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UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE To be published as HC 886-iii House of COMMONS MINUTES OF EVIDENCE TAKEN BEFORE NORTHERN IRELAND AFFAIRS COMMITTEE
ORGANISED CRIME IN NORTHERN IRELAND
Wednesday 1 March 2006 MS JANE EARL, MR ALAN McQUILLAN and MR ANTHONY KENNEDY Evidence heard in Public Questions 169 - 224
USE OF THE TRANSCRIPT
Oral Evidence Taken before the Northern Ireland Affairs Committee on Wednesday 1 March 2006 Members present Sir Patrick Cormack, in the Chair Gordon Banks Mr Gregory Campbell Rosie Cooper Mr Christopher Fraser Meg Hillier Dr Alasdair McDonnell Stephen Pound ________________ Memorandum submitted by Assets Recovery Agency
Examination of Witnesses
Witnesses: Ms Jane Earl, Director, Mr Alan McQuillan, Assistant Director, and Mr Anthony Kennedy, Head of Legal Services, Belfast Office, Assets Recovery Agency, gave evidence. Q169 Chairman: It is my very pleasant duty to welcome you this afternoon. Thank you very much indeed for coming. As I think you know we are now well into our inquiry into organised crime. The Chief Constable and a number of his senior colleagues gave evidence to us a fortnight ago and before that we received evidence from representatives of the business community and we have others yet to see, and we shall finish up in our final session with the Minister who has responsibility in this area, Shaun Woodward, and that will be in May, and we are hoping to report to the House around about the end of May/early June with recommendations. So you come at a very appropriate time. You are most welcome. Would you like to introduce your colleagues, Ms Earl, and anything you would like to say by way of opening submission we would like to hear. Ms Earl: Sir Patrick, thank you very much indeed for the invitation to come and speak to the Committee this afternoon. We have been very well supported by the Northern Ireland Affairs Committee under its previous chairmanship and we very much appreciated the support you have given to the work we do. I have with me this afternoon Allen McQuillan, the assistant director responsible for the Northern Ireland operations of the Agency, and Anthony Kennedy, our head of legal casework in Belfast. Q170 Chairman: We met Mr Kennedy when we were in Belfast. Ms Earl: We have sent you our formal submission will obviously focuses on the work the Agency does in Northern Ireland. I did just want to make three brief points, if I might, to start with. First, that our Northern Ireland work is a very key part of the work of the Agency overall. We are a single Agency which covers different parts of the UK but our work in Belfast is very important to us in terms of the impact we have in the community and in terms of the public awareness we have managed to build. Secondly, we are clear that whatever we do we only do it with the support of our other partners in law enforcement. It is important to place on record at the very earliest stages the close working relationships we enjoy with PSNI, HMRC and the other parts of the law enforcement community in Northern Ireland. Thirdly, we want to share with you the maximum possible information that we can and any question that you ask we will try to answer fully. There may be some questions which you wish to ask us which relate to cases which we are still involved in litigating, and I hope that you will understand why, if we say that we would perhaps not perhaps necessarily be able to answer that to the very fullest extent in a very public session. Q171 Chairman: On that very last point, when Sir Hugh came a fortnight ago we had a brief half hour session at the end in camera and that was very helpful to the Committee because we do appreciate that there are sensitive areas which you may not wish to go public on. Would you like the same facility this afternoon? Ms Earl: If you would find it helpful from the Committee's point of view then we would be very happy to make ourselves available for that. Q172 Chairman: I think it would be helpful for us and helpful for you in a sense that you could tell us things so fine, we will do that. In which case the period from half past four until five o'clock will be private. Thank you very much indeed. Picking up on something you said and just to start the questioning, we have had people before us who have said that the last few years have been particularly troubled from the point of view of crime. Sir Hugh tried to put this in perspective when he talked about Northern Ireland not being the "wild west of the United Kingdom" and so on, but there is obviously a problem and you yourself have said that your Northern Ireland operations are very important to the work of your Agency, and when we were in Belfast Mr Kennedy gave an admirable presentation for which we were extremely grateful informally to the Committee when we were on our first visit. Would you like to say something about how Northern Ireland compares to the rest of the United Kingdom? Ms Earl: Let me deal with the overall picture and perhaps Alan would like to add something. In terms of our resourced allocation the Belfast operation takes up about 30%/35% of our total resource across the country, so given the share of population that gives you some clue as to the amount of effort we want to put into the Northern Ireland operation. We see a good supply of cases coming forward in Northern Ireland but then we see a good supply of cases coming forward in the organised crime arena across England and Wales too, so I do not want you to leap to the assumption