Foreign Governments and their anti-corruption agencies have available the full range of mechanisms envisaged by the United Nations Convention against Corruption when seeking to locate, freeze and recover the proceeds of corruption located or laundered through the United Kingdom.
Available mechanisms include:
- mutual legal assistance from the UK authorities in support of a foreign state's criminal investigations and/or proceedings
- enforcement by the UK authorities, through mutual legal assistance, of a foreign state's confiscation or forfeiture orders
- repatriation of assets to a foreign state following criminal confiscation following successful criminal proceedings brought by the UK authorities
- repatriation of assets to a foreign state following successful civil forfeiture proceedings brought by the UK authorities
- private civil proceedings commenced in the UK by the foreign state
Each of the available mechanisms has its own advantages and disadvantages. The right mechanism for an asset recovery case will depend on its particular facts and circumstances. Our experience is that a successful asset recovery programme typically makes use of the full range of available mechanisms. Fuller consideration of the issues that arise are contained in our Guidance Note "Criminal and civil mechanisms to trace, freeze and recover the proceeds of corruption"1.
Mutual legal assistance in criminal proceedings
Mutual legal assistance is the formal mechanism by which countries request and provide assistance in obtaining evidence in one country to assist in criminal investigations or proceedings in another2.
The United Kingdom will provide most forms of assistance without treaty arrangements. Assistance may include use of investigatory powers; obtaining documentary evidence held by offenders or third parties, in particular obtaining banking documentation including know your customer information, bank statements and evidence of transactions; obtaining statements from witnesses; exercise of powers to search premises and seize relevant documents; and the tracing, freezing and confiscation of the proceeds of corruption (confiscation being available only with a domestic forfeiture or confiscation order, as discussed below).
A formal request for assistance may be unnecessary, unless compulsory powers are to be exercised. UK law enforcement agencies will typically assist in obtaining useful information available from public records (for example, information about ownership of properties and companies), or states can obtain the information themselves or by instructing lawyers or others to do so.
Requests for mutual legal assistance are sent to the UK's Central Authority in the Home Office. Requests in corruption matters will, as appropriate, be executed by the Proceeds of Corruption Unit of the Metropolitan Police, the Serious Fraud Office or the Overseas Corruption Unit of the City of London Police. In appropriate cases, the authorities can set up a Joint Investigation Team with a foreign state to investigate corruption cases that may involve criminal conduct in both countries.
Mutual legal assistance can be requested from the UK early in criminal investigations. In particular, the authorities can be asked to freeze assets suspected to represent the proceeds of crime at the outset of, or during, investigations. Mutual legal assistance can therefore be an efficient and effective method of securing assets at an early stage. Requests can be made later to enforce domestic forfeiture or confiscation orders against the assets, or civil proceedings brought for their recovery 3.
In cases of grand corruption, defendants have sometimes made numerous and sustained challenges to decisions to provide mutual legal assistance to support a foreign criminal investigation. In the past, these have caused considerable delay. Indeed, historically the mutual legal process has traditionally been a slow mechanism, although there are good grounds to believe that this has changed in corruption investigations and there are a number of recent examples of prompt and effective responses to requests for mutual legal assistance in corruption cases.
Domestic civil and criminal proceedings
Success in domestic civil and criminal proceedings (in the foreign state's jurisdiction) may lead to confiscation or forfeiture orders. These orders, with the consent of the Home Office, can be enforced by the United Kingdom's Serious and Organised Crime Agency. Recovered funds are returned to the foreign state seeking to enforce the order.
Certain criteria must be fulfilled to enforce an overseas confiscation or forfeiture order. This creates a risk that defendants may challenge the enforcement of foreign forfeiture and criminal orders, meaning that the issues have to be litigated twice, once at home when obtaining a judgment or conviction, and again in England when seeking to enforce a forfeiture order. Criteria for enforcement in the United Kingdom include:
- the order must specify the assets against which enforcement is sought;
- the order must be based on a finding that the assets had been obtained as a result of or in connection with criminal conduct (being conduct which would also be an offence if committed in the United Kingdom);
- criminal forfeiture orders must be based on a conviction that remains in force and which is not subject to any appeal;
- forfeiture orders must be compatible with the European Convention on Human Rights (there is considerable scope here for defendants to obstruct enforcement proceedings with claims that they did not have a fair trial, or that claims are politically motivated);
- civil forfeiture orders are not available against defendants that have acquired the asset in good faith, if enforcement would be detrimental to the person holding it.
Where available, enforcement of foreign orders will typically be cheaper than private civil proceedings. Enforcement will be carried out by the UK's Serious and Organised Crime Agency.
