Hussain R. v

This is the judgment of the Court to which all members have contributed.

On the 18^th and 19^th June 2003 in the Crown Court at Leeds, before HHJ Wolstenholme the appellants Liaquat Ali and Akhtar Hussain were convicted of two counts of conspiracy, counts 1 and 4. The jury were discharged from reaching verdicts on counts 2, 3, 5 and 6. On 19^th June the appellant Mohsan Khan was convicted of conspiracy, count 1. The jury were discharged from reaching verdicts on counts 2 and 3. Counts 1 and 4 charged conspiracies to contravene section 49(2) of the Drug Trafficking Act 1994, contrary to section 1(1) of the Criminal Law Act 1977. There was a fourth accused, Arshad Mahmood, who was acquitted.

In count 1 it was alleged that between September 1997 and February 2001 they had conspired together and with Ghulam Mustafa Khan, Raja Munawar Khan and other persons unknown. On count 4 it was alleged that between the same dates Ali and Hussain (but not Mohsan Khan) had conspired together and with Faisal Malik, Imran Syed, Abdul Mitha, James Carr and Asif Memon and with other persons unknown.

It was alleged in substance that the conspirators had concealed, disguised or removed from the jurisdiction bank notes knowing or having reasonable grounds to suspect that in whole or in part they represented another person’s proceeds of drug trafficking (in short, money laundering). The difference between the two counts was that in count 1 the bank notes were alleged to have come from Ghulam Mustafa Khan and in count 4 from Asif Memon.

The money was in each case alleged to have been laundered through a firm called Watan Travel. This firm had a travel agency and money transfer business which was not alleged to be unlawful. The money transfer business was of the kind known as Hawala banking, used for the remittance of money, usually deposited in the form of bank notes, by people of Asian origin to their country of origin. Watan Travel was an agent of Pakistan International Airlines. It had a shop in Bradford operated by Hussain and Mamood and one in Birmingham run by Ali.

On 19^th June 2003 Liaquat Ali and Akhtar Hussain were each sentenced to 12 years’ imprisonment concurrent on each count and Mohsan Khan was sentenced to 8 years’ imprisonment. Each now appeals against conviction by leave of the single judge.

On 12^th October 2004 at the same court and before the same judge Shahid Nazir Bhatti was convicted of two counts of conspiracy. On count 3 he was sentenced to six years’ imprisonment and on count 4 to four years’ imprisonment concurrent. He was acquitted of counts 1 and 2, which charged alternative conspiracies to count 3.

Count 3 charged Shahid Bhatti with conspiracy to contravene section 49(2) of the Drug Trafficking Act 1994 or alternatively section 93C(2) of the Criminal Justice Act 1988, contrary to section 1(1) of the Criminal Law Act 1977. It was alleged that Shahid Bhatti conspired with his father Nazir Bhatti, and with Faisal Malik, Imran Syed, James Carr and Asif Memon and other persons unknown to conceal etc bank notes knowing or having reasonable grounds to suspect that, in whole or in part, they represented another person’s proceeds of drug trafficking or other criminal conduct. In count 4 Shahid Bhatti was charged with conspiring together with his father and a George Cockerill to conceal etc bank notes knowing or having reasonable grounds to suspect that, in whole or in part, they represented another person’s proceeds of criminal conduct, other than the proceeds of drug trafficking. The period alleged in each count for the conspiracy is 1^st July 1999 to 12^th February 2001. The money was alleged to have been laundered through Bradford Travel and the associated Bradford Currency Exchange which were run by Shahid Bhatti and his father.

Count 1, of which Shahid Bhatti was acquitted, was in similar terms to count 3 but alleged that the proceeds were the proceeds of drug trafficking.

Count 2, of which Shahid Bhatti was acquitted, was in similar terms to count 3 but alleged that the proceeds were the proceeds of criminal conduct other than drug trafficking.

Shahid Bhatti applies for leave to appeal against conviction.

These two trials were the second and third trials arising out of an investigation by HM Customs and Excise culminating in arrests made in February 2001. In the first of the three trials four defendants were convicted, namely Amer Ramzan, together with Faisal Malik, Imran Syed (he on his plea of guilty) and James Carr. It was because the latter three had been convicted at the first trial that the case against them was not pursued in the second and third trials, in which they were named in some of the counts as co-conspirators. In the first trial it was alleged that the bank notes had been laundered through the Halifax office of Ramzan Travel which was run by Amer Ramzan.

There have been a number of issues raised or sought to be raised at this hearing. Those which were advanced until the day before this hearing are.

In a skeleton argument dated 17^th April 2005, that is the day before the start of this hearing, Ali applied for leave to argue a further ground of appeal, namely that the counts on the indictment on which he was convicted were bad in law in that the particulars of the offence did not allege an agreement that was capable of amounting to a conspiracy contrary to section 1 of the Criminal Law Act 1977. We granted leave to all three appellants in respect of this ground on 20 April 2005. This was linked to an argument advanced for Shahid Bhatti on the form of the indictment. We granted leave to Bhatti on this ground.

The three trials could in principle have all been combined into one. The reason for not doing this (we were told) was that the cases would then have become too long and difficult to manage efficiently.

All three trials arise out of the deposit of millions of pounds in cash with the three separate businesses referred to above, for the purpose of making corresponding payments abroad, mainly in Dubai and Pakistan, in US dollars or rupees. The three trials correspond to the three businesses: Ramzan, Watan and Bradford.

Each of the businesses operated a service for transmitting money from the UK mainly to Pakistan for the benefit of the Asian community here. The Crown accepted that the making of these cash remittances to a very substantial extent did not involve the proceeds of drug trafficking or any other crime. There were remittances totalling some £120m which the Crown did not allege to the proceeds of any crime. But the Crown alleged that sums amounting to £170 million did represent the proceeds of crime. They identified a number of individuals as sources from whom the defendants received the cash. The most significant of these was Asif Memon from whom some £80.6 million was received in cash by Watan in the period of less than two years identified in the indictment. The next most significant was GM Khan from whom £46.5m was received in cash by Watan in the period. These two were therefore identified in the counts of the indictments referred to above. For reasons of case management there were no separate counts identifying the other sources. But the jury bundles did include documents identifying the other sources, and the sums involved. These included Altaf K £30m, Bashir £5.2m, Moti £4m, Gazi £3.2m, Luton £805k, Multinet £221k and Ramzan £210k.

Until 1999 Watan Travel had had banking facilities with the Midland Bank. Through these facilities the money was converted into US dollars and transferred abroad, principally to the New York bank accounts of a Dubai based currency exchange business called World Link Exchange. Midland Bank became concerned about compliance with money laundering legislation and the business was transferred to Giro Bank. They offered a less advantageous facility. Asif Memon was alleged to be an official of World Link Exchange. Faisal Malik and Imran Syed delivered the £80.6 million on his behalf to Watan Travel in cash. Some of that was collected from James Carr in boxes at a meeting point near the M62 which had been observed by officers.

GM Khan carried on business in Islamabad, Pakistan and in that period, on the prosecution’s case, the £46.5 million in cash was delivered on his behalf to the business of Watan Travel at their offices either in Bradford or Birmingham. One of those carrying the cash was Mohsan Khan.

In the case of Shahid Bhatti, the Crown’s case was that between 1^st July 1999 and 12^th February 2001 over £71 million pounds went through the Bradford Travel business. Of this £29 million represented what the prosecution accepted to be traditional Hawala banking which they did not allege to be the proceeds of drug trafficking or other crime. The balance of £42 million was alleged to be the proceeds of drug trafficking or other criminal conduct. Of this £3.7 million was involved in count 4 and £38 million in counts 1 to 3.

Hawala banking is an arrangement by which individuals (or intermediaries who have collected money from individuals) deposit money, usually in the form of modest amounts of cash, with a Hawalader in, for example, the UK to be remitted to beneficiaries abroad, commonly in the country from which the remitters’ families originate, for example Pakistan. The UK Hawalader will have a Hawala contact in Pakistan who will pay a sum in rupees, at a rate of exchange which may have been agreed with the remitter in advance. The payment will commonly be made more quickly, more cheaply and with less formality than any corresponding service that might be available through the medium of the commercial banks. There is commonly a family relationship between the UK Hawalader and his contact in Pakistan which enables the transaction to be completed with a greater reliance on trust than is necessary in other commercial financial dealings. The accounts between the Hawalader and the contact in Pakistan could be settled by remittances in US dollars which might be paid into accounts held outside Pakistan, for example in New York or Dubai.

For ordinary Hawala there must be records to show the identities of the individuals from whom the money had originally been collected in the UK and of those to whom it was ultimately to be paid in Pakistan. In relation to the bank notes alleged to be the proceeds of drug trafficking this essential information was conspicuously lacking, whether in the records of Watan Travel, or the records of Malik or for that matter Carr. What was recorded was the name of the source, such as GM Khan or Asif, and the name of an intermediate transferee such as World Link Exchange. The defence case was that this was what they called corporate Hawala. They said that is ordinary Hawala money which had been collected from individuals by intermediaries, and that the intermediaries did not communicate to the defendants the source or ultimate destination of the funds for reasons of commercial confidentiality

Amongst the evidence relied on by the prosecution that this was not ordinary Hawala money was

At almost the start of the second trial, on 1^st May 2003, the judge ruled that the prosecution could adduce evidence that Faisal Malik and James Carr but not Amer Ramzan had been convicted the previous June of conspiracy with Asif Memon to launder the proceeds of drug trafficking through the business of Ramzan Travel.

The judge reached the same conclusion in the Shahid Bhatti trial and that is also appealed. At the conclusion of the argument we indicated that the appeals against the rulings failed. We said that we would give reasons later, and the reasons are as follows.

No distinct submissions were made on behalf of Shahid Bhatti and it is therefore sufficient to address the arguments made on behalf of Ali, Hussain and Khan.

The admissibility of evidence of the convictions of persons other than a defendant is provided for by the Police and Criminal Evidence Act 1984. That provides:

“74(1) In any proceedings the fact that a person other than the accused has been convicted of an offence by or before any court in the United Kingdom… shall be admissible in evidence for the purpose of proving, where to do so is relevant to any issue in those proceedings, that that person committed that offence, whether or not any other evidence of his having committed that offence is given….

