Clause 302 - Property obtained through unlawful conduct

Proceeds of Crime Bill – in a Public Bill Committee at 3:45 pm on 10 January 2002.

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Photo of Bob Ainsworth Bob Ainsworth The Parliamentary Under-Secretary of State for the Home Department 3:45, 10 January 2002

I beg to move amendment No. 337, in page 174, line 17, leave out 'Property' and insert

'Recoverable property obtained through unlawful conduct'.

Photo of Mr John McWilliam Mr John McWilliam Labour, Blaydon

With this it will be convenient to take Government amendments Nos. 338 and 339.

Photo of Bob Ainsworth Bob Ainsworth The Parliamentary Under-Secretary of State for the Home Department

These amendments will ensure that the drafting of clauses 302 and 303 is clear with regard to when property is recoverable. They do not represent a change of policy, but they will ensure that the clauses have the intended effect.

Amendment No. 337 is a drafting amendment. Clause 302 provides that property may be followed when it is disposed of by the person who originally obtained it through unlawful conduct. Where the property may be followed, it will remain recoverable, even though it is held by another person. Where property is disposed of, and one of the exceptions in clause 306 applies, the property ceases to be recoverable: it cannot be followed into the hands of the person who has obtained it. Thus, if property is disposed of to a bona fide purchaser, it cannot be followed into his hands—and it cannot be followed on a subsequent disposal. Amendment No. 337 makes that explicit, by establishing that the provisions to follow property apply to property obtained through unlawful conduct only while it is recoverable property.

Amendments Nos. 338 and 339 apply to clause 303. Subsection (1) of that clause provides that property that represents the original property obtained through unlawful conduct may also be recoverable property. It will be recoverable provided that the original property is, or has been, recoverable property. Thus, even if the original property has ceased to be recoverable—for example, because one of the exceptions in clause 306 now applies to it, or because it no longer exists—the property that represents it will remain recoverable. However, as I have mentioned, the original property may cease to be recoverable because one of the exceptions in clause 306 applies to it.

Subsection (2), as it is currently drafted, has the effect that, where other property is obtained in place of the original property, the other property represents the original property, regardless of whether the original property has ceased to be recoverable. I bet that that is not clear to Committee members, as we concentrated on cash forfeiture before switching to definitions, and we have now returned to civil recovery.

The situation to which I have referred with regard to subsection (2) should not arise under subsection (3), as it is implicit in that subsection that, if there is a disposal on which property cannot be followed, the property ceases to be recoverable. However, we think that it would be helpful if that was explicitly stated. That is why amendment No. 339 amends subsection (3) to make it clear that it applies only to recoverable property.

Photo of Dominic Grieve Dominic Grieve Shadow Minister (Home Affairs)

I am reminded that, when the Committee debated civil recovery, there was some

discussion of what constituted property that had been obtained through unlawful conduct, but I will not waste the Committee's time by rehearsing that at length.

The Government amendments are interesting, and I welcome them, as it is clear that they are intended to clarify: indeed, the Minister will be aware that I have tabled an amendment to clause 306 that addresses the same issue.

Subsection (1) states:

''Property obtained through unlawful conduct is recoverable property.''

Equally, it is not the case that recoverable property is property obtained through unlawful conduct. The reverse does not apply, because there is a series of exceptions. The law—as stated under the Bill—is that the property is deemed to have been obtained through unlawful conduct, but that it cannot be recovered.

It may be an exercise in linguistics or semantics, but as the Minister is aware, I expressed at an earlier stage my worry about at what point it could be said that property ceased to be property obtained through unlawful conduct. Unless that point is identified, it could be for ever and a day before the limitation period expires. I was also worried about the possible opprobrium that might be attached to a person. People could say of him, ''Well, it may be true that the property could not be recovered from you, but it was still obtained through unlawful conduct.''

