Report on the Proceeds of Crime Bill

REPORT AND PROCEEDINGS OF THE COMMITTEE ORDERED BY THE AD HOC COMMITTEE TO BE PRINTED 8 MAY 2001REPORT: 4/00/R (AD HOC COMMITTEE)

COMMITTEE POWERS AND MEMBERSHIP

1. The Committee is an Ad Hoc Committee of the Northern Ireland Assembly established, in accordance with Assembly Standing Order 49, by resolution of the Assembly on 26 March 2001. As agreed by the Assembly, the function of the Committee is to consider the draft Clauses of the Proceeds of Crime Bill, as set out in the Home Office's Command Paper Cm 5066, and to report to the Assembly by 29 May 2001.

2. The Committee has 11 members, including a Chairperson and Deputy Chairperson and a quorum of 5. The membership of the Committee is as follows:

Mr Alban Maginness (Chairman)
Sir John Gorman (Deputy Chairman)
Mr Alex Attwood
Mr Billy Bell
Mr Seamus Close
Mr Wilson Clyde
Mr Boyd Douglas **
Mr David Ervine
Mr Gardiner Kane
Mr Pat McNamee
Ms Sue Ramsey
Mr Denis Watson*

3. The Committee agreed at the meeting on Tuesday 24 April 2001 that deputies would be acceptable.

4. The Report and Proceedings of the Committee are published by the Stationery Office by order of the Committee. All publications of the Committee are posted on the Assembly's website at http://www.ni-assembly.gov.uk

5. All correspondence should be addressed to the Clerk of the Ad Hoc Committee Proceeds of Crime Bill, Room 371, Parliament Buildings, Stormont, Belfast BT4 3XX. The telephone number for enquiries is +44 (0)28 9052 1263. The Committee's e-mail address is Adhoc.Crimeproc@niassembly.gov.uk

* Mr Watson resigned from the Committee on 5 April 2001.

** Mr Douglas was appointed to the Committee on 5 April 2001.

TABLE OF CONTENTS

Section 1 - Background to the Report

Introduction

Remit of the Committee

Meetings of the Committee

Section 2 - Summary of Comments and Recommendations

Summary of Comments and Recommendations

Section 3 - Current Arrangements in Northern Ireland

Proceeds of Crime Investigations in Northern Ireland

Section 4 - Consideration of the Draft Proposals

Proceeds of Crime Bill

Criminal Assets Recovery Agency

Criminal Confiscation

Civil Recovery

Taxation

Investigations

Money Laundering

Appendix 1 - Minutes of Proceedings

Monday, 2 April 2001. Room 144, Parliament Buildings

Tuesday, 24 April 2001. Room 144, Parliament Buildings

Thursday, 26 April 2001. The Senate, Parliament Buildings

Tuesday, 1 May 2001. The Criminal Assets Bureau, Dublin

Thursday, 3 May 2001. Room 135, Parliament Buildings

Tuesday, 8 May 2001. Room 144, Parliament Buildings

Appendix 2 - Minutes of Evidence 55

NI Human Rights Commission, 24 April 2001

Royal Ulster Constabulary, 26 April 2001

National Criminal Intelligence Service, 26 April 2001

HM Customs & Excise, 3 May 2001

Inland Revenue, 3 May 2001

Appendix 3 - Written Submissions to the Committee

Written Submission by the Northern Ireland Human Rights Commission

Written Submission by the Royal Ulster Constabulary

Written Submission by the National Criminal Intelligence Service

Written Submission by the National Criminal Intelligence Service to the Ad Hoc Committee
- Financial Investigations (NI) Order 2001

Additional Submission by the National Criminal Intelligence Service

Written Submission by HM Customs and Excise

Written Submission by the Inland Revenue

SECTION 1

BACKGROUND TO THE REPORT

Introduction

1. This is a Report by an Ad Hoc Committee of the Assembly in accordance with a resolution of the Assembly on Monday, 26 March 2001.

Remit of the Committee

2. As agreed by the Assembly, the Committee has the following function:

To consider the draft Clauses of the Proceeds of Crime Bill, as set out in the Home Office's Command Paper, 'Proceeds of Crime - Consultation on Draft Legislation' (Cm 5066) and report to the Assembly by 29 May 2001.

Meetings of the Committee

3. The Committee held six meetings during the period covered by this Report: 2, 24 and 26 April 2001; 1, 3 and 8 May 2001 and heard evidence from the following bodies:

Criminal Assets Bureau
HM Customs & Excise
Inland Revenue
National Criminal Intelligence Service
NI Human Rights Commission
Royal Ulster Constabulary

4. The Committee received support and advice from Mr Hugh Widdis of the Assembly's Research and Library Services.

5. The Minutes of Proceedings and Minutes of Evidence are included at Appendix 1 and 2 respectively.

6. Written submissions are included at Appendix 3.

SECTION 2

SUMMARY OF COMMENTS AND RECOMMENDATIONS

Summary of Comments and Recommendations

7. The Committee welcomed the overall aim of the proposed Bill which is to undermine the economics of crime and to add significant weight to the efforts of law enforcement agencies by tightening provisions and enhancing investigatory powers.

8. The Committee agreed that the ordinary citizen should have nothing to fear from the enhanced powers in the Bill. Its fundamental rationale is to recover criminal assets from those who have a lifestyle for which they can show no visible means of support.

9. The Committee noted that no specific clauses have yet been drafted to deal with civil recovery in Northern Ireland and await their inclusion in the final Bill.

10. The Committee welcomed the recognition by the Human Rights Commission that new, innovative thinking is required to deal with the problem of unrecovered proceeds of crime and that traditional legal thinking, such as the distinction between criminal justice and civil justice, may need to be altered in order to allow the legal system to cope with the increasingly sophisticated methods employed by criminals. Existing measures have not been effective in recovering the proceeds of crime, with the size of unrecovered sums already large and growing.

11. The Committee welcomed the Home Secretary's intention that the proposed new powers, which are to be included in the Bill, should be compliant with the European Convention on Human Rights. Committee members recommended, however, the principle that persons cannot regard as punishment the loss of assets to which they were not entitled in the first place.

Criminal Assets Recovery Agency

12. The Committee welcomed the establishment of an independent agency, with enhanced investigatory powers, dedicated to recovering the proceeds of criminal activity.

Recommendations:

The Director should be autonomous and the Agency should be allowed to work free from political interference.
The Director should compile a business plan with appropriate objectives and targets, agreed with all key players.
The staff of the Agency should possess a broad level of investigative experience, criminal, financial and legal, and the Agency should operate on a holistic basis, ensuring a multi-agency approach.
Police, Taxation, Customs and Excise and Social Security staff should be seconded to the Agency to bring the benefit of their knowledge and experience to assist the investigatory process.
The official appointed to take responsibility for Northern Ireland must be at Deputy Director level, based locally and must have sufficient seniority to take decisions on behalf of the Agency in Northern Ireland.
The portion of the overall budget of the Agency, allocated to Northern Ireland, must be sufficient to allow the Agency's work to be effective.
Clear criteria must be established to ensure that any decisions taken by the Director of Public Prosecutions and the Director of the Agency on whether to proceed in any particular case, by way of criminal prosecution or by way of civil recovery, do not breach the provisions on equality enshrined in the European Convention on Human Rights.

Criminal Confiscation

13. The Committee welcomed the extension of powers of confiscation beyond simply drug trafficking into wider areas including oil fraud and tobacco smuggling.

14. The Committee also welcomed the inclusion of civil forfeiture powers i.e. the ability to seize cash at borders, in relation to the proceeds of, or money intended for use in, any criminal conduct. The proposed new powers to seek a restraining order, preventing the dissipation of assets at any time after the start of a criminal investigation, is welcomed by the Committee.

15. The Committee noted the concerns of the Human Rights Commission, that the use of assumptions may be incompatible with the European Convention on Human Rights.

Recommendation:

In criminal confiscation matters, confiscation orders should only be made where evidence meets the civil standard of proof i.e. the 'balance of probabilities'.

Civil Recovery

16. The Committee noted that the European Convention on Human Rights (Article 6) states that any person charged with a criminal offence shall be presumed innocent until proven guilty according to law. It agreed, however, that if proceeds of crime are to be recovered from criminals who are using increasingly sophisticated methods, it is necessary to be innovative.

17. The Committee noted the European Convention on Human Rights principle that there should not be punishment without criminal conviction but agreed that depriving a person of assets, to which they were not entitled, cannot be regarded as punishment.

Recommendation:

The Agency should negotiate settlements where possible, subject to these being backed up by a full disclosure agreement and judgement in default of that agreement.

Taxation

18. The Committee supported the retention of a single consistent national taxation system, whilst providing the Director of the Agency with additional investigatory powers, independent of the Inland Revenue.

Recommendations:

Clear protocols and guidelines should be agreed between the Inland Revenue and the Agency to agree lines of demarcation and secure the confidentiality of taxpayer information.

There may be data protection dimensions to the provision for information gateways which could raise the possibility of a breach of Article 8 of the European Convention. The Committee recommends that this matter is thoroughly investigated and guidelines devised which will ensure that Article 8 is not breached.

Investigations

19. The Committee welcomed the introduction of two new investigative powers i.e. the account monitoring order and the customer information order which will enable law enforcement authorities, the Agency and HM Customs and Excise to trace and investigate suspected criminal assets. It is noted that these new powers will facilitate the gathering of evidence from bank accounts in support of criminal offence and confiscation action.

Money Laundering

20. The Committee welcomed the removal of the current distinctions between drug and non-drug money laundering offence provisions. This will remove the requirement to demonstrate in court that laundered money is derived from a specific offence and not from general criminality.

21. The Committee also commended the proposals in the Bill which will extend the offence of 'failure to report suspected money laundering activities' to cover proceeds of any criminal conduct.

SECTION 3

Current Arrangements in Northern Ireland

Proceeds of Crime Investigations in Northern Ireland

22. Criminal justice matters are reserved and remain the responsibility of the Secretary of State for Northern Ireland. The Bill also covers excepted matters, such as taxation, which lie solely within the legislative competence of Parliament at Westminster.

23. Although there are many similarities in the law and procedures in Northern Ireland and in England and Wales, there are some differences. It is intended that the Bill will reflect those differences.

24. The legislation in Northern Ireland, which contains powers to assist investigations into the proceeds of crime, is the Proceeds of Crime (NI) Order 199^6. The Order contains provisions to obtain a production order and search warrant similar to those that exist currently in England and Wales. It also makes additional provision for powers of investigation into the proceeds of crime similar to those involved in the investigation of complex or serious fraud throughout the United Kingdom.

25. The Government has laid before Parliament an Order in Council entitled "The Financial Investigations (NI) Order 2001". The main provisions involve -

extending to Customs and Excise Officers the same financial investigation powers held by the Royal Ulster Constabulary under the Proceeds of Crime (NI) Order 1996;
requiring solicitors in certain circumstances to confirm whether a named person has been a client for certain types of transactions;
broadening the scope of the current financial investigation tool of the General Bank Circular, so that it applies in future to all relevant financial institutions;
providing flexibility on the time allowed for the commencement of a prosecution where those involved in criminal activity attempt to avoid prosecution.

26. It is intended that these powers will be retained and that if necessary, the Government may, by Order in Council, make provision for additional powers to be available to the Director.

SECTION 4

Consideration of the Draft Proposals

Proceeds of Crime Bill

27. The Proceeds of Crime Bill proposes to bring together, in one Act, the law governing investigations, money laundering offences and confiscation. In addition, it will establish the Criminal Assets Recovery Agency (the Agency) which will have both an operational and a strategic role. The Bill seeks to empower the Agency to recover criminal proceeds, making use of a new form of civil litigation in the High Court, and to exercise taxation functions delegated from the Inland Revenue.

28. The clauses of the Bill have been arranged under the following headings -

Criminal Assets Recovery Agency;
Criminal Confiscation;
Civil recovery;
Taxation;
Investigations; and
Money Laundering.

Criminal Assets Recovery Agency

29. The Bill proposes to establish a Criminal Assets Recovery Agency, which will have executive responsibilities for the recovery of criminal assets using a wide range of investigatory powers. It will be able to pursue criminal assets by confiscating the assets of convicted criminals; the recovery of assets through civil proceedings; or the taxation of persons suspected of having benefited from crime. The Director of the Agency will decide which route to pursue depending on the circumstances of each case.

30. The Director will be appointed by the Home Secretary and will be operationally independent. The Director will, however, be required to prepare an annual plan for the Home Secretary's approval, and submit an annual report, which the Home Secretary will present to Parliament.

31. The Director, who will have a strategic role both in promoting the recovery of criminal assets and in co-operation within the criminal justice system generally, will develop Memoranda of Understanding with law enforcement and prosecution bodies to determine how restraint and confiscation cases are to be apportioned.

32. The Agency will establish a financial investigation Centre of Excellence which will promote good practice and co-ordinate the provision of training and accreditation, in order to increase the number of qualified financial investigators in the law enforcement agencies.

33. The Agency will operate in England, Wales and Northern Ireland. A senior official will be appointed to take responsibility for exercising the Agency's functions in Northern Ireland.

Comments:

34. The Committee welcomed the establishment of an independent agency, with enhanced investigatory powers, dedicated to recovering the proceeds of criminal activity.

Recommendations:

The Director should be autonomous and the Agency should be allowed to work free from political interference.
The Director should compile a business plan with appropriate objectives and targets, agreed with all key players.
The staff of the Agency should possess a broad level of investigative experience, criminal, financial and legal, and the Agency should operate on a holistic basis, ensuring a multi-agency approach.
Police, Taxation, Customs and Excise and Social Security staff should be seconded to the Agency to bring the benefit of their knowledge and experience to assist the investigatory process.
The official appointed to take responsibility for Northern Ireland must be at Deputy Director level, based locally and must have sufficient seniority to take decisions on behalf of the Agency in Northern Ireland.
The portion of the overall budget of the Agency allocated to Northern Ireland must be sufficient to allow the Agency's work to be effective.
Clear criteria must be established to ensure that any decisions taken by the Director of Public Prosecutions and the Director of the Agency on whether to proceed in any particular case, by way of criminal prosecution or by way of civil recovery, do not breach the provisions on equality enshrined in the European Convention on Human Rights.

Criminal Confiscation

35. The Bill proposes to extend existing Northern Ireland legislation to make it possible to confiscate the benefits of any conduct that constitutes an offence, or would constitute an offence if it took place in Northern Ireland.

36. In addition to this the Bill proposes -

That all confiscation hearings will be in the Crown Court;
In Northern Ireland, restraint and charging orders should be dealt with by the High Court;
To abolish the role of charging orders in the confiscation legislation;
That confiscation orders will be enforced as if they were fines; and
That the prosecuting authority will be empowered to apply to the relevant magistrates' court for a new enforcement order.

37. Powers already exist to seek restraint of property, suspected to be proceeds of crime, when criminal proceedings are pending. Following a conviction for acquisitive, indictable and some summary offences, the Court can be asked to make a confiscation order equivalent to the estimated value of proceeds. The Bill proposes to amalgamate and strengthen these powers which are currently split between drug and non-drug Acts.

Comments:

38. The Committee welcomed the extension of powers of confiscation beyond simply drug trafficking into wider areas including oil fraud and tobacco smuggling.

39. The Committee also welcomed the inclusion of civil forfeiture powers i.e. to seize cash at borders, in relation to the proceeds of, or money intended for use in, any criminal conduct. The proposed new powers to seek a restraining order, preventing the dissipation of assets, at any time after the start of a criminal investigation, is welcomed by the Committee.

40. The Committee noted the concerns of the Human Rights Commission, that the use of assumptions may be incompatible with the European Convention on Human Rights.

Recommendation:

In criminal confiscation matters, confiscation orders should only be made where evidence meets the civil standard of proof i.e. the 'balance of probabilities'.

Civil Recovery

41. The Bill will create a new right of civil recovery. This will permit the recovery of criminal assets where no conviction has been possible, for example because individuals are able to avoid conviction by remaining remote from the commission of the crimes from which they benefit or because they have moved abroad. This will be a civil law procedure in the High Court, with the Agency having the sole right to bring an action.

42. The Bill also proposes a right to recover, through civil law, any property which has been obtained through conduct that is contrary to the criminal law by way of action in rem.

43. The civil law proceedings will not seek to determine the criminal guilt or innocence of any person, but will focus on whether the property can be shown to have been obtained through some person's unlawful conduct. To assist this, the Bill proposes that -

hearsay evidence should be more readily admissible;
the rule against self-incrimination should not be a bar to the admission, in civil recovery proceedings, of evidence obtained from a respondent under compulsion;
the civil standard of proof rather than the criminal standard should apply;
the Director's right of recovery should apply retrospectively to existing criminal proceeds.

44. In addition the Bill also proposes that property obtained through conduct, which contravened the criminal law of another country is also to be recoverable, provided that the conduct would also be criminal under domestic law if it occurred here.

45. The Bill proposes to place the following limits on the scope of the Director's claim over property -

The Director will have a claim to the actual criminal proceeds, but not to the respondent's other property;
The Director will not have a claim against a person who acquires criminal property for full value, in good faith and without notice of its alleged criminal origins;
The Director will not have a complete claim against property of which a third party has been unlawfully deprived;
The Director will be prevented from recovering criminal proceeds twice over; and
Where only part of a property or asset can be attributed to the unlawful conduct, the Director may be limited to recovery of only that part.

46. The proposal document indicates that the clauses are incomplete and subject to further development, with consideration being given to what further provisions may be needed in order to give effect to the following policy objectives -

The need to define the relationship between civil recovery and insolvency proceedings;
The need for the court to mitigate final recovery orders if the original order could not be made without breaching the court's duty under the Human Rights Act;
Provision is to be made for settlement of claims between parties and without the need for litigation;
The need for a limit on the period after criminal conduct during which property will be recoverable; and
What powers will be required by interim receivers, and at the final recovery order stage by trustees, in order to discharge their functions.

Comments:

47. The Committee noted that the European Convention on Human Rights (Article 6) states that any person charged with a criminal offence shall be presumed innocent until proven guilty according to law. It agreed, however, that, if proceeds of crime are to be recovered from criminals using increasingly sophisticated methods, it is necessary to be innovative.

48. The Committee noted the European Convention on Human Rights principle that there should not be punishment without criminal conviction but agreed that depriving a person of assets, to which they were not entitled, cannot be regarded as punishment.

Recommendation:

The Agency should negotiate settlements where possible, subject to these being backed up by a full disclosure agreement and judgement in default of that agreement.

Taxation

49. The Bill provides for the Agency to exercise taxation functions, under powers vested in the Director by the Board of the Inland Revenue, where income, gain or profits are suspected, on reasonable grounds, to have been derived or accrued from criminal conduct.

50. If at any time the grounds for that suspicion cease to exist, the Director's locus will cease and the case will be passed back to the Inland Revenue to process the taxation functions in the normal manner.

51. The Director will be able to take responsibility for the affairs of a person only for periods for which there are the requisite grounds for suspicion. In addition to responsibility for income tax, capital gains tax and corporation tax, the Director may also exercise responsibility for inheritance tax and functions relevant to a taxpayer's role as an employer in respect of PAYE and National Insurance Contributions.

52. It will be for the Director to decide, in consultation with the Inland Revenue, which tax functions the Agency should exercise. Any function the Director chooses not to exercise in a case will remain with the Inland Revenue.

53. The Agency will be responsible for all stages in the process of taxing a person for a particular period. This will include the recovery of the tax, interest and civil penalties. Responsibility for a taxpayer's affairs will then be passed back to the Inland Revenue to handle the liability for other years.

54. In carrying out these functions the Director will apply the Inland Revenue Board's interpretation of the law and the extra-statutory concessions published under its care and management powers.

55. The Bill also provides a power, exercisable only by the Agency, to raise assessments which do not require the identification of a source of income.

56. The Bill will make provision for information gateways to enable the Inland Revenue to pass relevant information to the Director. This will be available for confiscation or civil recovery purposes.

57. The Agency will be subject to the same duty of confidentiality as the Inland Revenue. In addition, when the Inland Revenue resumes responsibility for a taxpayer's affairs, any information obtained by the Agency other than under its taxing powers, will not be passed back to the Inland Revenue.

58. The selection of cases to be dealt with by the Agency, will be a matter for the Director rather than by referral from the Inland Revenue.

Comments:

59. The Committee supported the retention of a single consistent national taxation system, whilst providing the Director of the Agency with additional investigatory powers, independent of the Inland Revenue.

Recommendations:

Clear protocols and guidelines should be agreed between the Inland Revenue and the Agency to agree lines of demarcation and secure the confidentiality of taxpayer information.

There may be data protection dimensions to the provision for information gateways, which could raise the possibility of a breach of Article 8 of the European Convention. The Committee recommends that this matter is thoroughly investigated and guidelines devised which will ensure that Article 8 is not breached.

Investigations

60. The Bill provides five powers:

Production Orders;
Search Warrants;
Disclosure Orders;
Customer Information Orders; and
Account Monitoring Orders.

61. These powers, which are to be exercised under judicial authority, are for use in investigations into whether a person has benefited from criminal conduct and the extent or whereabouts of such benefit. The compulsory disclosure power is available only to the Director, whereas the other powers are also available to the Police, Customs and Excise and in some cases to accredited financial investigators.

62. Powers already exist for production orders and search warrants under current legislation. The Bill proposes to amalgamate the current powers that are split between drug and non-drug legislation. The Bill also seeks to extend these powers to the Director and to accredited financial investigators, as well as to Police and Customs Officers which is the current position.

63. A disclosure order will enable the Director to require a person who has information relevant to an investigation to:

Answer questions at interview;
Provide information; and/or
Produce documents.

64. This order will be exercisable against a person whose assets are under investigation or against a third party. In Northern Ireland, financial investigators, once they have been appointed for the purposes of exercising the powers by a County Court Judge, also have similar powers under the Proceeds of Crime (NI) Order 1996.

65. A customer information order would require banks and other financial institutions to provide the details of any accounts held by the person under investigation. Once accounts have been identified, production or account monitoring orders will enable a more detailed investigation to be carried out. An application for a customer information order may only be made by the Director, a police officer of the rank of superintendent or the Customs and Excise equivalent.

66. An account monitoring order will require a bank, or other financial institution, to provide transaction information on a suspect account for a specified period. Power to apply for account monitoring orders will be available to the same range of people as the new production order.

Comments:

67. The Committee welcomed the introduction of two new investigative powers i.e. the account monitoring order and the customer information order, which will enable law enforcement authorities, the Agency and HM Customs and Excise to trace and investigate suspected criminal assets. It is noted that these new powers will facilitate the gathering of evidence from bank accounts in support of criminal offence and confiscation action.

Money Laundering

68. The Bill will reform the definition of the criminal offences of money laundering, and replace the existing separate drug and non-drug offences with a single consolidated and simplified set of offences. This should remove obstacles and loopholes, which currently impede prosecution and which have been attributed to the low number of convictions.

Comments:

69. The Committee welcomed the removal of the current distinctions between drug and non-drug money laundering offence provisions. This will remove the barrier to demonstrate in court that laundered money is derived from a specific offence and not from general criminality.

70.The Committee also commended the proposals in the Bill which will extend the offence of 'failure to report suspected money laundering activities' to cover proceeds of any criminal conduct.

Appendix 1

MINUTES OF PROCEEDINGS
MONDAY, 2 APRIL 2001.
ROOM 144, PARLIAMENT BUILDINGS

Present: Mr Alban Maginness , Chairperson
Sir John Gorman , Deputy Chairperson
Mr Alex Attwood
Mr Billy Bell
Mr David Ervine
Mr Denis Watson

Attendees: Mr Tony Logue, Committee Clerk
Mrs Valerie Artt
Mr Damien McVeigh
Mr Hugh Widdis

10.28am the meeting opened in public session - the Clerk in the Chair.

1. Apologies

1.1 No apologies were received.

2. Election of Chairperson and Deputy Chairperson

2.1 Mr Maginness was nominated by Sir John Gorman and seconded by Mr Watson. No further nominations were received and it was resolved that Mr Maginness do take the Chair.

10.30am Mr Maginness in the Chair.

2.2 Following nomination by Mr Bell and being seconded by Mr Watson it was agreed that Sir John Gorman would be the Deputy Chairperson.

3. Declaration of Interests

3.1 No interests were declared.

3.2 Sir John Gorman requested that his Directorship of Risk Management International (NI) Ltd be removed from the register.

4. Procedures of the Committee

4.1 The Chairperson referred members to a memorandum from the Committee Clerk on the procedures of the Committee contained in their briefing papers. The Committee agreed to the following procedures -

Witnesses - the Committee agreed to take evidence from relevant bodies as part of its proceedings.
Voting - the Committee agreed that in the absence of consensus, simple majority would determine all decisions. It was further agreed that the Committee's Report would seek to reflect the strengths of the different views expressed within the Committee.
Minutes of Evidence - the Committee agreed that in the event that any members are unable to attend an evidence session, the uncorrected Minutes of Evidence would be copied to those members for their information.
Public meetings - the Committee agreed that it would seek to hold as many meeting in public session as possible.

4.2 The Committee agreed that it would consider the matter of using deputies at a future meeting of the Committee.

5. Forward work programme

5.1 Members noted the Committee's Terms of Reference as agreed by the Assembly on Monday, 26 March 2001.

10.36am Mr Ervine joined the meeting.

5.2 Mr Widdis gave a short presentation to the Committee on his background briefing paper on the draft Proceeds of Crime Bill.

5.3 The Committee agreed to schedule evidence sessions for Tuesday, 24 April 2001 at 10.30am and Thursday, 26 April 2001 at 9.30am. The Committee also provisionally agreed to hold meetings on 1, 3 and 8 May 2001.

5.4 The Committee noted a memorandum from the Committee Clerk setting out a list of suggested witnesses. The Committee agreed to invite the following bodies -

Criminal Assets Bureau;
National Criminal Intelligence Service;
Royal Ulster Constabulary;
HM Customs and Excise;
Inland Revenue; and
NI Human Rights Commission.

5.5 Further to these, the Committee also agreed to take evidence from either -

Liberty; or
Committee on the Administration of Justice.