75(1) Where evidence that a person has been convicted of an offence is admissible by virtue of section 74 above, then without prejudice to the reception of any other admissible evidence for the purpose of identifying the facts on which the conviction was based--

(a)

the contents of any document which is admissible as evidence of the conviction; and

(b)

the contents of the information, complaint, indictment or charge-sheet on which the person in question was convicted, shall be admissible in evidence for that purpose…”

All the defendants objected to the admission of those convictions on the grounds of relevance, under section 74, and on the further ground that the admission of the evidence would be unfair and should be excluded under section 78, which provides:

“(1)

In any proceedings the court may refuse to allow evidence on which the prosecution proposes to rely to be given if it appears to the court that, having regard to all the circumstances, including the circumstances in which the evidence was obtained, the admission of the evidence would have such an adverse effect on the fairness of the proceedings that the court ought not to admit it….”

The basis on which the prosecution submitted that the conviction was relevant was as follows. The principal courier of cash to Watan Travel on account of Asif Memon was Faisal Malik, assisted by Imran Syed and Abdul Mitha. Malik kept a book which had been seized by Customs and was an exhibit. In that book he recorded collections and deliveries of cash. Entries in the book for deliveries corresponded to entries in the Watan Travel books for receipts. The books showed that the money recorded as collected by Malik and his associates went mainly to Watan Travel up to August 1999 and thereafter went mainly to Ramzan Travel. All of it then went to World Link Exchange. On one occasion cash delivered by Carr to Malik was divided by Malik into separate onward deliveries to Watan Travel and Ramzan Travel. On another occasion the money from Carr was split between Watan Travel and Bradford Travel. It was the cash delivered by Malik and his associates to Ramzan Travel which was the subject of the first trial which resulted in the convictions the prosecution proposed to adduce. The evidence of Malik’s activities was in any event before the jury in the second trial in which this application was made. The question was whether the convictions should also be before the jury.

It is significant, in view of the fact that the conviction in the first trial is one for conspiracy, that the jury had been directed at the first trial to find a defendant guilty of that offence only if they were satisfied that at least some of the cash represented the proceeds of drug trafficking. The prosecution submitted that it followed from the form of the direction, and from the fact of the conviction, that the jury were sure that some or all of the money which Malik and his associates delivered to Ramzan was the proceeds of drug trafficking. The prosecution submitted that the convictions were relevant because they went to the issue of whether the bank notes that went to Watan Travel were the proceeds of drug trafficking. The prosecution submitted that the convictions supported the inference that some or all of the money delivered by Malik and his associates to Watan Travel was also the proceeds of drug trafficking. The prosecution did not contend that the convictions proved anything in relation to the state of mind of the defendants at the second trial. They were put in only on the issue of whether the Asif Memon money was the proceeds in whole or in part of drug trafficking.

The defendants submitted to the judge, as they have to us, that the bank notes were different in each delivery, and that the convictions were in any event consistent with some of the bank notes delivered to Ramzan Travel not being the proceeds of drug trafficking. So, it was said, it did not follow from the earlier convictions that the bank notes delivered to Watan Travel were the proceeds of drug trafficking. This is obviously correct, so far as it goes, as the judge accepted.

It was also submitted that strictly it is not a necessary ingredient of the offence of conspiracy that the cash in question in fact represented the proceeds of drug trafficking, only that the defendant must at least have reasonable grounds to believe such to be the case. This is also correct. But what was not disputed at the second trial was that, as a matter of fact, the jury in the first trial had been given the direction mentioned above, namely to find a defendant guilty of that offence only if they were satisfied that at least some of the cash represented the proceeds of drug trafficking.

The judge permitted the evidence to be adduced in relation to the couriers, Malik and Carr, but not in relation to Ramzan. In his summing up he explained the relevance of the evidence to the jury as follows:

“The relevance of this evidence is not to demonstrate what these defendants knew or suspected about the origin of the money, but that taken with the other evidence, it may tend to show that people in possession of these amounts of cash were connected with traffickers in drugs and therefore that the Asif cash delivered to Watan Travel is likely to represent in whole or in part the proceeds of earlier drug trafficking”.

This was an “issue” within the section as explained in R v Robertson (1987) 85 Cr App R 304. The judge gave other directions on the subject, some to a similar effect, and some additional, including a direction that it was not evidence relevant to Mohsan Khan (who was the courier from GM Khan, not Asif Memon). In his ruling the judge noted that even without the convictions of Malik and Carr, a prima facie case on the issue of whether the money was at least in part the proceeds of drug trafficking had been made out and called for an answer from the defence.

Before us it was submitted that the conviction proved only the propensity of Malik and Carr to handle the proceeds of drug trafficking, and that evidence of propensity was not admissible. But the rule excluding evidence of propensity relates to the defendant at a trial, not to others who are not defendants.

Further it is submitted that the convictions, even when considered in conjunction with the terms of the indictment, do not show that Malik and Carr were found to have dealt with what was in fact the proceeds of crime. This could be proved, if at all, only by also proving the terms of the direction to the jury. This is a step too far, it is submitted, there being no reported case in which a jury has had the basis for a plea or conviction adduced in evidence before it.

The possible significance of a basis of plea or conviction to evidence sought to be adduced under section74 was touched on in R v Mahmood and Manzur [1997] 1 Cr App R 414 CA, but the question we have to decide did not have to be decided in that case.

Where there is a conviction for robbery or burglary the indictment commonly will not identify the stolen property unambiguously. In a subsequent trial of a handler (or of some other person whose criminal responsibility depends on particular property having been stolen), it may be relevant to establish precisely what property was the subject of the earlier conviction. In practice this may well be entirely non-contentious.

Section 75 of the 1984 Act expressly makes some provision for solving the problem of identifying the facts on which a conviction is based. It provides specifically for the admissibility of certain documents such as the indictment. It also provides that that is “without prejudice to the reception of any other admissible evidence for the purpose of identifying the facts on which the conviction was based”. So the question is whether, in principle, the terms of the direction to the jury would be such evidence. We see no reason why it should not be. In practice, the point is likely to be dealt with by admissions.

That does not conclude the point before us, because the terms of the direction to the jury were not put before the jury in this case. If the point had been foreseen, they could have been. This could have been done all the more readily because the judge had put the essential part of his directions in writing. But as noted above, this point was not taken at the time, and Mr Clegg who advances the point to us on behalf of Ali was not counsel at the trial. Everybody on 1^st May 2003 knew about the earlier trial, it was the same judge and counsel for the prosecution. The matter proceeded on the footing that it was common ground that the jury in the first trial had been directed as the judge described. It was thus not necessary for the prosecution to take the matter any further.

So far as fairness is concerned, it was submitted to us that the evidence of the convictions might cause the jury to take the forbidden line of reasoning, namely that because Malik and Carr were guilty in the first trial in relation to money delivered to Ramzan, therefore they were also (as named co-conspirators) guilty in relation to the money delivered to Watan Travel (the subject of the second trial).

Given the careful and repeated directions which the judge proposed to give, and did give, to the jury in the second trial as to what the evidence was and was not to be used for, we can see no error in his decision under section78. The point on unfairness was a strong point in relation to Amer Ramzan. The fact that he was convicted on the basis that he was the person to whom the bank notes were delivered and who had laundered them might have led the jury to conclude that the defendants in this case were guilty. But the judge accepted this submission and excluded the evidence of Ramzan’s conviction.

We turn to the ground of appeal that concerns the contaminated bank notes.

Ali and Hussain have leave to argue that the judge wrongly admitted evidence of contamination of bank notes. The evidence as to contamination came from an expert scientist Mr Fletcher Burton. There was in the end no challenge to his expertise. This ground is based on the contention that the bank note contamination evidence is wholly irrelevant and therefore inadmissible.

Mr Burton, who is a chemist, works for a laboratory which specialises in the analysis of bank notes for the presence of drugs. Since 1995 his laboratory has regularly analysed cash in general circulation for traces of drugs. The cash is taken at random from banks in different parts of the country, the amount being analysed each time being £2000. From that his experience is that chemical evidence of cocaine and heroin is quite rarely found on bank notes in general circulation the average being three notes in every hundred. In the present case in January and February 2001 Customs and Excise officers seized cash that had passed through Watan Travel and Mr Burton analysed it to see if there was any difference in the degree of cocaine and heroin contamination found in the notes and the average for notes in general circulation. The first cash that was tested showed a contamination rate around 3%. But the second amount of cash collected from Watan produced on analysis a very different picture.

The cash collection was £25,000 and Mr Burton analysed £9400 worth made up of 622 individual notes. A graph was before the jury showing the result of the analysis of 170 notes 35% of which were contaminated to a significant degree. The percentage for the third batch of cash tested was that 25% of the notes were found to be contaminated to a significant degree. The fourth collection which was analysed resulted in a finding that 22% of the notes were contaminated to a significant degree. The percentage for the fifth examination of cash was 22%. For the sixth examination the percentage was 10%. Examination was made, of money seized from a safe at Watan Travel on the day of the arrests. Analysis of the 166 bank notes found showed contamination of 23%. He also tested some cash taken from Birmingham which was consistent with the percentage in cash in general circulation. The same result was achieved on examination of a substantial amount of cash taken from the home of Hussain.

Finally Mr Burton examined £2,175 consisting of 130 separate bank notes found in Moshan Khan’s briefcase. The graph for this examination showed 20% contamination.

In summing up, almost at the end, the judge took the jury in detail through the various charts of percentages.

In ruling on defence objections to the admissibility of this evidence the judge said:

“The Crown concede that it cannot be proved that that cash came either from the Asif monies or the Ghulam Mustapha Khan monies, both monies being the subject of the two particular conspiracies on the indictment, but the Crown have put the case on the basis that monies sent abroad in a similar manner on behalf of other named parties are also the proceeds of drug trafficking. The Crown concede that they cannot exclude the possibility that some or all of these samples relate to cash deposited in the course of Hawala business conducted by the defendants which before this jury the Crown have not sought to impugn. However, the Crown have to prove, as an element of the offence here, that some of the monies represent the proceeds of drug trafficking. All these samples concern cash put through the system by the defendants and I accept Mr. Bethel`s submission that it is logically relevant to proving or helping to prove that cash transmitted by Watan Travel was the proceeds of drug trafficking.”

The judge said he regarded arguments advanced by counsel as going to the weight to be attached to the evidence and not to admissibility.

Having taken the jury through the detail of the evidence the judge said (426)

“Now what do you make of all this? As I have already said, it is important to remember that none of this cash came from the Asif monies, the subject of count 4 and that it cannot be proved any of it came from the GM monies, the subject of count 1. All that is proved is that the cash examined by Mr. Burton was cash going through the Watan Travel business, apart from the cash in Mohsan Khan`s briefcase (427). The prosecution concede that if this is drug money, it could be drug money that went through the business as ordinary Hawala cash. What it proves, you may think, if you accept this scientific evidence, and having accepted it you draw the conclusion that this cash must have been in contact, directly or indirectly with people who have been in contact with drugs, what it proves is that such money was going through the business of Watan Travel in late January, early February, as shown by five out of the six random samples of cash taken and that Mohsan Khan had such money in his briefcase (428). Does it support the prosecution case that the Asif and GM monies represented the proceeds of drug trafficking? Well, Mr. Thomas has suggested to you that the evidence proves nothing and that it is simply prejudicial and certainly you will bear in mind that it does not relate to the Asif or GM monies and the prosecution do not suggest that this evidence is decisive, it is simply part of a picture and the whole picture has been put before you. It is for you to decide the extent to which, if at all, this evidence is helpful to you on the very important issue of whether the Asif monies and the GM monies must have been as the prosecution contend, at least in part the proceeds of drug trafficking.”

