Westminster on the Assets Recovery Agency

The Northern Ireland Affairs Committee is working on Organised Crime in Northern Ireland. Some of the sections of uncorrected evidence make for fascinating reading, even if it takes them a while to get it up on the site. Here’s a few snippets from concerning the Assets Recovery Agency‘s proposal that its powers be beefed up to make it comparable to the Criminal Assets Bureau in the Republic, and a question from Alisdair McDonnell on why most of the asset recovered (at the time of questioning – 1st March) had concentrated on Loyalists by a ratio of 2:1. Firstly the comparison with CAB:

Q180 Rosie Cooper: Can I ask you about recovery really and your success in 2005 and so far in 2006, how you compare against the Criminal Assets Bureau? I note today we have the press release with the major figures involved there, £3.5 million, but not only how much you are recovering but from what areas of crime?

Ms Earl: How do we compare with Criminal Assets Bureau? Let’s deal with that first. They are very successful operation and we have learnt an awful lot from them but, as I think you alluded to, Chairman, they have different legislation and have been operating for a considerable period of time. What we have discovered, slightly I have to say to my chagrin, is that this is a much longer process than I had ever assumed in order to get people from the very early stages where we can go in and do the sort of things we have done today, to restrain assets, to get to the final point where we get a recovery order. The recovery orders we have achieved this year, so far three in number in Northern Ireland, have all been cases where we have reached settlements with the three individuals so our total value of settlements in assets in this current financial year is running at about £350,000 and we have put about another £450,000 into the notional “tin box” as a result of cases which we completed last year because of the time lag between getting a recovery order and turning it into realisable assets which could be paid over to the Home Office for use for incentivisation purposes. So we are seeing that it is a very lengthy process. We are hoping that as we get more cases completed there will be more of our respondents who decide that settling rather than litigating to the full extent will be the right way to go. We have included in the evidence we submitted to you some of the factors which have caused that lengthy process, including the availability of legal aid, the number of legal challenges which have been made to different parts of the statute. I am sorry to have to tell you that we are still really struggling to prove some of those bits of legislation. We are in it for the long term so we are not worried about that to the extent that we are not going to go away because it has not been resolved quickly, but it does mean we are not showing the final tin box results we had hoped for.

Q182 Rosie Cooper: I was going to ask you the very final question about your proposal to amend Part 6 of the Act to make it more like the Criminal Assets Bureau?

Mr Kennedy: I think when comparing figures between Criminal Assets Bureau and the Agency in Belfast one has to realise they do their work in a very different way. 70% of their income, if I can call it that, is gained through the use of the taxation parlours. The vast majority of our cases, certainly 70% and upwards, actually goes through the High Court for civil recovery proceedings and I suppose the question therefore is why is their taxation regime of criminal assets looking more effective and efficient than ours? I think the reality is that when the Proceeds of Crime Act 2002 was passed by Parliament we made an attempt to replicate what was in Ireland and we have not quite managed it, so there are in fact a number of changes that one could make to Part 6 if one wanted to make it more in line with what the regime is that the Criminal Assets Bureau applies.

Q183 Stephen Pound: Pertinent to the point Rosie Cooper asked you will not be surprised to hear that as soon as you start talking about a “tin box” of goodies most members of the Committee show a considerable interest, but when looking at the press release you did on the McKinney case, and I am not personally expressing an interest in buying a Bentley, a Jaguar, a helicopter or Range Rover, I was intrigued by what you said about the process of conversion. In the Jim Johnston case, which we studied in some detail, I understand the property was sold at public auction. When we first started the inquiry we were told there would be difficulties in public auction sales as purchasers would be reluctant to identify themselves a a purchaser. Is that, in fact, the case? Do you have a problem with the process of realising the assets and diverting that precious stream into the tin box.

Ms Earl: I think we had a bit of nervousness about whether or not public auctions would be difficult in realising full value and our experience of doing this in the main house in the Johnston case was that it was not a problem. In fact, we exceeded the reserve price and there were clearly people who were very happy to go and buy his former home. Some of the other properties in that case, the smaller residential properties, we sold by private treaty for a variety of reasons because of the tenants who were living in them, and the one we had a difficulty in realising the full value of was the commercial property in Newtownards Road.