6. Any other business

6.1 None.

7. Date and time of next meeting

7.1 The Committee agreed that it would next meet on Tuesday, 24 April 2001 at 10.30am in Room 144, Parliament Buildings.

10.57am the Chairperson adjourned the meeting

Mr Alban Maginness
Chairperson, Ad Hoc Committee

24 April 2001

Tuesday, 24 April 2001.
Room 144, Parliament Buildings

Present:
Mr Alban Maginness, Chairperson
Mr Alex Attwood
Mr Billy Bell
Mr Seamus Close
Mr Wilson Clyde
Mr Boyd Douglas
Mr David Ervine
Mr Gardiner Kane
Mr Pat McNamee
Ms Sue Ramsey

In Attendance: Mr Tony Logue, Committee Clerk
Mrs Valerie Artt
Mr Damien McVeigh

Apologies:
Sir John Gorman /P>

Mr Maginness took the Chair at 11.38am in private session.

1. Apologies

1.1 The apology was noted. Mr Bell agreed to pass on to Sir John and his wife the Committee's best wishes in view of Lady Gorman's illness.

2. Chairperson's business

2.1 The Chairperson informed members that Mr Watson had resigned from the Committee and has been replaced by Mr Boyd Douglas. The Chairperson welcomed Mr Douglas to the Committee.

3. Draft Minutes of Proceedings

3.1 The Minutes of Proceedings for Monday, 2 April 2001 were agreed and signed.

4. Matters arising

4.1 The Chairperson referred members to the decision at the previous meeting to consider further whether the Committee should allow members to use deputies to attend Committee meetings in their place. The Committee agreed, in view of the unavoidable unavailability of the two representatives of the Ulster Unionist Party over the next few weeks, that deputies could be used if necessary.

4.2 Members discussed a memorandum from the Committee Clerk, detailing the progress on securing the witnesses agreed by the Committee. The Committee agreed in principle to accept the invitation of the Criminal Assets Bureau to visit their premises in Dublin. The proposed schedule of evidence sessions was agreed.

4.3 The Committee agreed to write to the Law Society of Northern Ireland to invite a written submission to the Committee.

5. Correspondence

5.1 The Committee noted the correspondence from the Committee on the Administration of Justice. It is understood that the Committee for the Administration of Justice and its sister organisation Liberty will respond directly to the Home Office by the deadline of 29 May 2001.

5.2 The Committee noted that the Secretary of State had been informed by the Speaker of the Assembly that the timetable for consultation did not allow sufficient time, not only for the Assembly to carry out a full consultation exercise, but for outside organisations to give their considered views.

The meeting was opened to the public at 11.48am.

6. Evidence from the NI Human Rights Commission

6.1 The Committee heard evidence from Professor Brice Dickson, Chief Commissioner and Mr Ronan Deazley, Education Co-worker of the NI Human Rights Commission on the draft Proceeds of Crime Bill. The presentation was followed by a Question and Answer session. [The entire proceedings are recorded separately in verbatim minutes of evidence.]

Mr A Attwood joined the meeting at 12.23 pm.

Ms S Ramsey left the meeting at 12.30 pm.

Mr A Attwood left the meeting at 12.31 pm.

7. Any other business

7.1 None.

8. Date and time of next meeting

8.1 The Committee agreed that it would next meet on Thursday, 26 April 2001 at 9.30am in the Senate.

The Chairperson adjourned the meeting at 12.47pm.

Mr Alban Maginness MLA
Chairperson, Ad Hoc Committee

26 April 2001

Thursday, 26 April 2001.
The Senate, Parliament Buildings

Present:
Mr Alban Maginness, Chairperson
Mr Alex Attwood
Mr Seamus Close
Mr Wilson Clyde
Mr David Ervine
Mr Gardiner Kane
Mr David McClarty (Deputising for Mr Billy Bell)
Mr Pat McNamee

In Attendance:
Mr Tony Logue, Committee Clerk
Mrs Valerie Artt
Mr Damien McVeigh

Apologies:
Mr Billy Bell
Sir John Gorman
Ms Sue Ramsey

Mr Maginness took the Chair at 9.42am in private session.

1. Apologies

1.1 The apologies were noted.

2. Draft Minutes of Proceedings

2.1 The Minutes of Proceedings for Tuesday, 24 April 2001 were agreed and signed.

3. Matters arising

3.1 Members noted that a visit to the offices the Criminal Assets Bureau in Dublin has been arranged for the morning of Tuesday 1 May 2001. Subject to the meeting being quorate, it will be regarded as being a formal meeting of the Committee and that deputies will be acceptable. Members agreed to inform the Clerk by mid-day on Friday 27 April 2001 of their intended attendance or otherwise and of their preferred mode of transport.

3.2 A short briefing paper on the Criminal Assets Bureau and copies of the Criminal Assets Bureau Act, 1996 were tabled.

Mr Close joined the meeting at 9.45am.

Mr Clyde joined the meeting at 9.48 am.

The meeting was opened to the public at 9.50am.

4. Evidence from the Royal Ulster Constabulary

4.1 The Committee heard evidence from Detective Superintendent David Thompson on the draft Proceeds of Crime Bill. The presentation was followed by a Question and Answer session. [The entire proceedings which ended at 10.42am are recorded separately in verbatim minutes of evidence.]

Mr McClarty left the meeting at 10.15am.

Mr Clyde left the meeting at 10.42am.

5. Evidence from the National Criminal Intelligence Service (NCIS)

5.1 The Committee heard evidence from Mr Vince Harvey, Director of the UK Division of the NCIS on the draft Proceeds of Crime Bill. The presentation was followed by a Question and Answer session. [The entire proceedings which ended at 11.17am are recorded separately in verbatim minutes of evidence.]

Mr Attwood joined the meeting at 11.00am.

6. Any other business

6.1 None.

7. Date and time of next meeting

7.1 The Committee agreed that it would next meet on Tuesday, 1 May 2001 in the offices of the Criminal Assets Bureau in Dublin.

The Chairperson adjourned the meeting at 11.18 am.

Mr Alban Maginness
Chairperson, Ad Hoc Committee
3 May 2001

Tuesday, 1 May 2001.
The Criminal Assets Bureau, Dublin

Present:
Mr Alban Maginness, Chairperson
Mr Seamus Close
Sir John Gorman
Mr Pat McNamee
Mr Danny O'Connor (Deputising for Mr Alex Attwood)

In Attendance:
Mr Tony Logue, Committee Clerk
Mrs Valerie Artt
Mr Damien McVeigh
Mr Hugh Widdis

Apologies:
Mr Alex Attwood
Mr Billy Bell
Mr David Ervine
Mr Gardiner Kane
Ms Sue Ramsey

Mr Maginness took the Chair at 10.42am. in private session.

1. Apologies

1.1 The apologies were noted.

2. Evidence from the Criminal Assets Bureau

2.1 The Committee heard evidence from Detective Chief Superintendent Felix McKenna, Chief Bureau Officer, Mr Barry Galvin, Bureau Legal Officer and other representatives of the Criminal Assets Bureau, Dublin on the work of the Bureau. The presentation, a copy of which is attached at Annex A, was followed by a Question and Answer session see Annex B.

2.2 The Chairman thanked the Garda Commissioner and the staff of the Criminal Assets Bureau for their invitation to visit the Bureau and for their very interesting and beneficial presentation. He also thanked them for the hospitality shown.

3. Any other business

3.1 None.

The Chairperson adjourned the meeting at 12.50 pm.

Mr Alban Maginness
Chairperson, Ad Hoc Committee
3 May 2001

ANNEX B

Q1. Does the Bureau have access to specialist staff?

A. The staff of the Bureau mainly comprises Garda officers. Specialists from the Department of Social, Community and Family Affairs and the Revenue Commissioners as well as computer specialists and accountants with forensic experience are also housed and resourced by the Bureau to allow it to operate on a multi-agency basis. Other specialists are available to the Bureau as required.

Q2 You say that a Civil Freezing Order is your preferred option, why is this?

A. When a Civil Freezing Order is issued by the Courts the burden of proof shifts to the suspect. The assets, about which the Bureau has obtained a civil standard of proof to show they are proceeds of crime, are frozen for up to seven years. If the suspect is unable to prove within that time that they are not proceeds of crime the assets go to the State.

Q3 What action can the Bureau take if for various reasons it is unable to prove the civil standard of proof?

A. A Chief Superintendent of the Garda may make an affadavit to a judge setting out the evidence. This may include information from sources who cannot be named in open court. The main focus of this activity is to shift the onus of proof to the suspected person, in the interest of justice.

Q4 How can a suspect obtain legal counsel if all of his assets are frozen?

A. A unique Ad Hoc Legal Aid system has been established which pays fees to lawyers at higher than normal legal aid rates but lower than commercial rates.

Q5 The Bureau is authorised to check accountants and solicitors files to obtain evidence. Does a suspect not have the right to client confidentiality?

A. The legislation allows Bureau Officers to search the files of both accountants and solicitors. They are also authorised to remove any papers which they might wish to use in evidence, except in the case of papers which are considered privileged, for example those which are part of a current criminal case.

Q6 Why does the Bureau negotiate a settlement in some cases?

A. The Bureau will negotiate a settlement in some cases if a reasonable proportion of the proceeds of crime can be recovered. The criminal must also disclose all assets during negotiations and if these are later found to be inaccurate the negotiated agreement is set aside and the Bureau will proceed with the prosecution. Often the proceeds of crime have been invested, for example in property, and the negotiated settlement returns to the Bureau the full amount of the original proceeds of crime.

Q7 What would you say would be the most important issues for the proposed Criminal Assets Recovery Agency to take on board?

A. The Agency will need to be staffed properly. Staff should have specific guidelines and criteria under which to operate. They should also have a background in investigative work with training in assets trading. The Agency, which should be multi-agency in its approach, should also liaise closely with law enforcement agencies in other jurisdictions as criminals do not recognise borders in the movement of money.

Q8 The European Convention on Human Rights is now part of United Kingdom domestic law and will shortly be incorporated into law in the Republic of Ireland. Will this effect the legislation under which the Criminal Assets Bureau operates?

A. Under the Constitution of the Republic of Ireland a criminal does not have a right to have or own proceeds of crime and, as the European Convention does not say different, confiscation after conviction will not be affected. With regard to confiscation after a civil case and the European Convention protocol that there should be no punishment without conviction, the High Court in the Republic of Ireland has decided that it is not punishment to deprive a person of assets to which he is not entitled. The constitution of the Republic of Ireland closely monitors the European Convention and the Bureau is not therefore expecting that there will be any major changes to the legislation which governs its work.

Q9 The Financial Investigations Order which will shortly come into operation in Northern Ireland requires the banking institutions to respond to bank circulars within seven days. Does the Bureau have problems with response times?

A. The Bureau does not have the power to trawl all banks but rather must identify client accounts at specific banks from intelligence gained and justify to the court the need for an order to check the records of a specific bank. From an operational point of view it is often better to deal with a specific bank branch where staff will know the suspect and often his family, aliases etc.

Q10 How many people have the Bureau investigated who have walked away?

A. Since 1996 the Bureau has carried out preliminary investigations on approximately six hundred people. No further action has been taken against approximately 350. Of the rest over one hundred and twenty have had criminal actions taken against them and the remaining 230 have had revenue actions taken.

Q11 Has the success of the Bureau caused criminals to move to other countries, for example Northern Ireland or England?

A. A few have moved to Northern Ireland and England. More have gone to Europe, for example Spain, Portugal or Holland. The Bureau liaises closely with law enforcement bodies in these countries.

Q12 The effectiveness of the Bureau must send a message to both criminals and public alike. Has there been any noticeable change in public confidence in law enforcement?

A. A survey in 1996, after a significant number of gang associated murders, showed that public confidence was low. A similar survey in 2000 showed that public confidence was much enhanced. The number of crimes has also decreased considerably since 1996, although the Bureau alone cannot claim the credit.

Q13 How much reliance does the court put on the word of a senior garda officer when issuing an order?

A. An order is never issued on an officer's word alone. He must also have sworn affidavits and other evidence, some of which may not be able to be given in open court.

Q14 Criminals who claim benefits in Northern Ireland often do so not only to obtain financial benefit but to show a record of legal income. Does this happen in the Republic of Ireland?

A. Yes, the claiming of benefits gives a person a record of how he supported himself and his dependants. Criminals are therefore deeply resentful when benefits are withdrawn because they are then exposed to the tax authorities.

Q15 Are benefits removed just from the individual targeted or from his dependants as well?

A. All benefits which are means tested are stopped, leaving only child benefit. It should be said, however, that the level of proof required to stop benefits is higher than that normally required by the courts.

Q16 Including investigation of claims for Social Welfare seems to be a significant part of the work of the Bureau. Is the information included in the Department's database of use to the Bureau?

A. At the early stages of an investigation the database can be successfully utilised to trawl for and identify a suspect. There is no bar to passing on this or any other appropriate information to authorised bodies for use in court but the database can only be accessed by Department of Social Welfare staff.

Q17 Is a Revenue assessment based on collective information?

A. It is based on the best estimate of the Inspector of Taxes, backed up by all the information available and must be robust enough to stand up in the High Court.

Q18 What is the annual budget of the Criminal Assets Bureau?

A. Since its establishment in 1996 the budget has averaged IR£2.2m per annum.

Q19 In cases where assessments have been made, how many negotiate a settlement?

A. All cases are open to settlement and increasingly people are prepared to negotiate rather than go to court and lose.

Q20 If a persons assets are spread over various countries is the Bureau able to access them?

A. If a person is resident in the Republic of Ireland, the total assets worldwide can be accessed.

THURSDAY, 3 MAY 2001.
ROOM 135, PARLIAMENT BUILDINGS

Present:
Mr Alban Maginness , Chairperson
Mr Seamus Close
Mr Wilson Clyde
Mr Boyd Douglas
Mr David Ervine
Sir John Gorman
Mr Gardiner Kane
Mr Pat McNamee

In Attendance:
Mr Tony Logue, Committee Clerk
Mrs Valerie Artt
Mr Damien McVeigh

Apologies:
Mr Billy Bell

Mr Maginness took the Chair at 2.10pm in private session.

1. Apologies

1.1 The apology was noted.

2. Chairman's Business

1.2 The Chairman thanked the Clerk and the Committee staff for arranging the visit to the Criminal Assets Bureau in Dublin at such short notice. The Chairman also asked the Clerk to pass on his thanks to Mr Hugh Widdis, of the Assembly's Research and Library Services, for his assistance to the Committee.

3. Draft Minutes of Proceedings

3.1 The Minutes of Proceedings for Thursday, 26 April 2001 and Tuesday, 1 May 2001 were agreed and signed.

4. Matter's Arising

4.1 Sir John Gorman said that he would welcome consideration of the proposed model for Scotland as set out in the consultation document.

The meeting was opened to the public at 2.18pm.

5. Evidence from HM Customs and Excise

5.1 The Committee heard evidence from Mr Bill Logan and Mr Donald Toon from HM Customs and Excise on the draft Proceeds of Crime Bill. The presentation was followed by a Question and Answer session. [The entire proceedings which ended at 3.10pm are recorded separately in verbatim minutes of evidence.]

Sir John Gorman left the meeting at 2 48 pm.

6. Evidence from the Inland Revenue

6.1 The Committee heard evidence from Mr John Gilbody, Mr David Humphries and Mr David Hinstridge from the Inland Revenue on the draft Proceeds of Crime Bill. The presentation was followed by a Question and Answer session. [The entire proceedings which ended at 3.33pm are recorded separately in verbatim minutes of evidence.]

7. Any other business

7.1 Members noted that no written submission had as yet been received from the Law Society.

8. Date and time of next meeting

8.1 The Committee agreed that it would next meet on Tuesday, 8 May 2001 in Room 144, Parliament Buildings, Stormont. The main item of business will be consideration of the Committee's draft report.

The Chairperson adjourned the meeting at 3.36pm.

Mr Alban Maginness MLA
Chairperson, Ad Hoc Committee

8 May 2001

Tuesday, 8 May 2001.
Room 144, Parliament Buildings

Present:
Mr Alban Maginness, Chairperson
Mr Seamus Close
Mr Arthur Doherty (Deputising for Mr Alex Attwood MLA)
Mr David Ervine
Mr Pat McNamee
Ms Sue Ramsey

In Attendance:
Mr Tony Logue, Committee Clerk
Mrs Valerie Artt
Mr Damien McVeigh
Mr Hugh Widdis

Apologies:
Mr Alex Attwood MLA
Mr Billy Bell MLA

Mr Maginness took the Chair at 10 00am. in private session.

1. Apologies

1.1 The apologies were noted.

2. Chairman's Business

2.1 The Chairman informed the Committee that the main item of business was the consideration of the draft report which had been circulated by the Clerk.

3. Draft Minutes of Proceedings

3.1 The Minutes of Proceedings for Thursday, 3 May 2001 were agreed and signed.

4. Consideration of the draft report

4.1 The Committee considered the draft report which was amended as agreed by consensus.

4.2 The Committee also agreed that the Chairman would approve the final draft on their behalf. A copy will be circulated to Committee members at that time for their information.

5. Any other business

5.1 Members noted that this was the final meeting of the Ad Hoc Committee Proceeds of Crime and agreed that theChairman would approve the Minutes of Proceedings for inclusion in the report.

5.2 The Committee report will be available to the Assembly Business Committee on 22 May 2001 and should be debated at the Assembly plenary session on 29 May 2001. Any Assembly Member, who wishes, will be able to speak to the Report at that time.

5.3 The Chairperson thanked the Committee members for the giving of their time and effort to consider and report on the consultation document. He also thanked the Committee staff and Mr Hugh Widdis of the Assembly Research and Library Services for their support.

The Chairman adjourned the meeting at 10 50 am.

Mr Alban Maginness MLA
Chairperson, Ad Hoc Committee
8 May 2001

APPENDIX 2

MINUTES OF EVIDENCE

MONDAY, 5 FEBRUARY 2001

Members present:
Mr Savage (Chairperson)
Mrs E Bell (Deputy Chairperson)
Mr Attwood
Mr B Hutchinson
Mr R Hutchinson
Mr J Kelly
Ms McWilliams
Mr M Murphy
Mr Paisley Jnr

Witnesses:

Prof B Dickson ) Northern Ireland Human
Ms M O'Conor ) Rights Commission

The Chairperson: Prof Dickson, you are very welcome, and we look forward to hearing your contribution.

Prof Dickson: Thank you very much for the invitation, and I apologise for not being able to make a written submission before this morning - I am afraid time did not permit that. I have now presented a paper, and I will briefly refer to it.

The Northern Ireland Human Rights Commission welcomes the Life Sentences (Northern Ireland) Order 2001 because it attempts to bring the law into line with the European Convention on Human Rights, and the comments we are making should be taken in that context.

At paragraph 2 of our submission, we suggest that when the Life Sentence Review Commissioners excercise their functions, they should be required to have regard to the "Convention rights of life prisoners". By virtue of the Human Rights Act they are already under a legal obligation to do this, but the insertion of this phrase would make it more explicit. We then suggest that where the Secretary of State has a discretion to direct that early release provisions apply, that should be replaced with a duty. That would bring the law regarding adult prisoners into line with the law regarding offenders aged under 18 when they committed the offence. We do not see any justification for distinguising between the two groups on the basis of age, and in any case this may well be contrary to section 75 of the Northern Ireland Act 1998.

We have difficulties with two or three provisions in the draft Order, which leave it to the Secretary of State to specify the tariff - that is the part of the sentence which must be served before the early release provisions apply - because the European Convention on Human Rights makes it clear that that kind of decision should be taken by a judicial authority and not by the Secretary of State. It is strange that the Order is setting up the Life Sentence Review Commissioners to direct the release of prisioners in many cases, yet leaves it to the Secretary of State in some residual cases - that seems anomalous.

In paragraph 5 we make it clear that the definition of "appropriate stage" is too subjective and too vague. It is possible that the European Court of Human Rights would not accept this definition. At the very least the word "reasonably" should be inserted at the appropriate point.

Article 6(4) requires the commissioners to be "satisfied that it is no longer necessary for the protection of the public from serious harm that the prisoner should be confined". Again, we find this provision vague. It does not specify what standard of proof the commissioners would apply and it does not define "serious harm". The phrase "to the public" seems a bit strange as well. For example, what if a particular person might be at risk from the release of the offender, say the person who testified against the offender - would that not matter? Should the person still be released, even though he or she is potentially a danger to that person?

In paragraph 7 we recommend that the views of victims of the prisoner be taken into consideration. Such views should not be determinative of the Life Sentence Review Commissioners' decision, but they should be taken into account. That would be in line with current trends in international human rights law, of which we approve.

Paragraph 8 indicates that the licence provision should remain in force until the prisoner's death. That is a particularly harsh provision, which is not mirrored in many other countries. It means that it is impossible for the life prisoner to wipe the slate completely clean, however young he or she may have been when the life sentence was imposed. There is an argument for saying that the licence should have a definite life that is short of the life of the prisoner and the strictness of the licence should diminish as the prisoner grows older. The longer a prisoner has been on licence the more difficult it would then be for the authorities to bring him or her back to prison, which is reasonable. At the very least, the standard of proof, which the authorities should have to satisfy, should increase in proportion to the length of time the prisoner has been on licence.

10.

Paragraph 9 of our submission indicates that the conditions the authorities can impose are unspecified in the Order. Some conditions would be unreasonable and we suggest that the Order should specify that no condition can be imposed which would be a breach of the prisoner's Convention rights.

11.

At paragraph 10 we indicate that the Order is silent on the standard of proof which the Life Sentence Review Commissioners should apply when making a recommendation for the recall of a released prisoner. It is not clear whether the breach of any condition, even a trivial one, would automatically justify a recall. The Secretary of State still has a discretion to recall a prisoner, apparently in situations where it would not be practicable to consult the Commissioners first. We do not easily see when such a situation could arise.

12.

At paragraph 12 we suggest that the test for recall is also very vague. The phrase "expedient in the public interest" seems to us to be very peculiar and we would suggest the use of the words "necessary to protect the public from serious harm".

13.

Article 9(4) says that the Secretary of State shall refer any case of recall to prison to the Commissioners, but it does not say when this must be done. We think it should be as soon as possible.

14.

Paragraph 14 repeats the point we were making earlier, at paragraph 4, about the Secretary of State having discretion.

15.

At paragraph 15 we indicate that the Order's definition of a transferred life prisoner is unclear to us. At one point it seems to suggest that people who have not received life sentences elsewhere would still be included. We wonder why.

16.

At paragraph 17 we indicate that the Life Sentence Commissioners' Rules talk about the chairman of the panel, but do not seem to make any provision for the appointment of such a person. In any event, we do not believe that these types of decisions should be left to one person. They should be taken collectively by the panel or by a majority if necessary.

17.

Rule 9 of the Life Sentence Commissioners' Rules deals with the location and privacy of hearings. We think that the Human Rights Commission should be permitted to observe hearings and we believe that the hearings should be in public, unless the panel directs otherwise. The current rules say that hearings should be in private, unless the chairman of the panel directs otherwise.

18.

Finally, at paragraph 21 we have grave difficulties with Rules 15 and 16 of the Commissioners' Rules. These provide for the non-disclosure of confidential information and the appointment of a special advocate. We have long been opposed to this method of dealing with an individual's liberty. The person is entitled under the European Convention to know the case against himself/herself and to have a legal representative whom he/she can consult. This provision does not permit that, and it worries us greatly.

19.

The Chairperson: Thank you very much. I am sure you have given us many ideas, and put doubts into some people's minds. The Committee would now like to ask you a few questions. Does the current law in Northern Ireland governing sentences to life imprisonment and detention at the Secretary of State's pleasure comply with all relevant human rights law?

20.

Prof Dickson: No, we think it does not. The European Convention, which is part of our law, requires a judicial authority to take decisions on the length of person's sentence, and when he/she should be released. Currently the discretions that lie with the Secretary of State or with the Life Sentence Review Board would not, in our view, comply with the European Convention.

21.

The Chairperson: Does the current law in Northern Ireland governing the release on licence of those on life imprisonment or detention at the Secretary of State's pleasure comply with all relevant human rights law?

22.

Prof Dickson: The answer I have just given would apply to that as well. Was your first question in relation to the imposition of life sentences, as opposed to release? If that is so then I should clarify my first answer. It was intended to apply to the release system that is currently in place.

23.

To go back to your first question, the current sentencing system is possibly inconsistent with the European Convention, insofar as it allows indeterminate sentences to be applied to people under 18 years of age. By and large, the Convention requires definite sentences to be imposed on individuals.

24.

Mr Paisley Jnr: There are three areas of interest to me. I notice that you object strongly to Rules 15 and 16 on special advocates. I assume that also applies to a witness being able to hear his accusers and his case, and put questions to his accusers. You object to this in this new legislation, though I am not aware of your objecting to it strongly or vociferously in the Northern Ireland (Sentences) Act 1998. As you know, it has been applied in some very prominent cases since then and I would like to hear your views on that.

25.

My second point is on Commissioners. Do you agree that Commissioners should have the following skills: relevant human rights experience; they should not be members, or former members, of the Executive, the Civil Service and they should not have been prison governors; and permanent members of the Human Rights Commission should be at every panel. They should also have judicial experience in criminal trials. You have already addressed the point about members of the Human Rights Commission - I believe you said that they should be present.

26.

In paragraph 7 of your submission - Article 6(4) on the treatment of victims - you make an interesting point about victims being represented. Could you give us your opinion on the operational mechanics and indicate the current position? I understand that under the Northern Ireland (Sentences) Act 1998 and the early release scheme some victims were informed while others were not. How would this be put in place, which victims would be informed, and what role would they play? Will they simply be allowed to express a view to the court, or will that view be recognised in some way?

27.

Mr B Hutchinson: For the record, people are confusing this with the Good Friday Agreement and the early release scheme, and it has nothing to do with either. This has been in place since 1987, and we need to be careful how we answer or ask questions. A person being informed has nothing to do with this. We can draw parallels, but we cannot say that some were informed and others were not. This is a totally different set up, and we must be clear about that.

28.

Mr Paisley Jnr: I am drawing a parallel because I want to find out how the Human Rights Commission believes it should operate. Should it operate from the experience we have gone through or should a new set of mechanisms be put in place, which would allow it to operate appropriately?

29.

Prof Dickson: On your first point, the Human Rights Commission endorsed the points made by our predecessor, the Standing Advisory Commission on Human Rights, in relation to the proposed provisions in the Northern Ireland (Sentences) Act 1998 on non- disclosure of confidential information and appointment of special advocates. Recently, we objected staunchly to those provisions in the case of Mr Adair. We sought permission to observe the hearing by the Sentence Review Commissioners, and were excluded from the closed hearing. People whose cases are being considered by the Sentence Review Commissioners - or in this case by the Life Sentence Review Commissioners - should be able to see the evidence against them and have their own legal representative with whom they can consult. We felt then, and still feel now, that this is a breach of human rights and we went on record to say that in relation to Mr Adair.

