Mirchandani, R (on the prosecution by) v Somaia

On 13 June 2014, at the Central Criminal Court before Judge Hone Q.C. and a jury, the applicant, Ketan Somaia (now aged 55), was convicted of nine counts of obtaining a money transfer by deception, as follows: by a majority (11-1) on counts 1 and 8; by a majority (10-2) on count 10; and unanimously on counts 2, 4, 5, 6, 9 and 11.

On 22 July 2014, he was sentenced to 8 years’ imprisonment concurrently on each count.

His appeal against conviction was dismissed by the full court on 22 April 2016.

He was acquitted by the jury of counts 3 and 7 (obtaining a money transfer by deception). Counts 12 and 13 (perjury) were ordered to lie on the file, subject to the usual terms.

On 12 January 2016 in confiscation proceedings under the Criminal Justice Act 1988 (“CJA 1988”) the applicant was found by the judge to have benefitted in the sum of £20,434,691. He was deemed to have realisable assets in the same amount and accordingly a confiscation order was made in the sum of £20,434,691, to be paid within 6 months, with a period of 10 years’ imprisonment in default. £18,220,723 of the confiscation order was directed to be paid by way of compensation in favour of the victim, Murli Mirchandani and £200,233 in favour of Dilip Shah. Given its relevance to an aspect of the present application, the relevant part of the judge’s order relating to compensation was, however, in the following terms:

“2.

In addition, a compensation order in the sum of £18,220,723 in favour of Mr Murli Mirchandani.

a.

The defendant shall pay the said sum within 6 months of this order.

b.

In default: six years’ imprisonment ((of which the defendant will serve half) consecutive to the current sentence for the offending, consecutive to the term of imprisonment in default of payment of the confiscation order and concurrent to the term of imprisonment in default in relation to the compensation order in respect of Mr Shah).

3.

Further, a compensation order in the sum of £200,233 in favour of Mr Dilip Shah.

a.

The defendant shall pay the said sum within 6 months of this order.

b.

In default: three years’ imprisonment ((of which the defendant will serve half) consecutive to the current sentence for the offending, consecutive to the term of imprisonment in default of payment of the confiscation order and concurrent to the term of imprisonment in default in relation to the compensation order in respect of Mr Mirchandani).” (emphasis supplied)

In the present proceedings, Somaia renews his application for leave to appeal against the confiscation order after refusal by the single judge, who granted an extension of time (21 days) in which to make the application. 

Given the focussed nature of the issues raised on this renewed application, only a short summary of the background facts is necessary.

Over many years, the applicant and Mirchandani were involved in several bitter disputes, involving wide-ranging litigation in various jurisdictions. Mirchandani, a businessman with companies in the Middle East and Africa, brought a private prosecution against the applicant, following various suggested frauds. He alleged that the applicant had dishonestly obtained monies from him over a period of 14 months between June 1999 and August 2000, as detailed in the nine offences of which the applicant was convicted. The total sum of the frauds amounted to just over £12.25 million. There was a second victim, Dilip Shah.

Mirchandani suggested that loans and various supposed long-term investments had been induced by fraudulent and dishonest representations on the part of the applicant. In his defence, the applicant disputed any dishonesty and maintained that Mirchandani was an experienced businessman and investor. He contended that the latter freely entered into the various relevant transactions, with his eyes wide open, accepting any commercial risks involved, as would apply with any experienced businessman.

A range of issues arose during the confiscation proceedings.  First, the applicant drew attention to the position of the private prosecutor. He contended that the use of the regime established under the CJA 1988, and particularly the power of self-certification under section 71(1)(a) and section 72AA by a private prosecutor to secure benefit for himself by way of compensation, was inconsistent with the role and the powers of someone prosecuting a case in the criminal courts. 

 Under the CJA 1988, in contrast to the position under the Proceeds of Crime Act 2002 (“POCA 2002”), the prosecutor is required to certify the appropriateness of making the assumptions under section 71, and the applicant contended that a private prosecutor is unable properly to discharge this quasi-judicial role.

The judge concluded, however, that a private prosecutor was not in a position of irremediable conflict and that the certification in this case under sections 71 and 72 was valid. He was particularly asked to consider two authorities, to which we will return in greater detail later in this judgment. In brief at this stage, the judge concluded that R v Zinga [2014] EWCA Crim 52; [2014] 1 Cr. App. R. 27; [2014] 2 Cr. App. R. (S.) 30 demonstrated that the prosecutor has the right to certify, albeit subject to consideration of whether this involved an abuse of process or unresolvable conflict of interest. Innospec Transcript 26 March 2010; [2010] Lloyd's Rep FC 462; [2010] Crim LR 665, a cartel case which did  not involve any individual victims, was treated by the judge as being easily distinguished on its facts from the present case. 

The judge considered the nature of the court’s discretion when making the statutory assumptions under section 72AA. The applicant contended that rather than having a duty to make assumptions, subject to the exercise of a very limited discretion, the court instead had a broad discretion not to make the assumptions. Furthermore, he argued that the assumptions in section 72AA (4) should not be applied. The judge determined that the terms of section 71(1C) envisaged either ongoing civil proceedings or an intention that the victim would commence such proceedings, neither of which was the case here, and as a result he was satisfied that the court was acting under a duty, rather than exercising a power. He concluded that the assumptions in section 72AA (4) should only be displaced if the defendant satisfies any of the relevant matters in section 72AA (5) (viz. the assumption is incorrect, the benefit has already been the subject of a confiscation order or there would be a serious risk of injustice). However, on the basis there was a general discretion, he indicated that even bearing in mind the matters on which the applicant relied (the ancient nature of the proceedings, the offences predating the ‘relevant period’ and the loss of germane material), he would not have exercised it in favour of the applicant.

It was agreed that the benefit figure from the nine offences of which the applicant had been convicted, adjusted to present day value, was £18,420,956. However, this was potentially only the starting point. There was also evidence of various loans; monies that passed through various bank accounts; and tainted gifts. The applicant had been shown not to have held assets in his own name, but rather to have used family members, staff and advisers as a front or as nominees to evade tax and to conceal his personal beneficial interests. He had benefitted from sums which represented unpaid tax on monies received from legitimate sources. The non-resident tax scheme, according to the prosecution’s tax expert, provided for the payment of 20% tax on UK sourced income. The judge applied this tax rate.

The applicant had received monies unlawfully from, amongst others, two companies: Neptune Finance Ltd and T Bro Investment Ltd, both controlled by a man called Bharat Thakrar, a successful businessman in his own right, whose businesses had a turnover of £300 million. The applicant’s sister, Sejal Padania, asked Thakrar for a loan using “one of her properties (2 Bishop Ramsey Close)” as security. In evidence, Thakrar maintained this was simply a transaction between friends. The judge determined it had all the hallmarks of a front. There was no mortgage application or any supporting documentation. The arrangement, the judge said, was for Thakrar to allow Padania to recycle funds from the applicant’s general criminal conduct through Thakrar’s corporate structure. The total amount of transfers from Thakrar amounted to £510,764.

