R v Florian Pierini & Anor

On 22 April 2022 Florian Pierini and Jeffrey Razaq were convicted by a jury at the Crown Court at Southwark of offences under the Proceeds of Crime Act 2002 (“the 2002 Act”).

Florian Pierini (“the applicant”) was convicted (in his absence) of conspiracy to launder the proceeds of crime, contrary to section 1(1) of the Criminal Law Act 1977 (“the 1977 Act”) and section 327(1) of the 2002 Act. He was sentenced (in his absence) to 5 years’ imprisonment and was disqualified from being a company director for 5 years. He renews an application for leave to appeal following the single judge’s refusal of his application for leave. His complaint is that the judge, HHJ Perrins, wrongly refused his application to participate in the trial from Brazil.

Jeffrey Razaq (“the appellant”) was convicted of acquiring criminal property, contrary to section 329(1) of the 2002 Act. He was sentenced to a suspended sentence order comprising 12 months’ imprisonment, suspended for 12 months, with a requirement that he complete 200 hours unpaid work. He has completed the unpaid work and the sentence has now expired. He appeals against conviction with the leave of the single judge. His complaint is that the judge wrongly permitted the prosecution to adduce bad character evidence.

The prosecution case centred on the activities of Essex and London Properties Limited (“ELP”). In support of its central case against the appellant it also relied on events involving two other companies: MH Carbon Limited (“MH Carbon”) and Montana Leon SA (“Montana Leon”), a company registered in Peru.

MH Carbon was incorporated in 2010. The appellant took over MH Carbon, and was appointed as sole director, on 24 October 2012. Prior to that date, Gavin Manerowski had been a director of MH Carbon. On 31 May 2013 MH Carbon entered voluntary liquidation. The Department of Business Innovation and Skills conducted an investigation into MH Carbon. The appellant cooperated with the investigation. On 15 May 2014, the High Court wound up MH Carbon, following the Secretary of State’s petition for a winding up order on the basis that:

MH Carbon had liabilities of £22.6m when it was wound up.

It was not alleged that the appellant had been involved in fraud, but it was alleged that he was unfit to be a company director because MH Carbon had become insolvent, and his conduct as a director of the company made him unfit to be concerned in the management of a company.

On 10 June 2015, the appellant signed a Disqualification Undertaking under the Company Directors Disqualification Act 1986 in respect of his conduct with MH Carbon.

The appellant had a close association with Mohammed Tanveer. Mohammed Tanveer worked for Montana Leon. It traded in gold. The appellant introduced an escrow service to Montana Leon. Ultimately, Montana Leon was wound up.

ELP advertised an investment bond which offered an 8% return on investments with a promise of the return of the investment at the end of three years. The investments would be used to purchase distressed residential properties in the London and Essex area, which would be developed or refurbished and re-sold at a profit.

Potential investors were sent newsletters and brochures which gave the impression of a successful and bona fide company. They were told that the risk was low because of the stake that they would hold in the properties purchased by the fund. The brochure used to advertise the bond included details of properties which were said to have been bought by the fund. In fact, they had not been bought by the fund. The details were lifted from estate agents’ websites. This was all backed up with documents that were said to be Land Registry documents showing that the fund owned the properties. Those documents were forged. Investors were encouraged to invest a minimum of £5,000.

Between January 2016 and mid-2017 approximately 800 investors paid funds totalling approximately £13.7m to ELP. Some invested multiple amounts and some more than £100,000. Some of the investors were elderly and particularly vulnerable to the high-pressure sales techniques used. Some investors were paid interest, but this was paid from the funds provided by other investors: a classic Ponzi fraud.

Initially, investors paid their investment monies into bank accounts in the name of ELP. Later, they were instructed to pay monies to two escrow agents who were then instructed to pay the money to ELP accounts in the United Kingdom or Dubai. The escrow agents were Escrow Custodian Services and Jade State Wealth. Each of these escrow agents was introduced to ELP by the appellant. The appellant worked on the basis that he would receive 1% commission on the funds paid by investors into the two escrow accounts. Between January 2016 and July 2017, the appellant received over £110,000 from ELP.

During his first interview on 10 October 2017, the appellant provided a prepared statement which denied involvement in the fraud. He said that at no time did he know or suspect that any funds he received from ELP were from criminal conduct. The monies received from ELP to his company, “Raz Solutions”, represented escrow commission payments which were due and represented legitimate trade. He had issued invoices to ELP. Thereafter, he exercised his right to silence.

