Beardall & Anor, R. v

On 5 April 2001 in the Crown Court at Southampton before His Honour Judge Darlow and a jury, Barry William Beardall and Samuel John Lord were convicted of conspiracy to contravene Section 170(2) of the Customs and Excise Management Act 1979. On 6 May 2001 Beardall was sentenced to six and a half years imprisonment. Lord absconded following conviction. On 16 August 2001, having been returned to custody, he was sentenced to six and a half years imprisonment, with six months imprisonment consecutive for his contempt, making a total sentence of seven years imprisonment. Both defendants were disqualified for ten years under the Company Directors Disqualification Act 1986. Beardall appeals against conviction by leave of the full court granted on 7 April 2004. Lord applies for an extension of time and for leave to appeal against conviction. In the circumstances, both applications of his are granted. Both men were granted bail subject to conditions.

Two other defendants, Sohail Khan and Simon Lord, the son of the appellant Lord, were acquitted. Khan had set up VAT registration and accommodation premises for forwarding mail for a company known as Delmac. A co-accused Salim Patel had pleaded guilty.

The prosecution case was that between July 1998 and February 1999 the appellants and their co-accused conspired together with Anthony Watkins-Burton, Cornelius Post and Hendrik Van Dooren and others unknown to evade duty payable on spirits. A substantial operation was conducted by HM Customs and Excise (“C & E”) and was known as Operation Crystal. It involved about a hundred consignments of duty-suspended spirits which left a bonded warehouse (“bond”) in Molembergnatie (‘MBG’) in Belgium. The consignments were imported into the United Kingdom under cover of Administrative Accompanying Documents (‘AAD’) showing a UK bonded warehouse as the destination. Many of the consignments were diverted prior to arrival at the bond, thereby avoiding payment of duty. AADs returned to MBG to indicate that spirits had reached their correct destinations were falsified. About twenty-five consignments were seized either at Dover or at their destination. Duty due was about £7.2m and the amount evaded about £5.5m.

The appellants, who were both bankrupts, were involved in running companies from Beardall’s home address at 21 White Horses, Barton-on-Sea, Hampshire. One of the companies, Dealson Management Limited (‘DM’) arranged the movement of the consignments out of MBG and on to the UK. Another company, Dealson (registered in Ireland) (“Dealson”) also appeared to act as agents for the consigning companies, Duo Distribution Limited (“Duo”) and Vici Limited (“Vici”) in which the co-accused Patel was involved. The prosecution’s case was that the appellants, together with Simon Lord and Patel, used the companies as a front to conceal the identities of the real consignors. Companies named on the AAD’s as purchasers of the assignment were alleged merely to be fronts.

The main bonded warehouse destinations were DCA Distribution, Romford, (“DCA”), NEMS Corning, Sunderland (“NEMS”) and Stanton Shipping and Trading, Birkenhead (“Stanton”). Between 1 September and 26 October 1998, Duo was the consignor of 17 loads, in 15 lorries. Consignments purportedly destined for ET Logistics (“ET”), East London, Stanton and DCA did not arrive. Vici was the consignor of the next 82 consignments, sent in 46 lorries between 26 October 1998 and 8 February 1999. The majority did not arrive. Delmac was the consignor of 16 consignments purportedly for NEMS.

The prosecution case was that DM’s only business was with the companies involved in the buying or selling of diverted goods and was the allegedly respectable front required for the conspiracy to work. The defence case was that Dealson was a respectable company. The appellants believed they were involved in legitimate business and had no idea that loads were going missing. Beardall claimed that his involvement in the running of the companies used was innocent and that it was Watkins-Burton who orchestrated the fraud. He also claimed that Watkins-Burton, acting for C & E, had set up the transport to entice innocent parties to become involved. The jury were told that the Crown wanted to prosecute Watkins-Burton but, at the time of trial, had been unable to extradite him from Belgium. Watkins-Burton was in the event extradited in April 2002, tried in October 2003, and convicted of the same offence as the appellants. He was sentenced to six and a half years imprisonment.

Some of the supplies had originated in the UK, having been exported, booked into MBG and re-imported. Invoices for Duo and Vici were sent to the Dealson Management address.

At the trial, it was not in dispute that a conspiracy existed. The issue for the jury was whether the appellants, and the co-accused, were knowing participants or innocent dupes.

There was considerable evidence of the appellants’ involvement in the transactions. Mr Voets, freight forwarding agent for MBG, dealt with both appellants who were purporting to act on behalf of Dealson. He met the appellants in Belgium in September 1998 and in October 1998. Reminders were sent to Dealson when AADs were not returned; Dealson blamed the delay on the UK bonds. The manager of MBG, Mr De Clerk also gave evidence.