Mr Clegg QC who made the principle submissions on this point said that the evidence lacked any probative value whatsoever. That the cash could have come from a legitimate source could not be excluded. It could for example be money from genuine Hawala customers who were nevertheless drug users.

Mr Clegg referred to the passages of the summing up we have already referred to. In particular the first sentence of paragraph 427 “the prosecution concede that if this is drug money, it could be money that went through the business as ordinary Hawala cash.” That concession having been made, the evidence was completely irrelevant and the jury had been asked to draw a wholly improper inference from this evidence. The judge was asking the jury that which logic, common sense and the law did not permit.

His understanding of the Crown’s attitude in closing was that this evidence was described as of little evidential value.

Mr Singh submitted that it was impermissible for the judge to invite the jury to look at the whole picture. He referred to the case of Boyson [1991] Crim. LR 274. This court (Watkins LJ Hirst and Popplewell JJ) indicated that it did not approve the growing practice of allowing evidence to go before a jury which is irrelevant, inadmissible, prejudicial or unfair simply because it is convenient for the jury to have “the whole picture”.

Mr Bethel first dealt with a point briefly raised by Mr Clegg as to the admissibility of the test results on the cash in Moshan Khans briefcase. Mr Bethel said it was plainly relevant. Moshan Khan was a carrier of cash for GM Khan and over £2000 had been found on his arrest. The jury could infer he had collected that for GM Khan and it was destined for him. Moshan Khan had given an explanation that it represented the proceeds of a take-away business. That was for the jury to consider and it was plainly admissible in the case.

He said the Crown’s case was that money from drugs was not confined to GM Khan and Asif Memon monies but included all the cash not supported by documents listed at divider 8 in the Respondents bundle.

While accepting that it was possible that some had come from Hawala money the evidence was rightly admitted on a limited basis. It was admissible to give the general picture particularly with repeated emphasis by the judge that the money tested could not have come from the GM Khan or Asif Memon deposits.

The judge had stressed that the evidence only went to the origin of the money and repeatedly stressed that the prosecution had to prove separately knowledge or suspicion. This was significantly the most important part of the case.

The jury had clearly paid attention because they acquitted Mahmood since they could not have been satisfied on the question of knowledge or suspicion.

The judge warned the jury carefully about the limitations of this evidence. Mr Bethel conceded it would have been better with hindsight if the judge had not summed up the evidence in such detail and reminded the jury of it graph by graph. However, he submitted that the safety of the conviction was not affected.

In our judgment this ground fails. The fallacy in Mr Clegg`s attractive argument lies in the fact that what the Crown contended was non Hawala cash, was not confined to the two Hawaladers identified in count 1 and count 4 i.e. GM Khan and Asif Memon. The others who received this money, as can be seen from the totals in Dubery P at 79, were given over £44 million with no documentary support or verification. This money, unlike the GM Khan and Asif Memon cash was received at times relevant to the cash sampling.

While the prosecution made the sensible concession that cash from Hawala transactions could possibly have been excessively contaminated, it was open to the jury as a matter of commonsense to infer that it was far more likely that the genuine Hawala cash would be either not contaminated or lightly contaminated. The cash which was contaminated was likely to come from non Hawala money. It was in our view legitimate for the jury to have regard to the contamination evidence and conclude that the evidence gave them some, but limited assistance in the way the judge offered for their consideration at paragraphs 426 to 428 of the summing up.

On its own it might not have the greatest importance but the jury would consider it alongside the devastating evidence of collection and delivery of cash: by way of example the hundreds of thousands of pounds delivered in cardboard boxes from Liverpool by car at pre arranged venues.

We agree with Mr Clegg that the emphasis given to the evidence at the end of the summing up was, with hindsight, unfortunate. It would, as Mr Bethel conceded, have been better if the judge had not spent so long reminding the jury of the detail of the charts. However, looking at the summing up on this topic in the round, we do not think that it can in reality be argued that any imbalance in the summing up at this point was such as to render the convictions unsafe.

We turn to the ground newly raised on behalf of Ali, Hussain and Khan and raised in a different form in the Bhatti grounds, namely: the conspiracy counts were bad in law in that the particulars of the offences did not allege an agreement that was capable of amounting to a conspiracy contrary to section 1 of the Criminal Law Act 1977. The thrust of the argument is that although the substantive offences relevant to this appeal are committed if a person merely has reasonable grounds to suspect that the property is the proceeds of drug trafficking or of other criminal conduct, the offence of conspiracy can only be committed if the person knows that.

Count 4 in the Ali, Hussain and Khan indictment read (other counts charging similar conspiracies in the Ali trial and in the Bhatti trial were framed using the same general language):

“Statement of Offence

CONSPIRACY to contravene section 49(2) of the Drug Trafficking Act 1994, contrary to section 1(1) of the Criminal Law Act 1977.

Particulars of Offence

LIAQUAT ALI, AKHTAR HUSSAIN and ARSHAD MAHMOOD [acquitted] on a day between the 1^st day of September 1997 and the 13^th day of February 2001 conspired together with FAISAL MALIK, IMRAN SYED, ABDUL MITHA, JAMES CARR and ASIF MEMON and with other persons unknown to conceal, disguise or remove from the jurisdiction property namely, a quantity of bank notes, knowing or having reasonable grounds to suspect that, in whole or in part, directly or indirectly, they represented another person’s proceeds of drug trafficking for the purpose of assisting another to avoid prosecution for a drug trafficking offence or the making of a confiscation order or avoiding the enforcement of a confiscation order in contravention of Part II of the Drug Trafficking Act 1994.”

We set out the various statutory provisions directly or indirectly relevant to this appeal, underlining references to the required mental element of knowing, suspecting or having reasonable ground to suspect.

Section 49 of the Drug Trafficking Act 1994 Act provides:

“(1)

A person is guilty of an offence if he –

(a)

conceals or disguises any property which is, or in whole or in part directly or indirectly represents, his proceeds of drug trafficking, or

(b)

converts or transfers that property or removes it from the jurisdiction,

for the purpose of avoiding prosecution for a drug trafficking offence or the making or enforcement in his case of a confiscation order

(2)

A person is guilty of an offence if, knowing or having reasonable grounds to suspect that any property is, or in whole or in part directly or indirectly represents, another person’s proceeds of drug trafficking, he –

(a)

conceals or disguises that property, or

(b)

converts or transfers that property or removes it from the jurisdiction,

for the purpose of assisting any person to avoid prosecution for a drug trafficking offence or the making or enforcement of a confiscation order.”

The predecessor to section 49 was section 14 (1) and (2) of the Criminal Justice (International co-operation) Act 1990 (see Montila [2004] UKHL 50; [2004] 1 WLR 3141 for the international and domestic history of the offences of the laundering of drugs money).

Section 50 (1) provides:

“Subject to subsection (3) below, a person is guilty of an offence if he enters into or is otherwise concerned in an arrangement whereby--

(a)

the retention or control by or on behalf of another person (call him "A") of A's proceeds of drug trafficking is facilitated (whether by concealment, removal from the jurisdiction, transfer to nominees or otherwise), or

(b)

A's proceeds of drug trafficking--

(i)

are used to secure that funds are placed at A's disposal, or

(ii)

are used for A's benefit to acquire property by way of investment,

and he knows or suspects that A is a person who carries on or has carried on drug trafficking or has benefited from drug trafficking.”

Section 50 (4) provides:

“4)

In proceedings against a person for an offence under this section, it is a defence to prove--

(a)

that he did not know or suspect that the arrangement related to any person's proceeds of drug trafficking;

(b)

that he did not know or suspect that by the arrangement the retention or control by or on behalf of A of any property was facilitated or, as the case may be, that by the arrangement any property was used as mentioned in subsection (1)(b).”

Section 51(1) provides:

“A person is guilty of an offence if, knowing that any property is, or in whole or in part directly or indirectly represents, another person's proceeds of drug trafficking, he acquires or uses that property or has possession of it.”

The offences created by these sections are punishable by 14 years’ imprisonment.

By virtue of section 52 (1) a person is guilty in certain circumstances of an offence if he knows or suspects that another person is engaged in drug money laundering and does not disclose the information to a constable as soon as is reasonably practicable after it comes to his attention. Similar language is used in section 53, which prohibits “tipping off”.

All these provisions of the Drug Trafficking Act 1994 were repealed and replaced by the Proceeds of Crime Act 2002

Sections 93A, B, C and D of the Criminal Justice Act 1988 (as inserted by the Criminal Justice Act 1993 and now repealed and replaced by Part 7 of the Proceeds of Crime Act 2002) correspond respectively to sections 50, 51, 49 and 53 of the Drug Trafficking Act 1994. The relevant differences are that the section 93 offences relate to criminal conduct. That is defined in section 93A(7) as:

“conduct which constitutes an offence to which this Part of this Act applies or would constitute such an offence if it had occurred in England and Wales or (as the case may be) Scotland."

Section 71(9) (c) of the Criminal Justice Act 1988 provides that an offence to which this Part of this Act applies includes any indictable offence other than a drug trafficking offence (or certain terrorist offences).

Section 93C, with which this appeal is concerned, provides:

“(1)

A person is guilty of an offence if he -

(a)

conceals or disguises any property which is, or in whole or in part directly or indirectly represents, his proceeds of criminal conducts; or

(b)

converts or transfers that property or removes it from the jurisdiction,

for the purpose of avoiding prosecution for an offence to which this Part of this Act applies or the making or enforcement in his case of a confiscation order.

(2)

A person is guilty of an offence if, knowing or having reasonable grounds to suspect that any property is, or in whole or in part directly or indirectly represents, another person's proceeds of criminal conduct, he -

(a)

conceals or disguises that property; or

(b)

converts or transfers that property or removes it from the jurisdiction,

for the purpose of assisting any person to avoid prosecution for an offence to which this Part of the Act applies or the making or enforcement in his case of a confiscation order."

