 247, for the record, and allow people to raise issues about the origin of the proposals in it. The clause makes it clear that a person may obtain property through unlawful conduct in two ways. The first is if the property is obtained directly through unlawful conduct. That would be the case if the property were stolen or obtained by dealing in illicit goods. The second is if the property were obtained in return for unlawful conduct. For example, if a person is paid to commit murder or arson, or takes a bribe—or even a wage, in the case of some organised criminal gangs—to give false evidence, he has effectively obtained that money through unlawful conduct. The clause makes it clear that it is immaterial whether the person committed the conduct, or whether it was committed by someone else. That is important because of the nature of criminal networks. It is especially relevant in the context of property obtained in return for unlawful conduct. The head of a criminal gang might agree to arrange a hit for a fee. If he then got one of his gang members to commit murder, it is clear that he obtained the fee in return for the criminal conduct of the gang member who carried out the murder. A slightly different example would be a person who agreed to undertake a hit and arranged for the fee to be paid to his wife, his mother or his mistress.

I assure the Committee that the definition in clause 247 applies only to a person who obtains property by or in return for unlawful conduct, whether that conduct is his or someone else's. It cannot apply to a bona fide purchaser for value. Such a person will not have obtained property by or in return for unlawful conduct. However, part 5 allows for the possibility of recovering property from people who were not themselves involved in the unlawful conduct.

Chapter 4 of part 5 makes explicit provisions as to how property that is obtained through unlawful conduct may be followed. I read out clause 302 for the hon. Member for Beaconsfield because it details why that may be necessary and the requirements for doing it. I assure the Committee that clause 306 sets out exceptions when property cannot be followed into the hands of another. It is clear that if a person obtains property in good faith for value and without notice that the property was recoverable, the property is not recoverable. Therefore, the Bill already provides the protection that the hon. Member for Beaconsfield wants—at least, I am fairly sure that that is what he wants.

The hon. Gentleman has researched part 5, and he puts a lot of effort into his work. He compared the provisions in part 5 with tort. I want to ensure that he knows the origin of the provisions, for the benefit of his further investigations as we consider part 5. The scheme is based not on tort, but on property claims. A victim who has his property stolen may sue the person who possesses that property. That may be done regardless of whether that person is the thief. In ordinary civil cases brought by one individual against another, the defence of being of a purchaser for value could be used as we are providing for it here. That is the origin of the provisions in the Bill, rather than the tort provisions that the hon. Gentleman has studied.

I assure the Committee that I will examine the wording—although I will not necessarily bring the draftsman in front of anybody to be shot.

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Prepared 13 December 2001