Ali v R [2014] EWCA Crim 2388

Case No 2013/00763

[2014] EWCA Crim 2388

IN THE COURT OF APPEAL (CRIMINAL DIVISION)

ON APPEAL FROM THE CROWN COURT SITTING AT WINCHESTER

Mr Recorder Bowes QC

T20090188

Venue Royal Courts of Justice, Strand, London, WC2A 2LL

Date 19/11/2014

Before

LORD JUSTICE BURNETT

THE HONOURABLE MR JUSTICE COULSON

HIS HONOUR JUDGE PETER COLLIER, THE RECORDER OF LEEDS

Between

IMITAZ ALIApplicant

THE QUEENRespondent

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Andrew Mitchell QC and Dean Armstrong QC (instructed by Stokoe Partnership) for Applicant

Andrew Marshall (instructed by the CPS) for Respondent

Hearing Hearing date: 12 November 2014

Judgment

Lord Justice Burnett :

[1]Imtiaz Ali renews his application for leave to appeal against a confiscation order made on 11 January 2013 by Mr Recorder Bowes QC under the Proceeds of Crime Act 2002 [“POCA”] in the sum of £2,255,689.66. The order required that sum to be paid within 6 months in default of which the applicant was to serve an additional 8 years imprisonment. The applicant also seeks leave to rely upon fresh evidence produced by a forensic accountant, Peter Luscombe FCA. The evidence set out in that report is directed towards demonstrating that a number of conclusions reached by the Recorder were wrong.

[2]At the conclusion of the hearing on 12 November 2014 we announced our decision that both applications were refused. Mr Mitchell QC, who appeared on behalf of the applicant, provided a short additional written note after the conclusion of the proceedings to which Mr Marshall, who appeared on behalf of the respondent, replied. Our decision remains the same. These are our reasons.

[3]The background to the confiscation proceedings is that the applicant was convicted on 21 August 2009 at the Crown Court at Winchester of being knowingly concerned in harbouring, concealing or dealing with controlled drugs contrary to section 170 (1) (b) of the Customs and Excise Management Act 1979. The drugs concerned were 119.7 kilos of cannabis. Two co-accused were also convicted. The trial judge sentenced the applicant to 8 years imprisonment. He adjourned the confiscation proceedings. The trial judge retired shortly thereafter. It was for that reason that the confiscation proceedings came before the Recorder, rather than the trial judge.

[4]The confiscation proceedings started on 15 February 2011. At the heart of the issues which were to be considered in those proceedings was the activity of a company called Wildberry Limited. That was the commercial alter ego of the applicant. Amongst the financial dealings which called for consideration were:-(1) Money which had passed through an account held by Wildberry at Barclays Bank in the sum of £1,026,125.87 [“the Barclays money”];

(2) A VAT repayment to Wildberry in the sum of £450,945.69 [“the VAT refund”];

(3) Further funds in an account held by Wildberry in the First Curacao International Bank amounting to £121,104.77 [“the Curacao money”].

[5]The benefit for the purposes of the POCA comprised those sums together with the value of the seized drugs, which were agreed at £357,000, various sums connected to properties in which the applicant had an interest, the value of an expensive watch worn by the applicant when he was arrested and one or two other minor sums. It was by adding all the relevant figures together that the Recorder arrived at the figure we have identified. We note that the Recorder considered the applicant’s interest in two other properties but concluded that they were not to be included within the benefit figure. The applicant’s interest in those properties was valued at between £100,000 and £200,000. It was unnecessary for the Recorder to resolve a dispute about the value of the applicant’s interest.

[6]It was common ground that the “criminal lifestyle” provisions of POCA applied in the applicant’s case. Thus statutory presumptions operated that the identifiable assets of the applicant were the proceeds of crime unless that presumption was displaced (as he was able to do in respect of the two properties).

