Former Scotland Yard Detective Superintendent Tristram Hicks has written an interesting response to the National Audit Office’s highly disparaging report on the UK’s confiscation regime published on 17 December 2013 (available here).  Amongst other positions relevant to recovery of the proceeds of corruption, Mr Hicks was previously the Head of the London Region Asset Recovery Team. 

The article, entitled “Not so bleak as odd” was published by the Money Laundering Bulletin. This is subscription only site, but offers a free trial:

Mr Hicks accepts that the confiscation process could be improved, and believes recoveries could be doubled without increased investment, and perhaps even tripled, by moving resources to the start of the process and with more engagement with asset recovery by “senior decision-makers”. But he makes a number of criticisms of the NAO’s report and, in particular, the methodology used to reach the “headline grabbing comment” that only “26p in £100 of criminal money” is recovered:

  • First, Mr Hicks argues that the figures being compared for recoveries and criminal money bear no relation to each other, making the comparison meaningless: 
    • The 26p comes from the £133m recovered by law enforcement through confiscation orders obtained in the Crown Court. It does not, for example, include sums recovered in civil recovery proceeds under the Proceeds of Crime Act (sometimes called non-conviction based confiscation or civil forfeiture), nor cash forfeiture by the police. These recoveries were not addressed in the NAO’s report. Sums recovered in civil proceedings by companies and others arising from fraudulent conduct would also not be included.
    • Adding recoveries from other mechanisms for recovery of criminal assets by law enforcement takes the current annual recovery to almost £400 million. Whilst the NAO report looked only at the confiscation regime, Mr Hicks suggests these figures should have been noted by the NAO. 
    • The £100 derives from estimated losses from fraud of £52 billion in the UK. That estimate is provided by the National Fraud Authority. But the Crown Courts do not deal with much of that activity (there is another discussion to be had as to why this is, and how it should be addressed). It is also a “loss” figure, not an estimate of the benefit to criminals. 
    • Mr Hicks argues that the figure of £52 billion is not a fair figure to use. Instead, he suggests that recoveries should be assessed against an estimate of the amount capable of being recovered through confiscation orders. Research commissioned by the Home Office estimated that amount to be much lower at £2 billion: see Dubourg & Prichard’s “Organised crime: revenues, economic and social costs” here.
    • Mr Hicks states that “£400m compared to £2bn is still a big shortfall, but it is looking a bit more bridgeable”, and suggests that at least these two figures relate to each other. 
  • Secondly, Mr Hicks criticises the NAO’s suggestion that confiscation orders were obtained in only a fraction of the cases where they may have been available. Again, the methodology underpinning that conclusion is viewed as flawed. 
  • Thirdly, it is noted that the NAO has not taken into account the costs of the criminal justice system: the police, the CPS and the Courts. In total, this costs £14.6b, and the £100m cost of administering confiscation orders is a small part of that. The NAO, in Mr Hick’s view, should not have ignored the cost of obtaining convictions. 
  • Fourthly, Mr Hicks regards as unfair the comment that £1bn had been confiscated since 1987, which implies that the inefficiencies the NAO identifies have been in place for over 25 years. But Mr Hicks notes that very few assets were confiscated until the introduction of the Proceeds of Crime Act in 2002. Most of that £1bn has been recovered in recent years, which the NAO’s report fails to recognise. 
  • Indeed, Mr Hicks notes that the number of confiscation orders made last year and the £133m recovered, are some of the highest figures ever recorded in the UK, with year-on-year improvement in the figures. This was not mentioned by the NAO. Mr Hicks also notes that there is international recognition of the UK’s confiscation regime, with “UK good practice and performance… recommended by both the European Commission and the Financial Action Task Force.”

In conclusion, Mr Hicks considers the methodology and findings of the report to be so odd that it raises concerns as to whether the real agenda is to present as hopeless the prospects of a successful confiscation regime providing value-for-money, with an agenda of actually reducing resources dedicated to confiscation.

This is clearly a debate which will run and run. One of the difficulties is the lack of data on which conclusions can confidently be reached, which gives plenty of scope for dramatically opposing views. Indeed, the Dubourg & Prichard report referred to above notes that there is a lack of reliable data, and that “many of the underlying assumptions are speculative and some calculations are unfortunately reliant on judgements rather than hard evidence”, but at least the report tries to calculate what is capable of being confiscated.

It seems very likely, however, that the figure viewed as recoverable by the study is itself only a small proportion of the value of criminal assets in the UK. The reach of the criminal justice system ought to be much better, although how to do so is a much wider issue than looking at confiscation alone.

What all of the debate demonstrates is the need for innovative thinking as to how to recover criminal assets and real commitment to doing so, including the full use of the range of tools available to law enforcement to recover criminal assets. With restraint orders down by 27% one hopes there is not a downward trend in recoveries. After all, successfully freezing the illicit assets in the first place is key to ensuring meaningful confiscation orders. New strategies and perhaps new law need to be considered. Perhaps one of the interesting comments in Mr Hick’s article is that “there are plenty of traditionalists in the upper ranks of the criminal justice system who don’t like confiscation, for a variety of reasons”.