Proceeds of Crime: EUC Report

Lord Rosser Excerpts

Tuesday 22nd May 2012 Lords Chamber

[Lord Rosser]

My Lords, I thank the noble Lord, Lord Hannay of Chiswick, for his very helpful opening speech, for the work that he and his committee have done on the draft directive that we are discussing and which we broadly welcome, and for the report that has been presented to us.

We await the Government’s response with interest, but I understand that a decision has now been taken to put back the scheduled debate upon the draft directive in the other place. It was scheduled to take place tomorrow. No doubt the Minister will confirm whether that is the case and, if so, will tell us why and, unless the reason is a lack of time in the other place tomorrow, why the Government considered it appropriate to proceed with our debate today.

The treaty of Amsterdam gave the Council the power to legislate in this field of police and judicial co-operation, since when four framework decisions and one decision have been adopted covering the area that we are considering today. The framework decisions require member states to enable confiscation, harmonise confiscation laws and provide for mutual recognition of freezing orders and confiscation orders. The Commission’s view is that member states have been slow in transposing the framework decisions on harmonising confiscation laws and providing mutual recognition of freezing orders and confiscation orders, and that the relevant provisions have often been implemented in an incomplete or incorrect way. The noble Lord’s committee has made it clear that it finds this most unsatisfactory, and it would be helpful to know if that is also the Government’s view.

The new draft directive appeared at one stage to have been expected by the Commission to strengthen the EU legal framework on confiscation through allowing more third-party confiscation and extended confiscation, and to facilitate the mutual recognition of non-conviction- based confiscation orders between member states. As the committee’s report states, though, in actual fact the draft directive is silent about mutual recognition, and the committee expressed its concern at the failure of the draft directive to deal adequately with the mutual recognition of extended confiscation orders and to deal at all with the mutual recognition of civil recovery orders. Once again, it would be helpful if the Minister said whether that concern is shared by the Government.

The principal issue considered in the report from the noble Lord’s committee is whether the Government should opt in to the proposed directive, and it is in no doubt that they should. The noble Lord’s committee has drawn attention to the very small proportion of the proceeds of serious organised crime that is currently recovered, has observed that confiscation would be a more effective weapon if there were better co-operation at international level and has stated that a failure by the Government to opt into a measure setting out minimum provisions to be adopted by member states would be against our national interest, since it would be in our national interest for all member states to introduce tougher measures on the confiscation of criminal assets. The committee also expressed the view that not opting in would send entirely the wrong message to our partners about the Government’s attitude to international co-operation. What is the Government’s response to this case for opting in that the committee has made in its report?

The Government have stated in their Explanatory Memorandum that they take a case-by-case approach to the application of the opt-in protocol and that, in this instance, the issues that they will need to consider in particular are: the ability to support or develop our asset recovery programme; wider domestic developments in tackling organised crime; the burden on the legislative programme; cost; and association with other international developments. The committee was clearly underwhelmed by the strength of the issue of,

“burden on the legislative programme”,

describing it as “lacking in merit”, bearing in mind that member states will have two years from the date of adoption of the draft directive in which to transpose it into national law, and bearing in mind that the Government consider that United Kingdom law already complies with most of the substantive provisions of the directive. In the light of the comment in the committee’s report, will the Minister say if,

“burden on the legislative programme”

is still seriously being advanced as an issue that needs considering when determining whether or not to opt in?

A decision on whether or not to opt in needs to be taken, as I understand it, by the middle of June, since the directive will apply to the United Kingdom only if by 15 June the Government notify the President of the Council that we wish to take part in the adoption and application of the directive—in other words, to opt in.

In the later paragraphs of their Explanatory Memorandum, the Government make a number of points that, frankly, could be construed as the basis of developing a case for not opting in. While the committee has made an argument in its report for opting in, and indeed strongly supports taking that course of action, the Explanatory Memorandum appears to lack any particularly positive statements about the draft directive. I hope that the Minister will give us an indication of the Government’s current thinking on the draft directive, although maybe, if it is true that there has been a hiccup that has led to the debate in the other place being put back, we shall find that the Minister is no longer in a position to say anything very much.

It would be helpful, though, if he could say what further developments there have been since the Explanatory Memorandum of 26 March that update any of the issues or points referred to in that memorandum. It would also be helpful if he spelt out in more detail, if they have not yet made a decision, the specific points being considered and why they are crucial under the five issues that the Government are considering before deciding whether or not to opt in, which I referred to earlier and which are set out in paragraph 26 of the Explanatory Memorandum. Included in those five issues is the issue of cost. What conclusions have the Government reached on this score, and why?

