Mahmood & Anor, R v

The appellants are a brother and sister who pleaded guilty to assisting in laundering the proceeds of thefts made by their brother. They were sentenced to terms of imprisonment against which no appeals are brought. They appeal, by leave of the single judge, solely in respect of the confiscation orders made on the basis that the judge should have taken into account the repayments made by their other brother to which they had contributed.

It is first necessary to describe briefly the circumstances of the theft and the history of the proceedings against the brother.

Khalique Shahin, the brother of the two appellants, worked at the Guilford Mail Centre. During 2002 he used his position to steal foreign currency from postal packets which were sent to the High Value Sorting Unit at the Guildford Mail Centre by a travel agency based in Guildford for distribution to its local branches. He was caught red-handed in October 2002 and charged with theft by the Royal Mail, as a prosecuting authority on behalf of the Crown.

It was the prosecution case against Khalique that he had stolen in excess of £348,000. In February 2003 he put forward a basis of plea that he had stolen £233,000. On 10 July 2003 that basis of plea was accepted on the understanding that the Crown did not accept that that was the sum stolen by him, but contended that was sufficient for the purposes of sentencing. Sentence was adjourned. On 10 December 2003 he repaid, in circumstances we shall hereafter describe £233,000. On 12 December 2003, he was sentenced to 2½ years imprisonment.

The appellants became involved in this matter as they were used to launder the proceeds of the theft. The circumstances can be briefly described:

The appellant Shahin, was an accountant at HSBC’s offices at Canary Wharf. He enjoyed advantageous terms for exchanging currency and used those terms to exchange some of the foreign currency stolen by his brother. The sterling proceeds were deposited in accounts at HSBC and at the Halifax Building Society. It was agreed that he had made deposits originating from the stolen sums of £96,000.

Khalique Shahin, had himself exchanged some of the stolen currency; he had deposited the sterling proceeds of approximately £6,000 into these accounts and paid about £70,000 into other accounts.

The second appellant, Mahmood, then an Assistant Bank Manager at the National Westminster Bank at Woking also became involved, probably with other members of the family, in the laundering of the proceeds. Through her approximately £60,000 derived from the thefts was paid into bank accounts.

Prior to Khalique Shahin’s arrest in October 2002, Khalique Shahin and the appellant Shahin proposed to buy the house of their sister, the appellant Mahmood and her husband, at 8 Fircroft Road, Woking. A mortgage was to be arranged.

In the event, when Khalique was arrested, the house was purchased in the sole name of the appellant Shahin; £182,000 from the accounts to which we have referred was used to pay for it. Completion took place on 23 October 2002, shortly after the arrest of Khalique.

The appellant Mahmood and her husband bought a more expensive house at 47 Brewery Road, Woking for £315,000. They paid for that by using the proceeds of the sale of 8 Fircroft Road and a mortgage for the balance.

After the discovery of the thefts, the Royal Mail placed a caution on 8 Fircroft Road.

In July 2003 both of the appellants were charged with money laundering. Those proceedings were brought by the Crown Prosecution Service as a prosecuting authority on behalf of the Crown whereas the proceedings against Khalique Shahin had been brought, as we have stated, by the Royal Mail as a prosecuting authority.

It is clear from the materials that were put before us that between about April 2003 and December 2003, the Royal Mail and Khalique Shahin were in discussions about the repayment of the sums stolen. It seems clear that the Royal Mail, on behalf of the Crown, were anxious to make a significant recovery; it was thought on behalf of Khalique Shahin that the more he repaid, the greater the credit he would receive in his sentence.

Two matters of importance to the future of the proceedings against the appellants were clear on the evidence:

No confiscation or forfeiture proceedings were begun by the Royal Mail on behalf of the Crown against Khalique Shahin.

The Royal Mail knew that Khalique did not have in his own name sufficient resources to repay the sum of £233,000 which he accepted he had stolen. We consider at paragraph 34 in more detail what was known to the Royal Mail, on behalf of the Crown, but it is sufficient to say at this stage that it is clear that the Royal Mail knew that the house was owned by the appellant Shahin and that some other monies were being contributed by other members of the family.

The appellant Shahin instructed solicitors, Tilbrook, Turner and Foster to act on his behalf solely to deal with the sale of Fircroft Road so that monies could be realised to repay the Royal Mail; it is right to observe that their practice did not cover criminal law.

It is clear from the limited materials placed before this court that:

8 Fircroft Road was sold for £200,000. The purchaser was the husband of Appellant, Mahmood and her husband. There was no suggestion put before us that the sale was anything other than at an arm’s length price.

