A & A v The Director of Public Prosecutions [2016] EWCA Crim 96

Case No 201503919 B4

201503921 B4

[2016] EWCA Crim 96

IN THE COURT OF APPEAL (CRIMINAL DIVISION)

ON APPEAL FROM BLACKFRIARS CROWN COURT

HIS HONOUR JUDGE PETER CLARKE QC

PCA/2015/0001

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

Date 23/03/2016

Before

LADY JUSTICE SHARP

MR JSUTICE EDIS

HER HONOUR JUDGE MUNRO QC

(Sitting as a Judge in the Court of Appeal Criminal Division)

Between

A & AAppellants

THE DIRECTOR OF PUBLIC PROSECUTIONSRespondent

Ms Helen Malcolm QC and Mr Robin Lööf (instructed by Debevoise and Plimpton LLP) for Appellants

Mr Jonathan Hall QC and Ms Fiona Jackson (instructed by The Crown Prosecution Service) for Respondent

Hearing Hearing date: 2 February 2016

Judgment

Introduction

[1]At the conclusion of the hearing before us, we announced that the appeal would be dismissed, and we now give our reasons.

[2]The appellants are husband and wife and are Kuwaiti nationals. The first appellant was Director General of the Kuwait Public Institution for Social Security (“PIFSS”) between 1984 and 2014. PIFSS is a Kuwaiti governmental agency that operates under the umbrella of Kuwait’s Ministry of Finance and invests state pension/social security funds accumulated from employers and employees for the benefit of the Kuwaiti population as a whole.

[3]On the 5 March 2015 in the Crown Court at Blackfriars, His Honour Judge Peter Clarke QC granted a restraint order in respect of $23.5 million All references in this judgment are to US dollars. in liquid assets that the appellants had in 12 bank accounts in the United Kingdom, after hearing an application by the Director of Public Prosecutions (the DPP) ex parte (without notice) and in private.

[4]The DPP acted under the Proceeds of Crime Act 2002 (External Requests and Orders) Order 2005 (the 2005 Order) further to a Letter of Request from the State of Kuwait dated 19 February 2015 and two supplementary Letters of Request dated 1 March 2015 and 4 March 2015. On 30 July 2015 the appellants applied to vary or set aside the restraint order. On 7 August 2015, the judge ordered that the restraint order should continue to 6 February 2016, when it would expire unless renewed.

[5]The appellants now appeal with limited permission of the single judge on two grounds, against the judge’s refusal to vary or set aside the restraint order, and they renew their application for permission to appeal in respect of the grounds on which permission was refused.

[6]The grounds are as follows: i) Ground 1: permission refused. There were insufficient and/or no reasons given by the judge on essential matters in dispute; ii) Ground 2: permission refused. There was a misstatement of the evidence that formed the basis of the application. iii) Ground 3: limited permission granted. There was a failure to deal with each of the three cumulative criteria in Article 7(2) of the 2005 Order either properly or at all, or in relation to each appellant separately. Leave was granted to argue that the judge did not deal properly with the requirement that relevant property in England and Wales must be identified in the external request, but refused in respect of the other two conditions identified in Article 7(2) of the 2005 Order. iv) Ground 4: permission refused. There was a mistake of law in maintaining the restraint order obtained on 5 March 2015. v) Ground 5: permission granted. There was a failure to deal with uncontested evidence of misinformation and lack of disclosure by the authorities of Kuwait. vi) Ground 6: permission refused. There was a failure to deal with the appellants’ renewed application for disclosure of the Letter of Request and supplementary Letters of Request and other information, redacted if necessary.

Fresh evidence and other matters

[7]Shortly before the hearing before us, the DPP issued an application for permission to rely on fresh evidence in this appeal. This evidence had been prepared for a further hearing before the same judge to renew the restraint order, which was due to take place on 5 February 2016. The DPP wished to rely on this further evidence for the limited purpose of persuading the court, if it was minded to allow the appeal, to remit the case back to the Crown Court for a further hearing, rather than to allow the appeal outright. The appellants opposed the application, on grounds amongst others that there was insufficient time for them to respond to that evidence.

