Examination of Witnesses (Questions 180-199)
ASSETS RECOVERY
AGENCY
1 MARCH 2006
Q180 Rosie Cooper: Can I ask you
about recovery really and your success in 2005 and so far in 2006,
how you compare against the Criminal Assets Bureau? I note today
we have the press release with the major figures involved there,
£3.5 million, but not only how much you are recovering but
from what areas of crime?
Ms Earl: How do we compare with
Criminal Assets Bureau? Let's deal with that first. They are very
successful operation and we have learnt an awful lot from them
but, as I think you alluded to, Chairman, they have different
legislation and have been operating for a considerable period
of time. What we have discovered, slightly I have to say to my
chagrin, is that this is a much longer process than I had ever
assumed in order to get people from the very early stages where
we can go in and do the sort of things we have done today, to
restrain assets, to get to the final point where we get a recovery
order. The recovery orders we have achieved this year, so far
three in number in Northern Ireland, have all been cases where
we have reached settlements with the three individuals so our
total value of settlements in assets in this current financial
year is running at about £350,000 and we have put about another
£450,000 into the notional "tin box" as a result
of cases which we completed last year because of the time lag
between getting a recovery order and turning it into realisable
assets which could be paid over to the Home Office for use for
incentivisation purposes. So we are seeing that it is a very lengthy
process. We are hoping that as we get more cases completed there
will be more of our respondents who decide that settling rather
than litigating to the full extent will be the right way to go.
We have included in the evidence we submitted to you some of the
factors which have caused that lengthy process, including the
availability of legal aid, the number of legal challenges which
have been made to different parts of the statute. I am sorry to
have to tell you that we are still really struggling to prove
some of those bits of legislation. We are in it for the long term
so we are not worried about that to the extent that we are not
going to go away because it has not been resolved quickly, but
it does mean we are not showing the final tin box results we had
hoped for.
Q181 Chairman: If there are particular
legislative changes you would like to see, and because this is
of necessity a fairly tight session, would you please write to
our Clerk and let us know so we can consider that?
Ms Earl: Yes.
Q182 Rosie Cooper: I was going to
ask you the very final question about your proposal to amend Part
6 of the Act to make it more like the Criminal Assets Bureau?
Mr Kennedy: I think when comparing
figures between Criminal Assets Bureau and the Agency in Belfast
one has to realise they do their work in a very different way.
70% of their income, if I can call it that, is gained through
the use of the taxation powers. The vast majority of our cases,
certainly 70% and upwards, actually goes through the High Court
for civil recovery proceedings and I suppose the question therefore
is why is their taxation regime of criminal assets looking more
effective and efficient than ours? I think the reality is that
when the Proceeds of Crime Act 2002 was passed by Parliament we
made an attempt to replicate what was in Ireland and we have not
quite managed it, so there are in fact a number of changes that
one could make to Part 6 if one wanted to make it more in line
with what the regime is that the Criminal Assets Bureau applies.
Chairman: Could you let us have a note
on that because that I think is better than having a long discussion
on legislation, but thank you for the question[1].
Q183 Stephen Pound: Pertinent to the
point Rosie Cooper asked you will not be surprised to hear that
as soon as you start talking about a "tin box" of goodies
most members of the Committee show a considerable interest, but
when looking at the press release you did on the McKinney case,
and I am not personally expressing an interest in buying a Bentley,
a Jaguar, a helicopter or Range Rover, I was intrigued by what
you said about the process of conversion. In the Jim Johnston
case, which we studied in some detail, I understand the property
was sold at public auction. When we first started the inquiry
we were told there would be difficulties in public auction sales
as purchasers would be reluctant to identify themselves a a purchaser.
Is that, in fact, the case? Do you have a problem with the process
of realising the assets and diverting that precious stream into
the tin box.
Ms Earl: I think we had a bit
of nervousness about whether or not public auctions would be difficult
in realising full value and our experience of doing this in the
main house in the Johnston case was that it was not a problem.
In fact, we exceeded the reserve price and there were clearly
people who were very happy to go and buy his former home. Some
of the other properties in that case, the smaller residential
properties, we sold by private treaty for a variety of reasons
because of the tenants who were living in them, and the one we
had a difficulty in realising the full value of was the commercial
property in Newtownards Road.