From the sum of £200,000, £78,300 was needed to discharge the mortgage. After allowing for various small fees, disbursements and expenses, this meant that approximately £120,000 was available towards the sum that was to be paid to the Royal Mail.

Thus a balance of £113,000 was needed to make up the sum of £233,000 to be paid to the Royal Mail. It was provided by a mortgage of just over £79,000 on property at 75 York Road (which had been transferred into the name of the appellant’s mother and the appellant Shahin) and £33,000 was provided in cash by the appellant Shahin; we were told that the appellant Mahmood Provided £48,000 to the co-appellant Shahin.

It was by reason of these arrangements that the Royal Mail received on 10 December 2003 £233,000.

On 19 April 2004 the appellants pleaded guilty to conspiracy to assist others in retention of a benefit in criminal conduct contrary to s. 1(1) of the Criminal Law Act 1977. It was agreed that the Crown would offer no evidence against other members of the family on that basis. The matter was then adjourned for sentence to 11 May 2004.

On 11 May 2004 the Crown gave notice of confiscation under s.71 of the Criminal Justice Act 1988. Thereupon the appellants sought to change their pleas. That application was adjourned to HH Judge Addison who refused that application on 14 May 2004.

On 27 May 2004, the matter was before HH Judge Addison. The Crown invited the court to postpone the determination of the confiscation proceedings to a later date. The judge then proceeded to sentence the appellants; Shahin was sentenced to two years imprisonment and Mahmood was sentenced to five months imprisonment. No appeal was brought against that part of the sentence.

The confiscation hearing took place on 13 October 2004. The legislative provisions under which the proceedings were determined were those in force at the time the offence was committed - s.71 of the Criminal Justice Act 1988:

After discussion between counsel for the Crown and the appellants the following were agreed:

The benefit that the appellant Shahin had received was agreed at £130,734 and his realisable assets agreed at £98,800.

The benefit in respect of the appellant Mahmood was agreed at £77,500 and her realisable assets were agreed in the same amount.

It was then contended on behalf of the appellants that the judge should take into account the payment already made by the thief, Khalique Shahin. The argument advanced to him was made on two bases:

If the amounts assessed as realisable from these appellants was added to the amount that had been paid on behalf of Khalique, the Crown would recover more than the Post Office had lost.

It would be unfair, in all the circumstances, not to take into account the contribution made by the appellants to the payment made by Khalique.

The judge ruled against these submissions. He held:

The Judge was also invited by counsel on behalf of the appellant Mahmood to consider staying the proceedings as an abuse of process. The learned judge concluded as to the suggestion that he had such a power:

It was rightly accepted in argument before us on behalf of both appellants that once the benefit and the realisable assess were agreed as they had been, s.71 provided no discretion to the learned judge to certify other than in accordance with its terms; the Judge correctly held that there were no circumstances on the facts of the case which fell within s. 71(1C).

The judge therefore had correctly decided that s.71 provided him with no discretion.

It was accepted, on behalf of the Crown, that a judge had in principle a discretion to stay proceedings if what the Crown was proceeding to do amounted to an abuse of process. We consider that that concession was rightly made by the Crown. As Lord Lowry observed in Hui Chi-ming v R [1992] A.C. 34 at 54:

Thus the issue before us was whether on the facts of this case the judge should have exercised his discretion to stay.

First, it is clear to us that the simple fact that the Crown might recover more than the Post Office had lost was no ground for alleging an abuse of process. The policy of the legislation is to deprive criminals of the benefits they may have obtained from the proceeds of their participation in criminal activity: see R v Roy Williams [2001] 1 Cr App (S) 140. The Crown should properly obtain that benefit. For example, if a bank employee had stolen £1000 from a bank, but used that money in such a way that the money had been used to advantage and a sum of £10,000 been obtained through its use, the criminal could not advance a contention that it was wrong for the Crown to recover more than had been lost. In such circumstances, the Crown would merely be recovering the benefit of the proceeds of the criminal activity. It would be wholly irrelevant that the criminal had used the proceeds to his advantage.

On the facts of this particular case, bearing in mind the course of the hearing before the judge, there was no evidence as to the way in which the proceeds of the theft were used other than that part of it which were used to buy 8 Fircroft Road. It is clear that some sums must have been obtained by way of rent from that property but, the fact that no enquiry was made is not relevant; the mere fact that the Crown may recover more than the wronged party has lost is irrelevant. Thus the argument made to the judge that it was somehow an abuse of process simply because there would be a recovery of more than what had been stolen was bound to fail.