[8]By the time of the hearing of this appeal it was agreed between the parties that if the appeal was allowed, the restraint order would be suspended pending the further hearing due to take place at the Crown Court and it was therefore unnecessary for us to adjudicate on the issue. We were however referred to some limited parts of that evidence on an issue of non-disclosure: see further, para 109 below.

[9]After we announced the outcome of this appeal, at the invitation of the parties, Edis J, sitting as a judge of the Crown Court, ordered that the hearing due to take place on 6 February 2016 should be vacated, and the restraint order would continue until 6 March 2016, or further order. This was to allow the appellants more time to respond to the further evidence from the DPP. Ms Malcolm QC for the appellants also invited us to direct that the further hearing should be dealt with by a High Court Judge. In our view, however, this is not necessary, and further matters can (and should if possible) be dealt with by the judge who has dealt with the hearings so far, and is therefore familiar with the relevant facts. We did not consider it necessary to order the disclosure of the Letters of Request and other information for the purposes of this appeal.

[10]The conditions for the making of a restraint order are now set out in Article 7(2) of the 2005 Order, as amended. By the Proceeds of Crime Act (2002) (External Requests and Orders) (Amendment) Order 2013 (SI 2013 No 2604). At the time of the hearings before the judge however, the material parts of Article 7 provided as follows: 7. — Conditions for Crown Court to give effect to external request(1) The Crown Court may exercise the powers conferred by article 8 if either of the following conditions is satisfied.

(2) The first condition is that— (a) relevant property in England and Wales is identified in the external request; (b) a criminal investigation has been started in the country from which the external request was made with regard to an offence, and (c) there is reasonable cause to believe that the alleged offender has benefited from the criminal conduct.

(c) as amended now reads:

“there are reasonable grounds to suspect that the alleged offender named in the request has benefited from his criminal conduct.”

[11]"Relevant property” for the purposes of Article 7(2) of the 2005 Order is property in respect of which there are reasonable grounds to believe that it may be needed to satisfy an external order which has been made or may be made: see section 447(7) of the 2002 Act and Article 55 of the 2005 Order.

[12]Section 447(8) of the 2002 Act defines criminal conduct as conduct which constitutes an offence in any part of the United Kingdom, or would constitute an offence in any part of the United Kingdom if it occurred there.

[13]The power of the Crown Court to make a restraint order pursuant to an external request is contained in Article 8 of the 2005 Order, as supplemented by Article 9. Though satisfaction of either of the conditions contained in Article 7 is necessary before a restraint order can made, the court’s power to make such an order under Article 8 is and remains discretionary. Article 8 provides that the court may if the relevant condition is satisfied make a restraint order restraining any specified person from dealing with relevant property that is identified in the external request and specified in the order. Article 9 provides for the making, discharge and variation of restraint orders, and it includes a mandatory discharge provision at Article 9(7) (the court must discharge an investigation-based order “…if within a reasonable time proceedings for the offence are not started”).

An overview of the case

[14]The case presented to the judge by the DPP was on the face of it, a straightforward one. The Kuwaitis were pursuing a lengthy criminal investigation into suspected criminal conduct by the first appellant (the criminal conduct specified was public funds theft, assistance and facilitation of Public funds theft, Damaging Public Funds and Money Laundering). The appellants had by then left Kuwait, and were living in the UK (the first appellant left Kuwait on 14 November 2014, thus shortly before the judgment of the Swiss Supreme Court was promulgated, and the second appellant on 21 January 2015). By the time of the hearing on 30 July 2015, the Kuwaiti authorities had issued international arrest warrants for them both. At the hearing in March, there was an international arrest warrant only for the first appellant.