30.

As a body, the Human Rights Commission has not discussed whether the Life Sentence Commissioners should have the kind of experience that you suggest. Looking at the skills you have identified, I see no reason why people should not be required to have those skills. The Human Rights Commission would like to have the right to be present, whether as a full member of the Life Sentence Review Commission or not (this is not something we would insist on). We would like the right to observe hearings, to ensure that everybody's rights are fully protected.

31.

The Commission has not discussed how the mechanism in paragraph 7 would work in practice. For the present, we simply draw the Committee's attention to the trend in international law and the wisdom of taking into account the views of victims. We are clear that their views should not be determinative, but that they are relevant to any decision on when, or if, to release someone.

32.

Mr Paisley Jnr: Could you explain that to us a little more fully?

33.

Prof Dickson: I am not sure I can. The Human Rights Commission has not yet had the chance to consider how this would work in practice - for example, whether the victim's view on when an offender should be released should carry a great deal of weight. We are clear that their views should be taken on board, but not about how much weight they should carry, except to say that they should not be determinative, meaning that they alone should not dictate the result.

34.

Ms O'Conor: There are very few international human rights studies in this area. The field is at the beginning of its development and is quite broad. There has been some development in certain jurisdictions but not enough to be able to answer your question in any detail. It is a matter which will need wide consultation and consideration.

35.

Mr Paisley Jnr: Do the mechanics of your suggestion mean that victims should be contacted, sending in their views on the tariff for your attention in writing? Should they be called to a special public hearing to give their views in the presence of the person who made them a victim? Would the victim have to give those views only then, or do you suggest there is some other course of action which the Commissioners could take to give them due weight?

36.

Prof Dickson: We are not making a recom- mendation on any of those points, but I will take them back for the Human Rights Commission to consider. I should have thought that at the very least their views should be sent in writing, but I am not so sure that it would be necessary to go to the length of having the victim or the victim's relatives present. We are clear that views submitted should not dictate the outcome of the issue, but would be given appropriate weight in the light of all the circumstances.

37.

The Chairperson: That is a very important issue, and I ask you to take it on board.

38.

Prof Dickson: Yes, I will do so.

39.

Ms McWilliams: Can you describe in detail how the tariff is used in Great Britain when life sentences are imposed? Is the life tariff under the draft Order compatible with all relevant human rights law?

40.

Prof Dickson: As far as I understand it, a judge in England sets the tariff in a way which ensures adequate retribution and deterrence against others committing the same offence. The two key concepts are retribution and deterrence. After that period has elapsed, it becomes possible for the person to be released early. There are differences in England which I do not feel qualified to talk about, although perhaps Ms O'Conor can. These concern the treatment of mandatory and discretionary life prisoners and young people detained at Her Majesty's pleasure. The merit in the draft Order is that by and large it harmonises the law for all three categories - I have adverted to one or two differences vis-à-vis young people. That is greatly to be applauded, because it goes beyond the position in England, which will continue to distinguish between mandatory and discretionary life prisoners.

41.

As to whether this new Order will comply fully with the European Convention, we have indicated that in several respects it may not. For example, retaining a discretion for the Secretary of State to set the tariff rather than requiring a judicial body such as the Life Sentence Review Commissioners, if indeed it is a judicial body for the purposes of the Convention, is a flaw. The vagueness of such terms as "appropriate stage" and "expedient in the public interest" is highly questionable in European Convention terms.

42.

Mr R Hutchinson: You may have answered my question. Do you think it is right that a politician such as the Secretary of State should have the final say as to whether someone is or is not released?

43.

Prof Dickson: No, we do not. That is exactly our point. The treatment of people who have been sentenced to imprisonment should be a judicial matter - at least the length of the sentence should be a judicial matter. Certainly the executive authorities should be responsible for the running of prisons and ensuring that prisoners have their rights protected. We feel strongly that the length of the sentence should be a matter for a judicial authority.

44.

Mrs E Bell: We share the concerns you raised in your submission in paragraphs 8 and 10. We also felt that the fact that

"The licence shall remain in force until the prisoner's death".

was very harsh. We are concerned that the standard of proof required by the Commissioners is not specified. Do the draft Order's licence and recall provisions raise any potential human rights concerns, especially in relation to Articles 8 and 9 of the European Convention on Human Rights? If the Order were enacted, would it comply with the highest human rights legal standards concerning life sentence prisoners?

45.

Prof Dickson: It is always difficult to be categorical about whether an actual or proposed law would or would not comply with particular provisions of the European Convention, because it often depends on how the provisions are applied in practice. They may sound fine on paper, but if they are applied in a certain way, they might contravene the Convention. Taking Articles 8 and 9 of the Convention, which protect the right to a private and home life and the right to freedom of conscience and thought and so forth, it is possible that certain licence conditions, for example, the hypothetical situation where a prisoner should not associate with a particular individual, would be a breach of that prisoner's right to a private life under Article 8.

46.

It is less easy to imagine a breach of Article 9, which protects the right to freedom of religion, conscience and thought. We have concerns that the provisions you have drawn attention to would breach Article 5 of the Convention which protects the right to liberty and security of the person. If somebody can be recalled to prison on a very trivial matter, perhaps on the evidence of an informer or somebody who wants to frame the individual and is making unsubstantiated allegations against a prisoner, then that person's liberty could be at stake. The general principle in international human rights law is that a very high standard of proof has to be met before a person can be deprived of his or her liberty.

47.

The length of the licence and the lack of clarity about standards of proof also give us serious cause for concern in relation to Article 6 of the Convention, which specifies that in all matters determining a person's rights and obligations, that person must have a fair hearing. That means having a proper standard of proof and, going back to Mr Paisley Jnr's question, knowing the case against them and having a chance to answer it.

48.

Mrs E Bell: It is the difference between the legislation as it is written and our responsibility to see that it is correctly enacted and implemented.

49.

Prof Dickson: That is why we suggest inserting a phrase such as "in compliance with the prisoner's Convention rights" as a safeguard.

50.

Mr B Hutchinson: I would like to ask about recall. It seems very clinical to talk about who should be responsible for the length of the sentence and how it should be done. First, regarding trivial breach, are you saying that we should have some standard of proof for the Commissioners to go by and, if so, are there examples in Europe or elsewhere that we could draw on?

51.

I am not sure who decides if someone is recalled. Do the police make a request to the Secretary of State, or is it the Commissioners? My understanding is that it remains with the Secretary of State, who deals with political prisoners even though he has never admitted it. I think the Secretary of State is the person who holds the licence. I have a licence signed by the Secretary of State.

52.

As for the length of time and who is responsible, are we talking about punishment or rehabilitation? If we are talking about punishment, the court can set the tariff and we can forget about everybody else. However, if we are talking about rehabilitation, then a time frame must be set.

53.

Prof Dickson: It is difficult to point to other international examples regarding the standard of proof. As far as I know, the new system for dealing with complaints against the police force in Northern Ireland has a sliding scale for standards of proof. I will double-check this. The more serious the alleged breach of discipline and consequences for the police officer if found guilty, then the higher the standard of proof that has to be applied.

54.

It might be possible to introduce a comparable provision in the Order. To recall somebody to prison for the rest of his or her life on the basis of an unsubstantiated complaint has very serious consequences for that prisoner, so the standard of proof applied ought to be quite high. Whether or not you would want to make it as high as "beyond a reasonable doubt" is something we could debate. If it were to be as high as that, then the full panoply of fair trial provisions that were applied when the prisoner was first tried would have to be re-applied, and that would be expensive and time-consuming. The standard ought to be commensurate with the consequences that the prisoner stands to suffer.

55.

Who decides to recall a prisoner? The Order is unclear in Article 9. It seems to indicate that the Secretary of State can recall a prisoner in emergency situations, whereas the general position would be that the Life Sentence Review Commissioners would recall the prisoner. It is strange that the Order appears to make no provision to require the Secretary of State, who recalled a prisoner in an emergency in the first place, to submit the matter to the Commissioners for double-checking.

56.

As for rehabilitation, it is certainly the case that the international standards applying to prisoners specify that the main purpose of imprisonment should be rehabilitation. Once the required period for retribution and deterrence has been served, then the sole purpose of imprisonment is rehabilitation. The prisoner should be released once the rehabilitation period is over. We would agree with the implication in your question that a prisoner on licence should be seen as somebody who is going through a rehabilitation process.

57.

Mr J Kelly: I think you have covered Article 11, and the five points made during the lifer's campaign. You have also covered legal representation at reviews and commissions. Could you be clearer on the stated criteria for release?

58.

Ms O'Conor: I think that the European Court has moved towards risk analysis - and Prof Dickson has already covered this to some extent. Once the period of deterrence, punishment, and retribution has been served, it then becomes a question of risk analysis. It becomes a question of whether there is any threat to the public by the release of the person concerned. That is probably the criterion that would comply with international standards.

59.

Ms McWilliams: On that point, Prof Dickson said earlier that public interest was an expedient matter.

60.

Mr Dickson: That relates to the recall provision in paragraph 12 of our submission, where we state that the phrase "expedient in the public interest" should be replaced with the phrase "necessary to protect the public from serious harm". In relation to the initial release of the prisoner, paragraph 6 of our submission states that the phrase "serious harm to the public" ought to be defined more clearly.

61.

Mr J Kelly: Have you considered the wealth of information which states that after eight years prison becomes debilitating rather than rehabilitating.

62.

Prof Dickson: There is research to suggest that.

63.

Mr J Kelly: Is there any reason why the Commission should not contain peers - people who have been in the position of having served life sentences?

64.

Prof Dickson: The Human Rights Commission has not considered what an appropriate tariff would be in any particular case. We can do so, if the Committee would like us to, although international standards are virtually non-existent.

65.

We have not discussed membership of the Life Sentence Review Commission. However, I could not imagine us having any difficulty with people serving on the Commission who have been released on licence. The Order currently disallows that. Our view would be the same as our views on the Police (Northern Ireland) Act 2000, where we say that people who have served their time ought to be eligible for appointment to the policing board or the district policing partnerships.

66.

Mr Attwood: Did the Northern Ireland Office consult with the Human Rights Commission before the draft legislation was issued?

67.

Prof Dickson: No. We received the first version before Christmas, at the same time as everyone else.

68.

Mr Attwood: Has the Northern Ireland Office formally asked you to submit your views like everybody else?

69.

Prof Dickson: Yes.

70.

Mr Attwood: Would you agree that the biggest structural flaw in all the proposed procedures concerns the powers retained by the Secretary of State in terms of role, discretion, and involvement in the management of life sentence prisoners?

71.

Would you agree that in your submission, at paragraphs 3, 4, 11, 12, 14 and 17, the main theme is that the Secretary of State, for all the intention behind the proposals, retains major intrusive powers?

72.

Prof Dickson: Yes, that would be fair. I would not like to elevate one criticism above all others, but that does seem to be a particular breach of Article 5 (4) of the European Convention.

73.

Mr Attwood: Are there any other international conventions, codes or directives, other than the European Convention, that should inform how this legislation is drafted in terms of either a fair process or the rights of prisoners?

74.

Prof Dickson: There are. The Human Rights Commission looks at the full range of internationally accepted rules and principles for the protection of human rights when assessing actual and proposed laws, policies and practices in Northern Ireland. In this regard we would cite documents such as the UN's International Covenant on Civil and Political Rights, the UN's Standard Minimum Rules for the Treatment of Prisoners, and the Council of Europe's Standard Minimum Rules for the Treatment of Prisoners. It has to be said that none of them are specific on the detail of what we are discussing today.

75.

Mr Attwood: Is there much added value in them as opposed to the European Convention itself?

76.

Prof Dickson: There is some added value, for example, in relation to Mr B Hutchinson's point about rehabilitation. The European Convention says nothing about rehabilitation, but I think I am right in saying that the UN's International Covenant on Civil and Political Rights stresses the need for rehabilitation.

77.

Mr Attwood: The document is very helpful.

78.

Mr M Murphy: What laws are there in the Republic of Ireland regarding life sentences? How do they differ from ours?

79.

Prof Dickson: I am afraid you have me there, Mr Murphy. I do not know what the Republic's law on life sentences is. I can check it out and provide information for the Committee if you would like me to.

80.

Mr Paisley Jnr: You have tried to plug a number of loopholes, but under Article 7 there seems to be a major loophole regarding compassionate grounds. The Secretary of State might at any time release a prisoner due to exceptional circumstances. He is required to consult with the Commissioners unless circumstances render such consultation impracticable. Do you think that this legislation should spell out what the exceptional circumstances should be and also when there should not be consultation with the Commission?

81.

Prof Dickson: The Human Rights Commission has not considered this in detail. As a general rule we would like to see phrases such as "exceptional circumstances" elucidated in some way, either in the legislation or in accompanying codes of practice. It is good practice for guidance to be given on how powers should be exercised without being prescriptive. So the short answer to your question is yes.

82.

The Chairperson: I thank you for your contribution. It seems to me, that a lot of work remains to be done in a very short space of time. I know that we would like to bring you back, but I do not know if time will allow us to do that.

MINUTES OF EVIDENCE
MONDAY, 5 FEBRUARY 2001

Members present:
Mr Savage (Chairperson)
Mrs E Bell (Deputy Chairperson)
Mr Attwood
Mr B Hutchinson
Mr R Hutchinson
Mr J Kelly
Ms McWilliams
Mr M Murphy
Mr Paisley Jnr

Witnesses:

Mr B Fulton ) Probation Board for
Mr A Darnbrook ) Northern Ireland

83.

The Chairperson: You are both very welcome. As you can tell, we have a tight deadline this morning. Thank you for the written submission to the Committee. Do you want to make a presentation?

84.

Mr Fulton: I will say a few words of introduction to make the link to what we have submitted. I will, first, introduce the two of us. I am Assistant Chief Probation Officer and I have responsibility for services to prisoners, released prisoners, and prisoners' families. I am accountable to the Chief Executive and through him to the Probation Board. Alan Darnbrook is a probation manager with particular responsibilities in this area. That is why we have come to respond to you.

85.

The Chairperson: Both of you have a big responsibility.

86.

Mr Fulton: It does not weigh lightly, in that sense.

87.

I will set the Probation Board for Northern Ireland in context. The Probation Board was set up in 1982, but before that it came under the Ministry of Home Affairs, and then under the Northern Ireland Office.

88.

We have had a presence in prison for 35 years now, both inside and outside, and we have been involved with life sentence prisoners during all that period. We have supervised a proportion of those life sentence prisoners released from that time, right back from the end of the 1960s. That, in a sense, sets our experience. That experience has also meant that the Probation Board has made some comments about the actual structure. When you get to the end of our paper, we comment separately on the structure and what our experience tells us and on the role that we would have to play within that structure and what implications that has.

89.

This has been part of a stage over the last couple of years. The Criminal Justice Review was looking at this issue, and the Probation Board had an opportunity both while it was considering that to speak to it and also after it publicised last spring. The board made a response to that review report. We did, in a sense, put up a model - maybe that is a bit fancy - or framework.

90.

When it came to the response to this particular Order, I suppose that is the shape that we are using in that context. Our experience over that period pointed the Probation Board towards looking for a more open system, a system that was more transparent, in which everybody could see what the roles were. We comment on some aspects of that as we get into how that is translated because each of those issues about openness, in a sense, is addressed in the new Order. You may make judgements about how well they are addressed, but they are addressed.

91.

From the Board's point of view, a large amount of our functions are in relation to courts. We are at home in that situation, and we are used to dealing with that. The Probation Board was looking for a much more judicial input into the actual process for life sentence prisoners. The setting of a tariff or the way in which the judge making the original sentence actually does that is important.

92.

It is also important from the point of view of the prisoner and all those dealing with that person in the prison system. Up until recently it has not always been clear how long a tariff would be. Therefore there has been a lot of uncertainty all through sentence.

93.

We were looking for a system that separated those factors. It is important to ensure that the length of time, retribution and deterrent elements are marked in a way that allows more focus on risk and rehabilitation. Retribution and deterrence are core in our work in helping prisoners to prepare for freedom. Once that process is complete, it is important to provide a report that gives that kind of risk assessment. If the Probation Service is to be involved in supervision, it must have the opportunity to ascertain what type of programme it will follow.

94.

The Chairperson: With regard to the rehabilitation of life prisoners, what are the strengths and weaknesses of the draft Order?

95.

Mr Fulton: There are many strengths in the draft Order. We would be able to move on from our current position. The strengths are to clarify the length of time the court is setting before release would be considered and the opportunity then to look at the release. The board wanted those stages to be judicially grounded. The first two stages are clearly grounded in the court. The third stage involves the independent body. If the independent body can specify the way in which it will operate - it can be assumed that the structure is to be established - a set of rules must be in place. Some of the weaknesses can be addressed when those rules are set out.

96.

Mr J Kelly: Is the issue of discretionary life sentences to juveniles adequately covered? Take the Matt Lundy case.

97.

Mr Fulton: Are you talking about discretionary life sentences?

98.

Mr J Kelly: Yes.

99.

Mr Fulton: My understanding is that there are certain safeguards relating to young persons who are sentenced at the Secretary of State's pleasure. Such cases will be referred at certain ages. The Secretary of State may, irrespective of the tariff, refer such cases to the commissioners, and there will be special treatment for under-18s, as I understand the Order.

100.

There have not been many people in the discretionary lifer category in Northern Ireland. There are few in the overall system. There is likely to be an increase in that category, but there are good safeguards for the under-18's. The system here is limited, first because of the small number of prisons and, secondly, as a result of the comparatively small number of young prisoners in those institutions that maintain them for a long time. It is likely that they will be incorporated in the adult system in some way.

101.

Mr J Kelly: In the sense you are part of the establishment, but is the Board actively involved in attempting to resolve the issues arising from your role in the Probation Service?

102.

Mr Fulton: We see our role in the Probation Board as walking a middle path. It is our role to mediate between the requirements of the courts and the system that we operate, and the needs of the community on the outside. We also have to ascertain how we can provide a pathway for a past offender who wants to work in such a way that the risk is manageable in the community. Our role allows us to find pathways in the system.

103.

Mrs E Bell: I have already declared an interest. My questions will reflect that. In paragraphs 29 and 30, it says

"Where a supervisory element is part of post-release licence, we will have the opportunity to put forward a plan ."

and

"As part of the supervisory function of a life licencee . we would prepare Progress Reports .".

104.

One of my concerns is that the licence is in force until death. What role does the Probation Board see itself as having? The way you have spelt it out in the paper is to try to mitigate the situation. Do you think that it needs to be looked at again, and perhaps amended, before the draft Order is implemented in order to see whether we could make arrangements so that the licence does not have to continue until the person dies? If he is rehabilitated, he should benefit from that.

105.

That obviously involves extra work which will impact on you. Have you considered the extent of the impact, or are you happy enough to go along with this and act as liaison between the two?

106.

Mr Fulton: I will let Alan Darnbrook answer part of that. From our point of view, the difference is between the licence and the supervised part of the licence. The licence being in operation is one issue, and that is pressure on anybody in that kind of situation. Our experience has been with the supervised element of the licence. Alan Darnbrook might say a few words about how that tends to work, because even under the current system we can review that.

107.

Mrs E Bell: Do you think this draft Order improves that situation?

108.

Mr Darnbrook: As was pointed out in paragraph 33 of the paper, we want to include a provision for the licence conditions to be withdrawn at an appropriate time when we feel that the person is fully rehabilitated and the risk is low enough that they do not pose any risk to the community. We achieve that by regular supervision by a supervising officer, regular monitoring of the supervision, assessments at intervals throughout that period and bringing in other agencies as required. Under the present system, a proposal is not normally made until after about five years of supervision. This varies according to the individual circumstances. If progress has been made to our satisfaction and the person is no longer a risk to the community in any form, we would then make a submission to the Secretary of State for the licence conditions to be lifted. From then on, we do not have any further statutory involvement with that person. However, we do offer ongoing voluntary contact and support, should that person require it at any period from then until death.

109.

Mr Fulton: With some of the offences with which we will be dealing, it may take longer to clarify whether the person is likely to leave that kind of offending behind. There is research which shows a longer cycle, and we have to keep that in mind as we look at what the time span might be. In some situations, it might make sense to hold on to that kind of possibility for up to 10 years.

110.

Mr B Hutchinson: You have just said something which I may have misunderstood. Did you say that you had made recommendations to the Secretary of State to have people's licences lifted after five years?

111.

Mr Darnbrook: No. On occasion we make a recommendation that the supervision elements of their licence be varied after a time when we are satisfied that they have reached a stage of stability.

112.

Mr B Hutchinson: In what kinds of cases do you have this supervision?

113.

Mr Fulton: They are not the cases under the Sentence Review Commission. It is predominantly cases that have been dealt with by the Life Sentence Review Board, which are the de-scheduled -

114.

Mr B Hutchinson: You are talking about non-political cases?

115.

Mr Darnbrook: Yes, absolutely.

116.

Mr B Hutchinson: Mr Fulton, you talked about safeguards for those sentenced at the Secretary of State's pleasure if those people are under 18. What are those safeguards? What is your opinion of recalls? Are there contradictions between the recalls and the court? Do you believe that too much attention is paid to trivial breaches?

117.

Mr Fulton: I will answer the last one first. Recall is a difficult issue. As a supervising agency we need to be able to act quickly, and we need someone to make that decision. We are more than happy to deal with that, as in our other areas we go to court if necessary. We are quite happy to be as accountable as we need to be. We think that, whatever the legislation, it needs a mechanism whereby a quick decision can be made, and we have been in that situation and have sought that kind of decision making before.

118.

Of course, the quicker people can go before the Commission the better. Our understanding of the legislation is that the Secretary of State will refer cases like that to the Commission. If it is not that kind of emergency, then my understanding is the legislation means it will go to the Commission before a decision about revoking the licence or about recall takes place. We accept that it should not be happening on poor or flimsy evidence and that we have to be more accountable about what we present. We are happy with that. We will look for the Commissioners to lay down requirements on what those hurdles will be before that happens.

119.

Mr B Hutchinson: Have you come up against contradictions in the court? For example, have there been instances of the magistrate saying that there is no case to be answered but the licence has still been revoked?

120.

Mr Fulton: Revoking the licence would not be a decision for the court at that point. Our understanding is that in cases that we have supervised there would be a decision about whether there was such seriousness. Quite often if the case was awaiting the outcome of the court, then review would take into account what the sentence was and the directions of the judge or magistrate before deciding on that. That is the kind of case which, if it is awaiting that decision, could be referred to the Commissioners for a decision.

121.

Mr B Hutchinson: I ask because I checked back on some material released by the Probation Board in the early 1990s. It was claimed that a number of people were taken to court on assault charges, the magistrate threw them out and said there was no case to be answered as at least three of the cases were self-defence, yet all those people had their licences revoked. I was wondering what statistics you have on that.

122.

Mr Fulton: We estimate that we have had five recalls in 20 years in that supervision element. There are aspects of this legislation which will make us more accountable in that situation, and there are also regulations that will make the Executive more accountable in its decision making.

123.

If we can return to the cases of the 18-year-olds, I think it is not so much the facilities but the fact that they are separated, the tariff is likely to be lower in that age group and they would be reviewed at an earlier stage. There is an issue in there which I think has to come after the actual legislation.

124.

The current system has some flexibility in it regarding the preparation for that kind of staged release. Certainly young people need opportunities for that to happen. However, it is not clear at this stage how we find a mechanism to ensure that this can take place in the new situation. The decision made by the Commissioners is about release, and that will be binding. There appear to be safeguards for young people.

125.

Mr Paisley Jnr: The Order that we are considering asks you to provide, although it does not mention you, certain things in terms of the rehabilitation of an offender. I want to look at some of the practicalities and financial realities of that request. The courts, Commissioners and Secretary of State have demanded certain things that you are obliged to deliver. Have you the financial wherewithal to deliver such things on your current budget? Furthermore, can you give us a ballpark figure as to how much it will cost to deliver this request in order to achieve your statutory obligations? This includes your proposals - which are outlined at point 31 - regarding the withdrawal of a licence. Are those proposals in any way financially driven? You are saying that there are certain cases where the licence should be withdrawn - for example, there may be a concern in the community that, for certain crimes, there are high reoffending rates and people could drift into other areas where there are not adequate rehabilitation levels.

126.

Moving on to the issue of the Commissioners, there is some suggestion that they should not be former members of the Executive, civil servants or prison governors. Should the Probation Board in Northern Ireland be in any way a part of the Commission team to consider the financial and practical realities of what is being asked of it?

127.

Mr Fulton: From the Probation Board's point of view, the Order does not change the resource issue in itself because the number of prisoners that are in the system and were likely to come through under the old system, whichever part of legislation it is. Therefore resource in itself is not a block to us with regard to how this is to be implemented. Like any public body there are occasions when our resources are limited, and we must make priorities. This is high priority work and in the context of decisions that are to be made about funding this issue is one that would come at the top of the list.

128.

There is currently £720,000 which is transferred from the Prison Service to the Probation Service so as to provide a service in prison. That will be one of the areas where the expectations will increase. We with the Prison Service would wish to provide individual and group programmes which assist prisoners to deal with the factors of risk and how they would reduce those factors. So there is a pressure there. There is further pressure in relation to multi-agency. At this time, we do employ psychologists. We have a relationship with two forensic psychiatrists in Northern Ireland. In terms of post-release, multi-disciplinary back-up, expectations will rise and there will be an increased need. Resources are not a prime worry to the service in relation to this Order.

129.

With regard to the Commissioners, the Board is keen that there should be a separation between those making the decisions and those who provide the information.

130.

The Board's feeling is that, at this point, we should not have staff of the Probation Board for Northern Ireland as Commissioners. We should obviously like their expertise to be represented among the Commissioners in some fashion, and we make some points about how that might be achieved. However, it is fundamental that we are happier coming to provide information, while others who are not involved make their decisions, challenging us about how we made ours.

131.

Mr Paisley Jnr: This brings us back to the issue of resources. Are any of your proposals financially driven?

132.

Mr Fulton: No.

133.

Mr Paisley Jnr: If you had the resources, would you propose it?

134.

Mr Fulton: No, it is not driven by that. It is an area of work where the decision is not made by an individual, but by a number of staff members. One examines the continuing possibilities in a case. Is the person involved living a safe life? Is there a likelihood of their doing anything? However, we currently have 22 supervised life sentence prisoners, and there are 70 to 80 in the prison system. That situation can be dealt with within our resources, allowing at least two probation officers on each case with a package of supervision. The numbers are workable at this stage.