Mr McQuillan: Yes. That had formerly
been a drinking club with a shop underneath but the primary problem
in selling it was the fact that there was so much commercial property
in the area up for sale because it was for redevelopment, and
there was no sign of redevelopment in the next 3-5 years people
were reluctant to buy for commercial reasons.
Q184 Stephen Pound: My problem was
entirely related to the Scottish experience with asset sales when
people deliberately would not buy seized goods. It was a political
statement rather than anything else then, but for the record that
is not the case so far?
Mr McQuillan: We have not seen
that so far and, as the Director has said, I was present at the
Jim Johnston auction and there were something like 13-14 bidders
for some of the properties. There was a huge amount of interest.
Chairman: Thank you. We just hope they
did not have northern bank notes in their pocket when they were
bidding!
Q185 Dr McDonnell: Moving on, the
impression has been gained that most of the referrals have loyalist
links rather than provo links. Are the provo associated paramilitary
operations too sophisticated, or are we not tackling them or not
getting referrals, or is it just that they are mostly loyalist?
Ms Earl: Alan can talk you through
the specifics on this but the point I would want to be very clear
with you about is that we act on the referrals that come to us
from other organisations and we can give you an absolute assurance
that we have not failed to act on any referral we have received
simply because of the background of the body. If we have sent
them back it would be because we have either discovered other
criminality which would be more appropriate for PSNI to try to
prosecute or because we have not linked the property there to
the unlawful conduct alleged. Those are the only reasons we would
send things back. Alan might like to talk about what we have seen
in terms of the trends coming forward.
Mr McQuillan: In terms of the
referrals to date, the figures are in the brief but so far we
have dealt with 29 cases that have a clear link to loyalist paramilitary
groups and 14 to republicans, so the ratio is about two loyalists
to one republican. There are differences in the structure of organised
crime in Northern Ireland. There are differences in the types
of organised crime that the various paramilitary groups get involved
in, and I think those figures probably are a reasonable representation
of the different groups, but as the Director has said we get cases
on referral and have never yet turned away a viable case, and
as the paramilitary cases come forward I have no doubt those numbers
will change as well.
Q186 Dr McDonnell: So you are saying
29 and 14 out of a total of—
Mr McQuillan: Ninety-five. So
that gives a total of 46% with a terrorist connection.
Q187 Dr McDonnell: So your answer
is you deal with them as they come to you but it may be at another
level that the differential has arisen. You deal with what you
get?
Ms Earl: Yes.
Q188 Dr McDonnell: And the fact that
there is a difference of 2:1 is not significant?
Mr McQuillan: For example, with
republican organised crime the biggest single area of organised
crime tends to be around excise offences, so if for example we
had a significant number of extra excise offences we would expect
to see the republican percentage go up. Loyalists, by and large,
not exclusively, do more on drugs so if we got a focus on drugs
from the referring partners then the loyalist percentage would
go up because the different communities groups tend to be involved
in different types of activity.
Q189 Chairman: What about the actual
sums of money in broad general terms? The 29 represent a lot more
than the 14, or the 14 represent a lot more than the 29?
Mr McQuillan: I do not have those
figures, Chairman. We could get them[2].
Q190 Chairman: That would be very interesting
because that is very relevant to what we are asking. The implication
of my question, as you clearly understand, is are the loyalists
involved in a lot more but rather minor, and the others involved
in less but rather more major?
Ms Earl: We will get that information
to you.
Q191 Dr McDonnell: The other thing
I wanted to ask, to take the flip side of that coin, if you like,
some of the figures we have suggest that 31 of those referrals
that you have had in over three years have been purely criminal
organised crime links. Can you tell us something about the nature
of those criminal gangs involved? Is there even indirect paramilitary
involvement with those gangs? Do they pull in a bit of paramilitary
support? Do they get paramilitary muscle? Are they former paramilitaries,
in other words?