[15]The Kuwaiti investigation centred on allegations amongst others, that the first appellant was ‘skimming’ commission payments from the massive government investment fund for which he was responsible. The investigation had begun in 2008 following allegations made by a “whistle blower”. It had so far discovered that though he was a “middle ranking civil servant” with apparently limited means, the first appellant had accrued massive sums (hundreds of millions of dollars) which was used to purchase assets overseas, deposited in off shore accounts and in banks in Switzerland and the UK amongst other jurisdictions, and concealed in various ways and in complex corporate structures. In short, this was conduct bearing all the hallmarks of money laundering.

[16]His wife, the second appellant, was allegedly implicated in the concealment, movement and laundering of these funds. She too had massive and unexplained wealth. It was believed these funds and assets, discovered in both of their names in Kuwait and Switzerland, may have derived from their criminal conduct.

[17]Between 2011 and December 2014 the appellants fought a protracted, but ultimately unsuccessful legal battle in Switzerland against attempts made by the Kuwaiti authorities to restrain their assets in that jurisdiction, and to obtain orders for relevant disclosure. The appellants lost their final appeal to the Swiss Supreme Court on 8 December 2014.

[18]In its judgment of that date, the Swiss Supreme Court said this: “A. By final ruling of February 28, the Office of the Public Prosecutor of the Confederation (MPC) ordered the submission to the Public Prosecutor of the State of Kuwait of banking documents regarding nine accounts with Banque K.____ SA, and six accounts with L.____ SA. This submission is in execution of a request for mutual legal assistance submitted as part of an investigation of F.____ for embezzlements committed against the State pension institution [institution de proveyance], of which he was director general. The amounts embezzled are reportedly US$ 390 million. At the same time, the MPC maintained the freeze on the funds that it had ordered previously. B. By two decisions of November 5, 2014, the Federal Criminal Court (TPF) rejected, to the extent they were admissible, the appeals filed by the owners of the accounts, i.e. the beneficiaries of the liquidated owner companies. All of the defense arguments (and the accusation of deceiving the requesting [sic] State) were dismissed, considering that the investigation opened in Kuwait was not limited to three investments made in the late 1980s. The actions described in the request were for acts of mismanagement and money laundering, and this satisfied the double jeopardy requirement. The principle of proportionality was observed since F.____ who resided in Switzerland, could not assert Article 2 let. a EIMP. Maintaining the freezes (for a total of about US$ 100 million) was justified in view of the alleged embezzlements…. …2.3. The appellants attempt to demonstrate the opposite by stating that the mutual assistance procedure was allegedly affected by serious defects; they allegedly requested in vain production of the criminal complaint filed abroad. However, the appellants lose sight of the fact that such a document is not among the documents that can be required of the requesting authority under Art. 28 subparagraph 3 EIMP… The appellants do not demonstrate that the step taken by the requesting State is allegedly an outright pretext. They mention the general situation in the requesting State without demonstrating that the criminal proceeding would have a preponderant political aspect, nor that the alleged gaps in the protection of human rights would be likely to affect the accused directly. From this standpoint, the considerations that pertain to the latter’s domicile (who allegedly lives both in Kuwait and Switzerland, which would entitle him to assert Art. 2 EIMP), have no impact on the outcome of the case. ... The amounts that were allegedly embezzled and the sums that were seized in Switzerland (US$380 and nearly 100 million respectively) appear considerable to be sure. However, regarding this last point, the decisions that were challenged have an impact because they only uphold temporary measures. Yet, the appellants do not explain how, even though they are required to demonstrate this as well, they would be justified in making an exception to the principle according to which, in the mutual legal assistance procedure, the temporary freeze measures do not cause irreparable damage according to Art. 93 subparagraph 1 let. a and subparagraph 2 LTF.

[19]What the Kuwaiti authorities discovered as a result of the litigation in Switzerland gave significant impetus to their investigation. The Swiss authorities provided the Kuwait authorities with information on bank accounts belonging to the appellants and companies or trust accounts which the first appellant owned indirectly. This led to further investigations by the Kuwaiti authorities, in particular into the movement of the appellants’ funds, which showed, so it is alleged, that the first appellant and his family had transferred part of the money allegedly generated by illegal commission payments to other countries including the UK.