The applicant also contended that monies totalling £383,279 received from entities known as Exmoor Properties, Muzoon Holdings and Derwick Associates were received legitimately in return for his consultancy work. The judge concluded that documents submitted to support the claim of legitimate consultancy payments in Dubai were insufficient to justify the substantial sums claimed. The judge found that the assumption had not been displaced and the sums could properly be regarded as general criminal conduct rather than genuine consultancy payments.

Taking the entirety of these additional monies into account the total benefit was calculated to be £20,434,691.

The applicant asserted during the trial that he had no assets at all. This stance was slightly modified in the confiscation proceedings, in that he accepted very limited assets. He disputed that any of his assets were hidden. The applicant said that he used the monies that were the subject of the indictment to support the businesses within the Dolphin Group. It is to be noted in this context that the applicant was the Chief Executive of the Dolphin Group of Companies and when in London he used 77 Brook Street, Mayfair as his office. The prosecution alleged that the very significant amounts received from unknown and unidentifiable sources were likely to be indicative of the applicant having further assets which were hidden and undeclared.

In these circumstances, the question for the court was whether the applicant had proved that there were no hidden assets, the burden resting on him. The judge concluded that the evidence did not support any substantial transfers to the Dolphin Group or the Delphis Bank in Mauritius; instead there was ample evidence that the applicant kept the money for his own purposes. The defence explanations in the responses, the judge observed, were “opaque in the extreme and suggestive of hidden assets”. 

The judge determined that there were hidden assets but their true extent was totally unknown. There was no evidential basis on which he could conclude that the realisable amount was less than the value of the benefit. Accordingly, a confiscation order was made in the sum of £20,434,691 with a default period of 10 years’ imprisonment to run consecutively to the substantive sentence. As set out above, the judge made compensation orders in favour of Mirchandani and Shah for £18,220,723 and £200,233 respectively, with concurrent default terms of 6 years’ and 3 years’ to run consecutively to the 10-year default term.

The core documents filed in support of this appeal are the Application for Leave to Appeal against Sentence: Confiscation Order Imposed Pursuant to Part VI Criminal Justice Act 1988 dated 18 January 2017 and a supplementary document, dated 16 March 2017, that adds a ground relating to the Financial Investigator’s calculations in the context of the changes in the value of money.

This first ground relates to the prosecutor’s alleged conflict of interest. As before the trial judge, it is argued the court was wrong to allow this private prosecutor to serve a notice under section 71(1)(a) CJA 1988 to the effect that it was appropriate for the court to make a confiscation order. Similarly, it is contended that it was wrong for the prosecutor to serve a notice containing a declaration that it was an appropriate case for the application of the assumptions under section 72AA CJA 1988.

Mr Trollope Q.C., for the applicant, highlights that the prosecutor is the principal prosecution witness and the loser, or victim, of the frauds perpetrated against him. It is argued that his position is to be contrasted with that of a public prosecutor, such as the CPS, whose function is to conduct prosecutions in the public interest and who are subject to the code for Crown Prosecutors. It is emphasised that, as part of the sentencing process, the concerns of victims are usually communicated to the court by way of a Victim Personal Statement which is subject to the Code of Practice for Victims. The material from the victim ought not to include a view as to the appropriate level of sentence. Ordinarily the victim does not control, dictate or, in any similar way, directly influence the sentence of the court. In summary, it is contended that when the victim is the prosecutor, these statutory arrangements become ineffective. 

Mr Trollope summarises his contentions in this regard at paragraphs 11 and 12 of the Application for leave to appeal against sentence:

“11.

The issue thus is that P, who served the notice […], had a powerful personal interest in seeking to recover extremely substantial losses and was thus highly motivated in utilising the draconian statutory provisions of the CJA to recover them. That motive inevitably predisposed P to serve the notice and was very likely to override any countervailing considerations. P’s primary motivation in bringing this case was to enforce his previous civil claims. That is not a proper reason for bringing a prosecution. Whilst not an abuse of process in this case, it substantially affects P’s judgement qua prosecutor. The methods employed in P’s case in bringing these proceedings are expressed and exemplified by email exchanges between P and those assisting him in taking action against KS. Examples include;

a)

Undertaking obvious and covert surveillance

b)

Using the media/press to make ‘exposes’ about KS

c)

Using media blogs to detail his corruption

d)

Slowly building pressure without creating a situation where he/they could be accused of extortion.

e)

MM wanted revenge through publicly discrediting KS

f)

Use of ‘further pressure tactics’ and the need to do much more than those already applied.

g)

A plan to inflict pain and disruption on KS

h)

Applying pressure to his associates and family members

i)

Use of force/unspecified pressure to gain access to KS

h)

Getting KS to settle or face a long term prison sentence

12.

Moreover it was also very much to P’s advantage if the court proceeded to make the assumptions under the provisions of s72AA. Any opinion of his as to the appropriateness of applying the assumptions was inevitably flawed on the grounds of bias.”

The applicant relies on the judgment of Thomas LJ (as he then was) in Innospec. In that case, the court was concerned, not with a case involving individual victims, but instead with a conspiracy to make corrupt payments to public officials of the Indonesian Government to secure contracts for the supply of lead (TEL). Thomas LJ set out in that case why it was that the Director of the SFO correctly accepted that the court should determine whether to impose a fine in preference to a compensation order, for two reasons, the second of which it is instructive to quote in full: 

“36.

(…) ii) For the Director to have preferred confiscation to a fine, in circumstances where Innospec Limited was unable to pay both a fine and the confiscation amount, would have given rise to a very considerable conflict of interest incompatible with his independent duties as a prosecutor. Under what is somewhat surprisingly called an “incentive scheme”, the proceeds obtained from a confiscation order are, once collected by the Ministry of Justice, distributed to the Home Office in accordance with an agreed protocol with HM Treasury. That confiscation income is then distributed by the Home Office who retain 50% passing 18.75% to the prosecuting authority and 18.75% to the investigating authority and 12.5% to Her Majesty's Court Service. As the Serious Fraud Office is both the investigating and prosecuting authority, 37.5% of the confiscation amount in this case would go to the SFO, it would form part of the income of the Office. In those circumstances, although in general this would not affect the duty of a prosecutor to initiate confiscation proceedings, there would be a clear conflict of interest, if a prosecutor were to give notice requiring a court to proceed to confiscation rather than a fine, as fines are paid to and retained by HM Treasury. No independent prosecutor, exercising the quasi judicial function in determining whether to issue a notice, could properly issue one in such circumstances. The position of the court administration is quite different; for example, no benefit to the court administration is in fact provided by this scheme, as the income of Her Majesty's Court Service is guaranteed by the Ministry of Justice, irrespective of the amounts paid to it under the so called “incentive scheme”.” (emphasis supplied)

It is to be remarked immediately that the court in Innospec did not deal with the position of private prosecutors and instead it addressed an “incentive scheme” that provided for the distribution of the proceeds of a confiscation order, when that route had been selected instead of imposing a fine.