Considerable evidence was called from bond employees, suppliers, lorry drivers and customs officers. There was a discussion between a customs officer and the appellants at 21 White Horses on 19 October 1998 and another on 17 November. Discussions followed the seizure of a load on 20 November. Invoices and AADs went missing. Lord said that he never checked with bonds about missing AADs; it was not his function. Beardall made the same claim; it was Watkins-Burton who was making the arrangements. Many copy AADs purportedly receipted by DCA were forgeries.

On 9 February 1999, the appellants were arrested while waiting in the departure lane at Dover Docks. A printing kit, which Lord had been observed purchasing earlier in the day, was in the car, together with faxes from MBG chasing missing AADs.

At interview, Beardall said that Dealson was approached by Watkins-Burton to undertake the paperwork for consignments. They were to be paid £250 a load for doing so. He, Beardall, was only the book keeper. Watkins-Burton was the mastermind; the appellants were unaware of any diversion. They made it clear to Watkins-Burton that they were not prepared to be involved in anything illegal.

Lord said that, on arrest, they were on the way to see Watkins-Burton to be paid and to go to MBG to pay the bills. He did not know that AADs had to go back to MBG. They had become involved in the transactions at the request of Watkins-Burton. It was Watkins-Burton who asked him to purchase the printing set. It was Watkins-Burton who gave all the instructions and who collected the AADs from the UK bond. He denied that Dealson was a front.

Beardall was questioned about the minutes of a meeting between the appellants and Watkins-Burton on 22 July 1998. The minutes were in Beardall’s handwriting. They included a statement that “goods come to England, do not go near bonded warehouse but go direct to client”. Beardall said that he did not mean that. There were subsequent meetings with Watkins-Burton at which introductions were effected. Lord said that he believed all the companies existed and that the intermediaries were passing goods on. Dealson was not responsible for booking the goods into the UK bond. In each case, it was stated in the Defence Case Statements that the defence case was detailed in the 1999 interviews.

A document found in the car on arrest was said to demonstrate that Dealson had earmarked a load for itself but this was denied by the appellants. Explanations were given; Lord said that he contacted Watkins-Burton who told him that it was to be used as an arm twister to get payment from a defaulting customer.

The prosecution relied on the fact that Dealson did not work for anyone else and did not engage in any legitimate business. Duo were not used following a visit of a Customs officer on 19 October 1998. The appellants maintained that they had acted in good faith. Their sole responsibility was for booking goods in and out. They believed Vici to be an established company with a proper person behind it, and they saw nothing wrong in being paid in cash. They had been caught unawares by someone they trusted and they subsequently accepted assurances that earlier conduct would not be repeated. Each of the appellants alleged that, if he was involved in fraudulent activity, he was involved unwittingly and neither knew nor suspected any such involvement.

Given the grounds of appeal, it is not necessary to set out the evidence at the trial in any further detail. No complaint is made about the conduct of the trial by the judge or the conduct of the defence by counsel and solicitors then appearing. In his summing up, the judge gave appropriate legal directions and sufficiently summarised the evidence. At the time of the trial there were hearings, at which only the prosecution were represented, for the purpose of considering disclosure of documents.

The appeals are based on material which has become available since the trial and a submission that relevant material was withheld at the trial. Moreover, since the trial, convictions in other C & E cases involving diversion frauds have been quashed and reliance is placed on findings in those cases to support a submission that investigations in the present case have been corrupt. Counsel now appearing for the appellants did not appear at the trial.

On behalf of Beardall, Miss Bex submits that he was involved in transactions without knowledge of their dishonesty. Reliance is placed on a photocopy of an affidavit dated 24 March 1998, purporting to have been prepared by Ms Jennifer Costello, which came to the attention of the police in October 2002. In it, Ms Costello who died in 2001, spoke of her friendship with the customs official Mr Bernie Small and how he had introduced her to Watkins-Burton whom she understood was working with Small not merely in investigating evasion of duty but in organising duty evasion. Small has now been shown to have arranged for the owner and manager of London City Bond (‘LCB’) to become a participating informant and to encourage diversion of dutiable goods. It is submitted that a failure to disclose relevant material about how and by whom information was provided to C & E in Operation Crystal deprived Beardall of advancing entrapment and abuse of process arguments at the trial. Reliance is particularly placed on the alleged participation of the discredited Mr Bernie Small in Operation Crystal and it is submitted that C & E were themselves involved in the fraud.

While it is accepted that Watkins-Burton was subsequently convicted and sentenced for the same offence as is now under consideration, it is not accepted that he served the prison sentence imposed on him. Following consultation with the prison authorities, the prosecution have assured the court that Watkins-Burton did serve the sentence imposed by the court. We accept that assurance and we have no reason to believe that the prison service have been involved in any cover-up.

