Golfrate Property Management Ltd & Anor, R (On the Application Of) v The Crown Court At Southwark & Anor

Dr Adam and Golfrate Property Management Ltd ('Golfrate') seek in separate proceedings heard together to set aside search and seizure warrants in relation to properties owned or occupied by them. The applications for the warrants were made under s.352 (1) and (6)(b) of the Proceeds of Crime Act 2002 ('POCA 2002') by the Metropolitan Police Service ('MPS') on the basis of an Information prepared by the MPS as a result of a money laundering investigation carried out by them known as “Operation Knabstrupper”. That operation was directed at the breach of the sanctions imposed by the EU in 2002 against members of ZANU-PF, the ruling party in Zimbabwe led by President Robert Mugabe. It was the case of MPS that Dr Adam and his UK associates were laundering money in breach of the sanctions regime. The suggestion was that criminal property was obtained from members of ZANU-PF for the purpose of investing in the London property market and the rent thus obtained then being passed back to them. The warrants were granted by HH Judge Higgins on 20 July 2012 after a short hearing.

The grant of the warrants is challenged on six grounds, including, non-disclosure and misrepresentation, the absence of grounds for suspecting Dr Adam was engaged in money laundering, the width of the terms of the warrant and the way the search was conducted.

Dr Adam and Golfrate

Dr Adam is a citizen of Zimbabwe. He is a member of a widely known and wealthy family which is resident in Zimbabwe.

Golfrate is a private company engaged in the business of property management on behalf of clients known to its sole director Mr Harun Aziz. It does not take business from the general public. Most of its clients have been known to Mr Aziz for many years. The property portfolio of Dr Adam was less than 10% of the business of Golfrate.

The information and the hearing before Judge Higgins

The Information was a 14 page document prepared and signed on 17 July 2012 by DC Ben Irons who is also an accredited financial investigator under POCA attached to the Proceeds of Corruption Unit. Although it will be necessary to refer to the Information in some detail, it is first necessary and convenient to summarise its contents:

The information then set out in some detail the matters upon which the MPS relied which in summary were as follows:

The information then set out the properties in respect of which warrants were sought.

The information noted that it was not anticipated that the police would be seizing legally privileged material and it was thought that the legal correspondence would be transactional in nature. If privileged materials were identified then independent advice would be sought, although there might be a necessity to use powers under s.50 or 51 of the Criminal Justice and Police Act 2001.

The hearing before the judge lasted 16 minutes beginning at 10:54 and finishing at 11:10 on 20 July 2012. It appears it was one of three applications made to the judge that morning. DC Irons gave evidence on oath simply to confirm the accuracy, on the basis of information and belief, as to what was stated in the Information. The judge gave no reasons for his decision to grant the warrants.

The execution of the warrants

Starting at 06:30 on 26 July 2012, the search warrants were executed at 9 properties including an address in South-West London where Dr Adam and other members of his family stayed when in England, the home of Mr Hassam, also in South West London, and at properties connected with Golfrate – its offices ('The Glasshouse') and the home of Mr Aziz.

Dr Adam was arrested at 06:45. He was described by the MPS as being calm and cooperative. His home was systematically searched for 11 hours; 40 bags of documents were seized. Dr Adam was interviewed and bailed. Mr Hassam, a director of Leyland Overseas Holdings (as indicated above in paragraph 6(v)) and company secretary of Golfrate, was also arrested later, interviewed and bailed.

The subsequent proceedings

An application under s.59 of the Criminal Justice and Police Act 2001 was subsequently issued. It was agreed on 10 August 2012 at a directions hearing before Judge Higgins that the issues in dispute should be resolved in this Court.

On 4 September 2012, Golfrate issued proceedings for judicial review; on 19 October 2012, Dr Adam issued proceedings for judicial review.

In the ensuing months permission was granted in both proceedings; there were significant delays because of the late service of evidence by the MPS.

The redactions to the Information

The MPS made very extensive redactions to the information placed before the judge before providing copies to Dr Adam and Golfrate. In the form provided initially, the redactions were so extensive that neither Dr Adam nor Golfrate was able to have any real idea of the case against them.

It is not necessary for us to set out the detailed arguments over the redactions as in the end the police sought to maintain only four minor redactions and did not rely on the material contained in those redactions.

However, we wish to make it clear that if the party obtaining the warrant wishes to redact any part of the Information or any part of the transcript of the hearing before the judge, an immediate application must be made by that party to the court on proper grounds supported by evidence from the Chief Constable or Commissioner of Police (or a very senior officer personally authorised by the Chief Constable or Commissioner) so that the court can consider whether the redactions should be permitted on PII or other grounds. The claim to withhold material on such an intrusive a process as a search and seizure warrant is one of very considerable importance as, if permitted, it infringes an otherwise applicable principle of justice that a party is entitled to know the grounds on which an application against him has been made. It is therefore essential that the claim to withhold is only made on the basis of the personal decision of the Chief Constable or Commissioner.

It is impermissible, as happened in this case, for the party obtaining a warrant on a without notice basis to refuse to disclose the material placed before the judge to the party against whom the warrant has been obtained. It can only be withheld if the court sanctions the withholding of that material on public interest grounds. No attempt was made by the MPS until a late stage in the proceedings to approach the matter in this way. This was a serious failure, but in the result has not affected the outcome of the proceedings.

The case of Golfrate and Dr Adam

Golfrate’s case was that it was, as we have set out, a property management company and not in any way involved in money laundering. Dr Adam’s case can be briefly summarised.

As to the property,

We turn to examine each of the grounds in turn. It is convenient to begin with the claim by Dr Adam and Golfrate that the Information contained material non-disclosures and misrepresentations. It is only possible to address the principal ground of the case of Dr Adam, namely, that there were no reasonable grounds for suspecting that he was engaged in money laundering, when the materials including all the relevant matters as known to the MPS which should have been put before the judge have been examined.

The legal principles

The applicable principles are well-established and not in dispute. A series of cases running from R v Crown Court at Lewes ex parte Hill (1991) 93 Cr App R 60 to In re Stanford International Bank Ltd and another [2011] Ch 33 demonstrate the nature of the obligation of the prosecution when making a without notice application for orders such as those sought in this case. The principles are summarised in R (Rawlinson & Hunter Trustees) v Central Criminal Court and the Serious Fraud Office [2012] EWHC 2254 [2013] 1 WLR 1634.

In ex parte Hill, which related to orders made without notice pursuant to s.9 of and Schedule I to the Police and Criminal Evidence Act 1984 (PACE) giving a police officer access to special procedure material held by the applicant's bankers, Bingham LJ, as he then was, with whom Waterhouse J agreed, said that it was necessary for the judge to have placed before him "the material … to make a reliable judgment" and continued thus (at p. 69):

"It is … impossible to lay down any rule which would be properly applicable in all cases. The judge should be shown such material as is necessary to enable him to be satisfied of the matters of which he is required to be satisfied before making an order and the judge should be told of anything to the knowledge of the party applying which might weigh against making an order."

In the Stanford International Bank case, Hughes LJ, as he then was, said at [191] in respect of a without notice application for a restraint order under POCA:

"It is not limited to an obligation not to misrepresent. It consists in a duty to consider what any other interested person would, if present, wish to adduce by way of fact, or to say in answer to the application, and to place that material before the judge. ….

The fact that the initial application is likely to be forced into a busy list, with very limited time for the judge to deal with it, is a yet further reason for the obligation of disclosure to be taken very seriously. In effect a prosecutor seeking an ex parte order must put on his defence hat and ask himself what, if he were representing the defendant or a third party with a relevant interest, he would be saying to the judge, and, having answered that question, that is what he must tell the judge. This application is a clear example of the duty either being ignored, or at least simply not being understood."

The procedure at the Crown Court

We would emphasise what was said in Stanford International Bank and in other cases that the duty of candour and of full and frank disclosure is rendered the more important from the practical point of view (as well as, of course, from the point of view of principle) because of the time constraints that will be operating on a busy Crown Court judge. Those constraints are evidenced in this case by some observations of the judge to DC Irons during the course of the hearing. He suggested to DC Irons that he ought to have made a “special appointment”, particularly given the nature of the case, “because in the normal way, had virtually any judge been confronted by his usual list or been in the middle of a trial, this couldn’t have been done.” He had observed that the papers were “comprehensive” and that “[it] so happens that today it can be done”, but that where the papers were substantial a “special appointment” was necessary. The officer did indicate that he had “dropped the information off yesterday afternoon … with the hope that you might have a bit of foresight of it”, something DC Irons has confirmed in a witness statement in these proceedings. The judge was unaware of this until told about it by the officer. It is absolutely no criticism of the judge, but these are highly unsatisfactory circumstances in which to consider an important and complex application such as this.