[7]The prosecution case was that none of the apparent trading represented by the Barclays money was genuine and that the VAT refund was fraudulent as part of a massive MTIC fraud (Missing Trading Intra Community fraud, including contra trading). That is a well known mechanism for defrauding Her Majesty’s Revenue and Customs [“HMRC”] of VAT. On the second day, the proceedings were adjourned to enable the parties to examine large volumes of further documentation relating, in particular, to the activities of Wildberry which the parties agreed might be relevant. By the time he adjourned the proceedings, the Recorder had heard evidence from the applicant together with his accountant, Mr Raza. Evidence had also been given by a resident of Dubai called Zahid Yahya (with whom the applicant had engaged in a property deal and who also gave evidence about the watch) to which we shall return. Finally, the Recorder had heard from Mr Khan who ran a company called Jubilee Leisurewear Limited which, in particular, imported sports shoes. His evidence was directed towards establishing that Wildberry dealt with Jubilee Leisurewear and thus that the apparent trading of Wildberry was genuine.

[8]The intention of the Recorder and the parties was to resume the confiscation proceedings in May 2011. However, it became apparent that there was an outstanding appeal due to be heard in this court which would determine whether the prosecution could assert that the applicant was guilty of offences other than that for which he had been convicted. In this case the prosecution were alleging that the applicant had been engaged in MTIC fraud. The case was Bagnall and Sharma

[2012] EWCA Crim 677

. The answer was that they could. It was in those broad circumstances that the part heard confiscation proceedings came back before the Recorder on 26 November 2012. He heard further evidence from the applicant and Mr Raza between the 26 and 29 November. He reserved his judgment. A comprehensive written decision was handed down on 11 January 2013. The Recorder set out the legal provisions applicable to the exercise in which he was engaged in an uncontroversial way. He concluded that the Barclays money in Wildberry’s account did not represent genuine trading. Having determined the benefit figure, the Recorder considered the recoverable amount by reference to sections 7 and 9 of POCA. In short, the burden of proof shifted to the defendant to prove to the court, if he could, that the value of his available assets was less than the benefit figure. The applicant failed to do so. It was in those circumstances that the confiscation order was made in the full benefit figure.

[9]The applicant had started at a disadvantage before the Recorder because he had fought the prosecution, making no admissions whatsoever, and furthermore continued to deny any wrongdoing even after his conviction and during the POCA proceedings. He gave contradictory evidence about the activities of Wildberry at his trial and in the confiscation proceedings, including the statement he provided for the purpose of those proceedings. In particular, in his trial he had said that there were no business records relating to Wildberry and further that it had not traded in 2006 (something repeated in his statement for the confiscation proceedings) but thereafter said that it traded and he produced volumes of records, including invoices. His case was that the company had gone rapidly from trading a few tens of thousands of pounds a quarter in sportswear to up to £100,000,000 in mobile phones.

[10]That trading bore all the hallmarks of MTIC fraud (including contra-trading). HMRC, having made the refund of £450,000, refused a further repayment of £3,900,000 because it was clear to them what was going on. We note that the Curacao bank used by the applicant featured in so many MTIC fraud cases that it was shut down by the Dutch authorities. The applicant’s position before the Recorder was that he accepted that the mobile phone trading was part of a MTIC fraud, but he suggested that he was an innocent dupe. The Recorder rejected that contention.

[11]The applicant sought permission to appeal which was refused by the single judge on 27 July 2013. He dealt systematically with each of the grounds then advanced. An application to renew followed promptly but the matter did not come on for hearing quickly. In July 2014 revised grounds were lodged together with the application to rely upon fresh evidence. That evidence is directed towards the proposition that it was at least likely that there was legitimate trading by Wildberry. It also deals with the question of how Wildberry managed to continue trading at all when HMRC refused the second (large) VAT refund.

[12]The application for fresh evidence was supported by a witness statement from the applicant’s solicitor. In that statement he referred to his recollection that on the first day of the renewed hearing, that is 26 November 2012, an application for an adjournment had been made to enable the applicant to obtain a forensic accountant’s report. There is no sign at all in the transcript of the hearing of that day of any such application. Nor was such an application heralded in any of the many communications which passed between the parties’ lawyers in the lead up to the resumed hearing. The consensual approach adopted by the parties was something which was commended by the Recorder in his judgment. Following receipt of the transcripts, the applicant’s solicitor produced a second short statement explaining that it remained his recollection that such an application was made. Realistically, Mr Mitchell did not suggest that we could proceed on the basis that any such application was in fact made.