The Costello affidavits, if genuine, are very significant. The first includes the following statement:

“It started to become clear to me that Mr Watkins-Burton was working with Mr Bernie Small and Mrs Maureen Dunn to set up companies and bank accounts to raise money by the sale of goods imported into the UK on which duty had been evaded … It also became clear that Tony Watkins-Burton was acting on the instructions of the officers in the National Investigation Service, including Mr Bernie Small”.

The first affidavit is claimed to have been sworn in March 1998, that is over two years before the LCB disclosures in Villiers, mentioned later in this judgment. Small and Mrs Dunn are mentioned in the document as the central figures. The stamp and signature of a solicitor are shown on the jurat though the solicitor has no recollection of the document or its deponent. The second affidavit, also a copy document, was received by the police by post on 14 June 2002. Small and Mrs Dunn are not mentioned. Ms Jennifer Costello died at Middlesex Hospital on 4 April 2001, aged 69.

At the instigation of the court, the Metropolitan Police conducted an enquiry into the Costello affidavits (part of Operation Gestalt). At a directions hearing on 15 April 2005, Rose LJ referred to the issue as to the genuiness of the affidavits and posed the question: “How can the appeal successfully and properly be resolved until the genuiness has been established or not?”

As result, the police produced a report, described as an ‘interim report’, on 16 June 2005. The effect of the documents is stated to be as follows:

“The overall impression presented by both Affidavits is that Mrs Costello is operating as an agent of both HMCE and the Secret Service while working for an unnamed import business. As such she has attended briefings, provided intelligence and apparently acted as a confidante to “Support agents”. As a result of these activities she has gained good knowledge of covert law enforcement techniques and the import of duty payable goods and bonded warehouses.”

The conclusion in the report, signed by DS Gary Cornell was:

“In summary, as things stand the authenticity of the documents cannot be proved as only copies have been located. However I believe the authenticity of the content of these documents has been disproved”.

Reasons are given. These are convincing and the affidavits could not be adduced in evidence under section 23 of the Criminal Appeal Act 1968 (“the 1968 Act”). In a letter to the court dated 20 June 2005, DCI McKinney made a distinction, present in the conclusion quoted, between the authenticity of the affidavits themselves as documents and the authenticity of the content. Having stated that the authenticity of the documents could not be confirmed, he added:

“Tracing and taking statements from family, friends and former work colleagues of Mrs Costello have tested the authenticity of the content of the documents. These people have provided valuable lifestyle and background detail that strongly contradicts how Mrs Costello and her life are represented in the affidavits. This combined with enquiries with HMCE and Mr Watkins-Burton (A prominent name within the documents) indicates overwhelmingly that the content of the documents and the alleged role of Mrs Costello, and Mr Watkins-Burton, portrayed in them to be false.

Although the investigation is technically not complete, as a number of witnesses have been identified and could be interviewed it is felt that that this process would not alter the conclusions that have been reached so far. However, this view will be reconsidered if any significant intelligence or new evidence comes to light.”

Miss Bex relies on the fact that the report was described as “interim” and that, three times in the report, reference was made to “outstanding lines of enquiry exist to complete this aspect of the investigation”, giving particulars. One reference is to “outstanding lines of enquiry … to complete the Lifestyle aspect of the investigation.”

The court has been told that the Metropolitan Police are not conducting the further enquiries suggested, being satisfied that the contents of the affidavit are, in all material respects, false. We are told by the prosecution that in the more general Gestalt inquiry, the conduct of Small and Mrs Dunn is still under investigation.

Reliance is not placed on the Costello report on behalf of Lord, subject to further information about its authenticity becoming available in the future. It can equally be accepted that Lord has not been involved in the preparation and disclosure of the documents found to be false.

We have no doubt that the Costello affidavits give no assistance to the appellants. Police enquiries have demonstrated that the contents are not genuine and, on that ground, should not be admitted. Moreover, as Miss Bex accepted, the claim that Watkins-Burton was an informer in Operation Crystal depends largely on the Costello affidavits. Their falsity substantially destroys that aspect of the appellants’ case. If enquiry into their authenticity had been made ahead of or at the time of the trial, had they then be available, it is not a real possibility that they would have affected the outcome.

For Beardall, Miss Bex submits that the material disclosed since the trial supports a case that Beardall was duped. For Lord, Mr Pardoe, while maintaining the case that Lord too was duped, submits, that had the material been available at the trial, an abuse of process submission would have had prospects of success. However, Miss Bex would also rely on abuse of process if Mr Pardoe’s submissions prove to be successful. Both appellants rely on the claim that Mr Bernie Small was central to Operation Crystal.