that we have put resources into Northern Ireland simply because the organised crime problems are that much worse. That is not to say there are not some very interesting cases we are dealing with, cases which have clearly had severe harm in the community as a result of the type of activity that has been going on for a number of years. Q173 Chairman: It would be true to say, of course, that a number of your other operations in the United Kingdom but outside Northern Ireland have a Northern Ireland connection, would it not? Ms Earl: Yes. There are some which do fit that category. Mr McQuillan: I think in terms of the overall pattern in Northern Ireland there are some unique features to organised crime in Northern Ireland. First, obviously the existence of the terrorist paramilitary groups. They are in different states of disorganisation or organisation but they do have an impact. Next is the critical element of the border. The border is exploited by organised criminals in all sorts of ways. It is exploited to commit crime, for example, smuggling; to frustrate law enforcement by trying to commit crimes across the border to hide evidence, and it is also exploited to hide assets. Also, a feature we should point out is that in terms of the totality of our case work the average case that we work on in Northern Ireland is actually about a third smaller in terms of value than the average case size in the rest of the United Kingdom, so there is a pattern of slightly smaller organised crime and a slightly different pattern of crime and slightly lower unit value per case. Some particular feat yours that come out of that are because of those things the border is of particular importance to us and our relationship with the Criminal Assets Bureau in the Irish Republic, and the other factor is the fact that we do have some advantages. In Northern Ireland we are dealing with a unitary police force, PSNI, and we also have a framework with OCTF, so those collectively help give us some advantages in terms of the rest of the United Kingdom where we deal with a multiplicity of forces. Q174 Chairman: When we were in Dublin a few weeks ago we had private briefings from your counterparts, and we came away with the distinct impression that relations between your Agency and theirs were extremely close and good and productive. Would you endorse that? Mr McQuillan: Absolutely, and they have improved over the last three years. There are significant differences in the frameworks. We have been working with different legislative frameworks and we operate in different ways, but over the last three years we have increasingly built up relationships on a personal and professional level; we have gateways in some circumstances in order to exchange information; we are running in some cases almost joint operations across the border where we will attack part of an organised crime network in the north and they will attack the same group in the Irish Republic and we try to co-ordinate our efforts between the different jurisdictions, and we share as much evidence as we possibly can between the jurisdictions, and that has proved very beneficial in assisting us and assisting law enforcement on both sides as well. Q175 Chairman: Having touched on relations with those from the Republic, would you like to say a word or two about Northern Ireland organised crime and how far it extends beyond the United Kingdom and not just into the Republic of Ireland? Ms Earl: Let me have a try at that because I think there are two elements in which organised crime might extend its activities, one is in where the criminality takes place and the second is in where the assets which result from that criminality are ultimately housed. Certainly on the latter point we are seeing cases in Northern Ireland exactly as we do in some of the England and Wales cases where people have thought it would be easier to hide them if they were property in other European countries or even further afield. Northern Ireland criminals are no different to their counterparts on the mainland. Do people who are operating criminally in Northern Ireland have outposts and puts elsewhere on the mainland? I think that is absolutely the case. Our observation about the types of people we are dealing with is that they will adopt a business-like approach to what they are doing, look at where the markets of their services are and where the weakest points are in order to be able to operate criminally and will go there, and simply because they are based in a particular community does not mean they will restrict their activities to that community alone. Q176 Gordon Banks: Very quickly, you mentioned that it would not be unreasonable to imagine that Northern Ireland criminals have got outposts elsewhere. What about the other way round? Is Northern Ireland an outpost for Eastern European criminals? Mr McQuillan: From our perspective, and obviously we only view the case work we are dealing with, there is no sense that that is the case. From what we have seen so far it is more Northern Ireland criminals going outside the sourced product to launder money through other jurisdictions, to hide assets in other jurisdictions, rather than other groups coming in. Now, obviously, when Northern Ireland criminals go abroad to buy product they may well buy it from organised crime cartels in Turkey or Eastern Europe, but it is very much led by the homegrown criminals. Q177 Rosie Cooper: The Agency suggests that you do not initiate your own cases but act on referrals, and I would like to really ask you to questions about the