[13]What is now apparent is that the applicant had sought funding for a forensic accountant’s report in September 2012 (suggesting that he had waited nearly 18 months since the first hearing) but the view was taken by the funding authority and not disputed by the applicant’s advisors, that Mr Raza could deal with all relevant matters.

[14]During cross examination in the course of the hearing between the 26 November and 29 November, the applicant himself referred to the fact that he had wanted a forensic accountant. Later, Mr Raza indicated that he could produce further evidence about the activities of Wildberry but that it might take him ten days. As it happens, no application for an adjournment was made.

[15]Mr Mitchell submitted that cross-examination of, in particular, Mr Raza raised an entirely novel point during the course of the resumed hearing. That was to seek to exploit the shortfall of £3,900,000 resulting from HMRC’s refusal to refund VAT, with a view to suggesting that Wildberry could not possibly have continued to trade in those circumstances. It was suggested that it would have been insolvent. The broad answer given by the applicant and Mr Raza was that Wildberry was trading vast quantities of mobile phones at very healthy profit margins so that the shortfall represented by the non payment of the VAT refund could be covered by profits. We observe that the large margins suggested have not been reflected in other MTIC mobile phone fraud cases, where one of the hallmarks is a series of transactions on tight margins.

[16]The reality in this case is that the applicant had 22 months between the two hearings to get his house in order in circumstances where, in our judgment, the issues were clear. Given the application of the criminal lifestyle provisions it was always incumbent for the applicant convincingly to explain the commercial activities of Wildberry with a view to avoiding the application of the statutory presumptions. His advisors, albeit rather late in the day, contemplated an independent report but in the end the applicant was content to rely upon Mr Raza. Mr Raza’s evidence was unsatisfactory in many respects, not least because it was often confused. As Mr Armstrong, who was representing the applicant in the confiscation proceedings, observed during the hearing in November 2012, it was sometimes difficult to get a clear answer from him. Be that as it may, it was always apparent that the detail of the trading activities of Wildberry would be the subject of close examination. That had been clear from the outset. A defendant facing confiscation proceedings must get his case in order before the hearing, not least because the statutory scheme operates by way of presumptions which it is for him to displace and also places the burden of proof squarely upon the defendant in the criminal proceedings when it comes to realisable assets. An appeal is not a vehicle made available to have another go with further and better evidence. The reality, as Mr Armstrong confirmed during the course of the hearing before us, was that all of the work which Mr Raza offered to do during the course of the November 2012 hearings would have formed part of the work done either by him or the forensic accountant before the resumed hearing if such work had in fact been undertaken.

[17]We have had regard to the factors set out in section 23(2) of the Criminal Appeal Act 1968. There was no reasonable excuse for failing to adduce evidence of the nature set out in the forensic accountants report during the underlying proceedings. That is a powerful feature in this case which has led us to the conclusion that the evidence should not be admitted.

[18]We turn to the grounds of appeal as they were refined and developed by Mr Mitchell in the course of argument. We observe that there is nothing in the suggestion that the Judge should have adjourned the second hearing in November 2012. That formed a large part of the written material before us although it was not strongly pressed in oral argument.

[19]The first ground is to the effect that the Judge should not have concluded that the Barclays money did not represent legitimate trading by Wildberry. Mr Mitchell submitted that the documentary evidence produced by the applicant, his explanation of it, coupled with the explanation given by Mr Raza, together with the evidence of Mr Khan of his dealings with Wildberry, should have led to the conclusion that the statutory presumption was displaced. He also submitted that the reasons given by the judge for dismissing Mr Khan’s evidence were inadequate.

[20]The Recorder recited the substance of the evidence he had heard. He was deeply sceptical of the veracity of the documents produced by Wildberry for the various reasons he explained (which we do not repeat). He set out the evidence of Mr Khan. Having concluded that the Wildberry documents were false, in the sense that they did not represent real trading, he went on to conclude that the evidence of Mr Khan, and such documents as he produced, which were said to confirm that Wildberry was buying goods from Jubilee Leisurewear, were also false. The question is whether that finding was open to the Recorder. In our judgment it was. Although his conclusion that the evidence of Mr Khan was to be rejected was stated in one short paragraph, it followed from his determination that the trading described by the applicant had not occurred. The Judge made clear that he had taken all the evidence into account. Having done so, if he was nonetheless satisfied that the Wildberry documents were false, the logical further conclusion was that Mr Khan’s evidence was also false. We consider not only that the conclusion was open to him on the evidence but that his reasoning was entirely adequate.