In Patel,Villiers and Ors, [2001] EWCA Crim 2505 a massive fraud was perpetrated in relation to goods consigned by LCB to other warehouses. Mr Alfred Allington, the owner and manager of LCB, and his younger brother Mr Edward Allington, were called as witnesses for the prosecution at the trial. Mr Edward Allington was a registered informant, handled by Small. While not a registered informant, Mr Alfred Allington was included in Small’s control sheets or daybook as providing information on a number of occasions. It was concluded in this court that he was a participating informant. Giving the judgment of the court, Longmore LJ stated, at paragraph 54:

“We have, for the reasons we have set out, come to the conclusion that there was a serious failure on the part of the Crown to disclose the true status of both Allington brothers as participating informants and the extent of their participation in the offences with Customs’ encouragement.  The defendants submit (a) that they were entitled to expect that any decision of the judge at trial on the question of disclosure should be based on proper information, (b) that if proper information had been before the judge he would have ordered disclosure and (c) that, had such disclosure been ordered, that might well have assisted the defence, even though they might still have refrained from attacking Mr Alfred Allington’s credibility.  We accept submission (a) and submission (b), because we consider that once the judge appreciated the degree of participation on the part of the Allington brothers in offences in general and the real possibility that they had participated in offences committed by some of these defendants in particular, he would have been bound to order disclosure as Judge Maher did at Wood Green.”

Longmore LJ added, at paragraph 56:

“…we cannot be sure that, if the status of the Allington brothers as participating informants together with their encouragement by Customs and the consequent LCB immunity had been disclosed to the defence, the jury would have been bound to return verdicts of guilty.  We accept that the material could have been deployed by the Defendants and that they should have been able to put forward their tenable cases in the best light, R v Agar (1990) 90 CAR 318.”

The convictions were quashed.

In Gell & Others [2003] EWCA Crim 123, defendants were alleged to have evaded duty at the Fort Patrick warehouse in Ipswich. Over a third of the goods received at the Fort Patrick Bond came from LCB. Before this court, it was demonstrated that Small had received evidence from the Allingtons as to the movements of stock from LCB to Fort Patrick. Material also became available which purported to describe the Fort Patrick investigation, Operation Stockade, as an LCB case. Giving the judgment of the court, Longmore LJ noted that, at the Patel/Villiers re-trial [in Liverpool] following the quashing of the earlier convictions, Small gave evidence and admitted that he had misled prosecuting counsel and judges in cases in which disclosure applications were involved. Longmore LJ stated, at paragraph 15:

“Any further abuse hearing would have required the participation of Mr Small, but the Crown has had to recognise that Mr Small’s position as an accurate witness who has effected full disclosure is entirely untenable. It was the Crown’s reaction to the evidence given in Liverpool by Mr Small that caused that hearing to collapse”.

The convictions were quashed.

On the other side of the line, convictions were upheld in R v Austin & Ors [2004] EWCA Crim 1983. That too involved a diversion fraud operated around Fort Patrick. Villiers and Gell were cited but the procedural irregularity which infected LCB did not apply to Fort Patrick and there was no significant link between Fort Patrick and LCB. Giving the judgment of the court, presided over by Kennedy LJ, Gross J stated:

“There was, or would have been no proper basis for any abuse argument in the present case. So far as entrapment or abuse went, it would have had to be shown (and none of the defendants grasped this nettle) that they had been induced by an agent of the authorities into committing an offence which would not otherwise have been committed. It was not enough simply to show that they might have committed some different offence.

In the present case any abuse argument would have been wholly untenable, not least because even if it was said the Crown had been slow in reacting, slow policing was not equal to entrapment. In other cases, such as Gell, convictions have been quashed because of nondisclosure, or wrongful disclosure but, in those cases, if there had been disclosure, it might have had a causative impact on a tenable abuse argument. That was emphatically not the position here.”

Reliance is also placed by the appellants on the judgment of Longmore LJ in R v Alibhai & Ors [2004] EWCA Crim 681. The conspiracy in that case did not involve C & E. Longmore LJ stated, at paragraph 57:

“We accept that in many cases it would suffice for an appellant to show a failure on the part of the prosecutor to meet disclosure obligations so that it is reasonable to suppose such failure might have affected the outcome of the trial. It is a matter of semantics whether this means that it is necessary upon an argument of this kind for a defendant to demonstrate "prejudice". That said, even where there has been a failure on the part of the prosecution to make disclosure, this court will not regard a conviction as unsafe if the non-disclosure can properly be said to be of "insignificance in regard to any real issue": see R v Maguire, (1992) 94 Cr App Rep 133 at page 148.”

The test to be applied when material, which would have had a bearing on an abuse of process submission, is disclosed after the trial was considered in R v Smith & Ors [2004] EWCA Crim 2212. Giving the judgment of this court, Latham LJ stated:

“19.

Whilst it could be said that in one sense the material which had not been disclosed went essentially to the credibility of Moore, that does not seem to us to provide the real answer. The issue is not just the credibility of Moore. The relevance of the material to these applicants is that it would have provided support for their application for a stay on the basis that there had been an abuse of process, in that the material is capable of supporting the argument that Moore's evidence was tainted by a deal which had been struck either with him or his solicitor. If the material is indeed capable of supporting such an argument then the applicants have been deprived of the opportunity to deploy it and therefore of having the indictment stayed. The failure to disclose the material therefore denied them a fair trial…

20.