In Zinga, Virgin Media Limited brought a private prosecution for the offence of conspiracy to defraud when the defendants sold Virgin set top boxes with illicit software which enabled those who had not subscribed to premium services to obtain these without payment to Virgin. Virgin entered into an agreement with the Metropolitan Police under which the company agreed to make a cash donation to the Met Police of 25% of any sums recovered under a compensation order. It sought a compensation and a confiscation order, albeit it later abandoned the former and pursued solely the proceedings for confiscation which would inure to the benefit of the Crown, but subject to the incentive scheme already described in the quotation from the judgment in Innospec. The court concluded it was lawful for a private prosecutor to conduct confiscation proceedings, as follows: 

“52.

Given the fact that the only benefit of the confiscation proceedings inured to the benefit of the state as no compensation or other recompense was sought by Virgin, there is no basis on which it can be contended that the agreement with the Metropolitan Police Authority gave rise to any abuse of process.”

 It was observed that in the overwhelming majority of these cases, the pursuit by a prosecutor of confiscation proceedings will serve the public interest to the same extent as that of the prosecutor [59]. The court directly addressed the situation in which the prosecutor has his own private interests to serve: 

“60.

However, there may well be cases where concern arises as to the interrelationship between the prosecution in the public interest and claims for recompense by the private prosecutor for its own benefit. Although claims for a compensation order are not likely to be common in view of the limited nature of the order, it is always open to the private prosecutor to seek recompense in the confiscation proceedings in the way set out in Jawad (see paragraph 41 above). 

61.

In such cases the court can in part rely on the professional duties of the advocates and solicitors under their professional codes and on the duties owed to the Court. These are examined in detail by Sir Richard Buxton in The Private Prosecutor as a Minister for Justice” [2009] Crim LR 427. Advocates and solicitors who have conduct of private prosecutions must observe the highest standards of integrity, of regard for the public interest and duty to act as a Minister for Justice (as described by Farquharson J) in preference to the interests of the client who has instructed them to bring the prosecution. As Judge David QC, a most eminent criminal judge, rightly stated in R v George Maxwell( Developments) Ltd [1980] 2 All ER 99, (1980) 71 Cr. App. R. 83, in respect of a private prosecution: 

“Traditionally Crown counsel owes a duty to the public and to the Court to ensure that the proceeding is fair and in the overall public interest. The duty transcends the duty owed to the person or body that has instituted the proceedings and which prosecutes the indictment.” 

There is no place in such a prosecution for what some have claimed as “end to end” case management on behalf of the client who has initiated a private prosecution. 

62.

But the discharge of these duties will not always be sufficient, even if they are carried out; as the appeal against conviction in the present case demonstrated, that is not always the case. Ultimately, as the decision in Waya makes clear (as set out at paragraph 34 above), it is for the court to ensure that an order is not disproportionate and the proceedings are not abused. In a case such as Jawad where the prosecutor is the Crown, there can be no conflict of interest in seeking recompense for the victim in the course of the confiscation proceedings. That may not be the case where the private prosecutor seeks compensation by way of order or some other form of recompense from the defendant in the course of confiscation proceedings in the manner suggested by Jawad. The prospect that the confiscation order with its penal sanctions can be reduced by paying compensation could be seen as a powerful incentive for a defendant to agree to such a proposal advanced by a private prosecutor. 

63.

In private prosecutions where compensation or recompense is made by the defendant, given the duty which was held in Waya to rest upon the court, a court must carefully consider whether it requires assistance, as it has no machinery of its own to carry out any inquiries. In such a case where the court, after due consideration, asks for such assistance from the CPS, we trust that the Director will use the powers given to intervene in the proceedings either by taking over the proceedings or assisting the court. The Director has indicated through counsel to us that she will carefully consider any request from a sentencing court. She will also reconsider guidance on this subject. If difficulties do arise in any particular case, then this court will always be able to review the issue on any appeal and use its power, if necessary, under s.3 (2) (f).”

Mr Trollope reminded the court that in Zinga the court was considering the provisions of Proceeds of Crime Act 2002, as opposed to section 71 (1)(a) or section 72AA (1)(b) CJA 1988, and thus the court in that case did not have to consider the implications of these provisions. Nonetheless, it is stressed that in Zinga the private prosecutor abandoned the claim for compensation and proceeded with the confiscation claim alone. Further, Mr Trollope underscores that in Zinga the investigation was conducted by a police force, whilst in the instant case the prosecutor both prosecuted and investigated. 

Against that jurisprudential backcloth, it is contended that the authorities strongly support the proposition that the present prosecutor laboured under an irreconcilable conflict of interest. Mr Trollope emphasises that it was to the prosecutor’s advantage to recover his substantial losses, and he would have a clear preference for the court to make a confiscation order rather than impose a fine, and for the application of the statutory assumptions. It is suggested that this fatally undermines the prosecutor’s quasi-judicial position when making an application under section 71(1)(a) and section 72AA (1)(b).

We do not agree.  Our starting point is the decision of Buxton LJ (who gave the judgment of the Court) in R v Belmarsh Magistrates' Court, ex parte Watts [1999] 2 Cr App R 188 when, at p.200, he observed that: “[…] a private prosecutor […] is still a prosecutor, and subject to the same obligations as a minister of justice as are the public prosecuting authorities”. More recently, in R (Gujra) v Crown Prosecution Service [2012] UKSC 52; [2013] 1 AC 484 Lord Neuberger of Abbotsbury PSC set out (at [68]):

“There is no doubt that the right to bring private prosecutions is still firmly part of English law, and that the right can fairly be seen as a valuable protection against an oversight (or worse) on the part of the public prosecution authorities, as Lord Wilson JSC acknowledges at paras. 28 and 29, and Lord Mance JSC says at para. 115.”

As Mr Talbot Q.C. for the Crown submits, private interests are, to some degree, almost invariably inherent in the bringing and conduct of private prosecutions. Sir Richard Buxton opined in an article entitled The Private Prosecutor as a Minister of Justice, [2009] Crim LR 427, at p.427: “A private prosecutor will almost by definition have a personal interest in the outcome of a case”.