[20]By the time of the ex parte hearing in March 2015, about $175 million Since the inter partes hearing further restraint orders have been made in Bahrain. of the appellants’ assets were restrained in Switzerland and Kuwait: over $100 million in bank accounts of the first appellant and his family in Switzerland as set out above, and $75 million in Kuwait (following restraint orders made by the Kuwaiti courts on 22 and 27 January 2015).

[21]The amount restrained is significant to this appeal, because one of the principal arguments mounted by the appellants is that this was sufficient to satisfy any confiscation order that may be made against them in Kuwait; and thus, that the condition requiring there to be relevant property (as defined) in Article 7(2)(a) of the 2005 Order, was not satisfied.

[22]The critical evidence in support of the restraint application was contained in five witness statements from Mr Chris Laiolo, an officer of the National Crime Agency (the NCA) designated under section 10 of the Crime and Courts Act 2013, who was authorised by the DPP to provide evidence in support of the application.

[23]His witness statements (which we shall refer to as Laiolo 1, 2, 3, 4 and 5) were made in reliance on information from two sources. First, that supplied by the Kuwaiti authorities in their Letters of Request (including a Supplemental LOR) and by way of further information; and secondly, that derived from an independent domestic investigation Mr Laiolo was conducting into alleged money laundering by the appellants, as a result of information received separately from the Letters of Request. His witness statements set out in considerable detail (and distinguishing between them) the information obtained from those two sources.

[24]The Letters of Request asked for the restraint of credit balances in 11 identified bank accounts with the Ahli United Bank (AUB) in this jurisdiction, as well as a wider restraint order in respect of any other assets within this jurisdiction and a disclosure order.

[25]As we shall detail below, there was evidence that the appellants had very significant assets in the jurisdiction, a matter no doubt of relevance to the overall issues of criminality being considered. However the DPP limited the application at that stage, to the balances in AUB bank accounts in the name of each appellant (amounting to $23.5 million) both on grounds of proportionality, and to hold the position while ownership of other potential assets was clarified.

[26]Kuwaiti law provides (as with confiscation orders made here) for value-based confiscation orders; the appellants’ assets could therefore be used to pay any consequential confiscation order, following a conviction, even if those assets were legitimately acquired.

[27]The case presented to the judge was that if the appellants were convicted of the criminal offences of which they were suspected in Kuwait, because of the size and scale of the suspected fraud, it was likely that Kuwait would use their assets in this jurisdiction together with those already restrained elsewhere to satisfy any confiscation order made by the courts.

[28]Laiolo 1 and 2, dated 4 and 5 March 2015 respectively were before the judge at the ex parte hearing as was a skeleton argument by Ms. Fiona Jackson who made the application on behalf of the DPP. Her skeleton argument contained a succinct and accurate summary of the statutory scheme. It referred the judge to The Director of the SFO v. A

[2007] EWCA Crim 1927

as authority for the proposition that there is a public interest in making restraint orders following foreign requests, because there is a public interest in the UK not becoming a safe haven for the proceeds of crime.

[29]An early return date for the inter partes hearing, ordered by the judge (the 27 March 2015) was vacated by consent at the appellants’ request, to give them more time to prepare their evidence in response. In the event, the appellants’ evidence was not served until 2 June 2015. It consisted of statements from the appellants, from a brother of the second appellant, and from three lawyers (from Kuwait, from Egypt, and from their solicitor here). Some further limited evidence was served thereafter. This included one further statement from Mr Laiolo served after the appellants served their evidence (Laiolo 5), one from the second appellant, and one from the first appellant (the latter was provided to the judge after the hearing, but before judgment).