135.

Mr Paisley Jnr: Of those 22, how many cases would each probation officer take on?

136.

Mr Fulton: They would be spread out geograph- ically, but it is an area of work where we certainly endeavour to have a member of the probation staff working with under 20 cases. We aim to achieve a ratio of 1:15 in that kind of situation.

137.

Mr Attwood: The Human Rights Commission referred to its doubts in relation to the non-disclosure of confidential information to prisoners going before hearings. Do you have any concerns about non-disclosure of information to the Probation Board for Northern Ireland in its input into those arrangements?

138.

Mr Fulton: Not at the moment. We have no reason to doubt the information we receive regarding the nature of offences.

139.

Mr Attwood: Have you had any concerns in the past about that sort of information?

140.

Mr Fulton: As far as I am aware, no.

141.

The Chairperson: If the draft Order were enacted, how would the work of the Life Sentence Commissioners impact on that of the Probation Board for Northern Ireland?

142.

Mr Fulton: I feel the earlier answers about resources covered most aspects. The main concern now will be how they wish to do business. A certain part is set out in the rules saying what a probation report to the board would achieve, but one of the main issues for us is finding ways to measure risk. What are their objective measurements? The expectation is that the Commissioners will begin to set out their understanding, which we must translate into our working practice. In our development of standards in relation to a new Order such as this, the Commissioners will be an important source of information on how we should do the work.

143.

The Chairperson: The Commissioners and you will work together very closely on all these issues.

144.

Mr Fulton: In the sense that they set the rules, yes. There will be a certain distance because of our different responsibilities, but, as the Commissioners develop their role, they will clearly set out how they determine risk, and we shall take that back to the Board and use it in our work.

145.

Ms McWilliams: It is perhaps a difficult question for you to answer, but much of this will not change the nature of your work. Your experience has been in the risk of reoffending as well as in rehabilitation. You argue that the courts will look at retribution and detterence, so your major role will be on risk of reoffending. At the moment, you clearly have a great deal of expertise on that.

146.

You could see a conflict of interest, if you, on the one hand are trying to provide information, and, on the other hand, are trying to provide decision making. In relation to Mr Paisley Jnr's point about decision makers, you suggest that you be excluded from the decision making of the Commissioner's role and simply be an information feeder. How much credence is given to that role?

147.

Mr Fulton: In these cases it is given a lot. Of course, it is not always possible for us to know exactly what others think, but in the context of what we see of decision making in the current situation, the risk and management plans that we have put up, or the fact that they are not there, would be significant in deciding whether someone was ready for release. It is acknowledged that we have the role of going into the community with somebody, and it is taken into account if we are uncomfortable about that management plan.

148.

Ms McWilliams: Have you managed to analyse how accurate you have been? What percentage have you got wrong?

149.

Mr Darnbrook: I suppose that is reflected in the figure that Mr Fulton mentioned earlier. Over this time there were five requirements to recall because of risk behaviour in the community. It could possibly be argued that we may have got something wrong in those cases, although it must be pointed out that the time that each had spent in the community varied considerably. They had, in the main, reached considerable stability and were well on the road to rehabilitation when certain issues in their lives came up and caused this difficulty. Overall, looking at that figure, we have been reasonably successful in our assessments and the level of error has been quite low.

150.

Mr Fulton: There is bottom line in that we are relieved to be able to sit here and say that nobody under supervision has recommitted a capital offence. It is important in our work in this area that it is rare in the UK and in European situations for that kind of reoffending to happen.

151.

Mr Paisley Jnr: I find your answer very interesting. You say that an offender or a person under rehabilitation can be well on the road to rehabilitation when something peculiar or not obvious has caused them to reoffend. Do you think it is right, under any circumstance, to propose the removal of supervision if something unforeseen on the horizon could upset an offender and make him or her reoffend? Should there not be constant supervision until that person is deceased?

152.

Mr Fulton: That line could be taken, although reoffending is not what Mr Darnbrook talked about. In the majority of cases it has been behaviour which has been of concern, rather than court decisions or a new offence. The balance of the judgement about the stability in a community is made on what supports are around.

153.

That is the balance of the judgement which is made about what the stability in a community may be. What are the supports for a feedback mechanism if someone's behaviour deteriorates? The Probation Board would be much more reluctant to recommend the end of the supervision period if someone lived an isolated life with no bounds around them.

154.

Mr Paisley Jnr: Again, this is resource driven. If you had the resources you would not need to make that proposal at all.

155.

Mr Fulton: It is about acknowledging that someone has started a new life and is getting on with it. In some cases it is obvious within a year of someone being released from prison that that person is so different from the person who committed the original offence. Part of our work is helping to lay down the foundation stones of that new life with a job or accommodation. Some people move on, but then some life event may hold them back and the Probation Board has to try to get them through that. Your point is very important, but quite often it is about looking at the range of supports and extended supports that they have, and whether there are feedback systems around.

156.

Mr B Hutchinson: You gave us very scant details about why the person went back into prison, but you said there were only five people in 30 years, which suggests that it was five out of quite a number. To use resources to track or supervise those people for the rest of their lives would be a total waste. We could be spending the money on preventative work, rather than on rehabilitation.

157.

Prior to the ceasefires there were 375 Loyalist and Republican life sentence prisoners on the street. In my understanding, only two were put back in prison and not for acts of violence. They were brought back on very scant evidence, which was contradicted by the courts. I am not questioning what you have said, but you should give us those statistics in writing. We do not need names but we need to know the total number of people of whom five reoffended, how long those people were in the community, and how long the supervision lasted. Hansard is reporting this and the statistics you have provided are not complete. If someone comes up with another question, those statistics could look foolish. If we could have those in detail, that would solve all the problems.

158.

Mr Fulton: As we said at the beginning, we were referring to those people who were under our supervision.

159.

The Chairperson: Thank you for your contribution this morning. I know you have a very difficult task, but are you making progress on the situation?

160.

Mr Fulton: We are well bedded in. It is an area of work which is planned and lasts for a long time. It is different from other areas of work which are much more immediate. It has a stability even in our agency with regard to the way in which we allocate resources.

MINUTES OF EVIDENCE
TUESDAY, 6 FEBRUARY 2001

Members present:
Mrs E Bell (Deputy Chairperson)
Mr Attwood
Mr Dalton
Mr B Hutchinson
Mr R Hutchinson
Mr J Kelly
Ms McWilliams
Mr Murphy

Witnesses:

Prof J Jackson ) Queen's University of Belfast (speaking in a personal capacity)

161.

The Deputy Chairperson: Thank you for coming, Prof Jackson, perhaps would you speak to your submission first and the Committee will ask questions afterwards.

162.

Prof Jackson: Thank you for inviting me to give evidence on the issue of life sentences. A paper was faxed to you this morning by my colleague, Prof Livingstone, although you may not have had an opportunity to read it yet. I will outline briefly some of the points in his paper.

163.

Prof Livingstone and I broadly welcome the draft Life Sentences (Northern Ireland) Order 2001. We do so for two reasons. The first is that the Order takes a principled approach towards the issue of life sentences for prisoners. By that I mean that the Order makes it clear that the liberty of the subject is a matter which primarily should be the concern of independent judicial figures rather than politicians.

164.

Obviously, I say this with some deference to members of the Committee, who are politicians. The point many people have been making for some years - for this Order reflects an approach we see being taken throughout Europe - is that sentencing and the larger issue of releasing life prisoners are better left in the hands of independent judicial figures rather than politicians. The worry, as regards politicians being involved, is the perception that political decisions or influences will govern their views. Where an independent judicial figure sits alongside experts, there should at least be some satisfaction that true impartiality governs these most important issues.

165.

As someone who has taken part in the Criminal Justice Review, I would say that the Order is a broad endorsement of the view expressed in the review that these issues are a matter for judicial figures. The Order makes the point that there are two distinct issues in life sentences. One is what the tariff should be. By "tariff", I mean the term necessary to ensure deterrence and retribution - in other words, the length of time a prisoner deserves. The Order clearly says that that should be a matter for the judge, who, when sentencing someone to a life sentence, should state what he or she feels the tariff should be.

166.

The second issue is protecting the public. Even when someone has served the tariff, he may still be a danger to the public for he may not be seen to have sufficiently reformed, therefore still posing a threat. That issue also requires an independent judgement. The Order says that, in future, that should be the decision of the Life Sentence Commissioners, who have been set up to replace the old Life Sentence Review Board, which formerly made recommendations exclusively to Ministers and the Secretary of State. The Commissioners will obviously decide the question of risk to the public in their own right. For the above reasons I feel that the Order is a principled approach to the issue.

167.

Another reason why I have broadly welcomed the Order is that it brings the area into compliance with human rights legislation. The United Kingdom has now incorporated the European Convention on Human Rights into its law, and it is clearly important that all its regions be seen to comply. That means not only complying with the Convention itself but also with Strasbourg court decisions which have emerged from it.

168.

In several decisions, the European Court of Human Rights has made it very clear that matters regarding discretionary life sentence inmates are for an independent court body to decide under Article 5.4 of the European Convention. Recently, because of the Thompson and Venables case in England, this category has come to include sentences relating to juveniles under the age of 17 and the issue of whether they are a risk.

169.

The European Court of Human Rights has not yet addressed the issue of mandatory life sentences and whether an independent judicial figure should take the decision to release prisoners.

170.

Experts more knowledgeable than myself have pointed out that the thrust of the recent decision in the Thompson and Venables case is that decisions relating to the issuing of a tariff are sentencing matters, which really ought to be taken by a judge. The decision on the Thompson and Venables case, in relation to issues such as release, seems to go in the direction of saying that such matters should be for judges and not politicians.

171.

I want to make those two basic points. First, the Order is a principled approach to sentencing and, secondly, it follows a human rights approach. A number of details could be raised about the drafting of the Order, and Prof Livingstone has provided the Committee with a paper 'Comments on Life Sentences (Northern Ireland) Order 2001', which contains detailed points in pages 2 to 4 examining the way in which the Order has been drafted.

172.

I do not know how valuable it would be for the Committee if I go into those issues in detail. There are one or two problems with Article 5 of the Order, which is not totally clear. The Article seems to suggest that people may still get life tariffs; that the judge, when sentencing someone to life, may say that the person should serve life to satisfy deterrence and retribution.

173.

Some people say that that is not the right approach, particularly for juveniles, and that it does not go along with some other Human Rights Conventions. It is an argument of principle as to whether juveniles should be given a life tariff, and it should be taken up. In any event, there are difficulties with the drafting of Article 5 of the Order in that it seems that even though a life tariff has been given, the Secretary of State may later refer the case to the Life Sentence Commissioners. That would happen when the Secretary of State takes the view that it would be appropriate to do so, but it seems to me that the circumstances in which it should happen are not terribly clear.

174.

There are other detailed points in Prof Livingstone's paper. One relates to the substance of the test in the Order that the Commissioners have to apply. The Order suggests that the test is whether the Commissioners are satisfied that it is no longer necessary for a person to be detained in order to protect the public. That seems to be what is laid down in Article 6(4)(b) as the crucial test for the Commissioners. However Article 3(4)(2) suggests that the Commissioners should take other criteria into account, one of those being the issue of rehabilitation. Is the Order clear enough about what the tests should be? Some Commissioners might take the view that while someone is no longer a threat to the public he might be better rehabilitated inside prison rather than outside it. If they take such a view, the suggestion seems to be that they should not release the prisoner. However, Article 6(4) seems to suggest that the only criterion is that of risk; is the person a risk to the public?

175.

I feel there is a problem about what the tests should be. There may also be an issue as to where the burden of proof should lie. At the moment, it is for the prisoner to show that he is no longer a risk to the public. That is not stated clearly in the Order, and there is an argument that - given that this is an issue of liberty - we should be discussing whether the onus should be with the Secretary of State to make the case that a person remains a threat to the public, and not vice versa. Other points are made in Prof Livingstone's paper, which I will address, but I was asked to give a brief introduction and I am conscious of the time.

176.

The Deputy Chairperson: You have raised many concerns that we identified. It may be useful for Members to ask some questions to expand on that. With respect to human rights, does the current law in Northern Ireland governing the sentencing to life imprisonment and detention at the Secretary of State's pleasure comply with all relevant human rights law?

177.

Prof Jackson: No, it does not comply, particularly with regard to people being detained under the Secretary of State's pleasure. The Thompson and Venables case made it clear that issues involving the sentencing and release of prisoners are matters for a judicial body. At present, that is not the case. Although the Life Sentences Review Board can make a recommendation to the Secretary of State, it is merely a recommendation. At present, the Board is not an independent judicial body that would satisfy the requirements of the European Convention.

178.

The Deputy Chairperson: Does the current law in Northern Ireland governing the release on licence of those on life imprisonment and those being detained at the Secretary of State's pleasure comply with all relevant human rights law?

179.

Prof Jackson: No, for much the same reasons, such as the recent European Court decisions.

180.

Mr B Hutchinson: I agree that politicians should not make these decisions. However, I am not sure that there is any such thing as an independent judicial figure, particularly when some people have such right-wing views that they want to hang you, or keep you locked up, rather than try to rehabilitate you. I am not sure whether it is worse to have an independent judicial figure or a politician.

181.

I am concerned about how the tariff works in England. If we take the case of Private Thain, he committed his crime in Northern Ireland, but went to England. He should have been sentenced under Northern Ireland law, which would have meant that the sentence would not have been reviewed for 10 years, according to the Life Sentences Review Board. However, his sentence was reviewed after 18 months. My understanding is that in England the sentence is reviewed after 18 months, then again after five years, eight years and 10 years. How can that happen if there is a tariff?

182.

Prof Jackson: In England, the Home Secretary has made such decisions and, over the years, successive Home Secretaries have been very jealous about their power in this regard. They believe that they should have the sole decision and, therefore, should keep discretion as to what they think the tariff period should be.

183.

In Northern Ireland, the Life Sentences Review Board has developed some guidelines as to when a case can first be looked at. However, in England, the Home Secretary has kept that decision very much to himself, up to now, on the grounds that his discretion should not be fettered by anybody and that he has to reflect public opinion. To some extent, that is what this argument is about; should decisions be taken by politicians to reflect public opinion, with the danger that there may be inconsistent treatment by the Home Secretary.

184.

The case you mentioned was obviously exceptional. To some extent there still are guidelines in England, but I think Ministers there have been very jealous about their discretion. Of course, insofar as mandatory life sentences are concerned - for murder, in which a life sentence must be imposed - the position has not changed in England yet. This Order would take us beyond England in this respect because it would be handing over such decisions to other people.

185.

Mr B Hutchinson: If somebody has been sentenced to life imprisonment why would you need to set a tariff? You do not have to release anybody? Do you think that deciding the tariff on the day somebody is sentenced is a punitive action, or would you prefer to see how somebody has been rehabilitated and then decide when he should be released? Do you understand what I am asking?

186.

Prof Jackson: Yes, I see your point. In practice, people are invariably released even after being sentenced to life imprisonment. So, even though we talk about a life sentence, that hardly ever happens, although there are obviously exceptions. We are then faced with devising procedures for the release of people sentenced to life, and perhaps one of the best ways is by dividing up the issues. The first issue is what length of time society requires the person to serve in prison to satisfy retribution, deterrence, and so on. That should be for the judge to decide at the trial.

187.

Following that period, we have to look at issues such as rehabilitation and risk. We have to consider individual cases and whether it is appropriate, with the tariff period having been served, for that person to be released. That seems to me to be a separate issue, but a very important one. It is so important that it is one that a judicial body should probably take - [Interruption]

188.

Mr B Hutchinson: There is a term in the Order, "risk to the public", which you referred to earlier. Do you think that term could be better defined?

189.

Prof Jackson: That is a very good point and it is one made by Prof Livingstone also. In England, when the Parole Board makes recommendations - and I stress that they are recommendations, except in the cases of those on discretionary life sentences - guidelines have been given to it as to what is meant by risk to an individual. These include the factors that should be taken into account, such as whether you should look at what that person has done in prison, their past, and so on.

190.

This Order does not really give any guidelines, nor does it allow for guidelines to be made. One would not necessarily expect a matter of detail like that to be in the Order but one would like to see provision being made in the Order for guidelines or directions to be established, perhaps with public consultation. The Life Review Sentence Commissioners could actually go about that themselves. But, however it is done, there is a strong argument for it.

191.

Mr Murphy: Article 11 of the Order ensures that the Secretary of State still has the final say, but it is not made clear as to what criteria governs him, such as secret reports and so on. Do you have an opinion on that?

192.

Prof Jackson: That is a good point because the Order is looking at what should happen from now on. This creates an important question about what should happen with existing life prisoners, and the Order suggests that should be a matter for the Secretary of State to refer to the Commissioners. One would not need to have that system. There are other ways of doing that, but the Order clearly says that it should be a matter for the Secretary of State.

193.

Mr R Hutchinson: Mr B Hutchinson's questions were about tariffs. If someone is given a tariff, of say 25 years, is there a mechanism by which they can serve less than that?

194.

Secondly, as we hear a lot about human rights, where do you see the victims' human rights coming into this whole scenario?

195.

Prof Jackson: As regards your first question, it would not be a possibility under the Life Sentences (Northern Ireland) Order 2001 for people to be released before the tariff has been served. The judge sets the tariff at the trial, and that period has to be served. The Life Sentence Review Commissioners will only look at the question of release once that period has been served.

196.

Mr B Hutchinson: Can you explain the difference between the tariff set by the judge and a recommended sentence that he gives? There is confusion here. Are they not two different things?

197.

Prof Jackson: Judges have tended to say "I recommend this," or, "I recommend that". Regarding mandatory life sentences for murder, the Secretary of State has had to consult with a judge - judges may not have said it in public - as to what the tariff period should be. That is going to be changed under the Life Sentences (Northern Ireland) Order 2001.

198.

Mr B Hutchinson: What I am trying to draw out is that that is different from the judge saying at a trial, "You have to do 25 years".

199.

Prof Jackson: It will be stronger now - if I may say so - for it will no longer be just a recommendation. The suggestion is that the judge will set the tariff and that will be the period to be served.

200.

Mr R Hutchinson: Are you saying that there will be no early release?

201.

Prof Jackson: That is right. As I understand it, the intention of the Life Sentences (Northern Ireland) Order 2001 is that there will be no release until the tariff period has been served, except on exceptional compassionate grounds.

202.

The Deputy Chairperson: What about the judge recommending a sentence? Will that be out?

203.

Prof Jackson: That is right. Recommendations are no longer going to be in. It is about setting the tariff and that is it: full stop.

204.

Mr R Hutchinson: What about the victims' human rights? Say someone commits rape and is sentenced to something like 3 months. Should there be input from victims, or would that be too emotional? Should they have any say?

205.

Prof Jackson: That is a very good question. It is very important for the sentencer, at trial, to ensure that he or she is aware of the impact on the victim. There are mechanisms in certain other countries that allow victims to give "impact statements" directly to the court.

206.

The Criminal Justice Review did not actually go so far as to recommend that that should be introduced in Northern Ireland. They suggested that it should still be for the prosecuting body to bring the experiences of the victim to the court, and not for the victim to come directly to court. However it is done, sentences have to have regard to it. That is why the tariff is so important -the tariff needs to represent that view in the sentence.

207.

Mr R Hutchinson: That is an excellent answer and I appreciate it, but maybe I phrased the question wrongly. The legislation provides for the Commissioners to discuss whether a person is suitable for release. I was thinking about that particular point, rather than at trial.

208.

A victim could be blinded and might want retribution. Should there be some mechanism somewhere for the representation of victims in that particular area - be it a female who has been raped or a child who has been abused? Is that not workable?

209.

Prof Jackson: That certainly would be possible, but then the whole test that the Commissioners would have to apply would be different. The Life Sentences (Northern Ireland) Order 2001 says that now, once that tariff period has been served - and that should represent the interests of the victim - the only ground that the Commissioners should be looking at is risk to the public. That question of risk to the public might involve the views of the victims, if they feel that they are still at risk. That would be relevant.

210.

Mr R Hutchinson: I fear that the Commissioners will replace the Secretary of State, which will not make a difference.

211.

The Deputy Chairperson: We will have to consider that point.

212.

Prof Jackson: We will have to see how that will work in practice.

213.

Mr Attwood: You said that the question of prisoner releases should not be considered by politicians. However, that was the primary point made by the Human Rights Commission in its critique of the proposed legislation. Politicians have an extensive role in the proposed procedures. For example, Article 5(4) confers discretion on the Secretary of State to

"at the appropriate stage direct that the early release provisions shall apply."

214.

Article 5(5) states that the Secretary of State specifies the part of the sentence that must be served before early release provisions apply. Article 9(2) states that the Secretary of State can call a released prisoner to prison without consulting the Life Sentence Review Commissioners. The list goes on.

215.

The Secretary of State has a strong involvement in determining what occurs operationally. The structures of an independent process are in place, but political involvement at critical points remains. That political involvement could mean that on the one hand, a prisoner could be recalled, or on the other, he could go forward to review. The system only determines what the Secretary of State allows it to determine. Is that a fair criticism of the proposal?

216.

I say that because the Secretary of State is retaining enormous powers, which can be seen in the Police (Northern Ireland) Bill, The Flags (Northern Ireland) Order 2000, and so forth. That is a cause for concern and reflects the culture in the British Government that they want value for their pound on one hand, and a role beyond their remit on the other.

217.

Prof Jackson: That criticism is fair with regard to existing life prisoners. There is a problem because, while the Order looks forward, it deals with the question of existing life prisoners and suggests that that will still be a matter for the Secretary of State to refer. So far as the future is concerned, your criticism goes a little bit too far. The Secretary of State's involvement will be limited to situations in which the judge has set a life tariff, meaning "Life should mean life". The setting of a life tariff is rare. Of all of the convicted murderers in England, very few - if any - are serving a life tariff. Admittedly those are controversial cases and a judge could say, "Life should mean life". However, under Article 5 of the draft Order that is the only circumstance in which the Secretary of State has the power of review and can send the case to the Life Sentence Review Commissioners.

218.

The appointment of the Commissioners could be an issue for concern. If the Secretary of State is to appoint these Commissioners, one might like to see greater independence in the process. It is also important to know why there is no Life Sentence Board. These Commissioners will be supported by civil servants from the Prison Service. If, on the other hand, there was an independent board of which the Commissioners would be part - similar to the Criminal Cases Review Commission or other such bodies - then it would be staffed entirely by their own people. That would create a culture of independence that would be greater than under the present provisions.

219.

Mr Attwood: The culture of independence has been undermined further by the Criminal Justice Review. The Probation Board has been brought into the mainstream of the criminal justice family.

220.

Mr Dalton: I am particularly interested in the comments you made on the possibility of a whole life tariff being handed down by the court. Is it your contention that the court should not, under any circumstances, be able to award a whole life tariff to a defendant, or is the objection simply that the Secretary of State is the one who determines whether or not that will have effect?

221.

Prof Jackson: There are two different objections there. The first one is as question of principle: should there be a possibility of a life tariff? My own view is that for people who are under 18, it is a very sweeping thing at that time in someone's life to say that the tariff should be life, and that life should mean life. I would certainly object, and I think that human rights provisions go along with that. There are strong objections to that for people under 18.

222.

As for adults, it would have to be a very rare case, and no doubt there would be views either way about whether there should ever be a situation like that. The second objection I have is that too much discretion is given to the Secretary of State, once there is a whole life tariff, to decide when to send the case to the Life Sentence Review Commissioners. The Order should be clear about the circumstances under which the case should be referred to the Commissioners.

223.

Mr Dalton: Schedule 2, line 15, allows the Secretary of State to say that certain information should not be disclosed to the prisoner or his representatives. What is the major problem that you have with that? Do you not foresee circumstances in which information may need to be confidential? Do you not think that the appointment of a special advocate deals with the article 6 problem?

224.

Prof Jackson: The appointment of the special advocate goes quite a long way towards meeting human rights objections, but I do not think it goes the whole way. As I understand it, under the proposed Order the Secretary of State can deem certain information to be confidential. However, human rights judgements in Europe have tended to say that when the Secretary of State or Government want to classify certain information as confidential, they should get the court to sanction it. They also say that there should be a judgement by the court to make that information properly confidential. There is an independent judgement on how confidential it is. Only then, if it is not confidential, should it be disclosed, but at least the court establishes that. That certainly seems to be what happens in criminal cases. There was a case last year wherein it was made very clear that it was a breach of Article 6 of the European Convention on Human Rights, in a criminal case, for the prosecutor to decide what should be privileged.

225.

Mr J Kelly: In this legislation we are looking to the future, not the past. We are looking at a different scenario. The notion of retribution and deterrence might not have been as applicable to those who considered themselves political prisoners as it might be to other categories of prisoners.

226.

On the question of political interference and having independent reviews, you mentioned that "Life is life" very rarely comes into play, except for Hindley and Brady, for example, which is very much a political issue. The Bulger case was somewhat different. They were two juveniles who had to make a transition to adulthood. However, there is a wealth of information to show that eight years imprisonment can have a debilitating effect. Therefore, fulfilling the criterion of public safety becomes more difficult, rather than less, for a prisoner who has served more than eight years. Would you like to comment on that? Understandably, the ability to fulfil a rehabilitative role is diminished.

227.

Prof Jackson: That is an important question and it raises many important issues. As to what extent there should be rehabilitative schemes for prisoners in prison, present resources do not often allow for that. That results in the situation that you mentioned, namely that people who serve a number of years in prison end up being unable to cope with life outside. We should be doing the opposite, that is, trying to create conditions for them in which they can deal with life outside.

228.

In setting the tariff, there are many considerations to be taken into account. The victim is a consideration at that stage. You have to look at that, at what society will accept, and so on. You cannot look at the issue entirely from a rehabilitative point of view. That is a matter for the judge. The importance of this legislation is that once that is set, these matters of risk need to be looked at in the context of what prisoners, in prison, are given to do. Guidelines on risk and resources are important.

229.

Mr J Kelly: Is it the relatives of the victim that we are concerned with, rather than the actual victim - particularly if we presume that the victim, in the case of a murder, is no longer looking at retribution? Could that also become emotive?

230.

Ms McWilliams: There is no easy way to put that.

231.

Mr J Kelly: For example, I was in prison during the 1950s, when people who were non-political who were in for murder got out after seven years.

232.