It seems to us that the question therefore is whether or not the material could indeed have had a causative impact on a tenable abuse argument. … we are not in a position to conclude that that effect would have been insignificant in the absence of hearing the sort of evidence which would have to be called during the course of an abuse hearing in order to deal with the issues raised by that material.

21.

… The applicants were therefore denied the opportunity to deploy that material in support of the abuse of process application and were accordingly denied a fair trial.”

Before considering specific documents, we mention the general submissions of Mr Pardoe on behalf of Lord. He questions whether, against the background of the conduct of disclosure in this case, the court can even now be satisfied that full disclosure has been made. Notwithstanding the assurance given at the trial, involvement of Bernie Small in Operation Crystal was, it is submitted, “root and branch”. Bernie Small was the controller of the operation, it is submitted, and, moreover, on the information now available, MBG should be treated as informers.

The failure to disclose the hundreds of documents subsequently disclosed, including documents showing dealings by C & E with bond holders and documents demonstrating Small’s involvement, cannot have been inadvertent and must have been wilful, it is submitted. It is inconceivable that Small could have forgotten the extent of his involvement. It is submitted that the appellant Lord was entrapped or at least was a victim of an abuse of process.

The court should not accept, it is submitted, that the lack of disclosure would have made no difference to the outcome at the trial. A burden of proof should not be imposed on an appellant in this respect. The disclosure was likely to have influenced an abuse of process submission and, failing that, the verdict of the jury following cross-examination based on the further documents.

The appellants rely on a document known as the Sugrue note, a note prepared by a customs officer from NW IMPEX [north-west import/export team], Mr Kevin Sugrue, on 9 October 1998. Its contents are [original spelling maintained]:

“Discussed Duo Distribution. Captain Mac [McDonald] had made his own inquiries. Traced Duo to Molenbergnatie. Spoke to Mr Volt (warehouse keeper). Movement commissioned by Tony Watkin Burton based in Brussels – has connections/office at British Embassy. Story very confused; but;

1.

Major Tony Watkin Burton appears to have been some sort of agent.

2.

He has contact in Coventry call Rajish (Rachish)

3.

Tony Watkin Burton instructed Molenbergnatie to effect the movement.

4.

Duo distribution are an Irish registered company, with an agent, Dealson Management, 21 White Horses. Marine Drive, Barton on Sea, Hants. Contact Mr Beasdall.

5.

The movement was paid to Volt, by a man called Danny. Captain suspected that this was Danny Slater, but having spoken to DS, DS denies it.

6.

Volt says at least four containers have moved to Stantons and he holds receipted copy AADs, apparently bearing Stanton’s stamp and signed by Miss Daly or Bailey. Uplifted copies of letter which Captain had obtained bearing Duo Distributions details, and details of movement from Molenbergnatie to Stanton.

17.10

hours, 9 October, 1998

Signed K. Sugrue”

This document was available to the disclosure officer and to prosecuting counsel during the trial and failure to disclose it was an oversight. The note records a conversation between Mr Sugrue and Captain McDonald the owner of the Stanton bond. McDonald related what he had been told by Mr Voets (described as Mr Volt) who was employed at MBG. Voets gave evidence at the trial. McDonald was not called and was himself a defendant in a trial alleging a similar fraud. At the end of his trial, he was acquitted by the jury.

It is submitted that the contents of the note raise the possibility that Voets was a participating informant and he could have been cross-examined at the trial on that basis. Moreover, McDonald might have been called as a witness for the defence. Alternatively, it might have been alleged that he too was a participating informant.

Viewed for present purposes and in isolation, we see no merit in the submissions made about the Sugrue note. Taking it at face value, it does not begin to support a suggestion that either Voets or McDonald were participating informants, or a suggestion that the appellants were entrapped. Moreover, as the prosecution submit, the contents of the note reflect in part a written statement of Ms Finley which was available to the defence.

Consideration is required of the involvement in Operation Crystal of Bernie Small. While the trial was in progress there was press coverage of events at LCB and information became available about the use by C & E of informants within LCB and the activities of Small, the Allington brothers and others.

At a hearing in the absence of the jury on 15 February 2001, counsel then appearing for Beardall, told the judge:

“In other words as I understand the information I have been given, the documents may contain information which suggests that there was an arrangement involving customs officers to actually set up duty evasion schemes together with bonds”.

In the course of submissions on 15 February, counsel alleged that “there was an unholy and dishonest relationship between Customs and Mr Allington whereby the course of justice was being perverted because Mr Allington was giving evidence in diversion fraud cases and pretending he knew nothing about the fraud having been instructed to do so by the Customs, who were allowing fraud to continue with the compliance of the bond so that they could choose their moment when the fraud had gone on for some time as to when to bring it to an end.” Reference was made by counsel for Lord to a document, to which we will refer, described as “the Barton-on-Sea document”.

