UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE To be published as HC 391-i
House of COMMONS
MINUTES OF EVIDENCE
THE COMMITTEE OF PUBLIC ACCOUNTS
Wednesday 7 March 2007
ASSETS RECOVERY AGENCY
ASSETS RECOVERY AGENCY
MR ALAN McQUILLAN OBE, MS JANE EARL and MR CHARLIE DICKIN
Evidence heard in Public Questions 1 - 126
USE OF THE TRANSCRIPT
Taken before the Committee of Public Accounts
on Wednesday 7 March 2007
Mr Edward Leigh, in the Chair
Mr Richard Bacon
Mr Philip Dunne
Mr Sadiq Khan
Mr Austin Mitchell
Mr Alan Williams
Sir John Bourn KCB, Comptroller and Auditor General, and Ms Janice Lawler, Director, National Audit Office, gave evidence.
Mr Marius Gallaher, the Alternate Treasury Officer of Accounts, HM Treasury, gave evidence.
REPORT BY THE COMPTROLLER AND AUDITOR GENERAL
THE ASSETS RECOVERY AGENCY (HC253)
Examination of Witnesses
Witnesses: Mr Alan McQuillan OBE, Deputy Director, Ms Jane Earl, Chief Executive, and Mr Charlie Dickin, Deputy Director, Assets Recovery Agency, gave evidence.
Q1 Chairman: Good afternoon. Welcome back to the Committee of Public Accounts where in our second hearing today we are considering the Comptroller and Auditor General's report on the Assets Recovery Agency. We welcome Jane Earl, the Chief Executive of the Assets Recovery Agency. Do you wish to introduce your colleagues?
Ms Earl: If I may, Chairman, thank you very much. On my right is Alan McQuillan, who is our deputy director who looks after operations, and on my left is Charlie Dickin, the deputy director who deals with all our services and training of financial investigators.
Q2 Chairman: You are leaving your post next month, are you not?
Ms Earl: I am, Chairman.
Q3 Chairman: And the Agency is being disbanded next year, is it not?
Ms Earl: The Agency is being merged into SOCA and the civil recovery powers are being expanded, Chairman.
Q4 Chairman: Is this because the Agency has failed?
Ms Earl: No, I do not believe it is because the Agency has failed. If I might just give you a couple of bits of background about the Agency, but before I do could I put on record our thanks to the National Audit Office and the team that Janice led for the Report. We found the work that we did with the team extraordinarily helpful and I would not like that to go unnoticed in the general rush of questions. Your question was has the Agency failed; my answer is no. There are some things that I wish had gone faster, but I would like to draw to the Committee's attention that, as we sit at the moment, there are 126 individuals who have lost property to the value of £36.4 million. Had the Agency not existed with our civil recovery taxation powers these would be people still enjoying the proceeds of their unlawful conduct and who would literally have got away with it within the mainstream criminal justice system.
Q5 Chairman: If I could stop you there. That, no doubt, is true, but that is not normally how we conduct our inquiries. In order to keep public sector bodies like yours up to the mark we like to see how you perform against targets. If you look paragraph at 1.8, figure 4, which you will find on page 11, you can see that the Agency has not met its objective, albeit a modest objective, of recovering assets to the value of its annual revenue. You have not even met the modest target of covering your annual running costs. How can you, therefore, feel that you have succeeded in the task you set yourself?
Ms Earl: Chairman, I am certainly not saying to you that we have succeeded in the entirety of the task we set ourselves, but I would like to come back to where the targets came from. We were set up four years ago to undertake completely new processes with new legislation and we were very excited about that chance, and continue to be excited about it, but we produced our business plan within six weeks of the Agency being set up. At that time we had something less than 20 staff and no cases, and I have to say to you that although we had talked to a lot of other organisations about how long our cases might take, nobody could give us an accurate projection. We thought long and hard about how to project forward and to set ourselves some targets and we worked on the best available information which said that our cases should take approximately two years from start to finish. We turned out to be hopelessly over-optimistic about that, and I have to apologise to you and the Committee for that, we got it wrong. Our cases have taken approximately four years to get from start to finish and I am sure the Committee will want to talk about the reasons for that.
Q6 Chairman: It is always good when people apologise, but we still have to carry on the afternoon so, by any standards, a disappointing performance, you have accepted that. Is it because you did not have the right powers?
Ms Earl: I think it would be wrong of us to blame the powers. There are some things in the legislation which were there properly because Parliament wished to ensure that the legislation would be compliant with the Human Rights Act, in particular. I would like to put on the record and right something that File on 4 did not accurately report last week: the reason that there is a 12‑year period of limitation, beyond which we cannot look at property acquired before that date, was a conscious decision of Parliament, we never sought to have that changed because we understand why that restriction is there. However, we do know that this means there are some large internationally-known names of criminals who are outside the reach of the Agency because of that limitation period. The second thing about powers is that, clearly, we have had to work our way through various things in the Act. One of the early causes of delays was in connection with the ability of respondents to be able to obtain legal representation and funding for their legal representation. We worked closely with the Home Office and managed to get an amendment in place so that we can now have legal funds drawn down from frozen assets. That was a major delay in the first place, we have now rectified that. There are other areas which are not about the powers, they are simply about the length of time which a normal civil litigation process takes.
Q7 Chairman: Your previous answer worries me, although you talk about the speed with which you set this up, this often happens, does it not, that claims and promises are made about the organisation but there is not enough thinking going into the whole project before it is set up and that is what you seem to be confirming?
Ms Earl: Certainly, we have learned about new legislation but we have learned in an active way.
Q8 Chairman: You have learned on the hoof?
Ms Earl: We have learned on the hoof, that is exactly right, Chairman.
Q9 Chairman: Which explains your disappointing performance presumably?
Ms Earl: I think it would have been very difficult to learn in any other way because it has only been when we started to take cases through the courts and see how respondents react to out activities that we have been able to work out what we need to do differently, so although it would have been interesting to have had some further academic research, I am not sure that would necessarily have stood up very long in the light of real experience.
Q10 Chairman: Would it be a fair criticism that you have concentrated on the small guys but totally failed to get what we call the "Mr Bigs"?
Ms Earl: We have had a balanced portfolio of cases, including the small characters, not least as a result of the views of political colleagues who have asked us to concentrate across the spectrum. You will see from our business plan last year that we have been trying to move the volume of cases up so we do deal with some of the larger value cases. We set ourselves a target last year of having a third of our cases at Level Three Criminality, the most serious criminality available. We are still moving the case values through.
Q11 Chairman: What worries me is that you have spent £65 million of taxpayers' money and only recovered £23 million and the Agency received its biggest recovery - this is paragraph 1.10 - to date of £11.5 million in November-December 2006, so half of what you have recovered comes from one recovery, that is right, is it not? By any measure, that is not a very impressive performance, is it?
Ms Earl: I would beg to differ with you, as you might imagine, because I am not going to say to you that we would not want to be able to go after some larger cases. Certainly, we have a number of those which are coming through, but it is absolutely right that our largest success to date was against an individual, Dylan Creavan, who had walked away from his criminal trial, acquitted, yet fully admitted in our civil recovery proceedings that he had at least been in possession of large amounts of taxpayers' money through his MTIC fraud activities. So although it is one case, I am very proud of the fact.