[21]The second ground relates to what Mr Mitchell described as double counting of the Curacao money. He submitted that the sum overlapped with the VAT. The VAT refund was paid into the Barclays Bank account in the United Kingdom. Other sums were also washing in and out of the account. Nonetheless, it was accepted by the prosecution that the overwhelming majority of that VAT refund was in due course transferred to the Curacao account. Mr Mitchell submitted that the Curacao money was the residue of the money transferred from the VAT refund, and has therefore been counted twice. The insuperable difficulty with that argument, in our judgment, is that not only were the transfers from the Barclays account part of wide ranging activity, but the Curacao account was awash with transactions of many millions of pounds. Furthermore, the evidence unequivocally showed that Wildberry had more than one account in Curacao, because there were intra-account transfers referred to. The Recorder was entitled to conclude that the statutory presumption relating to the residue in Curacao had not been displaced.

[22]The next ground concerns the watch. Its value and indeed ownership were both in dispute. Mr Yahya said that it belonged to him, that he had paid £10,000 for it and that he had given it to the applicant to enable the applicant to sell it on his behalf in the United Kingdom for a profit. It was the prosecution case that the watch was worth £62,000. The applicant said that it was worth not much more than £10,000, perhaps £14,000. The prosecution sought a valuation from the manufacturer. The watch was embellished with valuable diamonds. Had the embellishments been original (that is to say undertaken by the manufacturer), then the prosecution value would have been sustainable. The problem was that the embellishments had been introduced by others and so the manufacturers felt unable to give an independent valuation. It was in those circumstances that the Recorder rejected the prosecution valuation; but was also not satisfied that the relatively low value attributed to it by the applicant and Mr Yahya could be relied upon. The Recorder was faced with the same sort of difficulty encountered by judges in the civil and family courts when asked to value an asset in circumstances where neither of two competing valuations is accepted. We do not consider that the approach of the Recorder can be subject to any legitimate criticism.

[23]A new ground of appeal emerged in the speaking note which Mr Mitchell provided for the hearing. It was not taken in the original grounds of appeal by Mr Armstrong or in the perfected advice and grounds of appeal filed in July this year by Mr Mitchell and Mr Armstrong. We deal with it in deference to the submissions provided by the parties. The benefit figure included the value of the drugs which were seized. Those drugs were forfeited. It follows that the drugs were not available to the applicant for the purposes of satisfying the confiscation order. Thus, submitted Mr Mitchell, the Recorder should have proceeded upon the basis that the sum of £357,000 was not available to the applicant and deducted it from the benefit figure before making the confiscation order. This point does not appear to have been argued before the Recorder and for good reason. There was no doubt that the drugs could not be sold by the applicant to satisfy the confiscation order. However, as the Recorder identified in his ruling, once the benefit figure was determined the burden shifted to the applicant to show that he could not satisfy it from his available assets. In reality, a defendant in confiscation proceedings must identify and detail his assets and satisfy the court that he has provided a complete and honest account of those assets. As the Recorder noted, the key issue was whether the defendant satisfied him on the balance of probability as to the true extent of his assets. He went on:

“114. …the prosecution submits that I should have regard to his overall credibility and to what findings I have made as to his overall criminal lifestyle. 115. As set out earlier, the defendant has continued to deny his guilt in respect of the drug trafficking offence and I have largely rejected his evidence in respect of all the other property which makes up his benefit from his general criminal conduct. Specifically, I have found that the Wildberry receipts were false and that he was knowingly involved in a substantial MTIC fraud in relation to Wildberry. 116. The defence submit that the defendant is truthful and that his account is at least in part supported by other credible evidence. 117. Again, taking the evidence as a whole, I do not accept that the defendant has told the truth as to the extent of his assets and I find that he has failed to satisfy the court that the amount of his available free property is less than the benefit figure.”

[24]That was a conclusion open to the Recorder.

[25]Despite the extensive submissions made on behalf of the applicant, which have evolved significantly beyond those considered by the Single Judge, we concluded that the applications should be dismissed.