In reply to that submission, Mr Bartlett, for the prosecution, referred to the Barton-on-Sea document, in which Small was mentioned. He stated, as recorded in the transcript:

“There is absolutely no element of Allington/Small activity in any of the material that I have seen or read”.

It is most unlikely that counsel would have used the expression “oblique stroke” or “slash” used in the transcript but we are in no doubt from the context that it was to the joint activity of Allington, or the Allingtons, and Small to which reference was being made. There is no reason whatever to doubt the accuracy of counsel’s statement and Mr Pardoe accepts that there is no evidence of an Allington dimension in the present case.

Mr Bartlett went on to refer to the evidence of witnesses, Voets and de Clerk, from MBG, and that of customs officers. He concluded:

“In our submission it gives the total lie to the suggestion that there has been anything of the kind going on in this case as is alleged to have gone on in the cases involving LCB and Mr Allington. There has been no communication of that type. I have seen nothing to support the suggestion and really that is all I can say about the matter”.

The defence formally requested a statement from the prosecution as to the extent of Small’s involvement in investigating this offence. The reply, given in writing, was:

“As far as the prosecution are aware Bernie Small’s involvement was limited to:

a)

receiving two phone calls apparently on 4 November 1998 from Barry Beardall in relation to ceased loads.

b)

being present at a meeting on 8 December”.

It is also relevant to note an answer given by a customs officer who worked in Dover, Ms Veitch, when giving evidence at the trial. She was asked:

“Q. Can you confirm that there is an officer of customs and excise call Bernie Small who worked from London.

A.

I don’t know”.

The point was not pursued by defence counsel at the trial.

Further documents have subsequently been disclosed demonstrating participation by Small in Operation Crystal beyond that stated in the formal written answer given at the trial. Reliance is placed on the further documentation, together with Ms Veitch’s allegedly evasive answer, to demonstrate a deliberate attempt by C & E to conceal the extent of Small’s involvement. If the conduct is shown to be deliberate, Mr Pardoe submits, the court should readily conclude that the prosecution have been abusing the process of the court.

Counsel for both appellants refer to a number of documents disclosed since the trial in which Small is mentioned:

(a)

On 20 September 1998 he sent an email to another officer:

“DK Distribution are the subject of an active investigation. Should you come across any of their activities during the course of your duties please take no action without reference to me. Can you also let me know which bonds and accounts you are ‘controlling’ as I may be able to prevent you duplicating our efforts”.

b)

Customs officer Mr Evans noted on 6 November 1998 in relation to enquiries.

“Steve Thompson [another customs officer] advised and asked to keep me and Bernie up-to-date on matters”.

There is also a reference in the note to ‘DK Distribution AKA Duo Distribution’.

c)

Another officer comments in a note of 16 November 1998: “Rang Bernie and gave him the information”.

d)

On 18 November 1998 an officer writes, in relation to another officer: “He knows the Belgium Bond and has spoken to Bernie Small”.

e)

On 4 December 1998, Small wrote to Steve Thompson, Northern England IMPEX:

“Please find enclosed 12 AADs from MBN in Antwerp. The company account in Antwerp is in the name of Vici Limited who are of interest to this team but any contact with NEMS would be in the name of Delmac Limited. I know we have discussed this at length but can you have these documents placed in front of a responsible officer from NEMS to say that they have not received these loads”.

f)

In late November and early December 1998, Thompson wrote to Small in each case referring to the seizure of Vici loads. On 2 December “Sam Lord of Deaslon Management Ltd” was mentioned by name.

It is submitted that the documents demonstrate a substantial involvement by Small in Operation Crystal, and a role more central than that of mere intelligence gatherer. Another officer was requested to take no action without reference to Small and Vici were said to be of interest “to this team”. Small was known to be a poor record keeper and the extent of his involvement is unlikely to be reflected in such documents as he kept. It is submitted that Small’s involvement at LCB was such that he is likely to have employed the same techniques as when making enquiries elsewhere. Upon proof of Small’s involvement, and in the light of a deliberate attempt to conceal it, the court should find that its process has been abused.

It is further submitted that MBG were involved in the illicit trade. The further documents, and Small’s known involvement, would have provided scope for cross-examination of Mr de Clerk, the manager at MBG, and Voets. The length of time during which fraudulent consignments from MBG were allowed to continue supported a conclusion that MBG were illicitly involved and that the appellants were entrapped, it is submitted.