In this case, the private prosecutor was represented throughout by reputable solicitors and experienced leading and junior counsel (William Boyce Q.C and Rachna Gokani, instructed by Edmonds Marshall McMahon). They would have understood the need to conduct themselves as if they were acting on behalf of the state. The trial judge reassured himself that the solicitors and the barristers they instructed were progressing the case in a professional and principled way, observing the duties owed to the court. It is of note that in September 2012, the relevant Deputy Chief Crown Prosecutor reviewed the evidence in the case and concluded there was no need for the CPS to take over the prosecution. Mr Trollope expressly accepts that there is no question of a breach of counsel’s duty in this case, still less of impropriety.

On this issue, the trial judge concluded: 

“In my judgment sufficient safeguards have been put in place by experienced solicitors and both leading and junior counsel to conform to the duties of disclosure and to guard against potential abuse of process. The fact that in Zinga the Prosecutor (Virgin) disavowed any claim to compensation is explained by the fact that the object of the prosecution was to protect the Prosecutor’s intellectual property. The authority of Innospec is easily distinguished from the facts of this case.  Innospec was a cartel case and there was no individual victim.  This private Prosecutor has rights as a victim and as Mitchell in particular makes clear, the policy of the legislation is to put the victim first by way of compensation. The authorities all emphasise that at the end of the day it is for the Court to ensure that an order is neither disproportionate nor an abuse of process, nor inherently unfair. I therefore conclude that this private Prosecutor is not irremediably conflicted and that the certification in relation to s.71 and s.72 is valid.”

We consider these conclusions are entirely sustainable. Additionally, we note the applicant did not apply to the court for the CPS to take over the sentencing and confiscation proceedings. Indeed, the applicant’s solicitors approached the Serious Fraud Office, the City of London police, the Metropolitan Police Service and others to request assistance with, or for them to take over, the confiscation proceedings. No agency was prepared to assist within the time available.

Furthermore, we observe that the prosecutor could only benefit from a compensation order and not from a confiscation order (the proceeds of a confiscation order can never be paid to a private prosecutor). The compensation order is not the subject of an appeal.

In our judgment, what happened in the instant case was entirely permissible. It is for the court to consider whether it requires assistance and to ensure that the proceedings are not abused. These two requirements provide a vital protection, and there is no rule that a private prosecutor is, as a matter of principle, barred from pursuing a confiscation or a compensation order. Instead, it is for the court to judge whether it is appropriate for the private prosecutor to conduct the sentencing, confiscation and compensation stage of the proceedings, in addition to the trial.

Two subsidiary points are advanced under this ground of appeal. First, it is averred that the judge wrongly concluded that he had a duty to make an order, given the applicant had initiated civil proceedings in the High Court against the applicant in 2000 and he had obtained world-wide injunctive relief, as well as taking civil proceedings against the applicant in other jurisdictions. Mr Trollope suggests that, given the language of section 71 (1C), it is irrelevant that those proceedings were historical in nature and were not “ongoing”.

The judge concluded on this issue as follows: 

“6.

A glance at the litigation chronology given to the jury coupled with the more extensive analysis prepared by Ms Gokani shows that the Chancery Division proceedings lapsed long ago when the freezing orders were discharged. Also civil proceedings issued in Dubai concluded with a judgment enforceable only against the corporate defendants not KS personally. On 23 February 2001 the Vice Chancellor set aside the service of the claim form in the UK civil proceedings and it follows that no resurrection of those proceedings would now be possible. […]”

The judge then indicated that:

“ […] the terms of Section 71(1C) contemplate ongoing civil proceedings or an intention to commence such proceedings and neither is the case here.”

The judge additionally determined that if he was wrong as to whether he had a duty to make the order, he would have exercised his discretion in favour of doing so: 

“7.

It should not be forgotten that KS left the UK in 2003 and on 14 January 2006 there was a formal extradition request to the Kenyan Government to extradite KS to UK but at some time after March 2006 the request was unsuccessful. In 2008 KS was detained in Mumbai and in April 2009 the Chief Magistrate recommended that KS be handed over. On 8 July 2009 KS was formally extradited to UK without challenge. Just five days later on 13 July 2009 Peters and Peters were consulted by MM and shortly after were instructed to initiate a private prosecution. It is a reasonable inference that for a number of years KS was intentionally avoiding process since MM was not the only individual pursuing him.

8.

Even if I am wrong in my view that Section 71(1C) does not apply, and therefore the Court would be acting under a power rather than a duty to proceed to confiscation, I would still in the circumstances be satisfied that on the exceptional circumstances in this case, an extension of time should be granted.”

In our judgment, the approach of the judge to this issue was correct. The objective of the legislation is for the criminal courts to confiscate the benefit of the defendant’s crime, save that the court has a discretion to take into account concurrent or impending civil proceedings brought by the victim. It would defeat the clear purpose of the legislative provision if the duty on the court was removed because of earlier proceedings that are no longer in existence and which would have no impact on the monies that should be recovered from the defendant.

The second subsidiary argument raised by Mr Trollope under Ground 1 is to the effect that the judge erred in deciding he had no general discretion as to whether the assumptions should be applied under section 72AA (3) and (4). It is argued that he also erred in concluding that the assumptions should not be made only if the defendant displaces the assumption under (5). Having set out parts of section 72AA, the judge observed in paragraph 12 of his Ruling of 12 January 2016:

“[…] I do not think (section 72AA (3) gives the court the general discretion contended for. Only if a defendant satisfies either limb of section 72AA (5) will the assumptions be displaced. The assumptions “shall not” be made if, under Section 72AA (5), the defendant shows either that the assumption is incorrect or that the court is satisfied that there would (for any other reason) be a serious risk of injustice if the assumption is to be made. I do not think that the three “very unusual” features set out by the defence (ancient proceedings, offences predating the relevant period and loss of material) would justify the exercise of a general discretion, even if I found such a discretion existed. […]”

It is suggested by Mr Trollope that the wording of section 72AA (3) is plain:

“[…] the court may, if it thinks fit, determine that (subject to subsection (5) below) the assumptions specified in subsection (4) below are to be made […]”

He argues that the word ‘may’ clearly implies a discretion as to whether the assumptions are made, and that the phrase ‘if it thinks fit’ reinforces the interpretation that the court has a power and not a duty.

Furthermore, it is contended that subsection (5) makes it plain that it is only after the court has determined the assumptions will be made (in other words it has exercised its discretion) that it is prevented from making an assumption when it is shown to be wrong or where it would be unjust.

