National Crime Agency v Mrs A
| Jurisdiction | England & Wales |
| Judge | Mr Justice Supperstone |
| Judgment Date | 03 October 2018 |
| Neutral Citation | [2018] EWHC 2534 (Admin) |
| Court | Queen's Bench Division (Administrative Court) |
| Docket Number | Case No: CO/754/2018 |
| Date | 03 October 2018 |
[2018] EWHC 2534 (Admin)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
ADMINISTRATIVE COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
THE HONOURABLE Mr Justice Supperstone
Case No: CO/754/2018
Jonathan Hall QC and Tom Rainsbury (instructed by NCA) for the Applicant
James Lewis QC and Ben Watson (instructed by Gherson LLP) for the Respondent
Hearing dates: 24–26 July 2018
Introduction
This application concerns the first “Unexplained Wealth Order” (“UWO”) made under s.362A(1) of the Proceeds of Crime Act 2002 (“ POCA”). The material provisions in relation to UWOs are contained in ss.362A–362R POCA, which were inserted into Part 8 of POCA by ss.1–2 of the Criminal Finances Act 2017 (“CFA 2017”).
The provisions came into force on 31 January 2018 pursuant to the Criminal Finances Act 2017 (Commencement No.4) Regulations 2018.
According to the Explanatory Notes to the CFA 2017 (at para 1):
“The Criminal Finances Act 2017 makes the legislative changes necessary to give law enforcement agencies new capabilities and powers to recover the proceeds of crime, and to tackle money laundering, corruption and terrorist financing.”
The UWO is a new investigative tool.
On 27 February 2018 I made a UWO against the Respondent, who will be referred to as “Mrs A”, in respect of one property, which will be referred to as “the Property”, on a without-notice application by the National Crime Agency (“NCA”), which is an “enforcement authority” for the purposes these provisions.
Mr James Lewis QC and Mr Ben Watson appear on behalf of Mrs A on this application to discharge that order. Mr Jonathan Hall QC and Mr Tom Rainsbury appear for the NCA, as they did on the original application.
At the outset of this hearing Mr Lewis applied for an order that the hearing of this application be in private. I refused that application but I made an anonymity order to remain in force until further order, for the reasons I then gave.
Legislative Framework
Section 362A (“Unexplained wealth orders”) provides, so far as is relevant:
“(1) The High Court may, on an application made by an enforcement authority, make an unexplained wealth order in respect of any property if the court is satisfied that each of the requirements for the making of the order is fulfilled.
(2) An application for an order must—
(a) specify or describe the property in respect of which the order is sought, and
(b) specify the person whom the enforcement authority thinks holds the property (‘the respondent’) (and the person specified may include a person outside the United Kingdom).
(3) An unexplained wealth order is an order requiring the respondent to provide a statement—
(a) setting out the nature and extent of the respondent's interest in the property in respect of which the order is made,
(b) explaining how the respondent obtained the property (including, in particular, how any costs incurred in obtaining it were met),
(c) where the property is held by the trustees of a settlement, setting out such details of the settlement as may be specified in the order, and
(d) setting out such other information in connection with the property as may be so specified.
…
(5) The order may, in connection with requiring the respondent to provide the statement mentioned in sub-section (3), also require the respondent to produce documents of a kind specified or described in the order.”
Section 362B sets out the requirements for the making of a UWO in respect of any property.
“(2) The High Court must be satisfied that there is reasonable cause to believe that—
(a) the respondent holds the property, and
(b) the value of the property is greater than £50,000.
(3) The High Court must be satisfied that there are reasonable grounds for suspecting that the known sources of the respondent's lawfully obtained income would have been insufficient for the purposes of enabling the respondent to obtain the property.
(4) The High Court must be satisfied that—
(a) the respondent is a politically exposed person, or
(b) there are reasonable grounds for suspecting that—
(i) the respondent is, or has been, involved in serious crime (whether in a part of the United Kingdom or elsewhere), or
(ii) a person connected with the respondent is, or has been, so involved.
(5) It does not matter for the purposes of sub-section 2(a)—
(a) whether or not there are other persons who also hold the property;
(b) whether the property was obtained by the respondent before or after the coming into force of this section.