On behalf of Beardall, reliance is placed on customs officer Mr Evans’ note of 27 August 1998, now disclosed. He said that he had received a telephone call from Lord: ‘immediately identifying him as an account holder at ET Logistics and a known diverter’. It is submitted on behalf of Beardall that, if Lord was a known diverter, it is more likely that Beardall was duped. Mr Pardoe, as well as the prosecution, submit that Evans must have been mistaken in that respect. We accept that submission. There is no reference to any knowledge in C & E, in the bulk of documentation now available, that Lord was known at that time to be a diverter.

We also accept that Mr Evans must have confused DK Distribution and Duo Distribution. He was mistaken when he referred, in the note of 6 November 1998, to ‘DK Distribution AKA Duo Distribution’. DK were concerned in only one relevant load and that was on 2 September 1998. Duo were involved in about twenty-five loads. DK were peripheral to the investigation and references in the documents to Small’s involvement with DK are of little relevance for present purposes.

Available to the defence and placed before the judge in the course of argument on 15 February 2001 was what has been described as the Barton-on-Sea document. It describes, in some detail, a meeting of customs officers on 8 December 1998, discussing the progress of the enquiry. There are references to the appellants which would have made it most unhelpful from their point of view to place the whole document before the jury. However, what is clear is that Small’s involvement in the investigation was disclosed: “it seems that the EXIRT team and in particular, Ian, Clive, John and Bernie [Small] have been putting the details of this case together for some time. In their opinion this is a major inward diversion fraud that has been going on for at least four months and that they may have moved and got away with between 70/80 loads”. Further investigation was planned.

As appears from the transcript of the hearing before the judge on 15 February 2001, already cited, the allegations against Small were by that time known, though the extent of his conduct at LCB only became fully available in the proceedings before this court already mentioned. While the subsequently disclosed documents on which reliance is placed throw more light on Small’s involvement in Operation Crystal, his participation in the team was already known from the reference in the Barton-on-Sea document which was available at the trial. In terms of his involvement, the documents now relied on make little difference. An attack could have been made on Small at the trial on the basis of the information available, though we accept that the full discrediting of Small occurred only later. That is the new feature and one we bear in mind. What the Barton-on-Sea document does also help to demonstrate is a legitimate, well organised, though complex, investigation, without entrapment and the use of participating informers.

The appellants also submit that documents subsequently disclosed establish that two of the witnesses who gave evidence for the prosecution at the trial, Stephen Doe of ET and Ms Pat Finley of Stanton, in supplying information to C & E, went far beyond what was required of them and they should have been treated as participating informants. We do not propose to refer to the C & E records which indicate what information was supplied by Doe and Finley. It is clear that there were frequent contacts between them and customs officers. We are quite unpersuaded that the material establishes that they should have been so treated or that their conduct supports a submission of entrapment of the appellants. Equally, the material does not assist the case put on behalf of Beardall that his participation in fraudulent activities was or may have been unwitting.

Home Office Guidelines (cited at paragraph 12 in Villiers) distinguish between public spirited citizens and individuals supplying information of value (contacts) on the one hand and informants on the other. The guidelines are not of course binding on the court but provide a helpful background against which to assess the legality of the investigation.

Informants are classified as follows:

“A Confidential Informant (CI)

Is an individual who may have a criminal history, habits or associates, who gives information about crime or persons associated with criminal activity, whether or not for financial reward or other advantage. That individual has the expectation that his/her identity will be protected.

Participating Informant (PI)

Is an individual who has been registered as a Customs and Excise informant, in the knowledge that he may play a part in a crime or its preparation. His role will be disclosed to the defence and he will be expected to give evidence.

Confidential Informant (Participating)

Is a participating informant who has been authorised by the CIO to play a minor role in a crime or its preparation. A confidential informant (participating) will not give evidence or be disclosed to the defence. However, the role of the CI(P) will be fully disclosed to the trial judge”

As to the submission that employees of the bonds were informants, bonds are required to provide C & E with information. Regulation 24(1) of the Excise Warehousing (etc) Regulations 1988 is headed “Information for the Protection of the Revenue” and provides:

“The occupier or the proprietor shall furnish the Commissioners with any information relating to any relevant business or activity of his which they specify or information which they think it necessary or expedient for them to be given for the protection of the revenue”.

In all the circumstances, it is not surprising that Mr Pardoe has thought it necessary, to make good his case, to attack the entire investigation as fraudulent and dishonest.

The first submission is that in the light of the information now available, it would have been unfair to try the appellants. Reliance is placed on the principle that conduct of prosecuting authorities which brings about state-created crime is unacceptable and improper and it is the duty of the court to ensure that it does not happen. The relevant principles were stated in the House of Lords in R v Looseley; Attorney General’s reference (No.3 of 2000) [2002] 1 Cr.App.R 29. Among the factors to be considered in deciding whether there has been an entrapment which is an abuse of the process of the courts are the nature of the offence, the reason for the particular operation by the prosecuting authority and the nature and extent of the participation of that authority in the crime. The greater the inducement held out by the authority and the more forceful or persistent the overtures, the more readily might a court conclude that the boundary had been overstepped (per Lord Nicholls of Birkenhead at paragraph 28).

