Sheikh, R. v

MR JUSTICE TREACY: These are renewed applications for leave to appeal against sentence made by two brothers, Rafi Asghar Sheikh and Sami Asghar Sheikh. The brothers were convicted after a lengthy trial at Southwark Crown Court in July 2009 of three counts; a count of conspiracy to contravene the provisions of the Copyright Design and Patents Act 1988; a count of conspiracy to contravene the provisions of the Trade Marks Act 1994 and a count of conspiracy to acquire criminal property. The trial judge, His Honour Judge Beddoe, sentenced the brothers on 28th July 2009. In all they were sentenced to a term of 6 years' imprisonment and in each case the judge made a disqualification order pursuant to section 2 of the Company Directors Disqualification Act 1986 for a period of 10 years. This renewed application for leave relates only to the disqualification order which was made.

The brothers were tried alongside their father, Khalid Asghar Sheikh, who was convicted of conspiracy to acquire criminal property, sentenced to 4 years' imprisonment and disqualified for a period of 10 years. He is not an applicant before the court. In the case of Rafi Asghar Sheikh an extension of time is required in which to renew his sentence application. We shall deal with that after having considered the matter on its merits.

The background is as follows. A company by the name of Samrana was incorporated in March 2003. It was a family run business. The two applicants were both directors and were central to the operation and control of Samrana's activities. Their father was a former director of the company but continued to be heavily involved in the day-to-day running of the company. The Crown's case was that Samrana had been involved for a number of years in the illegal production and wholesaling of counterfeit DVDs from its various premises and that those activities had earned the company very substantial revenues. In addition those running Samrana knowingly facilitated the production of counterfeit DVDs by third parties through the sale of the raw materials required to establish DVD factories. The evidence showed that nearly £4 million had passed through Samrana's bank account in cash since its inception, and counsel this morning has accepted before us that the total turnover involved was in the region of £6 million. The Crown alleged that not only had Samrana been concerned in the production and retail of counterfeit DVDs by the conventional burning method, but in addition had purchased specialised industrial replication machinery from Hong Kong in March 2005 so as to enable the company to produce hundreds of thousands if not millions of replica DVDs of a significantly higher quality than is normally produced by counterfeiters. Samrana paid over a million Hong Kong dollars for that plant, machinery and raw materials which included 1.5 tons of polycarbon resin, the principal material from which DVDs are made. The Crown's case was that Samrana had close links with Malaysia, Hong Kong and China and that the machinery involved was highly technical and required expert servicing and operation.

A number of counterfeiting factories were raided by the police and the evidence produced showed links with Samrana. By way of example, in April 2006, one of the largest DVD factories yet found in the UK was raided and the police found 52 burner towers, tens of thousands of counterfeit DVDs, many of them already packaged and labelled for delivery, with hundred of thousands of printed DVDs inserts.

On 13th June 2006 Samrana's own main premises in Harlow and the applicant's home were raided. Further evidence was discovered. At the brothers' home address the police found over £100,000 secreted in various caches together with counterfeit DVDs and other materials. The applicants were arrested.

The judge accepted in sentencing that there was no evidence to suggest that when Samrana was set up early in 2003, that the brothers and their father had any intention other than to operate a legitimate business. There was some evidence of legitimate trading. However, it was equally clear that the operation turned largely to an illegal one within a short space of time and that those activities continued until the date of arrest, in June 2006.

The judge in sentencing observed that the factories at which materials were being produced exploited vulnerable immigrants from China for the purpose of substantial financial reward for those involved in running the scheme. The judge found that these applicants were aware of such exploitation. He also commented that they had derived significant illicit revenue, running into millions of pounds a year, of which they were getting a significant and sizeable share. The judge accepted that these applicants had initially been corrupted by their father but, in the end, saw no reason to distinguish between the three of them. This was a family business. All three knew what each was doing from the outset and they bore a joint responsibility. The judge also had regard to the fact that there was an international element to these conspiracies.

The applicants are of good character. They, of course, lack the mitigation of having pleaded guilty. A trial took place over a period of 10 weeks and both of these applicants gave evidence which the jury plainly did not accept. It would be safe to deduce from those circumstances that up to the point of their conviction they showed no remorse for what they had done.