We reiterate, hopefully for the last time, that HMCTS must make the necessary resources available so that the Resident Judge at the Crown Court can discharge his responsibility for ensuring that arrangements are in place for these difficult and important applications to be dealt with properly. Judges must therefore be provided with the papers promptly, be accorded the time required to read the papers, to hear the application and to provide written reasons; as this court has observed in other contexts, it is far, far better that time is afforded for an initial application to be subject to rigorous scrutiny in a complex case such as this; the consequences of failing to accord the judge time is that much more time-consuming and expensive proceedings have to be undertaken by way of a review.

At all events, a judge faced with such an application requires the presentation of a full and clear picture of what lies behind it and to be told of matters that might tell against it. The target of the application is entitled to expect such candour. This obligation is well understood by experienced legal practitioners in the commercial and civil fields.

If and to the extent that it is not well known and understood by police officers seeking orders such as those sought in this case, it is time that the message was brought home clearly. Legal advice at an appropriate level should be sought in every case where such an order is sought. That may reduce the risk of an application being made without adequate disclosure. The Criminal Procedure Rule Committee is actively considering improvements to the process and procedure and the provision of standard forms.

The material available to the MPS

It appears that a good deal of the material that the MPS had at its disposal when considering the formulation of the Information emanated from UBS pursuant to a production order dated 8 August 2011. The papers included a UBS risk profile written in January 2007 which formed an important part of Dr Adam’s case of non-disclosure (see paragraphs 38 and 41 below) and a further risk profile dated 11 August 2011 (see paragraph 42 below). The background to that order appears to be that in July 2011 UBS became aware of the publication of a working paper in the previous month entitled “Anti-developmental patrimonialism in Zimbabwe” published online by an NGO called “Africa Power Politics Programme”.

We refer further to that working paper at paragraph 66 below, but in its original manifestation it contained suggestions that Dr Adam was, through FW Woolworth (Zimbabwe) and Quest (see paragraphs 19.iii) and 19.iv) above), linked closely to M&S Syndicate (ZANU-PF’s investment vehicle) and Billy Rautenbach, each being listed at the time on the EU sanctions list as set out at paragraph 20.iii) above.

According to the written evidence of Dr Adam, the private banking team at UBS called him for an urgent meeting in July 2011 to tell him that the compliance department of the bank had sought immediate closure of the accounts he and the companies owned by the Sanmahr Trust held with them. It was the linkage between the Woolworth and Quest companies and M&S Syndicate and Billy Rautenbach, according to Dr Adam, that led the bank to the view that he and the Sanmahr companies were no longer acceptable customers.

UBS filed a Suspicious Transaction Report ('STR') to the anti-money laundering authorities pursuant to Part 7 of the POCA 2002. That sequence of events does not appear to be in dispute. The obvious inference to be drawn from the chronology is therefore that the police investigations commenced as a result of the STR and that the production order was a preliminary part of the investigatory process.

In June 2013, as part of the preparation for this application and following the resolution by the court of the issues relating to the redacted Information provided to Dr Adam and Golfrate, Dr Adam's solicitors had asked the MPS to disclose the documents it had in its possession at the time the Information was formulated.

On 14 October 2013 (and thus 2 weeks prior to the hearing before the court) a bundle of documents was received by his solicitors which provided some of the documents that had been requested. Apart from the UBS documents to which we have referred, this disclosed a report of the Habib Bank on Jamesons, an entity to which we refer at paragraphs 79 and following. The parties remained at odds about whether that disclosure was adequate, but the hearing took place without further reference to those issues. It is said on Dr Adam's behalf that the documents supplied demonstrated further instances and/or evidence of material non-disclosure to the judge.

Prior to that disclosure, Mr Keith QC had identified a number of matters in his Skeleton Argument dated 30 September 2013 that, in his submission, constituted failures on the part of the prosecution to discharge its duty in this regard and thus were guilty of presenting to the judge an Information that was materially misleading. Following the disclosure referred to in paragraph 34 above, he added to that list and supplemented certain of the matters previously identified. Some of the matters raised might be characterised as alleged omissions of relevant information and some as alleged positive misinformation. There is some overlap in some areas, but we will for convenience adopt this classification.

The case of Dr Adam on non disclosure

It was submitted that none of the following matters was included in the Information and that each should have been in order to present a fair and balanced picture:

(a)

Dr Adam was of good character and came from a well-respected Indian family in Zimbabwe and whose close relatives included former senior members of the judiciary.

(b)

His family’s wealth, including his own, pre-dated (by a number of decades) ZANU-PF coming to power and the imposition of sanctions.

(c)

None of his companies or interests had ever been subject to EU or UK sanctions.

(d)

Land belonging to Dr Adam’s family (namely, the Kilworth Estate) had been compulsorily seized by the Zimbabwean Government in May 2002 despite the objections from the Claimant's family.

(e)

From 2010 onwards the ZANU-PF-dominated Government had been taking issue with the steps taken by Quest to comply with its Indigenisation and Economic Empowerment policies.

We will deal with each of these matters separately, though it will be necessary to look at the overall picture before reaching a final conclusion.

Dr Adam’s background

As to (a), it is correct that Dr Adam had no convictions of any kind. As a practising medical practitioner in Zimbabwe for a good number of years following his qualification as a physician, he was entitled to be seen as having a positive good character. That latter factor was revealed in the UBS papers. Presumably the police would have checked for previous convictions. The UBS risk profile of January 2007 would certainly suggest that Dr Adam came from a well-connected family with a number of his relatives, including his two daughters, being engaged in reputable professions. His brother is described as a “retired High Court Judge” and his brother-in-law (who is married to his sister) is referred to as a “Supreme Court Judge”.

Whilst all these matters should have been drawn to the Judge’s attention, we do not consider that their omission would of themselves and standing alone constitute material non-disclosure. They would not go directly to the question of whether reasonable grounds existed for suspecting money laundering offences (cf. R (Mercury Tax Group) v HMRC [2008] EWHC 2721 (Admin) at paragraph 54) and in this particular context “respectability” can be a useful cloak for such activities. In any event the failure to refer to previous convictions would have suggested to the experienced judge that Dr Adam had no previous convictions.

We would add at this point that we consider that the failure to mention that the Sanmahr trust, and the associated companies, Accent, Coachway and Annandale, were administered for some years by professional trustees on the Isle of Man (a further matter relied upon by Mr Keith QC) falls into a similar category as the contention that Dr Adam’s previous good character should have been revealed: whilst it should have been mentioned, the failure to have done so does not, in our judgment, create a materially misleading picture.

Dr Adam’s wealth

As to (b), the 2007 UBS profile of Dr Adam records that he gave up full-time medical practice in the “mid 1980s” and concentrated on his business interests in the UK commercial real estate market and the motor trade in Harare. It indicates that he first started investing in UK real estate when “undergoing his post-graduate training in London” (which, given that he graduated in Zimbabwe in 1969, looks to have been in the early 1970s) and “wisely continued to aggressively invest and take speculative positions in the market over the next 30 years”. It was recorded that the “substantial increase in London property prices over this period has benefited Dr Adam greatly” and that “[his] main wealth generation is from profitable proceeds from this activity.” The estimated net value of the property portfolio then (in 2007) was around £12 million (or US$24 million). The net value was assessed on the basis that the gross value of the property portfolio was £40 million which was “leveraged at an estimated 70%” – in other words, the net value was 30% of £40 million.

Focusing solely on the property portfolio, the 2007 risk profile would certainly suggest that a sizeable proportion of the increase in the “property wealth” of Dr Adam was built up prior to 2002, although doubtless some increase in the value of the properties would have occurred in the period from 2002 to 2007. It is worth noting that a more up-dated assessment of Dr Adam’s worth reflected in a UBS document dated 11 August 2011 (presumably produced to comply with the production order) shows that the net property portfolio was still said to be £12 million (which had decreased in value by reference to the US dollar to US$20 million).

