A recent article described how a businessman, despite being acquitted of a £162 million VAT fraud, was nevertheless ordered to surrender £18 million after proceedings brought by the Asset Recovery Agency (ARA).
It also said that in these proceedings the businessman has the burden of proof. What ever happened to the principles of double jeopardy and presumption of innocence?
The case you mentioned involved missing trader intra-community fraud, commonly known as carousel fraud, where rogue traders obtain goods such as computer chips for EU export without VAT and then disappear with the VAT once paid by customers in the other EU country. It is considered such a threat to Government finances that Gordon Brown proposed measures to counter it in this year’s Budget.
A criminal prosecution was brought against the businessman but in complex cases like this, the prosecution has a difficult job to convince the jury that every element of the offence is present beyond reasonable doubt. The accused does get a presumption of innocence and here a lingering doubt led to the acquittal.
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However, the Proceeds of Crime Act 2002, which builds on earlier statutes relating to drug trafficking and terrorism, allows the ARA to take civil proceedings to recover criminal proceeds. Proof here is on the balance of probabilities, ie, that the assets probably resulted from crime, with certain assumptions applying particularly in the case of a person with a “criminal lifestyle”. This notion is defined very loosely to cover cases where there were two previous convictions in the past six years. This effectively reverses the burden of proof as the person will have to show the assets probably had a legal source.
Of course there is a right to a fair trial, which is enshrined in the European Convention on Human Rights Article 6 and incorporated into our law by the Human Rights Act 1998. This right is stronger where the case involves a criminal charge as Article 6(2) clearly states that the accused is “presumed innocent until proved guilty”.
However, the House of Lords in Rezvi [2002] and the European Court of Human Rights in Phillips v. United Kingdom [2001] both concluded that confiscation orders (under earlier legislation) did not involve fresh criminal charges and so did not benefit from this presumption. The courts in these cases also rejected an argument that this was an interference with property rights (protected under Protocol 1, paragraph 1 of the Convention) as confiscation was a proportionate response to the threat to society if criminals were able to keep their ill-gotten gains. Nevertheless, in making the order the court must always consider whether there is a risk of serious or real injustice and refuse the order if there is. The basic safeguards of a fair trial in non-criminal cases thus remain intact.
The Assets Recovery Agency was set up in 2003 and has been very active in pursuing the proceeds of all crime – including tax and social security fraud. In the case you mention it seems that the ARA was able, despite the acquittal, to bring fresh evidence which led to the trader agreeing the recovery of these assets in civil proceedings involving mediation. The case involved co-operation with the Irish authorities and the recovery of assets including racehorses and a Spanish villa.
Although the press release from the agency does not mention “criminal lifestyle” this was presumably the basis of the use of their powers. Therefore, despite the earlier acquittal this is not double jeopardy. This kind of civil confiscation leaves the person without a criminal record – but means that he cannot keep what are probably the fruits of criminal activity.
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We regret that we cannot reply to individual queries. The above must not be taken as legal advice; readers should consult a solicitor. Readers can e-mail queries to law@timesonline.co.uk