The report of the committee of the noble Lord, Lord Hannay, sets out, in paragraphs 14 and 15, certain legal questions. What is the Government’s response to those questions and points? The committee also says in paragraph 20 of its report that the joint action and certain provisions of the two framework decisions are to be repealed and replaced, but only,

“in relation to Member States participating in the adoption of this Directive”.

The report goes on to say on this point that if the United Kingdom does not opt in, it will continue to be bound by the existing measures and that this would be an unfortunate situation and an unnecessary complication. Do the Government share the committee’s view on this point?

The House of Commons European Scrutiny Committee said in its report last month that,

“the draft Directive nevertheless represents a significant extension of EU competence on such matters as third party and non-conviction based confiscation and on the freezing of property, in some cases without first obtaining a court order”.

Is that the Government’s view as well? If so, is it this point that is the Government’s principal concern over opting in?

We share the committee’s view about the importance of co-operation at the international level on the freezing and confiscation of the proceeds of cross-border organised crime. I hope that today the Minister will be able to tell us more about the Government’s stance on the draft directive, including issues that are still of concern to them or are unresolved and which may still be precluding a final decision on whether or not to go down the road recommended by the noble Lord’s committee—namely, that we should opt in to this draft directive.

[The Minister of State, Home Office (Lord Henley)]

My Lords, as always, I welcome the opportunity to debate the draft directive. I offer my thanks to the noble Lord, Lord Hannay, for his introduction, particularly for his explanation of the process, for his explanation of the Ashton undertaking and how we are supposed to take these things forward. It is obviously right that the Government should listen to the expertise that we have in this House and on the European Union Committee. On that basis, I welcome the presence of the noble Lord, Lord Roper, the former chairman of that committee; the noble Lord, Lord Boswell, whom I can no longer call my noble friend now that he has taken over that job; and all those who offer their expertise, particularly the noble Lord, Lord Hannay. The Government will certainly bear all that in mind before making their decision on whether to opt in or out.

At this point I must offer an apology to the House as, at this stage, the Government have not made a decision as to which way we should go. As the noble Lord, Lord Hannay, made clear, if we want to opt in at an early stage, we must do so before 15 June. A decision will certainly be made before then. However, it is always possible that we could opt in after final decisions have been taken and the whole adoption stage has been completed, when we have seen what has been agreed. There are very difficult decisions to be made. I hope I will be able to explain exactly why we have not yet made a decision and give some thought to our reasoning behind the different options before us.

Before I do so, I will say a little about the timing of this debate and the debate in another place, which was raised by the noble Lord, Lord Rosser. I know that the noble Lord is immensely experienced and has been in this House for a number of years. However, he obviously does not realise that things operate on a very different basis between the two Houses in this particular matter. In line with the Ashton undertaking, the appropriate time for this debate to take place was a matter for the noble Lord, Lord Hannay, as chairman of the sub-committee, to negotiate with the usual channels. It was agreed some weeks ago—before we prorogued, I think—that it would take place around now. Quite rightly, it went ahead. Even though the Government have not come to their final decision, it would not have been right for me or anyone else to go to the noble Lord, Lord Hannay, to suggest that it should be put off to a later date, purely because we had not made a decision.

The debate in another place is on a government Motion, which is completely different. It would not be right for the Government to table a Motion before they have made up their mind. However, as the noble Lord is probably aware, the Government will make up their mind before 15 June. We will have that debate and another place will have a debate—I give that assurance—before 15 June.

[Lord Rosser]

I think I understand the procedures. Will the Minister just confirm whether it is true that the debate in the other place was scheduled to take place tomorrow and that it has been put back?

[Lord Henley]

My Lords, my understanding is that a debate was to take place tomorrow. It was put back because the Government have not come to a final decision. There is nothing wrong with that. The Government want to make the right decision. All that I make clear to the noble Lord, who obviously does not understand these procedures, is that we will have done so before 15 June. That is our timeline. I give the noble Lord that assurance. The noble Lord seems to imply that there is some sort of conspiracy here. The Government want to get it right and must put down a Motion for the debate. Procedures in this House are different, which is why we do things differently. The noble Lord should have understood that.

