The Criminal Finances Act 2017 runs to nearly 150 pages. It was hurried through Parliament shortly before the June 2017 election. It is an example of lazy and confusing legislating, where numerous sections and sub-sections are added on to existing legislation, giving rise to the creation of sections numbered 339ZD and 396L which pile uncertainty on to the already unsatisfactory provisions of the Proceeds of Crime Act 2002.
The 2017 Act, in addition to being impenetrable in its quest to tighten up the rules of confiscation and compensation, has added some interesting new provisions. Much has already been said about Part 3, the corporate offence of failure to prevent facilitation of tax evasion. It will be surprising if any corporation is prosecuted under this section, but it may assist in making board members more circumspect about tax schemes. It will certainly encourage corporates to seek advice about how to undertake risk assessments, secure top level commitment from the board, and develop implementation and communications plans.
Less comment has been made about Chapter 3 of Part 1 of the Act. None of the nine Factsheets published by the Home Office refer in any detail to these provisions. No guidance has been issued – HMRC has produced a 48 page guide to the failure to prevent tax evasion offence. Nevertheless, section 13 of the Act adds three pages of verbiage to section 241 of POCA, which, in three lines, defines unlawful conduct for the purpose of implementing the civil recovery of the proceeds of unlawful conduct: in short, conduct which is criminal under UK law, or which, where the offence is committed in another jurisdiction, is a criminal offence under the law of that jurisdiction and under UK law.
What has been added by section 13 is that conduct which constitutes gross human rights abuses or violations outside the UK is a type of ‘unlawful conduct’ which can lead to an action in the High Court for civil recovery from a person or entity of the financial proceeds of such abuses or violations. It may be noted in passing that there must have been a recognition by the Home Office that this procedure would be better positioned as a civil recovery rather than relying on a criminal conviction, followed by confiscation proceedings. It may also be noted that civil recovery actions have been few and far between in the last 15 years (in June 2014 the CPS stated that it had obtained just 2 civil recovery orders, but was embarking on a new strategy to improve its record).
Section 241A POCA, as added by the 2017 Act, sets out the three conditions which have to be met before any conduct can be deemed to be a gross human rights abuse or violation. First, that the abuse must be against a person who has sought to expose illegal activity by a public official; or against a person who has sought to uphold human rights or fundamental freedoms. Second, that the unlawful conduct must be a consequence of the victim seeking to expose illegal activity or uphold human rights. Third, the conduct must be carried out by a public official or with their consent or acquiescence.
Section 241(A)(5) states that conduct is connected with the commission of a gross human rights abuse if it is conduct by a person that involves acting as an agent for another, or directing or sponsoring, or profiting from, or materially assisting, such activities.
The conduct must involve the intentional infliction of severe pain and suffering, either physical or mental.
Other provisions define the limits of the offence, including time limits – proceedings may be brought up to 20 years from the date on which the offending conduct occurred.
Therefore, the provisions are aimed specifically at the conduct of foreign public officials, and there is on the face of it no obvious connection between what such an official may do to a man or woman who is protesting about human rights abuses in a foreign jurisdiction, and money or goods received by a UK company. Some improbable scenarios may be imagined: AminingCo PLC faces a strike in sub-Saharan Africa, and public officials, allegedly paid by AminingCo, round up the ring-leader and torture him. The strike is brought to an end by this means, and production continues, bringing revenue to a UK company which buys the product. But there are a number of points in this story which will surely be difficult to prove, and it is very difficult to imagine any case being established, even to the civil level of proof, that will result in the recovery of the proceeds of this ‘crime’. For a start, how will the benefit be assessed?
What can, or should, corporates do about this? What risks are they taking in their production lines around the world? The answer may be that they simply need to beef up their anti-bribery compliance manual. If AUKCO PLC pays a sub-Saharan public official, or connives in such a payment by Aminingco, to beat up a protester, it is committing an act of bribery, which may be easier to prove than the abuse of human rights offence. The company can be fined a large sum, and no complex proceedings in the High Court need to be embarked on. AUKCO PLC will suffer the same level of opprobrium, perhaps more, than if it has some assets seized by a High Court action.
What, therefore, is behind section 13 of the 2017 Act? Is it gesture legislating, like the Modern Slavery Act, seeking to demonstrate that the UK takes human rights abuses as seriously as slavery, and thereby encouraging better behaviour, but without any realistic prospect of any proceedings being brought? It is self-evident that there are human rights abuses and torture in many parts of the world, but proving that such abuses lead to unlawful financial gain may be a stretch. I predict that it will be some time before we see a civil recovery order procedure in the High Court under section 13 of the Criminal Finances Act 2017.