During a police interview on 7 March 2018 the appellant stated that his role was to introduce the companies to the escrow agents, who conducted their own due diligence checks on the business, and there were no issues with ELP. He negotiated fees of about 1% of the funds paid by investors into two escrow accounts, which he legitimately invoiced. He did not know or suspect that ELP was a fraud or that the monies he received were the proceeds of crime.

During his police interview on 27 April 2018, the applicant exercised his right to silence and did not answer any questions.

The appellant and applicant were prosecuted on an indictment containing three counts.

Count 1 did not concern either the appellant or the applicant. It alleged that Mohammed Tanveer, Mitchell Mallin and Abdul Mukith had conspired to commit fraud.

Count 2 alleged that the applicant, together with Mohammed Tanveer, Mitchell Mallin, Abdul Mukith, Anthony Whymark and Mohammed Hussain had conspired to launder the proceeds of the fraud, contrary to section 1(1) of the 1977 Act read with section 327(1) of the 2002 Act. It was alleged that he had been part of an agreement to transfer funds through his own accounts and that he had known or intended that the funds represented the benefit from criminal conduct. The applicant did not dispute that there had been a fraud. He denied that he had been party to the conspiracy to launder money or that he knew that the funds had been fraudulently obtained.

Count 3 alleged that the appellant had acquired criminal property, contrary to section 329(1) of the 2002 Act. The allegation was that he had acquired £110,407.38 from ELP knowing or suspecting that it wholly or partly represented the proceeds of crime. The appellant accepted that the funds were the proceeds of the fraud but denied that he had known or suspected that at the time.

Mohammed Tanveer pleaded guilty to counts 1 and 2. The applicant, the appellant and the other defendants pleaded not guilty.

The appellant: As against the appellant, the prosecution relied on:

The prosecution case was that, because of the appellant’s involvement with MH Carbon and his involvement with Mohammed Tanveer, he ought to have been aware of the risk that ELP was operating a fraud. It was said that he should have been especially careful about becoming involved in ventures involving Mohammed Tanveer. His previous involvement in investment schemes should have led him to undertake careful due diligence. His failure to make enquiries to ensure that the ELP investment was genuine suggested, said the prosecution, that he was not acting as an honest businessman and he either knew or suspected that the scheme was fraudulent. He failed to disclose most of the income that he received to HMRC. This was said to support the prosecution’s case that he knew or suspected the funds to have been obtained from criminal conduct.

The appellant did not give evidence. He relied on the answers provided in his police interview. His case was that he did not know or suspect that ELP was acting fraudulently and he did not know or suspect that any of the monies he received were the proceeds of crime. He accepted that there had been previous and legitimate dealings with Mohammed Tanveer and he said that the monies received from ELP represented a commission of 1% (or less), invoiced to ELP, for his role as an introducer. He was not responsible for conducting due diligence on the company introduced to the escrow agents. His role in relation to ELP had been different to his role as a director of MH Carbon. He was an “introducer” and it was the responsibility of the escrow agents to carry out due diligence, not him. He had not lied or misled the police in interview, but instead he had estimated the value of the fraud based on the 1% commission he had received and the figures that had been disclosed to him during the interview. He denied that the failure to declare receipts to HMRC was evidence of fraudulent activity.

The key issue for the jury was to decide was whether the appellant knew or suspected that the £110,407.38 derived from fraud.

The applicant: As against the applicant, the prosecution relied on:

As explained below, the applicant did not attend the trial. He was represented throughout. His case, presented by counsel, was that he did not know that the money passing through his accounts was the proceeds of crime.

The issue for the jury was whether the applicant was a party to a conspiracy to launder money and whether he knew that the monies being deposited in, and moved between, his personal and company accounts had been fraudulently obtained.

The applicant and the appellant were each convicted by the jury.

On 14 September 2020 the applicant was charged by postal requisition. The requisition was deemed to be served on 16 September 2020: rules 4.4(2)(a) and 4.11(2)(b) of the Criminal Procedure Rules. This imposed an obligation on the applicant to appear before the magistrates’ court to answer the written charge: section 29(2A) Criminal Justice Act 2003.