I want to explain relatively briefly what our thinking is and not which way we are going—as I have said, a decision has not yet been made—but the pros and cons of the different options before us. I want to make it quite clear to the House that we believe that asset recovery is a very important weapon in our efforts to tackle organised crime. We believe that the proceeds of crime are not only a central motivation for organised criminals but that they also fund further criminality. Freezing and confiscating criminal finances hurts organised criminals and protects the public.

The United Kingdom has advanced legislation in this area, as other noble Lords have alluded to, and we have had real operational success. In 2010-11, United Kingdom law enforcement agencies froze or recovered more than £1 billion worth of criminal assets. The amount of assets recovered has increased year-on-year since the Proceeds of Crime Act 2002 was passed. As my noble friend Lord Hodgson made clear, the United Kingdom is recognised as a leader in this field. We still want to do more, particularly on international asset recovery, as we made clear in our organised crime strategy in July 2011. In 2008, it was estimated that some £560 million of UK criminal assets was held abroad. Improved international co-operation is a necessary step towards recovering that money. That is why we welcome the aims of this directive. It is right that we seek, as leaders in this field, to drive up standards throughout the European Union and to find better ways of working together with our EU partners. To this end the directive covers confiscation following a criminal conviction, extended confiscation, third-party confiscation, non-conviction-based confiscation, and powers to freeze assets.

We must, of course, consider carefully the contents of the draft directive. The Government’s analysis is in progress. Our recommendation on the opt-in decision will be communicated to the parliamentary scrutiny committees at the first opportunity. The United Kingdom already has all of the powers envisaged by the directive in our Proceeds of Crime Act 2002. In almost all areas we exceed the minimum standards established by the directive. There are, however, areas where changes to domestic legislation might be necessary were the final version of the directive to include the same provisions as this draft.

Some aspects of the directive’s provisions on non-conviction-based confiscation, extended confiscation, and freezing without a court order do not sit easily with our domestic regime. Without prejudice to the Government’s final position, it should be noted that the directive as drafted appears to pose a risk to our domestic non-conviction-based confiscation regime. Our non-conviction-based confiscation powers are civil law measures—they allow prosecution agencies to take action against property that they think has been acquired through unlawful activity. The action is not taken against an individual and no criminal conviction is necessary. It is a particularly useful tool for tackling the high-level, organised criminals against whom it is difficult to achieve a criminal conviction. In 2011-12, some £20 million worth of criminal assets were recovered using non-conviction-based confiscation powers.

Due to its criminal law basis, the directive risks placing non-conviction-based confiscation measures in the UK onto a criminal law footing, opening new avenues of legal challenge to our powers. If criminal law procedural protections and a criminal law standard of proof were introduced, our domestic regime could be severely weakened and our law enforcement agencies would find it harder to disrupt the workings of some of the most dangerous organised criminals.

The Government are considering whether the best approach is to opt in to the directive and attempt to negotiate out those aspects that conflict with our domestic regime; or whether the conflict in some areas is sufficiently serious that not opting in at this stage is the better approach. While the directive does not offer direct benefit to the United Kingdom’s domestic regime, tougher legislation and more effective action elsewhere in the EU will help tackle those cross-border criminals who cause harm in the UK, as the European Union Committee said in its report, and for that we are grateful. We believe that it is vital that we get the detail right and we must consider the effect of the directive on our domestic regime and its likely operational impact.

The noble Lord, Lord Hannay, wanted to know whether we would press for mutual recognition to be included in the directive from both conviction and non-conviction-based confiscation. We would like to see effective mutual recognition arrangements for both conviction and non conviction-based confiscation. This aim would be better achieved through separate instruments. The directive is a minimum standards directive; obviously, we will continue to work with our partners to seek further new mutual recognition instruments from the Commission.

None the less, it is certainly our intention to play an active part in the negotiations on this directive, irrespective of whether we opt in or not at the outset: that is, before 15 June, the date to which the noble Lord, Lord Hannay, referred. The United Kingdom’s internationally recognised experience and expertise in asset recovery will help us to achieve an influential position in negotiations. The directive offers us a valuable opportunity to raise the standard of asset recovery legislation in the EU, enhance our co-operation with member states, and increase our powers to recover criminal assets held overseas. I repeat the fact that the expert views of the EU sub-committee will play a very important part in the Government’s thinking as they decide whether to opt into this directive. For that I am very grateful, and again we will take note of everything that has been said.