referrals you have had in terms of numbers, trends, and perhaps the referring organisations and what they would do there. Ms Earl: Let me again just put the headline pitch, if I might. What we have seen over the three years that we have been in existence has been a much improving trend of the sort of referrals coming from other parts of the law enforcement community. The reason we take cases on referral is because that is what the Act says and that is what the guidance which I operate under from the Secretary of State says. We will normally take cases on referral from law enforcement. We have seen, as people have started to become more aware of the power of being able to remove the profit from crime, a growing number of referrals across the piece nationally and seen a continued high level of support from referrals from the police service in Northern Ireland in particular who have continued to be one of our major suppliers set across the entire national picture, and I think that is good news. The referrals which come to us from HMRC clearly in the days when they were still Customs & Excise were a significant proportion of our work load. We will need to see how that changes going forward in light of the emergence of the Serious Organised Crime Agency which obviously will have taken quite a significant amount of work previously done by the old Customs & Excise operation. In terms of the types of crime, I will turn to Alan. Mr McQuillan: We have given some figures on that in the briefing but broadly the pattern of organised crime we are seeing follows the sort of priorities that in the past the Organised Crime Taskforce have identified as key areas of organised crime, so we have seen for example a lot of drugs cases, a lot of smuggling cases, then some property crime. I suppose the one area that is perhaps a little bit out of sync is intellectual property crime, we have not seen so many of those cases as perhaps we might have expected, but the broad spectrum follows the pattern of what we would expect from OCTF and on the figures we have at the moment around 63% of the cases to date have a terrorism or organised crime link, and 46% have got a terrorist component in them. Q178 Chairman: That is surprising what you say about IP in respect of what Sir Hugh said, when he said there were more intellectual property crimes in Northern Ireland than in the rest of the United Kingdom altogether, and you are low down on the referral list. Mr McQuillan: Again, that may depend. One has to look at the whole system end to end, and if PSNI or other agencies are able to investigate or prosecute those people then that is the best way to deal with them. We would come in, and we have dealt with some intellectual property cases, where a prosecution cannot be successfully mounted and would then go after the assets, so I think one does have to review the totality of the picture. Mr Kennedy: I think what Sir Hugh said, if I remember correctly, was that he was comparing the activity of the PSNI as compared with other police forces in England and Wales. What he did not perhaps say was that in England and Wales most of the work, I think, on intellectual property crime is done by trading standards agencies, so I am not sure he was necessarily drawing a comparison between intellectual property crime in England and Wales versus Northern Ireland, but merely activity in police forces. Q179 Rosie Cooper: I was trying to develop that in asking whether any of the agencies which refer to you have shown any significant delays in the referral pattern, and why would they do that? Ms Earl: I think we are always mindful that when people send us a referral we want them to be very clear that they do not send us a box of papers and then think that their job is done because we are, as I said at the beginning, absolutely dependent on their continued co-operation throughout the process. One of the things we work very hard with our referring agencies to do is to try and make sure that we have the best possible exchange of information at all stages, not just as the initial referral but right the way through the length of time it takes to litigate the cases. What I think we have seen in a number of referring agencies is, if you like, a bit of a bottleneck of cases where things have been sent over initially; we have then needed further information, and the organisation has had to sequence the way in which they pass that further information to us. That is probably the case in Northern Ireland as in other forces and other referring agencies. Mr McQuillan: In that context, I would add that one of the key learning points crossing the partner agencies over the first three years has been the extent to which our work involves work for them as well. They cannot just hand a package of papers across to us. When they refer a case to us we data-mine the records for perhaps 12-15 years to find out everything we can about the people involved. That is quite intensive, and we have now progressed with PSNI, for example, to a point where we have established basically a joint intelligence cell staffed by both organisations which does a lot of the basic work of digging the material out, but it has been a gradual process of developing to that as the case volume as the case volume support. Mr Kennedy: There is a very real education process going on here. From the point of view of the other agencies they are looking to us and thinking: "Well, what does the Assets Recovery Agency actually need? What does it want? How can we supply whatever raw material it is?" because we are a new creature and they have to understand and come to a point where they recognise what it is that we can work with, so it is very much a co-operation and education process whereby they come to understand what it is we can do and what they need to do to help. 