Q12 Chairman: I am sure in that one case you did very well, although he seems to have shot himself in the foot by what he said, but, anyway, be that as it may, how much work did you have to do on this one case which made half your money?
Ms Earl: We had the case within the Agency for about 15 months. I cannot give you an exact detail of the amount of work but I can tell you that the legal fees in that case alone were something approaching £200,000, which gives you some idea of the complexity. In that case was, perhaps, a good example of the sorts of things we see happening. We spent quite a lot of time in front of judges in the High Court arguing about how much money Mr Creavan should have to fund his legal expenses. He asked for £600,000, or his lawyers asked for £600,000, for them to be able to prepare their defence to our trial, not to mount the trial, just to prepare the defence. I think that gives us some sort of clue about the complexity of the work that was going on in that particular instance.
Q13 Chairman: Could you look at figure 9. It says there that only 129 bodies out of a possible 696 have referred cases to you, so what is going wrong? Is it because these bodies do not have sufficient incentive to refer cases to you, or what?
Ms Earl: The first thing to say, Chairman, is that of the police forces, Revenue and Customs and the Police Service of Northern Ireland, we have a very good record there of referrals. The gaps where we have not had so many referrals come from local authorities, particularly smaller local authorities, perhaps, which run housing benefits departments. We think that these powers present a huge opportunity for local authorities to get better at recovering money which has been fraudulently stolen from the public purse, but it is quite clear that we have a major education programme to do and, of course, these bodies need to want to send cases to us. We have been encouraging them also to look at their own criminal prosecution and confiscation activities, so although they have not come into the Agency, we do know that through the work of the regional assets recovery teams a number of them have been starting to use the Proceeds of Crime Act powers to full effect.
Q14 Mr Mitchell: I am afraid it is going to go down in science text books as another example of institutional failure, kind of like the CSA, in a sense, it is going to be a familiar scene. What were the origins of this? Where did the impulses that set up the Agency come from? Were they coming from politicians who wanted to show themselves as tough on crime, "We can deal with it and get the money back from the bastards"? Was it frustration on the part of authorities, a desire of the police to have some body which would track funds and get them back? Where did the impulses to set this up come from?
Ms Earl: If I might do a very brief history lesson. What happened was in the year 2000, the Cabinet Office and the Performance Innovation Unit produced a report about the proceeds of crime at the request of the Prime Minister I think and the Home Office, it was before I came into the Civil Service. The aim of that report was to look at three things, first of all, were the powers that currently existed to take money off criminals sufficient; secondly, were the powers that were in existence being used properly and thirdly, were there other things that were being done by other parts of the world that might be more efficient. The existing powers were mainly around criminal confiscation and they were very limited. If I give you a brief example. They were mainly around drug dealing, so you could confiscate money for drug dealing. One of the first cases that came to the agency was a man who had been convicted of drug dealing and he had had a confiscation order made against him in respect of his drug dealing. He went back to the court and he appealed a proportion of his confiscation order on the grounds that he had not made the money from drug dealing there, he had made it from alcohol and tobacco smuggling and on the basis that is where his money had come, he had admitted that was where his money had come from, the court had to give his money back.
Q15 Mr Mitchell: I do not want to spend too long on this because we have not got much time, but here is something from blue skies thinking, is it not?
Ms Earl: Yes.
Q16 Mr Mitchell: We want to stop that gap and get the money out of people, "What can we do", so that is the inference.
Ms Earl: Yes.
Q17 Mr Mitchell: Who then scoped it and decided whether it would work and what could be done?
Ms Earl: The original scoping was done by the Home Office as the Bill was taken through Parliament, the Proceeds of Crime Act, and when the Bill received Royal Assent ----
Q18 Mr Mitchell: You mean the Bill was taken through first?
Ms Earl: The Bill set out the requirements for the Asset Recovery Agency and set out a very headline responsibility for us.
Q19 Mr Mitchell: Nobody thought before the Bill went in "We can set up this Agency, here is how it will work and what it will do", that was not thought of first. It was the Bill first, "We can show these bastards" and then we work out how.
Ms Earl: When I arrived in February 2003 we had an Act, we had some powers, we had an implementation team which the Home Office had set up and which had done some useful work, but we did have to move literally, as I said earlier, from a standing start. We did not know how it was going to work until we got into learning.
Q20 Mr Mitchell: The politicians are using easy populous rhetoric, we have to take our revenge and get the money back, the key thing is crime does not pay and nobody is working out, until the Bill goes through, how that is going to be done.
Ms Earl: I think it is difficult for me to give you a categoric answer on that.
Q21 Mr Mitchell: That is likely?
Ms Earl: I am sure it is possible.
Q22 Mr Mitchell: You then came in and took office and you set your own targets. Why did you set such high targets?
Ms Earl: Let me personalise this. I have always thought, as a public servant, that it is really important that we are clear and accountable about what we want to do and I have always thought that it is important that we set ourselves targets which are going to be challenging.
Q23 Mr Mitchell: The ideal of the whole thing is to begin quietly and then build up rather than "Razzmatazz, we are going to get it".
Ms Earl: You have already referred to the fact that there have been some suggestions made about the level of activity. What we had to do was see if we could find an appropriate level which we thought we could achieve but which we knew would be very stretching and that is exactly what we did.
Q24 Mr Mitchell: But you were over‑optimistic?
Ms Earl: We were over‑optimistic and I said that on the record.
Q25 Mr Mitchell: One of the causes of failures from the report was that there were too few referrals, their number was too low and you have given some reasons for that to the Chairman. Was it that people did not know about you or you did not publicise yourselves?
Ms Earl: No, I think it was slightly more difficult than that. People did know what was happening but, at the same time, the police forces particularly were also coping with vastly new increased powers on criminal confiscation and cash seizure so there were a lot of other things going on.
Q26 Mr Mitchell: I would have thought if you had set out targets and said "This is how we are going to do the job", and there is always expectation, people would have been rushing to refer cases to you.
Ms Earl: No, that was not our experience. We have worked quite hard to build a reputation for taking cases through and, as I have already said to the Chairman, some of those were smaller than we would have hoped to start with.
Q27 Mr Mitchell: Clearly, you had a problem with turnover of staff from the report. I think this is an area where you do need concentrated staff who can see the application all the way through. Why was there such a high level of turnover? Was it a failure of morale, a feeling that it was not working? Why was there turnover in that kind of fashion?
Ms Earl: I am going to ask Mr Dickin to give you the full details but I would say it is not a failure of morale, I have nothing but praise for the staff who work in the Agency who are very committed to what they do. I think Charlie might be able to tell us a little about the breakdown of where the staff have left to give you a little context.
Mr Dickin: I think the context is probably the way in which I would begin my answer to that question on the basis that a new organisation needs different skills sets at different times and clearly that contributed to individuals coming in and out of the organisation. I think the NAO Report helpfully sets out the movement of staff within the organisation over the last 12 month period and focuses in some ways on the centre of excellence, the training part of it. What I can tell you is that we have seen quite a high turnover of administrative support staff. We are a very small organisation, we have got a flat structure, nevertheless, we welcome individuals into the organisation and support their development.