[30]In the interim, the appellants had asked for, but had then withdrawn (on 12 May 2015) a request for an interim hearing to deal with their request that various documents including the LOR be disclosed, after the CPS refused to provide disclosure on the ground amongst others that such disclosure was not necessary for the fair disposal of the action: see National Crime Agency v. Abacha

[2015] EWHC 357 (Admin)

[31]The judge made the restraint order on 5 March 2015 because he was satisfied on the basis of the evidence before him, supplemented by some oral evidence from Mr Laiolo on oath, that it was appropriate to make a restraint order, ex parte. We have a transcript of that hearing (and the one that took place on 30 July 2015). In his short judgment, the judge said he had had an opportunity to read the papers and to refer to In Re Stanford International Bank Limited

[2010] EWCA Civ. 137

[2011] Ch. 33

, and Director of the SFO v. A

[2007] EWCA Crim 1927

. He prepared and signed a note of his reasons, so that when the order was served the appellants would know why it had been made.

[32]When the matter came before the judge at the inter partes hearing, in addition to the evidence in the witness statements, he had detailed skeleton arguments provided by both sides. The hearing lasted a full day; and it is apparent from the transcript of it that the evidence and arguments advanced were considered by the judge in some depth.

[33]We set out below in more detail some of the evidence to which we have already briefly referred, and some observations on it. Our observations are limited because although the Court of Appeal has power to conduct a re-hearing where it decides it is in the interests of justice to do so, See the Criminal Procedure Rules: r 33.12 and r 42.20(2) which must be read with Articles 10 and 47 of the 2005 Order. the matter proceeded before us by way of conventional appellate review.

[34]Laiolo 1 dated 4 March 2015 set out the basis for the application for the restraint order, and identified the sources of the material to which it referred. It said that an International LOR dated 19 February 2015 has been made under the United Nations Convention against Corruption 2003 (UNCAC) and the United Nations Convention Against Transnational Organised Crime 2000. These conventions emphasise the need to provide assistance to State Parties with regard to the ‘instrumentalities’ of crime. Article 31(1)(b) of UNCAC obliges State Parties to take measures to enable the confiscation of instrumentalities. Article 55(1) requires compliance “to the greatest possible extent” with a request from another State Party for the confiscation of instrumentalities. The State of Kuwait and the United Kingdom are both parties to these treaties. Supplementary information had been submitted by Kuwait on 1 March 2015 and a supplementary Letter of Request was sent on 4 March 2015.

[35]Information derived from the Letters of Request included the following. The first appellant was under investigation by the Kuwait Authorities for public funds theft, assistance and facilitation of public funds theft, damaging public funds and money laundering. The State of Kuwait had issued an international arrest warrant which had not yet been executed. The first appellant would be interviewed once he had been arrested and he could only be charged after this had taken place. The second appellant was only under investigation for money laundering offences. The investigation had been ongoing since 5 October 2008. It had begun after a whistle blower had made allegations against the first appellant and others. The first phase of the investigation was completed by January 2011. Kuwait sought a restraining order in Switzerland on the 19 January 2011, which was granted. This order survived a series of appeals, and $100 million is restrained in Swiss bank accounts belonging to the first appellant and his family.

[36]Two strands to the alleged criminality were identified.

[37]The first strand related to commission payments. The investigation had led the authorities in Kuwait to suspect that the first appellant had stolen large amounts of money which were then deposited in offshore accounts and used to purchase assets overseas. Money had been deposited in banks in the United Kingdom and in Switzerland. Evidence from witnesses showed that the first appellant had made several stock purchasing deals through brokers. The commission was shared between the broker and the first appellant. The first appellant’s share was paid into Swiss bank accounts. The price of the assets had been inflated so that greater commission was generated.

[38]It was an offence in Kuwaiti law for the first appellant to benefit from commission payments which he was not authorised to receive. Large sums of money had been identified in Kuwait and Switzerland in the names of both appellants. It was believed that these derived from the criminal activities. The second appellant assisted with the movement of these “criminal monies”. The loss during the period 1998-2005 was said to be in excess of $390 million.