Mr McQuillan: I think there is
a definitional issue here. In terms of the way we have prepared
these figures we would only count something as having a paramilitary
connection if we had been given specific intelligence by law enforcement
that there was a link to paramilitaries. So within that 31 crime
figure there could be people who, for example, could be operating
in areas like South Armagh or the Shankhill Road in Belfast where
one might expect that there would be some paramilitary interest
or influence or protection money paid, but one cannot say that
because quite simply we do not have any evidence or intelligence
of that. So that is one issue. In terms of those groups themselves
they cover again the entire spectrum of crime. We have people
there who have been involved in counterfeiting, an individual
who specialises in the robbery of elderly people in their homes;
we have an entire range of different types of criminality in there.
Q192 Mr Campbell: On this issue of
referrals, the numbers you have supplied us with are numbers of
referrals. In terms of taking the referrals to the point, for
example, that you are at today with the case of Portadown, if
you were producing a graph for that stage of events, would that
reflect the 29/14 that is reflected in the referrals, or would
it change?
Mr McQuillan: We can look at producing
those figures for the Committee[3].
I honestly would not like to give you a view on that at this point.
Q193 Mr Campbell: If you could give us
those. The reason I am asking is that there is a general view
in Northern Ireland, and right across the spectrum, that the more
cases you can produce the better. Everyone irrespective of political
label wants to see action taken against groups of parasites living
off the backs of their own community, but there is a general view
that you have been quite effective in dealing with loyalists,
particularly those involved with drugs, but not anything like
as effective against republicans. Now that is a general view that
is held that will probably be reinforced by the press release
today. After three years is it not getting easier or less difficult
to take action against the fuel smugglers, against those on the
border, who perhaps it was more difficult to take action against
in the past, and to get referrals for in 2006 than it was in 2004?
Mr McQuillan: In terms of our
operations what I would say is this: every case that has come
forward to us that has been referred to us by other agencies we
have investigated, and every case that has been viable as a civil
recovery or tax case we have taken, so what you will see in the
figures are the products of the viable cases put forward to us.
Cases only cease to be viable if we cannot get sufficient evidence
of the criminality by the individuals concerned or if they do
not have sufficient assets, so those are the strict legal tests
that we apply. Everything else we go for.
Q194 Mr Campbell: I can put it another
way: do you think on the basis of the referrals we have, which
is twice as many loyalists and republicans, and I accept that
you deal with referrals, but do you think on the basis of that
there is twice as much loyalist criminal activity as republican
criminal activity in Northern Ireland?
Ms Earl: Let me have a go at that
as a slight outsider. I do not think you can draw that conclusion
because what we are seeing are the cases that are referred to
us which by definition will be criminality which has been happening
at some point in the past. The reason for that is that we will
only take cases if I can be satisfied that there is genuinely
no chance of prosecution leading to conviction and a confiscation
order, so to some extent we are always driving by looking in the
rear view mirror. We can tell you that what we have at the moment
reflects a pattern of referrals relating to historic criminality.
I think that is where we find ourselves in some difficulty giving
you properly informed advice about what is going on now. I think
Sir Hugh is in a much better position to do that.
Q195 Chairman: Could you comment
on something? From other witnesses we have been told, based on
paramilitary either individuals or groups, there are two emergent
mafias in Northern Ireland, and to put it very crudely it was
said to us that the loyalists on the whole are less sophisticated
in their criminality than the republicans. Is this something your
observations would bear out, or not?
Mr McQuillan: To an extent, yes.
On the loyalist side, first of all, they are much more fragmented.
There is a lot of history behind this, and I think I have given
evidence on this perhaps to this Committee before, but there is
a lot of history on this. The loyalist organisations have always
been much more fragmented and in comparison to the Provisional
IRA, for example, there has always been much more criminality
for personal gain within the loyalist groups than there was necessarily
in the republican groups. That pattern is probably going to change
in the future but at this stage that is the historic position
we face, and therefore when we are investigating, and bear in
mind that we go back 12 years, that is one of the patterns we
are going to find reflected in the figures. So in answer to the
question from Mr Campbell, if I am looking at a typical loyalist
paramilitary I would probably see much more of the assets derived
from crime have been diverted to personal gain, and for some of
the republican paramilitaries I would find pro rata probably
less of the assets are as visible. Now, the net overall republican
assets may be greater and it is therefore harder to find them,
it is a bigger job to find them, but on the loyalist side it is
much more fragmented and there are a lot of people out there flaunting
their wealth, much more so pro rata than what we have seen
in the republican communities.