Q28 Mr Mitchell: The smaller the organisation, the more disastrous the high turnover is.
Mr Dickin: It is more difficult. I think the point I would come to is in terms of the key posts in that particular area of the organisation, we have seen very little turnover whatsoever. The other thing it is worth mentioning here is that the organisation is a multi‑disciplinary organisation with some specialist skills. There is a real need to refresh those skills both in areas of forensic accountants, for example, we second in and out of the organisation. Also, as part of the GLS system with our lawyers and as part of the encouragement for development of our lawyers, they seek to move on within a three‑year period and, of course, we have just come through that period at the present time.
Ms Earl: Can I add one thing, if I might. 50 people left the agency in the year that the NAO picked up on. 18 of those were temps from the Agency who came in to do short‑term things. Three of them were people who had been on loan from other departments, seven were secondees from the private sector and other parts of Government and four were people who were on fixed term contracts who we knew would leave. 18 people who were permanent members of staff left the Agency which represents about 9% of staff turnover of permanent staff in that year.
Q29 Mr Mitchell: You have the cases coming in but not enough. Why did you not prioritise them and say. "We will go for the big pots, the headline successes"? Perhaps easier victories rather than big money is what are needed to prioritise. Why did you not?
Ms Earl: I want to take issue slightly with that question because I want to refer you back to the purpose that we were set up for, which was about crime reduction.
Q30 Mr Mitchell: What is in issue now is your survival as an institution. You have got to show yourself successful, otherwise we get what has happened. Why did you not set out to prioritise?
Ms Earl: Again, I am going to answer the question about survival of the institution because I want to be clear with you that I have said throughout my time here that no institution should exist in perpetuity because it is in institution. The important thing is how the powers of civil recovery taxation are used, to make sure that they are used in more places, more often against more people. We have always believed that there would be a point at which the Agency should not exist but that the powers should go elsewhere. Why did we not go for the big cases? In some places we did go for big cases. I have to say to you that those are some of the ones that are still under litigation at the moment. When you look at our forward projections of cases which we hope will come to conclusion, which Alan can talk about in a little more detail if that would be helpful, those are still in litigation. What we have managed to do is to get them through ---
Q31 Mr Mitchell: Seeing that you were effectively taken for a ride by the receivers, which is a not uncommon experience, they all tend in long cases to increase the thickness of the file to maximise their income at the expense of maximising what survives at the end, why did you not expect that? Did you trust them?
Ms Earl: Did we trust them? No, we monitored them very carefully. I do not think we trust them, but actually on some cases it is not about what they are doing; it is about how the respondents react. Alan will give a couple of examples of that.
Mr McQuillan: One of the difficulties we have with receivers is that the receivers we have unique powers. They both hold property and they also carry out investigations. The way the legislation is structured, once we appoint a receiver, the receiver is the creature of the High Court. They take control of the investigation and we lose control of it. That does not stop us carefully monitoring their expenditure. There are negative sides to that and positive sides to it. One of the positive sides was shown this week. It happened to be a Belfast case where we put a receiver in on a case with an estimated value of half a million pounds and within perhaps five months they had identified a further £8.2 million worth of property that we have now frozen. So on occasions receivers come good, but the costs are horrendous and they currently amount to around 22% to 23% of our budget. We recognised that right from the start. You ask if they misinformed us. The answer is: no, they did not. When we were first set up, we noticed the potential for receivers. We took advice from people who had used receivers in other contexts. We immediately began to try to use things called Morava injunctions to freeze property without using the receivers, but the advice was that we were on potentially dangerous legal ground there, so we persuaded the Home Office to introduce a new power, the property freezing order.
Q32 Mr Mitchell: You are going and the Agency is being wound up. Would it ever have worked? Should it be kept going?
Ms Earl: My point is not about: is the organisation working? The important point is: are the powers working? I keep coming back to this point. The powers are working. My hope is that within SOCA and the powers of civil recovery going to other prosecutors, they will not only be used as well as we would have been using them, but they will be used in far more circumstances far more of the time.
Mr McQuillan: In terms of would it ever work, this year we are on target to meet all our operational targets. We will recover this year around £15.6 million against the base budget, the base line budget of the Agency being £15.5 million. We will meet all our targets for disruptions and completions this year, so we have turned a corner in that sense. There is a long way to go yet. Clearly, as the NAO report identifies, there are areas where we could further improve.
Q33 Mr Mitchell: The experience will not be lost?
Mr McQuillan: The experience will not be lost. The experience of the staff will be translated into SOCA and also SOCA will inherit a pipeline of cases worth approximately £130 million. So the pipeline at the end of this financial year will be about £130 million of assets in action, which can be realised in future years.
Q34 Mr Khan: Let us be clear. Before your inception, there was no single body tasked with the job of recovering the assets of convicted criminals?
Ms Earl: That is correct.
Q35 Mr Khan: You and Mr McQuillan have been there since the beginning. Mr Dickin joined within the last year.
Mr Dickin: I was there at the beginning as well.
Q36 Mr Khan: You were promoted recently? Good. There are two key things here. One is: do you provide value for money? Two: are there lessons to be learnt? In that context, it seems to me you can break down some of the problems you have experienced as identified by the report into the first category, which is a steep learning curve. You did not realise cases took that period of time; there were structural problems because you were new. There is a second category, which is basic management failures. Do you accept those two sub-groups?
Ms Earl: Without necessarily accepting the words "management failures", certainly. It is helpful to separate our activities into two sub-groups.
Q37 Mr Khan: This is pioneering stuff. You are doing work that has never been tried before: the length of time you recover assets; the steps that defence lawyers, on instructions from their clients, I hasten to add, will take to prevent recovery; third party interventions, all that sort of stuff, which is pie in the sky?
Ms Earl: Yes.
Q38 Mr Khan: It could not be foreseen reasonably what obstacles you face, so it is not unfair that three years on you have had some problems in that area.
Ms Earl: No. What we did early on was to go and talk to other people who are active in civil litigation to see what sort of obstacles were put in the way of, if you like, normal civil litigation.
Q39 Mr Khan: You have obviously read my script. My next question is: are there any other countries in the world that were doing this stuff when we started to do it a few years ago?
Ms Earl: Yes. The Criminal Assets Bureau in Dublin is probably the nearest in location to us but the powers of the Criminal Assets Bureau, the way it was structured, was quite different from the way in which the Assets Recovery Agency was set up in the United Kingdom. We also looked at the experience of colleagues in South Africa and parts of Australia and parts of the United States to see what we could learn from there. Equally, we have tried to look at other bodies within the United Kingdom that are involved in civil litigation. If I might develop the point for a moment, one thing that people have said to us is that we could have made a difference much more quickly by being prepared to settle cases as would be normally the cause in civil litigation. I fully accept that, but I have a particular problem which I will share with you because I am very keen to get your views on this. Our business is as much about ethics as it is about economics.
Q40 Mr Khan: I think you are right. You raise a very fair point, which is a crude balance sheet exercise to see cost recovered versus cost spend as a fair way to assess the benefit you bring. For example, before your inception, there were criminals getting away with the proceeds of crime but they now probably will not. Also, we have in the pipeline things about stuff you can hand over to SOCA, who will get all the glory, I am sure, but we will work with number of organisations. Is that a fair point to make?