However, it is first necessary to obtain domestic confiscation or civil forfeiture orders, from which no further appeal lies. This is sometimes difficult because of the improper influence of the defendants, or because defendants abscond or die, or because of the ability of their legal teams to cause repeated delays to the conclusion of proceedings or because an incomplete picture of the corrupt activities make it difficult to satisfy the criminal standard of proof, or because appeal mechanisms may take years to be complete. Further, assets may be held in the names of foreign companies and trusts that are not susceptible to criminal proceedings in the victim foreign state, or to domestic confiscation or forfeiture orders made against the owners or beneficiaries personally.
UK criminal and civil forfeiture proceedings
The United Kingdom law enforcement authorities may bring criminal proceedings against British or foreign nationals that have committed corruption or money laundering offences within their jurisdiction, including foreign public officials, their associates, or those that have assisted in the laundering of funds. Indeed, such investigations and prosecutions may be triggered by requests for mutual legal assistance in support of foreign criminal investigations or prosecution. Typically, prosecution will require the presence of the defendants in the UK, either because they have been arrested here or because they have successfully been extradited.
Assets may be frozen during investigation and prosecution. On conviction, confiscation orders can be sought against defendants to the value of the benefit from the offender's criminal conduct.
A criminal court also .
Further, United Kingdom proceeds of crime legislation permits the Serious Organised Crime Agency, the Crown Prosecution Service and the Serious Fraud Office to bring civil forfeiture proceedings, known as civil recovery proceedings, to freeze and recover assets as the proceeds of crime inhas power to award compensation to victims of criminal conduct, or the return of stolen property. However, disputed cases involving complicated issues are likely to be left to the civil courts the absence of a criminal conviction (and there is a summary procedure in relation to seizures of cash believed to derive from the proceeds of corruption). Civil forfeiture powers have, however, been sparingly used to date in the UK in corruption cases.
However, whilst criminal investigations may produce evidence that assets have been corruptly acquired, criminal prosecution and confiscation may be impossible for the reasons identified above, in particular because foreign defendants abscond.
There is no formal mechanism in the United Kingdom for corruptly acquired assets to be repatriated following confiscation or forfeiture4. However, it is the present practice of the United Kingdom Government in corruption cases to repatriate forfeited or confiscated corruptly acquired assets to the victim state.
Civil proceedings brought by the foreign Government
Foreign states or their anti-corruption agencies are able to bring private claims in the UK's civil courts to secure and recover corruptly acquired assets, or to seek damages in respect of assets that have been laundered through the UK. This will require the foreign state to retain lawyers to make the claim. This may have the disadvantage that the state will have to pay for the legal representation, but in most cases costs are a small proportion of the amounts claimed and there are also a number of ways for cases to be funded which do not require payments to be made until assets are recovered.
English civil proceedings offer some powerful weapons and advantages:
- A variety of ways in which claims can be put, including the ability to claim both bribes and misappropriated funds, and potentially assets acquired using such tainted funds, as assets held on trust for the victim foreign state, together with damages for fraudulent conduct. Claims can also be made against third parties, including banks, that have knowingly assisted public officials to misappropriate public funds or receive bribes.
- The Courts have wide jurisdiction to hear claims relating to assets in the UK, and claims for assets overseas where there is sufficient connection to the jurisdiction.
- The ability to claim other assets held in other countries, with the intention of enforcing a judgment against those assets in due course.
- A relatively quick legal process, with appeals only permitted with the permission of a judge, which limits delaying tactics.
- A large number of countries will readily enforce a UK judgment. For example, European countries have mechanisms for the mutual enforcement of judgments, and the UK is a party to other international treaties or bi-lateral arrangements for the enforcement of judgments.
- Freezing injunctions (potentially with world-wide effect5) can be obtained securing assets suspected to be the proceeds of corruption, pending the outcome of a claim to those assets. In appropriate circumstances, these can be obtained on a without notice (ex parte) basis, meaning that assets can be secured with an injunction before a defendant is aware that proceedings have been brought.
- Orders can be made against third parties for disclosure of relevant documents6. This is a powerful mechanism to obtain helpful evidence from, for example, banks that hold accounts or other assets, financial or other advisers, or solicitors that have acted on acquisitions of property. It has even be used to obtain evidence previously gathered by law enforcement agencies using their investigatory powers, provided that ongoing investigations are not prejudiced.
- These orders can be coupled with "No-say" orders (gagging orders) preventing, for a period of time, banks and other third parties from informing the defendants of a freezing injunction or disclosure order. This is particularly useful if it is believed that banking documents may reveal further assets that have not yet been identified and secured.
- Defendants can be required to provide details of their assets, their source and dealings in them7. Defendants have obligations to disclose documents during proceedings, and, effectively, to explain and prove the source of assets claimed to be the proceeds of corruption. Search and seize injunctions can be obtained permitting a claimant's lawyers to attend premises for the purpose of preserving evidence that may otherwise be destroyed.