Proceeds of Crime Bill

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Mr. Dominic Grieve (Beaconsfield): I agree with every word the hon. Gentleman says about the drafting aspects. I simply venture to suggest that the reason for such problems is that the model that has been used is section 52 of the Drug Trafficking Act 1994. That has been reproduced, with twists to try to encompass circumstances in which the test is not knowledge or belief but an objective test. That is why this part of the Bill is in such a mess.

Mr. Stinchcombe: I am grateful for that. I am not especially aware of the origin of the drafting, or why a statutory provision has been created in such a way, but however it originated, I agree that it can be improved by the kind of amendment suggested. Although that would improve the clause, it would not improve the Bill. I say that because as a matter of principle, there should be an objective offence, but it would be better

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to create it in a separate provision of failing to disclose information when you had reasonable grounds for knowledge or suspicion that the other person was engaged in money laundering. A simpler objective offence would deal with the drafting problems that I mentioned.

We are dealing with the regulated sector, and with a massive social problem. We should therefore impose high burdens of professionalism on people who are dealing with the proceeds of crime in the regulated sector. Objectively, if there were reasonable grounds for suspicion of money laundering, people working in the sector should disclose that information. If they are not up to that standard, they should be penalised for that failure. It is not unusual to have such a standard of proof in a professional area, but we can take a better approach to the clause by dividing those two offences. You must make it clear that there are two offences that are committed in two different ways, and make it clear that there are two levels of seriousness, so that different penalties will probably be appropriate.

The Chairman: May I remind the Committee that the word ''you'' refers to me? That word was used many times in that contribution.

4.45 pm

Mr. Davidson: I remind the Committee that the hon. Member for Cities of London and Westminster has admitted that the purpose of his contribution to the debate was to water down the clause. We must ask ourselves whether the Opposition's amendments were designed to make it more difficult to catch misbehavers—or easier. It is absolutely clear that their proposals would make it much more difficult to catch and punish white-collar employees, workers or agents who are collaborating with drug dealers and other criminals, and without whom the said criminals could not be nearly as effective or as prosperous.

All major crime figures—certainly in the west of Scotland, and, I am sure, in the rest of the country—have staff such as drivers, enforcers and, in some cases, killers, but they will also have lawyers, accountants and bankers. Any person from those categories is just as bad as the others, inasmuch as he is supporting the actions of major criminals.

Mr. Field: Understandably and rightly, the hon. Gentleman has drawn attention to a problem. Major gangsters have an infrastructure of support that goes beyond the driver and the heavies to the white-collar professional. No doubt anyone who was collaborating would fall under the clause, even if our exemption were accepted. There is no question that those who know or suspect that money laundering is taking place would be guilty. We do not dispute that. What we are worried about is the idea of a reasonable suspicion that was not held not by the individual concerned, but objectively, some months or years later, by the court. Those who collaborate in the distribution of the proceeds of crime should rightly feel the full brunt of the law.

The Chairman: Order. That was rather a long intervention, but it had the merit of bringing the Committee back to the amendments, and I should be grateful if the hon. Member for Glasgow, Pollok would deal with them.

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Mr. Davidson: Indeed, it did, Mr. McWilliam—and in a helpful way, too. Subsection (2)(b) refers to

    ''reasonable grounds for knowing or suspecting''.

It ties together the argument about collaboration put forward by the hon. Member for Cities of London and Westminster in response to my point. The good old phrase, ''There are none so blind as those who will not see,'' is important. A substantial number of lawyers, accountants and bankers choose to turn a blind eye to the sources of the moneys with which they deal and from which they profit. It is only subsequently that that defence is tested in the court. They work their way through various arrangements, pretending that they did not understand, and it is only when they go to court that judgments are made about whether their actions were reasonable.

Mr. Hawkins: Obviously the hon. Gentleman appreciates that Opposition Members take the problem seriously, but we may differ from him about its scale. He has often expressed a general view about lawyers, accountants—and, indeed, Conservatives—but what does he regard as a ''substantial'' number of such professionals? Will he give us a ball-park figure of how many he considers are involved in such corrupt practices?

The Chairman: Order. Can we come back to the amendment?

Mr. Davidson: Thank you, Mr. McWilliam.