Ms Earl: It is absolutely fair and a point that we have made on occasions.
Q41 Mr Khan: I will make it on your behalf. We just look at the bottom line, I am afraid. There have been, I think you will have to accept, some basic errors made over the last few years. Let me give you a couple of examples. With the best will in the world, and I am trying to be helpful, staff have not been held accountable for the progression of cases. That is a basic failure, is it not?
Ms Earl: We have been trying to find ways of holding staff properly to account. I would like to ask Alan to talk you through what we are doing now, partly as a result, I fully acknowledge, of the way we deal with the National Audit Office.
Q42 Mr Khan: I am sure you are now addressing those. We only have a short time to get in as many questions as we can. A second point is this. There is no formal and consistent case management. Again, that has nothing to do with your pioneering stuff, has it?
Ms Earl: It is to do with our pioneering nature because the volume and type of cases we have been dealing with are very different. What we have not done well enough, and again I am absolutely prepared to put my hands up and apologise for this, is that we have not systematically sat down and worked through processes which we can document, but I can tell you with absolute certainty that there is not a case in the Agency where we are involved in investigation or litigation which we do not review on a monthly basis.
Q43 Mr Khan: That is the present. I am talking about the past.
Ms Earl: No, again I have to come back to you and say that we have been doing that right from the start because we have been very keen to make sure that we know where cases are. What we do not have, and I absolutely acknowledge this, is that documented in the way which we can demonstrate to the National Audit Office, and that is a failure and one for which I apologise.
Q44 Mr Khan: That leads me on to my third criticism which is this. Staff do not record the time they have spent on each case. That is a basic failure, is it not?
Ms Earl: One can view it as a basic failure but again we went and talked to people like the Crown Prosecution Service.
Q45 Mr Khan: Come, come; I did civil litigation and as an equity partner, if any of my solicitors did not bill for the time they spent on a case, they would soon know about. It is a basic failure, you accept, do you not, not time recording work you have spend on a case. There is case management software.
Ms Earl: I am recording that we looked at producing a time recording system and we looked at acquiring it. At the time it was going to cost about £300,000, which was the cost of another case. We did not buy it and we should have done. I am not disagreeing with you at all. We should have put it in sooner.
Q46 Mr Khan: It is a basic failure. High levels of staff turnover: you have made the point that some of your high levels of staff turnover are because of temporary staff. Cleary you will know from running organisations that the best thing to do is to employ staff who will become permanent staff rather than take on temporary staff. It is not effective, is it? It is a basic point of failure. There is nothing pioneering about this?
Ms Earl: There is nothing pioneering but on occasions, if we are unable to appoint permanent staff, then we take on temporary staff to fill those gaps. That has been the difference.
Q47 Mr Khan: Another basic error we see people making all the time is to instruct private firms for some work that can be done in-house. I give you a good example, which is expenditure totally somewhere in the region of £16 million on private receivers.
Ms Earl: Alan will deal with why we spend that money.
Mr McQuillan: As I was answering Mr Mitchell earlier, we identified potential cost of the receivers at a very early stage and we persuaded the Home Office to change the legislation to give us additional types of freezing activity. In 2004-05, some 68% of our cases that were disrupted were disrupted using receivers. By this year, we have reduced that to 10%.
Q48 Mr Khan: Let me stop you there. I did not disagree with you about that. You have now identified the failing and taken steps to address that. I accept that. My point is that these are basic points that somebody other than a rocket scientist could have worked out, could they not? They are not that difficult.
Ms Earl: Can I pick up on one particular point of detail? The legislation specifically provides that if we have an interim receiving order, that has to be managed by someone who is not a member of staff at the Agency. That is a fundamental point of the legislation.
Mr McQuillan: When we were first set up, the only effective freezing power available to us was an interim receiving order. We immediately identified that. The Home Office then produced amending legislation and we immediately began to do that and we now have 68% of cases ----
Q49 Mr Khan: I understand and thanks for that. I have a couple more questions. The first is this. Can you reassure us that when your unit is merged with SOCA and the other units, we will still be able to assess for example whether the costs spent on this unit exceed or is less than the assets recovered? Will we still be able to do that exercise?
Ms Earl: That is not a question which I can answer.
Q50 Mr Khan: Can I ask you that question, Sir John? One of the criteria of the PAC, and I know it is a crude one, to assess value for money is whether the cost spent exceeds the amount of assets recovered. When this unit merges, will you still be able to do that task?
Sir John Bourn: Yes. It should have a proper system of management accounts which will provide that information and we shall see that it does have.
Q51 Mr Khan: Thank you. Another basic failure is that one of the explanations for the low number of referrals could be a lack of "advertising" of what you do to the potential detriment of the Agency. Do you accept that?
Ms Earl: No. I am sure we could always do more. That is really important and we recognise that, but over the past four years, we have been engaged with the police service at ACPO level; we have been out in all the forces; we have run regional conferences in the partnership.
Q52 Mr Khan: Which are the four forces that did not send you any work at all?
Mr McQuillan: They are: Cumbria, Hertfordshire, Humberside and Dyfed-Powys.
Q53 Mr Khan: Did any of those police forces have no convictions in the last three years? Presumably all of those had convictions in the last three or four years?
Mr McQuillan: Yes.
Q54 Mr Khan: There were thefts, drug deals made, all that sort of thing. Have you discussed with them why they failed to refer anybody to you?
Ms Earl: We have continued to go and talk to those forces.
Q55 Mr Khan: When was the first time you spoke to them?
Ms Earl: We have been talking to them literally throughout the four years life of the Agency.
Q56 Mr Bacon: When Mr Khan described some of the activities as basic management failures, I think you said that you take issue with the phrase "basic management failures". It is slightly unfortunate for me, although it is helpful to remind me of the questions I was going to ask. Mr Khan has asked most of my questions. One of them was about the number of cases. I find it extraordinary that a new organisation, of all things, would not, from the outset, have a way of managing cases. It turns out that there were 707, although that took the National Audit Office a little while to figure out, and indeed they say in paragraph 3.10: "One database listed 536 cases but when we sought to verify this information, the Agency gave us two additional databases, one for civil recovery and taxation cases and another for criminal confiscation cases, which listed a total of 639 cases. Both the original list of 536 cases and the two new lists contained cases which did not appear on the other lists. We [the National Audit Office] had to manually collate and check the lists to derive the figure of 707 for the total number of cases." Surely that is a basic management failure, is it not?
Ms Earl: We certainly apologise ----
Q57 Mr Bacon: Is it a basic management failure?
Ms Earl: Certainly it is a failure of not knowing how many cases have come through the door. However, that is about the number of referrals we had. Going back to the database, that is about the number of cases we were actively litigating, but a number of those cases that came through at a very early stage were returned because they simply were from people who had sent us things which we could not take forward. I can give you some detail if you would find that helpful.
Q58 Mr Bacon: You said to Mr Khan that you would like to assure him that the Agency tries to keep a track of cases regularly but you did not have them in a form that you could say to the National Audit Office, "Here are all our cases". If you could not say it to the National Audit Office, it is unlikely you could say it to yourselves, to your management committee. That is a basic management failure, is it not?
