AG Ref 004/2003 Under S 36 Of Criminal Justice Act 1988 v Suchedina

On the 22^nd March 2002, in the Crown Court at Inner London, the offender was convicted of an offence of conspiracy to convert or transfer the proceeds of drug trafficking or of criminal conduct, contrary to Section 1 of the Criminal Law Act 1977. On that day he was sentenced to five years imprisonment. A Confiscation hearing was postponed until the 16^th December 2002. On the 16^th December 2002, HHJ Philpot declined to make a confiscation order in the offender’s case. The judge did not consider that he had jurisdiction to do so, as the offence of which the offender had been convicted was neither a “drug trafficking offence” within the meaning of Section 1 of the Drug Trafficking Act 1974, nor an offence of a relevant description within the meaning of the Criminal Justice Act 1988. On the 12^th July 2004, we gave leave to the Attorney General to refer the judge’s refusal to make a confiscation order pursuant to his powers under Section 36 of the Criminal Justice Act 1988, on the grounds that the judge had erred in law as to his powers of sentencing. Mr Owen on behalf of the offender accepted that on the authority of R –v- Flowers & Others [2003] EWCA Crim 3374, a confiscation order is a sentence for the purposes of Section 36. Having given leave, we quashed the judge’s decision, and ordered that confiscation proceedings should take place, for which we gave appropriate directions. We now give our reasons.

The factual background leading to the offender’s conviction can be relatively shortly stated. In March 2001 an investigation began into suspected money laundering being carryied on at a Bureau de Change called Multi Currency Foreign Exchange Ltd of which the offender was the directior and chief executive. A man known as Hussain Hafedh transferred substantial amounts of money to the offender and other representatives of Multi Currency ForeignExchange Ltd, which were then added to money in various currencies which had been air freighted to Multi Currency Foreign Exchange Ltd from a company in Dubai. This money was then converted to United States Dollars and transferred via an account held at the Royal Bank of Scotland by Multi Currency Foreign Exchange Ltd to an account held by the company with the Middle East Bank in Dubai. The evidence suggested that the amount of money laundered during the period January 2001 to June 2001, when the offender and six others were arrested, was as much as £7 million.

The offender was tried on an indictment containing three counts. Count 1 alleged a conspiracy to convert or transfer the proceeds of drug trafficking, contrary to Section 1 of the Criminal Law Act 1977, Count 2 alleged a conspiracy to convert or transfer the proceeds of criminal conduct, contrary to Section 1 of the Criminal Law Act 1977; Count 3 alleged a conspiracy to convert or transfer the proceeds of drug trafficking or of criminal conduct, contrary to Section 1 of the Criminal Law Act 1977. The offender pleaded not guilty to all three counts. He was found not guilty on Counts 1 and 2, but guilty on Count 3.

Count 3 was in the following terms:

“Statement of Offence

Conspiracy to convert or transfer the proceeds of drug trafficking or of criminal conduct, contrary to Section 1 of the Criminal Law Act 1977.

Particulars of Offence

[The offender and others] between 1^st January 2001 and 5^th June 2001, at Maida Vale, London and elsewhere conspired together and with others to convert, transfer or remove from the jurisdiction property, namely bank notes knowing or having reasonable grounds to suspect that, in whole or in part, directly or indirectly, that property represented another persons proceeds either of drug trafficking or of an offence to which Part VI of the Criminal Justice Act 1988 applies, for the purpose of assisting any person to avoid prosecution for such an offence or the making of or enforcement of a confiscation order in contravention of Section 49(2)(b) of the Drug Trafficking Act 1994 or Section 93C(2)(b) of the Criminal Justice Act 1988.”

The prosecution sought a Confiscation Order against the offender under Section 2 of the Drug Trafficking Act 1994 (the 1994 Act) on the grounds that he was a defendant appearing before the Crown Court to be sentenced “in respect of one or more drug trafficking offences” which is the pre-condition for the making of such an order. By Section 1(3) of the 1994 Act, a “drug trafficking offence” includes the following:

“(f)

an offence under Section 49 …. of this Act ….