Ms McWilliams: We are looking at the human rights implications when we talk about the importance of guidelines for risk assessment. Clearly, that means reoffending as well as deterrence and retribution. You mentioned English provisions in relation to some guidance. Can we see the guidance that is currently available to the Parole Board?

233.

Secondly, who should produce that guidance? I understand why you are concerned that that is not set out in the Order. Although there may be some doubts as to whether it is the responsibility of the Secretary of State, nonetheless it could help the Commissioners. Since we are talking about risk assessment in general terms, it is possible to look at what is currently available, but perhaps we should also look at how we can build on that.

234.

Mr R Hutchinson: Do you agree that the human rights of the victim are as important as the rights of the perpetrator?

235.

Ms McWilliams: I want Professor Jackson to answer that question.

236.

Prof Jackson: I can make available the guidance that is provided to the Parole Board in England for mandatory life sentence prisoners there. It was drawn up by the Home Secretary. As you say, there is an issue as to whether it is appropriate that the Secretary of State should be responsible for that. It is not clear who should be doing it.

237.

However, these guidelines are something that the Commissioners will have to evolve over time. It would be a good exercise for them to engage in consultation with the public and with people like yourselves in order to draft those. That must be done in a way that appears to be more open and transparent, rather than how it was in England, where it was done mostly by civil servants for the Home Secretary.

238.

A key point is that initially one would like to see some guidelines, or at least provision in the Order for these guidelines to be drawn up. We will be calling those people more into account than at present. Their job is to look at risk, but there is no indication as to how they are to do that.

239.

Ms McWilliams: If the guidelines were transparent and published it would take out the element of discretion.

240.

Prof Jackson: That is exactly right.

241.

Ms McWilliams: It would also address the issue from both sides.

242.

Prof Jackson: Issues will be raised about the extent to which the victims should be taken into account. It would be much better if that issue were transparently addressed. That would allay public concerns as to what they should do.

243.

The Deputy Chairperson: I think that that is indeed necessary. We would all agree on that, and that is a very good point to end on. Thank you for your submission. If you can let us have the further information that Ms McWilliams requested, that will be helpful to us in our consideration. I know that you are as busy as we are; it was very good of you to appear before us, and your submission was very interesting.

244.

Mr Close: What would that be?

245.

DS Thompson: There would need to be approximately 25 people with various backgrounds to make an impact.

246.

Mr Close: Would that include a director for Northern Ireland?

247.

DS Thompson: There will be an overall national Director. There should also be an assistant director based in Northern Ireland. He would be solely responsible for Northern Ireland. Ideally that is what is necessary.

248.

Mr McNamee: Significant powers are already available to the RUC under the Proceeds of Crime (Northern Ireland) Order 1996. Some of the investigative powers under that Order are unique to the North, and they will be enhanced by the introduction of the Financial Investigations (Northern Ireland) Order 2001. You said that the RUC has identified approximately 180 individuals who are worthy of investigation. Does that represent 180 out of 200? How many have you not identified? With regard to the existing powers and those people, how is the existing legislation inadequate in view of the fact that there are powers unique to the North?

249.

DS Thompson: I cannot say how many people have not been identified. The purpose of the exercise was to identify people with assets, and that is the number that we came up with. There may be some still unidentified, but I suspect that we are looking at the bulk of the number already.

250.

With regard to inadequacy of the Proceeds of Crime (Northern Ireland) Order 1996 the new legislation will bring together separate legislation, which has existed on the mainland, and re-enacts the Proceeds of Crime (Northern Ireland) Order 1996. However, there are enhancements, particularly in respect of mandatory assumptions. Perhaps that was the weakness in the Proceeds of Crime (Northern Ireland) Order 1996. You quite rightly point out that we have unique power under the Proceeds of Crime (Northern Ireland) Order 1996, which is being re-enacted to some degree and enhanced in the Financial Investigations (Northern Ireland) Order 2001.

251.

Mr McNamee: Will the Bill equate the powers of investigation throughout England, Wales and Northern Ireland?

252.

DS Thompson: It standardises the legislation throughout the three areas taking into account the different judicial procedures in Northern Ireland.

253.

Mr Kane: Will CARA pursue paramilitaries who are on ceasefire, as there is little doubt that is they who have assumed the drugs franchise in Northern Ireland?

254.

DS Thompson: CARA will tackle individuals. It is immaterial as to whether those individuals are members of organisations. CARA will not be there to target an organisation per se. If individuals have substantial assets from crime then they will be the subject of attention.

255.

The Chairperson: CARA will be a separate statutory body set up under the legislation. There will be a memorandum of understanding between the RUC and the CARA. Can you give any indication of the relationship that will exist between the police and CARA when it is set up? How do you envisage that operating?

256.

DS Thompson: I envisage that it will be a very close relationship. It is not beyond the bounds of possibility that police officers will be seconded to it - particularly in the early stages - to get it up and running.

257.

The Chairperson: Will it be a matter of the police informing CARA that there are a number of individuals that are worthy of examination under the new legislation?

258.

DS Thompson: Yes. They will have access to a considerable amount of police intelligence.

259.

The Chairperson: Have you had any relationship with the Criminal Assets Bureau in the Republic of Ireland regarding its operations, or learning from it?

260.

DS Thompson: We have worked with them on a couple of joint investigations, and have operated simultaneously. They have pursued individuals in the South and we have done likewise in the North against those involved in the same criminality. The Criminal Assets Bureau has taken forward the aspect of confiscation regarding its jurisdiction. That is the closest we have operated, although we are familiar with the mechanism of the Bureau.

261.

The Chairperson: As a professional police officer, how would you rate the success of the Criminal Assets Bureau?

262.

DS Thompson: The Criminal Assets Bureau has only been operating since 1996 and its legislation is rather different. Confiscated assets are held for seven years before disposal. That is not going to happen in CARA. Similarly, the bureau is headed by a police officer and is very closely aligned with the Garda Síochána. CARA will be a stand-alone agency outside the police service. I do not think that it is the intention that it be headed by a serving police officer, but it will have a close relationship with the police. There are some distinct differences between the two organisations.

263.

The Chairperson: Thank you, Mr Thompson. We will welcome any further information you can give.

MINUTES OF EVIDENCE
THURSDAY 26 APRIL 2001

Members present:
Mr A Maginness (Chairperson)
Mr Attwood
Mr Close
Mr Clyde
Mr Ervine
Mr Kane
Mr McNamee

Witnesses:
Mr V Harvey (National Criminal Intelligence Service)

264.

The Chairperson: Thank you very much, both for coming before us this morning and for the documentation that you have given to the Committee. Would you like to make an opening statement?

265.

Mr Harvey: I listened to the statement made by the RUC earlier this morning and I do not have much to add in general terms. A few comments about the National Criminal Intelligence Service might be of help.

266.

The Chairperson: Yes, that would be very helpful.

267.

Mr Harvey: Although created 10 years ago, we gained independent status as the National Criminal Intelligence Service three years ago. We are a multi-agency, law-enforcement organisation that serves the whole of the United Kingdom. That, in itself, is unusual. Although set up under the Police Act 1997, and predominantly seen as a police organisation, we consider ourselves to be a multi-agency organisation. About one third of our strength consists of police officers. The next largest component consists of customs officers, and almost every other agency that has some kind of law-enforcement role in the United Kingdom is represented.

268.

One of our principal roles is to prepare a UK threat assessment, which is an overview of actual crime impact upon the United Kingdom, as distinct from crime that is reported. We try to find out what is going on underneath the layers, so we include crimes that do not normally come to the attention of the police. We also focus our intelligence-gathering processes on the top tier of criminality throughout the United Kingdom. We have a number of specialist desks that focus on particular crimes. We also provide a number of services to law enforcement, ranging from the interface with Interpol and Europol to the UK National Schengen Information System or Sirene Bureau, which will be based here. We have our own liaison officer network throughout Europe in order to facilitate law enforcement enquiries, wherever they may be.

269.

I am in charge of the UK division. That, by definition, includes offices throughout the UK and the various specialist intelligence desks for particular crimes. Those vary from heroin, cocaine and synthetic drugs to serious sex-offenders and counterfeit currency. I am even responsible for the football hooligan desk. I should emphasise that that only applies to English hooligans, as we do not do any work on other countries' hooligans.

270.

Those are, loosely, our terms of reference. We are currently about 700 strong and are due to grow, through the various different funding systems, to about 900 over the next 12 months. I hope that we will continue to grow.

271.

The Chairperson: Thank you. Looking at the draft Proceeds of Crime Bill and at some of the points made in your documentation, I suppose the most innovative aspect of this draft Bill is the civil recovery issue. That represents quite a change and a departure from normal legal standards in the UK and in Northern Ireland. How would you answer the argument that that is going too far in trying to protect society from criminals by endangering the human rights of individuals who are the subjects of investigation?

272.

Mr Harvey: One can see the true nature of the concern. Human rights has been a theme from the outset and throughout the work that the organisation has been involved in. As law enforcement officers, we came to it from a simple basis, which is that there is no human rights legislation anywhere that says that criminals have the right to enjoy the continued profits of their crimes. Their victims also have human rights that need to be protected. As long as we can get the balance correct, then that is right.

273.

The focus of the European Convention on Human Rights (ECHR) is proportionality and necessity. The people whom we envisage being brought to the attention of the Criminal Assets Recovery Agency (CARA) are those whom we bring through necessity, because we cannot get a criminal prosecution in reasonable terms. This is the appropriate means to bring them before the courts in some way. There are a whole host of reasons why they may not be readily available for criminal prosecution. We are strong on the fact that if criminal prosecution can take place, it must still have priority. However, in the case of people higher up in the structure and funding of organisations, it has proved to be virtually impossible to associate them directly with specific crimes. The cost of trying to bring that type of case is disproportionate.

274.

The National Criminal Intelligence Service (NCIS) feels that criminal prosecution is an essential weapon in combating criminals rather than letting them continue to grow. Of course, many of these criminals, particularly in the drugs trade, are extremely cash-rich. If we improve our tactics to prevent money-laundering, criminals will not be able to bring their money back into the system. However, they have to do something with the money, and the most obvious thing to do is to divert the money to other crimes and the funding of other crimes. They may use drug money to buy a new counterfeit printing press or to bring in more bootleg beer. We are looking at a wide range of activities by those types of people, because they are cash-rich. We must find a way of stopping that.

275.

The Chairperson: We had the chief commissioner of the Human Rights Commission here the other day. He accepted, of course, that criminals should not enjoy the fruits of their criminal endeavours, but one of his worries was the concept of civil recovery itself. He was not opposed to innovative measures, but he was concerned about shifting the onus from the state to the individual under investigation to show that, in fact, his assets were acquired legitimately. Should that be the situation? Could CARA or another such organisation not operate under the traditional law that dictates that those who are making the accusations discharge the onus of truth?

276.

Mr Harvey: My understanding is that it has not quite shifted that far. There were those in law enforcement who sought an actual reversal in the burden of proof so that we, as law enforcement, could bring the person either before an agency or, through an agency, to the High Court and ask him or her to prove that the money had been obtained legitimately. That is not the case. CARA, other such groups and the High Court must be convinced that the person is involved in criminal activity. It is then up to the person to use the opportunity to explain how he or she comes to have the money, given that we can see no legitimate way in which it could have been earned. That is not quite the same, I would argue, as saying that the burden has suddenly shifted to the person and that we will descend on them and ask where the money came from. We must prove that the person is involved in criminal activities.

277.

The criminal standard of proof is "beyond reasonable doubt". That is why - as we saw in the case of the development work - if there is any element of doubt in the whole thing, it gives the criminal the opportunity to walk away with the proceeds of the crime and continue to enjoy them. The last thing that we want is for this type of innovative legislation not to work.

278.

The Chairperson: To go back to the mechanics of the draft Bill, is it envisaged that the director of CARA will sue the person, and that CARA must show that that person has a criminal lifestyle? Is that the first stage of the process?

279.

Mr Harvey: Yes.

280.

The Chairperson: At that point, is the onus of proving that the assets were acquired legitimately shifted to the defendant?

281.

Mr Harvey: The opportunity to explain how the assets were acquired is shifted to the defendant. We are talking about a person who has never worked - only drawn the dole and equivalent benefits - yet has a million-pound house, a flat in London and a villa in Spain. I am not exaggerating. If you asked me how I got my house, I could quickly show you. The innocent person has nothing to worry about. The other side is, of course, that we must build appropriate structures so that we are satisfied that those people who are brought to the attention of CARA and the cases that the agency takes forward are targets worthy of attention. It must not be seen as some sort of back-door route for shoddy law enforcement.

282.

The Chairperson: To finish the point about procedures, am I right in saying that civil recovery is a two-stage process - establishment of a criminal lifestyle, then the shift in the onus of proof to the defendant - and that that is all done in the context of a High Court action?

283.

Mr Harvey: Yes, in accordance with High Court standards. There are no short cuts.

284.

The Chairperson: The High Court has to be presented with actual evidence. Pure intelligence would not be sufficient?

285.

Mr Harvey: Absolutely, regardless of the degree of that intelligence or its relevance. I suggest that that will require counsel, and perhaps judges, to be more highly trained. It will at least require them to be informed on the structure so that they have an understanding of the processes behind it.

286.

Mr Kane: Has the National Criminal Intelligence Service (NCIS) been the subject of any breach of security in the last two years?

287.

Mr Harvey: No. We are subject to reports on all our activities by the Data Protection Commission and the European Court of Human Rights. Obviously, our various applications are examined for intrusive surveillance, et cetera. We are very strictly monitored, and work in accordance with the law. I cannot think of a single breach. I would not like to say that we have done everything perfectly, but there is a difference between making a mistake and having overt breaches. Any mistakes would normally be in dates of cancellations and such.

288.

Mr Kane: How much work has been focused on the evasion of duty on fuel imported from the Irish Republic in the last year?

289.

Mr Harvey: Virtually none. The NCIS presence in Northern Ireland is nominal. We have one police officer and one support worker. It is perhaps relevant to say at this stage that we sought increased funding in the last budgetary bid in order to enlarge the office here, but it was not given to us. We are now following other routes. That said, a Bill is before Westminster that will change the way we are funded, so there is a future opportunity. I am on the organised crime task force, and we see that there is a major tool to be applied here.

290.

Criminals and their commodities see no boundaries. To think of them as having any sort of regional restriction is a common misconception. When we attack major drug dealers in, for example, Liverpool or Manchester, we see that their trade routes extend to Northern Ireland and the Republic and into Scotland. The integration and melding of all that information and intelligence makes law enforcement more useful. That is our value.

291.

Mr McNamee: You said that NCIS believes that the powers given by this Bill are essential in the recovery of the proceeds of crime from people who have so far been, shall we say, untouchable. I would be interested in your comments on some of the information we have been given, and your views on the extent of investigative interest in a number of individuals in the North of Ireland in comparison with England and Wales. I would also be interested in your views on a comparison of the assets involved.

292.

If the Bill is essential, then it is essential that it can operate. The Northern Ireland Human Rights Commission has raised several issues in relation to the Bill and article 6 of the European Convention on Human Rights (ECHR). Some people view the Human Rights Commission as a body that worries too much about the rights of criminals, but it has a statutory role in ensuring that our legislation is compliant with European legislation and a duty to advise people if it thinks that it may not be compliant. If it is not and the Bill is introduced, implemented and subsequently and successfully challenged in the European Court of Human Rights, then of course the whole purpose of the Bill would be undermined. It is essential that the Bill complies with human rights legislation. I am not trying to tell you what you already know, but I want to pre-empt what I want to ask you.

293.

Some of the concerns raised in terms of compliance with the human rights legislation were about the limitations on recovery of assets. If a person is deemed to have a criminal lifestyle, do you take everything that they have ever possessed? How do you establish what part of their property is the result of the proceeds of crime and what part has been legitimately obtained?

294.

Another issue is the burden of proof - moving the standard of proof from "beyond reasonable doubt" to a "balance of probability". The Human Rights Commission felt that it should be stronger than a simple balance of probability, although in terms of civil recovery, "beyond reasonable doubt" might be setting too high a standard in terms of recovering the proceeds of crime. The Bill is not complete - at present, it does not cover that particular point - but there was a concern that the burden of proof issue could also affect its compliance with the human rights legislation.

295.

My third point concerns the six-year retrospective nature of the Bill. It will affect any property that a person has obtained up to six years before the date of the Bill's introduction. It was felt that the extent of that period might also have some implications in terms of article 6 of the ECHR.

296.

Mr Harvey: There are a host of issues there. I was not primarily involved in the original work, either before or after the Performance and Innovation Unit report that generated this in Westminster. Of course, the ECHR has been at the forefront. This has all been referred to the appropriate lawyers throughout, to ensure that it is ECHR-compliant from the start.

297.

As a pragmatist, I feel that the first case of any great size that is brought by CARA will certainly be challenged. The type of people that we will be attacking through this will be able to spend a great deal of money on defending themselves. We must anticipate that, which is why it is going to take a certain amount of time before large numbers of criminals are brought to book in this way. It will start off slowly and then develop incrementally, which is why there is only relatively small funding to start with for what will be a relatively small number of cases. It will then build up over time. I do not anticipate thousands of criminals being brought before the High Court straight away.

298.

We remain convinced that it is compliant with ECHR. We believe that it is proportionate, accurate and necessary to bring these people to book. This has not just been driven by law enforcement asking for an easy solution, it has been driven by the courts, it has gone to the Lord Chancellor's Department, and everybody at Westminster level has examined this and agreed that these principles can be complied with.

299.

It should not just be seen as a money-gathering exercise. I understand that we are focusing on that, but the Bill brings in many other things. It need not just be the drugs or terrorist organisations that we can get the assets from, or taking money from people who are literally moving large sums around. We are now seeking certain other changes in the area of cash seized, not at borders, but where it is being moved around the country, because we can literally see large volumes of cash being passed around. We need a panoply of weapons if we are to attack the financing of organised crime, as opposed to individual assets.

300.

Mr McNamee: What is the situation in England and Wales?

301.

Mr Harvey: Difficult as it is to believe, after three or four years we are still trying to compile figures on how many villains in the United Kingdom are worthy of our attention. My starting point was to establish how many of our targets were worth £1 million. I can assure you that every one of them is worth at least that. We look at the house they live in and at the businesses they own; we also consider other factors, but the size of their business is what first attracts our attention.

302.

A minor player would not attract the attention of the National Criminal Intelligence Service. Of course, a small-time drugs dealer, who is for whatever reason beyond the reach of local law enforcers, will have a much greater impact on a small rural community than he would in a big city, and we must take that into account. We want to improve people's lives by taking such criminals out of the picture. I cite the example of a drugs dealer, but none of the criminals we deal with restrict their trade to drugs.

303.

Mr Ervine: Are there international implications? Can a wealthy criminal move his interests - not necessarily his criminal interests - beyond your jurisdiction?

304.

Mr Harvey: They can most certainly move their interests and money out of the United Kingdom, and I consider that to be an important part of disrupting their activities. A part of the United Kingdom that is not diligent in applying this legislation will find itself prey to organised crime. That is why we stress the importance of consistency of approach. Countries that have introduced such legislation have found that organised crime has been quick to move its money - even the threat of it is enough to make criminals move their money.

305.

One of my responsibilities is the financial intelligence unit, which deals with suspicious disclosures. Through that, we track the movement of moneys to countries that have signed a protocol or agreement. Of course, that must be converted into evidence, but it means that the world is beginning to realise the importance of uniting to fight the movement of criminal money. To date, 58 countries have signed an agreement, and we hope that that will increase by another 16 in the next two years.

306.

No countries want criminal money; it does them no good. Of course criminals will move their money around, but that does not mean that it will be beyond our remit. We might find it extremely difficult to recover that money, but we can tell a judge that it is relevant that so-and-so owns land in a foreign country and leave it to the judge's discretion to decide on how it was paid for.

307.

Mr Ervine: How independent can a politically appointed director be? Can he be free from interference from, say, the Home Secretary?

308.

Mr Harvey: Actually, I am not concerned by that particular issue. That might be naivety on my part, but I do not believe that it is. Obviously, until the director and others are actually appointed, we can not define the detail precisely. We certainly see NCIS as a clearing house for the role, for many reasons.

309.

First of all, we have to know if this person is a criminal worthy of attention. The last thing we want, as I said earlier, is police officers getting some sort of cheap revenge on somebody who they happen to dislike. That is a possibility. Furthermore, we want to hit certain standards, because there are only going to be a limited number of cases. We will be doing that. Also, what we will need to ask is whether, by impacting upon this particular person, we will affect another inquiry -

310.

Mr Ervine: What worries me more - illegal though it may well be, and we all should be annoyed, hurt and frustrated that there is illegality in our society - is that I can picture one of the major designer companies or one of the major label companies getting into the ear of the Home Secretary, who then gets into the ear of the director, who then directs his resources, and the next thing is that we see on the news that all this counterfeit clothing has been lifted. While that is perfectly legitimate work for the service to do, it is the question of political direction that I worry about. You absent yourself from needing to think about that because you are not a politician, but you are a citizen and you should wonder whether or not it is the right way to direct a service.

311.

Mr Harvey: Rather than saying that we have not though about it, we should stress the independence of NCIS. We will be determining that these people are worthy targets. If we do not agree that they are worthy targets, then we do not believe that CARA will be taking them on. In the general outline, that has been agreed.

312.

Furthermore, we do not report direct to the Home Secretary. We report to a separate service authority, similar to the Police Authority, which has public meetings and which is accountable. Obviously there are parts of that that are not public, but it has local politicians, professional businessmen and the like, and they will ensure that we are complying with what they think is appropriate. We have to report to them on our activities. We are the only independent intelligence agency, and we are headed by a chief constable. I think that the autonomy of chief constables is fairly well known in the United Kingdom.

313.

Mr Ervine: Do you operate informants?

314.

Mr Harvey: Yes.

315.

Mr Ervine: Do you, then, closely follow the Regulation of Investigatory Powers Act 2000?

316.

Mr Harvey: We follow it exactly.

317.

Mr Ervine: Therefore, there must be commi- ssioners?

318.

Mr Harvey: Commissioners inspect our work regularly. There are similar restrictions on every other part of our activity, for example, the Data Protection Act 1998.

319.

Mr Ervine: In that case, the only thing that is wrong is that you need to put the job out for advertisement. It should not be given out under political patronage. Then you would be doing almost everything right.

320.

Mr Harvey: Personally, I think that the type of person that is being looked at is far more likely to have a good business background than a political background. I do not know who is applying.

321.

Mr Ervine: To be fair, the fact that they achieve political patronage does not necessarily preclude them from being capable for the job, but it does put a bad taste in politicians' mouths.

322.

Mr Harvey: I understand the point. I should have made a better one.

323.

The Chairperson: We have discussed civil recovery and confiscation and so forth, but there are other aspects to the draft Bill. In general terms, what aspects of the Bill do you particularly welcome, and what weaknesses do you see in it?

324.

Mr Harvey: The greatest step forward is, of course, stretching it beyond drugs and terrorism. I cannot stress enough that these are not single-minded people. The targets that we will be looking at are not just people who bring over a bag of drugs from the continent. They are involved in every type of thing, and you cannot always guarantee that the operation is going to catch them when they have that particular substance in their possession. They may well, for any one of a number of reasons, have shifted it. That is extremely valuable. The seizure of cash, et cetera, will be another valuable aspect.

325.

The third element - quite frankly, we might as well be pragmatic - is that this is going to generate a great deal of money, in our view. It may take a couple of years to kick in. Not only will that fund the agency to improve and increase its capacity, but under the recovered assets fund - and that is work that is going on as we talk about it - there will be more money directly available for law enforcement to bid against for more operations. The current view is that 50% of the proceeds will be available for that purpose, as opposed to just going to the Treasury, which is the traditional route, as you are aware, for all these sorts of funding.

326.

I have many operations in mind that I could pursue if resources were unlimited. I am not saying that resources will be unlimited, but the Bill will boost law enforcement in that it directs activities against people who deserve more attention.

327.

The Chairperson: Do you see any weaknesses in the Bill?

328.

Mr Harvey: We are addressing one or two weaknesses. If the weaknesses of the Bill are not addressed, then other elements of it can be reviewed. We will be pulling those elements apart in fine detail. Some have already been addressed - for example, all the members of my economic crime unit will have some police powers. Previously, my financial analyst would not have been able to look at certain work because certain disclosures can only be made to a police officer.

329.

There are elements of change that could make us more powerful. We are now asking for the ability to seize large amounts of cash that has been carried around the country. The seizure of cash has previously been done at borders by customs, and we seek to improve that. When we are following the money in order to seize it, we can take another route. When we talk about recovered assets, that route is not necessarily against people in general - it is meant predominately to attack the drugs trade. The people that we work on are so cash-rich that real action against them is required. They can afford the best defences, and that is why they have always been so difficult to intercept.

330.

The Chairperson: Does the Criminal Assets Bureau in the Republic have any measure or operational capacity that would be helpful for CARA?

331.

Mr Harvey: We have looked at the Criminal Assets Bureau and have seen its powers and how those are effected - it seems to be working for the Republic. Our measure will work better for us. The Bill is good and innovative. It is worth reflecting that 10 or 12 years ago the United Kingdom was the first to compel the reporting of suspicious financial transactions, whereby banks, financial institutions and others were legally required to tell one of my units about suspicious money. At the time, that was considered revolutionary and pushing at the limits; now just about every country in the world has passed similar legislation.

332.

Countries that wish to join the European Union are required to have corresponding legislation. People can see the value of that legislation. The United Kingdom is at the forefront of "attacking the money", and this is another step along those lines. Being the first will always be testing, and others will look at us, particularly in the debate on human rights. If you are in the lead, you must expect some of your paths to be less smooth than the paths of those who are following.

333.

The Chairperson: Thank you, Mr Harvey.

MINUTES OF EVIDENCE
THURSDAY 3 MAY 2001

Members present:
Mr A Maginness (Chairperson)
Mr Close
Mr Clyde
Mr Douglas
Mr Ervine
Sir John Gorman
Mr Kane
Mr McNamee

Witnesses:
Mr B Logan ) HM Customs and Excise
Mr D Toon )

334.

The Chairperson: Gentlemen, I thank you for coming here today. We look forward to your contribution.

335.

Mr Toon: First, I will emphasise the department's primary areas of responsibility - in direct taxation, VAT, excise duties and control of the international movement of goods. That involves the enforcement of a range of prohibitions and restrictions on drugs and firearms, and sanctions against weapons of mass destruction, paedophile pornography and a range of related issues. It is worth noting that all operational Customs and Excise issues are reserved matters for which Westminster is responsible.