[39]Information recovered as a result of proceedings in Switzerland, which became final on 8 December 2014, appeared to show that the first appellant and his family had transferred some of the money derived from illegal commission payments to other countries, including the United Kingdom.

[40]The second strand to the alleged criminality was the investment of the pension funds of PIFSS in high-risk shares which was forbidden by its rules. These transactions were inaccurately recorded in the books of PIFSS. The loss was said to be in excess of $900m. According to the Letter of Request this conduct amounted to damaging public funds, misfeasance in public office and, if done intentionally, corruption. (It should be noted that this second strand was not relied on by the DPP at the hearing on the 30 July 2015. The reason given in summary, was that though the conduct alleged would have been capable of amounting to criminal conduct in UK law - either as misconduct in public office or false accounting (and perhaps under the Fraud Act) - it would not have produced any benefit to the offender which could be the subject of confiscation proceedings).

[41]Mr Laiolo said:- “Given [the first appellant] and his family’s middle class background and his employment as a public servant, and the State of Kuwait’s belief that [the second appellant] does not work and has no other known sources by the Kuwaiti authorities of substantial legitimate income, in the Request it notes that Kuwait cannot find an alternative explanation other than the alleged criminal activity that may have generated such enormous amounts of funds and permitted him and his family to live a high-cost lifestyle. “I should say at this point that the State of Kuwait has since informed me that [the second appellant] father was made bankrupt in 1985, during the financial crisis……The Kuwaiti authorities are making enquiries into whether [the second appellant] inherited any property, and additionally whether she owns property and receives a rental income, which although the amount is not known, they do not believe they would be significant in any event if she did.”

[42]The Letter of Request and supplementary Letter of Request identified 11 United Kingdom bank accounts and client numbers held with AUB in London. Two were in the name of the second appellant and one in that of the first appellant. The first appellant had been on the board of AUB between 2002 and 2015, and had been its Chairman for about two years until he resigned on 22 January 2015. It was noted that he may have received some remuneration in that role, but not enough to account for the large sums of cash held in the United Kingdom, Switzerland, and elsewhere.

[43]On 22 and 27 January 2015 restraint orders were made by Kuwait, preventing dissipation of all funds, securities and properties held in Kuwait belonging to the appellants and other members of his family. This had prevented an attempt by the second appellant to liquidate $4.9 million initiated on 19 January 2015.

[44]In relation to his own investigation, Mr Laiolo said this had begun on 18 February 2015 when, acting on separate information received, an investigation had begun into money laundering offences suspected to have been committed by the appellants. Production Orders under section 345(4)(a) of POCA 2002 in relation to accounts they may hold with American Express and AUB were granted on 20 February 2015.

[45]Information on Mr Laiolo’s file showed that $18 million had been paid into the second appellant’s AUB bank account in London on 16 January 2015. AUB was told this was the proceeds of sale of inherited property. The Kuwaitis had been asked about this. They said they were still investigating, but did not believe that her family owned assets worth anything like that amount.

[46]After the restraint orders in Kuwait were imposed, the second appellant had tried to remove $16 million from the UK jurisdiction; $2 million to her sister for “Repayment of a Loan”; $2 million to repay a property loan made to Prelude Property Limited (said to be a property holding company belonging to the appellants) and $14 million to her account with the Fransabank SAL, in Beirut, Lebanon. Two of the bank accounts held by the appellants with AUB (with the numbers 015306 and 015308) contained a number of other accounts, including Prelude Property Limited.

[47]Mr Laiolo had discovered that the first appellant had been paid £16,000 per month as chairman of AUB for two years and $50,000 per month from a BVI registered company, AGC Equity Partners. Mr Laiolo said that this may account for some of the funds in the appellants’ bank accounts but not the substantial sums that appeared to have been accrued.