The first hearing took place in the South Essex Magistrates’ Court on 22 October 2020. The applicant had legal representation. There was no suggestion that the proceedings had not been validly commenced against the applicant. The case was sent to the Crown Court for a hearing on 19 November 2020. The applicant was granted bail.

A plea and trial preparation hearing took place on 19 November 2020. The applicant did not attend the hearing. His counsel told the judge that he was in Dubai and was “on a travel bond because he has not met the bond in Dubai [and that the] Authorities have his documentation until [a] debt is paid.” Arrangements were made for the applicant to attend by video link. He did so, was arraigned and entered a not guilty plea. The applicant was granted bail subject to a residence condition at an address in Dubai. The judge told the applicant that if he did not attend trial he risked being tried in his absence.

The trial was listed for 7 February 2022. A further directions hearing was listed on 4 May 2021 (subsequently changed to 14 June 2021), with a direction that the applicant would attend remotely via video link from Dubai. The applicant did not attend the hearing on 14 June 2021 and the court log indicates that he had not been expected to attend. It was indicated that he had agreed a payment plan for the debt and that, in any event, he would be able to (and would) return to the United Kingdom by the end of the year and in time for the trial.

At a further hearing on 10 January 2022 the court was not informed that the applicant had not returned to the United Kingdom or that there was any difficulty in the applicant attending trial. On that date, the prosecution sought and received an assurance from the applicant’s legal team that, as far as counsel were aware, he would be in the United Kingdom in time for his trial.

On 28 January 2022 the prosecution was informed that the applicant had not returned to the United Kingdom. On 31 January 2022 the applicant made a written application seeking a direction to permit him to attend the trial by live link. The application was supported by a statement dated 23 January 2022. In that statement he said that he had been unable to leave Dubai because of a civil debt. It subsequently became clear to him that he would not be able to raise the money in Dubai to repay the debt, so he decided to fly to Brazil to sell his wife’s property there to raise the necessary funds. He was able to secure the release of the travel embargo and he flew from Dubai to Brazil in September 2021. He was unable to sell the property, he had no money to pay for a flight and so he was (he said) unable to return.

A hearing took place on 1 February 2022. The applicant attended by video link from Brazil. His counsel told the judge that he had been advised of the consequences if he did not attend the trial, but that he was unable to travel to the United Kingdom because “he has no money.” The judge addressed the applicant directly and told him that he should “get on a plane now” and attend his trial, and indicated that otherwise he might be tried in his absence. The applicant apologised and said he had “no money and nowhere to stay.”

On the first day of the trial, 7 February 2022, five of the six defendants attended court. The applicant did not. He had still not returned to the United Kingdom. The applicant sought a ruling to permit him to participate in the proceedings by live link. On 8 February 2022 the judge refused that application. He was not satisfied that it would be lawful to grant the application, because there had been no international letter of request to the authorities in Brazil. It was not therefore known whether linking remotely to the applicant in Brazil would be in breach of the law in Brazil. In any event, the judge did not accept that the appellant had been unable to return to the United Kingdom and he was satisfied that the appellant had deliberately absented himself from the proceedings. That was because:

Having found that the applicant had deliberately absented himself from the trial, the judge concluded that it was not in the interests of justice to allow him to attend by video link. He did not accept that this meant that the applicant was being denied a fair trial: he was represented by two experienced counsel who were fully instructed and who were in regular contact with him in Brazil. His case could therefore be properly presented, he could be informed of its progress and he could give daily instructions. If he wished to give evidence, then all he needed to do was book a flight to the United Kingdom in time for the defence case.

The judge then issued a warrant for the applicant’s arrest, with a direction that he be brought before the Crown Court at Southwark to surrender into custody. He acceded to an application that the defendant be tried in his absence.

Section 51 of the Criminal Justice Act 2003 came into force on 7 December 2007. It made provision for live links in criminal proceedings. As originally enacted, it stated:

As originally enacted, section 51 did not permit a defendant to give evidence by live link. That was explicitly excluded from the ambit of section 51(1) (“other than the defendant”). Aside from section 51 of the 2003 Act, there was (prior to March 2020) no other provision which would have enabled a court to permit the applicant to give evidence by live link. Section 33A of the Youth Justice and Criminal Evidence Act 1999 permits the court, in certain circumstances, to allow a defendant who is under the age of 18, or who suffers from a mental impairment, to give evidence by live link. That did not apply here.