It is unnecessary to resolve whether the judge erred in concluding that section 72AA (3) does not create a “general discretion”. Instead, the determinative factor is that it was inevitable that the judge would exercise his suggested discretion in favour of making the assumptions. The foundations for taking this step were patently satisfied: during his evidence at trial, the applicant stated that it was his practice, even when his personal wealth was of the order of $100m and he controlled companies with a total annual turnover of $250m, to ensure that not a penny of his wealth, assets or income was held in his own name; and, during his evidence during the confiscation hearing, the applicant stated that the fact that he sought comparatively small sums of money from others was no indication that he did not have substantial personal assets. Given that striking evidence, and according due weight to the matters relied on by the applicant, it would have been perverse for the judge not to make the assumptions. Furthermore, the judge expressly indicated that on the facts of this case he would have exercised his discretion in favour of making the assumptions if he was wrong in his conclusion that there was no “general discretion”.  

The applicant asserts that the court erroneously calculated the amount relating to criminal benefit, by wrongly applying the assumptions under the CJA 1988. There are two categories of monies in this regard: i) unpaid tax from rent paid by various companies on property in Brook Street, and ii) the amount liable to tax on the amount sent to the applicant as a result of the ‘Pattni Settlement’ and following the sale of the Dolphin Group’s assets.

Taking the rental property first, it was common ground that the applicant had not paid tax in this country during the relevant period. The central issue in question on this aspect of the ground of appeal is whether the failure by the applicant to declare this rental income for tax could properly result in a finding that he derived relevant benefit from the commission of a criminal offence. 

The judge acknowledged that none of the relevant companies were involved in the criminal enterprises of the applicant. Instead, he concluded the applicant had decided, from the outset, not to pay tax, and that this amounted to a cheat on the revenue; put otherwise, there had been criminal conduct in the form of an inchoate offence when he received this rental income with the fixed intention not to declare it to HMRC and to evade tax. He determined that this was a pecuniary advantage within the terms of section 71(5) and could, in consequence, be treated as general criminal conduct: 

“(5)

Where a person derives a pecuniary advantage as a result of or in connection with the commission of an offence, he is to be treated for the purposes of this Part of this Act as if he had obtained as a result of or in connection with the commission of the offence a sum of money equal to the value of the pecuniary advantage.”

Contrary to the submissions of the applicant, the operation of section 71(5) CJA 1988 is not subject to section 71(1E), which provides the definition of “an offence of a relevant description” for the purposes of section 7(1). In contrast, section 71(5) is directed at determining the monetary value of any pecuniary advantage arising from a criminal offence committed by the defendant. Moreover, it is to be emphasised that the court was not limited in this context to those offences of which the applicant had been convicted in determining the extent of the benefit from relevant criminal conduct (see section 72 AA (6): “Where the assumptions specified in subsection (4) above are made in any case, the offences from which, in accordance with those assumptions, the defendant is assumed to have benefited shall be treated as if they were comprised, for the purposes of this Part of this Act, in the conduct which is to be treated, in that case, as relevant criminal conduct in relation to the defendant”). It was argued by the applicant that the judge was not entitled to take account of any benefit in relation to which the defendant had not been convicted. This is to ignore the whole purpose of section 72AA which was to extend the reach of the confiscation powers under the 1988 Act to property held by the offender which is the result of other offending, in respect of which he had not been convicted nor had (formally) taken into consideration.

The court judged that the criminal pecuniary advantage obtained by the applicant in this context was limited to the 20% of tax evaded, rather than the global rental sum, and that the assumption to be made under section 72AA (4) was accordingly 20% of the overall amount (see the Ruling paragraph 35). Criticism is made of the judge in having adopted this approach, and for determining that this represented a proportionate conclusion. We are unable to accept these submissions. R v Dimsey and Allen (2000) 1 Cr App R (S) 497 is clear authority for the proposition that when a fraudulent scheme to cheat the revenue leads to the evasion of tax, the unpaid tax was a “pecuniary advantage” within section 71(5). Moreover, this conclusion is consistent with the approach to proportionality taken by the Supreme Court in R v Waya (2012) UKSC 51; (2013) 1 AC 294. (See also R v Smith (David) (2001)UKHL 68; (2002) 1 Cr App R 35). The prosecution argued that the applicant was liable to pay an order for the overall amount – not merely the tax – but it is unnecessary for us to determine that issue, given it is incontestable the applicant was liable for the 20% tax. 

We accept the contention of the Crown that the assumptions had been correctly applied in this instance, and that the applicant had benefited from relevant criminal conduct (cheating the revenue) and that he had benefited in the way identified by the judge.

Turning next to the Pattni Settlement monies, it is contended that the judge erred in holding that a percentage (viz. the amount liable to tax) of the amount sent to the applicant as a result of the Pattni Settlement upon sale of the Dolphin Group’s assets constituted a benefit.

The judge concluded that Kamlesh Pattni purchased the assets of the Dolphin Group from the applicant in Kenya. He accepted those monies had not been derived from the applicant’s general criminal conduct, and in consequence he concluded that the statutory assumption should only relate to the 20% tax evaded (based on the expert evidence of Ms Churchill). In our view, the same considerations apply to these sums as those relating to Brook Street, and in the circumstances the determination of the judge is incontestable. Furthermore, on the materials put before this court, there is nothing that would justify reversing or varying the finding by the judge that the proceeds of the settlement were received in the UK by the applicant and were liable to UK taxation, notwithstanding the suggestion that legal fees (£849,000) were paid to the negotiating solicitors: the judge accepted the evidence of Ms Churchill that the bulk of the Pattni monies were received by the applicant in this country.

Finally as regards unpaid tax under this ground of appeal, the applicant raises the receipts from Lyca Mobile, and submits that the judge was wrong to conclude that unpaid tax on receipts amounting to £250,000 from Lyca Mobile was a benefit from relevant criminal conduct. We are reminded that the defence case was that these amounts were paid in respect of consultancy fees in respect of the takeover of four radio stations. This was accepted as being genuine. In all material respects, the arguments on this issue are identical to those set out above, as is our determination that the judge was entitled to treat the unpaid tax as a benefit. 

We turn next to the arguments concerning Bharat Thakrar, S and M Padania, T Bro Investments, Neptune Finance and 2 Bishop Ramsey Close. The learned judge found that Thakrar is a successful businessman. He is a director of 103 companies and a close friend of the Somaia family. There are close familial relationships between the Padanias and the applicant (Sejal Padania is the applicant’s sister). Thakrar was a 50 % shareholder in Neptune and a 100% shareholder in T Bro. His business turnover from the companies was about £300m. T Bro Investments had its own bank account at Barclays through which many millions of pounds passed from unknown sources.

The central argument raised by the applicant in this context is that there was no sustainable basis for concluding that monies provided by Thakrar to the applicant were anything other than legitimate loans by someone who was well known to his family. In particular, it is contended that there is no evidence that the monies originally came from the applicant.