The balance of Dr Adam’s wealth in 2007 was recorded as comprising “net funds” of approximately US$10 million which had been “earned from investment returns and profits from motor business and liquidation of property sales.” It was also recorded that Dr Adam’s “motor business franchise is estimated to be worth US$5 million which includes property, machinery and stock.” The motor business was Quest which was noted as having been acquired by Dr Adam “during the 1980s”. The total of US$15 million was added to the US$24 million to make a net worth of approximately US$40 million. Again, an inference to be drawn from that material is that at least some part of the accretion of wealth derived from Quest would have been achieved prior to 2002, although it would not be possible to be specific about the precise amount or the precise proportion.

In August 2011 the net worth of Dr Adam was said to be approximately US$45 million. There is a further feature of the August 2011 record to which we will refer below at paragraph 60, but in relation to the issue of whether the judge ought to have been told that Dr Adam’s family’s wealth, including his own, pre-dated the imposition of sanctions, that appears to be the totality of the evidence upon which the assertion is based.

In our judgment that point is undoubtedly a point that should have been made in the Information. However, the mere fact that the bulk of the wealth accrued prior to the imposition of sanctions would not have itself meant that additional wealth accruing thereafter may not have been the result of monies received in the UK in breach of the sanctions and thus be available for “money laundering”.

We do not think that this point of itself and standing alone would have assisted Dr Adam.

No sanctions against Dr Adam’s interests or companies

As to (c), this is true as a proposition and could have been included in the Information. However, we cannot see that it would have added greatly to the picture. It is akin to the omission of reference to the fact that Dr Adam had no convictions. It would not have assisted on the question of whether reasonable grounds existed for suspecting money laundering offences.

Seizure of Kilworth estate by the Government of Zimbabwe

As to (d), the UBS papers reveal quite clearly that the Kilworth Estate was made the subject of a preliminary notice of acquisition by the Government of Zimbabwe on 1 September 2000; that by a letter dated 21 September 2000, signed by ‘Y.A. Adam’ on behalf of Kilworth Estates (PVT) Ltd, Dr Adam’s brother made representations against the making of an order acquiring the land; that on 25 February 2002 the Minister of Lands, Agriculture and Rural Resettlement made an Acquisition of Land Order in respect of the estate that came into force on 21 April 2002; and that on 10 May 2002 a notice seeking confirmation of the order for acquisition was lodged by the government in the Administrative Court of Harare. There is with the UBS papers a draft final order though no final order as such, but equally nothing to indicate that the order sought by the Government of Zimbabwe was not made.

It seems to us, therefore, that there was clear evidence from which the compulsory acquisition of a sizeable estate belonging to members of the Adam family by the ZANU-PF Government could be inferred.

Given the nature of the application being made by the MPS, in our judgment, this should plainly have been disclosed. It is undoubtedly the kind of factor that the applicant, wearing its ‘defence hat’, should have revealed because it demonstrated that Dr Adam, or those closely associated with him, were not immune from expropriation by the regime and thus arguably had good reason not to wish to become involved in any activity that amounted to support for the regime. The failure to mention it was, for the reasons given in paragraph 52.iii) below, potentially very misleading.

The letter of 21 September 2000 was not referred to, directly or indirectly, in the Information at all, although DC Irons subsequently claimed in his evidence to the court that he believed (a) that it was written by Dr Adam (not by anyone else) and (b) that it evidenced “close links between [Dr Adam’s] family and ZANU-PF up until 2000”. He drew that from the contents of one paragraph in the letter which said that:

“the owners of this farm have had a very close relationship with ZANU-PF going back to the late fifties and have been actually joint-venture partners in the localization of the Woolworth’s departmental stores in 1986.”

However,

Steps taken against Quest by the Government of Zimbabwe from 2010

As to (e), if it can be made good, it would also suggest that those features of the available evidence that might suggest that Dr Adam was not favourably disposed to the regime (and vice versa) were not highlighted properly.

Within the UBS papers there is a letter dated 2 June 2011 addressed to the Company Secretary of Quest Motor Management Services (PVT) Limited (and marked for the attention of ‘N. A. Adam’) from the Minister for Youth Development, Indigenisation and Empowerment, referring to a form designated as ‘IDG01’ which was received by the Minister on 30 June 2010 (in other words, a year previously) and asking that the Company submit its “Indigenisation Implementation Plan and to comply immediately with the Indigenisation Economic Empowerment Act ….” We understand the purpose of that Act (passed in 2008) was to ensure that at least 51% of the shares of every public company and any other business would be owned by indigenous Zimbabweans.

Also within the papers is an undated letter from ‘N. A. Adam’ on behalf of Quest to the Secretary for Youth Development, Indigenisation and Employment, simply referring to “the letter we received” (and thus not identifying which letter it was) and enclosing “a copy of the letter sent together with the form IDG01, outlining the transfer of shares.” It appears that the letter enclosed with the letter was a letter from Mr Hassam who, as we have indicated, was a Director of Leyland Overseas Holdings Limited (see paragraph 6.iii)) which held 100% of the shares in three Quest companies, indicating that Leyland had “agreed to sell 51%” of that shareholding to Dr Adam 'personally' as an indigenous Zimbabwean”. That letter was dated 21 April 2010 and indicated that the shares would be transferred to Dr Adam as and when he was able to pay for them in the period expiring on 28 February 2015.

It would seem, therefore, that the letter referred to in paragraph 54 was a “chaser” from the Government following that earlier correspondence. We are not entirely sure that that limited clip of correspondence justifies the assertion that the Government had been “taking issue with Quest to comply with its indigenisation and empowerment policies”, as contended by Mr Keith QC, but it does indicate clearly that Quest (or the Quest Group) was also not immune from the Indigenous Indigenisation Programme and that there is some evidence that it was not embracing its obligations under the programme with any degree of expedition or enthusiasm.

Should information to that effect have been revealed in the Information? We consider that a more fairly balanced picture would have been painted by stating that the correspondence indicated that Quest was not exempt from the Indigenisation Programme and appeared to be complying in a dilatory and unenthusiastic manner, or words to that effect.

Alleged positive misrepresentations

Mr Keith QC asserts that a significant section in the Information concerning alleged links between Dr Adam and those on the sanctions list is misleading. That section was as follows:

“15.

Dr Adam also told UBS that this primary source of wealth was the QUEST MOTOR GROUP, a renaming of the Leyland franchise in Zimbabwe. The Quest Motor Group is a significant element in POCU’S investigation. The reasons being:

a)

It links Dr Adam financially to Zimbabwean PEPs (Footnote: ¹). Quest has received a number of payments into its billing company which is called ACCENT FINANCE LTD (registered in BVI). This company had an account with UBS and its purpose is listed as being to receive “funds transferred as result of car sales”. The client information goes on to say that “Accent Finance will only receive funds transferred as result of car sales in Zimbabwe”. Intelligence suggests that there were payments made directly into the account from Zimbabwean PEPs. Between December 2008 and 31^st May 2011, Accent Finance Ltd received 34 payments totalling $695,675 from a company called AMC (Amalgamated Motor Corporation) which was owned by a man called Ray KAUKONDE who according to open source is connected to ZANU PF and was on the EU Sanction List during this period after the majority of payments had been made …

b)

It links Dr Adam personally to someone on the sanctions list. Quest links Dr Adam to a subject of sanctions, Billy RAUTENBACH, who has also been convicted of fraud in South Africa.

c)

It has given Dr Adam cause to be disingenuous over his business activities. Dr Adam has denied that Mr Rautenbach had anything to do with Quest Motors or any of his business ventures. Intelligence suggest otherwise.

d)

It links Dr Adam to ZANU PF. Quest has been directly linked to ZANU PF through allegations that its investment company called M&S SYNDICATE (a sanction listed entity) is believed to have invested in Quest Motor Group …

…

g)

It offers an instance of suspicious income generation. In 2007 Dr Adam told UBS that the expected income of Quest Motor Group would be $1 million pa. In fact intelligence suggest that in the four years subsequent to 2007, Quest Motor Group paid $28 million into Accent Finance (BVI). This represents a seven fold increase in income in a country that was economically broken. A field report from a bank official dated 13^th July 2009 and generated from Dr Adam’s relationship with HABIB BANK AG ZURICH, LONDON, has been seen. It concedes that “due to the prevailing market conditions, the motor trade indeed was slow”.