The Coronavirus Act 2020 was a legislative response to the covid-19 pandemic. Its purpose was to enable the Government to respond to an emergency situation and manage the effects of a covid-19 pandemic: see paragraph 1 of the explanatory notes. It was passed, and (with certain exceptions) it came into force, on 25 March 2020. Sections 53-57 made provision for the use of video and audio technology in courts and tribunals. The policy reasons for these provisions were explained at paragraphs 92-93 of the explanatory notes:

Section 53, read with schedule 23, made temporary modifications to the Criminal Justice Act 2003 (“the 2003 Act”), including section 51 of that Act.

Section 51 of the 2003 Act, as in force at the time of the judge’s ruling on 8 February 2022, provided:

The provisions of the Coronavirus Act which temporarily modified section 51 of the 2003 Act were repealed with effect from 28 June 2022. From that date, the Police, Crime, Sentencing and Courts Act 2022 substituted a new version of section 51 of the 2003 Act. It introduced a requirement for a judge, when considering whether to make a live link direction, to take account of any guidance given by the Lord Chief Justice.

The Lord Chief Justice issued guidance shortly after the new provision came into force. This included the following:

In R v Kadir [2022] EWCA Crim 1244; [2023] 1 WLR 532 the trial judge refused the defendant’s application for a live link for a witness to give evidence from Bangladesh. His appeal against conviction was dismissed. At [33] Holroyde LJ said:

No steps had been taken to establish whether Bangladesh was willing to permit a live link of the kind sought. There had been no request or inquiry of any relevant authority in Bangladesh. This meant that the judge lacked vital information in deciding whether, in the light of the factors identified in the Lord Chief Justice’s guidance, it was in the interests of justice for a live link direction to be made. As a result, the judge was right to refuse the application: see [45]-[49]:

Mr Wainwright, on behalf of the applicant, said that permitting a live link may, at first sight, seem an “unattractive proposition”, but that that was not a reason for refusing the application. In Polanski v Condé Nast Publications Limited [2005] 1 WLR 637 the House of Lords had held that a claimant who was a fugitive from criminal proceedings in the United States of America was entitled to bring civil proceedings in the United Kingdom and to give evidence from abroad, even though his reason for doing so was to avoid extradition. In Deutsche Bank AG v Sebastian Holdings Inc [2023] EWHC 2234 (Comm), the decision in Polanski was applied to committal proceedings, so as to allow a respondent to participate in such proceedings from abroad. The position in criminal proceedings should not be different. The judge in the present case should have applied Polanski and Deutsche Bank so as to permit the applicant to attend by live link.

Mr Wainwright submits that the point of principle is that, by failing to attend the proceedings, a litigant does not thereby lose all of his fair trial rights. Where it is still possible to preserve some fair trial rights, they should be afforded. This would not provide an incentive to other defendants to flee abroad before a criminal trial and to take part by live link. That is because there are disadvantages in a defendant taking that course which mean that it would be unlikely to happen in practice:

Even if the applicant was not permitted to give evidence by live link, he should at least have been able to observe the proceedings. That would have enabled him to give full instructions to his legal representatives, without in any way causing an affront to the interests of justice.

Mr Sharkey, on behalf of the Crown, submits that the judge was right to conclude that it was contrary to the interests of justice to permit the applicant to participate in the proceedings by way of a live link. Polanski and Deutsche Bank can be distinguished, as they were civil, not criminal, in nature and in neither case did the court have the power to compel the party’s attendance, nor were they cases where a party would have been in breach of orders of the court by failing to attend to give evidence in person.

There is no challenge to the judge’s conclusion that the applicant had deliberately absented himself from the proceedings. The sole challenge is to the judge’s conclusion that it would be contrary to the interests of justice to permit the applicant to participate in the proceedings by way of a live link.

In Polanski the claimant pleaded guilty in a California court to unlawful sexual intercourse with a 13-year-old girl. He fled from the United States of America to France before sentence was passed. He could not be extradited to the United States of America from France. In 2002 he brought an action in the United Kingdom for libel. He applied to give his evidence by live link from France, because he feared that if he came to the United Kingdom he would be extradited to the USA. Eady J granted the application, because, although the reason underlying the application was “unattractive”, this did not justify depriving Mr Polanski of his right to have his case heard at trial. The Court of Appeal allowed the defendant’s appeal and held that the claimant should not be permitted to give evidence by live link. That was because (see the summary by Lord Nicholls at [9]): “[t]he general policy of the courts should be to discourage litigants from escaping the normal processes of the law rather than to facilitate this.” The House of Lords, by a majority, allowed the defendant’s appeal and restored the judge’s order.

