Recovery orders: repatriation

Criminal Finances Bill – in a Public Bill Committee at 2:30 pm on 22nd November 2016.

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‘(1) The Proceeds of Crime Act 2002 is amended, after section 266, by inserting—

(1) Where a court—

(a) issues a recovery order under section 266; and

(b) has reasonable grounds for suspecting that property subject to the recovery order was obtained through unlawful conduct in a foreign country,

the court must issue a repatriation order in relation to that property.

(2) A repatriation order shall provide that within a year of the property’s having been recovered the property must be repatriated back to its country of origin.

(3) When a repatriation order has been issued, the Secretary of State shall send a request for cooperation and assistance to a representative of the government of the country of origin, in consultation with relevant third parties, and must, upon a court having issued a recovery order, endeavour to agree with that representative—

(a) as to how such property or the value of such property will be used upon its being repatriated to ensure that wherever possible the property repatriated will be used in a manner that will contribute to the implementation of Sustainable Development Goal 16, that benefits victims of the unlawful conduct, or that ensures the repatriated property is used for the original purpose from which it was diverted;

(b) a mechanism for accounting for the disbursement of the property and for making public a report on the use to which the property has been put.

(4) For the purposes of this section—

“relevant third parties” will include civil society actors and non-governmental organisations; independent audit bodies; the Department for International Development and multilateral development banks; and

“victims” will include communities affected by the unlawful conduct as well as the State.

(5) A repatriation order shall not be issued where—

(a) the court is satisfied that on the balance of probabilities that successful repatriation would lead to the property or the value of the property being subject to conduct that, were it within its jurisdiction, would violate the Human Rights Act 1998;

(b) the court is satisfied that on, the balance of probabilities, that successful repatriation would most likely result in such property being subject to illicit financial activity by a Politically Exposed Person in its country of origin; or

(c) the court is satisfied that, on the balance of probabilities, the property would not reach and/or be used for the purposes as agreed to by the Secretary of State and the representative of the country of origin.

(6) The UK may retain the total value of the recovered property where the Secretary of State and the relevant enforcement agency take all appropriate steps as set out in section (3) subsections (a) and (b) to assist the State in question in repatriating such property and yet receive no cooperation from the other State within a year of having taken such appropriate steps.

(7) For the purposes of subsection (6) “cooperation” is defined as the foreign State’s conclusively demonstrating to the Secretary of State and enforcement agency of its having done or being in the process of implementing the necessary steps required to ensure that the property or value of such property will be used for the ends laid down in section (3) (a) and the court is satisfied on the balance of probabilities that the property or value of such property will be used in accordance with those activities and probabilities as laid down in subsection (5)(a), (b) and (c).

(8) The court may order that a repatriation order may grant that the property could be given, subject to an agreement between the Secretary of State and a representative of the government of the country of origin, to a non-state actor who may distribute the property in accordance with subsection (3)(a) and (b) above.

(9) Upon application by the relevant enforcement agency the court may increase the time period within which repatriation must happen up to a maximum of five years if the court is satisfied that operational circumstances preclude the possibility of repatriation within the period previously required.

(10) The relevant enforcement agency may apply to the court for further extensions to the time period, where there is less than a year before the date of repatriation.

(11) Where the court grants an extension the enforcement agency in conjunction with the Secretary of State must publish a public report detailing the reasons why it sought an extension to the deadline for repatriation.

(12) Where the Secretary of State in conjunction with the enforcement agency publishes such a report as set out the Secretary of State may omit sensitive operational information which would preclude the possibility of repatriation being successful should such details be published.

(13) Such a report without redacted information will be passed to the Secretary of State upon each application made to the court for an extension.

(14) No later than one year after such property is repatriated all such reports will be made public in an uncensored form.””—

This new clause would require property that was subject to a recovery order to be repatriated to its country of origin where the money was options through unlawful conduct in that country.

Brought up, and read the First time.

Photo of Rupa Huq Rupa Huq Shadow Minister (Home Office) (Crime and Prevention)

I beg to move, That the clause be read a Second time.