Section 93A, which we shall have to also consider provides in so far as relevant:

“If a person enters into or is otherwise concerned in an arrangement whereby –

(a)

the retention or control by or on behalf of another (A) of A’s proceeds of criminal conduct is facilitated …..

knowing or suspecting that A is a person who is or has been engaged in criminal conduct, or who has benefited from criminal conduct, he is guilty of an offence.”

The other statutory provision which we shall have to consider in detail is section 1(1) of the Criminal Law Act 1977, which reads –

“Subject to the 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, either –

(a)

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

(b)

would do so but for the existence of facts which render the commission of the offence or any of the offences impossible,

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

That subsection is subject to section 1(2) of the Act which provides –

“Where liability for any offence may be incurred without knowledge on the part of the person committing it of any particular fact or circumstance necessary for the commission of an offence, a person shall nevertheless not be guilty of conspiracy to commit that offence by virtue of subsection (1) unless he and at least one other party to the agreement intend or know that that fact or circumstance shall or will exist at the time when the conduct constituting the offence is to take place.”

It is worth noting that clause 48(2) of the Draft Criminal Code for England and Wales provides that “recklessness with respect to a circumstance suffices where it suffices for the offence itself” (see Law Commission Report No. 177 and commentary thereon at page 241, where it is stated that this “sub-section “states for conspiracy a rule in similar terms to that stated in 49(2) for attempt”).

Mr Clegg submits that by virtue of the decision in Montila and of section 1(1) and (2), a person cannot be guilty of a conspiracy to commit an offence against section 49(2) or a conspiracy to commit an offence against section 93C(2) unless he and another conspirator know at the time of the agreement that the property is the proceeds of drug trafficking (section 49(2)) or of other criminal conduct (section 93C(2)).

The first issue which we propose to consider relates to the meaning of the expression “reasonable grounds to suspect”. It or a similar expression is very familiar. Section 24 of the Police and Criminal Evidence Act 1984 provides:

“(4)

Any person may arrest without a warrant—

(a)

anyone who is in the act of committing an arrestable offence;

(b)

anyone whom he has reasonable grounds for suspecting to be committing such an offence.”

(5)

Where an arrestable offence has been committed, any person may arrest without a warrant—

(a)

anyone who is guilty of the offence;

(b)

anyone whom he has reasonable grounds for suspecting to be guilty of it.

(6)

Where a constable has reasonable grounds for suspecting that an arrestable offence has been committed, he may arrest without a warrant anyone whom he has reasonable grounds for suspecting to be guilty of the offence.

(7)

A constable may arrest without a warrant—

(a)

anyone who is about to commit an arrestable offence;

(b)

anyone whom he has reasonable grounds for suspecting to be about to commit an arrestable offence.”

For the purposes of these and similar provisions a person has reasonable grounds for suspecting X if he suspects X and there are reasonable grounds for suspecting X (see Archbold, 2005, paras 15-23-24).

If that definition were to be applied to the provisions in issue in this appeal, the offence would be committed if the defendant suspected that the property was the proceeds of drug trafficking or of other criminal conduct and that suspicion was a reasonable one. It seems unlikely that the draftsman intended that result- interpreted in that way it would be more difficult to obtain a conviction of the offences in sections 49(2) of the 1994 Act and 93C(2) of the 1988 Act. Whereas for the other offences knowledge or suspicion would be sufficient, for these two offences knowledge or a reasonable suspicion would be required.

Mr Collier submitted that, if suspicion were sufficient (which he does not accept) the judge should have directed the jury that if they were sure that the defendant and a co-conspirator suspected at the time of the agreement that the property was the proceeds of drug trafficking, then the prosecution must also prove that the suspicion was reasonable.

If the draftsman intended to include liability for negligence, as well as for knowledge and suspicion, then one would have expected the use of an expression such as: or “he knows or suspects or ought to know or suspect that the property is the proceeds of drug trafficking or of other criminal conduct”. Section 49(2) would then read:

“A person is guilty of an offence if, when he knows or suspects or ought to know or suspect that any property is, or in whole or in part directly or indirectly represents, another person’s proceeds of drug trafficking, he –

(a)

conceals or disguises that property, or

(b)

converts or transfers that property or removes it from the jurisdiction ...”.

That does not however solve a further problem. The section requires the defendant to conceal or disguise etc “for the purpose of assisting any person to avoid prosecution for a drug trafficking offence”. It is difficult to see how a person who only ought to have known or suspected can have as the purpose of the concealment etc “assisting any person to avoid prosecution for a drug trafficking offence ...”.

The judge recognised this difficulty in paragraph 52 of the Ali, Hussain and Khan summing-up, to which we turn shortly.

Between those two competing possible interpretations is a middle way, which was adopted by Tuckey LJ in Rizvi and Chisti [2003] EWCA Crim 3575. The effect of the decision is that if “the facts or circumstances” proved by the prosecution ought to have given rise to the suspicion that the property is the proceeds of drug trafficking (section 49(2)), then the defendant has reasonable grounds to suspect that the property is the proceeds of drug trafficking.

The judge in the Ali, Hussain and Khan summing-up (the Bhatti summing-up is to a like effect) reminded the jury of the words of the indictment and of section 49(2). He continued:

“51.

Now as a matter of strict law a person would be guilty of this offence even if he did not know or even suspect that the money represented the proceeds of drug trafficking or other criminal conduct provided he had reasonable grounds to suspect that might be the case because that is what the Act of Parliament says that having reasonable grounds to suspect is sufficient.

52.

Having said that you may think it is difficult to envisage a situation where you could be sure a person’s purpose was to assist somebody to avoid prosecution or a confiscation order unless he actually suspected, as opposed to simply having reasonable grounds to suspect, that the money had the requisite criminal origin.

53.

Now, as I have said, to help you with all this I have put into writing what needs to be proved. We will have a quick look at it now and then when I start on Monday I will go over it again, but we will have a quick look at it now, if you will bear with me, because it brings together, I hope, the directions I have been giving you.

(Document handed to jury)

54.

Members of the jury, it is six pages long but today we will just look at page 1, which relates to count 1.

“Before you can convict any of these defendants of count 1 you must be sure:

That at least part of the bank notes delivered to Watan Travel on behalf of Ghulam Mustapha Khan was the proceeds of drug trafficking; and

That there was in fact a conspiracy, that is an agreement between two or more persons to commit the offence of money laundering the proceeds of drug trafficking; and

That the defendant whose case you are considering is a party to that agreement in the sense that;

He agreed with one or more of the other persons referred to in the count that the agreement would be carried out; and that he knew or suspected that at least part of the money he was dealing with was another person’s proceeds of drug trafficking; and that he knew that the purpose of the agreement was to assist another person to avoid prosecution for a drug trafficking offence or the making or enforcement of a confiscation order.”

Thus the judge, as the written directions show, told the jury to convict a defendant only if he knew or suspected that at least part of the money he was dealing with was another person’s proceeds of drug trafficking.

We note that the “other persons” whose proceeds were being laundered were named in the indictments as co-conspirators (in the Liaquat Ali case, Ghulam Mustapha Khan in count 1 and Asif Memon in count 4). No point is taken on that. It is worth noting, however, that a person who launders his own proceeds of drug trafficking commits an offence under section 49(1) and not section 49(2). (The indictment in this case is worded, in this respect, in the same way as in Sakavickas [2004] EWCA Crim 268; (2005) Crim LR 2005, to which we turn below.)

In the light of that direction it is not necessary for us in this case to resolve the issue raised by the words “reasonable cause to suspect”. Mr Bethel QC told us that any decision on the meaning of these words could have a substantial effect on a number of convictions. It is necessary however to deal with the submission of Mr Collier QC set out in paragraph 88 above. We have no doubt that even if Mr Collier were right, the failure to direct the jury in either case that the suspicion had to be reasonable would not affect the safety of the convictions on the facts of these cases. If the jury only found suspicion, it is inconceivable, on the facts of this case, that the jury would not also have found the suspicion reasonable.

Mr Clegg has two arguments in support of his submission that a person cannot be guilty of a conspiracy to commit an offence against section 49(2) or a conspiracy to commit an offences against section 93C(2) (or indeed the other offences) unless he and another conspirator know at the time of the agreement that the property is the proceeds of drug trafficking (section 49(2)) or of other criminal conduct (section 93C(2)). First, a count of conspiracy to commit an offence against section 49(2) or 93(C)(2) is bad in law if it includes the words “reasonable grounds to suspect” or even just “suspect”. He submits that such a count falls foul of section 1(1)(a) of the Criminal Law Act 1977 in the light of Montila. He submits that an agreement to conceal etc the property will not necessarily amount to or involve the commission of the substantive offence of money laundering if the state of mind of the conspirators is only suspicion (objective or subjective). Secondly, in the light of Montila, such a count falls foul of section 1(2) of the Criminal Law Act 1977. That sub-section requires the defendant and another co-conspirator to intend or know at the time of the agreement that the fact that the property is the proceeds of drug trafficking (section 49(2)) or of other criminal conduct (section 93C(2)) “shall or will exist at the time when the conduct constituting the offence is to take place”. Mr Collier merely expressed his agreement with the first argument but further developed the second argument.

In Montila the House of Lords decided that for the offences under subsection 49(2) of the 1994 Act subsection 93C(2) of the 1988 Act it must be proved that the property was in fact the proceeds of respectively drug trafficking or of other criminal conduct. It is not enough that the defendant has reasonable grounds to suspect that the property is the proceeds of drug trafficking or of other criminal conduct when in fact it is not (or cannot be proved to be so). Lord Hope of Craighead giving the considered opinion of the Committee said:

“27 Subsection (2) states that a person is guilty of an offence "if knowing or having reasonable grounds to suspect that any property is ... another person's proceeds of drug trafficking [section 49(2) of the 1994 Act] of criminal conduct [section 93C(2) of the 1988 Act]" he does one or other of the things described to "that property" for the purpose which the subsection identifies. A person may have reasonable grounds to suspect that property is one thing (A) when in fact it is something different (B). But that is not so when the question is what a person knows. A person cannot know that something is A when in fact it is B. The proposition that a person knows that something is A is based on the premise that it is true that it is A. The fact that the property is A provides the starting point. Then there is the question whether the person knows that the property is A.

28 The opening words of the subsection thus provide a strong indication that it is directed to activities in relation to property which is in fact "another person's proceeds of drug trafficking" or "another person's proceeds of criminal conduct", as the case may be. A further indication is to be found in the absence of any defence if the property which the defendant is alleged to have known or had reasonable grounds to suspect was another person's proceeds turns out to be something different. Subsequent events may show that the property that he was dealing with had nothing whatever to do with any criminal activity at all, but was the product of a windfall such as a win on the National Lottery. On the Crown's argument it is enough for it to be proved that he had the mens rea at the time when he was dealing with the property and that he was doing what he did for the purpose that the subsection identifies.