(g)

an offence under Section 1 of the Criminal Law Act 1977 of Conspiracy to Commit any of the offences in paragraphs (a) to (f) above.”

The judge concluded that this definition did not include the offence of which the offender had been convicted, because the conspiracy which was charged was not a conspiracy to commit an offence under Section 49 of the 1994 Act, but a conspiracy to commit an offence under Section 49 of the Drug Trafficking Act 1994, or Section 93C of the Criminal Justice Act 1988. That alternative formulation did not, in his judgment, entitle him to conclude that the conspiracy of which the offender had been convicted was, therefore, a relevant conspiracy.

The dichotomy reflected in the wording of the count was the result of the statutory distinction between the proceeds of drug trafficking on the one hand, and the proceeds of crime on the other which was the result of the wording of the provisions of the Criminal Justice Act 1988 (the 1988 Act). By Section 71 of that Act, provision is made for a confiscation order if an offender is convicted “of an offence of a relevant description”; such an offence is described by Section 71(1E) as “an offence to which this Part of this Act applies”. By Section 71(9) such an offence includes “an indictable offence, other than a drug trafficking offence”. It also excludes offences under the Terrorism Act 2000.

The difficulties created by these provisions have been the subject matter of two decisions of this court, R –v- El-Kurd, [2001] Crim LR 234, and R –v- Hussain [2002] 2 Cr App R 26. Those difficulties have now been addressed by the Proceeds of Crime Act 2002. But they remain difficulties in relation to cases involving proceeds of drug trafficking offences or proceeds of crime which pre-date the coming into effect of that Act. The particular difficulties with which we are concerned, as was this court in El-Kurd and Hussain, arisewhen the prosecution has clear evidence of money laundering, but is unable to identify the precise provenance of the money laundered.

In El-Kurd the appellant was indicted on four counts, two counts of conspiracy in relation to the proceeds of criminal conduct, and two counts of conspiracy in relation to the proceeds of drug trafficking. He was convicted of the counts relating to the proceeds of criminal conduct, and acquitted of the counts relating to the proceeds of drug trafficking. On appeal it was argued that the two regimes required the prosecution to establish that the property in question was wholly or in part, directly or indirectly, the proceeds of criminal conduct on the one hand, or of drug trafficking on the other. In other words the submission was that without proof that the property was in fact the proceeds of drug trafficking or criminal conduct, none of the counts in the indictment were made out.

In dismissing the appeal on the facts, this court said:

“Before we leave this appeal we would express some concern that the matter proceeded before the jury on an indictment which, perhaps understandably, reflected the dichotomy that we have referred to, when it seems to this Court that the appropriate course to take, when confronted with problems in relation to the provenance of the proceeds in relation to which it is said that the defendant has carried out the activity of money laundering, is by way of a compendious count of conspiracy which would avoid the necessity for any choice to have to be made so that in a case such as the present if the jury were satisfied, as they would have been bound to have been, that the proceeds were the proceeds of illicit activity, the jury should be provided with the opportunity to conclude that the conspiracy was a conspiracy by the conspirators to launder money illicitly obtained, whether it be by way of drug trafficking or other criminal activity. That seems to us to have been the reality in the present case and, would, therefore, perhaps have been more appropriately reflected by a count drawn in such terms.”

That suggestion, which was not part of the ratio of the decision, was adopted by the prosecution in Hussain. In that appeal, as in the present, the appellants were indicted on three alternative counts of conspiracy; a conspiracy to contravene the provisions of the 1994 Act, a conspiracy to contravene the 1988 Act, and a conspiracy to contravene either the 1994 Act or the 1988 Act. But at a preparatory hearing, it was argued that the count relating to both the 1994 Act and the 1988 Act was bad for duplicity. This Court held that it was not, because what was alleged was a single agreement, constituting a single offence of conspiracy, to commit one or more offences, the essence of the conspiracy offence being the making of the agreement and not its implementation. This court accordingly confirmed that the course suggested in El-Kurd was an appropriate course to take where the conspiracy could properly be described in such terms. The issue of the effect of a conviction on such a count on confiscation proceedings was expressly reserved by the Court which said: “The Crown might or might not get into difficulties” if defendants were convicted on such a count. That is the issue with which we are now confronted.