Ms Earl: No.
Q59 Mr Bacon: What is it then?
Ms Earl: I am not going to agree with you that it is a basic management failure.
Q60 Mr Bacon: If it is not a management failure, what kind of failure is it?
Ms Earl: One of the things that we are talking about in that 707 cases is cases which came into the Agency and which went through the pre-referral, pre-assessment stage and were referred back to the reporting agency at an early stage.
Q61 Mr Bacon: Have you ever used a spreadsheet?
Ms Earl: Yes.
Q62 Mr Bacon: You know that if you type "page down" you go down to the bottom of it. Do you know how many lines there are on a spreadsheet horizontally now on the latest version of Microsoft Excel?
Ms Earl: A great many.
Q63 Mr Bacon: There are 64,000. I used to be able to trawl to the end and get there. I sat there going "page down" until I got to the bottom and there are 64,000. You could easily have all these cases in one place with one person trained on Excel. It would not have been that difficult. It would not have cost you a lot of money.
Ms Earl: No, and we did not do it.
Q64 Mr Bacon: That, surely, is a basic management failure?
Ms Earl: We held information in several difference places and one of the things that we have learned is that we were managing activity by different streams. We were managing activity in Belfast; we were managing activity by civil and tax; and by criminal. What we have done is to put them all in once place because you are absolutely right.
Q65 Mr Bacon: Could I ask you if that is a basic management failure?
Ms Earl: I am still not accepting that phrase.
Q66 Chairman: What is it then? This is quite important. In your own words, if it is not a basic management failure, what is it?
Ms Earl: We started out by managing things in silos. We should have managed them as a complete ---
Q67 Mr Bacon: Especially with something relatively this small, and I was struck by Mr Khan's phrase. It exactly accorded with my own reading of the report. Can I turn to the question of financial investigators? You did not keep track of those financial investigators who were following their continuing professional development such that it was possible for people, strictly speaking, to be in a position where they should have been struck off as not being accredited. That is right, is it not?
Ms Earl: I will ask Mr Dickin to deal with that. He has the detail.
Mr Dickin: No, I cannot accept that in the way in which you put it.
Q68 Mr Bacon: What way would you put it?
Mr Dickin: I would like to say, first of all, to put it into context, part of the organisation's continuing objective was to develop financial investigation training. Again, we were starting with nothing. I would like to say in the first instance is that since we have begun and the Agency became a lawful organisation, we have delivered training to 4,500 financial investigators.
Q69 Mr Bacon: I know it has got better. It says in 4.7: "The Agency has now identified that there are 1,937 accredited Financial Investigators who should be completing Continuing Professional Development." It is true, is it not, that when the NAO started you did not know how many financial investigators you should be monitoring for continuing professional development? That is true, is it not?
Mr Dickin: That is not actually correct either.
Q70 Mr Bacon: Can I read from the brief that I have been given by the National Audit Office? It says: At the start of the audit, however, it [the Agency] did not know how many financial investigators it should be monitoring via its formal system of continuing professional development. Are you saying that is untrue?
Mr Dickin: No.
Q71 Mr Bacon: Is it true or untrue?
Mr Dickin: The figure itself was derived from the individuals who were registered on the financial investigations support system, a part of which is the database that records details of financial investigators. The point I was going to make was that not all of those are financial investigators because we have a number of different categories on the financial investigation support system: managers, administrative support staff and others that with whom we have done financial investigation training. Therefore, the number itself of over 3,000 was not the number of registered financial investigators.
Q72 Mr Bacon: No. So you accept, Mr Dickin, from what you have just said and the Agency has signed up to it, the sentence in paragraph 4.5 that says: "We [the National Audit Office] found contradictory information on the number of Financial Investigators." That is correct?
Mr Dickin: I do accept that they found conflicting information. The point I was trying to make was that we are quite clear that we are aware of all of the financial investigators and where they were located.
Q73 Mr Bacon: But they did not complete their questionnaires, and then in paragraph 4.5 it says: " ...completion of the questionnaire being a mandatory requirement for Continuing Professional Development of Accredited Financial Investigators". Out of the 2,788 that the NAO were told about, there were only 1,028 replies received by the deadline. That is true, is it not?
Mr Dickin: I think the figure that the NAO used was the upper figure, the 3,000.
Q74 Mr Bacon: If you read paragraph 4.5, it uses a variety of things. I want to move on because I do not want to miss one other point. It is about the total number of staff you have. It over 200 but how many exactly?
Ms Earl: It is 223 as at yesterday.
Q75 Mr Bacon: You have human resources and facilities at 18.6 people. It is not normal to put in put in FM with HR. They are normally separate, the bloke who makes sure the central heating works and turns up at 5 in the morning to open the building up and the person who prepares the pensions and maternity leave. They are not normally bracketed together. How many of those people are HR?
Ms Earl: Our HR team is 7.2.
Q76 Mr Bacon: So the other 11 or so are facilities management?
Ms Earl: They are support staff operating in the two buildings that we have, the building in London and the building in Belfast.
Q77 Mr Bacon: For over 200 staff, you have had 707 cases it finally works out. That is only about three and a half cases per person. It would not have been that difficult to keep track of it all, would it?
Ms Earl: No, Chairman. I am absolutely prepared to put my hand up and say we should have had had a better single database. It would have made the life of the National Audit Office easier and it would have made our life easier. I am perfectly prepared to say that we did not get that right and I am very sorry.
Q78 Mr Bacon: You should send your staff on Excel courses. That is what I do with my staff.
Ms Earl: We may even come and see if you can run a part-time training course.
Q79 Mr Bacon: Parliament does it. I do not do it myself.
Mr McQuillan: I have to say that one of the problems was that we tried to run it on Excel.
Q80 Mr Davidson: I was on the Bill committee when this was being established and we had great hopes for what you are attempting to achieve. I am a bit surprised at the impression you seem to give us, Ms Earl. When you were appointed, you started off almost with a blank sheet of paper. I was under the impression, from what we told by the Home Office at the time that this was being set up, that they had a cunning plan and that, as soon as the legislation was passed, then it would be up and running right away. That seems really not to be the case. Is that correct?
Ms Earl: Without being unduly frivolous, I think I was probably the cunning plan because we were brought in, Alan and I both arrived at a very early stage, and what the Home Office had given us was actually a very good piece of legislation, but having a piece of legislation that has been passed by Parliament and turning that into something which works, which irons out all the wrinkles, is quite a long process.
Q81 Mr Davidson: I do understand the point about all the wrinkles. I got the impression that you were talking about more work needing to be done than just simply ironing out a few wrinkles, that you were essentially starting with a blank sheet of paper and the preparatory work that could have been done - because this legislation, if I remember correctly, apart from some minor amendments, was going through the House unanimously - and ought to have been done clearly was not done and that therefore delayed your start.
Ms Earl: I do not wish in any way to diminish the efforts of the Home Office and the implementing team.
Q82 Mr Davidson: That is our job.
Ms Earl: What they were able to do was to provide us with a building; they have provided us with some initial set-up arrangements. You need to bear in mind that we were set up as a non‑ministerial department, which brings with it a lot of flexibility.