29 Further indications that when the subsection refers to "another person's proceeds" it proceeds on the basis that the property in question is in fact proceeds of the kind described are to be found in the surrounding context. ...”

At one point in his argument Mr Clegg appeared to be submitting that the effect of Montila is that a person can only commit a conspiracy to commit an offence against section 49(2) or 93C(2) if the property actually exists. Thus, he submitted, if A and B agreed to deal with (a convenient expression to describe conceal, disguise etc) the supplier’s proceeds of a supply of drugs which they expect to take place tomorrow, they would not be guilty of conspiracy. He accepted after further time to consider the point, that this could be an effective conspiracy even if the supply did not take place. If the prosecution proves that the property which is the subject of the agreement would be, to the knowledge (belief would be a better word) of the co-conspirators, the proceeds of drug trafficking or of other criminal conduct at the time when the conduct constituting the substantive offence is to take place, then the offence of conspiracy would be made out (if the other ingredients are satisfied). This follows from section 1(2) which refers to knowledge (belief would be a better word) that the fact or circumstance shall or will exist at the time when the conduct constituting the offence is to take place.

Mr Clegg relies upon Harmer [2005] EWCA Crim 01, which he says supports both of his arguments. The ratio supports his first argument, so he submits, and the obiter dictum supports his second.

Harmer was convicted of conspiracy to convert or transfer property, namely currency, which he and his co-conspirator (Hadley) had reasonable grounds to suspect in whole or in part represented another person’s proceeds of criminal conduct and/or drug trafficking. The count as left to the jury reflected an earlier amendment:

“7.

... [T]he words ‘knew or’ had been deleted from the Particulars before the words “had reasonable grounds to suspect”. Thus, the prosecution had accepted that they could not establish that the various amounts of money were the proceeds of crime; and ... they were not alleging that the appellant and Hadley knew that the money was another person’s proceeds of criminal conduct or drug trafficking. The case rested alone on the allegation that the appellant had reasonable grounds to suspect this.”

The facts were:

“9.

Between April and September 2001, the Customs and Excise conducted surveillance on the appellant and Hadley. They observed regular meetings between them, when they arrived at and departed from various places, such as a local hotel and station car parks. On occasions, packages were passed between them. They were also seen to meet others, including Hooshang Lanjani, Kaushik Taylor and Paul Kennedy. After his meetings with Hadley, the appellant was seen on the same day visiting various branches of Barclay’s Bank in Essex, where he made cash deposits of up to £20,000 into various corporate bank accounts. Large amounts of money were then regularly transferred to bank accounts in Spain. Each of these Spanish accounts was bogus. They had been opened using passports with photographs of Walter Callinan or Barry Smith, who was Paul Kennedy’s father-in-law.

The prosecution case was that the purpose of the meetings was to facilitate money laundering. It was alleged that from the 1^st December 2000 to the 29^th September 2001 the appellant and Hadley had conspired with others to launder the proceeds of another person’s crime or drug trafficking. It was alleged that during this period over £1.2m was transferred out of the jurisdiction from accounts to which the appellant was a signatory. Before it was transferred abroad, the money had been transferred between different corporate bank accounts in order to mix it up and make it difficult to trace.”

May LJ giving the judgment of the Court allowing the appeal said:

“14.

At no stage did the judge direct the jury that the prosecution also had to prove that the relevant money was the proceeds of criminal conduct or the proceeds of drug trafficking. His omission to do so was in accordance with the understanding of the legal requirements of the substantive offences under section 93C of the 1988 Act and section 49 of the 1994 Act, as it was before the House of Lords decision in Montila. As we have said, the prosecution had accepted that they could not prove this. Their evidence was very strong as to the suspicious movement of what in general may have looked like illicitly obtained money. But they called no evidence to attempt to establish its provenance. As Mr Ross, for the prosecution, said, the evidence might have surely sustained an inference that the provenance of the money was illicit, but the jury were not invited to draw such an inference, nor did the judge direct them as to that possibility. Whether the evidence might have surely sustained an inference that the provenance of the money was drug trafficking on the one hand or criminal conduct on the other is not clear to us.

15.

Indeed, the prosecution had, so it seems, three related difficulties. First, they were unable to establish the criminal provenance of the various amounts of money. Second, they were unable to establish the person or persons whose proceeds of crime it was. Third, they were unable to establish whether it was the proceeds of drug trafficking or of criminal conduct. The first of these difficulties is central to what is now the main ground of appeal in the present case. ...”

Having summarised the decision in Montila and set out section 1 of the Criminal Law Act 1977, May LJ continued:

“23.

[For the appellant] Mr Kane’s central submission is that the statutory definition of conspiracy comprising section 1(1)(a) of the 1977 Act embraces an agreement whereby the conspirators intend and agree to commit “an offence or offences”. Montila decides that converting or transferring property which a defendant has reasonable grounds to suspect represents another person’s proceeds of crime is not an offence, unless the Crown also prove that the property is the proceeds of crime. The Crown, therefore, did not establish in the present case that the appellant was guilty of conspiracy under section 1(1)(a), since they did not establish that the object of the agreement was an offence. In our judgment, this is clearly a correct construction of the sub-section. ... Mr Kane’s ... point appears to have been conceded by the prosecution before this court in R v El Kurd [2001] Crim. LR 234 – but see paragraph 39 of Montila. We also note that this court said in paragraph 33 of its judgment in R v Hussain [2002] EWCA Crim 06; [2002] 2 Cr App R 26 page 363 at 375 of equivalent conspiracy charges:

‘… as we have already said, the Crown have to establish the Conspiracy Offence comprised in the making of the agreement. They do not have to establish as such that one or other of the Agreed Offences was committed, although they may incidentally do so as part of the evidence from which they would ask the jury to infer the agreement. They do have to establish that the Agreed Offences would, if the agreed course of conduct was carried out, be offences.’

24.

... Mr Ross submits that the Crown can rely in answer to Mr Kane’s submission on section 1(1)(b) of the 1977 Act. A person, who agrees with another person to convert or transfer property which he has reasonable grounds to suspect represents another person’s proceeds of crime, does agree that a course of conduct will be pursued which, if the agreement is carried out in accordance with their intentions, would necessarily amount to or involve the commission of an offence or offences, but for the existence of facts which render the commission of the offence or any of the offences impossible, if nevertheless the property does not represent the proceeds of crime. He submits that there is no difference in principle between a person who agrees to convert or transfer property which he has reasonable grounds to suspect is the proceeds of crime, when it is not, and a person who agrees to import a package which he believes to contain prohibited drugs, but where customs officers have removed the drugs which were previously there. These examples are not, in our judgment, equivalent. With the second, if the drugs had been there as the importer believed, an offence would have been committed. The prosecution can readily prove this. With the first, the offence would be an offence if the prosecution could prove that the property was the proceeds of crime. But in the present case they could not prove this. The substantive offence was not impossible to commit. It was simply that the prosecution could not prove that it had been committed. This is not a case where the prosecution could prove the agreement alone, apart from what they could show might be the substantive offence. They had to ask the jury to infer the agreement from the subsequent putting of it into operation. Although the offence of conspiracy comprises an agreement to commit an offence (not the subsequent committing of the agreed offence), the agreement has to have a material object. In the present case, the appellant was not alleged to have been party to an abstract agreement to convert or transfer theoretical property which might turn out opportunistically to be the proceeds of crime. The alleged agreement concerned the particular money to which the Crown’s evidence related and was, on the Crown’s case, to be inferred from that evidence.”

In the light of paragraph 24 it could be said that the Court’s decision is limited to the facts. This not being “a case where the prosecution could prove the agreement alone, apart from what they could show might be the substantive offence” and given that the prosecution “had to ask the jury to infer the agreement from the subsequent putting of it into operation”, the inability to prove that the various amounts of money were the proceeds of crime was fatal to the charge of conspiracy (as it would be to the substantive offence after Montila).

However that would overlook what was said in paragraph 23 where the Court adopted the interpretation by Mr Ross of the sub-section as clearly the correct construction: the prosecution had not established that the appellant was guilty of conspiracy under section 1(1)(a), since the prosecution did not establish that the object of the agreement was an offence. If a person agrees with another to deal with property which he only has reasonable grounds to suspect is the proceeds of drug trafficking or other criminal conduct, the prosecution will not have established that, if the agreement is carried out in accordance with their intentions, it will necessarily amount to or involve the commission of any offence or offences by one or more of the parties to the agreement. It will only necessarily amount to or involve the commission of any offence or offences if the defendant and another co-conspirator know this, because a person can only know that property is the proceeds of drug trafficking or other criminal conduct when it is (or will be) the proceeds of drug trafficking or other criminal conduct.

In this case the judge, who skillfully anticipated Montila, directed the jury (for example) in relation to count 1 in the Liaquat Ali case, that they could not convict unless sure that at least part of the bank notes delivered to Watan Travel on behalf of Ghulam Mustapha Khan were the proceeds of drug trafficking. He gave a similar direction in relation to other counts. Thus, on the jury’s verdict, the defendants agreed to deal with the banknotes which were (in part at least) the proceeds of drug trafficking and which they (at least) suspected were at least in part the proceeds of drug trafficking. At the time that they reached the agreement to deal with the banknotes which they suspected were the proceeds of drug trafficking, the offence against section 49(2) would necessarily be committed if they did deal with them.

Let us take two examples.

The second example reflects this case (assuming that the jury were sure of “suspicion” but not sure of “knowledge” on the part of the defendants)- subject to one caveat. The two examples envisage an agreement being formed about the particular cash brought into the Hawala bank. In reality the agreement is likely to have been formed earlier- D1 and D2 have agreed that D1 will send to Pakistan C’s money if D2 brings it in to the Hawala bank. That should not however make any difference in the light of the concession rightly made by Mr Clegg to which we refer in paragraph 98 above.

Likewise if D1 and D2 agree to receive goods which are (or will be) stolen believing (only) that they are (or will be stolen), then, if the course of conduct (handling) is carried out in accordance with their intentions, that will necessarily amount to the commission of an offence by both parties (that still leaves the section 1(2) problem to which we turn next).

Not without some hesitation in what is a difficult area, we think that the passage in paragraph 23 of Harmer to which we referred in paragraph 105 above is open to doubt.

In our view this first argument fails because the jury were directed to convict only if sure that (at least) part of the money was in fact the proceeds of drug trafficking. In the light of that direction section 1(1)(a) is, in our view, satisfied.