The judge was required to form his own independent judgment on the evidence, and he described Thakrar as a reluctant and evasive witness. Despite repeated requests, Thakrar failed to provide documents which he referred to in evidence. After an extensive review of the main relevant transactions, the judge concluded that there were unsatisfactory features to the many supposedly legitimate business transactions. He found that the applicant played a particularly prominent role in relation to a suggested loan of £500,000 to Sejal Padania, whilst simultaneously ensuring that his own name did not appear on any of the documents. The highly informal nature of the dealings by Thakrar with the applicant did not match any other loans by companies controlled by Thakrar. There was no application form, no written offer letter and no contract. The judge concluded that Thakrar would not have behaved in the “cavalier” financial manner revealed by the evidence if he had been dealing with his own monies. Overall, he did not accept that the arrangements were genuine, and in one notable instance he described them as having all the hallmarks of a “front”, with the objective of enabling the applicant to recycle the funds from his general criminal conduct through the corporate structure run by Thakrar, a device that was typical of the modus operandi of the applicant. Moreover, the judge concluded that the evidence revealed clear hidden assets, and the applicant had engaged in a post-conviction device (a second mortgage), attempting thereby to protect his assets from confiscation. There was no adequate explanation as to why a charge was created over the property of the applicant ten days following his conviction and three days before he was sentenced. Similarly, the judge sustainably concluded that the applicant was the source of funds used to make sixteen transfers by Sejal Padania to the applicant and that a substantial tainted gift deriving from general criminal conduct of the applicant had been made by Mrs Gheewala in 1997.

We reject the suggestion that the judge acted on supposition instead of evidence. Whether all the conclusions reached by the judge were tested with Thakrar when he was in the witness box (albeit he was asked whether a device had been used to defeat confiscation), the judge was entitled to assess the evidence in its entirety in order to decide whether the arrangements were genuine or a sham. The applicant was aware that it was alleged that he had previously given money to Thakrar for “safe keeping”. Once the judge had determined that the suggested loan arrangements were not genuine, the evidence justified the further conclusion that the sums advanced represented benefit to the applicant from criminal conduct: he was recycling funds from his general criminal conduct through the corporate structure run by Thakrar.

We address next Derwick, Mohammed Allabar and Muzoon Holdings. The amounts involved in this regard were reflected in invoices submitted in relation to consultancy work supposedly carried out by the applicant for the names just set out in the field of on-line reputation management. The judge concluded that the documents submitted provided no evidence of the work allegedly undertaken. He also found that “apart from one email” there were no progress reports or other documentation. Against that background, he determined that the payments bore the hallmarks of a scheme by which the applicant used the names of prominent individuals as a cloak for his own nefarious activities.

It is argued he was not justified in coming to any of those conclusions. First, there is said to have been no basis for concluding that the individuals who provided the invoices did not do so in the ordinary course of business. Second, it is suggested the judge erroneously approached the supporting documentation. In particular, there was a lever arch file of contemporaneous emails relating to the applicant’s consultancy work, including nine progress reports. Finally, it is contended that the materials were consistent with consultancy work being carried out and the supporting materials were substantive.

It is of note that Mr Pearson said in evidence that he was “sceptical” about the truth of the invoices and the consultancy work said to have been undertaken, and at paragraph 2.2 of his fifth addendum report, he added that, “no correspondence in respect of the initial sign-up of the clients, the terms of engagement, the work actually undertaken and whether the clients were satisfied with that work has been provided.”

We accept the Crown’s submission that the judge was entitled to find that the applicant had not displaced the burden on him to show the legitimate source of these transfers. Although the court was provided with a bundle of documents during the confiscation proceedings which included the results of Google searches, various email exchanges, invoices and suggested Progress Reports, there was no witness statement from any individual asserting that these arrangements or the supporting materials were genuine.  Although the judge made a few minor factual errors in his Ruling in this context regard, he had had the benefit of hearing the evidence and seeing the witnesses over a long period and his conclusions were entirely sustainable.

It is suggested the judge made four critical errors of law. First, as regards the test to be applied to the amount that might be realised. Second, in finding there were “hidden assets”. Third, in his identification of property held by the applicant. Fourth, it is suggested he made an order that was disproportionate.

It is argued that the judge not only failed sufficiently to identify the test he had to apply in making the relevant calculation but he appeared to have applied the provisions of the Proceeds of Crime Act 2002 rather than section 71(6) of the CJA 1988. It is important to note at the outset that at paragraph 9 of the Ruling the judge highlighted certain differences between the Proceeds of Crime Act 2002 and the CJA 1988, and emphasised that he was operating under the latter. 

Nonetheless, Mr Trollope contends that the alleged error in this regard by the judge is demonstrated by the fact that he referred to three authorities dealing with the question of hidden assets, of which two related to legislation other than the CJA 1988. However, it is critical to note that those two authorities were brought to his attention by the respondent. R v Barnham (2005) EWCA Crim 1049 was cited, not to assist on the test in section 71(6), but to make good the proposition there was no need for the prosecution to adduce evidence in support of its claim of hidden assets. R v Lee [2013] EWCA Crim 657 was brought to the attention of the judge as an authority that would assist the court on the topic of hidden assets.

As the Crown argue, section 71(6) requires the court to assess the amount that appears to the court to be realisable and under the CJA 1988 the burden of proving that the amount that might be realised is less than the benefit rests on the defendant: see R v McIntosh and Marsden [2011] EWCA Crim 1501; [2012] 1 Cr App R (S) 60. As set out in the headnote to McIntosh: 

“The Criminal Justice Act 1988 s.71(6) as amended provided that the amount of the confiscation order should be equal to the benefit in respect of which the order was made or “the amount appearing to the court to be the amount that might be realised at the time the order is made”, whichever was the less. This provision required the court to assess what amount appeared to the court to be realisable. It was now settled that the burden of proving that the amount that might be realised was less than the benefit rested on the defendant (Barwick [2001] 1 Cr. App. R. (S.) 129 (p.445) .) It should be noted that in Barwick the sentencing judge disbelieved the defendant but nevertheless concluded that his realisable assets were less than the amount of the full benefit figure. In May [2008] UKHL 28; [2009] 1 Cr. App. R. (S.) 31 (p.162), Lord Bingham identified the objective of the confiscation scheme as being to deprive defendants of the benefit from their criminal conduct “within the limits of their available means”. Lord Bingham stressed the need to focus on the statutory regime in which no discretion survived, save in relation to the application of the statutory assumptions. The approach of “standing back and deciding whether there is or might be a risk of serious injustice” could only be adopted within the confines of the statute itself. It was recognised that it would be unjust to imprison a defendant for failure to pay a sum which he could not pay, but provision had been made for assessing the means available to a defendant and if that yielded a figure smaller than his benefit, the confiscation order would be made in the smaller figure. In the Court’s view, there was no room, outwith the statute, for any residual discretion in the court to relieve a defendant who had failed to prove that his assets were less than the full amount of the benefit.”