It is noteworthy that the Minister must have had a sliver of feeling in that direction, because the Government amendments attempt to clarify that issue. I raise that matter now because when we discuss clause 306 I shall tempt him a little further. I shall ask him to exclude the bona fide purchaser for value without notice from being deemed to possess property obtained through unlawful conduct. Save for what I have just said, I welcome the Government amendments.

Photo of David Wilshire David Wilshire Conservative, Spelthorne

I not sure whether it is the appropriate moment to raise the matter, but the Minister made a point today that is absolutely correct and accurate. He bet that some people did not understand what he had read out. He was spot on. I followed him for the first couple of sentences, though, and there is a matter under clause 306 that worries me. I understand that he said that he had tabled the amendments to clarify that people who had acquired property in good faith would not find themselves in an unholy mess. Will he reassure me that, if a person has money of his own that is nothing to do with crime, and he purchases something in all good faith without any sort of collusion, he will not be caught up in seizure, forfeiture, confiscation, or whatever the correct word is? I think that that is what he was trying to reassure me about. If he was not, I am deeply concerned. I do not believe that buyer beware should apply to that type of situation. Is that what the wonderful legal jargon, carefully prepared by one of the Minister's civil servants, was telling me?

Photo of Bob Ainsworth Bob Ainsworth The Parliamentary Under-Secretary of State for the Home Department

I do not know whether I can satisfy the hon. Gentleman without returning to the explanation that we used in an earlier part of the

Bill. Unless we say that property that represents recoverable property is itself recoverable, we will not succeed, because people will be very effective at hiding the proceeds of crime. Therefore, there is a need for mobility, so that such property can be chased through. At some point, for various reasons, property ceases to be recoverable. The example that has been flagged up is when a property has been acquired by a bona fide purchaser for value—and why not?

However, the chain then goes off in another direction and I suggested that it was like the branches of a tree. Selling property to a bona fide purchaser for value would provide a return, which would then represent the original property that was the proceeds of crime. The tracing should be allowed to continue. The innocent bona fide purchaser for value will be free of any ability to claim back that which has fallen into his hands, but the eventual profits of that original criminality should be traced.

The hon. Gentleman is right. He is worried about a situation when a legitimate person who acquires property in a legitimate way for full value, not knowing it to be the proceeds of crime. I can assure him that such property is not recoverable. We will discuss the matter when we consider the amendments to clause 306. Heaven only knows how we remove the opprobrium from such situations. As the hon. Gentleman and I know, people still suggest that the Elgin marbles and the Koh-i-noor diamond and other items were obtained by semi-legitimate or illegitimate means. Debate will continue about that and about the circumstances in which something is chased because it is the proceeds of crime.

Photo of David Wilshire David Wilshire Conservative, Spelthorne

I am grateful to the Minister for his reassurance on the question that I asked. However, I have a mind that looks for a booby trap and his reply prompts a further question. If I were a collector who, in all good faith, purchased an antique that was acquired by a person involved in a crime, I understand that the Minister says, ''That's that,'' and that the antique ceases to be recoverable because I have acquired it, but if the person who sold the antique to me returned and said, ''I desperately want it back; I'll pay you 20 per cent. more than you gave me for it,'' would that person, who sold the proceeds of crime, acquire back property that cannot be gathered in?

Photo of Bob Ainsworth Bob Ainsworth The Parliamentary Under-Secretary of State for the Home Department

No, the person would not, because the branches of the tree have gone around the blockage. The only way in which the hon. Gentleman would be protected would be if he bought the antique for full value without knowledge that it was the proceeds of crime. If the person returned and offered to buy the antique, it could be shown that he bought it back with money that was gained from his original criminality. The money that was paid for the antique in the first place could be recoverable and if money were paid to get the antique back, the antique would again become recoverable property.

Photo of David Wilshire David Wilshire Conservative, Spelthorne

What about the 20 per cent. extra that was paid in good faith?

Photo of Bob Ainsworth Bob Ainsworth The Parliamentary Under-Secretary of State for the Home Department

That depends where it came from.

Amendment agreed to.

Clause 302, as amended, ordered to stand part of the Bill.