Q196 Mr Campbell: On this sophistication
issue, I can well understand in the first year or so of your operation,
even though you may not say it is easier to go after the more
fragmented groups, that is what many people believe has happened,
after three years surely you will be getting much more sophisticated
and even more professional than you already are at pursuing the
more difficult cases, and surely we should be starting to see
that graph starting to even up. Do you expect in the next year
to be seeing a much more emphatic pursuit of the more sophisticated
criminals?
Mr McQuillan: That graph actually
reflects the cases that are referred to us, so if more cases from
people from a republican background are referred to us that would
be reflected in the graph. I can encourage referrals by talking
to partners but I cannot control the process, and again I have
to come back to the point that we are part of an overall system
and that other people may be dealt with preferentially in the
criminal justice system because they may be actively being criminally
investigated by the police or HMRC at any given time, so one has
to look also at the totality of the picture.
Q197 Meg Hillier: You mentioned that
you can encourage people to make referrals to you and Gregory
Campbell was saying that you will have got more sophisticated
obviously as you have been working at this. Do you find that there
have been times when you have been investigating an individual
case and in that investigation you have found out intelligence
that you then pass back to the agencies that refer to you, and
how often has that increased the referrals that you receive?
Mr McQuillan: I think it is fair
to say that in virtually every case we investigate we find intelligence.
Again in the memorandum to the Committee we have identified the
number of cases we have referred back because we have found criminality,
and when we find evidence of significant criminality through our
investigations we usually conference the issue with the relevant
LEA, and if the law enforcement agency wants to take the case
then we turn in our investigation, hand our materials over to
them and offer them every assistance to pursue it as a criminal
investigation.
Meg Hillier: But in a convoluted way
if you could find evidence of some other assets, if the case were
referred to you for another criminal you could then investigate
those assets, but presumably you cannot when you have it referred
on an individual?
Q198 Chairman: Do you have sophisticated
reciprocity?
Ms Earl: We can always go back
to the referring Agency. Let me give you an example not of a Northern
Ireland case but of a case where an individual was referred to
us. He turned out to have very little property in his own name
but the woman with whom he lived appeared to have a remarkable
amount of property and appeared not only to be holding property
for him but for a number of other people in that locality. We
went back to the law enforcement agency and said, "It would
be awfully helpful if you could refer not only him but her as
well", and that has enabled us to build a much bigger case.
Mr McQuillan: In another Northern
Ireland case, for example, we began an investigation which PSNI
referred to us and we recovered some documentation in relation
to that in relation to a property transaction involving a third
party. We looked at it and said: "That is prima facie
evidence of money laundering." We brought in PSNI who said
"Yes, we will take this case back". They took it away,
investigated it, and for various reasons could not eventually
prosecute the individual concerned, so they then handed it back
to us again. So there is this continual interplay which is conditioned
largely by the phrasing of the Act.
Q199 Mr Campbell: Moving on to the
Organised Crime Taskforce, obviously the Agency approach is one
which I presume is working to some considerable success. Are there
any gaps or changes? Are there any recommendations or thoughts
that you have that could be implemented to make it even more successful?
Ms Earl: I think we have gone
through a phase in the life of OCTF which has grown up in another
sense again. We were fully involved with NIO in looking at the
complete restructuring of the OCTF to try and make it more dynamic
and more positive and more effective. That is part of a natural
learning process. We are still developing that. I am very pleased
to see the way OCTF is developing and I certainly am working hard,
and I think our partners are working hard with us, to look at
how we can use that to improve both the number and quality of
referrals coming forward to the Agency. So at the moment I am
very happy with the way things are developing with OCTF but, as
in everything else, the proof of the pudding will ultimately be
in what we collect and produce and the result of that.
Mr Kennedy: At the moment the
OCTF is developing an asset recovery strategy which is quite exciting
in that it will focus for the first time in a very joined-up way
on asset recovery work in Northern Ireland and the responsibility
of agencies across the board, including PPS, who I do not think
has been mentioned yet this afternoon, Customs & Excise, PSNI
and ourselves.
1 See note page Ev 115. Back
2
See note page Ev 115. Back
3
See note page Ev 115. Back
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