There is no material distinction between the words used by the Court of Appeal in McIntosh (“the amount that might be realised is less than the benefit”) and the words used by the learned Judge in the instant case (“the realisable amount was less than the value of the benefit”). Whilst the prosecution must establish that the offender has benefitted from the offence, and the value of his benefit, it is for the offender to show that the amount that might be realised is less than the value of the benefit: R v Barwick [2001] 1 Cr. App. R. (S) 129; R v Ilsemann 1990 12 Cr App R (S) 398.

The judge quoted in full a passage from McIntosh relied upon by the applicant:

“15.

(…) there is no principle that a court is bound to reject a defendant’s case that his current realisable assets are less than the full amount of the benefit, merely because it concludes that the defendant has not revealed their true extent or value, or has not participated in any revelation at all. The court must answer the statutory question in s.7 in a just and proportionate way. The court may conclude that a defendant’s realisable assets are less than the full value of the benefit on the basis of the facts as a whole. A defendant who is found not to have told the truth or who has declined to give truthful disclosure will inevitably find it difficult to discharge the burden imposed upon him. But it may not be impossible for him to do so. Other sources of evidence, apart from the defendant himself, and a view of the case as a whole, may persuade a court that the assets available to the defendant are less than the full value of the benefit.”

The judge concluded his reasoning in this context as follows:

“As Hughes LJ commented in Lee (2013), Moses LJ said that the judge hearing the confiscation had found that the value of what the defendant had abroad was totally unknown and that was a crucial finding. Once a judge reaches that conclusion, there was no evidential basis on which the judge could conclude that the realisable property was less than the value of the benefit. There was no evidential justification for valuing his available assets as less than the full value of the benefit, even accepting the modest style in which the defendant in that case lived. Contrary to what was found in that case, in KS’s case, the lifestyle was lavish indeed and continued until imprisonment. If there is nothing other than evidence which is disbelieved, the judge is likely to have to come back to the original conclusion that the hidden assets equate to the benefit figure.”

That is a faultless conclusion and there is no foundation for the contention that the judge misled himself as to the test to be applied.

The judge emphasised it was disputed that there were any hidden assets. He highlighted that, as alleged by the prosecutor, very significant amounts had been received from unknown and unidentifiable sources and that these were likely to be indicative of the defendant having yet further assets that had been hidden and which were undeclared. The applicant had been responsible for serious, acquisitive crime over a significant period and he was well positioned to conceal his assets. The judge took note of the natural tendency of a dishonest businessman with a criminal and lavish lifestyle to hide “slush funds” as a precaution should his business empire collapse. He took into account lies told by the applicant during his evidence: he had, for instance, in evidence stated that he was “broke” but on enquiry significant funds had been revealed from the Pattni Settlement and from alleged consultancy work in Dubai through the Arctic account. The judge found that it was a “startling feature” of the case that there was a “paucity” of documentary evidence as to the final destination of Mirchandani’s loans and investments, even allowing for the fact that the receiver of the Delphis Bank had not retained any paperwork. The judge found it to be significant that the evidence failed to support any substantial transfers to either the Dolphin Group or the Delphis Bank from the funds from Mirchandani, and instead there was an ample basis for concluding that the applicant kept the money for his own purposes. The judge noted the reports from Vimalen Reddi (Mauritius), Neil Miller (South Africa) and Dr Reynolds Muza (Zimbabwe) as regards assets held by the applicant in his own name in those countries. However, they were dependent on publicly available information and the judge observed the applicant “specialises in operations well under the radar”.

As the judge set out at paragraph 69: 

“KS has a track record of using others as a front or nominee to conceal his ownership and with a fixed intention not to declare income for taxation anywhere in the world. At paragraph 58 of the Prosecutor’s skeleton argument, 12 propositions with supporting references are summarised in support of there being hidden assets. Taken cumulatively these points are compelling and I therefore find that there are hidden assets but that their extent is totally unknown.”

The applicant ignores this critical foundation for the judge’s conclusions, and instead focuses on elements of the prosecution’s Case Summary which, it is suggested, were inconsistent with a finding of hidden assets, particularly the extent to which he concealed problems regarding his corporate wealth and his personal finances. We accept the suggested approach of the prosecution on this issue:

“It is to be borne in mind that, by that stage, the Judge had presided over this case for two years. He was uniquely placed to assess: the evidence he heard over the course of a 10 week trial; the evidence he heard over the course of a confiscation hearing lasting 6 weeks (albeit that the Court did not sit every day) and the applicant’s conduct during the proceedings as a whole.”

This was clearly a case in which it was appropriate to make the section 72 AA assumptions. The suggested contradictions between the prosecution’s case and the determination that there were hidden assets were undoubtedly relevant but they were not in any sense determinative.  At the conclusion of the evidence and the submissions, the applicant had failed to persuade the judge that the assumptions were incorrect, and for the reasons set out above the judge was entitled to reach the conclusions that we have described above. 

It is suggested there was no basis upon which the judge could properly reject the evidence of Anisha Somaia as to the sum of £85,544 in her account. It is observed that she expressly set out that she had no employment, and she had provided an explanation as to some of the payments. She was not cross-examined. It is argued there was no material to contradict her and that the judge’s decision to reject her account was unreasonable.

As the prosecution submit, however, the Crown had no opportunity to challenge or test her witness statement in cross-examination. There were unanswered questions raised by her evidence, such as why her father used her account, including to transfer money to Mrs Desai for transmission to others. Similarly, the question was asked as to why a payment was made to T Bro Ltd from her account.  We note the prosecution made a reduction in this context reflecting information provided by the applicant which was accepted. In all the circumstances, we accept there was a strong inference to be drawn that the defendant used his daughter’s account for his own purposes, given the defendant did not adduce any persuasive evidence to the contrary.

As part of the judge’s Ruling, he observed “there is evidence of a Land Rover Discovery and a Range Rover. However it is not clear these vehicles are currently available to be sold”.  In the order of the court at paragraph 3, under identified assets, the judge set out “iv. Land Rover Discovery (if found to be available) v. Range Rover (if found to be available)”. It is suggested neither vehicle had been shown to exist; neither vehicle had been identified; and neither vehicle had been demonstrated to have been in the possession, still less the ownership, of the applicant. There were two emails. One was to the effect that Temple Technologies at one stage consented to have a Range Rover Discovery registered in its name as a complimentary gesture for no consideration for the applicant. The vehicle was to be held in a corporate identity. The other sent to the applicant set out that “the corporate form from the Range Rover will be sent tomorrow; it has been impossible to get back to my desk this week. I will do it from Bristol”.