We turn to the second argument. It follows from Montila, so it is submitted on behalf of the appellants, that for the purposes of section 1(2), the fact that the property is or will be the proceeds of drug trafficking or of other criminal conduct is a fact upon which the sub-section bites. To the extent to which the substantive offence imposes liability without knowledge on the part of the person committing it of any particular fact or circumstance necessary for the commission of an offence, a person shall nevertheless not be guilty of conspiracy to commit that offence unless he and at least one other party to the agreement intend or know that that fact or circumstance shall or will exist at the time when the conduct constituting the offence is to take place. Knowledge of the fact that the proceeds are or will be the proceeds of drug trafficking or of other criminal conduct is required- suspicion is insufficient.

It is necessary to consider another passage in Harmer, a passage which it is agreed is obiter:

“25.

There is a further answer to Mr Ross’ submission, which, in our judgment, is fatal to it. It derives from the late Professor Sir John Smith QC’s commentary on Hussain in [2002] Crim. L.R. 407 at 409 where he said:

“Agreement to commit crime A or B as circumstances dictate. The parties agree to launder money illicitly obtained – i.e. obtained contrary to section 49(2) of the 1994 Act or (a different crime) contrary to section 93C(2) of the 1977 Act. The difficulty here lies in the very strict mens rea requirements of statutory conspiracy. Recklessness is not enough. The effect of section 1(2) (not mentioned in Siracusa, El Kurd or the judgment in the present case) is that D is not guilty of conspiracy to commit an offence by virtue of section 1(1) –

“unless [D] and at least one other party to the agreement intend or know that [all the facts and circumstances necessary for the commission of the offence] shall or will exist at the time when the conduct constituting the offence is to take place”.

Can it be said that the parties “intend or know” that the money will be the proceeds of drug trafficking? Or that they “intend or know” that it will be the proceeds of criminal conduct other than drug trafficking? If it is one or the other, they cannot know both, so they cannot know either. A person who believes that there is a 50/50 chance that something is so can hardly be said to “know” that it is so; and “intend” appears to be irrelevant where the parties know they have no control over the existence of fact or circumstances - as here.”

26.

This commentary addresses the more complicated problem, alluded to earlier in this judgment and discussed in El Kurd and Hussain, when the prosecution cannot establish that the provenance of obviously illicit money is criminal conduct on the one hand or drug trafficking on the other. But the commentary emphasises the statutory requirement that, where, as in the present case, the substantive charge would only be that the defendant had reasonable grounds to suspect that the money was the proceeds of crime (i.e. the offence would be incurred without knowledge on the part of the person committing it), he is not to be guilty of conspiracy unless he and at least one other party to the agreement intend or know that the money will be the proceeds of crime when the agreed conduct takes place. This intention or knowledge is precisely what the prosecution in the present case accepted they could not prove when the words “knew or” were omitted from the particulars of count 2. If the prosecution cannot prove that the money was the proceeds of crime, they cannot prove that the appellant knew that it was. So section 1(2) of the 1977 Act applies and is not satisfied. Mr Ross drew our attention in this context to paragraphs 27, 28 and 34 of the judgment of this court in R. v. Singh [2003] EWCA Crim 3712 (18 December 2003). This decision preceded Montila and, in so far as it might be seen to support Mr Ross’ argument, does not in our view survive Montila.” (Underlining added)

The Court then went on to consider a possible solution, charging an attempt to commit a conspiracy. The Court said that it “found the concept of attempting to make an agreement an odd one”. It rejected that solution given that:

“the case was simply not conducted and the judge did not direct the jury with an eye to attempt; and it is not possible to say that the jury must have been satisfied of facts which proved the appellant guilty of attempting to commit the indicted offence the case was not conducted in that way. ”

Mr Clegg relies on this passage in Harmer. If it is a correct analysis of section 1(2), then he submits that these appeals must succeed. He points out that, although the Court in paragraph 26 referred to “reasonable grounds to suspect” (not relied upon by the judge in the instant cases), the underlined passage, he submits, shows that “suspicion” is also insufficient if the charge is one of conspiracy. Mr Bethel does not dispute this anlysis. He submits, however, that Harmer is wrong, that the law was laid down in Rizvi and Chisti, approved in Sakavickas (not cited to the Court in Harmer) and that this Court is bound to follow those decisions and not Harmer.

In Rizvi and Chisti the appellants had been convicted on a count which stated:

"Conspiracy to deal with the proceeds of drug trafficking, and/or criminal conduct, contrary to section 1(1) of the Criminal Law Act."

The two substantive offences were 49(2)(b) of the Drug Trafficking Act 1994 and its mirror provision, section 93C(2)(b) of the Criminal Justice Act 1988. So it was alleging a statutory conspiracy. The particulars of the offence were:

It was submitted by counsel for the appellant that:

“... the learned judge misdirected the jury that they could convict on the basis that they were sure that a particular defendant had reasonable grounds to suspect that the monies came from the proceeds of drug trafficking or other crime. This is contrary to section 1(2) of the Criminal Law Act 1977, which provides that where liability for any offence may be incurred without knowledge on the part of the person committing it of any particular fact or circumstances necessary for the commission of the offence, there can be no criminal liability ..."

The Court set out section 1(2) and continued:

11 ... So far as actual knowledge is concerned, there is no question of a defendant being convicted of an offence without knowledge on his part. The more difficult question is what the effect of section 1(2) is on a person who has reasonable grounds for suspicion that the money is 'hot'.

12.

In this situation again it seems to us that there is no question of liability without knowledge of any particular fact or circumstance. In other words the liability is not absolute. It depends upon the defendant's knowledge of the facts or circumstances which ought to give rise to the suspicion. On this analysis, there is no lack of knowledge of "any particular fact or circumstance" for the purposes of section 1(2).

13.

We do not think there is anything in Anderson (1985) 81 Cr App R 253, or its consideration in Siracusa (1990) 90 Cr App R 340 to which Mr Campbell Clyne referred which casts doubt on that conclusion. A defendant is guilty of conspiracy if he agrees to commit the offences created by the two sections knowing or having reasonable grounds for suspecting that the money is 'hot'.”

In Sakavickas he and Reichwald had been convicted of conspiracy to commit an offence contrary to section 93A of the Criminal Justice Act 1988. We have already set out the terms of that section (paragraph 80 above). It should be noted that the required mental element is “knowing or suspecting”. In other words the same mental element as the judge directed the jury to find before conviction in the instant cases.

Summarising the facts, the Court said:

“In substance what was alleged was that a bank account operated by Reichwald was used to deal with the cash proceeds of cigarettes smuggled by Sakavickas and his associates out of Eastern Europe into the United Kingdom.”

The judge had, like the trial judge in the instant cases, directed the jury:

“Have the Crown made you sure that the money, or part of it, was the proceeds of crime which involved Sakavickas and others? The Crown have nailed their colours to that mast. The money that they say you are concerned with is money coming from crime which involves Sakavickas and others. If they do not convince you of that it is not guilty all round. That is the first hurdle they have to cross.”

The judge continued:

“Secondly, have the prosecution made you sure that the defendants knew or suspected that Sakavickas and others were engaged in criminal conduct or were benefiting from such conduct? Thirdly, have they proved to you that the defendant agreed with others to help retain control of and the benefit of those criminal proceeds, knowing or suspecting that they were indeed criminal proceeds? ”

It was submitted on behalf of the appellant Reichwald by Mr Rees QC that:

“[The judge’s] direction as to the third element of the offence was mistaken because as conspiracy was alleged it was not enough to show that the alleged offender suspected that Sakavickas and others had obtained the money under consideration by means of crime. It had to be shown that the alleged offender knew that to be the case. That is said to be the effect of section 1(2) of the Criminal Law Act 1977 in the circumstances of this case.”

It is important to set out the reasons given by Kennedy LJ for dismissing the appeal:

“13.

To support that basic submission Mr Rees drew our attention to some legal commentaries, mainly emanating from the late Professor Sir John Smith QC, and to some decisions of this Court. He started with the legal commentaries. In an article in the Criminal Law Review on Conspiracy under the Criminal Law Act 1977 – [1977] CLR 598 – Professor Smith examined the wording of section 1(2) and said at 603 that the provision is intended to ensure that strict liability and recklessness have no place in conspiracy. The subsection, he said, is intended to codify the principles of the mens rea of conspiracy as stated in Churchill v Walton [1967] 2 AC 224. In that case their Lordships held that a defendant could not be liable for a conspiracy to commit a strict liability offence unless he had knowledge of the facts which rendered the implementation of the agreement unlawful. Before us it seems to be common ground that this was the purpose of the subsection, but, whatever may have been the original intention, it was Professor Smith’s contention that section 1(2) as enacted became applicable to conspiracy to commit any crime, a view not shared by all other academic commentators. It seems to us relevant to observe that Prof Smith took this view principally because he thought that, unless the subsection were given this broad construction, defendants could be liable for a statutory conspiracy without appreciating all the elements of the offence which rendered the envisaged course of conduct unlawful, provided one of the conspirators had the appropriate mens rea. As we point out below, the House of Lords has held in Anderson [1986] 1AC27 that this premise is incorrect.

14.

The wording of subsection 2 is not easy. It applies –

“Where liability for any offence may be incurred without knowledge on the part of the person committing it of any particular fact or circumstance necessary for the commission of the offence.”

Mr Rees points out that liability under section 93A of the 1988 Act can be incurred without knowledge on the part of the alleged offender that the money which he is said to be helping to launder is in fact the proceeds of criminal conduct by someone else. It is enough if he suspects that to be the position. Mr Rees goes on to submit that in the words of section 1(2) the illegal provenance of the money is a “fact or circumstance necessary for the commission of the offence”. Section 1(2) is therefore applicable to an offence contrary to section 93A, and the subsection states that where it is applicable a person shall not be guilty of conspiracy to commit (the section 93A offence) –

“Unless he and at least one other party to the agreement (i.e. the conspiracy) intend or know that that fact or circumstance (i.e. that the money to be laundered is or will be the proceeds of someone else’s crime) shall or will exist at the time when the conduct constituting the offence (i.e. the section 93A Act offence) is to take place.”

That conduct is the entering into or otherwise being concerned in an arrangement to launder.

Our initial response.

15.

The starting point for the analysis is the opinion of Lord Bridge, with which the rest of their Lordships concurred, in Anderson [1986] 1 AC 27. His Lordship considered the effect of section 1(1) of the 1977 Act. He observed that “an essential ingredient in the crime of conspiring to commit a specific offence or offences under section 1(1) of the Act of 1977 is that the accused should agree that a course of conduct be pursued which he knows must involve the commission by one or more of the parties to the agreement of that offence or those offences.”(p.39E) It is not sufficient that another conspirator appreciates that the course of conduct will involve acts infringing the criminal law; the defendant himself must do so. On this analysis, therefore, there is no question of a defendant being held liable if, on implementation of the agreement, he could not be liable for the substantive offence. It is not necessary, therefore, for subsection (2) to be invoked to achieve that particular objective.