Mr McQuillan: Yes. That had formally been a drinking club with a shop underneath but the primary problem in selling it was the fact that there was so much commercial property in the area up for sale because it was for redevelopment, and there is no sign of redevelopment in the next 3-5 years people were reluctant to buy for commercial reasons.

Q184 Stephen Pound: My problem was entirely related to the Scottish experience with asset sales when people deliberately would not buy seized goods. It was a political statement rather than anything else then, but for the record that is not the case so far?

Mr McQuillan: We have not seen that so far and, as the Director has said, I was present at the Jim Johnston auction and there were something like 13-14 bidders for some of the properties. There was a huge amount of interest.

Chairman: Thank you. We just hope they did not have northern bank notes in their pocket when they were bidding!

Then Alisdair McDonnell:

Q185 Dr McDonnell: Moving on, the impression has been gained that most of the referrals have loyalist links rather than provo links. Are the provo associated paramilitary operations too sophisticated, or are we not tackling them or not getting referrals, or is it just that they are mostly loyalist?

Ms Earl: Alan can talk you through the specifics on this but the point I would want to be very clear with you about is that we act on the referrals that come to us from other organisations and we can give you an absolute assurance that we have not failed to act on any referral we have received simply because of the background of the body. If we have sent them back it would be because we have either discovered other criminality which would be more appropriate for PSNI to try to prosecute or because we have not linked the property there to the unlawful conduct alleged. Those are the only reasons we would send things back. Alan might like to talk about what we have seen in terms of the trends coming forward.

Mr McQuillan: In terms of the referrals to date, the figures are in the brief but so far we have dealt with 29 cases that have a clear link to loyalist paramilitary groups and 14 to republicans, so the ratio is about two loyalists to one republican. There are differences in the structure of organised crime in Northern Ireland. There are differences in the types of organised crime that the various paramilitary groups get involved in, and I think those figures probably are a reasonable representation of the different groups, but as the Director has said we get cases on referral and have never yet turned away a viable case, and as the paramilitary cases come forward I have no doubt those numbers will change as well.

Q186 Dr McDonnell: So you are saying 29 and 14 out of a total of —

Mr McQuillan: Ninety-five. So that gives a total of 46% with a terrorist connection.

Q187 Dr McDonnell: So your answer is you deal with them as they come to you but it may be at another level that the differential has arisen. You deal with what you get?

Ms Earl: Yes.

Q188 Dr McDonnell: And the fact that there is a difference of 2:1 is not significant?

Mr McQuillan: For example, with republican organised crime the biggest single organised crime tends to be around excise offences, so if for example we had a significant number of extra excise offences we would expect to see the republican percentage go up. Loyalists, by and large, not exclusively, do more on drugs so if we got a focus on drugs from the referring partners then the loyalist percentage would go up because the different communities groups tend to be involved in different types of activity.

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  • This criminal assets recovery thing is a dangerous tool that needs to be carefully managed. The law permits the deprivation of liberty as an appropriate sanction for crime, and / or fines appropriate to (physically legislated for) the offence. In practical terms, those targeted by the CAB / ARA tend to be reproachable, and that means that their appeals to the law are likely to be minimal. However, the link between the proceeds of crime and the criminal act is often tenuous. In addition, a careful and skillful management of those proceeds can result in good returns, where those proceeds are invested wisely. Arguing that the interest returned from lawful investment is in turn directly resultant from the crime is therefore even more tenuous. For example, if a thief steals 100k, and buys a house, which is now worth 200k, how much is the ARA / CAB entitled to recover?

    Tax law has specific mechanisms to recover interest and impose hefty (even for the wealthy) fines, and is therefore more acceptable / palatable / legal as a means of securing assets.

    Going around tax law is a little dodgy, and subjects itself to the potential charge of arbitrary declaration of what is owed. Should the ARA/CAB run into a more feisty and presentable case, the Human Rights Court / House of Lords / Supreme Court could compromise the whole thing, and even lead to retrospective claims by the less presentable criminals.

    Mind how you go there…

  • Crataegus

    I believe that 50% of the proceeds will return back to fund the CAB. Let’s imagine we extend this principle to speeding fines, parking violations, VAT, tax returns, littering etc. Good or bad?