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 parlours. 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. 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 formally 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 is 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 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. 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 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. 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 to come 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 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 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. Q200 Mr Campbell: On the issue of some secondments to Criminal Assets Bureau from Northern Ireland staff of the ARA, how has that worked? Has that helped in the issue of cross-border criminal activity such as fuel smuggling, money laundering and so on? Mr McQuillan: I think it has certainly helped. I think certainly over 80%, possibly almost all of our investigators, have all spent at least a week of their secondment with Criminal Assets Bureau in Dublin, and that has been hugely beneficial to us in the first couple of years. It has also established very strong personal relationships between investigators in the Agency and CAB and we have regular visits between each other's offices on operational issues. So I think that has been extremely valuable and we will be keen to build on that in the future. To give another example, because we were talking about how we could make more effective use of tax, because of Criminal Assets Bureau's success in using tax they recently hosted a tax seminar for us, and we brought our tax team from London and specialist tax staff and some of our ops staff across to Dublin and they ran a very successful seminar for 2-3 days, and we are actually meeting in about ten days' time to look at how we can build upon the experiences of that. The Committee suspended from 4.00 pm until 4.15 pm for a division in the House. Chairman: We had I think dealt to your satisfaction, Mr Campbell, with organised crime, and I would like to move on therefore to the links with national and European and international bodies, and for Stephen Pound to take the lead on that. Q201 Stephen Pound: We are very grateful for your written submissions; they are extremely helpful, and the press release. One of the things you talked about in your submission, just quoting your own words back to you because they are rather better than mine, was that you felt you could be even more effective through "the creation of international mutual legal assistance arrangements in respect of civil recovery investigations and procedures. I want to ask you a question about that in a minute but, firstly, what are you doing to persuade the government to support you in this? Ms Earl: Let me cover that bit first and then perhaps Anthony will talk about precisely the work. First, the Proceeds of Crime Act 2002 contains Part 11, which is the part which enables international co-operation to take place. I am delighted to say that was actually brought into force on 1 January this year so we only have so far two months of experience of that but certainly that helps us to clarify the relationships we have with other jurisdictions and enables us to support even better the mutual criminal legal assistance regime which has been in operation. Having said that, there are some difficulties, which is not about what our own government is doing but is about our ability to have our powers recognised in other countries. For a number of jurisdictions the concept of using civil powers to deal with crime reduction and to enact criminal purposes is a very difficult one to understand, so we are finding in our discussions with other jurisdictions that we have to talk a lot about the purposes behind our activity, and it is one of the reasons why in some circles we will talk about non conviction based forfeiture rather than civil recovery, because the word "civil" in front of "civil recovery" can set us into a number of difficult areas. So we are out, if you like, on a campaign of missionary work, evangelising just how these powers can help, talking to a number of countries within the European Union and alongside some of the dependencies, Jersey, Guernsey and the like, to be able to talk about how best to use the powers we have and to be able to collaborate with them properly within the confines of their legal systems, because what has to be paramount for us is that we never ask a jurisdiction to do something which would be illegal or unwise for them to do. So part of our approach has been to say how can we best explain what we do, find out how we can best get other jurisdictions to be able to help us, and to take it forward on that basis. There is a further set of issues about enforcement later but perhaps Anthony might want to expand on those points. Mr Kennedy: The first thing to say is there is a very extensive and well-recognised system of letters of request for assistance and investigations. There are criminal investigations, but there is no similar infrastructure for civil investigations. We are not in a position, we do not think, according to counsel, to use the various conventions that are in place for assistance for civil