Lord Nicholls’ reasoning was that:

At [31] – [33] Lord Nicholls said:

Lord Hope and Baroness Hale agreed with Lord Nicholls. Lord Hope considered that the critical factor was that the grant of a live link would not assist the claimant to remain a fugitive (cf paragraph 55(4) above): [65]. Baroness Hale said, at [69]:

It follows from Polanski that the general rule is that a litigant who is a fugitive from justice should be permitted to give evidence in civil proceedings by way of live link from abroad in order to pursue or defend a claim and thereby vindicate his civil rights.

In Deutsche Bank, the decision in Polanski was applied to contempt proceedings. A respondent to an application for committal for contempt of court was granted permission to attend the hearing by video link from France if he chose to give evidence. The respondent was outside the jurisdiction, the court did not have the power to compel him to attend the hearing and it would be wrong to place the respondent in a position where, in order to give evidence in his defence, he was forced to come into the jurisdiction.

Much of the reasoning in Polanski reads across not just to contempt proceedings, but also to criminal proceedings. Thus:

Thus, the fact that the applicant is a fugitive from criminal proceedings in this jurisdiction is not, in itself, a sufficient basis for distinguishing the decision in Polanski.

There are, however, significant and important distinctions between the position of the claimant in Polanski (and the respondent in Deutche Bank) and the applicant in these proceedings.

The applicant was required to attend court by the postal requisition (the service of which has not been challenged). He was granted bail by the Magistrates’ Court on 22 October 2020. That was subject to his obligation to surrender to custody for the hearing at the Crown Court on 19 November 2020: section 3(1) Bail Act 1976. The applicant was in breach of that obligation. He thereby committed an offence (unless he had reasonable cause not to surrender to custody): section 6(1) of the Bail Act 1976. Even if he did have reasonable cause not to surrender to custody, he committed an offence by failing to surrender to custody as soon as was practicable thereafter: section 6(2) of the Bail Act 1976. On the judge’s unchallenged finding that the applicant had deliberately absented himself, it was practicable for him to attend the proceedings and he was committing a criminal offence by not surrendering to custody.

We did not hear any argument as to the power of the Crown Court to grant bail to a defendant who appears by live link from abroad or to impose a residence condition abroad. We do not express any view on those questions. It is not necessary to do so. The orders for bail and the arrest warrant have never been challenged by the applicant. They had legal effect, and the appellant was under a legal duty to comply with them, unless or until they were set aside: R (Majera) v Secretary of State for the Home Department [2021] UKSC 46; [2022] AC 461 per Lord Reed at [44] – [56]. The applicant was in continuing breach of his legal obligation to surrender to custody.

The Criminal Practice Direction states, at section 14B:

Polanski makes it clear that there is no material distinction between a litigant who is a fugitive from justice in respect of criminal proceedings in another country and a litigant who is a fugitive in respect of criminal proceedings for an offence committed in the United Kingdom. Here, however, the applicant was not just a fugitive in respect of an offence committed in the United Kingdom, he was a fugitive from the very proceedings in which he was seeking to participate from abroad. He was thereby in breach of a statutory obligation to surrender to custody and a court order. He was committing a criminal offence. If his application to participate by live link, instead of attending in person, had been granted, then that would amount to the court condoning the applicant’s continued offending under the Bail Act. It would have permitted the applicant to give evidence on his own terms, flagrantly flouting his obligation to surrender to custody. It would mean that the applicant would stand to gain the potential advantage of participating as a defendant in criminal proceedings and seeking an acquittal, without being in any immediate jeopardy of punishment in the event of conviction.

For these reasons, granting the application would have diminished the court’s authority to require compliance with the law. It would have been an affront to the legal integrity of the proceedings and would undermine public confidence in the criminal justice system, bringing it into disrepute. It would have been contrary to the interests of justice. The judge was right to conclude that it was not in the interests of justice to grant the application.