16.

Mr Conrad ‘Billy’ Rautenbach …. Intelligence suggests that he is a partner in the Quest Motor Corporation. One of Mr Rautenbach’s companies, SABOT, was used to settle costs incurred by Quest – flights within Southern Africa in the 1990s. SABOT was the company used in a fraud that Mr Rautenbach was convicted for by the South African Authorities in 2009. Intelligence further suggests that it was Dr Adam who introduced Mr Rautenbach to Emmerson MNANGAGWE, the ZANU PF Defence Minister who then progressed Mr Rautenbach’s mining business in the Democratic Republic of the Congo. A fact that has been denied by Dr Adam.

17.

…

18.

Quest is jointly owned through Leyland Overseas Holdings by two trust structures. One is the Sanmahr Trust which is Dr Adam’s, the other is the Hopley Trust. Intelligence suggests that whilst it is true that Mr Wessels Rautenbach did originally settle money through the Hopley Trust, the Trust’s beneficial owner remains the Rautenbach family, including Mr Conrad “Billy” Rautenbach.”

The financial standing of Quest

In relation to the assertion in paragraph 15 of the Information that Dr Adam “told UBS that his primary source of wealth was the Quest Motor Group”, Mr Keith QC drew attention to the material to which we referred in paragraphs 41-44 above. As at 2007, the figures show that 60% of Dr Adam’s wealth was derived from his UK property portfolio. By 2011 the proportion of his wealth attributed to his UK property portfolio was approximately 45% and the balance of 55% came from Quest, the re-balancing apparently occurring as a result of the changed value of the pound against the dollar. There is no express reference in the UBS documentation that speaks of Dr Adam’s “primary source of wealth”. It is, in our judgment, right to criticise the fairness and accuracy of the assertion in the Information to which we have referred given the figures to which we have also referred.

There is another issue relating to what the Information suggests that Dr Adam “told UBS” about Quest; it derives from paragraph 15(g) of the Information quoted in paragraph 58 above. The suggestion is that Dr Adam told UBS that the anticipated annual income of Quest received on its behalf by Accent, which MPS described as its billing company (see paragraph 6.iii) above and paragraph 15 (a) of the Information), was US$1 million and yet US$28 million was paid in the following four years. The UBS documents dated early 2007 (see paragraphs 41-44 above) do indicate: (a) that so far as Quest was concerned, because of the “current political issues in Zimbabwe the Company’s business have (sic) been adversely affected” and, whilst it was “an ongoing concern” (by which we understand that it was a “going concern”), it had “limited profitable potential”; (b) so far as its billing company (Accent) was concerned, the anticipated income would be approximately US$250,000 per quarter – or US$1 million per annum. The equivalent documents from UBS in August 2011 do not refer to Quest as having “limited profitable potential” or being affected by “political issues” and contains the information that the “estimated turnover of the Company” (which employed 200 people and made around 900 cars per year) was US$8 million. It was recorded in those documents that that information was given to UBS in 2009. The equivalent document for Accent still referred to the “estimated income” as US$250,000 per quarter.

Mr Keith QC submits that the MPS presented a misleading picture to the judge by suggesting that the estimated likely income for Accent (reflective, he submits, of Quest’s turnover) was to be taken as US$250,000 per annum which related to a single year (2007) and was not the four-year period used by the MPS to contrast the predicted annual earnings with amounts paid by Quest to Accent (totalling, it is said, US$28 million). The implication of the suggestion in the Information is that Accent (and thus Quest) was doing far better than its predicted income in a time of economic decline and, therefore, that the sums being paid over by Quest to Accent were in some way part of a money laundering scheme.

The picture is not entirely clear. Since Accent is said by the MPS to be the billing company for Quest, it is not easy to see why any sums are paid by Quest to Accent. However, Dr Adam explains in one of his witness statements that Accent did bill for a minority of Quest’s customers, but that Accent is the means by which Quest pays for its supply of imported vehicle kits from its suppliers. Quest, therefore, pays Accent and Accent pays the supplier. Accent earns a commission from Quest for doing this. This would, therefore, explain payments by Quest to Accent.

Subsequent research by the MPS has shown that over the four-year period between July 2007 and July 2011 the total amount paid directly to Accent by Quest over that period was US$7 million compared with the US$28 million referred to above. That figure is said to be based on “intelligence”, a most unsatisfactory term as it would ordinarily be the case that this kind of specific information would be derived from readily available documentation. However, it is also said that the “primary source of intelligence” indicated that US$28 million was paid to Accent during this period by Quest “and its ostensible client”, whatever that expression means.

There is, in our judgment, no doubt that what was stated in the Information was inaccurate: that is effectively admitted by the subsequent research to which we have referred. It is unclear what material other than “the intelligence” the MPS had at the time, but it is now said (in a witness statement from DC Smart dated 28 October 2013) that having analysed information “presently in our possession” (which appears to constitute the “relevant accounts” of Accent) that “the true total figure paid into Accent … by Quest and related entities or its purported clients … was not less than US$28,000,000.” This statement is extremely opaque and does not assist us in reaching anything like a satisfactory view of the essential validity of the assertion that Quest was earning more than US$1 million per annum which is what lay at the heart of what the Information was endeavouring to suggest.

We are obliged to conclude that the Information given to the Judge was not accurate and was misleading.

The NGO working paper and the connections with Mr Billy Rautenbach

The next broad area of attack by Mr Keith QC relates to parts of the extract from the Information we have quoted in paragraph 58 above that are essentially derived from the working paper referred to in paragraph 29 above. His fundamental submission is that some of the contents of that article were taken as the truth (and asserted as the truth) for the purposes of the Information whereas in fact certain features of that article were withdrawn after the publishers had received a letter from solicitors acting for Dr Adam threatening defamation proceedings.

The principal complaint related to the alleged link between Dr Adam (through Quest) and Billy Rautenbach and the allegation that he had "introduced Mr Rautenbach to Emmerson Mnangagwa, the ZANU-PF Defence Minister who then progressed Mr Rautenbach’s mining business in the Democratic Republic of the Congo" (the assertion made in paragraph 16 of the Information).

The original version of the NGO working paper suggested that Dr Adam had "facilitated [Billy] Rautenbach’s entry into the DRC [the Democratic Republic of Congo] by introducing him to Emmerson Mnangagwa". The common link between that part of the article and what appeared in the Information was the suggestion that Dr Adam introduced a listed person (Billy Rautenbach) to a minister in the ZANU-PF government who then played a part in securing Mr Rautenbach's involvement in the DRC. The article also contained a chart which sought to demonstrate links between various companies and as a result suggested a linkage between Dr Adam and Billy Rautenbach.

Dr Adam's solicitors (Whitmore Law LLP) wrote on 2 August 2011 to the publishers and authors of the NGO working paper complaining about aspects of the paper. So far as the aspect under consideration is concerned, they asserted that the alleged link with Billy Rautenbach was a "complete fabrication" and that Dr Adam had "never worked with or held any interests together with Billy Rautenbach” and this categorically is the position. They confirmed that Dr Adam "had previous historic dealings with Wessels Rautenbach who has since passed away", but that Dr Adam had never "dealt with or been in negotiations or contracts with Billy Rautenbach."

The letter of 2 August 2011 was with the UBS papers that the MPS obtained a week or so after it was written (see paragraph 29 above). It is not, we understand, accepted by the MPS that the NGO working paper was the sole basis for what subsequently appeared in the Information in relation to this issue, the suggestion being that there was further “intelligence” to this effect. Mr Keith QC invites us to compare the wording of the relevant part of the working paper and the wording of the penultimate sentence of paragraph 16 of the Information and draw our own conclusions. There are undoubtedly similarities of expression and there is certainly the basis for an argument to the effect that the assertion in the Information to which we referred in paragraph 66 above was that part of the working paper to which we referred in paragraphs 67-68. We are not, however, sure that we can draw the inference that there was no other basis for the contents of the Information, but we do not see that as fatal to Mr Keith’s attack for reasons to which we will turn.

