The Growth in Confiscation Proceedings

When the Proceeds of Crime Act was introduced there was a general feeling that it was a consolidation of existing legislation and would be directed against organized crime and terrorist outfits. The reality has been quite different. One only has to have a cursory glance at high profile cases that have reached the Court of Appeal such as Shabir EWCA/Crim/2008/1809, Perkes EWCA/Crim/2010/101 and Del Basso EWCA/Crim/2010/1119 to see that PoCA has been used against what many would consider to be just ordinary businesses rather than and the Mr Bigs of the criminal underworld.

I have previously written about a recent case in which I was instructed by defence lawyers who were representing a company and one of its directors who faced confiscation proceedings after pleading guilty to offences under waste management legislation. Readers should be aware that such cases are not uncommon and should take note of a case this month in which the Gambling Commission secured its first confiscation order under the Proceeds of Crime Act 2002 following one of its investigations.

Marc Darren Bird, 38 and from Coventry was ordered to pay £30,000 at a hearing at Leamington Crown Court. The confiscation order is in addition to fines and costs of nearly £27,000 awarded against Bird in September 2010 under the Gambling Act 2005. The defendant had been found guilty at Birmingham Magistrates Court in January 2009 of eight counts of making ‘Joker Poker’ gaming machines available for use and eight counts of supplying and maintaining gaming machines without an operating licence. Bird abandoned an appeal against the conviction August 2010 following a test case in the Divisional Court in March of that year. This case confirmed the Commission’s view that a machine offering players the chance to win credits that can be exchanged for a cash prize is classified as a gaming machine.

The list of regulators now vigorously using the confiscation legislation makes interesting reading. In 2009 a new tranche of regulators were given powers to confiscate the assets of convicted defendants. The list now includes:

  • Counter Fraud and Security Management Service of the NHS;
  • Department for Business, Innovation and Skills (BIS);
  • Department for Work and Pensions (the DWP);
  • Environment Agency;
  • Financial Services Authority (FSA);
  • Gambling Commission;
  • Gangmasters Licensing Authority;
  • Local authorities in England and Wales;
  • Medicines and Healthcare products Regulatory Agency;
  • Office of Fair Trading (OFT);
  • Revenue and Customs Prosecutions Office;
  • Royal Mail;
  • Rural Payments Agency;
  • Serious Fraud Office (SFO);
  • Transport for London; and
  • Vehicle and Operator Services Agency.

Accountants in practice should be aware that the very Draconian legislation of the Proceeds of Crime Act 2002 may be applied to their clients. From experience when I have raised this with fellow accounting practitioners or even solicitors the reaction is one of stunned disbelief.

Comments
cymraeg_draig's picture

Bias

cymraeg_draig | | Permalink

As I said in the previous thread - the thrust of legislation has been to hammer the poor whilst allowing the rich to "get away with it" and people are reaching breaking point. 

davidwinch's picture

Plus the obvious

davidwinch | | Permalink

Gerard doesn't list (because it is obvious) SOCA, the Police and the Crown Prosecution Service.

Agencies such as the UK Border Agency work with the police to apply confiscation to persons who have committed offences in relation to, for example, employment of illegal immigrants.

I have seen some very large benefit figures (over £1 million) proposed in respect of what, on the face of it, appear to be minor offences - such as sale of illegal copy CDs at a car boot sale.

The position seems to be that very serious consequences can follow for those who get caught and convicted (even of relatively minor offences) whilst those who are not caught suffer no consequences at all.  It's a lottery!

David

Exception

alistair_king | | Permalink

Luckily the poor politicians who mistakenly overclaimed on expenses were by and large able to make repayment without undergoing the trauma of confiscation... A couple of minor court cases for the more blatant cases but on the whole no harm done...

no Doubt

The Black Knight | | Permalink

They discovered that the real crims just live the livestyle and don't accumulate assets that can be confiscated.

Can't take it with you, can't keep it either.

Wine, women and song is the way to go.

cymraeg_draig's picture

There's a problem with that theory -

cymraeg_draig | | Permalink

Wine, women and song is the way to go.

 

Posted by kalden on Mon, 31/01/2011 - 09:37

 

As you get older it's not an option

Your voice breaks - so you stop singing.

Then you find the wine makes you fall over - so you give that up.

I still chase women - but I cant remember why any more. 

 

Nonsense

alistair_king | | Permalink

CD - you can keep chasing long into your dotage...

Just follow Berlusconi's bunga-bunga model and you'll have no trouble 

Gerard Murray's picture

the Weir Group- a Lesson even for PLCs

Gerard Murray | | Permalink

After all the roaring an shouting about the Proceeds of Crime Act 2002 being applied to the average Joe Bloggs and the Middle England white criminal,  readers should take note that the legislation has been recently applied to a PLC, the Weir Group which suffered confiscation proceedings in excess of £13 million as well as a fine of £3 million. This may be draconian legislation but it is being applied across the board. Accountants in practice should be well placed to advise clients especialy as it with the accountnat that the business usually has an on noing relationship, whereas their lawyer is not usually contacted on such a regular basis. The best advice is to tell the client what he needs to hear rather than what he wants ro hear. He isn't there for sympathy but professional advice.

davidwinch's picture

The Weir Group PLC confiscation

davidwinch | | Permalink

There is more on The Weir Group PLC confiscation on another thread in this discussion group

Weir Group's £13.9m confiscation

An interesting point is that the 'benefit' figure applied (in a Scottish court) was based on the gross profit derived from the illegitimate business, and not the total amount received (which was £34 million).