Q83 Mr Davidson: I understand that. That does not cover my point about inadequate preparatory work. Could I follow on this point about the fact that you have achieved far less and you have moved far more slowly than we were led to expect would be the case. Is that at all because you had insufficient powers?
Ms Earl: there are some areas where the powers were less than we would have hoped. One of those was the point that I have already made about the ability of people to become legally represented in defending themselves in cases in front of High Court judges.
Q84 Mr Davidson: Rather than go through the detail of them, in a sense, in your view, was there an adequate feedback mechanism? We had assurances at the time when the Bill was going through that if flaws were identified, then these would be remedied. You indicated earlier, and I forget what it was, that there was a couple of points where subsequently legislation was amended. Are there still examples outstanding of flaws in the legislation which have not been addressed?
Ms Earl: I think it is not so much flaws in the legislation. We have had good dialogue with the Home Office, DCA and other departments in the Northern Ireland Office to identify areas where we think we needed to strengthen the powers. Those have gone through a number of the Criminal Justice Bills. The things that we are still talking about are things that we are discovering as we move forward. One of the things that is a particular frustration of mine, which I make no apology for banging on about one more time, is the lack of sanction if our respondents singularly fail to engage with the legal process. If they just do not engage with the courts, if they do not meet the court's set deadlines, what happens is that court cases are deferred; they are rescheduled, and we go back.
Q85 Mr Davidson: Rather than getting into too much detail, it would be helpful, Chairman, if we could ask for a note outlining where difficulties were identified and have been remedied and also where difficulties have been identified that have not yet been remedied and what process they are going through. This correction, this feed-back look, is an important part of it. It would be helpful to have that. To what extent have you, the people working for you and those you employ been outgunned by exceedingly high priced lawyers and accountants that have been brought in by the guilty?
Ms Earl: The respondents do bring in extraordinarily highly paid lawyers and other professional advisers. We continue to take a robust line. As I mentioned, we challenge the nonsense that the defence could possibly cost £600,000 to prepare, but there is no doubt that if you have a highly paid firm of lawyers, they will continue to rack up costs.
Q86 Mr Davidson: That is not altogether a bad thing. That just bleeds them white in a different way, does it not? It is essentially a transfer of money from criminals to lawyers. Many people may see no distinction there! Legally there is. Therefore, it is a penalty in a way on the guilty, is it not? While I appreciate that they can ratchet up large charges and so on, I want to be clear whether or not you find yourselves outgunned by them and not able to cope with the array of talent that is being brought against you, not whether or not they are expensive.
Ms Earl: I think the measure of that, in answer to that question, is: have we lost any cases? The answer is: no, we have not because we do use external counsel to argue our cases in courts where we need to. We do it in-house if we can, where that is better value for money.
Q87 Mr Davidson: That is a complete area where there is no difficulty as far as you are concerned?
Ms Earl: It is not so much that we are outgunned. I will ask Alan to comment in a moment, if I may. It is more the fact that what they will do is seek to find every opportunity to lengthen the processes and to continue to delay. When we get to court, we can normally win but there can be delay.
Mr McQuillan: Going back to the point that other members have raised earlier, the fundamental problem we have had arising from that is that we have won every case; we have won virtually every technical challenge but the difficulty is that it all takes time. For example, the legislation was amended to allow individuals to draw down some of their assets to pay for legal costs. We are seeing some outrageous accounts drawing amounts of money that are wholly disproportionate. We challenge every one of those in the courts. It adds three to five months on to the timescale of the case every time we have to do that. That has had an impact on our ability to deliver the actual money in the box by the right dates. That is the problem we face.
Q88 Mr Davidson: I have covered the point about being outgunned, in a sense. The other point I want to pick up is the question of the civil litigation system being too slow. Is there any way, and it comes back to the question of feedback, in which that could be speeded up that would be helpful to you where requests have been made that have not been met?
Ms Earl: I think I have already made the point about the timetables which we are now talking to the Home Office about and whether we can get some practice-led guidance or guidance in the face of the legislation about timetables so that if you have not responded, then you are deemed to have accepted.
Q89 Mr Davidson: How long have you been pursuing that with the Home Office?
Ms Earl: We have been talking about it in the context of legislation which is being drafted at the moment. We have talked about it in outline with colleagues from South Africa who have something of this sort. They tell us that it is not a panacea but we think it is certainly something worth exploring.
Q90 Mr Davidson: With respect, that does not quite answer the question. I ask you how long you have been raising this with the Home Office.
Ms Earl: It is not so much how long we have been raising it with the Home Office; it is how long we have been trying to work it through ourselves. We have certainly raised it with the Northern Ireland Affairs Committee.
Q91 Mr Davidson: If you have identified what it is you want to have as guidelines, somebody else has to produce those; you cannot produce them yourself. How long has it taken the people who ought to be producing these on your behalf to help you to do so? Is this something that has been outstanding for two years, three years or two weeks? How speedy is this feedback?
Ms Earl: We have probably been in discussion about these things certainly over the last year or so, but with the Home Office, DCA and the court service. It is a composite.
Q92 Mr Davidson: It would be helpful if things like that were included in the note that we receive about the issues that you are seeking to pursue. Could I ask the Comptroller and Auditor General of NAO: was this compared with the Scottish example? Is what is happening here better or not as good as what is happening in Scotland in terms of asset seizure?
Ms Lawler: We did not make any comparison with Scotland.
Q93 Mr Davidson: The legislation went through and it is part of the same legislation and it would have been an obvious thing to have done, would it not?
Sir John Bourn: Yes, it would. We should have done that.
Q94 Mr Davidson: In terms of your own position, do you benchmark yourselves against the Scottish example and have you done better or worse than the Scottish system?
Ms Earl: We do. We have very close links with the Civil Recovery Unit in Scotland, not least because of course of the taxation powers in the process.
Q95 Mr Davidson: Have you done better or worse?
Ms Earl: I am going to give you a weasel worded answer, if I may, because it is difficult to say. The Civil Recovery Unit in Scotland deals with all the cash forfeitures, which we do not deal with; those are dealt with by police forces.
Q96 Mr Davidson: Are you comparing like with like relative to that?
Ms Earl: On civil recovery cases, the volume is much smaller, obviously. I think the values of cases in the Civil Recovery Unit in Scotland have been small, but they are starting to do some very interesting work on early settlements. There is quite a big case in the pipeline with them at the moment which is in the region of just over £1 million, which they are about to settle. The framework is very different but we are in good contact with them to see what we can learn in both directions.
Q97 Mr Davidson: The final point I wanted to raise is the question of receivers where essentially I think you are telling us that the receiver are bigger rascals than those who are convicted. Presumably, all of this must have been spotted, if not at the time, then fairly soon into the exercise. Again, in terms of feedback, why has that not been changed? Why are you still obliged to use receivers? Presumably you outlined to the Home Office and the appropriate government departments the difficulties that the mechanism that you are stuck with are causing you and sought some change. Why has that change not helped?