Mr Pearson, who gave evidence for the prosecution on these issues, was not cross-examined on this subject and the applicant did not refer to them in evidence. It follows there was evidence from the prosecution of realisable property in this context but, critically, the applicant was not prejudiced because the Court Order was expressly limited by the words “if found to be available”. There was no prejudice to the applicant if, as he asserts, these vehicles either did not exist or had never been in his possession or ownership. This ground of appeal is without merit. 

It is contended that the order of the court was disproportionate, in that the confiscation order was made in the sum of £20,434,691. In addition, compensation orders were made respectively in the sums of £18,220,723 and £200,233.

It is argued the confiscation order was disproportionate because, first, the court must look at the whole of the evidence including the evidence as to the expenditure of the sums received. Second, the finding that £1.5m paid to the applicant from ‘unknown and unsupported sources’ did not support the conclusion that assets of £20 million or more were available. Third, there was no sustainable relationship between the amounts received by the applicant and the figure of £20 million.

The correct approach in this context was identified by Moses LJ in R v McIntosh and Marsden at paragraph 15 (see above).

In this case, as in McIntosh, the order of the judge followed the factual findings he had made, particularly as regards hidden assets. The requirements of justice and proportionality did not require the judge to conclude that the concealed assets, the extent and value of which were unknown, should be assumed to be of lower value than the full value of the applicant’s benefit. The judge made his assessment on the basis of all the evidence he had heard and his conclusions are unimpeachable. 

The Crown accept that the compensation orders should not operate as an additional liability, given the judge’s finding that “there are hidden assets which represent the balance of the benefit figure” [71]. It follows that the order of the court needs to be varied as follows:

“2.

In addition, a compensation order in the sum of £18,220,723 in favour of Mr Murli Mirchandani.

a.

The defendant shall pay the said sum within 6 months of this order.

b.

In default: six years’ imprisonment ((of which the defendant will serve half) consecutive to the current sentence for the offending, concurrent to the term of imprisonment in default of payment of the confiscation order and concurrent to the term of imprisonment in default in relation to the compensation order in respect of Mr Shah).

3.

Further, a compensation order in the sum of £200,233 in favour of Mr Dilip Shah.

a.

The defendant shall pay the said sum within 6 months of this order.

b.

In default: three years’ imprisonment ((of which the defendant will serve half) consecutive to the current sentence for the offending, concurrent to the term of imprisonment in default of payment of the confiscation order and concurrent to the term of imprisonment in default in relation to the compensation order in respect of Mr Mirchandani).”

For the sake of clarity, given it appears the applicant will not have sufficient means to satisfy both orders in full, the entirety of the compensation orders should be paid first out of any sums recovered under the confiscation order (see section 72 (7) CJA 1988).

It is suggested that a sentence in default of 10 years consecutive to the sentence of 8 years for the offences themselves was manifestly excessive. The court has, when fixing a default term, to consider all the circumstances of the case which, it is submitted, includes any sentence passed for the relevant offending. It is suggested, furthermore, that notwithstanding the amount of the confiscation order, no consideration appears to have been given to the fact that there are cases in which much larger amounts are involved where the term in default will also be 10 years. Some reduction, it is argued, is appropriate to allow for this consideration.

As Laws LJ observed in R v German Castillo (2011 EWCA Crim 3173; (2012) 2 Cr App R (S) 36:

“13.

…The purpose of the default term is not punishment for the achievement of retributive justice. It is rather to secure satisfaction of the confiscation order and so deprive the criminal of the fruits of his crime. In that endeavour, the demands of proportionality are much weaker than where the court is punishing the offender. Although retributive justice is by no means the only aim of sentencing, it remains a first condition of criminal punishment that the offender should get no more than his just deserts. Proportionality is thus at the centre of the process. By contrast, the ancillary regime of asset recovery is established on an altogether different footing. Its first condition is effectiveness.”

The court in Castillo accepted that proportionality in this context commands some attention, albeit it will not define the right order. In our judgment, given the default term of 10 years’ applied to any amount over £1 million, it is impossible sustainably to argue that applying the maximum default term was unjustified, given this case involved a confiscation order that was twenty times greater. As Laws LJ observed in Castillo at [12] “the court is not to be influenced by the overall totality of the sentence passed for the crime plus the default term”. 

We dismiss this ground of appeal.

The applicant sought to add a ground of appeal on the basis that although the Financial Investigator correctly adjusted the value of the assessed benefit to take account of the subsequent changes in the value of money, he then adjusted that figure by reference to annual average retail Price Index [RPI] figures. He used a multiplier of 1.509. When applied to the total benefit figure this resulted in a figure of £18,389,275. It is argued that the RPI is no longer regarded as accurate by the Office of National Statistics and has been replaced by the RPIJ as a more accurate measure of inflation.

No sufficient basis was advanced for this suggested ground of appeal. Mr Trollope simply invited our attention to a website, and otherwise no evidence has been filed in support of this submission. In R v Shepherd (2014) EWCA Crim 179, this court concluded that “… consistency and certainty is imperative and for that reason the use of the RPI in our judgment continues to be appropriate”[15], albeit the court at paragraph 17 noted an agreement by the CPS and the SFO to use the RPIJ in future. Gloster LJ sitting at first instance in R v Godley (2014) EWHC 2343 accepted the use of the RPIJ in that case but she did not purport to disapprove the use of the RPI (see [23] and [24]). The use of the RPI had been agreed before Judge Hone in the present case ([40] and [41]) and there is no proper basis for suggesting that, even allowing for other methods of calculation and the agreement referred to above, the use of the RPI is impermissible. It is of note that no calculations were put before the court as to a suggested revised figure. 

An application to adjourn, based on claims being made by Bharat Thakrar and Anisha Somaia to certain property that was the subject of these confiscation proceedings, was not pursued with any enthusiasm before us and we decided it was in the interests of justice for this application to proceed. We declined to give an indication that the court will sympathetically entertain an application for leave to appeal if either Thakrar or Somaia establishes ownership or title to any of the property subject to the confiscation order. Any application must be considered on its merits at the time of the submissions.

In the event, this application is granted only as to the period of imprisonment to be served in default of payment of the compensation orders. The appeal on that limited issue is allowed, to the extent that the two default periods (six years’ and three years’ imprisonment) will run consecutively to the sentence for the offending, but concurrently with each other and concurrently with the term of imprisonment in default of payment of the confiscation order. On all other grounds, this application is refused.