David

Do the MLRs and legislation apply to dictators?

Stephen Morris | | Permalink

It has been said that the Mubaraks have property in London. It is reasonable to suspect that the property was funded with stolen money (ie pilfered tax receipts, misappropriated foreign aid etc). I wonder whether a suspicious activity report was submitted to SOCA and, if so, what action was decided. I wonder whether Mubarak laundered other criminally obtained assets through London. I bet the UK authorities turned a blind eye to it.

It seems to me that in cases where dictators and others in government are helping themselves to other people's money the MLRs and legislation could be of real benefit - certainly of more benefit than pursuing a neighbourhood plumber for undeclared earnings and lost tax receipts.

Just a thought. Ho hum.

 

 

 

 

don't be silly

The Black Knight | | Permalink

you can't go around accusing members of your own club.

The police are there to keep the lower and middle classes under control. !

davidwinch's picture

Text book answer

davidwinch | | Permalink

High ranking politicians, officials and judges in overseas governments and their armed forces are "politically exposed persons" (PEPs) and as a result are subject to additional customer due diligence under Reg 14 of MLR 2007.

It is only UK politicians etc who can be trusted to be purer than the driven snow and therefore do not acquire PEP status.

David

carnmores's picture

C_D

carnmores | | Permalink

reports in the newspaper at the weekend state that alcohol (unfortunately only in moderation) can offset the effects of dementia - so dont give up hope 2 delights may be back withing range soon   :-)

 

 

Old Greying Accountant's picture

Just wondering ...

Old Greying Acc... | | Permalink

... I've been catching up on all the telly I recorded during January and just watched Hugh F-W's fish wars.

I was interested to see the investigation into tuna fishing, with Tesco brand tuna proudly displaying the tuna friendly logo, whilst very cursory research into their tuna sources indicated this to be not the case, despite their protestations.

Does falsely using such logo's come under the same remit as not having a waste disposal licence? That would be an interesting confication order as Tesco do sell rather a lot of tuna!

I suppose the difference is the quality of lawyer/barrister that one could afford.

 

Tescos

Stephen Morris | | Permalink

If they are selling tuna under a false promise then arguably they are obtaining money through deception. If obtaining money this way is a criminal offence then the benefit they receive is criminal property which meets the definition of money laundering. I wonder whether one of the prosecuting authorities will prosecute. 

tysonn's picture

further increase under new UK Bribery Act

tysonn | | Permalink

There is some discussion at the moment that POCA will also be used more under the forthcoming UK Bribery Act. 

tysonn's picture

further increase under new UK Bribery Act

tysonn | | Permalink

There is some discussion at the moment that POCA will also be used more under the forthcoming UK Bribery Act. 

What are we coming to?

Mallock | | Permalink

Murder someone, severely disfigure them or similar and you lose your freedom for a number of years and the State provides you with food and shelter for the duration of the sentence. Come out of prison and your assets should be intact allowing you to get on with the rest of your life.

Fiddle your taxes and the law can take everything you have leaving you and your family with little more than the clothes you stand in. For many this will be the end of life!

It appears that the sanctity of money has replaced the sanctity of life. 

davidwinch's picture

Murder

davidwinch | | Permalink

I was once asked for help by the police in relation to a murder.  The defendant organised a fatal 'accident' for his wife.  This saved him the inconvenience of telling his new girlfriend that he was married and also got him some much needed funds courtesy of the life insurance he had arranged.

He pleaded not guilty but the police proved the 'accident' could not have occurred in the manner in which he had described it and he 'went down'.

(I was asked whether the evidence showed him to be in urgent need of money - to buttress the prosecution case of motives for murder.  In the event they didn't use me because they thought (rightly) that they had enough other evidence.)

I don't think the police pursued confiscation.  The chap didn't have a 'criminal lifestyle' (the offence did not continue over a period of at least 6 months - more like 6 seconds!) so the only confiscatable benefit was the life insurance payout and I guess the insurance company wanted their money back.

But there is no bar to using confiscation in a murder case where a financial benefit is obtained from the crime.

David

davidwinch's picture

Bribery

davidwinch | | Permalink

Certainly confiscation can be used in cases of bribery / corruption.  The recent confiscations (already mentioned in other threads on here) involving The Weir Group PLC and Mabey & Johnson Ltd were bribery / corruption cases pursued under the old legislation.

We may well see more such cases under the new legislation in years to come.

David

davidwinch's picture

Tesco

davidwinch | | Permalink

What Tesco are alleged to have done would most likely be considered under the Consumer Protection from Unfair Trading Regulations 2008 as a possible criminal offence under regs 3 or 5 and 8.

Reg 3(3) says:

(3) A commercial practice is unfair if —
(a) it contravenes the requirements of professional diligence; and
(b) it materially distorts or is likely to materially distort the economic behaviour of the average consumer with regard to the product.

Reg 2 says:

“professional diligence” means the standard of special skill and care which a trader may reasonably be expected to exercise towards consumers which is commensurate with either
(a) honest market practice in the trader’s field of activity, or
(b) the general principle of good faith in the trader’s field of activity.

David

Thanks David

Stephen Morris | | Permalink

Useful info and reassuring that the law does apply to them even though they be ever so high (as one judge phrased the high and mighty).

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