Mr McQuillan: That change has occurred and the Home Office were extremely responsive to this. As I have said, we have set up in 2003-04. We really began to take on the bulk of our work in 2004-05 and that year 68% of the disruptions we did used receivers. We had already identified by that stage the potential costs in that and we went to the Home Office to give us lower cost tool and they gave us property freezing orders. For example, this year we are going to disrupt 40 cases of property freezing orders and six with receivers. The Home Office were responsive.
Q98 Mr Davidson: All this stuff about receivers and the badness thereof is of interest but it is historical and you no longer need to go that route?
Mr McQuillan: It is largely historical. The difficulty with receivers is that once you commission them, the costs continue until the case is concluded, at a different rate but you end up paying the bill until the end of the case. What we are seeing now is that the bulk of the receivership costs we are paying now relates to cases that were commissioned maybe two and sometimes three years ago.
Q99 Mr Davidson: It is a sort of legacy issue working its way through the system?
Mr McQuillan: We also took a policy decision at the start of this financial year, as the NAO have recommended, that we now only let new receiverships on a fixed-price basis and we force the receivers to share risks.
Q100 Mr Davidson: On the question of staffing, why are you based in London when everybody knows that London is the worst place to have and to hold staff? Why not be in my constituency, for example, where people are much nicer and stay longer?
Ms Earl: I do not think there is anyone from Northern Ireland here, so I would like to make your point but in a different way. When the Agency was set up, there was already a commitment made that there would be a presence in both Belfast for Northern Ireland purposes and in London. The reason for putting us into London was because all of our cases were going to be conducted in the High Court. There was a view that had been taken by the implementation team that we needed to be within fairly easy reach of the High Court. That was a decision that was made prior to my arrival. When we looked at this, what we did was to say, "Are there any things that we do that could be done elsewhere?" As a result of that, right from the start, we said that our finance team and our procurement function could be much more effectively and economically recruited in Northern Ireland rather than in London. So when we could put people into Northern Ireland, we did. We have not yet looked to go further afield than that, but we have, as we have developed, had a number of our trainers who work from their own homes to cut the cost of accommodation and also the criminal confiscation people who are related to the regional asset recovery teams are out in the regions. The reason we are in London is very much about being close to the High Court for litigation purposes. I think that were we continuing in an independent form, we would have been looking to see where else we could go to reduce the costs and to use new technology, and we already use things like video conferencing very successfully, to make some of those savings.
Q101 Mr Williams: I see from the report that four police forces have not referred cases. Are you surprised that they have not?
Ms Earl: Yes, we are. I think the point has already been made by one of your colleagues that there is criminality in every part of the country. I am very clear that there is criminality where civil recovery might be an appropriate response.
Q102 Mr Williams: Do these forces have any sort of mitigating argument for the fact that they have not done it?
Ms Earl: Some of them do very well with the use of criminal conviction and confiscation powers. We always have to look at whether there are cases which are suitable for civil recovery. Of course, you can do very well on criminal confiscation. If you can get people locked up and take away all the benefit of their activities, then you never need to use civil recovery. Civil recovery is, if you like, a second route after that.
Q103 Mr Williams: Are these four in that category? Are any of them?
Ms Earl: One of them, I think,
Q104 Mr Williams: Just one. What about the other three? Are they dilatory? Can you tell us which the other three are?
Mr McQuillan: Dyfed-Powys traditionally has had the highest primary detection rate for crime in the UK. It is one of the most successful forces investigating and prosecuting criminals in the UK.
Q105 Mr Williams: I am asking which of the three you were surprised have not submitted anything. Which are they?
Ms Earl: I think Hertfordshire again has a very high level of criminal conviction and confiscation. They have been using that part of the process.
Q106 Mr Williams: You said only one of the four. Now you seem to be jumping around. You said there were four. You said there is one that you were not surprised at, for certain reasons. Each time you are asked to name somebody, you provide a reason why they should not be named. Can you tell us who they are? If you do not remember, put in a note.
Ms Earl: The four forces that have not referred are: Humberside, Hertfordshire, Cumbria and Dyfed-Powys.
Q107 Mr Williams: That is interesting. You have no powers to instigate investigations. Is that something that concerns you or does it actually save you a lot of wasted cost in doing preliminary work that is better done by someone else?
Ms Earl: I think it is entirely right, given the way that the hierarchy operates in the Act, that we do not have the power to institute investigations because clearly one of the tests we have to be satisfied about is why criminal conviction has not been possible or feasible. If we ever thought that civil recovery could be an easy way to bypass criminal convictions and confiscation, we would not be acting in the spirit of the legislation.
Q108 Mr Williams: I note that it has been referred to that you were supposed to monitor the performance of financial investigators. The fact there are four has been referred to but as this was a statutory requirement, it was actually written into the Act; a red light was flashing over it. Why on earth was it ignored?
Mr Dickin: I think the Agency had already identified a number of issues around the timeliness of its monitoring regime, particular CPD. It was acknowledged within the report that we were in the process, through a census questionnaire, of seeking to try and resolve some of those issues. Our early policy in relation to continued professional development mirrors a number of similar professional registers on the basis that they were not time-critical for the completion of all of the activities. The CPD regime is made up of three separate elements, one of which is the activities that were set by the organisation. As I alluded, the policy of the organisation in the early stages was to re-accredit individuals on a 12 month and then three year basis. That in effect meant that, as I said, in line with other professional registers, what we would seek to do is to examine the whole content of each CPD information or box within the financial investigation support system before we were to re-accredit any of the financial investigators in order to give them powers for a further period of time. We have since addressed that and, in line with the helpful recommendation from the NAO, we have changed that policy and taken on board the recommendation that what we should do would be more robust in timeliness and indeed that if individuals did not complete the CPD activity within a three-month period, then we would take action to suspend them.
Q109 Mr Williams: Coming back to my initial question, it suddenly dawned on me that I should have asked this. Have you made any direct approaches to three of the four that you feel are dilatory by asking them why they have not responded and what explanation have they given?
Ms Earl: The first answer to the question is: yes, we have made approaches to them. We have made approaches to them at operational level and at Association of Chief Police Officer level. The general view that they have come back with is that they have not yet had something appropriate to refer to us. We cannot force people to refer cases to us. That is clearly not part of our remit. What we have to keep doing is continuing to ask them whether they have anything which they think ought to be suitable. My view is that there will be cases in every force where civil recovery would be an appropriate response.
Q110 Mr Williams: I ask the Comptroller and Auditor General: could we ask those forces why have not? Do we have that power?
Sir John Bourn: You certainly do.
Q111 Mr Williams: With the Chairman's permission, may I ask on behalf of this committee for an urgent reply within two weeks. There is not much left to cover. I was surprised to see that at least 30% of financial investigators did not subsequently use their skills. How much would it cost to train them? What would be the total cost of training these people and the time of the individuals employed when they went on the training course?
Mr Dickin: That is a difficult question to answer in its entirety. Can I assist you in this way? The initial training for financial investigators, the training that the organisation offers, is appropriate. It takes individuals through various levels and very different disciplines within financial investigation. To train a basic individual to the level of a financial investigator, in essence our charges were at that time were set at just under £700. In terms of timing, the course itself is a three-phased approach, so there would be an element of knowledge and testing earlier on, then a five-day residential programme, followed by the final part, the evaluation, where they would submit a competency-based portfolio, which we would validate. That can take up to 12 months.
