R v Landy

JurisdictionEngland & Wales
CourtCourt of Appeal (Criminal Division)
JudgeLORD JUSTICE LAWTON
Judgment Date12 January 1981
Judgment citation (vLex)[1981] EWCA Crim J0112-4
Date12 January 1981
Docket NumberNo. 3183/R/79 No. 3620/R/79

[1981] EWCA Crim J0112-4

IN THE COURT OF APPEAL

CRIMINAL DIVISION

Royal Courts of Justice

Before:

Lord Justice Lawton

Mr. Justice Michael Davies

and

Mr. Justice Bingham

No. 3183/R/79

No. 3424/R/79

No. 3620/R/79

Regina
and
Harry Landy
Arthur Malcolm White
and
Charles Kaye

MR. J. HAZAN, Q.C. and MR. J. GOUDRIE appeared on behalf of the Appellant Landy.

MR. J. ALLIOTT, Q.C. and MR. R. LAURIE appeared on behalf of the Appellant White.

MR. R. DuCANN, Q.C. and MR. H. GRUNWALD appeared on behalf of the Appellant Kaye.

MR. A. GREEN and MR. R. RHODES appeared on behalf of the Crown.

LORD JUSTICE LAWTON
1

These appellants, Harry Landy, Arthur Malcolm White and Charles Kaye, appeal by leave of this Court against their convictions at the Central Criminal Court on July 25, 1979, after a trial lasting 90 days before His Honour Judge Abdela. All three were convicted on a count charging them with conspiracy to defraud; Landy and White were also convicted on two counts charging them with conspiracy to utter forged documents. Kaye was acquitted on those counts. Landy was sentenced to 5 years imprisonment for the conspiracy to defraud. He was also fined £350,000 for that offence with a further 12 months imprisonment in default of payment and ordered to pay £100,000 towards the costs of the prosecution. He was also sentenced to concurrent terms of 3 years imprisonment on each of the counts of conspiracy to utter forged documents. White was sentenced to 4 years imprisonment for the conspiracy to defraud and concurrent terms of 3 years for the conspiracies to utter forged documents. He was also fined £5,000 on the count charging conspiracy to defraud and was ordered to pay £2,000 towards the legal aid costs of the defence. Kaye was sentenced to 12 months imprisonment suspended for 2 years and ordered to pay a contribution of £2,500 towards the legal aid costs of his defence.

2

On December 12, 1980 we adjudged that the convictions of all three appellants should be quashed on the ground that the verdicts had been un-satisfactory. We stated that we would give our reasons later and we are today doing so.

3

The case centred round Landy. He was born in 1911. In 1935 he married the daughter of a wealthy man named Williams, who had extensive interests, including one in banking acquired later known as The Palestine British Bank. Soon after his marriage Landy became involved in his father-in-law's business interests and by about 1968 he was a director of 156 companies and had himself become a wealthy man. He became a managing director of the Palestine British Bank in 1953. This bank had been founded in Palestine in 1942 and had a London branch, From 1962 onwards its premises were on two floors of the Williams National House in Holborn Viaduct. In 1968 the London branch was incorporated as the Israel British Dank (London) Ltd. It was a wholly owned subsidiary of the parent bank which was from about 1962 known as Israel British Bank (Tel Aviv). This bank was managed by another of Williams' sons-in-law named Bension. We shall refer to the Tel Aviv bank as "IBBTA" and the London bank as "IBBL". Until his death in 1971 Williams was chairman of both banks. During the period with which this case is concerned IBBL was primarily a bankers' bank, that is to say, most of its business was international and consisted of borrowing; from and lending to other banks but it had a few private depositors, mostly charities and members of, or connected with, the Williams family or the Williams' group of companies. Outwardly IBBL was run like any other secondary bank based in London. It was recognised as an authorised bank and depository by the Bank of England for the purposes of the Exchange Control Act 1947. Without this recognition it could not have carried on its international banking business.