The new clause would place a duty on the Secretary of State—and the enforcement agencies vested with the power to do so—to receive recovered property under the Proceeds of Crime Act 2002, and to repatriate recovered property where a court is satisfied that the property or the value of the property was begotten by illicit means. I hinted at the issue this morning. The clause builds on former Prime Minister David Cameron’s global forum for asset recovery, which came about after the anti-corruption summit of May 2016. We Opposition Members commend him for that. How he is missed. We have seen the forum begin to bear fruit, with the Government having signed a memorandum of understanding with Nigeria last September. There has clearly been limited progress on repatriation, but the Crown Prosecution Service’s most recent asset recovery strategy laments the low take-up of mutual legal assistance requests:

“Since London is a global centre for finance, there are a large number of criminal proceeds deposited in its financial institutions. Despite this, historically the CPS has not received a high volume of incoming MLA requests for the restraint and recovery of assets.”

Many of the people from the charitable sector who gave evidence worry that, at the end of the process, little will go back to those communities and third-world economies.

The Minister said on Second Reading, in relation to repatriating illicit wealth, that

“It is important to note that we are already doing this. In November 2015, the UK returned £28 million to Macau, which were the proceeds of corruption laundered in the UK. That is a concrete example of our giving back money to those countries that have been robbed by crooks who have used Britain to launder the money or to make the money in its jurisdiction. I want to see more of that and to see it go further.”—[Official Report, 25 October 2016; Vol. 616, c. 198.]

Through this new clause, we seek to help him with that process. He has made a clear commitment to seeing repatriation go further, and to ensuring that there is more of it. The CPS has also stated that mutual legal assistance is seriously underused, and that massive sums of illicit wealth are simply not subject to such requests and are therefore not being repatriated.

The new clause would not obstruct the Minister or the Government in their desire to see greater repatriation of illicit wealth. In fact, it would aid the Government in realising their aims. The new clause seeks to provide a different avenue from mutual legal assistance for repatriating illicit wealth, and it has a number of in-built safeguards to ensure that the UK repatriates such wealth to deserving countries, as well as safeguarding against the UK’s time being wasted.

Although the new clause is substantial in scope and takes up a number of pages in the amendment paper, we are not trying to cause an argument for argument’s sake. A precedent for repatriating wealth has been set, and the Committee has heard an example. The new clause would streamline the process, and I hope that the Government will take that in good faith; the new clause is technical, rather than political.

This is how we envisage the new clause working: where a court is satisfied that property is recoverable and issues a recovery order, and where it is also satisfied that the property was acquired with wealth illicitly obtained abroad, it may instruct a receiving enforcement agency to take steps towards repatriating that wealth upon the property being initially recovered. We term that a “repatriation order”—that is snappy.

Once such an order has been made, the Secretary of State would request co-operation and assistance in the repatriation process from a representative of the Government of the country of origin. The Secretary of State would then be free to enter into consultation with any other relevant third party. After that initial contact, an agreement would be reached with the aforementioned actors on how the value of the property would be used on repatriation.

The purpose of the measure is international development. In the new clause, proposed new section 266A(3)(a) of the Proceeds of Crime Act 2002 states that

“wherever possible the property repatriated will be used in a manner that will contribute to the implementation of Sustainable Development Goal 16”,

or the repatriated property will benefit the victims of the crime, or it will be used for its original purpose. The Government have some flexibility and room for discretion in the phrase “wherever possible”. Proposed subsection (4) contains a list of definitions.

There are two obvious questions: what are the conditions by which the property will be repatriated, and how will this large-scale, cross-jurisdictional activity be funded? To answer the first question, if a court is satisfied that on the balance of probabilities, the property or value of the property, if repatriated, would be put to a use that would violate the Human Rights Act 1998, the UK would have the right to retain the entirety of the property and its value, and no repatriation order would be issued.

Secondly, if a court was satisfied that on the balance of probabilities, a politically exposed person or group of PEPs would subject the property or value of the property to illicit financial activity, the UK would retain the property or its value, and no repatriation order would be issued. If the court was satisfied that on the balance of probabilities, the property or its value, if repatriated, would not be put to use for the purposes agreed by the Secretary of State and the country of origin, yet again, the UK would retain the entire value of the property, and the repatriation order would be rescinded.

Finally, proposed new subsections (6) and (7) stipulate that the UK will retain the total value of the property if the Secretary of State has taken all the necessary steps to aid the country of origin in working towards the provisions set down in proposed new subsection 3(a), but the other state has been unco-operative. That is meant to be the basis of the new clause. As for the timescales, they are in proposed new subsections (9) to (14).