Q112 Mr Williams: Why is it, do you think, so many have not continued using their new knowledge?
Mr Dickin: I think it is again an issue which was kindly acknowledge in the report that we had identified at the end of the last financial year. It is very challenging to monitor and hold to account individuals across 112 organisations when of course they do not work directly for us. What we were seeking to do and to address with the census questionnaire was to provide some more substantive evidence to be able to produce to our stakeholders. Of course, with the planned introduction of the charging as of 1 April this year we hope to focus a bit more on making the best use of this valuable resource.
Q113 Mr Williams: This is my final area of questions. I see that amongst this high turnover, which Mr Mitchell referred to, you lost half of the legal staff. I would have thought they were pretty central to your operations. Why on earth have you been unable to keep half the people you desperately need.
Mr McQuillan: There are two factors but slightly different situations in Belfast and London. A number of the staff in Belfast came in as secondees from the civil service. Typically, after three years, they find they are posted back into the civil service to maintain their career progression in the civil service. The second element is that our lawyers in London are members of the Government Legal Service. Our understanding is that the Government Legal Service actively encourages lawyers to move posts every three years to broaden their experience base and maintain a wide range of experience and for career progression. We face a situation where our lawyers in London are actively encouraged by GLS to seek new posts after three years. That causes some difficulty for us. I think a longer period would be desirable. I do not think that we would expect people to stay with us in perpetuity because you do have to recognise that we operate in a very specialist area of the law. I would prefer that they stayed with us on average for a slightly longer period but the encouragement to them is to go after three years.
Ms Earl: May I add one other point? One of the other things about the lawyers is that the lawyers Alan has been talking about are, if you like, the people who work internally within the Government Legal Service. We also took a view, as part of our learning from other places, that we would benefit from bringing in people from the private sector on relatively short-term secondments, around a year at a time, mainly because we could not get them for any longer. I pay tribute to some of the firms that have allowed us to borrow some of their staff. It has been enormously helpful to us to bring in a new approach to litigation and to make sure who we are dealing with, a point Mr Davidson made about are we being outgunned. We do want to know what sort of tactics these people will be using were they representing people on the other side. We have had lawyers who have gone because they only ever came to us for a year at a time. Alan has made the bulk of the points.
Q114 Mr Williams: I can understand the value of bringing in somebody from outside. Those within the Government Legal Service, you say they are covered by this policy of moving about every three years. Are you given plenty of warning? The loss of 50% sounds severe but if you had a year's warning that they are going, it becomes a different ball game because as long you have been able to re-recruit, it is less of a problem. Is it done in an orderly, controlled and agreed style between yourselves and whoever it is that is responsible for it?
Mr McQuillan: The answer is: yes and no.
Q115 Mr Williams: Which is yes and which is no?
Mr McQuillan: We know what the policy is and therefore we expect a certain level of turnover. The difficulty is that individuals will find vacancies, find promotions, unpredictably, so we cannot control the process entirely. It is fair to say, there are in central London sometimes recruitment difficulties of getting lawyers at civil service salaries even within the GLA and getting suitable lawyers who are prepared and experienced enough to undertake the work. It is a mixed bag but we do try actively to manage it.
Q116 Mr Williams: In fact, in a way, ignoring the Scottish imperialism of my neighbour, there is a certain sense in what he was implying that you might do better in that respect if you were sited somewhere other than in London or would that not make sense for the end product of the operation?
Mr McQuillan: One of the issues is that all our cases until recently were heard in the Administration Court in London in the Strand, so being at another court elsewhere could cause us difficulties, although the courts are now changing and are moving more and more cases to the Queen's Bench Division, but initially the courts and the judges wished to hear our cases in the Administration Court. We understand that was because this was novel legislation and they wanted to see it through that phase initially in the Strand in London.
Q117 Mr Williams: Would an average case be very lengthy? Often financial cases are.
Ms Earl: To give you an example of a case which is not particularly high in value, we have been asked to make available 14 days for the length of the trial. That is a case where we have a receiver in post and the receiver will be asked to make herself available for those 14 days, which will add further to our bills.
Q118 Mr Williams: The cost to the people involved who are coming in to London from outside and keeping them here, say, for 14 days, might that not be offset by the lower sum you pay for them in other parts of the country?
Ms Earl: I think there is a cost benefit analysis to be done.
Q119 Mr Williams: Are you doing it?
Ms Earl: We were starting to look at where else we might go.
Q120 Mr Williams: The Chancellor has asked that departments should, if possible, be moving outside London. It would be in the spirit of that if you did so. Have you actually started or are you about to start?
Ms Earl: Given the proposal for merging with SOCA, part of the key arrangements for the merger with SOCA are about talking to them about the accommodation needs, location and how best to fit our asset recovery business into their mainstream activities. It is a matter which we will take forward with them but we are not in a position to make a decision about that now.
Mr Williams: Could you put in a written report? Early on you said you wanted to share with us your thoughts about something.
Q121 Mr Bacon: I want to follow up on something Mr Williams was asking about staff. It is said the head of legal operations was appointed in January of this year, the post having been vacant for three and a half months. A typical public sector horror story would be that you are then wound up and such a person would then get a big pay-off in redundancy. That is not going to happen?
Ms Earl: No.
Q122 Mr Bacon: Are any redundancies going to be paid or are all the staff going to move across to SOCA?
Ms Earl: The commitment that has been made to all the staff is that they will have the ability to transfer into SOCA and the NPIA in accordance with the civil service code of transfer.
Q123 Mr Bacon: If they do not, will any severance payments be made?
Ms Earl: The civil service code provides for them to move into the new organisation, so I cannot imagine circumstances in which redundancy would be payable.
Q124 Mr Bacon: So it is entirely unlikely that any severance or redundancy, or whatever one calls it, payments to Asset Recovery Agency staff will be made. They will either go into SOCA or they will choose to leave and they will not get their payment for doing that?
Ms Earl: I can think of practically no circumstance in which that would not be the case, but there will of course be a requirement in the civil service generally to be able to find suitable alternative roles for people to be able to move into as a result of that merger.
Q125 Chairman: You have been a very effective witness, Ms Earl. To sum up, you have spent £65 million and you have recovered £23 million. You have no complete record of the cases referred to you. You have worked on over 700 cases and only managed to recover assets in a mere 52; 90% of financial investigators you have trained have not completed the courses that they need to. The fact is that, despite the very effective performance you have put up today, the criminal fraternity are laughing at us, are they not?
Ms Earl: Chairman, I have to say that I do not believe that that is true. I would like you to go and look at the 126 people I referred to earlier on who did leave the criminal court thinking they had got away with it and who have now lost money.
Q126 Chairman: That is such a small proportion?
Ms Earl: I want to say to you absolutely clearly that of course we have not done enough. We have not done enough in the Assets Recovery Agency; we have not done enough across the law enforcement field collectively. I am not going to pretend to you that we have dealt with crime and solved all known problems, but I will say to you that I believe that there is really strong base of work going forward, which I believe that SOCA will helpfully take forward and will start to make a real difference.
Chairman: Thank you very much.
Mr Williams: It is very dangerous to disagree with the Chairman!