In the circumstances of this case, the only ground on which an argument could have been advanced was that that when the Crown, through the Post Office, entered into an arrangement with Khalique Shihin, this was done on either an agreed basis or a common understanding or a representation by the Crown that the contributions made by the appellants would either be the limit of their contributions or brought into account. We accept that it would, in principle, have been open to the judge to conclude that there would be an abuse of process if

the members of the family, including the appellants, had agreed with the Crown (or there was a common understanding or they had been told by the Crown) that either no confiscation proceedings would be brought or their contribution would be brought into account and

the Crown was seeking to go against what had been agreed, understood or said, by bringing the confiscation proceedings or claiming the amounts they did in the proceedings.

We consider it is important in the overall interests of justice that those engaged in criminal enterprise should make as quickly as possible full restitution, including any benefits derived from their criminal activities such as the profitable results or fruits of any investments made. Restitution is often made without a formal agreement. It is in the general interests of justice to encourage the making of full restitution of the benefits without the need for confiscation proceedings and therefore to protect the person making full restitution, if ever the Crown were unjustly or without proper cause to seek to go behind an agreement reached with full and proper disclosure or an understanding reached or representation made in similar circumstances.

Thus the appellants sought before us to develop an argument that they had reached an agreement or had an understanding with the Crown to the effect that, having contributed to the repayment by Khalique Shahin, no confiscation proceedings would be brought against them or that in any such proceedings their contribution would be brought into account.

For the purposes of this submission, we accept first of all that it matters not that at the time £233,000 was paid that the Crown was acting through the Royal Mail and at the time of the confiscation proceedings in respect of the two appellants the Crown was acting through the Crown Prosecution Service. If there was agreement or understanding at the time the Crown was acting through the Royal Mail, that must be binding on the Crown for all purposes thereafter.

The difficulty, however, facing the appellants in this court is the fact that no enquiry had been made in the proceedings before the learned judge as to what, if anything, had been understood or agreed at the time £233,000 was paid. Quite simply there was no detailed enquiry before the judge; it appears that some enquires were made before the hearing by solicitors acting for the appellants, but none of the facts were enquired into before the judge. No findings were made by the learned judge. Even if it had been permissible for this court to undertake such an enquiry, the materials simply were not available to this court; we were provided during the course of the hearing with some letters, but nothing like the complete file and nothing by way of statement or correspondence from the Royal Mail:

We have set out at paragraph 14 above the facts we were able to discern from the letter written by Tilbrook Turner Foster in relation to the principal source of the payments as known to those solicitors. However even that letter did not deal, save by inference, with any payments made by the appellant Farhat Mahmood.

It was clear from a letter written by the Royal Mail on 22 October 2003 that they were aware that funds of £33,000 were coming from Khalique Shahin’s family and £200,000 from the sale of 8 Fircroft Road and the re-mortgage of 75 York Road. However, there was nothing in that letter or in the other letters put before us which showed how much was known or understood by the Royal Mail as specifically being provided by the two appellants.

Nor was there any statement before us which showed that the Royal Mail, on behalf of the Crown, were receiving these monies on the understanding that these were being contributed by the family as part of the family settlement of their engagement in this criminal enterprise, in contra-distinction to their participation in providing finance, by arrangements unknown to the Royal Mail, for the settlement of Khalique’s participation. There is nothing to suggest there was an agreement, let alone an understanding or representation, that the monies were being contributed represented the family’s restitution in respect of the proceeds.

It seems to us that it would have been highly unlikely that the Royal Mail would have agreed to accept the sum of £233,000 bearing in mind their loss was greater, without a much clearer understanding of the way in which the sums had been used, disclosure of the assets of the family and a much fuller understanding of exactly what had happened.

Thus, although in principle it seems to us clear that the judge had a jurisdiction to stay the confiscation proceedings (which he could have exercised), we cannot on the materials before this court conclude that the appellants have come anywhere near discharging the burden on them of establishing circumstances in which it would have been right for the judge to order a stay of the confiscation proceedings either in whole or part.

We considered whether it might be possible for us to send the matter back to the trial judge, but, as this is an appeal against sentence, our power under s.10 (3) of the Criminal Appeal Act 1968 is, on the basis of the materials before us, either to quash, vary or uphold that part of the sentence relating to confiscation. On the materials before us it plainly cannot be shown that the way in which the Crown proceeded was an abuse of process; for the reasons we have given, the fact that the Crown may be recovering more than the capital sum originally lost by the Post Office is irrelevant. Although we have some sympathy for the appellants, there is nothing before us which would enable us to make any variation of the order on the basis there was some form of agreement or common understanding in respect of the payment of £233,000 made.

We therefore dismiss the appeal.