It seems clear that the letter of 2 August 2011 constituted the basis for the final sentence of paragraph 16 of the Information which was to the effect that Dr Adam denied the links with Billy Rautenbach. There was no reply to that letter with the papers disclosed by UBS. Apparently unknown to the MPS by the time the Information was formulated in July 2012, the publishers of the working paper had agreed to withdraw this particular part of the working paper and issued a statement dated 22 November 2011 indicating that this was so. It noted that as soon as the letter from Whitmore Law LLP was received it was withdrawn “without any admission of liability” and that it then published a revised version of the working paper on 8 November 2011 which, inter alia, had the effect of removing any statement “linking Dr Adam with Billy Rautenbach in connection with either Quest Motors or the Democratic Republic of Congo”. The diagram was also withdrawn.

It appears that the MPS took no steps to discover whether there had been any response to the letter of 2 August 2011. Had it done so before July 2012, it would have discovered that the publishers had responded to Dr Adam’s complaints by withdrawing the offending parts of the working paper.

The other matter of potential significance in this context is that Mr Billy Rautenbach was removed from the sanctions list in February 2012 as we have set out at paragraph 20.iii) above. There was no reference to that fact in the Information. We might add that at the same time that Mr Rautenbach was removed from the sanctions list, so too was Mr Ray Kaukonde as we have set out at paragraph 20.iii) above. He was mentioned in paragraph 15(a) of the Information, but this fact was not drawn to the judge’s attention.

As it seems to us, the mere withdrawal from a published paper of a previously made allegation does not of itself amount to an acknowledgement that the allegation was unfounded, but it does at least afford some evidence that those who made the allegation originally have become less confident that they can prove it. Should that fact, together with the fact that Billy Rautenbach was no longer on the sanctions list, have been revealed to the judge? In our judgment, wearing its ‘defence hat’, the MPS should have done so (as indeed with Mr Kaukonde). The Information lacked the balance in this respect that it should have possessed before it was placed before him.

Value of the property portfolio

Mr Keith QC also submits that the judge was misled by the contents of paragraph 13 of the Information which said (a) that Dr Adam had told UBS in January 2007 that his property portfolio “was worth US$40 million … his own equity being US$12 million”, (b) that the MPS “believed that the actual figure was over ten times that amount” and (c) that the reason for Dr Adam’s misrepresentation of the value was that he “would not have been able to account for the size of the portfolio from his own earnings or been in a position to declare his silent partners”.

Mr Keith QC draws attention to the fact that the value of the portfolio recorded by UBS at the time was £40 million (not US$40 million), double the value of US$40 million at the time (see paragraph 41 above) and that there is nothing in the Information to justify the assertion that the portfolio was worth ten times the amount indicated.

It is undeniably true that the figure recorded by UBS was as Mr Keith QC suggests, and not as set out in the Information, so it follows that the judge was given the wrong information. It is also true that no justification for the belief in the distinctly higher value was given.

Again, it appears to us that the judge was not given an accurate or a full picture.

Dealings with Ravenscourt Corporation

Although certain other matters were raised by Mr Keith QC, the final matter to which we need to refer at this stage is his contention that paragraph 27 of the Information was materially misleading in relation to Dr Adam’s dealings with Ravenscourt Corporation (to which we have referred at paragraph 6.vi)) and Jamesons. It read as follows:

“Dr … Adam made credits of up to $6 million to Ravenscourt through another wealth management company called JAMESONS. That account also sits with Habib, and throughout Ravenscourt’s account one sees credits and debits of Zimbabwean individuals often seemingly connected to each other through family ties.”

That paragraph was preceded by a paragraph that suggested that Ravenscourt had “made a number of payments without explanation to Gideon Gono’s children between 2006 and 2008”. Gideon Gono, who was at the time Governor of the Reserve Bank of Zimbabwe, was said in the Information to be someone “currently on the sanctions list”. The Information had also stated that the Ravenscourt account was with the Habib Bank and that Ravenscourt had “won an almost exclusive contract as a private distributor of oil in Zimbabwe” despite “its lack of experience in the field”.

Mr Keith QC submitted that this all gave the impression that Ravenscourt was, using the vernacular, “bent” and that, as Dr Adam had made payments to it, he too must be “bent”. His complaint was that a proper analysis of the account in the name of Jamesons (which was available to the MPS) would have shown that the credits from that account to Ravenscourt (in fact totalling US$6.5 million) were made in four separate payments in March and May 2006 and that the following year (on 24 April 2007) roughly the same amount (in fact US$6.23 million) was paid back to the Jameson account by Ravenscourt. Moreover Habib Bank had provided to the MPS the report on Jamesons to which we referred at paragraph 34 which showed the bank had made enquiries to satisfy themselves of Dr Adam’s status of a businessman.

A fair representation of the relationship between the Jameson account and Ravenscourt on the basis of that analysis would, he submits, have been to the effect (a) that whatever the nature of the transactions, they took place well before Mr Gono was placed on the sanctions list on 24 July 2008 (as shown in the Official Journal of the European Union and as set out by us at paragraph 20.iii) above) and (b) were initially payments to Ravenscourt (and thus could not evidence handling by Dr Adam of criminal monies provided to him).

We think that a combination of paragraph 27 of the Information and the other parts of the Information summarised in paragraph 80 above would have led the judge, reading it relatively quickly, to believe that transactions were being conducted by Dr Adam, through the Jameson account, with Ravenscourt that were benefiting the children of someone then on the sanctions list when that was not so, or at least not so until July 2008. The dates of the payments to Mr Gono’s children were not specified other than that they were between 2006 and 2008.

As to the point made in (b) of paragraph 82 above, the Information would certainly have conveyed the position more accurately if it had been revealed that sums totalling over US$6 million were paid by Ravenscourt to the Jameson account in April 2007 because the natural inference would be that the original payments from the Jameson account to Ravenscourt (made the previous year) were in the nature of a loan. When Dr Adam was interviewed by the police, his explanation was that he had loaned his niece and nephew, the beneficial owners of Ravenscourt, that amount for their fuel import business which they were starting up.

We turn next to consider Golfrate’s case on non-disclosure.

Golfrate’s case on non-disclosure

Golfrate’s case on non-disclosure is essentially parasitic upon the success of Dr Adam’s challenge on the same ground. However, Mr Imran Khan’s argument identified three particular features associated with the search of Golfrate’s premises that are said not to have been disclosed properly to the judge: (i) that the MPS were proposing, once on the premises, to use the powers under s.50 of the Criminal Justice and Police 2001 Act which was, it is contended, an improper use of those powers; (ii) that the plan was a wholesale seizure of documents rather than, as it should have been, seizure of documents of substantial value to the investigation (reliance for this purpose being placed on the non-disclosure of the fact that the officers conducting the search would not have known what they were looking for); (iii) that Golfrate was a company of good standing with a substantial property portfolio of which Dr Adam’s portfolio comprised less than 10%.

We deal with (i) and (ii) in connection with the submissions made by Mr Keith QC for Dr Adam at paragraphs 139 and following below and we see no reason to add to our conclusions in that regard for present purposes.

As to (iii), we consider that this is equivalent to the submission made on behalf of Dr Adam concerning his previous good character and in relation to the proposition that much of his wealth was acquired prior to the imposition of sanctions (see paragraphs 38-45 above). We accept that the point might have been made in order to give a more balanced picture than conveyed by the Information provided to the judge, but we do not consider that, of itself, it amounts to non-disclosure. Golfrate may have operated substantially on the right side of the law for much of its history and a very significant part of its portfolio was unaffected by the constraints of the sanctions regulations, but neither fact would necessarily mean that the company, in a limited area, was not guilty of the laundering of monies transferred in breach of the sanctions legislation.

Neither Mr Keith QC nor Mr Khan have contended for any test other than that the issue for this court is whether “the errors and omissions would in fact have made a difference to the decision of the judge to grant the warrants”: see R (Rawlinson & Hunter Trustees) v Central Criminal Court, etc., at paragraph 173.

We therefore turn to consider what difference the deficiencies in the Information that we have identified might have made in the context of the claim that there were no reasonable grounds for suspecting that Dr Adam had committed a money laundering offence.