336.

Overall, the department has a dual approach to its responsibilities. First, we support those who are compliant, or who wish to be compliant, in all our areas of responsibility, be they businesses or individuals. Our other approach is to enforce the law effectively against those who are deliberately non-compliant.

337.

On that end, we are heavily involved in combating serious and organised crime throughout the UK. Our most high-profile areas are combating class A drug trafficking; excise and VAT fraud; and related money-laundering issues. Over the last few years we have come to recognise just how important and effective it is to tackle the money flows related to serious crime. Those flows of money are the reason for the crime and, very often, its lifeblood.

338.

To illustrate the scale of the problem in the UK, intelligence estimates suggest that around 60 to 70 tonnes of class A drugs - heroin and cocaine - are directed towards the UK every year. Between £1 billion and £1·5 billion must leave the UK annually to pay for that amount. Moreover, that is simply to pay for the drugs and not necessarily the movement of profit from those drugs.

339.

My final preliminary remark before turning to the detail is that we were involved with, and strongly supported, the work of the Performance and Innovation Unit. Its work led to the Government's report and subsequent policy on recovering the proceeds of crime. We have also worked closely with the Home Office and other policy departments in developing the Bill since that stage. We strongly support the provisions contained in the Bill.

340.

The Bill has six principal benefits to Customs and Excise: the changes to the criminal confiscation procedures; changes to the restraint procedures; amendment and strengthening of the money-laundering offences; changes to the provisions for the seizure of crime-related cash; two new investigation powers and the overall introduction of a civil recovery regime.

341.

The main change to the criminal confiscation procedures is the consolidation, strengthening and streamlining into one Bill of the provisions currently contained in the Drug Trafficking Act 1994 and the Criminal Justice Act 1998. At present, the courts are taking an inconsistent approach to the application of the assumptions on people's benefit from criminal activity. In future, where any convicted defendant is identified as having a criminal lifestyle - the Bill defines what that would constitute - it will be mandatory for the court to base a confiscation order on the premise that all property that has passed through that defendant's hands in the previous six years was the proceeds of criminal activity. That mandatory application is currently only available in connection with drug trafficking convictions.

342.

By widening the spectrum, we would expect to see the new provisions leading to an increase in the amount of money ordered to be confiscated in a range of other offence cases, including our priority areas of oil fraud and tobacco smuggling. There are also helpful amendments in England and Wales bringing restraints and criminal confiscation processes together in the Crown Court. However, restraint will remain a High Court responsibility in Northern Ireland.

343.

Another helpful change is that power is to be given to prosecutors to challenge the court's decision when they consider that the criminal confiscation order is lower than is warranted by the evidence. Therefore we can essentially appeal the court's decision.

344.

One very simple change has been made to restraint procedures. The Bill will give prosecutors the power to seek a restraint order, at any time after a criminal investigation has started - we can currently only seek a restraint order close to the time when a person will be charged. As people become aware that an investigation is ongoing, we witness the dissipation of people's assets. A restraint order can help ensure that confiscation has the maximum effect after conviction.

345.

In regard to money laundering offences, the Bill will remove the current distinctions between provisions relating to drug and non-drug money laundering offences. The law currently causes difficulty in court cases where we have to demonstrate to the court that the laundered money was derived from a specific offence as opposed to being derived from criminality. Recent cases in England have run into trouble because although juries have been certain that the money involved derived from criminality, they have not been certain "beyond all reasonable doubt" that the money was derived from either drugs or some other forms of criminality. This has led to problems with the application of the assumptions (which would be used in drug trafficking offences when we have had convictions) and confiscation orders, which have then been related to non-drugs criminality.

346.

Another point is the offence of failing to report suspected money-laundering activities. That, as an offence, will be extended to cover the proceeds of any criminal conduct - not just drug trafficking, as at present. Any business covered by the money-laundering regulations - banks, building societies, bureaux de change, et cetera - will, in future, be susceptible to prosecution where they have reasonable grounds to suspect that a person that they are dealing with is engaged in money laundering. The change is that we currently have to demonstrate actual knowledge or suspicion, that the person did suspect, rather than that they had reasonable grounds to suspect.

347.

Seizure of crime-related cash: This is an interesting area for us and a power which is almost exclusively used by us. We have a power under Part 2 of the Drug Trafficking Act 1994 to seize and detain cash to the value of £10,000 or more being imported or exported and which is reasonably suspected as being the proceeds of, or intended for use in, drug trafficking. We seize that cash at the frontier, seek an authorisation by the Magistrate's Court for continued detention and then take forfeiture proceedings under civil rules in front of a Magistrate's Court.

348.

We expect the Bill to extend those powers to include the proceeds of, and money intended for use in, any criminal conduct, and also to cover non-cash instruments such as travellers' cheques, bearer bonds and a few other categories. That area is still under discussion with the Home Office: the final policy is not settled, and the clauses have not been drafted. We believe that provision to extend that power beyond the drug trafficking arena would have a significant impact. At present we have problems where we identify money that we know is related to tobacco, or to other excise goods, trafficking but under current legislation we have no power to seize that money.

349.

Extension would enable us to cover all crimes and to take action on behalf of other agencies if we detect money that proves to be the proceeds of a robbery, for example. We would be able to seize that money and to provide the police with information to enable them to take the case forward.

350.

Two changes on investigation powers are the introduction of an account monitoring order and a customer information order. An account monitoring order enables a senior officer of Customs and Excise to go before a County Court Judge in Northern Ireland to seek an order under which a financial investigator will then be able to gain access to transaction information on suspect bank accounts for a specified period. The customer information order, with the authorisation of a County Court Judge, would enable us to require banks to identify accounts held by a person who is under investigation. We would expect these new investigatory powers to be useful in gathering evidence to support criminal offence and confiscation action, and overall to increase the effectiveness of financial investigation work.

351.

Finally, and perhaps a major part of the Bill, but not one in which we have a significant role, is civil recovery. The proposed civil recovery scheme will enable the Criminal Assets Recovery Agency to recover the proceeds of criminal conduct under the civil rules of evidence. That will not be of direct benefit to Customs and Excise.

352.

As a law enforcement agency, we will expect to refer cases to the Director of the new agency for civil recovery action, where we have concluded that it is not feasible to mount a successful prosecution but that there are substantial assets which appear to come from criminal activity. In those circumstances we would pass the case to the new agency and it would be for the Director of the agency to use his powers under the civil recovery provisions. We also expect to second some of our financial investigators, possibly some of our lawyers, and other staff to the new agency. We have already agreed to second two officials - one is a specialist financial investigator - to the agency in Northern Ireland.

353.

Fiscal fraud in Northern Ireland is our highest priority issue and, within that, the highest priority work is concerned with tackling hydrocarbon oils fraud, which poses a specific and very serious threat. In addition, as per the rest of the UK, there is a serious problem with tobacco smuggling that we are tackling with a national tobacco strategy. There is an element of class A drug trafficking, as there is throughout the UK, and we have a national and a multi-departmental strategy to tackle that. However, it is not such a high profile issue for us in Northern Ireland. Enhanced resources for tackling oils fraud in Northern Ireland, and tobacco smuggling nationally, have already enabled us to make significant increases in our enforcement approach and presence for tackling these problems. We expect the powers in the Bill to go some way towards further improving the effectiveness of our increased resources.

354.

Overall, Government strategy is about undermining the economics of smuggling and removing the profits of criminals. We expect the Bill, in its final form, to make a significant contribution towards our efforts and interdepartmental efforts by tightening the offence provisions, enabling us to seize cash and improving our investigatory powers and confiscation procedures. We expect this to make it much more difficult for traffickers or fraudsters to make a profit and then to sequester those profits.

355.

The Chairperson: Oil and tobacco smuggling seem to be the two main areas of fiscal fraud in Northern Ireland. Do you have an estimate of the amount of tax evasion in that area?

356.

Mr Toon: We would not make an estimate for tobacco fraud specifically for Northern Ireland. However, we would make the point that tobacco fraud is an UK-wide threat, and about 22% of all cigarettes that were smoked in the UK last year were illicit. This area involves huge issues such as the undermining of Government health objectives. The Government has increased our resources quite significantly - we have had over £200 million of additional investment to enable us to tackle the problem. Mr Logan, would you like to say anything with regard to oils fraud in Northern Ireland in particular?

357.

Mr Logan: We published an estimate that the total revenue lost for the year 1998 was £100 million. We are working to update this estimate, and the most recent trade estimate is that there is a fifty-fifty split between legitimate cross border shopping and smuggling. In addition, we would say that oils fraud takes the form of four main components: smuggling, laundering of marked and gas oil, misuse of rebated fuels, and mixing all of these. However, work is ongoing to update the position in order to inform our strategies on how to take our work forward.

358.

The Chairperson: You spoke about a loss of revenue of £100 million. Is that correct?

359.

Mr Logan: Yes.

360.

The Chairperson: I want to get the facts correct. Half of that is made up by people who cross the border, fill up their tanks, and come back; and the other half is made up of tax evasion by people who launder oil products?

361.

Mr Logan: Yes.

362.

The Chairperson: The £100 million represents the loss of revenue, but that is the tip of the iceberg because there is loss of revenue to the outlets in Northern Ireland that sell petrol or other oil products. Is that correct?

363.

Mr Logan: Yes.

364.

The Chairperson: It represents a huge loss to the economy in Northern Ireland.

365.

Mr Logan: We recognise that. While the figure of £100 million is for the calendar year 1998, we have been working to update that. In order to evaluate the total loss, Customs and Excise has, since September last year, increased its resources fourfold in order to deal with the problem. Since then, the indications are that legitimate sales have stabilised, which is a significant impact.

366.

Mr Close: There appears to have been a lot of foot-dragging over this, certainly from the aspect of the petrol retailers in Northern Ireland. They are suffering at an unacceptable rate through the illegal fuel trade. It is also on record. A letter, raised at the highest authority, stated that £100 million, in the overall scheme of things, was a rather small amount. However, the marginal changes that have taken place recently have been appreciated.

367.

A House of Commons Select Committee report in 1999 produced a number of recommendations, but there appears to have been some tardiness in the application of many of those recommendations. There have been suggestions of licensing systems and other checks that might go some way to improving the situation.

368.

There also appears to be a number of diverse organisations that would be involved in licensing retailers for petroleum and other spirits. There is our own Health and Safety Executive and local authorities, but there does not appear, either to me or to petrol retailers, to be any joined-up Government approach.

369.

A lack of such an approach leaves it wide open for outlets, which appear to be legitimate on the surface, to operate illegally. It is happening in virtually every local authority area in Northern Ireland, with outlets openly flouting the law. We need to seriously get to grips with it. The relativity of the £100 million may be small in the overall scheme of things, but as it relates to Northern Ireland, and with the impact that it is having here because of the land frontier, it is quite dramatic.

370.

There needs to be urgent and determined effort made by everyone through a joined-up approach to deal with that and to get this scourge out of our society. That is merely the position on the oils. The legislation also needs to be looked at. Petroleum licensing is governed by legislation dating from the 1920s, and there are also holes in that.

371.

Mr Logan: The Northern Ireland Affairs Committee recommended a joined-up approach, which Customs and Excise has been pursuing. That has been added to by the creation of the Organised Crime Task Force, which has brought other organisations together under the umbrella of looking at criminality and organised crime. A key part of that is to look at any additional legislative issues that are needed.

372.

Mr Close: Are there any timescales for that? Many petrol stations have gone out of business since the 1999 report by the Northern Ireland Affairs Committee because of Government policy on the difference in the rates of duty and also because of criminality.

373.

Mr Logan: As far as oils and Customs and Excise are concerned, we have increased fourfold our resources since September 2000. All the evidence suggests that we are making a serious impact on stabilising the amount of smuggling. We are evaluating the results of this work and considering how we can improve on that. We are in the process of doing that in order to make sure that we retain and maintain the amount of our effort in this area.

374.

Mr McNamee: Although some of the legislation has yet to be drafted, the Human Rights Commission has a number of concerns about its compliance with the European Convention on Human Rights, particularly in relation to the limitation of recovery. Your introduction states

"all property that has passed through a defendant's hands in the previous six years"

375.

The aspect that there is no limitation on the property - it applies to all property that has passed through a person's hands - and the six-year period could both be open to challenge.

376.

Another point is that the burden of proof is on the person accused to show how they obtained property, rather than the prosecution proving beyond reasonable doubt that they are guilty of something. There are also concerns that relate to employees of sectors covered by the money laundering regulations. They will be susceptible to prosecution where there are reasonable grounds to suspect that another person is engaged in money laundering. Take, for example, an employee of such a business who may not be at all focused on the issue of money laundering - they are just employed to do a job and they are probably thinking of going on holiday in the summer. Have you any concerns about how those employees may be affected? Somebody could say that they had reasonable grounds for suspecting that a third party was involved in money laundering and that the employee did not report it. The employee would be liable to prosecution because of that.

377.

In the cases where you have seized cash at borders under the existing powers - and in all likelihood there will be a significant increase in those incidents - to what extent has Customs and Excise been tied up in the legal process that follows that when a person challenges it? How do you anticipate this legislation affecting your operation? Are you concerned about the amount of time you will spend facing challenges in court? Given that there are concerns about the regulations' compliance with European Human Rights legislation, are you concerned that Customs and Excise will spend more time in court dealing with challenges than in investigation and seizure?

378.

Mr Toon: The easiest point to comment on first is the position of employees of businesses covered by the money laundering regulations. There is a duty, on all such businesses, to ensure that their employees are aware of the money laundering regulations. That is a key part of their responsibility in carrying out their business. Generally, the National Criminal Intelligence Service obtains a large number of Suspicious Transaction Reports. However, some businesses do not provide the reports that they should when it is clear that there are reasonable grounds to suspect money laundering. Such an example would be bureaux de change, which are not simply dealing with customers wishing to change a few hundred pounds into dollars for their trip to America. Recently, we had a case in the north of England, which involved people moving £0·5 million at a time into and out of a bureau de change in cardboard boxes. There is a clear responsibility on that bureau de change to report that as a suspicious transaction. It is very difficult to see why somebody would be moving £0·5 million in cash legitimately. All they are required to do is report that there is a transaction that looks suspicious. It is then for the law enforcement agencies to take any further action. There is not a heavy burden on those employees.

379.

This legislation will have to be certified as being compliant with the Human Rights Act 1998. Law officers will examine it, and the Home Secretary will be responsible for certifying its compliance with the Act. I have no doubt that there will be challenges, but I have no reason to believe that the legislation will not be compliant with the Human Rights Act 1998.

380.

We have got quite a lot of experience of drugs cash at borders. It is not time-consuming, nor are the investigation and subsequent forfeiture hearings. We are applying the civil burden of proof. On many occasions we seize large amounts of cash. We have seized hundreds of thousands of pounds from suitcases where the individuals have simply never challenged us. This suggests that there is quite a lot of money being moved around which people cannot demonstrate as legitimate.

381.

To an extent, a "suck it and see" scenario will apply as we see how this fits in with the broader powers. A good deal of training and education will be required for our officers as we are now looking at a much broader set of circumstances in which we might be seizing money. Provided we are effective in training, I do not see that it should cause a significant increase in court time or challenge.

382.

Mr Kane: Do you believe that the Bill will result in criminals moving their headquarters to another jurisdiction? How do you perceive the legal basis of "innocent until proven guilty" to be distorted by this Bill? Finally, would the ordinary citizen be aware that he or she should retain proof of possession of any asset?

383.

Mr Toon: It is difficult to see at this stage what the likely reaction would be as regards moving assets to other jurisdictions. There is quite a comprehensive set of international agreements on asset recovery. Their effectiveness depends on the effectiveness of the law enforcement agencies in the states concerned. However, we are talking about serious organised criminals who wish to remain in their locality. They wish to live where they are and have a good lifestyle surrounded by people they know. Many of them will find it very difficult to move assets overseas without those assets being traceable and capable of being attacked by international agreements.

384.

I cannot comment in detail on the issue of "innocent until proven guilty". Much of what you are referring to concerns civil recovery, which is more an issue for Criminal Assets Recovery Agency (CARA). It would be much more of an issue for the Home Office and the Northern Ireland Office. There is no real comment we can make.

385.

If we are talking about crime-related cash at borders, then the guilt lies in the cash, rather than on the person. This is how aspects of customs work have operated for hundreds of years - focusing on the status of the goods or the cash and not of the individual. Criminal confiscation is a direct follow-on from a criminal conviction, so we look at the full criminal standard of proof before confiscation takes effect.

386.

I am not quite sure what your last question was.

387.

Mr Kane: Would the ordinary citizen be aware of the need to retain proof of the manner in which he or she came into possession of any asset?

388.

Mr Toon: There is an implication there that the ordinary citizen has something to fear from this, and that is not so. For the matters that we are dealing with, criminal confiscation follows on from a conviction anyway - that takes it away from your average, ordinary citizen.

389.

If you are talking about the powers concerning cash at borders, the ordinary citizen does not tend to move £10,000 or more in cash without being able to demonstrate to some degree where it came from. We have to have reasonable grounds of suspicion in order to seize it. The burden of proof is not reversed but remains on us. It may be to the civil standard of proof, "the balance of probabilities", but the burden is still on us to demonstrate that that cash is intended for use in crime. I do not see it as being a huge issue. It may be more of an issue with civil asset recovery, but that is not something we can comment on in detail.

390.

Mr Close: If somebody has a suitcase with £100,000 in it, do you have a reasonable suspicion that he is up to no good?

391.

Mr Toon: It is not just the fact that we find it that causes a reasonable suspicion. There would be a number of other indications such as where the person was going, how he obtained the ticket and how it was paid for. It would be considered whether the person was going to a major drug trafficking destination, whether £100,000 was consistent with the appearance of the person, and so on. All that can give one reasonable grounds to suspect and make an initial detention, before going at a later time in front of the Magistrate's Court. One would do a degree of investigation then to try and demonstrate the link to criminality.

392.

These are difficult issues when the amounts are £10,000 or £12,000,which are just over the limit. When you get to hundreds of thousands of pounds, it rapidly becomes clear that very often, the money is inconsistent with the person. There is just as much use in the drug arena of mules to move cash as to move drugs.

393.

Mr Close: That is exactly my point.

394.

Are tobacco smugglers immune from cash seizure, and what is the thinking behind that?

395.

Mr Toon: Tobacco smuggling is currently immune because cash seizure provisions were brought in under the Drug Trafficking Act 1994, which focused solely on combating the drug trade. While excise goods smuggling has always been a problem, it was not the high profile problem and the level of smuggling as it is now. It is a problem that has grown.

396.

Mr Close: Today it is a wide open door through which a lot of money is made.

397.

Mr Toon: Certainly a lot of money is made through it, but I might argue about whether it is a wide open door. We seized about two billion cigarettes last year, so it is not quite as wide open as you might perceive. We think we are beginning to have a significant impact now on tobacco smuggling, but it is a big problem.

398.

Mr Ervine: Mr Logan told us about a fourfold increase in resources to target oil smugglers. What kind of an increase have you had to target drug dealers and drug importation?

399.

Mr Logan: While you rightly ask me that question in the context of a local scene, the drug aspect is resourced nationally. Because of the modus operandi of drug trafficking, we deal with drugs on a national UK basis.

400.

Mr Toon: Mr Logan is right; this is very much seen as a national and an international problem. We are putting together, in common with all the other enforcement agencies - the Home Office and Foreign Office have been involved - a joint action plan to cover all of the UK's activity to combat drug trafficking from end to end - from local police forces dealing with dealers at the 1 to 5 kilogram level in local areas, through Customs activity at the frontier, to working with law enforcement and intelligence operations overseas in order to tackle the problem as close to the source as we can.

401.

The Government has recently put some additional money - £67 million over the next three years - in to combating drug trafficking. That does not seem like a large amount, but you need to appreciate that this sum is additional to the hundreds of millions of pounds that are currently spent by the enforcement agencies on combating drug trafficking.

402.

Mr Ervine: Oil smuggling is a much greater problem here, by comparison to the rest of the United Kingdom. This is because we have a land border with the Irish Republic. Drugs are more easily carried across land borders than by ferry or plane. There is substantial evidence to suggest that there is a serious drug problem in the Republic of Ireland and that a substantial amount of drugs enters here via that border. Your resources have been increased fourfold to deal with the importation of illegal oil. How much funding have you been given to combat the importation of illegal drugs across that land border?

403.

Mr Logan: No additional resources have been earmarked specifically to combat drugs trafficking. However, all our law-enforcement work is intelligence- driven. If there is any fraud involving tobacco, alcohol, drugs or hydrocarbon oil, the resources will be made available to deal with that.

404.

Mr Toon: We would argue that although you have a land boundary, which can be more easily penetrated than a sea boundary, the drugs need to be smuggled into the Republic in the first place, and that is done by sea or air. It is possibile to deal with the problem much further upstream, for example, in co-operation with Europe as a whole, or with the authorities in the Republic of Ireland.

405.

Mr Ervine: I am not an expert on how importation takes place, but the land border is clearly used in the importation of drugs. I asked the question, and in such a manner, because resources are always a matter of politics, especially in the context of Government institutions. I would argue that, in the political mind, there is often a hierarchy of offences. Therefore, when CARA comes on board and begins to make its decisions, it will have a raft of offences with which it might wish to deal. It will not be able to deal with them all at once. What is the likelihood of gaining political direction in that respect? In other words, if the Exchequer is being hit, the Chancellor might deem that to be of more serious concern than the problem of kids dying after taking some type of chemical produce. There may well be a political evaluation. Do you feel that you have been a victim of such political evaluation? This would probably depend on how much you want more resources and whether you are satisfied with the resources that you have? You might remember that in a previous incarnation, I wanted you to be proactive, rather than reactive, so I am not complaining about the introduction of this legislation. However, I am worried about the degree of political direction which might take place, based upon the level of resources you are given.

406.

Mr Toon: Ultimately, decisions on resources are made by Ministers, but all law-enforcement activity is based on an agreed UK threat assessment for serious and organised crime that defines the priorities. The Director of CARA will be responsible to an asset recovery committee, which will be driven by the UK threat assessment. The trafficking of class A drugs is one of the top priorities in that assessment.

407.

Mr Ervine: I can picture the manufacturers of CDs, jeans or any item which is fraudulently created or imported, kicking the door of number 11 Downing Street, or the door of any Minister which deals with such matters, and that Minister phoning Customs and Excise or CARA.

408.

I fear that this will provoke a reaction that will affirm that there is a hierarchy of offences depending upon the political direction that is given at any time.

409.

Mr Toon: There is a hierarchy of offences. It is not dependent on political direction, and the picture you draw is not one that I recognise.

410.

Mr Clyde: In combating VAT crime, how will the draft Bill assist HM Customs and Excise?

411.

Mr Toon: The main assistance will increase our ability to remove assets after there has been a conviction of VAT fraud. VAT fraud will attract the same assumptions on lifestyle criminality as drug trafficking does now. This brings us back to the point that it will be assumed that property that has passed through the hands of a convicted person during the past six years, is the proceeds of crime.

412.

The key issue in regard to many areas of criminality is the broader use of those assumptions. Those assumptions are mandatory in regard to criminal lifestyle offences, as defined in the Bill. The courts must apply those assumptions, and they must apply the six-year assessment. That will have the greatest impact.

413.

Mr Logan: That is a different regime. We have powers at the moment, however they will be added to by the Proceeds of Crime Bill.

414.

Mr Toon: This is perhaps the area of the Department's work on which the Bill will have the least impact.

415.

Mr Douglas: You said that oil fraud caused the most serious loss, followed by tobacco and drug trafficking. In the past it was not the large-scale drugs traffickers who got caught, but those operating at a local level. Will the legislative changes help to catch these people? Even at a local level, such individuals can accumulate great wealth, and they still manage to stay out of the reach of the law.

416.

Mr Toon: Yes, that is the fundamental rationale for the introduction of civil assets recovery. It is aimed at curbing those who never get their hands dirty or who never commit an identifiable prosecutable criminal offence, but who are able to maintain a lifestyle without any visible means of support.

417.

The Chairperson: In the modern world, assets can be moved between countries and jurisdictions, and Mr Ervine quite rightly referred to the land border in Ireland. It is very easy to discreetly move assets between the North and the South. Under the present circumstances and arrangements, do you have any difficulty in tracing assets if they are moved from Northern Ireland to the Republic?

418.

Mr Toon: You have phrased your question in a way that makes it quite difficult to answer. On the whole, the difficulty in tracing the assets depends very much on how well they are hidden. The difficulty is not caused by the fact that the assets have been moved into the Republic of Ireland. We follow up assets in the Republic of Ireland through standard mutual legal- assistance provisions, as we would with any of around 100 other countries.

419.

The Chairperson: So, no serious problems with tracing are caused by any official barrier between the North and South?

420.

Mr Toon: Barriers will always be created because there are slightly different forms of legislation in each jurisdiction but, in general, there are no significant barriers to tracing assets in the Republic. Co-operation is, and has been, good.

421.

The Chairperson: Mr Close raised a point about your involvement with CARA. You mentioned that personnel would be seconded to CARA. Is that correct?

422.

Mr Toon: That is correct, partly because CARA will not only take on the role of civil recovery. CARA will also become the overall centre of excellence for financial investigation on a national level. We will expect our financial investigators to be accredited by CARA, which will operate an accreditation regime for financial investigation. CARA must start from somewhere. The best start for it will be to have seconded staff with experience of financial investigation work.

423.

The Chairperson: We recently visited Dublin where we learned about the impressive work of the Criminal Assets Bureau there. Assuming that CARA is set up - and I know that you cannot speak on behalf of CARA - do you envisage full co-operation between it and the Criminal Assets Bureau in the Republic?

424.

Mr Toon: We hope that there will be full, appropriate co-operation between CARA and all other agencies that have a role, where that is appropriate and necessary.

425.

The Chairperson: Thank you for your submission and for engaging in the question-and-answer session. It has been very interesting.

MINUTES OF EVIDENCE
THURSDAY 3 MAY 2001

Members present:
Mr A Maginness (Chairperson)
Mr S Close
Mr W Clyde
Mr B Douglas
Mr D Ervine
Mr G Kane
Mr P McNamee

Witnesses:
Mr J Gilbody )
Mr D Hinstridge ) Inland Revenue
Mr D Humphries )

426.

The Chairperson: You are very welcome. We are very pleased that you could come to give a submission and to answer some questions. Mr Gilbody, are you leading the delegation?

