When one thinks about controlling illicit behaviour, it is the criminal law that comes to mind, since its objectives include both punishment and deterrence. Yet, the civil law, through its asset recovery mechanisms, may actually provide a more powerful weapon against crime. At the same time, unlike the criminal law, the civil law is instrumental in providing a remedy for victims of financial crimes.
The multi-faceted approach that may be taken under the civil law should be of concern to professionals, such as lawyers and financial intermediaries, who may become involved in the proceeds of crime. As will be shown, it is these measures that represent a real risk of liability for anyone involved in the business of handling other people's money.
Apart from terrorism, crimes of passion and crimes committed for the sake of violence, most crimes are pursued for the acquisition of wealth. Indeed, it is plain avarice that drives most criminals to pursue a life of crime. As Benjamin Franklin said, “Money has never made man happy, nor will it, there is nothing in its nature to produce happiness. The more of it one has the more one wants”.
Asset recovery devices are therefore important in dealing with acquisitive crime and, hopefully, suppressing the criminal's insatiable appetite for wealth. The strategy of asset recovery is to deprive criminals of the fruits of their criminal enterprise so as to reduce their means of committing future crimes and negate the benefit of engaging in illegality.
The Proceeds of Crime Act (“POCA”) seeks to achieve these objectives through the following provisions:
This discussion will focus on civil recovery orders. Civil recovery is a reparative measure that concentrates on the fruits of crime themselves. The Asset Recovery Agency (“ARA”) is given the task of tracking down and recovering the proceeds of criminal activity, whether they remain in the hands of the criminal or have been passed on to someone else and whether or not anyone has been convicted of the crimes that have produced them. Here, forfeiture is made pursuant to civil proceedings which are aimed simply at the identification and recovery of property obtained as a result of unlawful conduct. The focus is not on a particular defendant but upon property that is the product of criminal conduct, wherever in the world this is committed1. It is also not necessary that the person who holds or owns the property should be the person guilty of the criminal conduct.
Under POCA, civil recovery takes the form of proceedings in the Supreme Court against any person who the ARA believes holds recoverable property, that is, property obtained from unlawful conduct2. Where a civil recovery order is made, the property is vested in the ARA unless the property is either associated property, joint property or consists of rights under a pension scheme3. In any of these cases, the payment of an equivalent value may be ordered.
To succeed in a claim it must first be shown that the unlawful conduct occurred, although it is not necessary to prove that individual items of property were derived from specific offences. Nonetheless, it must be shown that the property was obtained through conduct of one of a number of kinds, each of which would have been unlawful conduct4. A description of the conduct in relatively general terms should suffice, such as an allegation of the property being derived from importing and supplying controlled drugs, fraud or money laundering. These are all examples of conduct which, if it occurs in Jamaica, would be unlawful under the criminal law.
Consequently, although the ARA need not allege nor prove the commission of any specific criminal offence, “in the sense of proving that a particular person committed a particular offence on a particular occasion”5 they must prove that, on the balance of probabilities, the property was obtained by one of a number of kinds of unlawful conduct.
It is sufficient to prove that a criminal offence was committed, “even if it is impossible to identify precisely when or by whom or in what circumstances and that the property was obtained by or in return for it”6. It is for the court to decide whether it is more probable than not that the matters alleged to constitute unlawful conduct have been proved.
In this regard, it is the whole picture which has to be balanced. It is important to look at the totality of the evidence as a claim for civil recovery cannot be sustained solely on the basis that a respondent has no identifiable lawful income to warrant his lifestyle.
Although it is one thing to point only to an unexplained lifestyle, it may be another if an explanation is offered but rejected as untruthful7. The absence of any evidence to explain that lifestyle may provide the answer because the inference may be drawn from the failure to provide an explanation or from an explanation which was deliberately untruthful that the source was unlawful8.
The court may follow recoverable property into the hands of a person who obtained it from the original perpetrator. Thus, where, as is commonly done, a criminal places his property in the possession or names of his relatives the court may trace and recover it from those persons. This order may also be appropriate in cases where the perpetrator has placed the illicit property with an attorney or a financial institution.
Recently, in the UK, the civil recovery mechanism was invoked to recover the proceeds of crime by targeting dividends gained through unlawful conduct. Mabey & Johnson Ltd (M&J) was sentenced at Southwark Crown Court in September 2009 in relation to offences of overseas corruption and breaching UN sanctions9.
The prosecution for corruption arose from the company's voluntary disclosure to the Serious Fraud Office (“SFO”) of evidence that the company had sought to influence decision-makers in public contracts in Jamaica and Ghana between 1993 and 2001.
The SFO took action in the high court to secure a civil recovery order against Mabey Engineering (Holdings) Ltd (“ME Holdings”), the parent company of M&J, and part of the Mabey Group. The SFO sought payment of more than £130,000. The sum represents the dividends which ME Holdings collected from the contracts won by M&J through its unlawful conduct.
On January 13, 2012, the SFO secured a civil recovery order requiring ME Holdings to pay £131,201 plus costs. This case highlights the use of the civil recovery mechanism to recover the proceeds of crime from shareholders that fail to conduct sufficient due diligence on the business practices of the companies in which they invest. Otherwise, shareholders who receive the proceeds of crime as a dividend can expect civil action against them to recover the illicitly obtained money10.
A civil recovery order is discretionary and the court would only make one if it is just and equitable to do so. Consequently, the court must consider the degree of detriment to the respondent and will not make an order if he acted in good faith and had no notice that the property was derived from unlawful conduct11. It is arguable that where shareholders have received dividends in good faith, without knowledge of any wrongdoing, from companies carrying on a legitimate business and they have done something with those dividends “which they cannot undo without cost, loss or liability”, the courts may not think it just to grant a civil recovery order12.
Civil recovery is a particularly useful device where the offender is unavailable for prosecution or where it is difficult to obtain sufficient evidence to obtain a conviction against him, primarily because of the reluctance of witnesses to testify. Hence, it is an important tool for dealing with crime bosses who are usually divorced from the day-to-day activities of their enterprise and thus insulated from detection and prosecution13.
Where the defendant is outside of the jurisdiction, the civil recovery machinery is particularly useful where the location of the defendant is unknown or it is unlikely that he would be extradited for criminal prosecution ( Kennedy, 2006 ). Where the defendant is beyond the reach of the criminal justice system, a civil recovery order will ensure that he does not benefit from his crime ( Kennedy, 2006 ). In
In some cases, a civil recovery order may be sought where, following a criminal investigation, a decision is taken not to initiate a prosecution. This may stem from the fact that there is insufficient admissible...