We do not consider that there is merit in Mr Wainwright’s subsidiary submission that the applicant should have at least been permitted to view the proceedings by live link, even if he was not permitted to give evidence. The same objections apply. It would have been contrary to the interests of justice to allow such an application for the same reason. There was no unfairness to the applicant. It was his choice to commit a criminal offence, and to challenge the court’s authority, by failing to surrender to custody: R v Jones [2002] UKHL 5; [2003] 1 AC 1 per Lord Bingham at [11]:

That is sufficient to dispose of the renewed application. There are, however, further reasons why it was not in the interests of justice to accede to the application that had been made. As the Lord Chief Justice’s guidance (which post-dates the judge’s decision) makes clear, particular issues arise and must be confronted where a witness gives evidence from abroad. The judge recognised that it would be necessary to consider the need for an international letter of request to the authorities in Brazil. No steps had been taken in that regard, because of the very late stage at which the applicant made it clear that (contrary to his previous protestations) he would not be returning to the United Kingdom.

In the present case the judge correctly recognised that, in the light of his conclusion that it was not in the interests of justice for the applicant to give evidence by a live link, the application failed irrespective of the need to consider the potential for damage to the United Kingdom’s international relations. Kadir (which, again, post-dates the judge’s decision) shows that lateness of the application, and the failure of the applicant to have made the checks required by Agbabiaka, were in themselves a sufficient basis to refuse the application.

There is no challenge to the judge’s decision to proceed with a trial in the applicant’s absence. That is hardly surprising given the unchallenged finding that the applicant had deliberately absented himself and that he was represented by counsel who were fully instructed and who could conduct his defence on his behalf.

It follows that we dismiss the applicant’s renewed application for leave to appeal against conviction.

The prosecution sought to adduce evidence as to the appellant’s involvement in MH Carbon. The prosecution contended that the evidence was relevant to the appellant’s state of mind, and his knowledge about investment schemes promising high returns to investors, including the risks of, and the need to conduct proper due diligence on such schemes.

It was submitted on behalf of the prosecution that the appellant’s explanation in interview as to his involvement in MH Carbon (to the effect that he was not aware of any fraudulent activity) did not amount to bad character evidence. Even if it was evidence of bad character, it was admissible under section 101(1)(c) of the 2003 Act because it was important explanatory evidence. Alternatively, it was admissible under section 101(1)(d) because it demonstrated a propensity to act to the detriment of retail investors for his own financial gain and/or to fail to undertake proper due diligence in relation to investment products.

It was submitted on behalf of the appellant that the evidence in relation to MH Carbon was bad character evidence, involving as it did his subsequent disqualification from being a company director on the basis that he was an unfit person. Further, the defence submitted that the case against him was weak and the evidence sought to be admitted was intended to bolster a weak case. It was not part of the appellant’s role to conduct due diligence on ELP: that was the responsibility of the escrow companies. It was not explanatory evidence and it did not demonstrate any propensity as alleged by the prosecution.

The Judge ruled that the evidence in relation to MH Carbon amounted to bad character evidence. That was because the appellant had accepted making serious failures in his role as director which led to the mis-selling of investments. The evidence could therefore only be adduced if it satisfied one of the gateways in section 101(1) of the 2003 Act. The judge considered that the bad character evidence was important explanatory evidence which was admissible under section 101(1)(c) of the 2003 Act:

The judge therefore permitted the prosecution to adduce the bad character evidence under section 101(1)(c). The judge did not explicitly rule on the prosecution application to adduce the evidence under section 101(1)(d) as evidence of propensity. We were told that the judge subsequently made it clear that he was only permitting the evidence to be adduced under section 101(1)(c), and not section 101(1)(d).

Following the conclusion of the evidence, and before counsel’s speeches, the judge gave the jury written legal directions, which he also read to the jury. These included an explanation of the relevance of the MH Carbon evidence:

Following counsel’s speeches, the judge gave the second part of his summing up, in which he summarised the evidence. At the start, he repeated a legal direction that he had previously provided, to the effect that the assessment of the evidence was for the jury not the judge, so that, if he appeared to express a view about the evidence the jury did not have to agree with him, or if he failed to mention something that the jury considered was important, then they should take it into account. Similarly, he reminded the jury that they were not bound to accept the arguments of counsel (which he indicated he would summarise), because it was the jury’s judgment, and theirs alone, that counted.