427.

Mr Gilbody: Yes.

428.

The Chairperson: Would you introduce your colleagues, and we will then proceed.

429.

Mr Gilbody: I am from the Inland Revenue's policy division in London. Mr David Hinstridge, on my right, is the director of the Inland Revenue in Northern Ireland. My policy colleague, Mr David Humphries is on my left. We are grateful for the invitation to provide evidence to the Committee.

430.

It is the Home Office, rather than the Inland Revenue, which is responsible for the Proceeds of Crime Bill. The Inland Revenue is supporting the Home Office by helping to develop policy on matters related to taxation. The Inland Revenue has been fully involved over the past few months in advising the Home Office on taxation matters. The draft legislation on those issues was not, therefore, new to the Inland Revenue, and it represents an agreed position.

431.

Since the Inland Revenue's involvement is limited to taxation issues, it is not in a position to comment on any other provision in the Bill. The Home Office and the Northern Ireland Office are the appropriate departments to approach in regard to any other matter. It is important to appreciate that the proposed Criminal Assets Recovery Agency (CARA) will be operationally independent of the Inland Revenue. Therefore it would be inappropriate if the Inland Revenue were to comment on internal issues which might arise in the future daily operation of the agency. Those will fall within the remit of the Director of CARA, should the Bill become law, and when he or she has been appointed.

432.

I do not wish to be unhelpful, but it is important to define the Inland Revenue's locus on these matters. The Inland Revenue is happy to assist the Committee in its consideration of the taxation matters which are contained in chapter 6 of the consultation document. The Committee also had some written questions to which the Inland Revenue replied in the memorandum. I apologise that we were not able to respond within the requested time, but we are happy to answer your questions.

433.

The Chairperson: CARA is the most novel aspect of the Proceeds of Crime Bill. What role do you envisage the Inland Revenue playing in the setting up of CARA, its staffing, and the discharge of its functions?

434.

Mr Gilbody: In my view, the Inland Revenue will not have a large role. It will want to discuss with the Director of CARA operational issues and the interface between the agency and the Inland Revenue, but CARA will be operationally independent and will be run solely by the Director.

435.

The Chairperson: Will any staff from the Inland Revenue be attached to CARA?

436.

Mr Gilbody: That is a possibility but not a certainty, and it is something that the Inland Revenue must carefully consider. That issue has not yet been addressed.

437.

The Chairperson: During the Committee's visit to Dublin, members were interested in the workings of the Criminal Assets Bureau. It has the power to carry out the equivalent of civil recovery in the High Court, but if civil recovery is unlikely or difficult because of a lack of evidence, the Criminal Assets Bureau focuses on taxing the suspected criminal.

438.

It seems to be an effective method of dealing with the problem. Around £10 million was raised through taxation over the past four to five years. That is additional to a further £10 million that was raised through civil recovery. It is therefore a very effective weapon in the fight against crime. What are your views on that approach to the problem?

439.

Mr Gilbody: When the Home Secretary launched the Bill, he made it clear that the Director of CARA would have three main approaches. The first would be to seek prosecution, the second to seek civil recovery, and the third to use his taxation powers. The use of taxation powers is clearly a third option for CARA. We hope that it will be a very effective power, and we have all approached it on that basis.

440.

Mr Close: Does the Inland Revenue believe that tax investigation by CARA would be part and parcel of the operation rather than being an option? Do you believe that Inland Revenue staff, if they are seconded to CARA, could actually raise assessments against individuals who are suspected of living a lifestyle beyond their means?

441.

Mr Gilbody: We need to draw a line of demarcation between what the Inland Revenue currently does, what it will continue to do - functions that will be unchanged by the Bill - and what the director of CARA will do. The taxation power is one weapon in his armoury that we hope will be successful, but I do not want to go further in commenting on how that might be used.

442.

Mr Close: I would like to believe that we are seeking a joined-up Government approach to tackling and defeating criminality in our society. However, I am concerned that if it appears that there are lines of demarcation or little empires, people will be prevented from doing what is necessary in the public interest. I would like there to be an impression that everything possible is being done to defeat criminality; that the Inland Revenue would be slapping assessments on those whose lifestyle provokes suspicion among the proverbial "dogs in the street", asking them to account for their assets. It strikes me that under current Inland Revenue rules, "Joe Citizen" can be put through the hoops to demonstrate his income, make his returns, et cetera, yet the criminal seems to manage to avoid that.

443.

Mr Gilbody: I use the term "demarcation" simply to make it clear that the Inland Revenue and the new agency must be careful not to step on each other's toes. Each must be clear about its powers and responsibilities. The strategy is joined-up - the evidence for that is the extent to which we have been involved in supporting the Home Office.

444.

As regards your point about our investigation activities and those of CARA, we will continue to pursue tax evasion as we currently do. We hope that CARA will bring in this additional weapon of tax investigation and that it will be able to perform certain sorts of investigation more effectively.

445.

Mr Close: It may be difficult to refer to a specific case. In a current case that is related to foot-and-mouth disease, an individual allegedly returned because of an assessment that was made through the Criminal Assets Bureau in Dublin. Do you foresee that type of situation in Northern Ireland, where an individual comes back to face the music after an assessment?

446.

Mr Gilbody: We are trespassing into areas of CARA's operation, which I am not empowered to comment upon.

447.

Mr Hinstridge: It is unwise for us to comment without having further details of the circumstances of the case. To a certain extent, it is a matter of public record, but we do not know the background or history of the individual who has been named by the press.

448.

Mr McNamee: One of the strengths of the Criminal Assets Bureau in the South is that it takes a multi-agency approach. A number of bodies, including the Office of the Revenue Commissioners, Customs and Excise, and staff from the social welfare section of the Department of Social, Community and Family Affairs have been seconded to work for the Criminal Assets Bureau while remaining with their original employers.

449.

If Inland Revenue staff were seconded to CARA, they could not only raise tax assessments. A staff member with experience of revenue matters could make a great contribution to certain areas of investigative research in which a Garda Síochána member would not realise the significance of the relevant papers. Similarly, people in other bodies, because of their experience in a given field, could make a significant contribution in CARA investigations, as well as raising assessments. Would the Inland Revenue object if CARA were to request a secondment of experienced staff who could be of benefit to them?

450.

Mr Gilbody: We would respond to such a request with great care, and we would discuss it with the Director. It is an attractive idea for the reasons you have mentioned, however, there are a number of considerations that we would want to examine in detail. In addition, the Director of CARA will be setting up an agency from scratch. It will become a centre of investigative excellence, and it is hoped that the agency staff will, through time, acquire the skills needed to carry out their functions.

451.

Mr Kane: Does the Inland Revenue currently receive information from the RUC that could lead them to investigate individuals?

452.

Mr Hinstridge: I will phrase my response carefully. The Inland Revenue receives information from a variety of sources, and in certain circumstances they can include the RUC. However, the circumstances in which we receive information from these sources, and in which we can use that information for evidence or in an investigation, are regulated by statute.

453.

Mr Kane: How will the proceeds of crime be used after they have been seized from criminals - and how will this affect the issue of victims benefiting? Is it not now the case that HM Customs and Excise and the Inland Revenue will be the best placed to gain from property seizure?

454.

Mr Gilbody: In my understanding, the money recovered during CARA's operation will go to the Exchequer. That is the only comment that I can make.

455.

Mr Ervine: The Bill provides a greater opportunity for society or the state to be proactive in apprehending criminal assets. Do you therefore have individuals in mind who seem to fit your targets? Are there many in Northern Ireland? I am not asking you to name them, and you have not said that there are any. In practical terms is there already a series of likely targets for investigation by virtue of the opportunity offered by this legislation?

456.

Mr Gilbody: In due course, we certainly expect to have such a discussion with the Director of CARA. This will take place when the Director approaches the Inland Revenue and other departments, such as Customs & Excise, to seek information which could assist CARA, in accordance with the Bill and his specified duties. We are far from the stage of identifying the types of case that might be appropriate to CARA, and not the Inland Revenue. It is far too early to comment on that.

457.

Mr Ervine: Do you think, however, that there might well be some specific benefits for your organisation in this legislation?

458.

Mr Gilbody: I am not sure that there are many benefits for the Inland Revenue but I hope that in due course we can provide information to the Director of CARA to assist in the destruction of organised crime.

459.

Mr Clyde: Will cases in which the only crime is tax evasion be dealt with by CARA or the Inland Revenue?

460.

Mr Gilbody: Tax evasion, and the investigation of it, is a matter for the Inland Revenue, and that will continue to be the case. The Director of CARA must have a suspicion of criminality before he can act.

461.

The Chairperson: Are you familiar with the criteria that might be used to establish a suspicion of criminality?

462.

Mr Gilbody: Only in so far as it is defined in the draft Bill.

463.

The Chairperson: Do you envisage a situation where the Inland Revenue might refer individuals to CARA?

464.

Mr Humphries: That would be unlikely. The Director of CARA will get cases from other sources. The Inland Revenue could refer cases, but it is unlikely. Agencies other than the Inland Revenue will act as intelligence sources. When a case is referred to CARA, it will be considered for prosecution, civil recovery and finally for taxation. It is unlikely that a case will open with a tax investigation or that it will be referred at that level.

465.

The Chairperson: The Inland Revenue commiss- ioners already have the power of taxation that CARA will have. That power enables the commissioners to investigate a person's circumstances and to raise an assessment. Where is the distinction between the Inland Revenue's existing power and the new power that CARA would have to deal with someone who is involved in criminality?

466.

Mr Gilbody: The Inland Revenue is constrained by the Taxes Management Act 1970, and its powers are derived solely from that. When carrying out tax investigations, the Director of CARA will stand in the shoes of the Inland Revenue. It will have precisely the same powers, and he will interpret the Acts in the same way. The Bill makes provisions to make sure that this happens properly. The Inland Revenue does not have the power that CARA will have to make an income tax assessment without specifying the source of that assessment. That is the difference between the way that CARA will operate and how Inland Revenue operates at present.

467.

Mr Humphries: The Director of CARA will have greater powers to gather information from such third parties as banks and financial institutions.

468.

The Chairperson: The Inland Revenue does not have those powers?

469.

Mr Humphries: That is correct.

470.

Mr Ervine: Perhaps I am wrong, but it seems that all liaison between the Inland Revenue and CARA will be based on the mainland.

471.

Mr Gilbody: No, I did not mean to give that impression.

472.

Mr Ervine: I did not say that you had given that impression.

473.

Mr Close: I want to clarify a point about demarcation. Could a situation arise in which CARA would be legally authorised to assess, charge and demand tax?

474.

Mr Gilbody: Yes.

475.

Mr Close: Will CARA be obliged by statute to fully apply revenue Acts to those who are suspected of criminal activity?

476.

Mr Gilbody: The Director of CARA will be empowered to serve a notice on the board of Inland Revenue. The Director must specify the tax payer, the suspicion, the periods for which he wishes to take over the taxation affairs, and the taxes - whether income or corporation tax- that he wishes to investigate. The board will then respond to that and pass the case over. It will be clear what the Director of CARA will be doing and what the Inland Revenue will be doing. There will be a mechanism to specify the precise arrangements.

477.

Mr Close: Can you foresee any circumstances in which the Inland Revenue might refuse to give information to CARA? I cannot foresee that.

478.

Mr Gilbody: No, that cannot happen.

479.

The Chairperson: Thank you very much. Your contribution has been helpful to our deliberations.

Appendix 3

Written Submissions to the Committee

Written Submission by the Northern Ireland Human Rights Commission

1. The Northern Ireland Human Rights Commission welcomes the opportunity provided to it by the Northern Ireland Assembly's Ad Hoc Committee to comment on the draft Proceeds of Crime Bill. As the Bill is a complicated document, as it is incomplete in many areas, and as the Commission has not yet had the opportunity to debate fully the implications of the Bill, this document is tendered as an initial submission on the Bill. It is likely that the Human Rights Commission will refine its comments in time for submitting them to the Northern Ireland Office prior to 29 May 2001.

2. The Human Rights Commission commends the Home Office for making the Bill available for consultation in advance of its introduction in Parliament. We believe that this way of proceeding with legislation should be the norm rather than the exception. We believe, for example, that the Northern Ireland Office should proceed in this fashion when bringing forward legislation to implement the recommendations of the Criminal Justice Review published in March 2000.

3. The Human Rights Commission recognises that society is obviously entitled to take measures to protect itself against crime and to punish criminals. We accept, moreover, that when convicted criminals are able to benefit financially from their crimes even after they have been convicted and sentenced in relation to them, this is offensive to public morality and damaging to public confidence in the rule of law. It is also offensive when persons who have not been convicted and sentenced in relation to crimes nevertheless appear to be benefiting from them.

4. The Commission acknowledges that new thinking is required in order to deal with the problem of unrecovered proceeds of crime. Existing measures do not seem to have been effective and there appears to be evidence that the size of the unrecovered sums is both large and growing (research conducted by the Home Office estimated that in 1995 the value of criminal proceeds available to be confiscated was £650 million). In particular the Commission recognises that traditional legal thinking, such as the distinction between criminal justice and civil justice, may need to be altered in order to allow the legal system to cope with changing conditions in society. The fact that "penalties" can now be imposed for minor traffic offences without the need for court proceedings to take place is one example of such innovative thinking in recent years.

5. The Human Rights Commission is nevertheless firmly committed to the adoption and application throughout Northern Ireland of internationally accepted rules and principles for the protection of human rights. Many of these standards do not yet form part of the binding domestic law of Northern Ireland, although the Commission urges law enforcers and judges to refer to and use them when at all possible. But one set of standards - those contained in the European Convention on Human Rights and Fundamental Freedoms (1950) - does now form part of binding domestic law throughout the United Kingdom as a result of the entry into force in October 2000 of the Human Rights Act 1998. As of then, no existing or proposed law in any part of the United Kingdom can be incompatible with the European Convention unless Parliament expressly decides that it wishes so to proceed. Even if Parliament does so proceed, a successful challenge to that decision could be mounted before the European Court of Human Rights in Strasbourg.

6. In examining the draft Proceeds of Crime Bill the Human Rights Commission has therefore paid particular attention to the requirements of the European Convention on Human Rights. Although the United Kingdom Government is prepared to declare that the Bill complies with those requirements (see page 6 of the consultation document, at para. 16), this Commission cannot be so confident. Our concerns relate to four particular provisions in the European Convention - Articles 6, 7 and 8, and Article 1 of Protocol 1 (see Annex A to this submission). For ease of reference, these provisions are reproduced in an Annex to this submission.

7. Article 6(2) of the European Convention says that "Everyone charged with a criminal offence shall be presumed innocent until proved guilty according to law". In English and Northern Irish law this right is already enshrined in the basic common law principles that when a person is charged with a criminal offence the burden of proving that person's guilt rests with the prosecuting authorities and the standard of proof to be attained is "proof beyond all reasonable doubt". It is not up to the person charged to prove his or her innocence. The draft Proceeds of Crime Bill targets persons who have been convicted of one or more crimes and also persons who have not been so convicted. As far as Northern Ireland is concerned, the former are dealt with by Part IV of the Bill (clauses 154 to 238), but the Bill does not yet contain provisions dealing with the latter. However at page 5 of the consultation document (para. 11), and again on page 226 (para. 5.2) we are told that Part V of the Bill (civil recovery in England and Wales) will in due course be adapted to apply in Northern Ireland.

8. Persons already convicted: (pages 167 to 176 of the consultation document contain the explanatory notes to the clauses in question here, namely clauses 154 to 238 - Part IV of the Bill):

Here the Bill further distinguishes between persons who have a criminal lifestyle and those who do not. The former can lose the benefits gained from their "general criminal conduct" while the latter can lose only the benefits gained from their "particular criminal conduct" (see clause 154(4)). "Criminal lifestyle" is defined in clause 220 (in identical terms to those used for England and Wales in clause 72), but in very woolly terms. The definition would seem to allow a one-off offender to be labelled as having a criminal lifestyle - e.g. if he or she has conspired for a period of six months or more.

Once a person has been designated as having a criminal lifestyle the court must make four assumptions when deciding whether and to what extent he or she has benefited from such general criminal conduct. These assumptions are set out in clauses 159(2) to 159(5). They are extremely wide-ranging. For example, if Mr Smith were convicted today in proceedings which started on 1 September 2000, then it is to be assumed that all the property he has received since 1 September 1994 is the result of his general criminal conduct. Moreover it is also to be assumed that all the money he has spent since 1 September 1994 was money obtained as a result of his general criminal conduct. The burden of showing that these assumptions are incorrect in his particular case would lie on Mr Smith. He would have to be able to show - on the balance of probabilities - the source of all the property he has received, and of all the money he has spent, since 1 September 1994.

As mentioned on page 29 of the consultation document (para. 2.6), the Privy Council has recently upheld similar provisions in Scottish law as being compatible with the European Convention (the McIntosh case), but another case (Phillips v UK) is pending before the European Court of Human Rights. In the opinion of the Northern Ireland Human Rights Commission it is quite possible that the European Court of Human Rights will decide that such provisions - being so draconian because they reach back six years and extend to all property received and to all expenditure during that period- are in breach of Article 6(2) of the European Convention.

9. Persons not yet convicted: (pages 226 to 249 of the consultation document contains the explanatory notes to the clauses in question here, namely clauses 239 to 271 - Part V of the Bill):

Part V of the Bill contains provisions allowing the Director of the new Criminal Assets Recovery Agency to sue individuals in the High Court for the recovery of property obtained through criminal conduct. At present this Part applies only to England and Wales but the consultation document makes it clear that in due course it will be adapted for the law of Northern Ireland also (see page 5 at para. 11 and page 226 at para. 5.2).

The United Kingdom Government describes these provisions as being civil in nature, even though they deal with property acquired through criminal conduct and even though (presumably) persons can eventually be imprisoned if they do not comply with the High Court's order. This does not mean, however, that they will be so considered under the European Convention on Human Rights. Article 6 of that Convention confers greater rights on persons in criminal proceedings than it does on persons in civil proceedings and the European Court of Human Rights applies its own autonomous definition of what amounts to "criminal" proceedings. It has held, for example, that proceedings for tax evasion leading to large financial penalties are criminal in nature (Bendenoun v France (1994) 18 EHRR 54). One of the leading textbooks on the European Convention points out that "[i]f a domestic court has the power to impose imprisonment, this will generally be sufficient to define the proceedings as 'criminal'" (Lester and Pannick, Human Rights Law and Practice, 1999, para. 4.6.13). Proceedings whereby a person may be bound over to be of good behaviour are also criminal in nature (Hashman and Harrap v UK, 2000).

If these civil recovery proceedings are in fact labelled as criminal under the European Convention then the features of the proceedings mentioned in the consultation document as meeting the Government's objectives (page 227 at para. 5.8) may nevertheless be held to be in breach of the Convention. Thus:

the admission of hearsay evidence may contravene Article 6 (3)(d);
the admission of evidence obtained from the respondent as a result of compulsion may be a breach of Article 6(2);
the use of a civil standard of proof rather than a criminal standard may contravene Article 6 (2); and
the retrospective application of the provisions may be a breach of Article 7(1).

10. The consultation document itself acknowledges that the statutory provisions in the draft Bill are incomplete in this field. It is not therefore possible for the Human Rights Commission to comment on the human rights implications of these in detail at this stage. However the following points should be noted:

(a) There is to be a "gateway" provision allowing the Director of the new Agency to access information held by existing law enforcement agencies (page 229 at para. 5.16 and page 230 at para. 5.24). There may be data protection dimensions to this, which could raise the possibility of a breach of Article 8 of the European Convention.

(b) It is unclear from the consultation document on what criteria decisions will be taken by the Director of Public Prosecutions and by the Director of the Criminal Assets Recovery Bureau as to whether to proceed in any particular case by way of criminal prosecution or by way of civil recovery. Unless clear guidelines for making such decisions are drawn up and applied, there could be inequality of treatment under the law in this context. That would breach provisions on equality in United Nations' treaties on human rights.

(c) The Bill is to be amended so as to allow the High Court to draw inferences from the failure of a respondent to provide evidence of the legitimate origins of property (pages 230-231 at para. 5.25). While the use of assumptions in this field may not be as serious as in the "purely" criminal field discussed above (see para. 8 of this submission), they could still give rise to arguments that the respondent's right to a fair trial is being breached.

(d) As with confiscation orders in criminal cases, there is the danger that persons who have no connection with the alleged criminal conduct in question (e.g. dependants of those involved) will be sued by the state for civil recovery of property. Under Article 1 of Protocol 1 to the European Convention, however, there is a right to the peaceful enjoyment of one's possessions. While Article 1 itself allows this right to be compromised in the "public" interest or in the "general" interest, and subjected to conditions provided for by law, it remains questionable whether the very extensive powers of recovery granted by this draft Bill are wholly compatible with this European provision. At page 231 of the consultation document (para. 5.30), the United Kingdsom Government acknowledges that it needs to consider further whether the provisions in the Bill provide sufficient protection for third parties. The Human Rights Commission is of the view that additional protections are required.

(e) The Bill does not yet contain any provision guarding against the use in subsequent criminal proceedings of information obtained from a respondent by compulsion (see page 232 at para. 5.31). This is a crucial matter if a breach of Article 6(2) of the European Convention is to be avoided.

Professor Brice Dickson
Chief Commissioner
23 April 2001

ANNEX A

EXTRACTS FROM THE EUROPEAN CONVENTION ON HUMAN RIGHTS

Article 6 - Right to a fair trial

(1) In the determination of his civil rights and obligations or of any criminal charge against him, everyone is entitled to a fair and public hearing within a reasonable time by an independent and impartial tribunal established by law. Judgment shall be pronounced publicly but the press and public may be excluded from all or part of the trial in the interests of morals, public order or national security in a democratic society, where the interests of juveniles or the protection of the private life of the parties so require, or to the extent strictly necessary in the opinion of the court in special circumstances where publicity would prejudice the interests of justice.

(2) Everyone charged with a criminal offence shall be presumed innocent until proved guilty according to law.

(3) Everyone charged with a criminal offence has the following minimum rights:

(a) to be informed promptly, in a language which he understands and in detail, of the nature and cause of the accusation against him;

(b) to have adequate time and facilities for the preparation of his defence;

(c) to defend himself in person or through legal assistance of his own choosing or, if he has not sufficient means to pay for legal assistance, to be given it free when the interests of justice so require;

(d) to examine or have examined witnesses against him and to obtain the attendance and examination of witnesses on his behalf under the same conditions as witnesses against him;

(e) to have the free assistance of an interpreter if he cannot understand or speak the language used in court.

Article 7 - No punishment without law

(1) No one shall be held guilty of any criminal offence on account of any act or omission which did not constitute a criminal offence under national or international law at the time when it was committed. Nor shall a heavier penalty be imposed than the one that was applicable at the time the criminal offence was committed.

(2) This article shall not prejudice the trial and punishment of any person for any act or omission which, at the time when it was committed, was criminal according to the general principles of law recognised by civilised nations.

Article 8 - Right to respect for private and family life

(1) Everyone has the right to respect for his private and family life, his home and his correspondence.

(2) There shall be no interference by a public authority with the exercise of this right except such as is in accordance with the law and is necessary in a democratic society in the interests of national security, public safety or the economic well-being of the country, for the prevention of disorder or crime, for the protection of health or morals, or for the protection of the rights and freedoms of others.

Article 1 - Protection of property

Every natural or legal person is entitled to the peaceful enjoyment of his possessions. No one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law.

The preceding provisions shall not, however, in any way impair the right of a State to enforce such laws as it deems necessary to control the use of property in accordance with the general interest or to secure the payment of taxes or other contributions or penalties.

Written Submission by the Royal Ulster Constabulary

1. The proposals in the Proceeds of Crime draft legislation essentially provide two discrete elements that are both intended to assist investigations where the intention is to prevent criminals profiting from their unlawful activities.

2. Firstly, the Bill will update, strengthen and consolidate in one Act legislation which currently exists in the various jurisdictions of the UK in respect of investigations into money laundering offences and confiscation. The proposed legislation will fully reflect the differences in the law between Northern Ireland and Wales.

3. Secondly, and perhaps more significantly, the Bill will establish, for the first time in the UK, a mechanism to recover criminal profits without the necessity of prosecution. A Criminal Assets Recovery Agency is being created and this will have executive responsibility in England, Wales and Northern Ireland for the recovery of criminal assets using a range of investigatory powers. It will be able to pursue criminal assets through confiscation of the assets of convicted criminals, or recovery of assets through civil proceedings, or taxation of persons suspected of having benefited from crime. It will be for the Director of the Agency to decide which route to pursue, depending on the circumstances of the case.

4. A Director of the Agency will be appointed by the Home Secretary and a senior member of his staff will have responsibility for Northern Ireland. The precise structure and make-up of the Agency is not known at this time.

5. Proceeds of Crime investigations are well established in Northern Ireland. RUC Financial Investigation Officers are regularly tasked to investigate the financial background of individuals who are under investigation for offences of an acquisitive nature. This is done with a view to making an application to the court for a Confiscation Order subsequent to conviction and it is important to remember that, at present, confiscation can only occur following conviction.

6. The proposed legislation will not dramatically affect the way police conduct financial investigations in cases where evidence exists to prove the case to the criminal standard. In such circumstances it is anticipated that the Director of Public Prosecutions will continue to be the conduit for confiscation applications.

7. The RUC acknowledges that a substantial number of criminals enjoy the fruits of their labour and that many law-abiding citizens find this difficult to understand. We are, therefore, extremely pleased to see the establishment of the new Agency with its powers to seek the recovery of criminal assets where no conviction has taken place. We anticipate that it will function in a similar, but not identical, manner to the Criminal Assets Bureau in the Republic of Ireland.

8. Of concern to the RUC is the extent to which the Agency will be resourced in Northern Ireland. The Home Secretary announced in July 2000 that £54m would be made available over the next three years to pay for the Agency. As indicated previously, a senior member of the Agency will be responsible for Northern Ireland. It is our view that this person must be based in Northern Ireland and have the necessary staffing level to make an impact against criminals operating within the Province. It is hoped the Committee and the Assembly will support this view.

9. On the practical front, it is anticipated that a Memorandum of Understanding will be entered into between the Director of the Agency and the Chief Constable and Director of Public Prosecutions for Northern Ireland respectively.

10. The effects of drug trafficking and acquisitive crime of a highly profitable nature should not be underestimated. Their impact on society, business and individual victims, particularly where organised criminality is involved, has been widely publicised. No good argument can be advanced as to why individuals should profit from their illegal activities. It is only right that their ill-gotten gains are taken away. This proposed new legislation provides much of the capacity to see this carried out.