Secondly, deliberate attempts to withhold relevant material from the court and the defence may also amount to an abuse of process, though of a different kind. Mr Pardoe submits that the court should hold that there has been a deliberate withholding of information in this case. In such circumstances, it was unfair that the appellants be tried.

Mr Pardoe submits that it is inconceivable that Small, who supplied the information which led to the short written statement as to his involvement, can have forgotten the rest of his involvement and whether it was to cause an entrapment. The court should consider why he would seek to minimise his involvement and whether it was to conceal an entrapment. The court should also carefully consider whether it can now rely on full disclosure having been made, including disclosure of Small’s involvement and the involvement of bond holders in the investigation. There was an overwhelming inference that the failure to disclose the investigative role of Small was not accidental, it is submitted.

For the prosecution, Mr Bartlett submits that this was not a case in which the UK bonds were at risk of losing their security or where an indemnity had been offered, as it had been to LCB. The evidence did not establish any wrong doing or participating informing by MBG. Regulation 24 was widely drawn and bond holders knew of the risk of losing their status if they failed to comply with it. Though information beyond the statutory duty may well have been supplied, it was with a view to assisting in the apprehension of offenders and did not involve participation in the crime. Mr Bartlett also submits that the disclosure of large numbers of documents in this case does not involve an admission of their relevance to the issues before the court.

The appellants were experienced businessmen who worked closely together at Beardall’s premises. Their correspondence, records of meetings and schedules demonstrate an active involvement in the fraudulent activities. Reference to the fresh material enhances that impression. A suggestion that either of them was or may have been duped is no more persuasive now, in our judgment, then it had been when the jury considered it at the trial.

This was a prolonged and thorough investigation of a major fraud. The complexity of the fraud was such that the lapse of time before arrests were made is not surprising. We are satisfied that the additional material now available as to the activities of the bond holders during the investigation does not create a doubt as to the safety of the verdicts. It does not demonstrate an abuse of process. We accept the submission of Mr Bartlett for the respondents, that, in cooperating with C & E, the bond holders were doing no more than was legitimate by way of assisting in the detection of crime. McDonald was different in that he was later prosecuted and acquitted but the material does not establish him as a participating informant.

Mr Bartlett submits in relation to Small that his greater involvement in the investigation, now established, does not assist the appellants in the circumstances. He submits that even if Small has deliberately minimised his involvement, the requirements for a stay on the ground of abuse of process would not have arisen and do not now arise retrospectively.

As to Small, while the material now available does not establish that he was controlling Operation Crystal, we accept that his participation was far from insignificant. It is surprising that further particulars of that participation were not supplied by him or, upon enquiry, by other customs officers. However, it is difficult to reconcile a deliberate attempt to conceal with the disclosure of the Barton-on-Sea document with its reference to the EXIRT team “and in particular Ian, Clive, John and Bernie have been putting the details of this case together for some time” [our emphasis]. A calculated attempt to trivialise Small’s involvement would not have permitted the disclosure of that document, which reveals a substantial involvement by Small.

We are far from persuaded that the investigation has been corrupted, or that there has been, by way of entrapment, or withholding of information or otherwise an abuse of the process of the court. We reject the submission that the entire investigation has been and remains corrupt. The investigation has not been corrupted by Small and, in our judgment, the investigation has been competently and properly conducted by the customs officers involved. The situation is far removed from that prevailing in the LCB cases. There is nothing to suggest that the involvement of Small was, in this case, unlike in the LCB cases, pernicious or that it contaminated the integrity of the investigation. Even if, which we doubt, there was an ulterior motive, and an attempt to limit knowledge of the extent of Small’s involvement, it has not upon further enquiry shown to be material or to entitle the court to quash the convictions.

We bear in mind the test in Pendleton in reaching that conclusion. In R v Pendleton [2002] 1 WLR 72, the House of Lords upheld its earlier view in Stafford and Luvaglio v DPP [1974] AC 878 that in fresh evidence cases it is for the Court of Appeal to make a judgment whether the conviction is safe. Lord Bingham of Cornhill, in Pendleton, added the cautionary note that it would usually be wise for the court to test their own provisional view by asking whether the evidence, if given at trial, might reasonably have affected the decision of the jury to convict.

An examination of the new material, against the background of that available at the trial, has not persuaded us that there is any doubt about the safety of the verdicts. We bear in mind the impact which the fresh material would have had upon a judge considering an abuse of process application. We bear in mind the effect the further enquiries and disclosures might reasonably have had upon the deliberations of the jury. Having regard to all the material we have considered, and the submissions of counsel, we find no abuse of process entitling the court to intervene or to hold that the verdicts were unsafe.

For the reasons given, these appeals must be dismissed.