The case of Dr Adam

It was submitted by Mr Keith QC that that there were no reasonable grounds for suspecting that Dr Adam had committed a money laundering offence:

The statutory power

As we have set out, the warrants were issued under s.352(1) and 352(6) (b) of POCA 2002. The effect of these provisions is that the requirements of s.353 are satisfied.

The first question to consider in relation to the question as to whether there were reasonable grounds for suspicion is the money laundering offence alleged against Dr Adam. S.340(11) defines money laundering as an act which -

“(a)

constitutes an offence under section 327, 328 or 329,

(b)

constitutes an attempt, conspiracy or incitement to commit an offence specified in paragraph (a),

(c)

constitutes aiding, abetting, counselling or procuring the commission of an offence specified in paragraph (a), or

(d)

would constitute an offence specified in paragraph (a), (b) or (c) if done in the United Kingdom.”

The sections referred to are:

S.340 provides:

“(2)

Criminal conduct is conduct which—

(a)

constitutes an offence in any part of the United Kingdom, or

(b)

would constitute an offence in any part of the United Kingdom if it occurred there.

(3)

Property is criminal property if—

(a)

it constitutes a person’s benefit from criminal conduct or it represents such a benefit (in whole or part and whether directly or indirectly), and

(b)

the alleged offender knows or suspects that it constitutes or represents such a benefit.

(4)

It is immaterial—

(a)

who carried out the conduct;

(b)

who benefited from it;

(c)

whether the conduct occurred before or after the passing of this Act.

(5)

A person benefits from conduct if he obtains property as a result of or in connection with the conduct.

(6)

If a person obtains a pecuniary advantage as a result of or in connection with conduct, he is to be taken to obtain as a result of or in connection with the conduct a sum of money equal to the value of the pecuniary advantage.

(7)

References to property or a pecuniary advantage obtained in connection with conduct include references to property or a pecuniary advantage obtained in both that connection and some other.

(8)

If a person benefits from conduct his benefit is the property obtained as a result of or in connection with the conduct.

(9)

Property is all property wherever situated and includes—

(a)

money;

(b)

all forms of property, real or personal, heritable or moveable;

(c)

things in action and other intangible or incorporeal property.

(10)

The following rules apply in relation to property—

(a)

property is obtained by a person if he obtains an interest in it;

(b)

references to an interest, in relation to land in England and Wales or Northern Ireland, are to any legal estate or equitable interest or power;

(c)

references to an interest, in relation to land in Scotland, are to any estate, interest, servitude or other heritable right in or over land, including a heritable security;

(d)

references to an interest, in relation to property other than land, include references to a right (including a right to possession).”

The case of the MPS was that the breaches of the sanctions regime to which we refer at paragraphs 98 and following are capable of being in the range of possible criminal offences from which an inference could be drawn that the property was criminal property. Such an inference could be drawn either by showing that the property derived from conduct of a specific kind or kinds and that the conduct was unlawful or the circumstances of the dealing with the property were such that it gave rise to an irresistible inference that it could only have been derived from crime: see R v Anwoir [2008] 2 Cr App R 36.

At the hearing it was not entirely clear what case the MPS were making as to the breach of the sanctions regime. We therefore accorded them time to put in further submissions with a response from Dr Adam. We are grateful to the parties and to HM Treasury for their further detailed submissions.

The three sanctions regimes: the EU and UK Regulations

There were three applicable regimes during the relevant period. It is convenient to refer to each in turn.

The first regime covered the period between 2002 and 2004. Council Regulation (EC) No 310/2002 had the effect of freezing the assets of members of the Government of Zimbabwe and persons and entities listed in the Regulation. Article 2 prohibited making such funds available to any listed person or entity. Article 9 prohibited knowing or intentional participation in activities the effect of which was to circumvent the provisions of the Regulation (Footnote: ²).

To implement the Regulation, the Treasury made the Zimbabwe (Freezing of Funds, other Financial Assets or Economic resources) Regulations 2002. The material part of those regulations was Regulation 2 which made it an offence to breach Article 2, and insofar as it related to Article 2, Article 9 of the 2002 EC Regulation.

The effect of the UK Regulations was to criminalise breaches of the freezing provisions in the 2002 EC Regulation.

The second regime covered the period between 2004 and 2009. Council Regulation (EC) No. 314/2004 had an effect which was broadly speaking equivalent to Articles 2 and 9 of the 2002 EC Regulation. Article 13 expanded the territorial and personal jurisdictional scope of the Regulation. Effect was given to that Regulation in the UK by the Zimbabwe (Freezing of Funds and Economic resources) Regulation 2004.

The third regime covered the period from 2009 when the Zimbabwe (Financial Sanctions) Regulations 2009 was made to implement the 2004 EC Regulations in a different manner. Instead of directly criminalising breaches of the 2004 EC Regulation it created and defined offences modelled on the requirements of the 2004 EC Regulation. For example by Regulation 6 it was an offence to deal with the frozen funds and economic resources of persons designated under the 2004 EC Regulation.

The effect of the Regulations

It was submitted on behalf of the MPS that the direct transfer of funds from a designated person outside the United Kingdom to another person in the UK would not, without more, amount to a breach of the freezing provisions of the EC Regulations. Nor would it constitute an offence in the UK relating to a breach of the freezing provisions. The effect of the freezing provisions would be to freeze the funds once received in the UK. However, if the designated person retained a property interest in the funds after the transfer to a person in the UK, any subsequent movement of the funds would, unless authorised, constitute a breach of the freezing provisions and consequently be an offence. This would include, for example, the transfer of the funds by the person in the UK from one bank account to another without prior authorisation.

If a designated person outside the UK transferred funds to a person in the UK with the intention of circumventing the prohibitions in the Regulations that would amount to an offence without any further use or movement of the funds. The offence would involve the participation, knowingly or intentionally, in activities the object or effect of which was directly or indirectly to circumvent the freezing of the funds or making funds available to a designated person. The broad scope of this was made clear in Europaisch-Iranische Handelsbank AG v The Council of the European Union [2013] All ER (D) 126.

Territorial and jurisdictional scope of the Regulations

It was the submission of HM Treasury that the measures were to be read with a view to achieving the purpose of avoiding, insofar as possible, any extraterritorial effect of the measures. Despite what appears to be the unlimited territorial reach of the jurisdictional provisions in the UK Regulations, HM Treasury submitted that the provision should be read as being confined to offences or breaches committed in the UK by the person specified.

It was therefore submitted that Regulation 12 of the 2009 UK Regulations had to be construed as conferring jurisdiction with respect to both an offence committed by any person in the UK and an offence committed by any person elsewhere than in the UK who was a British citizen.

It was also submitted that persons of any nationality anywhere might be indicted for conspiracy to commit sanction breaches offences in the UK involving a person falling within the jurisdictional provisions of the UK Regulations.

The basis for our examination of the Information as it should have been put before the judge

We proceed on the basis that the MPS had to show reasonable grounds for suspecting either that funds had been transferred into the UK with the connivance of Dr Adam with a view to a breach of the sanctions regime in the UK or that he dealt in the UK, either himself or through an agent, with funds that he knew had been transferred into the UK in breach of the sanctions.

We therefore examine whether, on the basis of what was set out in the Information with (a) the misrepresentations corrected (as we have set out) and (b) with the disclosure which should have been made (as we have set out), there were such reasonable grounds. The case made by the MPS can be summarised and analysed under three headings as follows:

On the basis of the analysis of the Information, as it should have been presented, we have concluded there were only two matters that might amount to reasonable grounds for suspicion – the two payments set out in paragraph 15(a) of the Information and summarised by us at paragraph 110.i)a) involving Ray Kaukonde’s company, Amalgamated Motor Corporation and payments from the unnamed company owned by Solomon Majuru. However, Amalgamated Motor Corporation was never on the sanctions list and, as is indicated by its name, is connected with the motor trade. Without more detail, it is difficult to see how the payment from that company to Quest necessarily provided the necessary reasonable grounds, as there was a readily available alternative explanation.

Those two matters have then to be considered in the context of the difficulties that Dr Adam’s family had had with ZANU-PF in relation to Kilworth (see paragraphs 48-52 above) and the indigenisation of Quest (see paragraphs 53-57 above).