(6) For the purposes of sub-section (3)—
(a) regard is to be had to any mortgage, charge or other kind of security that it is reasonable to assume was or may have been available to the respondent for the purposes of obtaining the property;
(b) it is to be assumed that the respondent obtained the property for a price equivalent to its market value;
(c) income is ‘lawfully obtained’ if it is obtained lawfully under the laws of the country from where the income arises;
(d) ‘known’ sources of the respondent's income are the sources of income (whether arising from employment, assets or otherwise) that are reasonably ascertainable from available information at the time of the making of the application for the order;
(e) where the property is an interest in other property comprised in a settlement, the reference to the respondent obtaining the property is to be taken as if it were a reference to the respondent obtaining direct ownership of such share in the settled property as relates to, or is fairly represented by, that interest.
(7) In sub-section (4)(a), ‘politically exposed person’ means a person who is—
(a) an individual who is, or has been, entrusted with prominent public functions by an international organisation or by a State other than the United Kingdom or another EEA State,
(b) a family member of a person within paragraph (a),
(c) known to be a close associate of a person within that paragraph, or
(d) otherwise connected with a person within that paragraph.
(8) Article 3 of Directive 2015/849/EU of the European Parliament and of the Council of 20 May 2015 applies for the purposes of determining—
(a) whether a person has been entrusted with prominent public functions (see point (9) of that Article),
(b) whether a person is a family member (see point (10) of that Article), and
(c) whether a person is known to be a close associate of another (see point (11) of that Article).”
If the respondent fails “without reasonable excuse” to comply (or purport to comply) with the requirements imposed by the UWO within the period specified by the court, the property is “presumed” to be recoverable property (i.e. property obtained through unlawful conduct) for the purpose of civil recovery proceedings under Part 5 of POCA, unless the contrary is shown (s.362C(2) and (5)). The presumption will apply only to the respondent's interest in the property (s.362C(3)(a)). However, where the respondent is a politically exposed person by virtue of being a “family member” of, “close associate” of, or “connected with” an individual entrusted with prominent public functions, the respondent's interest is “taken” to include any interest of that individual (ss.362C(6)(b) and (8)).
Factual Background
The NCA's case is set out in the first witness statement of Ms Nicola Bartlett, a financial investigator employed by the NCA, dated 19 February 2018.
The NCA believes that the Property is held by Mrs A. She is a national of a non-EEA state. It is believed that she is married to Mr A.
The Property was purchased on 22 December 2009 by Vicksburg Global Inc (“VG”), a company incorporated in the British Virgin Islands (“BVI”). The price stated to have been paid was £11,500,000. VG was and remains registered as the sole proprietor of the property.
On 22 December 2009 (also the date on which the property was purchased), a mortgage was secured against the property in favour of Barclays Suisse. The charge was executed in return for a loan facility of “up to £7,475,000”.
On 23 December 2014 VG applied to the Land Registry to discharge the charge against the property, Barclays Suisse confirming that the property was no longer charged as security.
On 3 June 2015 Mrs A informed the Home Office in her application for indefinite leave to remain that she was the beneficial owner of VG.
On 31 January 2018 the BVI Financial Investigation Agency informed the NCA that the beneficial owner of VG was Mr A.
From March 2001 to March 2015, Mr A was the chairman of a bank which will be referred to as “the Bank” in a non-EEA country, which will be referred to as the “non-EEA Country”. The Bank was the largest bank in the country, in which the State had a controlling stake.
Mr A resigned from the Bank in March 2015. On 5 December 2015 he was arrested in the non-EEA Country and subsequently charged with various offences including misappropriation, abuse of office, large-scale fraud and embezzlement in connection with the Bank.
On 14 October 2016 Mr A was convicted after trial in the Serious Crimes Court in a city in the non-EEA Country. He was sentenced to 15 years' imprisonment. In addition he was ordered to pay the Bank a sum of approximately $39m.
The NCA believes that on or around 23 June 2016, Mrs A was arrested “in absentia” by the authorities for the non-EEA Country and declared “wanted” in connection with avoiding the investigation into the Bank.
Grounds of Application to Discharge the UWO
Mrs A contends that the UWO should be discharged on eight grounds:
i) Mr A is/was not a “politically exposed person” (“PEP”).
ii) The NCA seriously mischaracterised Mr A's role when persuading the court that the “income requirement” was met.
iii) The NCA was wrong to place...
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