Post conviction in serious fraud cases

Last week 25 Bedford Row hosted a seminar focusing on ‘Post Conviction in Serious Fraud Cases’. Paul Hynes QC presented his thoughts on the latest developments in money laundering and the hard-hitting effect that the addition of such a charge has on sentencing, and then Geoffrey Payne considered the recent key cases in confiscation.

The addition of a money laundering count, says Hynes, has the prosecutorial advantage of being relatively easy to prove when sitting alongside the primary offence. With a maximum sentence of 14 years, such a charge is particularly attractive to prosecutors keen on bumping up the comparatively low sentence available for a small regulatory offence, or in big frauds charged either under the Fraud Act or as a common law conspiracy to defraud.  Hynes took us through the recent case law considering the grounds under which a sentence under POCA 2002 should be passed consecutively with the primary offence and the conflicting principles which emerged from the cases of Alexander & others [2011] and Greaves & others [2011].

Geoffrey Payne considered the issue of proportionality, which was a thread throughout a number of confiscation cases in 2012. The question before the Supreme Court in the case of Waya [2012] was whether POCA 2002 is capable of operating in a manner which is oppressive and/or an abuse of process, and whether the court ought to give any guidance on when that might occur. The Supreme Court examined paragraph 12, Article 1 of the First Protocol to the European Convention on Human Rights and analysed the issue of proportionality. It was held that the essence of the legislation is not the deterrent effect which might be had on criminals (whilst it is inevitable that such a severe regime must act as such); the true essence of the legislation is to remove from criminals the pecuniary proceeds of their crime. In its guidance the court stated that s6(5) POCA 2002 should be interpreted to mean that a confiscation order should be made ‘except insofar as such an order would be disproportionate and so a breach of Article 1, Protocol 1.’ The court disputed that this inserted an element of discretion into the Act and maintained that the introduction of discretion was purely an issue for Parliament.  It should be noted that this was not a criminal lifestyle case, however it does show further attempts at keeping this draconian legislation within bounds. It also flows from this case, says Payne, that it is now open for a defendant to assert that to even ask for an order, let alone make one, would be contrary to the Convention.

Payne also looked at the case of Ahmad & Ahmed [2012] (which featured the largest ever order of £92m) and considered the conflict of turnover versus simple benefit, and whether the costs of committing an offence should be included in the benefit figure. Whilst the prosecution are often known to assert that expenditure should be included within the benefit figure, the court held here that to include the costs of a crime as part of the sum required under a confiscation order, would cause it to operate by way of a fine, which is contrary to the intention of the Act.

For many defendants, the threat of confiscation proceedings is a greater threat than any prison sentence. It therefore goes without saying that the introduction of some common sense into the POCA regime would inevitably lead to more guilty pleas being entered in fraud cases. The courts remain bound by the Act however, as acknowledged in Waya, and whilst a complete overhaul is not expected any time soon, Parliament does at least have the power to restore some discretion to the regime.

Corker Binning is a law firm specialising in business crime and fraud, regulatory and general criminal work of all types. Visit our website for more information about our tax investigation practice or call us now on 020 7353 6000.