proceedings because we are, in effect, a state party rather than a private individual or commercial entity. So the question is then what can we do to foster mutual legal assistance between jurisdictions in the kind of work we do in the civil arena? Early on, for example, we paid our first visit to the Criminal Assets Bureau and we pointed out to them that their legislation said they could assist a police force, a revenue authority and a social security authority, and we explained to them that we were neither but there was a provision in their legislation to extend that. They went away and thought about it and I am delighted to say that the Irish government, the Dail, passed an amendment to their legislation which allows them now to assist any assets recovery agency worldwide. So we are engaging in things like that. I had an opportunity to make an input to the legislation to Caribbean jurisdictions recently to encourage them to put similar provisions in their legislation, and there is one case currently before Parliament and another still at the draft stage. In terms of our own legislation it is probably the most advanced in the world in terms of providing assistance on a civil recovery front but there is still probably more that we could do to amend ours, and in fact I would anticipate that there is one suggestion that we will take the Chairman up on in terms of making suggestions of how things could be made more effective. Q202 Stephen Pound: Is this a question of existing legislation being implemented on a bilateral basis at your instigation, or do you feel that there is primary legislation you still require that would enable you to drive this forward? Mr Kennedy: There is an amendment to the Proceeds of Crime Act 2002, or perhaps better still the Crime International Co-operation Act, that would be of assistance to us, but the more important thing is that in fact jurisdictions around the world in a sense apply the current regime of criminal mutual legal assistance to civil investigations and proceedings in relation to criminal proceeds. Q203 Stephen Pound: You have actually seized property in foreign jurisdictions in Ireland and Spain. I take your point about the legislation through the Dail but is that on the basis of reciprocity or on the basis of individual representations that you have made? Mr Kennedy: Neither. What we have done in relation to the Irish property is in effect that the receiver required an individual to sign a power of attorney allowing property to be sold abroad. Q204 Stephen Pound: And what if that had been refused? Mr Kennedy: We would have had to do some more creative thinking! Q205 Stephen Pound: That is pretty damned creative, a power of attorney. It sounds quite impressive. What about Spain? Mr Kennedy: The Spanish case was one of the London cases so I am afraid I am not sighted on that. Ms Earl: We have done something very similar there and the court was very constructive in helping us and the receiver to transfer property that was held by an individual into the name of the receiver, again acting under a power of attorney. I think it is fair to say we are operating as creatively as we can within the international legal frameworks available to us. We are still at very early days but we are quite happy to try some of these things and see if they work. If they do not work then we will need to go back and talk to the various authorities about other forms of legislation. Sometimes it will not be our legislation that is needed but other legislation in other jurisdictions. Q206 Stephen Pound: I appreciate that. When we went to the Netherlands in the previous Parliament and we spoke to senior Dutch drug squad officers and we asked about this arrangement the answer was "we all know Alan". I am not entirely sure whether it is an informal basis or a formal one. In terms of Europol and Interpol do you have a formal relationship, advantageous as the original contacts are? Ms Earl: We do, and we are active members of an organisation called CARN, Camden Asset Recovery Network which is being sponsored through support from the European Union and through Europol, and effectively what it is trying to do is promote good exchange of information across a number of countries within the European Union and also some countries outside. We have been taking an active part, as indeed have the Criminal Assets Bureau, and if all goes according to plan the United Kingdom will take the Presidency of that in 18 months' time, and again we hope that will be the opportunity to start to raise the profile of what other places need to do in order to make some of these orders more easily enforced. Q207 Stephen Pound: I should hasten to add that the familiarity of the Netherlands police with Alan McQuillan was purely professional, and was certainly predicated on admiration on their part! On 1 April the Serious Organised Crime Agency will be unveiled. What difference will that make to the work you do? Ms Earl: We hope it will be another support to us in the sense that a number of our larger referring agencies, the National Crime Squad, parts of the old Customs & Excise, will be part of the Serious Organised Crime Agency. They have been very clear that one of their key priorities is not only to catch and convict but also to take the proceeds out of crime, and therefore they will see us as an important adjunct in those cases where they have not been able to take criminal conviction and compensation action. That may be where cases have failed to be prosecuted successfully but it may also be in circumstances where they