16.

In our view the judge summed up in accordance with this principle. He required the jury to be sure that the agreed course of conduct, if implemented, would involve commission by the appellants of the substantive offence. They therefore had to have the necessary mens rea for that offence. Mr Rees accepts, as we understand it, that the judge’s direction required that his client did, on the assumption that the agreement was implemented, have the mens rea necessary to satisfy the substantive offence. He contends, however, that for a statutory conspiracy the effect of section 1(2) is to alter the required state of mind so that knowledge and not merely suspicion of in this case ( to put it shortly) the criminal character of Sakavickas is required. The premise of the argument, as we have said, is that his criminal character is a relevant “fact or circumstance” within the meaning of subsection 2.

17.

We reject that argument. The fundamental weakness, as it seems to us, is that it fails to recognise that for the purposes of section 93A the existence of suspicion on the part of the alleged offender (as an alternative to actual knowledge) of the criminal character of Sakavickas is a fact to be proved by the prosecution. It is the suspicion, as opposed to the fact, that Sakavickas was engaged in criminal conduct which is, for the purposes of section 1(2) of the 1977 Act, a “fact or circumstance necessary for the commission of the offence”. True it is that the defendant must have knowledge of the suspicion, but he will of course inevitably have knowledge of his own state of mind. (The position would be otherwise if the statute required reasonable grounds for suspicion, for then the defendant would have to have knowledge of the reasonable grounds. An illustration of this is the Rizvi and Chisti case, discussed below.)

18.

Accordingly, an offence contrary to section 93A is not an offence where liability can be incurred without knowledge on the part of the alleged offender of any fact or circumstance necessary for the commission of the offence. The prosecution must prove the suspicion of the defendant and in so doing they inevitably prove knowledge of that suspicion. It is not therefore an offence to which section 1(2) of the 1977 Act applies. We would add that in any event, even if subsection 2 were applicable, in our judgment the directions of the judge were consistent with it precisely because establishing suspicion also establishes knowledge of that suspicion.

The Authorities.

19.

We turn therefore to the authorities which we asked to consider to see whether they assist as to the conclusion which we have tentatively expressed.

20.

In Mir and Beg 22^nd April 1994 the offence under consideration was conspiracy to commit aggravated arson. Section 1(2) of the 1977 Act was found to be relevant to that offence, and the court held that in those circumstances it was necessary to establish against each defendant subjectively the element of recklessness. In Browning and Dixon 6^th November 1998 the same approach was adopted in relation to a conspiracy to commit criminal damage, being reckless as to whether life would be endangered.

21.

In Rizvi and Chisti [2003] EWCA Crim 3575 the conspiracy alleged was in the form approved in Hussain, Bhatti and Bhatti [2002] CLR 407. Under the relevant statutory provisions in play in that case it was necessary for the prosecution to show that the defendant knew or had reasonable grounds to suspect that certain property had an illegal provenance. It was submitted that because of the provisions of section 1(2) of the 1977 Act the judge was wrong to direct the jury that each defendant had to know or have “reasonable grounds for suspicion that the money was hot”. The point taken by counsel for the appellant was that a person may have reasonable grounds for suspicion without ever in fact becoming suspicious. As to that Tuckey LJ said at paragraph 12 –

“There is no question of liability without knowledge of any particular fact or circumstance. In other words the liability is not absolute. It depends upon the defendant’s knowledge of the facts or circumstances which ought to give rise to the suspicion. On this analysis there is no lack of knowledge of ‘any particular fact or circumstance’ for the purposes of section 1(2).”

22.

Although relating to different statutory provisions, that, as it seems to us, is entirely in accordance with the view which we have tentatively expressed, and Mr Rees recognised that the decision in Rizvi does make it very difficult for him to succeed in the present case.

Finally our attention was invited to the decision of this Court in Gulbir Rana Singh [2003] EWCA Crim 3712. Once again the charge followed the form approved in Hussain but included the assertion that the defence knew or had reasonable grounds to suspect that the money was from an illicit source. The Court at paragraph 34 held that to be an immaterial averment, but Rizvi, which had been decided about 3 weeks earlier, does not appear to have been cited, and before us Mr Jeremy for the Crown did not attempt to place any particular reliance upon the decision in Singh.

Conclusion.

23.

It is therefore clear that the authorities, and in particular Rizvi, afford some support for the conclusion which we set out tentatively earlier in this judgment, and which we now adopt. As section 1(2) of the 1977 Act did not apply to the offence alleged in this case the appeal of each appellant must fail. Mr Kivdeh for Sakavickas could only have any hope of success if the appeal of Reichwald were to succeed and even then he had to face the almost insurmountable problem that the only conceivable inference from the verdict of the jury is that Sakavickas did know of his own criminal character and of the tainted source of the money, as, it seems, did the other conspirators, as indicated by their pleas of guilty. It follows that the appeals fail.”

We turn to Browning and Dixon, which was cited by Kennedy LJ in Sakavickas and in which Mir and Beg, also cited by Kennedy LJ, was followed.

The substantial point in Browning and Dixon related to the mens rea necessary to support a charge of conspiracy to commit criminal damage being reckless as to whether life would be endangered. Dixon and Browning were jointly indicted in alternative counts of conspiracy to commit criminal damage:

“Both charges were laid under section 1(1) of the Criminal Law Act 1977 but the first reflected the substantive offence of aggravated criminal damage under section 1(2)(b) of the Criminal Damage Act 1971 and the second and alternative charge reflected the simple offence of criminal damage under section 1(1) of the same Act. The particulars of the first count were that they between 1^st January 1996 and 26 September 1996 conspired together and with Michael James Ashton and other persons unknown to damage a railway line belonging to Railtrack intending to destroy or damage such property and being reckless as to whether the life of any person who travelled upon the railway would thereby be endangered. The second and alternative count charged a conspiracy between themselves, Michael James Ashton and others unknown to damage a railway line belonging to Railtrack intending to destroy or damage such property or being reckless as to whether such property would be destroyed or damaged.”

Mantell LJ giving the judgment of the Court said:

“The point taken is that the judge mis-directed the jury in inviting them to consider whether or not Dixon had been reckless as to whether the life of any person who travelled upon the railway would be endangered by reference to what would have been the appreciation of the risk by an ordinary prudent bystander. That, submits Mr Sweeney is to apply an objective test and what was necessary to support count 1 was proof that Dixon along with at least one other conspirator himself appreciated the risk – that is to say that the test is a subjective one. The judge’s direction begins at p.5 of the transcript of the summing up and continues through to p.8. It begins by explaining that it is the agreement which constitutes the offence and that the fulfilment of the purpose of the conspiracy is immaterial. It makes plain that it is what is in the minds of the conspirators at the time of the making of the agreement which is important and not what they might be thinking when the unlawful act is carried out. The direction goes on to distinguish between counts 1 and 2 and then to isolate those matters which the prosecution had to prove to bring home count 1. At the bottom of p.6 the direction concentrates on the mental element which distinguishes count 1 from count 2. The judge explained that the prosecution had to prove,

“That the defendant was reckless as to whether the life of any person who travelled on that piece of damaged track would thereby be endangered”

and then went onto explain that if [that] element or ingredient had not been proved but that all the others had that it would be open to the jury to convict on the alternative contained in count 2. He then went on in the course of his direction at p.7 to explain what was meant by recklessness.

[the trial judge then gave the Caldwell test for recklessness which is now no longer the right test following G [2004] AC 1034]

Mr Sweeny submits that the direction in those terms was to apply a test which might be appropriate in consideration of the substantive offence (see R v Sangha (1988) 87 CAR p.88) but which was inappropriate to a charge of conspiracy.

[The Court then referred to Professor Smith’s article in the 1977 Criminal Law Review 598 and 638]

Fortunately we do not need to become embroiled in the debate because on a previous occasion this court has had an opportunity of considering the effect of section 1(2) of the Criminal Law Act in circumstances very similar to those in the instant case. In R v Faheem Mir Safdar Beg (unreported) 22^nd April 1994 the court had to consider the appropriate direction where the charge was one of conspiracy to commit aggravated arson. The particulars of the offence were that the appellants and others had conspired together without lawful excuse to destroy or damage by fire a building intending to destroy or damage such property and being reckless as to whether the life of another would thereby be endangered. Apparently those involved had brought petrol onto the premises and were caught red-handed before the fire could be started. The risk to life arose out of the fact that there was gas present and an explosion could well have occurred as a result of the fire. In dealing with the accused’s perception of the risk of danger to others the judge directed the jury as follows:

“Of course it is for you as reasonably prudent persons”. The fact that the defendants in question, the defendant whose case you are considering, personally did not foresee the risk is neither here nor there. The test is would the risk be obvious to a reasonably prudent person without any particular specialised knowledge as represented by you members of the jury?”

The court agreed with the submission of counsel that section 1(2) of the Criminal Law Act 1997 was relevant to the case and that it was necessary for the Crown to prove as a subjective ingredient that the appellant’s intended or knew that the agreed course of conduct to be pursued would or might create an obvious risk that the life of another would be endangered and then in giving the judgement of the court Lord Justice Farquharson said this at p.9 of the transcript:

“We accept Mr Fortson’s submissions on these facts, if the prosecution was to succeed on count 1 against the appellants and the others accused it was necessary to prove:

They knew and agreed that the gas would be employed;

They knew that the use of gas would in the circumstances create an obvious risk to life;

That they recognised the risk; and

That they still proceeded to take the risk. It follows that it was for the prosecution to prove that knowledge subjectively and not by any objective standard.”

The court then held that the passage which we have recited from the summing up was a misdirection and quashed the convictions on that count.

We are unable to make any sensible distinction between the case of Mir & Beg and the present case. If we follow the same reasoning, as we are bound to do, the result must be the same. Consequently we have decided to quash Dixon’s conviction on count 1.”

We now take a closer look at these cases, starting with the criminal damage cases referred to in Sakavickas. Professor David Ormerod in his commentary on Sakavickas in the Criminal Law Review (April 2005, 293) writes this:

“[These cases seem] to support the approach in the present case because it adopts a degree of mens rea less than knowledge as to a fact. It is submitted however that the cases offer no such support. They are based on the false assumption that the substantive offence requires proof of a fact that life is endangered. It does not: Parker [1993] Crim LR 856. Since life endangerment is not ‘a circumstance’ that needs to exist for the full offence, it is unnecessary in a conspiracy to prove that Ds knew of or intended it; recklessness as to this element will suffice on a conspiracy charge. It is submitted therefore that the decisions in Mir (1994) 22 April, Browning (1998) unreported, on which the court in the present case places reliance (and Ryan (1999) The Times, 13 October) offer no support for the interpretation adopted.”