Our conclusion

The Information in this case was prepared and the hearing before the judge took place just before the handing down on 31 July 2012 of the decision of this court in Rawlinson & Hunter v Central Criminal Court. As was made clear by this court in that case, where search warrants are sought in relation to complex financial transactions, the preparation of the Information is a task that requires a very different approach to that adopted in that case and seemingly adopted in relation to the Information in this case – see paragraph 88 of the judgment in Rawlinson & Hunter. The judge is then required to bring his own critical and analytical scrutiny to the Information and other evidence before him and personally satisfy himself that there are reasonable grounds for suspicion (see paragraphs 83-86 and 89 of the judgment) and explain why in full reasons.

The decision of this court in that case is equally applicable to the complex transactions in issue in this case which are said to relate to breaches of the sanctions regime. A clear and analytical approach is required so that the judge can carefully scrutinise the materials and ascertain whether there are reasonable grounds for suspicion.

Looking at the whole of the material as it should have been presented before the judge, and subjecting it to the very lengthy analysis contained in this judgment, we are satisfied that the material said to give rise to reasonable grounds for suspicion cannot withstand analytical scrutiny. The approach adopted was not that which was required and as is now made clear by the judgment in Rawlinson & Hunter, even if it was not clear before.

We would add that Mr Miskin QC relied on the fact that the very experienced judge had granted the warrant and permission had initially been refused on this ground. However, this cannot avail the MPS in any way. On the contrary, if the MPS had prepared the Information in the manner now set out in the decision in Rawlinson & Hunter, then it would have been clear that the material did not withstand analytical scrutiny.

It has required a very large amount of work by the solicitors and counsel for Dr Adam to analyse the material held by the MPS, two days of hearings and considerable time thereafter to scrutinise the Information. In essence the Information sought to advance a case not by making clear what the reasonable grounds for suspicion were in relation to money laundering in connection with the sanctions regime, but by suggesting that Dr Adam and Golfrate were connected with a number of other questionable activities which on analysis do not support the sole ground on which these warrants were granted.

We have also considered the further evidence put before this court by the MPS as contained in the statements provided by the MPS to see if any of the further material could have justified the grant of the warrants.

There is, however, one matter which might add to what the MPS put before the judge. In his statement of 11 April 2013, DC Irons relied on an article found in the Herald, a Zimbabwe newspaper, which suggested that Quest sponsored the Zimbabwe Football Trophy as the army was one of its biggest customers. His mobile phone contained the telephone numbers of Mr Gideon Gono and army officers, police officers and ZANU-PF politicians. However, although this shows Dr Adam’s close connections with those who rule Zimbabwe, it really takes the money laundering allegations relating to the sanctions regime no further.

As we have reached the conclusion as set out in paragraph 115 that the warrants should not have been granted, and we can find nothing in the further evidence that assists, the warrants must be set aside. We can therefore deal with the other grounds more briefly.

As we have set out at paragraph 92 above, s.353 requires that in addition to the existence of reasonable grounds for suspicion, the first or second set of conditions must be complied with. The second set of conditions is set out in S.353 (5):

“(5)

The second set of conditions is that—

(a)

there are reasonable grounds for believing that there is material on the premises specified in the application for the warrant and that the material falls within subsection (6), (7) or (8),

(b)

there are reasonable grounds for believing that it is in the public interest for the material to be obtained, having regard to the benefit likely to accrue to the investigation if the material is obtained, and

(c)

any one or more of the requirements in subsection (9) is met.

…….

(8)

In the case of a money laundering investigation, material falls within this subsection if it cannot be identified at the time of the application but it—

(a)

relates to the person specified in the application or the question whether he has committed a money laundering offence, and

(b)

is likely to be of substantial value (whether or not by itself) to the investigation for the purposes of which the warrant is sought.

(9)

The requirements are:

(a)

that it is not practicable to communicate with any person entitled to grant entry to the premises;

(b)

that entry to the premises will not be granted unless a warrant is produced;

(c)

that the investigation might be seriously prejudiced unless an appropriate person arriving at the premises is able to secure immediate entry to them.”

In the light of our conclusion in relation to the main issue of reasonable grounds for the suspicion, it follows that it is difficult to see how these conditions could be met.

It was further submitted by Mr Keith QC that given the very large number of premises to be searched, the Information should have set out in much greater detail than it did the reasons why the conditions were satisfied and the judge should in any event have questioned the officer more closely. The assertion at paragraph 41 of the Information that there was a risk that evidence would be destroyed if those subject to the application were asked to produce it should have been questioned.

For example, the premises to be searched included those of SRV Delson, the UK accountants for Quest. The Information stated:

“I suspect them of being complicit in the laundering and I therefore do not feel it appropriate to treat them as a third party and use a PACE order.”

SRV Delson were chartered certified accountants in Harrow. No grounds whatsoever were given for the suspicion held by the MPS. Nor was anything set out as to compliance with the conditions in s.353(9).

Although in the circumstances it is not necessary for us to reach a concluded view, it is difficult to see how the conditions could have been satisfied in respect of any of the warrants in the light of our earlier conclusions on the reasonable grounds for suspicion.

The contention that the warrants were too wide

It was the contention of Dr Adam and Golfrate that the terms of the warrant were excessively wide; that they did not satisfy the terms of s.353(8) or the requirements set out in s.15 and s.16 of the Police and Criminal Evidence Act 1984 (PACE).

The warrants after reciting the fact that the judge was satisfied stated:

“I hereby authorise DC Ben IRONS and any appropriate person or any other person deemed necessary to assist in the execution of the warrant to enter on one occasion only and search premises situated at …… and seize and retain material that cannot be specified, and where appropriate image that material at the location and elsewhere; the material may include, but is not limited to, documents, computer equipment, telecommunication equipment and any other material or items identified that may be of substantial value to the Money Laundering investigation into the activities of Gulam Hussein Ali ADAM and associates which does not consist of items subject to legal privilege or excluded material.”

Safeguards in PACE

Ordinarily ss.15 and 16 of PACE provide safeguards in relation to any search warrant issued under any enactment. For example s.15(2)(c) requires the applicant for a warrant to identify so far as is practicable the articles to be sought.

However, s.355(1)-(3) of POCA provided power to modify the provisions of s.15 and s.16 of PACE by Order made by the Secretary of State. By The Proceeds of Crime Act 2002 (Application of the Police and Criminal Evidence Act 1984 and Police and Criminal Evidence (Northern Ireland) Order 1989) Order 2003 SI 2003 No. 174), made on 29 January 2003, s.15 and s.16 of PACE were significantly modified.

Unfortunately, the leading criminal law textbooks in common use, as distinct from the specialist publications, had not picked up this modification nor had counsel. Thus, although in the grounds s.15(2)(c) and 15(6)(b) were relied on, the modifications made by the 2003 Order removed the application of s.15(2) (c) and modified s.15(6)(b).

Our conclusion on the width of the warrants

If there had been a proper basis for obtaining the warrants, we would have had to consider very carefully whether the warrant could have been drafted in more precise terms. As this court has set out in a number of cases as, for example, Energy Financing v The Director of the SFO [2005] EWHC 1626 at paragraph 5, the wording must be clear. We appreciate the starting point for any police force will be a standard formulation. However, as is necessary in every kind of order, it is necessary to craft it to suit the particular circumstances of the case. On one reading of the wording used what could be seized was unlimited as the phraseology employed meant that the material was not limited to material connected with the money laundering investigations.

It appears that what should have been set out would have been something along the lines of the following:

“… the material is confined to documents, computer equipment, telecommunication equipment and any other material or items in whatever form identified as being potentially of substantial value to the Money Laundering investigation into the activities of Gulam Hussein Ali Adam and associates which does not consist of items subject to legal privilege or excluded material.”

It is important for the future that, quite apart from the very close attention that has to be paid to the Information, those drafting the warrant and judges scrutinising it must ensure that the wording is crystal clear and does not permit any ambiguity.

It is not, however, necessary for us to decide whether the words in the warrant could have been read in the way suggested and therefore would have been unlawful. It certainly should have been better drafted.

There is one further point. It was suggested that the warrants could have been limited in the way DC Smart instructed his officers to that which was relevant to the purchase and handling of property, as set out in his statement of 25 March 2013. If there had been reasonable grounds to suspect that Dr Adam was engaged in money laundering relating to sanctions, then it would have been necessary to look into the whole of the activities of Dr Adam as, given his widespread business interests, money could have been laundered through any of those activities.