are seeking to prosecute key individuals at the centre of an organised crime operation and we might then want to look at some of these people on the periphery who have been involved in facilitating perhaps or handling the property as a result of that activity. Q208 Stephen Pound: Finally, there is a perception which is probably wrong, as most are, that you are a reactive rather than proactive body and that people bring cases to you rather than you going to them. Is this a perception within the organisation and do you feel there is more you could be doing to go to other agencies, identify sources, rather than waiting for what you described earlier on, the boxes of papers being brought to you? Ms Earl: I think we should not confuse the fact that we take cases on referral from other organisations with a lack of proactivity. What we have spent quite a lot of time doing over the last three years, particularly in Northern Ireland, is going to talk to a whole range of agencies in the law enforcement world and discussing where we might be able to help them to meet some of their over-arching targets, so not only the financial investigation capacity in the police service but also the drug squad and other parts of PSNI about how we might help. Similarly talking to people in the Department of Work and Pensions and the Benefits Agency about how our powers can be used to tackle those people who have committed benefit fraud. We have some very powerful deterrent roles to play both in taking money from people who should not have them and also sending out a very clear message to the law abiding community that we are acting on their behalf and are on their side. Q209 Stephen Pound: How would you publicise that deterrent role? Ms Earl: That is why we have such an active communications policy. I have seen the press releases you have picked up from this morning. Whenever we do something where we legitimately feel we can tell the community that we are taking action on their behalf we will put things out into the media at the earliest opportunity. We will not do it in every case because it may not be wise to do so, but the proof of that effectiveness is in Northern Ireland, where our market research tells us there is something like an 80% recognition rate of the Assets Recovery Agency which is pretty high. Chairman: Politicians will be very happy with that. Let's move on. Q210 Gordon Banks: On the distribution of assets, in 2005 the Recovered Assets Incentive Fund that had been previously announced by the Home Secretary in 2004 was extended to cover asset recovery agencies in as much as they would be able to benefit in 2006/7 and would be entitled to receive a share of the assets recovered, the figure I believe was 50%. Bearing in mind the calendar, what difference do you expect this will make as additional funding, and "will" and "additional" really being the key words in the question. Ms Earl: Let me take this as a collective agency-wide question. You are absolutely right, for any money we obtain as a result of our civil recovery action which goes into the tin box we will be entitled to a payment of 50% of that back out again. Because of the partnership nature of the work we do, because of the fact we are continuing to be dependent on those who refer cases to us and we want them actively involved, we have taken a policy decision that we will share our share of the receipts, usually on a 50/50 basis with the referring agency. We think that is about putting the values of partnership into practice and it will involve us finding ways to write cheques to other organisations, but we think it is important that we do that. What we put into the tin box will also be dependent on the amount of money that we spend on the fees we pay to interim receivers, people we bring in to help us investigate and manage the assets. One of the things that was agreed in the early stages of the Agency was that where we have paid out interim receivers' fees we can recover that as first call from any of the assets we bring back into the Agency. That is really important because that has enabled us to increase the capacity of cases that we can take through the system quite significantly. Interim receiver fees in cases can range from £150,000 up to a million depending on the size of the assets that we are dealing with, so our projections for next year are still not entirely clear but we would hope there will be some additional capacity as a result of incentivisation which we will plough back into the Agency share, into resourcing further investigators and lawyers to be able to take on an increased number of cases, and we hope as a result of that slowly we will be able to build up a virtual circle. You will understand if I am not entirely clear with you about exactly what that is going to look like at the moment because we are still doing some of the modelling. Q211 Gordon Banks: I am intrigued by the fact that, of the 50%, you are writing a cheque for 50% going back. Can you tell us the reasoning behind that? Why do that? Ms Earl: Because we are absolutely dependent on the good will --- Q212 Gordon Banks: Just to foster good relationships? Ms Earl: To foster goodwill and relationships, but also to demonstrate the point that this is a partnership activity. There is nothing my Agency can do without the support of the law enforcement community at large and the last thing we would want to do would be to enter into an arrangement which said "We will keep whatever we bring in", because the likely effect of that will be, or that it would be possible for the