Clause 78 - Gifts and their recipients
Proceeds of Crime Bill
5:00 pm
Mr Dominic Grieve (Beaconsfield, Conservative)
A series of questions arises under clause 78, and I drafted several amendments to highlight an issue that the Committee needs to consider. Let me start by considering the clause generally. It covers gifts
and their recipients, and of course the intention is that tainted gifts should be confiscated. There is no problem with that. If someone gives someone else a tainted gift, it is right and proper that it should be confiscated.
I am, however, anxious about subsection (1), to which amendment No. 274 relates. That subsection states:
''If the defendant transfers property to another person for a consideration whose value is significantly less than the value of the property at the time the defendant obtained it, he is to be treated as making a gift.''
This is about the circumstances in which a transfer has taken place for value. Let us suppose that a person obtains an asset illegally—it is the proceeds of crime—and at a subsequent date he sells it to a third party. For the moment, I ask the Minister to assume that the third party is an innocent third party, because that is important. If he were not an innocent third party, I would not be very concerned, and the stuff could be confiscated. However, as I read the impact of subsection (1), the valuation of the asset is the value at the time when the defendant obtained it, not the value at the time when he transferred it for value to the third party.
Once we have that in mind, it is not difficult to appreciate that the innocent third party may legitimately buy an item, say a chattel, that was worth £5,000 when it was obtained as the proceeds of crime by the defendant, but was worth only £2,500 according to market value—values do go down—when he transferred it for value. However, its value as a tainted gift in the hands of the recipient will be the value at the time when the defendant obtained it.
Moreover—this leads to the subsequent amendments—for the purposes of confiscation from the third party, the value that is attached to the item is the original valuation. Therefore, the third party will have to hand back not only £2,500, but an extra £2,500 out of his own pocket, even though he was completely innocent of any wrongdoing. That is unfair and completely barmy. I cannot believe that that is what the Government intend. We shall have numerous examples of individuals who obtain from defendants for perfectly straightforward and correct value items whose value is lower than it was at the time when the defendant originally obtained them. I tackled that first in amendment No. 274, by seeking to replace ''obtained'' with ''transferred''. The intention is that the valuation for purpose of recovery from a third party should be carried out as of the date of transfer, not the date of obtaining. Amendment No. 275 would qualify the clause, if accepted—it is an alternative—and highlights the fact that we are concerned only with an innocent third party.
I suggested that new clause 5 could be tagged on. I am mindful that the Government wish to recover the proceeds of crime and do not want to let the defendant off the hook. If that is what the Minister is worried about, I am perfectly prepared to allow the director to recover the balance between the value of the item obtained and its value at the date that it was
transferred from the defendant, but I am not happy about the Government recovering it from the innocent third party to whom the transfer was made.