We agree.

As to Rizvi and Chisti, Professor Ormerod wrote in the same commentary:

“... The Court of Appeal held that ‘a defendant is guilty of conspiracy if he agrees to commit the offences created by the two sections knowing or having reasonable grounds for suspecting that the money is ‘hot’’ [para 13]. The conspirator’s knowledge, it was held, must be established only as regards the facts on which his suspicion was formed, and not as to the fact of the provenance of the money. With respect, there is an enormous gulf between what s1(2) requires on a natural reading – knowledge of the circumstance of the money being ‘hot’– and knowledge of a fact that gives rise to a suspicion that it is ‘hot’. To take a very different example, the fact that D knows goods on offer are ridiculously cheap which causes him to suspect they may be stolen, does not amount to him having knowledge of the fact or circumstance that they are stolen. Support for this view can be gained from the Draft Criminal Code, which defines knowledge with respect to a circumstance as ‘being aware that it exists or will exist’ and avoiding ‘taking steps that might confirm the belief that it exists or will exist’ (cl.18.). Support also derives from Montila in the House of Lords at para. [27]

‘A person may have reasonable grounds to suspect that property is one thing (A) when in fact it is something different (B). But that is not so when the question is what a person knows. A person cannot know that something is A when in fact it is B. The proposition that a person knows that something is A is based on the premise that it is true that it is A. The fact that the property is A provides the starting point. Then there is the question whether the person knows that the property is A.’

Any support that Rizvi does offer to the interpretation in the present case must now be seriously undermined because it was based on an erroneous interpretation of the substantive law. The Court of Appeal had held in Montila that it was unnecessary for proof of the substantive offences under ss.49(2) of the 1993 Act and 93C of the 1988 Act to establish that the money in issue was in fact illicit; it was sufficient that the accused thought it was: [2003] EWCA Crim 3082. This harsh approach has been overruled by the House of Lords in Montila [2004] UKHL 50. While it was extant, which included the period of the decisions in the present case and Rizvi this view meant that the substantive offence under s93C could be established without proof of the fact or circumstance of illicit provenance.”

We take the view that Professor Ormerod’s is right and that Rizvi and Chisti is no longer good law in the light of Montila.

We would add a further comment about Rizvi and Chisti. If, as decided in Rizvi and Chisti, it is sufficient to establish the conspirator’s knowledge only as regards the facts which ought to have given rise to the suspicion that the money was the proceeds of drug trafficking (or of other criminal conduct), then it is difficult to see how the jury could be sure that the purpose of the alleged conspirators in dealing with the money was to avoid any person’s prosecution for a drug trafficking offence (the point made by the judge in the instant case, see paragraphs 89 and 90 above). In addition to a standard conspiracy direction, the judge would presumably have to identify for the jury those material facts (and circumstances) which a jury would be entitled to conclude ought to have given rise to the suspicion that the money being dealt with was the proceeds of drug trafficking. The judge would then say: “If you are sure about those facts and if you are sure that the defendant had knowledge of them, are you sure that the facts ought to have given rise to that suspicion?”. If the answer to that question is “Yes”, the jury would then have to be told that they must also be sure that the purpose of the defendant whose case they are considering was to avoid any person’s prosecution etc. But if a defendant neither knew or suspected, it is difficult to see how the jury could conclude that he had that purpose.

We turn to Sakavickas. To the extent to which the Court relied on Rizvi and Chisti, we take the view, as we have said, that Rizvi and Chisti is no longer good law.

The offence alleged against the defendants in Sakavickas was, as we have said, a conspiracy to commit an offence against section 93A of the Criminal Justice Act 1988. Quite why it was necessary to charge conspiracy, given the wide terms of the substantive offence, we are not sure.

Section 93A, on the facts in the Sakavickas appeal, made it an offence if Reichwald agreed to enter into an arrangement whereby the retention by Sakavickas of his proceeds of criminal conduct was facilitated, knowing or suspecting, at the time, that Sakavickas is a person who is or has been engaged in criminal conduct.

It was submitted on behalf of Reichwald, in reliance upon section 1(2) of the Criminal Law Act 1997, that he was guilty of conspiracy only if he, at the time, knows that Sakavickas is a person who is or has been engaged in criminal conduct. That the Court held was wrong. The Court decided that the prosecution “must prove the suspicion of the defendant and in so doing they inevitably prove knowledge of that suspicion.” Section 93A “is not therefore an offence to which section 1(2) of the 1977 Act applies”. Professor Ormerod argues in the Commentary to which we have referred that: “This is clearly not how section 1(2) was intended to be interpreted”.

Although, as Mr Bethel rightly submits, in Sakavickas the judge had directed the jury, in accordance with section 93A, that the prosecution must prove that the money was the proceeds of criminal conduct, counsel does not appear to have argued that, nor the Court considered whether, section1(2) of the 1977 Act “bit” on this fact. Counsel did not argue that that Reichwald had to know that the money, the retention of which he was facilitating, was the proceeds of drug trafficking.

That distinguishes this case. Following Montila, the substantive offences under section 49(2) and 93C(2), requires proof that the defendant is in fact dealing with the proceeds of drug trafficking or of other criminal conduct. Following Harmer section 1(2) of the 1977 Act bites on that and the jury may only convict of conspiracy if the defendant knew that he was dealing with the proceeds of drug trafficking or of other criminal conduct.

Mr Bethel has not submitted that, if Harmer is right and to be followed, the convictions for conspiracy are nevertheless safe.

We must now consider one further case, Singh [2003] EWCA Crim 3712, referred to by Mr Bethel. It was not cited in Harmer. The appellant was convicted on three counts of conspiracy to convert, transfer and remove from the jurisdiction the proceeds of drug trafficking and/or of other criminal conduct. The particulars of the counts read:

“… conspired together and with persons unknown, knowing or having reasonable grounds to suspect that certain property, namely banknotes, was, or in whole or in part directly or indirectly represented, another person’s proceeds of drugs trafficking and/or criminal conduct, to convert or transfer or remove from the jurisdiction that property for the purpose of assisting any person to avoid prosecution for a drug trafficking offence and/or for an offence to which Part IV of the Criminal Justice Act 1988 applies, or for the purpose of avoiding the making or enforcement of a confiscation order, in contravention of …the Drug Trafficking Act 1994 and/or …the Criminal Justice Act 1988.”

Mr. Krolick, on behalf of the appellant, submitted, in the light of section 1 of the 1977 Act:

“that the formula in the indictment, “knowing or having reasonable grounds to suspect”, whilst apt for an allegation of the specified substantive offences of concealing or transferring proceeds respectively of drug trafficking under section 49(2)(b) of the 1994 Act and of criminal conduct under section 93C(2)(b) of the 1988 Act, was not sufficient for an allegation of statutory conspiracy to commit either of those offences.”

Auld LJ giving the judgement of the Court rejected the argument saying:

“34.

... the inclusion in the particulars of the words ‘knowing or having reasonable grounds to suspect that certain property, namely banknotes, was, or in whole or in part directly or indirectly represented, another person’s proceeds of drug trafficking and/or criminal conduct’ ... are an immaterial averment.”

The particulars of the indictment “could have been drafted so as to give effect to section 1(2) of the 1977 Act and as a mercy to the jury, namely that the appellant and his co-accused”:

“… conspired together and with persons unknown to convert or transfer or remove from the jurisdiction certain property, namely banknotes, which in whole or in part directly or indirectly represented, another person’s proceeds of drug trafficking and/or criminal conduct, with the intention of assisting any person to avoid prosecution for a drug trafficking offence and/or for an offence to which Part IV of the Criminal Justice Act 1988 applies, or for the purpose of avoiding the making or enforcement of a confiscation order…” etc

Auld LJ concluded:

“35.

... there is no point of substance in Mr. Krolick’s complaint that something short of knowledge was alleged in the indictment when, given the thrust of the prosecution case, knowledge of the precise provenance of the banknotes money was not at the heart of this conspiracy, but intention to launder illicitly obtained money was.”

In Sakavickas Kennedy LJ said of Singh:

“22.

Finally our attention was invited to the decision of this Court in Gulbir Rana Singh [2003] EWCA Crim 3712. Once again the charge followed the form approved in Hussain but included the assertion that the defence knew or had reasonable grounds to suspect that the money was from an illicit source. The Court at paragraph 34 held that to be an immaterial averment, but Rizvi, which had been decided about 3 weeks earlier, does not appear to have been cited, and before us Mr Jeremy for the Crown did not attempt to place any particular reliance upon the decision in Singh. ”

It seems to us that Singh does not survive Montila. An intention to launder illicitly obtained money is not enough. The money must be proved to have been the proceeds of drug trafficking or other criminal conduct. On to that requirement, section1(2) of the 1977 Act bites.

In the light of our analysis of the cases and of our decision that Harmer reflects the law as it stands after Montila, the jury should not have been directed to convict if a defendant only suspected that at least part of the money he was dealing with was another person’s proceeds of drug trafficking.

For these reasons the appeals are allowed.

Finally we wish to say something about the use of conspiracy counts. In the case of Ali, Hussain and Khan the prosecution’s overall case was that they dealt with nearly £171 million in bank notes, which were the proceeds of eight other persons’ drug trafficking. The dollar equivalent of those banknotes, on the prosecution’s case, was remitted by the defendants abroad. As we have seen the defendants claimed that the money was being sent to Pakistan as part of a genuine Hawala business and not to pay the suppliers of drugs. Why then could the prosecution not charge the substantive offences? The answer Mr Bethel gave was that each delivery of money would be a separate offence and would have to be charged separately, given the rules against duplicity (see Rule 4(2) of the Indictment Rules 1971). Thus to charge substantive offences would have lead to an overloaded or unrepresentative indictment.

The consequence of the present decision is (if we are right), that the prosecution has a heavier burden to discharge than it would have in order to prove the substantive offence. Although there are issues of duplicity with a conspiracy count (see e.g. Singh, paragraphs 23-24), a conspiracy count can be presented to overcome those difficulties.

Sections 17 and following of the Domestic Violence, Crime and Victims Act 2004 (not yet in force) provides one solution to the problem caused by the duplicity rule. Another solution would be to amend Rule 4(2), which can now be done by the Criminal Procedure Rules Committee together with the Lord Chancellor and the Home Secretary (see section 2 of the Indictment Act 1915 as amended by the Courts Act, section 109(1), Schedule 8 paragraph 67). We invite the Committee to consider the matter.