I must point out that there was a mistake in the Hansard report of our last sitting. I was quoted as saying:

    ''I do not think that all lawyers are crooks and shysters, and not just because some of them are good lawyers.''—[Official Report, Standing Committee B, 17 January 2002; c. 1044.]

I actually said, ''not just because some of them are dead'', which is not quite the same thing.

I shall follow up the question of what a person should have known: the ''didnae ken'' defence. It seems that much depends on the culture of the institution in which the individual operates. If there is a culture of compliance, it is likely that there will be few difficulties. If the attitude were, ''We do not want to be involved in this in any way whatever'', problems would be minimised. However, that is not the culture, and legislation along the lines in the Bill is desirable.

The question of culture may seem to take us wider than the clause, but it is essential to allow us to make a decision about subsection (2)(b). May I refer to an article from a newspaper last year that was about exactly this point of culture? The headline is, ''Swashbuckler who just could not resist a deal'', and the article says:

    ''The SFA's public punishment of Sir Michael Richardson is a sad finale to a 50-year career in the City''.

Apparently, two independent tribunals found that Sir Michael was

    '' 'no longer fit and proper' to work in the City.''

The question of his attitude is relevant to our debate.

That article appeared not in the Morning Star, Socialist Worker, or Militant, but in The Daily Telegraph, which is not known as an instigator of

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the overthrow of capitalism—unless things have changed drastically. It is against the European Union, but not necessarily against all things. The article continues:

    ''It is a sad ending to a 50-year career that spanned Panmure Gordon, Cazenove, Rothschilds and Smith New Court. Sir Michael spearheaded privatisation, is known for his unswerving loyalty to clients and was once considered a brilliant judge of stock markets. He describes his knighthood in 1989 as the 'high point' of his career. Sir Win Bischoff, chairman of Schroder Salomon Smith Barney, says: 'I first came across him when he was working on a number of transactions for Hanson Trust. He had a very good read of the markets and an extremely good bedside manner. He handled his clients extremely well.' ''

I remind the Committee that Sir Win Bischoff was referring to someone being described as

    '' 'no longer fit and proper' to work in the City.''

The article continues:

    ''Lord Walker, former energy secretary, describes him as 'a very tough, very good corporate financier'.

    Richardson's public punishment has shocked his contemporaries. Sir Evelyn de Rothschild, chairman of the family bank, describes it as 'quite unnecessary. He should have been warned off or given a slap on the wrist, but to ban somebody for life at 70-odd is out of all proportion. He did a terrific job here at Rothschilds, and we owe him a tremendous debt of gratitude,' he adds. 'He has a strong character and he invigorated our corporate finance department.' ''

That is a pretty glowing reference from a person who is obviously very high up in the City. It may help the Committee if I outline what Richardson did, because it is relevant to the idea of a person who has reasonable grounds for knowing or suspecting.

The Daily Telegraph states:

    ''The fall started in October 1998 when, as vice-chairman of Hawkpoint Partners, then a division of NatWest, Richardson wrote a letter on headed notepaper on behalf of an acquaintance, Alan Shephard.

    'I knew him well and he'd had three major jobs while I'd know him with top American companies,' Richardson explains. 'I believed in him.'

    The letter declared that 'up to $350m' was available, subject to certain guarantees. Over the next 10 months, Richardson wrote at least four similar letters for differing sums. 'See how simple they are,' he says, placing two on a coffee table.

    A letter from a financial company 'assured me that the money was there and, secondly, they told me that corporate business would come to me,' he explains. 'I was employed to get corporate business for Hawkpoint,' he adds defiantly.

    Unfortunately, Shephard has a background. He was once accused of advance-fee fraud in America''—

I shall not go into detail and explain what advance-fee fraud is, as I am sure that Conservative Members have a greater knowledge of such matters than I do. The article continues:

    ''Richardson never sought approval from NatWest or Hawkpoint to write the letters. It was only when he introduced an acquaintance of Shepard's to NatWest, who 'opened an account and put £100m in it' that the alarm went off.

    'NatWest immediately closed the account,' he admits. 'Then they came to me and said, 'we don't want you to introduce any more banking business from your acquaintance to NatWest,' which I didn't.' ''

The Daily Telegraph goes on to state:

    ''This is typical of the man. He cannot resist the deal, but nowadays his recollection of events may not be as clear he thinks.

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    There are glaring inconsistencies in his account. Friends suggest his memory is not what it was.''

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