There is a superficial attraction in the judge’s approach which Mr Owen QC has skilfully sought to support. The fact is that the offender was acquitted of the count which unequivocally related to the offence under the 1994 Act. The Count of which he was convicted does not, he submits, enable the Court to say that there has been such a conviction which is the necessary pre-condition for the relevant confiscation order. The court is, accordingly, not able to say whether the jury’s verdict entitles the court to exercise the jurisdiction which the prosecution seeks. There is accordingly an uncertainty as to the basis upon which the court should proceed which offends against the principle of legal policy that a person should not be penalised except under clear law as described in Statutory Interpretation by F.A.R. Bennion (2002 Ed) at page 705.

But in our view, Mr Perry on behalf of the Attorney General is right in his submission that this approach misunderstands the nature of the offence of conspiracy and the effect of Section 1 of the Criminal Law Act 1977 (the 1977 Act). This provides as follows:

“(1)

Subject to the following provisions of this Part of this Act, if a person agrees with any other person or persons that a course of conduct shall be pursued which, if the agreement is carried out in accordance with their intentions, …

(a)

will necessarily amount to or involve the commission of any offence or offences by one or more of the parties to the agreement, ..

…..

he is guilty of conspiracy to commit the offence or offences in question.”

His submission is that this provision makes it clear that a conspiracy can amount to an agreement to commit one or more offences. The offence of conspiracy itself is completed by the agreement and not by the way in which the agreement is to be implemented. Thus an agreement to commit a number of different offences remains an offence under Section 1 of the 1977 Act even if only one, or even none, of those offences is in fact committed. It is the agreement which constitutes the offence. Equally, if the agreement is to commit either of two offences, that is also an indictable conspiracy. For example, if conspirators agree that they will steal a particular item and that they will, if necessary, either commit burglary or commit robbery in order to obtain that item, that will amount to an agreement to commit the offences of theft, burglary and robbery. That submission was accepted by this court in Hussain at paragraph 27 and is, in our view, correct. The fact that the agreement to burgle or rob is contingent on the particular circumstances, does not affect the nature of the conspiracy.

In our judgment, it follows that the offender’s conviction of Count 3 in the indictment with which we are concerned means that the offender was guilty of a conspiracy to commit offences under both the 1994 Act and the 1988 Act. The result is that the pre-condition for confiscation proceedings under the 1994 Act has been met. This is, in our view, both right in principle and in practice. If the judge is correct, the court would not be able to sentence conspirators who have entered into an agreement of the kind alleged in count 3, or in the circumstances we have envisaged in the previous paragraph upon a basis which reflects the conspirators true criminality. That would be an affront to justice. It would not reflect the true nature of the agreement. In the present case, the effect of the jury’s verdicts was that they did not consider that the conspiracy was restricted to either the proceeds of drugs offences on the one hand or the proceeds of crime on the other, but was an agreement to launder the money whatever its provenance. In our view, that necessarily, as we have explained, involved the offender’s guilt of conspiracy to commit the offence under the 1994 Act. The judge was accordingly wrong to hold that he had no jurisdiction to entertain the confiscation proceedings.

Mr Owen QC on behalf of the offender has submitted, however, that we should nonetheless refuse leave to the Attorney General to refer the ruling on the basis that the court would be in no position to make the appropriate allowance for “double jeopardy” which is a factor which this Court has consistently taken into account when determining what order to make under Section 36 of the 1988 Act. We accept that the mere fact that we consider that the judge was wrong does not require us to give leave, or indeed to quash the decision. Section 36(2) makes it plain that it remains a matter of discretion. The fact that the judge erred in law as to his powers of sentencing does not, of itself, require the court to give leave. It merely provides a yardstick for determining whether or not the sentence was “unduly lenient” for the purposes of Section 36(1)(a). But where, as here, the effect is that the court did not proceed to carry out a statutory requirement (Section 2 of the 1994 Act says that where the necessary pre-conditions apply, the court “shall act as follows”) this Court is unlikely to conclude that it should refuse leave to the Attorney General to refer the matter, or to make the order required by statute.