The grounds of appeal advanced before this court on the renewed application, are that the period of disqualification was too long. The court's attention has been drawn to the decision of this court in R v Millard (1994) 15 Cr App R(S) 445. In that decision this court adopted an analysis made in a Chancery case of three ranges of disqualification which are available to the court in circumstances such as these. The top bracket of disqualification for periods of over 10 years should be reserved for particularly serious cases. These may include cases where a director who has already had one period of disqualification imposed on him fails to be disqualified yet again. The minimum bracket is a bracket of 2 to 5 years' disqualification which should be applied where, although the disqualification is mandatory, the case is relatively not very serious. The middle bracket of disqualification, for a period between 5 and 10 years, should apply for serious cases which do not merit the top bracket. The judge assessed that this case fell into the middle bracket of disqualification. The complaint made is that the judge imposed a period of disqualification which was right at the top of that middle bracket.

The submission is made to us that, first of all, the business had been set up on a legitimate basis to start with, although it quickly degenerated into one which was essentially illegal in nature. Secondly, reliance is placed on the fact that both of these applicants are still young men. Rafi Asghar Sheikh being now 27 years of age and Sami Asghar Sheikh now being 29 years of age. It is pointed out that when Samrana was started Rafi Asghar Sheikh would have been 20 years of age and his brother 22. It is submitted that these brothers have considerable ability and business acumen and that therefore the court should reduce the period of disqualification so as to enable them to put those abilities to good and honest use in the future.

In our view, this was a serious and sophisticated dishonest activity which was carried out over a number of years and which only ceased on detection. These applicants were the guiding lights of that operation and the scheme crossed international boundaries and exploited vulnerable people within this jurisdiction. It involved huge gains for the perpetrators and commensurate losses for others. Even on the basis that Samrana was not set up as a dishonest enterprise from the start, it soon became the vehicle for very sustained dishonesty.

These applicants lacked the mitigation of a guilty plea and have shown no remorse or regret for their conduct. When their age and previous good character are relied on, these are plainly counterbalancing factors. We have, as I have said, taken account of the decision in Millard and observed that the period imposed here is at the top of the middle bracket. However, this was an enduring fraud on a significant scale, intended to make huge sums for the applicants and involve, as we have said, an international element. No doubt the applicants are young men with drive and ability but their efforts so far have been devoted to a wholly dishonest way of life. The judge's sentencing remarks show how seriously he regarded their course of conduct.

Given all the circumstances, we are not persuaded that the judge fell into error. He had the benefit of seeing these defendants and assessing the circumstances of the case over a period of 10 weeks. His view therefore should not be lightly interfered with. He did not put this case into the top category and, in our view, was justified into assigning this case to the middle category identified in Millard and at the top of that bracket. The term of disqualification imposed was severe but, in our judgment, deservedly so. We therefore dismiss these applications in the case of both applicants and in the case of Rafi Asghar Sheikh, we dismiss his application for an extension of time in the light of the lack of merit in this application.

MR ROUSE: My Lords, there is an application for costs from the respondents in the sum of £400 per applicant?

SIR ANTHONY MAY: What do you say about that Mr Chinn?

MR CHINN: My Lords, plainly they are serving prisoners at the moment. They do not have much if anything by way of means. I appreciate your Lordships' judgment is against the application but it has been taken obviously on advice. We would invite your Lordship to say that as there are no funds immediately available and the confiscation hearing is pending in any event, such sums they do have which are realisable are liable to be taken from them or a period of imprisonment in default. So we would invite your Lordship to say that in all the circumstances, it would not be right to order costs personally against them?

SIR ANTHONY MAY: Was there any court requirement, Mr Rouse, for the prosecution to spend money on this case?

MR ROUSE: I am instructed we were asked to attend but I have no more information.

SIR ANTHONY MAY: Mr Bishop do you want to say anything about costs?

SIR ANTHONY MAY: Mr Rouse, we do not make an order for costs.

MR CHINN: Thank you very much.