Proposed new subsection 8 is a last-chance saloon for an unco-operative state that receives a repatriation order. Lots of conditions must be satisfied first. It simply affords the courts the chance to grant the Secretary of State the discretion to work towards an agreement by which a non-state actor may distribute the property or its value in the country of origin, provided that the distribution would not violate proposed new subsections 3(a) and (b).

On funding, the new clause would basically pay for itself. It is common practice for the UK to retain some of the value of any property that it repatriates to another country. I see no reason why that should change, and the new clause does not argue that it should. We acknowledge that there are states that are hugely corrupt—I think “fantastically corrupt” were David Cameron’s words —that routinely violate human rights agreements, and that engage in behaviour that would be deemed illegal here. In such instances, it is only fair that the UK retains the value and puts it to good use.

There is a third dimension to the new clause: it provides the UK with soft power to influence other states, to ensure that the UK does not stand idly by where there is corruption and systemic human rights violations. Nor can it be even remotely complicit by returning value to countries if it could be used for untoward purposes. I am open to questions from the Minister and tweaks to the clause, but I hope that he will agree that the principle is a good one.

Photo of Ben Wallace Ben Wallace Minister of State (Home Office) (Security) 2:45 pm, 22nd November 2016

First, I think that we all support what we are trying to do: returning money that we take off the bad guys to whomever it belongs to. If that is not possible—I used the example earlier of a criminal enterprise whose wealth was created by drug dealers, rather than by ripping off a state or somebody else’s assets—we return it to the prosecution authorities to ensure that they can continue.

Significantly, in the past, we have seen money paid back in cases of grand corruption. The UK is party to the UN convention against corruption, article 57 of which clearly requires embezzled funds to be paid back to the victim state, so we are already obliged under international law to do that. We must do that, and it is what we want to do. The £28 million returned to Macau that the hon. Lady and I both mentioned fell under the auspices of that convention. As we are subject to international law, there is no requirement to put such provisions in our domestic legislation. Nothing in our law prevents us from returning recovered assets.

Sharing and repatriating assets in asset recovery cases is a fast-developing issue in international law, and it is something that the UK fully supports. For example, there is a requirement, under the EU framework decision on the mutual recognition of confiscation orders, that at least 50% of assets recovered on behalf of another member be sent back to that state. The UK can return assets to any country, and where underpinning international agreements are required, we enthusiastically pursue them. For example, we recently concluded an asset-sharing agreement with Nigeria, under the formal title I referred to earlier.

This helpful debate on the Opposition’s new clause has allowed us to put these points on the record, but I trust that the Opposition will agree that there is no need for further primary legislation. Asset return happens anyway, with my full support and encouragement. Indeed, strict requirements in an Act could restrict our flexibility and make it harder to obtain effective asset-return agreements tailored to the peculiarities of individual cases. I am aware of a number of cases in which another country’s Government members have requested that we effectively co-return assets for certain projects, for fear of them disappearing into other parts of that Government that are corrupt. That type of flexibility is important to make sure that moneys returned do indeed get to the right place, rather than going back to the same place, and the same individual turning the assets of crime back into another townhouse in London.

That flexibility is really important, and while I cannot bind any successor Government, it would be odd if any Government chose to say, “No, thank you, we are going to keep everything, break our international law obligations, and upset a number of countries around the world by just pocketing this for ourselves.” It is not what we have done in the past, and it is not what we will do in the future. I urge the hon. Member for Ealing Central and Acton to look to our obligations under international law; I hope that that will satisfy her that we do not need more restrictive primary legislation on this issue.

Photo of Rupa Huq Rupa Huq Shadow Minister (Home Office) (Crime and Prevention)

I listened carefully to the Minister. The 14 subsections in new clause 20 have a set of in-built checks and balances, and I know that the development charities would be disappointed if the new clause was not in the Bill. I accept, as I said, that things are being done on this front—the Macau example is a very good one—but as I understand it, the Minister says that there is no need for the new clause because there are international agreements. He mentioned the EU framework; the first money laundering directive also came from the EU, and we are leaving the EU, so I think it is no bad thing to put our own defence in the Bill, if only for ourselves. We would like to put the new clause to a vote.

Question put, That the clause be read a Second time.

The Committee divided:

Ayes 7, Noes 8.

Division number 3 Christmas Tree Industry — Recovery orders: repatriation

Aye: 7 MPs

No: 8 MPs

Ayes: A-Z by last name

Nos: A-Z by last name

Question accordingly negatived.

New Clause 21