4

IBBTA was run differently. It had its international banking side but it dealt in commodities, futures, securities, gold and silver on what was described later by the liquidator of IBBL as an enormous scale. Indeed such was the scale of its dealing activities that the Bank of Israel, which in that country occupies a position and performs a function akin to that of the Bank of England, was displeased with what was going on as being inconsistent with normal banking activities and took steps, seemingly unsuccessfully, to stop Bension doing what he was doing which was to do IBBTA's dealings through a group of companies which had been formed mostly in Liechtenstein from the late 1940's onwards by Williams or persons connected with him. Two companies, Mobilia and Investment and Building Trust (IBT), had been founded by Landy, the first in 1951, the other in 1962. The bene-ficiaries of IBT were stated to be Landy and Williams' four daughters. Why Bension wanted to do IBBTA's dealings through these Liechtenstein com-panies was never established. During the period covered by the indictment, that is from September 30, 1968 to July 12, 1974 he may have wanted to hide what he was doing from the Bank of Israel.

5

Bension used IBBL as a source of finance for these dealings. He would borrow money from IBBL, asking that it should be credited to IBBTA's account with another bank outside the United Kingdom. He would then use this money for dealing in the name of one of the Liechtenstein companies. IBBL, how-ever, would not debit IBBTA but the Liechtenstein companies of Bension's choice. The full details of Bension's dealings and of the profits and losses made have never been discovered. Attempts by IBBL's liquidator to find out have been unsuccessful. It is known, however, that substantial profits were made from dealings in gold and sliver through a Liechtenstein company called Denver Finance Establishment. IBBL debited the Liechtenstein companies with the interest payable on the loans requested by Bension in their names but the liquidator was unable to find any evidence that any profits which may have been obtained from Benslon's dealings, and there were probably substan-tial ones from some of them, ever reached IBBL, Landy, his wife or any of the Williams group of companies based in Great Britain. There was a lot of documentary evidence showing that over many years and particularly between 1968 and 1974 Landy gave instructions to the so-called trustees of the Liechtenstein companies, who were little more than registrars. These in-structions were mostly of a formal kind and were usually given at Benslon's request. Landy never went to Liechtenstein and there was no evidence that he took an active part in Benslon's dealings.

6

He did, however, know that Bension was managing IBBTA in a way which met with the disapproval of the Bank of Israel. On January 12, Landy had been present at a meeting in Israel which had been attended by the Governor of the Bank of Israel, Dr. Heth, who was an examiner of that bank, Bension and others connected with IBBTA. The Governor and Dr. Heth made it clear to the two joint managing directors of IBBTA, who were Landy and Bension, although the latter was the active one, that the Bank of Israel was dis-turbed first by the size of the indebtedness of the Williams group of com-panies to IBBTA as the security for loans seemed to be inadequate, secondly by various management deficiencies for which Bension carried responsibility, and, thirdly, by auditing deficiencies which had concealed IBBTA's true liquid-ity position and showed that Bank as being stronger than it was. IBBTA's position was serious. At the end of 1968 there had been a deficiency of I £37,000,000 in collateral securities. The Williams group of companies owed I £28,000,000, which was covered by no more than a guarantee.

7

The Bank of Israel's expressions of disapproval did not curb Bension's activities nor stop IBBL from providing finance for them. By 1970 IBBTA required help from the Bank of Israel. A loan of I £12,000,000 by that Bank to IBBTA was arranged on terms, the important one for the purposes of this case being that no credit whatsoever should be given to the Williams group of companies, which included IBT and Mobilia which Landy had established, without Dr. Heth's prior authority. This agreement was disregarded. IBBL continued to finance IBBTA through the Liechtenstein companies.

8

In October 1972 the Supreme Court in Israel, when dismissing an appeal by IBBTA in a civil case (referred to in the evidence as the Gutwirth case) had stated that IBBTA was unfit to act as a bank or trustee. On November 7, 1972 the Governor of the Bank of Israel, accompanied by Dr. Heth, had a meeting with Landy and Bension. At the trial there was some difference of recollection as to what had been said at this meeting. The details may not be all that important; but what is clear is that Landy left the meeting knowing that the Governor disapproved of Bension and the way he was running IBBTA. On November 15, 1972 Landy had a private meeting with the Governor. According to Landy the Governor said that Bension had not acted fraudulently but he had gone as far as he could within the law, he was too speculative and needed restraining. After this conversation Dr. Heth joined them and, according to his recollection, Landy said the agreement made in December 1970 would be honoured. It was not. The only step which IBBL seems to have taken to safeguard its position in relation to the advances to the Liechtenstein companies was to ask IBBTA for guarantees, and letters of pledge, in respect of two Liechtenstein companies. They were given. The guarantees were not in the usual form used by banks and it is probable that they could not have been in law. The pledges were nothing more than pieces of paper.

9

At one stage, one of the Liechtenstein companies did deposit some...

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