referring agencies to say "Well, why don't we keep those cases ourselves, why don't we do them ourselves and see if we can get a criminal conviction or confiscation". In some cases they might be able to; in others they would not, and in that case the only person who benefits might be the person who holds the unlawfully acquired property, and I do not think that is sensible way for us to implement the will of Parliament. Q213 Gordon Banks: Moving on to the assets that you have seized in the past year, a certain percentage of this can be returned back to the communities in a certain shape or form. How is this done? In Northern Ireland is there a communities fund? If there is, how does it operate? Ms Earl: I think that is a question better addressed to the Home Office and colleagues in the Northern Ireland Office. Effectively all assets are paid over to the Home Office who then decide how to use those. They have in the past used money to support things like the employment of additional financial investigators within the Police Service for Northern Ireland and they have in other parts of the country put money into specific community projects which might relate to this year tackling gun crime, in the past supporting community rehabilitation projects around drug use and drug abuse, but I think in terms of how those decisions are made that is probably a question for the Home Office rather than us. Q214 Gordon Banks: So you are not aware of a communities fund for Northern Ireland? Ms Earl: Not to the best of my knowledge. Q215 Mr Fraser: Can we turn to the issue of sentencing? We had a written submission from PSNI that stated that the level of deterrent in Northern Ireland is often perceived as lower in terms of sentencing than it is in the rest of United Kingdom, and sentences tend to be significantly shorter. Do you have a comment on that? Ms Earl: I think it would be inappropriate for us to make comment on that because we are not part of the criminal justice system or have any locus in that. We operate in a slightly different space of civil recovery, so I am sorry to be unhelpful but I think probably "No comment" is the right answer on that one. Chairman: Do you have any thoughts on that at all? Q216 Mr Fraser: What about the standard of proof? No? Ms Earl: Cannot be drawn. Q217 Chairman: You are entirely proper, of course, but maybe we can write to you on one or two little issues surrounding that. Ms Earl: Of course. Q218 Mr Fraser: Can I turn to resources, then, which I hope you can comment on? Do you have sufficient resources to do the job you are supposed to be doing? Ms Earl: I think it would be unlikely that you would ever find anyone who is a director of a public organisation telling you they had sufficient resources to do the job, particularly given some of the figures you have seen in terms of the organised crime networks that operate in England and Wales as well as in Northern Ireland. Having said that, one of the jobs I am given as director of the Agency and accounting officer is to make sure we maximise the efficiency of every single pound of public money we have, and I think I am happy to tell you that we are continually looking for other ways to be able to spend the money you grant us as effectively as we can. Q219 Chairman: You are a United Kingdom-wide organisation, as you made plain, but you also said a third of your work was to do with Northern Ireland and yet very much less than a third of your resources, either in manpower or money, is based in Belfast. Are you happy about that? Ms Earl: Sorry, I think I explained myself badly. A third of our investigative resources is actually based in Belfast; that is not that a third of our casework is based in Belfast. In fact, on this year's figures something like 22% probably is done by Northern Ireland compared to the rest of the Agency covering England and Wales. It is that sort of order of magnitude. I can let you have the exact figures, if you like. Q220 Mr Campbell: Just on those figures, you have said that is an explanation of it but if Northern Ireland is roughly about 3% of the population of England and Wales and Northern Ireland and whether the figure is 22% or 30% of your work or investigative responsibilities of Northern Ireland, does that mean Northern Ireland is ten times more prone to criminality or that you are underactive in England and Wales? Q221 Chairman: And are you not under-resourced, if this is true, as well? Ms Earl: I think that is almost "if I had a wife I would have stopped beating her at this point"! The first thing to remind you is that when the Act was being considered by Parliament there was a very clear and I think proper view which said these were powers which assist in the normalisation process going on in Northern Ireland and as a result of that there is a statutory requirement for my Agency to have Alan as an assistant director in Northern Ireland; I do not have a statutory requirement to have an assistant director in any other part of the United Kingdom. So there was always a very clear understanding that we would put a significant presence into Northern Ireland, and I have to say I am very happy that we do that because I think we can make an impact. I think what is interesting for us is to be able to operate in a concentrated way to see just what impact we can have on both the perceptions of the risk to reward criminality and also the perceptions by the community at large about whether or not we are genuinely all working together to try and make them feel safer and to take action perhaps against some of those