Dr Adam and Golfrate advanced as another ground of their application that the judge had not given any reasons.

A similar issue arose in Rawlinson & Hunter v Central Criminal Court – see paragraphs 202- 208 of the judgment. In this case no one drew to the judge’s attention the clear authorities from this court. We do not accept the submission made that this can give rise to an independent reason for review of the decision of the judge for the reasons given in Rawlinson & Hunter. It is in essence part and parcel of the second issue.

Both Dr Adam and Golfrate contended that the police misused their powers under s.50 of the Criminal Justice and Police Act 2001, as it would not have been difficult to identify the documents that were reasonably believed to be material to the investigation, but instead the MPS removed documents wholesale. It was also the contention of Golfrate, as we have set out at paragraph 86 above, that it was always the intention of the MPS to use those powers and not to conduct a search; the MPS had failed to disclose this to the judge.

The statutory provisions

The relevant part of s.50 of the Criminal Justice and Police Act 2001 provides as follows:

“Additional powers of seizure from premises

(1)

Where—

(a)

a person who is lawfully on any premises finds anything on those premises that he has reasonable grounds for believing may be or may contain something for which he is authorised to search on those premises,

(b)

a power of seizure to which this section applies or the power conferred by subsection (2) would entitle him, if he found it, to seize whatever it is that he has grounds for believing that thing to be or to contain, and

(c)

in all the circumstances, it is not reasonably practicable for it to be determined, on those premises—

(i)

whether what he has found is something that he is entitled to seize, or

(ii)

The extent to which what he has found contains something that he is entitled to seize,

that person’s powers of seizure shall include power under this section to seize so much of what he has found as it is necessary to remove from the premises to enable that to be determined.

(2)

Where—

(a)

a person who is lawfully on any premises finds anything on those premises (“the seizable property”) which he would be entitled to seize but for its being comprised in something else that he has (apart from this subsection) no power to seize,

(b)

the power under which that person would have power to seize the seizable property is a power to which this section applies, and

(c)

in all the circumstances it is not reasonably practicable for the seizable property to be separated, on those premises, from that in which it is comprised,

that person’s powers of seizure shall include power under this section to seize both the seizable property and that from which it is not reasonably practicable to separate it.

(3)

The factors to be taken into account in considering, for the purposes of this section, whether or not it is reasonably practicable on particular premises for something to be determined, or for something to be separated from something else, shall be confined to the following—

(a)

how long it would take to carry out the determination or separation on those premises;

(b)

the number of persons that would be required to carry out that determination or separation on those premises within a reasonable period;

(c)

whether the determination or separation would (or would if carried out on those premises) involve damage to property;

(d)

the apparatus or equipment that it would be necessary or appropriate to use for the carrying out of the determination or separation; and

(e)

in the case of separation, whether the separation—

(i)

would be likely, or

(ii)

if carried out by the only means that are reasonably practicable on those premises, would be likely,

to prejudice the use of some or all of the separated seizable property for a purpose for which something seized under the power in question is capable of being used.

….”

The relevant part of section 52 of the Act provides as follows:

“Notice of exercise of power under s.50 or 51

(1)

Where a person exercises a power of seizure conferred by section 50, it shall (subject to subsections (2) and (3)) be his duty, on doing so, to give to the occupier of the premises a written notice—

(a)

specifying what has been seized in reliance on the powers conferred by that section;

(b)

specifying the grounds on which those powers have been exercised;

(c)

setting out the effect of sections 59 to 61;

(d)

specifying the name and address of the person to whom notice of an application under section 59(2) to the appropriate judicial authority in respect of any of the seized property must be given; and

(e)

specifying the name and address of the person to whom an application may be made to be allowed to attend the initial examination required by any arrangements made for the purposes of section 53(2).

(2)

Where it appears to the person exercising on any premises a power of seizure conferred by section 50—

(a)

that the occupier of the premises is not present on the premises at the time of the exercise of the power, but

(b)

that there is some other person present on the premises who is in charge of the premises,

subsection (1) of this section shall have effect as if it required the notice under that subsection to be given to that other person.

(3)

Where it appears to the person exercising a power of seizure conferred by section 50 that there is no one present on the premises to whom he may give a notice for the purposes of complying with subsection (1) of this section, he shall, before leaving the premises, instead of complying with that subsection, attach a notice such as is mentioned in that subsection in a prominent place to the premises.

(4)

Where a person exercises a power of seizure conferred by section 51 it shall be his duty, on doing so, to give a written notice to the person from whom the seizure is made—

(a)

specifying what has been seized in reliance on the powers conferred by that section;

(b)

specifying the grounds on which those powers have been exercised;

(c)

setting out the effect of sections 59 to 61;

(d)

specifying the name and address of the person to whom notice of any application under section 59(2) to the appropriate judicial authority in respect of any of the seized property must be given; and

(e)

specifying the name and address of the person to whom an application may be made to be allowed to attend the initial examination required by any arrangements made for the purposes of section 53(2).

….”

Paragraph 94 of the Code of Practice issued under s.377 of POCA 2002 provides in relation to the exercise of powers under s.50 that:

“Appropriate persons must be careful that they only exercise these powers where it is essential to do so and they do not remove more material than is absolutely necessary. The removal of large volumes of material, much of which may not ultimately be retainable, may have serious implications for the owners, particularly where they are involved in business.”

Similar guidance is given in Code of Practice B issued under PACE 1984.

The evidence in relation to the home of Dr Adam

It was the evidence of Dr Adam that he was awoken at 06:15 and introduced to the team led by DC Smart. He was immediately arrested and told he must remain in the lounge of the house whilst it was searched. He was not permitted to call his solicitor until 08:30; that was not contradicted by DC Smart. He was taken to the police station at about 11:00.

The evidence of DC Smart was that the house was searched from top to bottom and 40 bags removed. Dr Adam’s evidence was that all of these were bagged by about 11:00. His evidence was that there was a preliminary sift and he advised the officers with him as to the relevance of the documents.

The evidence in relation to the search at Golfrate’s premises and the home of Mr Aziz

The evidence of Ms Jessica Parker, a solicitor at Corker Binning who then represented Golfrate, was that on arrival at the offices of Golfrate at about 09:30 on 26 July 2012 she was told by DC Cocks that he proposed to bulk seize all the files within the office as the volume of files meant that it was impracticable to inspect them. She told DC Cocks that there was legally privileged material and it was agreed that would be sealed for later examination by independent counsel.

Her evidence was that she then went to see what was happening and saw officers taking all the files, only inspecting one file. They imaged all the computer hard drives with the exception of one they removed.

Ms Parker then went at about 11:50 to the home of Mr Aziz which was also being searched under the superintendence of DS Rance who had been drafted in from the extradition unit to help; he had no detailed knowledge of the investigation. DS Rance told her that he intended to bag up the computers and files.

She returned to the offices of Golfrate at 13:50 and observed the continued seizure and removal of the files without examination. A notice under s.50 was issued at 15:20 and signed by DC Cocks; it gave as reasons for the exercise of the powers the volume of documentary material and the need to examine the computer and electronic material elsewhere.

The evidence of DC Cocks in relation to the search of Golfrate’s premises was that after an inspection of the premises it was clear that to examine each document would be time consuming and would mean closing Golfrate for a number of days. They would also need space and scanners. He therefore took the decision to exercise the powers under s.50; it appears that the decision was taken prior to the arrival of Ms Parker. The timing recorded on the notice did not represent the time at which the decision was made. He disputed a significant part of Ms Parker’s account.

The contentions

It was contended that s.50 only applied if documents were found which came within the terms of the section; it was never intended to allow wholesale seizure without any attempt to examine the material.

Although we can see some force in this contention, we cannot reach any firm conclusion on the materials before us. The evidence is disputed and would require full examination against the documents which is not a process to which judicial review is well suited.

If the parties wish to pursue the issue, we will consider any appropriate further directions that should be given. We hope, however, that they will not given the clear conclusions to which we have come on the main issue.

For the reasons we have set out, we set aside the warrants. Any further proceedings under s.59 of the Criminal Justice and Police Act 2001 should take place as is usual in the Crown Court.