During his summing up the judge addressed the appellant’s interview, and said:

In the course of summarising counsel’s speeches, the judge said:

Section 98 of the 2003 Act defines “bad character” as:

Section 101 states:

Section 102 states:

Mr Martin, on behalf of the appellant, advanced a single ground of appeal. That is that the judge erred in permitting the prosecution to rely on the MH Carbon evidence. He said that it did not amount to “important explanatory evidence” within the meaning of section 101(1)(c) of the 2003 Act, as explained in section 102. Its purpose was to establish that the applicant had a propensity to become involved in fraudulent businesses. It should therefore have been considered under s101(1)(d) of the Act, with the appropriate safeguards. It was wrong in principle to admit propensity evidence under section 101(1)(c) and thereby avoid the safeguards that operate in respect of propensity evidence: R v Davies [2008] EWCA Crim 1156. The evidence was highly prejudicial and none of the appropriate directions for propensity evidence were given because it was admitted under a different gateway.

Further, the evidence was not relevant to any issue in the case. It was common ground that the appellant had not committed any criminal offence in relation to MH Carbon and, in particular, was not involved in any fraud. So far as ELP was concerned, it was no part of the prosecution case that the appellant had been a party to the conspiracy: otherwise, he would have been charged on count 1. Nor did he have any due diligence role – that was the responsibility of the escrow agents. Further, there was no correlation between MH Carbon and ELP. The investments offered by MH Carbon, i.e. carbon credits, were genuine investments. Any awareness that the appellant had gained about the unsuitability of carbon credits as a form of investment could not have put him on notice that ELP was being operated in a fraudulent manner. The fact was that Mohammed Tanveer was operating a Ponzi scheme, taking in the investors’ funds, and running away with them. That was completely different from what had happened at MH Carbon. The risk to which the prosecution said the appellant should have been alive in respect of ELP was the risk that investments might not produce the elaborate returns that were offered. But knowledge of that risk could not be derived from anything that had happened at MH Carbon. The appellant had not learned anything at MH Carbon that could have put him on notice that ELP might be a fraud.

These were not submissions that Mr Martin made to the jury. He candidly accepted that he had made a strategic decision not to spend time on MH Carbon, given the way in which the judge had directed the jury. However, it necessarily followed from the above analysis, he said, that the evidence should not have been admitted under either section 101(1)(c) or section 101(1)(d). The jury were influenced by its improper inclusion and that renders the conviction unsafe.

Mr Martin also suggested that the summing up was internally contradictory. That was because in the course of his legal directions the judge said that the bad character evidence could not provide support for the prosecution case. Yet in his summary of the police interviews, and of the prosecution closing speech, he suggested that the jury could take it into account when assessing the prosecution case on the appellant’s state of mind.

Mr Sharkey, for the prosecution, submits that the judge was right to permit the prosecution to adduce the material, for the reasons he gave. If the defendant had no business experience, then that would have been highly relevant to his state of mind and to the possibility that he had not appreciated that the monies were criminal property. It followed, conversely, that the fact that he had recent experience of a failed investment scheme in which he had been “burned”, and that he had signed a statement of unfitness, was likewise highly relevant to his state of mind. If the evidence were excluded, and if the appellant had chosen to give evidence, then there could have been no cross-examination of his understanding of investment schemes and the need for due diligence. It would be wholly artificial and wrong for the court to have to completely disregard a significant part of the appellant’s business experience, but that would be the result of excluding the MH Carbon evidence. The judge was right to recognise that the evidence was relevant and to permit it to be adduced under section 101(1)(c).

The different gateways for the admission of bad character evidence under section 101(1) are not mutually exclusive silos. There is a degree of overlap, and bad character evidence may be admissible under more than one gateway. Further, once bad character evidence is admissible by virtue of one or other of the section 101(1) gateways, it becomes part of the general evidence in the case; leaving aside propensity evidence, its permissible use is not circumscribed by the ambit of the gateway through which it was admitted, but instead by the matters to which it is relevant: R v Highton [2005] EWCA Crim 1985; [2006] 1 Cr App R 7 per Lord Woolf CJ at [10].

The ambit of section 101(1)(c), read with section 102, has been considered in many authorities. These show that bad character evidence may be admitted under section 101(1)(c) where it is background evidence that has substantial importance to enable the jury to assess other important evidence in the case.