people who have been very adverse role models in the past, but I do not think you can do the mathematical calculation and say it is ten times worse there. Q222 Chairman: At the end of the day when this Committee makes it report and makes recommendations to Parliament are there particular things you would like to see in those recommendations insofar as your operation in Belfast is concerned? You are not beating your wife but if I were your fairy godmother what would you like me to give you to make your operations in Belfast more effective and comprehensive? Ms Earl: I think there are some of the legislative changes which Anthony can certainly talk about, and making better use of the tax powers. I think there is a second issue which would be fantastic to see in Northern Ireland, as it would across the England and Wales police, which is back to this issue about delays, about putting some firm timetables into the legal system with which we operate so that if people have not responded by a given time then we draw different inferences from those who are prepared to engage in the process, and I think we would be looking for better ways to enforce on some of our internationally obtained property because we need to be able to make that very clear deterrent message. Mr McQuillan: Coming back to resources, obviously it would be nice to have more but I think the other important factor to realise is that we are totally dependent upon our partners and they are very committed but every referral involves them in a significant amount of work, and just pumping more money into the Assets Recovery Agency would not resolve anything unless there were a consummate comparable commitment in other areas to resource the provision of the information. That would be critical as well. It is a systemic approach that is needed. Q223 Mr Fraser: Obviously the point has been made about financial resources but it is also management and professional skills resources. Can you share with us briefly your priorities in that respect over the next few years? Mr McQuillan: In terms of management and professional skills we reckon quite clearly is the opposition will become cleverer as time goes on. We have a comprehensive training regime for our staff. We are the national accreditation agency for financial investigators and as part of that we have a comprehensive programme for continuous personal development for staff, and we are continuously seeking ways in which we can improve that. We have developed relationships with our colleagues in the Criminal Assets Bureau building on their experience. We are looking at colleagues elsewhere in other areas of the world to see if we can learn anything from experience there, and therefore we are trying to build up that area of the skills base in the Agency. As an Agency we are also attempting to build our own internal management skills to make sure we get the absolute best value for all the public money that has been vested. Ms Earl: The only thing I would add to that is, exactly as Alan said, the other side are getting cleverer as we go along and we have to continue to be one step ahead. We also have to get better at ensuring that everybody knows just what we are doing and which of those points of law which really have now been properly dealt with to make it clear to our Respondents that fighting those points is only going to involve them in more abortive legal costs, and will not actually make a difference to the outcome in the end. Mr Fraser: So you could hypothetically put a proposal forward that you need as much short money as political parties that do not get their seats get? Q224 Chairman: I do not think we can expect you to comment on that mischievous question! Moving on before our private session, you quite rightly and understandably said you could not comment on sentencing. This is a slightly different point. The IMC have recently recommended that there should be a licensing regime whereby if a business did not perform ethically it could be closed, and this is something that came through in the evidence we had from the road hauliers as well, and that was on-the-record evidence. Would you welcome a tighter regulation of businesses that operate within Northern Ireland? Would that make your job easier? Ms Earl: I think it would. I think we are supportive of the line which has also been taken by the emerging Serious Organised Crime Agency which is that we all collectively involved in the widest sense of possible law enforcement have a range of powers and on occasions we have to look at how we might widen regulatory powers in order to better, in that case, a more level playing field for those who are operating legitimately, so certainly I think we would have no difficulty with being on the record saying that that always is worth exploring. Chairman: Thank you very much indeed and thank you and your two colleagues for the very lucid and helpful evidence that you have given, which will certainly assist us when we come to prepare our report. Thank you for the supplementary information you promised to send. It may well be that we will wish to ask you some specific questions in writing as well and you have given me a private assurance which I now put on the record that you would be as helpful as possible. We appreciate that and wish you success in your endeavours, and may your resources not get smaller and may your receipts get larger! Thank you very much indeed. Could I now declare the public session closed and ask colleagues to remain, and those in the public gallery to withdraw. Thank you very much. |