Confiscation orders: A lesson for prosecutors
A recent judgment of the Court of Appeal Criminal Division reaffirmed the limits of the Proceeds of Crime Act 2002 (‘the Act’) in cases where confiscation proceedings are brought against defendants who have previously been the subject of a confiscation order.
The respondents in R v Chahal  2 Cr. App. R. (S.) 35 had, on 7th August 2008, been convicted on a number of counts of money laundering and conspiracy to use false instruments (Sunbird proceedings: £20m cheque fraud). Confiscation proceedings were subsequently brought and an order for confiscation was made against the two respondents on 4th August 2010. At around the same period, the respondents were also investigated and ultimately convicted (though not in the same proceedings) of offences arising out of an MTIC fraud (Duma proceedings: £181m carousel / MTIC fraud). At the conclusion of the confiscation proceedings which arose out of the Duma proceedings, the judge held that an assessment of the benefit from general criminal conduct under section 8 of the Act was confined to the benefit from general criminal conduct after the last confiscation order.
Appealing against this decision, the Crown submitted, that in the Sunbird proceedings, the judge had, on 4th August 2010, in fact made an assessment of benefit from particular, rather than general, criminal conduct. This contention was swiftly dismissed. And rightly so, given that the offences of which the respondents had been convicted were criminal lifestyle offences under section 75(2)(a) of the Act, and the court was therefore compelled to consider the benefit figure in terms of general criminal conduct under section 6(4)(b) of the Act.
Of greater interest was the second submission on behalf of the Crown: that the true construction of section 8 of the Act was that where a court was considering confiscation in a case where there had already been a confiscation order on a previous occasion, the court was empowered to assess whether the earlier order had in reality been determined in respect of particular criminal conduct rather than general criminal conduct, even if, the judgment on its face indicated the latter. The Court of Appeal went as far as to say that the original order may indeed have been wrong, and noted the oddity that, after invoking the criminal lifestyle provisions and the statutory assumptions under section 10 that flow from that, the court in the Sunbird proceedings nevertheless assessed the benefit simply by reference to the modest profit (£280,000) that the respondents had made on the deals that formed the substance of the offences of which they were convicted. However, this oddity, and others, were considered irrelevant:
‘Even if the orders were erroneous, they stand unless lawfully varied or set aside. They were not, and are not, nullities.’
The Crown’s appeal was dismissed: ‘the words of section 8 mean what they say: and the second judge is not empowered to go behind the prior determination of the first judge as to benefit from general criminal conduct’.
The result was that the respondents did not have to hand over anything like the true proceeds of their serious criminality. That outcome ‘is not attributable to a deficiency in the statutory provisions: it is attributable to the (unwise) decision of the prosecution to elect to apply to proceed in the Sunbird confiscation proceedings and then, having done so, to proceed to a conclusion of those confiscation proceedings and to agree the confiscation orders in the terms made: all prior to the conclusion of the Duma proceedings’. The Court of Appeal hoped perhaps lessons could be learned from this case as to how not – from the prosecution point of view – to go about things in such a situation.
The lesson for prosecutors: consider carefully the nature of the order you are seeking, and whether it might be better to defer such an order being made whilst there are still criminal proceedings pending. It cannot be assumed that inappropriate orders can be addressed by having another bite of the cherry at subsequent confiscation proceedings.