DS David Thompson
Royal Ulster Constabulary
20 April 2001

Written Submission by the National Criminal Intelligence Service

Thank you for your letter dated 6 April 2001 and the information on the specific areas of concern that the Committee will be interested in. I welcome the opportunity to comment on the draft legislation and to contribute to its progress and development through the Northern Ireland Assembly.

This reply is intended to build upon the written response provided by John Abbott, the Director General of NCIS to the Northern Ireland Assembly in January of this year (copy enclosed). With regard to the Committee's expressed areas of interest, I have set out my reply in the same manner so as to provide a response to the highlighted areas.

I have also, in light of the request for a brief overview of NCIS, included a copy of a briefing sheet that demonstrates the contribution that NCIS makes towards the policing of Northern Ireland and a copy of the NCIS Service Plan.

What effect will the new agency have on the work of the NCIS?

It is important to acknowledge that NCIS has a wide range of customers in the forms of government departments, law enforcement agencies, and private sector bodies. The Criminal Assets Recovery Agency (CARA) will be another agency with which NCIS will need to develop a two-way relationship.

The formation of the CARA will be a significant step forwards in the fight against serious and organised crime by attacking the benefits accrued by those involved at all stages of the criminal process. NCIS targets those individuals and organisations involved in the most serious forms of crime, and such activities often result in the accumulation of significant assets, including houses, cars, yachts, share portfolios, retail businesses, leisure outlets, and more.

Civil recovery as operated by CARA will make a real difference to tackling such assets. At present, criminals are often able to hold onto their assets by either distancing themselves from the crime itself - by using subordinates - or by utilising complex financial schemes to break the audit trail between the criminal benefit and the eventual asset.

NCIS is aware of individuals with significant wealth who have never had a legitimate income; at present such individuals cannot effectively be linked to the criminal acts that generate their wealth. NCIS will be able to look to CARA to target and remove the assets of such individuals, undermining their power and prestige. This will in turn help to deconstruct criminal organisations. The most important effect of CARA on the work of the NCIS should therefore be the ability to remove assets from specific individuals and organisations linked to serious and organised crime.

Secondly, the general increase in financial investigation and asset confiscation work that the Proceeds of Crime Bill is likely to promote will result in additional work for NCIS. Requests for financial intelligence will be passed from police forces - including that of Northern Ireland - to the Economic Crime Unit at NCIS. Requests for assistance with particular financial analysis work will be increasingly lodged with NCIS Regional Offices across the UK. In short, financial intelligence will become increasingly in demand as CARA promotes the identification and removal of criminal assets as a new tool for fighting crime.

How do you envisage co-operation between CARA and NCIS?

As NCIS is the primary handler and disseminator of financial intelligence in the United Kingdom, the level of co-operation between the two agencies is expected to be substantial.

In due course, the gateways between NCIS and CARA will be introduced into the Bill by the Home Office, but the main aim has to be to ensure that NCIS will be able to disseminate intelligence and evidence to CARA to facilitate civil recovery investigations. In particular, when CARA is targeting specific assets it may request a search of the NCIS intelligence databases to determine whether any relevant information is available. NCIS may also wish to put forward suitable targets for consideration by CARA.

The fine details of tasking are still under negotiation, however, it is apparent that NCIS is the organisation best placed to undertake a key role ensuring that intelligence regarding criminal assets is utilised by the most appropriate agency.

The Committee will also be aware that NCIS publishes an Annual Threat Assessment of Serious and Organised Crime. As CARA will have responsibility for overseeing the National Confiscation Strategy, NCIS anticipates working closely with the organisation on a range of strategic issues.

What are the essential elements that will need to be incorporated into any memorandum of understanding between NCIS and CARA?

It is always essential when sharing intelligence with another agency that adequate safeguards are in place to protect sources. Memorandums of understanding that NCIS has in place with other regulatory and law enforcement bodies state general conditions under which information exchanged between parties may be disseminated onwards. With regards to the work of CARA, such an agreement will be especially pertinent in light of the evidence that may or may not be presented to the courts during recovery hearings.

The memorandum will also need to include general performance measures for standard tasks requested between parties - such as search requests from CARA to NCIS or acknowledgement of target tasking requests from NCIS to CARA.

What are your views on the reforms proposed for the money laundering offences?

Reform of the legislation surrounding money-laundering offences is long overdue. The current complexity leads to an inefficient and piecemeal approach to both enforcement and prosecution. The draft Bill's unification of drugs and non drugs money laundering offences is one example of an improvement that should make prosecution and conviction of those involved in all types of money laundering more practicable.

A further significant improvement is the introduction of a 'reasonable grounds for suspicion' test for the offence of failing to disclose. This offence will only apply to those individuals and institutions within the regulated sector, reflecting the professionalism and training that should be present within the financial services industry.

I believe that the application of such a test will ensure that individuals are no longer able to 'turn a blind eye' to criminal funds passing through their company's business. Currently, some 30% of disclosures originate from just 10 financial institutions. The failing to disclose offence will also, and for the first time, apply to funds linked to all crime. Intelligence exists that individuals have previously used cover stories of 'tax evasion' to encourage institutions not to make a disclosure, although the funds were actually derived from drugs trafficking or other serious crime. The change to the law will therefore remove the burden on the institution to decide which underlying offence it believes the funds may be linked to, thus encouraging disclosure.

General legislative issues:

Overall, I support the objectives of the draft Bill, but feel that in its current form it does not fully address all of the issues. The single most important weakness in the current Bill is, in my opinion, the restriction of investigative powers to allow investigations into the whereabouts of the proceeds of crime.

There will be circumstances where the ability to apply for an account monitoring order or customer information order as part of a proactive investigation into crime would be of immense use in solving a case. For example, in an organised-crime murder scenario, the ability to obtain a monitoring order on a suspects account would enable the investigators to be kept abreast - possibly in real time - of any withdrawals from the account and thus possible location. However, at present, unless such crimes had had a clear financial benefit, no such use of the powers could be made.

I and NCIS would support an extension of the powers to cover such circumstances - the final approval for such orders would, of course, still rest with the courts, ensuring that the rights of the citizen were fully protected.

The final issue that I would wish to raise is the ability to seize drug and terrorist related cash at borders. This is actually due for inclusion in the Bill at a future date, but I am of the opinion that it is of such importance for Northern Ireland that the Committee may wish to consider it at this stage.

The ability to seize drug and terrorist-related cash at borders is of great importance in disrupting organised criminal activity. NCIS would support any extension of these powers to cover funds derived from any crime, and for the development of a scheme to allow seizure of such cash detected anywhere within the United Kingdom - including in transit between Northern Ireland and the mainland. At present cash detected at, say, Belfast International en route to Liverpool cannot be seized under the Drugs Trafficking Act S42 - the Proceeds of Crime Bill presents the legislature with an excellent opportunity to correct this loophole.

Finally I would like to repeat the offers put forward by John Abbott. NCIS would welcome the secondment of Northern Ireland law enforcement officers as it does both strengthen and improve working practices. Also, should any member of the Ad Hoc Committee wish to visit NCIS headquarters in London to see the work carried out by the Economic Crime Unit or NCIS as a whole, I would be delighted to facilitate such a visit.

Yours sincerely,

V J Harvey
Director UK Division
19 April 2001

Written Submission by the National Criminal Intelligence Service to the Ad Hoc Committee - Financial Investigations (NI) Order 2001

Thank you for your letter dated 20 December 2000. I welcome the opportunity to comment on the draft Order and its impact on the work of the National Criminal Intelligence Service (NCIS). You will already be aware that in accordance with European Union requirements the United Kingdom has a single central unit charged with receiving financial disclosures from financial institutions. This unit is the Economic Crime Unit (ECU) at NCIS.

Overall, I believe that the draft Order would clarify and strengthen the anti-money laundering and asset confiscation legislation, increasing the effectiveness of law enforcement in Northern Ireland and reducing the ability of criminals to hold on to the profits of their criminality.

With regard to the impact on NCIS, there are three main issues which I wish to draw to the attention of the Committee:

Firstly, we would expect the general increase in financial investigation work that would result from the draft Order to increase the number of requests for financial intelligence lodged by Northern Ireland law enforcement at the Economic Crime Unit (ECU) within NCIS.

Secondly, NCIS has forecast that as financial institutions are made increasingly aware of their disclosure responsibilities as a result of the financial investigation work generated by the draft Order, the number of disclosures from financial institutions based in Northern Ireland will rise. As explained above, all such disclosures must be directed through the Economic Crime Unit.

Thirdly, it is possible that the NCIS ECU may act as the central hub for dissemination and collation of general bank circular requests should such legislation be enacted in England and Wales in the future. Should this be the case, it would also be rational to include orders raised in Northern Ireland. The expansion in banking circulars proposed in the draft Order would, therefore, increase the potential workload on NCIS.

However, although each of the issues above is judged to result in an increase in workload for NCIS, overall we believe that the benefits to the Northern Ireland community of increasing the effectiveness of asset confiscation from criminals are highly desirable. I am also hopeful that the forthcoming judgement by the Home Secretary on NCIS funding will allow the organisation to fulfil the increased demands of the draft Order without necessitating a request for additional funding from your jurisdiction.

Finally, it has been the experience of NCIS that many law enforcement and government organisations from across the country have benefited from seconding selected staff into the ECU. Such secondments strengthen relationships between NCIS and parent organisations, as well as allowing effective exchanges of ideas to allow improvements in systems and procedures. Your Committee may wish to consider the potential benefits of such a secondment from the Northern Irish law enforcement community in the light of continuing financial investigation developments in your jurisdiction. Personally, I would welcome a positive proposal along these lines.

I hope that my comments are of use to the Committee, and if you have any further questions please feel free to contact me through my administration. In addition, should you or any members of the Ad Hoc Committee wish to visit NCIS headquarters in London to see the work of our Economic Crime Unit (and other parts of NCIS) I would be delighted to facilitate such a visit.

John Abbott
Director General
4 January 2001

Additional Submission by the National Criminal Intelligence Service

Human Rights:

Draft Bill carefully constructed to reflect interests of all members of society.
Rights are accompanied by responsibilities
The state has duty to protect citizens from crime and criminal organisations, and removing finances is a highly effective way of doing this
The following, taken from the recent evidence given to the High Court by NCIS, gives a break down of the cost of crime on the UK and puts it clearly in perspective in respect of the costs to the nation and the power (and duty) of the state:

Estimates of the total cost of crime vary, but it was assessed in 1996 to have a total financial impact of £50 billion per annum (not including tax evasion and benefit fraud). This figure includes £12 billion costs on the Criminal Justice System, £28 billion for pain and suffering and £3.8 billion on vehicle thefts. It is further estimated that in 1999 robberies involving cash-in-transit cost £9.5m, theft of lorries and their loads cost £39.8m, and art and antique thefts cost £300-500 m. In the first six months of 1999, losses from the use of counterfeit payment cards were estimated to be £19.6m. Tax evasion is estimated at £10 billion per annum (which includes lost excise duty on smuggled tobacco at £2.5 billion). Benefit fraud is estimated at £1.5 billion.

Quite apart from humanitarian issues, the financial cost of organised smuggling of illegal immigrants, although difficult to quantify, is believed to be extremely high. There are about 110,000 illegal immigrants detected each year in the UK and a conservative estimate suggests this reflects only 20% of the total. Each illegally smuggled entrant will pay an average of £5,000 to the smuggling group, but those from the Far East are regularly paying up to £20,000 each.

In 1998 the value of the main drug types seized by Police and Customs in the UK was £832m. It is believed that this constitutes about 10% of the total value of illegal drugs in circulation. The size of the drugs market continues to rise. Total seizures in the UK in 1988 were 38,235, however these had risen by 1998 to 149,907. Customs estimate that £1.7 billion worth of drugs were prevented from entering the UK in the financial year 1997/98, but, again, this had risen to £2.4 billion the following year. The total value of the UK drugs market in 1998 has been given as £6.6 billion.

In recycling the proceeds from criminal activity, organised crime groups resort to money laundering techniques which infiltrate illicit gains into the legitimate financial system. Money laundering is conducted in many forms, but is typically facilitated either through business 'fronts' which involve high cash flow or the purchase of high value capital assets (such as art work, jewellery or property) for cash. When these latter items are resold, the money received acquires an outwardly legitimate character. The International Monetary Fund considers 2 - 5 % of the World's GDP involves money which has been filtered in this way. The Office of National Statistics has valued cash in circulation from the illegal drug market in the UK at around 1% GDP (worth £8.5 billion in 1998).

Organised Crime is entrepreneurial in nature and the removal of the profit incentive can potentially have a powerful impact on crime reduction. Forfeiture of assets has a further preventative aspect in removing financial resources which would otherwise be reinvested in criminal enterprise. Forfeiture legislation is aimed at recovering assets which have been obtained contrary to law and acquired at significant cost to society.

Confiscation orders are made in only 20 % of drug trafficking cases (in real terms in 1998 there were 1,243 orders made out of a possible pool of 6,998 convictions). In the same year in respect of the Criminal Justice Act only 136 orders were made from a potential 52,456 confiscation cases (i.e. 0.3%). The actual collection rate is far less than the value of the orders made. Under UK Drug Trafficking legislation in the year to 31st MARCH 1999, the total value of confiscation orders made was £22.3m, but only £10.5m was collected. In that same year confiscation's ordered under the Proceeds of Crime Act was £12.7m, but only £6m was recovered. Forfeiture orders for the recovery of unlawful assets are more common. In 1998 there were 27,353 such orders made in the Magistrates' Court and 10,406 in the Crown Court (i.e. 37,759 in total of which 25,700 were drugs offences). This equates to about 27 forfeiture orders for every one confiscation order made.

Although LONDON is recognised as the principal financial market in EUROPE, the UK uses powers of confiscation and forfeiture less than some other jurisdictions. In 1996 the UK made confiscation/forfeiture orders valued at US$ 26.4m against a GDP of US$ 1,177 billion, the USA made orders worth US$ 759m against a GDP of US$ 7,751 billion, EIRE made orders worth US$ 19.5m with a GDP of US$85 billion whilst ITALY ordered confiscation/forfeiture of US$ 460 million having a GDP of US$ 1,229 billion.

Standard of Proof:

The standard proposed in the draft Bill is not mirroring the legislation in Eire
Rather it requires the state to present a factual case and gives the defendant the opportunity to disprove the claims made
The defendant will be in the best position to disprove
Any innocent individual would have no problem defining where the vast majority of their wealth had originated from
The matters are not criminal - they are a civil hearing to consider the origin of ownership of disputed assets, not tainting an individual with a criminal conviction

Offences:

As discussed in the original written submission

Operational Issues:

NCIS liases closely with a range of agencies in Eire in relation to financial intelligence, as it does with a range of other agencies around the world.
Such contacts are essential for the efficient working of an anti-money laundering regime
The issue of seconding staff to and from CARA will be developed in coming months

V J Harvey
Director UK Division
24 April 2001

Written Submission by HM Customs and Excise

1. Benefits to Customs & Excise enforcement activity.

1.1 General

The principal benefits to HM Customs and Excise from the Proceeds of Crime Bill are expected to arise from the replacement and strengthening of the current legislation on:

investigation powers;
restraint and confiscation procedures;
money laundering offences; and
seizure of crime-related cash.

These are dealt with in more detail in the following paragraphs.

1.2 Criminal Confiscation Procedures

1.2.1 The main changes in this area involve the consolidation, strengthening and streamlining into one Act of the current criminal confiscation powers contained in the Drugs Trafficking Act 1994 and the Criminal Justice Act 1988. At present there is an inconsistent approach to the application by the courts of the assumptions about benefit derived from past criminal conduct. In future, where a convicted defendant is identified as having a "criminal lifestyle", it will be mandatory for the court to base a confiscation order on the premise that all property which has passed through the defendant's hands in the previous six years was the proceeds of criminal conduct. Since the mandatory application of the assumptions is currently only available in connection with drug trafficking convictions, the new provisions can be expected to lead to an increase in the amount of money ordered to be confiscated in other offence cases which are priority areas for Customs. Examples would include, oils fraud and tobacco smuggling.

1.2.2 The Bill also introduces, in England and Wales, a "one stop shop" by providing for all restraint and criminal confiscation hearings to take place in local Crown Courts rather than being split between three courts as at present (ie, Magistrates', Crown and High Courts). In Northern Ireland, restraint orders will remain the prerogative of the High Court.

1.2.3 Prosecutors will also be given a new power under the Bill to challenge the court's decision where they consider that the criminal confiscation order is lower than warranted by this evidence.

1.3 Restraint procedures

1.3.1 The Bill will provide prosecutors with the power to seek a restraint order at any time after the start of a criminal investigation. At present this is only possible when a person is about to be charged with a criminal offence. We expect this provision to assist in preventing the dissipation of assets during the criminal investigation.

1.4 Civil forfeiture powers (Cash at borders)

1.4.1 Customs currently have the power under Part II of the Drug Trafficking Act 1994 to seize and detain - with a view to forfeiture in the Magistrates' Court - cash being imported or exported which is reasonably suspected of being the proceeds of, or intended for use in, drug trafficking. The Bill is expected to extend these powers to include the proceeds of - or money intended for use in - any criminal conduct and to cover non-cash instruments such as travellers' cheques and bearer bonds. Whilst this area is still under discussion with the Home Office and clauses have not yet been drafted, we believe that such provisions would be of particular benefit to Customs issues. Problems like tobacco smuggling are currently immune from cash seizure, even when it is clear that the monies are related to smuggling. The proposed "all crime" coverage will also enable us to take action on behalf of other agencies such as the police (eg, if we detect money which is the proceeds of a robbery) and to pass the case to them for further progression.

1.5 Civil Recovery

1.5.1 The proposed civil recovery scheme, which will enable the Criminal Assets Recovery Agency (CARA) to recover the proceeds of criminal conduct on the basis of the civil rules of evidence will not be of direct interest to Customs and Excise except that:

we expect to refer cases to the new Agency for civil recovery where we have concluded that it is not feasible to mount a successful prosecution but there are, nevertheless substantial assets appearing to derive from criminal activity; and
we expect in due course to second financial investigators, lawyers and other staff to the newly-formed Agency. (We have already agreed to second two officials, one being a specialist financial investigator, to the Agency in Northern Ireland).

1.6 Investigation Powers

1.6.1 In addition to the existing powers of a production order and search warrant, two new investigation powers will be granted to enable Customs and Excise, other law enforcement authorities and the new Agency to trace and investigate suspected criminal assets. The two new powers are:

the account monitoring order, under which financial investigators will be able to gain access to transaction information on suspect bank accounts for a specified period; and
the customer information order, which will require banks to identify accounts held by a person under investigation.

We expect these new investigatory powers to facilitate the gathering of evidence to support criminal offence and confiscation action, and generally to increase the effectiveness of our financial investigation efforts.

1.6 Money Laundering

1.6.1 The Bill should remove the current distinctions between drug and non-drug money laundering offence provisions. This should remove a barrier to securing convictions which is currently created by the need to demonstrate to the court that the laundered money derived from a specific offence, not simply that it derived from criminality. The offence of 'failure to report suspected money laundering activities' would under the Bill, be extended to cover the proceeds of any criminal conduct, not just drugs trafficking as at present. Furthermore, persons carrying on a business in a sector governed by the Money Laundering Regulations (eg, banks, building societies, bureaux de change) will in future be susceptible to prosecution where they have reasonable grounds for suspecting that another person is engaged in money laundering. Currently we need to demonstrate actual knowledge or suspicion, and this has hindered the successful progression of criminal action.

2. Specific benefits to C & E enforcement activity in Northern Ireland

2.1 Fiscal fraud

2.1.1 Customs' highest priority in Northern Ireland is tackling hydrocarbon oils fraud, which poses a specific and serious threat. In addition, and in common with the rest of the UK, there is a serious threat from tobacco smuggling which Customs are tackling through a national strategy. Enhanced resources for tackling oils fraud in Northern Ireland specifically and the tobacco smuggling problem nationally, have enabled Customs to increase the enforcement presence tackling these frauds.

2.1.2 The Government's strategy is designed to undermine the economics of smuggling and remove the profits of criminals. We expect the Proceeds of Crime Bill to make a significant contribution towards achieving these aims, both in Northern Ireland and the rest of the UK by:-

tightening money laundering offence provisions so as to make disposal of smuggling profits more difficult;
enabling Customs to seize cash (and equivalent monetary instruments) at ports, airports and the Northern Ireland Land Boundary where it is reasonably suspected of being the proceeds of, or intended for use in, excise fraud; and
providing stronger investigatory powers and more flexible confiscation procedures to enhance the quality of our financial investigations and generate more substantial confiscation orders.

All these powers will make it more difficult for the smugglers to make a profit and will help Customs take away these profits.

2.2 Organised Crime

2.2.1 The criminals involved in oils and tobacco smuggling are serious gangs who will smuggle anything to make money. The Northern Ireland Threat Assessment estimates that some 21% are involved in fiscal fraud as well as drug dealing and trafficking. Customs' task is to tackle fiscal fraud and drugs trafficking, no matter who perpetrates it, especially since excise fraud gangs may use profits from excise smuggling to fund other criminal activities.

Donald Toon
Head of Prohibitions & Restrictions Policy

1 May 2001

Written Submission By The Inland Revenue

1. Your letter of 9th April invited the Inland Revenue to produce a written memorandum setting out our views on the draft Proceeds of Crime Bill. You also listed 5 questions, which you think the Committee will be especially interested in.

2. It is important to be clear that the Inland Revenue has been fully engaged in the process of developing this policy. The draft legislation represents a position we have agreed with the leading government departments. The original study, which made the series of recommendations resulting in this draft legislation, was by the Cabinet Office's Performance and Innovation Unit. The lead department responsible for drafting the legislation is the Home Office. Both have sought our views and advice throughout the process and the resulting Chapter VI of the consultation document, "Taxation", represents these views.

3. As a consequence we fully support the proposals in the draft legislation.

4. Taking the Committee's questions in the order asked:

A. What effect will the new agency, the Criminal Assets Recovery Agency (CARA), have on the work of the Inland Revenue?

5. The precise operational arrangements for how the Director will take on tax cases have yet to be finalised.

6. An important point to make here is that there are no new powers assigned to the Inland Revenue as a result of the taxation proposals in the Proceeds of Crime Bill. Cases of serious tax fraud will continue to be investigated by the Inland Revenue's Special Compliance Office, using existing powers and existing operational practices.

7. The Inland Revenue will not have the new "sourceless assessing" power and will continue to need to identify sources of income attributable to any income tax assessments raised.

B. How do you envisage co-operation between the Inland Revenue and CARA?

8. There will be clear lines of demarcation between the Revenue and CARA. It will be possible for the Revenue to be responsible for some taxes and the Director other taxes within the same tax period. So good communications between CARA and the Revenue will be vital.

9. The Director will have authority under the legislation to serve notice on the Board of the Inland Revenue that he is assuming responsibility for whichever tax functions he chooses relating to a case. The legislation requires the Revenue to comply with the notice.

10. The Revenue's involvement will be limited to the provision of case-specific information. This will be at the time of transfer of the case to CARA and continuing during CARA's operation of the case. The Revenue will also receive information relating to taxation from CARA when the case is handed back.

C. What are the essential elements that will need to be incorporated into any memorandum of understanding between the Inland Revenue and CARA?

11. A key area for agreement will be the provision and security of taxpayer information. This will include the arrangements to be put in place for the transfer of files to and from the Director CARA. It will also include the scope and limitations on the use of information gateways between CARA and the Revenue. Section E below provides further details.

12. A second area is the Director CARA's application of his taxing powers in keeping with the Board of Inland Revenue's practice, in particular, the application of published statements of interpretation and extra statutory concessions. The draft legislation provides for the Revenue to gain assurances from the Director CARA that he is applying the tax system in this way and the Revenue may ask for documentation from CARA to satisfy themselves accordingly.

D. What are your views on the reforms proposed for the taxation of income whose source is unknown?

13. Before this power can be used, the Director must apply a "suspicion of criminality test". So we accept that the Director CARA will need this assessing power because of the nature of the cases he will be dealing with.

E. Does the Inland Revenue have any concerns regarding the use of information gateways and the protection of data held on your information systems?

14. The Inland Revenue operates to very high standards of taxpayer confidentiality, which will be rigorously maintained in relation to the new Agency. In particular:

All Inland Revenue staff sign a declaration of secrecy, which is a statutory commitment to confidentiality about taxpayers' affairs. Breaches of this are criminal offences. We would expect to see CARA staff who have access to taxpayer information being subject to a similar duty of confidentiality;
The gateway from the Inland Revenue to CARA will be permissive, which is to say that the Revenue can disclose to CARA, but we are not obliged to;
The Revenue will be able to pass on to CARA information it receives under existing statutory provisions from DSS, Customs and financial institutions;
The Revenue will not pass on information gained through tax treaties, mutual assistance directives or other agreements which require that information is not passed on to other parties;
Disclosures by the Revenue to CARA can be for any of the Director's functions;
Disclosures by the Revenue may not become the subject of onward disclosures to third parties by the Director CARA;
Disclosures to the Revenue by the Director CARA should be limited to those matters concerned with the taxation functions of the Director CARA, not those purely to do with criminal or civil confiscation;
We are also legally required to comply with any limitations imposed by the Data Protection Act 1998.
In practice we intend that disclosures will be limited to case-specific information only. CARA will not be given direct access to the Revenue's databases.

15. Each of these key points above is being developed with the Home Office and we envisage these being made explicit in a memorandum of understanding. We are content that our policy objective of maintaining taxpayer confidentiality will be met.

More generally the Committee asked whether we feel there are any weaknesses in the draft legislation.

16. We have been fully involved in the drafting of the Home Office legislation and so it reflects our views in each important policy area. These are:

The maintenance of a single, consistent national taxation system;
Legally robust vesting of tax raising powers in the Director CARA, whilst retaining his operational independence from the Inland Revenue;
Proportionate and secure use of taxpayer information - CARA will not be able to sift through the Revenue's databases;
Clear lines of demarcation between CARA and the Revenue in terms of who does which cases;
No new powers for the Inland Revenue through what would be perceived to be a "backdoor" route.

17. In each case we believe our policy intentions are being addressed. We look forward to discussing this further with the Committee on 3rd May.

David Humphries
Policy Adviser
1 May 2001

Report on the Proceeds of Crime Bill

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