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Financial Investigators

Volume 715: debated on Wednesday 16 December 2009


Asked By

To ask Her Majesty’s Government, following the Motion agreed by the House on 7 December about the increase in the number of public bodies accredited as financial investigators under the Proceeds of Crime Act 2002, what steps they are taking to ensure that due legal process is followed by such investigators.

Noble Lords are probably aware of my Written Statement, made on Monday, which addressed this point. The legislation already ensures due legal process. In the light of concerns, the Government propose to issue a circular to all investigators to make clear the scope and focus of the powers, to ensure that they will not be misused. We will be issuing a draft of that circular to the Merits of Statutory Instruments Committee. Should it wish to make any observations on the draft, we will give such observations careful consideration.

I thank the Minister for that reply and refer back to that same Statement. I draw his attention to the schedule he has set out in Hansard of 14 December at col. WS213 of the recoveries over the past five years, rising from £172,000 to £5.6 million. Can the Minister please confirm that the £5.6 million—or any of the other figures in that schedule—contains only moneys to which the Government can unambiguously remain entitled, and which are not subject to any appeal process that might require any refunds subsequently to be made? How do the Government take care, in their own guardianship, of assets held while pending appeals?

My Lords, the most significant figure is £148 million: the asset recovery total for last year. It shows that rendering ill-gotten gains back to the taxpayer is an important area of our activity.

Under POCA, assets can be frozen by court order from the commencement of a criminal investigation if there is reasonable cause to believe that the alleged offender has benefited from his crime and there is a real risk that he would dissipate his assets to avoid a confiscation order. The Crown Court can allow a person access to these funds for reasonable living expenses, but it would be wrong to allow access to money that is reserved for possible confiscation to fund a legal defence.

After a conviction but prior to an appeal, the state can seek to enforce the confiscation order. This is a power over the defendant’s remaining in prison after a court has enforced a prison sentence or, indeed, when a fine is to be paid, even though the matter is under appeal. The action is not suspended, as conviction and sentence remain in force until overturned. If the appeal is successful, moneys or assets are returned and the proceeds of sales are returned to the original owners minus any fees incurred in realising the assets.

I have a simple question for the Minister. Can he say whether employees of HMRC are now part of the bonus culture? Do they receive bonuses for funds recovered? How much is the total of bonus payments for the past year?

I have learnt in your Lordships’ House that the simple questions are usually the most difficult. I am pleased to say that, on this occasion, it is a simple question that I can answer quite simply.

The incentivisation scheme pays quarterly in arrears to the central accounts of the agencies that have recovered proceeds. There is no evidence from the returns on how moneys have been allocated that any of the money has been used for any staff bonuses. The incentivisation scheme is to drive up asset recovery; it is not a payment on commission to individuals.

With my head slightly spinning from the Minister’s answers, I revert to the original Question. What steps are the Government taking to ensure that due legal process is followed by these investigators?

My Lords, first, the order that we dealt with on Monday provided that investigating officers are of an appropriate senior grade, equivalent to that of a police superintendent, and that they are NPIA-trained with an emphasis on the proportionality of the use of their powers. It is important that the restraint orders can only be made by a Crown Court judge, who must be convinced, on the evidence and facts of the case, that an order is appropriate.

Confiscation powers therefore remain in the hands of judges, and not in the hands of police or other financial investigators. I think that that is the reassurance that the noble Lord seeks.

My Lords, will the Minister please explain to the House what steps the Government are now taking to ensure that such extraordinary draconian powers are not extended in future without proper consultation, following such Acts as the Proceeds of Crime Act?

This is a case where “draconian” is in the eye of the beholder. Following criticism of the order not being subject to prior consultation, I made a commitment to take that lesson on board and to ensure that consultation would take place in future. I hope that is the reassurance which the noble Baroness seeks.

My Lords, a quick totting up of the number of bodies that are now able to exercise powers as financial investigators reveals no fewer than 459. That excludes the police and SOCA but includes all local authorities. There has been unhappy experience of local authorities abusing powers handed to them in other legislation—for instance, national security legislation. One wonders whether it will be different this time. Does the Minister think it proper for the state to make available so widespread a right to exercise such deep and intrusive powers? Does he not agree, on reflection, that, in the words of the Police Federation, this is a case of mission creep which should be severely cut back?

No, my Lords, I do not at all agree with the noble Baroness’s sentiments. This is a question of having more specialist investigators to deal with more specialised crime. The police deal with volumes of crime and with anti-social behaviour and have to deal with many aspects of other crime. Trading standards officers are just one example whereby local authorities deal with major crime such as the sale of fake goods and fake DVDs. London Transport will be letting major railway, Underground and bus contracts. Specialist staff will be needed to deal with specialised crime, thereby releasing police from such areas where they do not have the relevant expertise. Therefore, it is entirely appropriate to extend financial investigations to these bodies, but it is equally important to ensure that we do not have mission creep or, as the noble Baroness said, misuse of powers. That is why we are seeking to put out guidance which clearly seeks to avoid misuse in relation to local authority overexuberance as regards certain anti-terrorist legislation, as some noble Lords have mentioned.