In R v Pronick [2006] EWCA Crim 2517 the judge’s decision to allow the prosecution to adduce evidence of the defendant’s previous acts of violence and rape against the complainant under both section 101(1)(c) and 101(1)(d) was upheld because it enabled the jury “to make a proper assessment of the respective evidence of the two protagonists”: per Latham LJ at [8].

In R v Haigh [2010] EWCA Crim 90, Dyson LJ explained at [23], by reference to authority, that at common law, prior to the 2003 Act, evidence was admissible:

At [24] Dyson LJ said “section 101(1)(c) closely reflects the pre-existing common law.” He added that that is so, notwithstanding the oft-repeated warning that section 101(1)(c) should not readily be used to admit evidence of propensity which would not satisfy the test under section 101(1)(d): [25].

In the present case, we can discern no error in the judge’s ruling. The critical issue in the case was the appellant’s state of mind and, specifically, whether he knew or suspected that the monies paid into his account were criminal property. The appellant sought to rely on his prepared statement of 10 October 2017 where he had denied knowing or suspecting that the funds were the proceeds of criminal conduct. He also sought to rely on his answers in interview on 7 March 2018 when he maintained that denial. The jury could not fully assess those denials without knowing background evidence that was relevant to the appellant’s state of mind. The MH Carbon material was relevant to the appellant’s state of mind. As the judge observed, “to exclude such material would give the jury a wholly misleading impression of [the appellant’s] business experience and prevent them from being able to properly evaluate his state of mind.”

The judge was correct that the bad character evidence was not evidence of propensity. The reason for admitting the evidence was not because the applicant had behaved in a particular way during his stewardship of MH Carbon, and was therefore likely to have behaved in a similar way in respect of ELP. Nor was the evidence admitted to rebut the possibility of a coincidence. It was admitted because it was relevant to the appellant’s state of mind. The prosecution application to adduce the material under section 101(1)(d), on the grounds of propensity, was therefore correctly rejected by the judge.

However, even if the judge was wrong to admit the evidence under section 101(1)(c), we consider it was properly admissible under section 101(1)(d), albeit not on the grounds of it being relevant to an issue as to the appellant’s propensity to a particular form of conduct. Rather, it was admissible because it was relevant to an important matter in issue between the prosecution and the appellant. That matter was not propensity, but the appellant’s state of mind.

The appellant’s argument that he was not responsible for carrying out due diligence, because this was the role of the escrow companies, was for the jury to assess. The argument that this was a reason to refuse to admit the evidence misses the central point of the bad character evidence, which was to elucidate the appellant’s state of mind. The arguments over the responsibility for carrying out due diligence are not a reason for refusing to allow the jury to consider the bad character evidence.

We do not consider that the judge’s directions to the jury caused any unfairness or that they render the conviction unsafe. The judge accurately explained the purpose for which the evidence was relevant, namely as to the appellant’s state of mind. His direction that the evidence “does not make it more likely that he committed the offence of acquiring criminal property. As such it provides no further support for the prosecution case that he knew or suspected the money received to be criminal property” was, on one reading, arguably generous to the applicant. The evidence was capable of supporting the prosecution case as to the appellant’s state of mind – that was the whole purpose of it being adduced. The point the judge was making was that the “bad character” sting that underlay the evidence – that the appellant had been disqualified as being unfit – did not itself make it more likely that he had committed this offence. In that sense, it did not support the prosecution case. The direction is likely to have been understood in that sense. If it was taken by the jury literally, narrowly, and in isolation as meaning that the MH Carbon evidence could not provide any support for the prosecution case, then that hardly provides a basis for complaint by the appellant.

Nor did the judge’s later summary of the prosecution closing speech cause any unfairness. He accurately set out the prosecution’s argument as to the relevance of the evidence, which reflected the basis upon which the judge had permitted it to be adduced – namely, that it was relevant to the appellant’s state of mind. He then balanced that section of his summing up by immediately reminding the jury of the defence case.

It follows that the appellant has not identified any material error in the judge’s approach and has not shown that his conviction is unsafe. We dismiss the appeal.

We refuse Florian Pierini’s renewed application for leave to appeal against conviction.

We dismiss Jeffrey Razaq’s appeal against conviction.