[48]Further, Mr Laiolo had established that the appellants now lived in a five bedroomed apartment in Knightsbridge London. Documents from HM Land Registry showed it had been bought in 2006 for £6,690,000 by a company registered in the Isle of Man, and that the first appellant was the Beneficial Owner of it. Two other London properties – one in Eaton Square and another at York Place Mansions were identified. The York Place property was bought in 2009 for £685,000. The Eaton Square property was valued at about £7 million, with a net equity of £4.2 million. The details of the ownership of these valuable properties were complex and Mr Laiolo set out what he had found.

[49]In summary the properties belonged to a trust registered with the AUB, namely, the Myrose Trust of which the appellants were the settlors, and their children were ultimate beneficiaries. The Myrose Trust had other assets, including shares worth $64 million, and £13.2 million.

[50]Laiolo 1 referred to some further transfers of funds: in May 2014, the first appellant had transferred nearly $4 million to his AUB UK account; about two weeks later he transferred $1.7 million to the account that his daughter (Farah) held at Citibank in the US. In April 2014, the first appellant transferred $3 million to the second appellant’s AUB UK account. Six days later, she transferred the same amount to the same Citibank account in the US.

[51]Mr Laiolo drew the court’s attention to three AUB documents obtained from AUB under the Production Orders. He said he did so because of the duty of full and frank disclosure on an ex parte application, and on the basis that the assertions within those documents (which were still being investigated, and which it had not been possible to verify or confirm as accurate) might provide some answers for the appellants in relation to the application.

[52]Lengthy extracts of those documents were set out in Laiolo 1, together with Mr Laiolo’s comments on them. The documents themselves were also exhibited to Laiolo 1. They were: i) An Account Profile, Risk rating and Review Form for the first appellant. This gave an assessment of the net worth of the first appellant (significantly at odds with the suggestion that he was a modestly paid civil servant). It also referred to his political influence and connection by marriage to a deceased ex-Amir of Kuwait. It recorded that the first appellant has always denied the allegations made by the Kuwaiti authorities and claimed that they were politically motivated. It said that the Swiss court had rejected that claim. Mr Laiolo commented that the document made clear that the first appellant is connected with wealthy individuals, and he said he did not know whether they had ever provided funds to the appellants. The document provided an endorsement of the first appellant by the Relationship Manager of the AUB who had known him for 10 years. It also said however that the accounts it was reviewing had not been operating in line with expectations. Mr. Laiolo drew attention to some oddities in this document, which he noted was not signed or dated. ii) A similar profile for the second appellant. In that document, the second appellant’s father (who is now dead) was described as a “well-known business man in Kuwait”. The document said she and her brothers inherited his assets on his death. Her worldwide net worth was stated as over $10 million. i) An enhanced due diligence report for the first appellant. This said:

“[The first appellant] is widely reported to be one of the most powerful Arab individuals in the world.”

It gave a long list of appointments he had held, which may reasonably have been expected to produce income. For example, it noted that he “heads Bahrain’s largest lender by market value, Al Ahli United Bank…” a major commercial and investment banking group with a wholly owned subsidiary in the UK”. It also reviewed media reports of the allegations against the first appellant and recorded the fact that he denied those allegations.

[53]Laiolo 1 set out the Kuwaiti responses in their supplementary Letter of Request to some of the factual statements about the appellants’ wealth set out in the three documents. In short, they disagreed with them. They said they were still investigating the issues raised, in particular the inheritance said to have been received by the second appellant, but they asserted that the first appellant was a public servant on a modest income who was believed to have stolen more than the funds which were restrained in Switzerland; and that the assets in the United Kingdom were illegitimate and the proceeds of crime.

[54]Mr. Laiolo said this:

“From all that is set out above, it is my belief that both [the appellants] are not legitimately wealthy to the value of the monies identified in the UK and Switzerland. I suspect that the majority of the funds in the bank accounts that I seek to restrain are derived from the criminal offences said to have been committed by [the first appellant].”

[55]Paragraphs 60-79 of Laiolo 1 set out “relevant property” which he had identified (in addition to the relevant property identified in the Letter of Request and Supplementary Request). It was (leaving aside small assets): i) A bank account in the name of the first appellant containing £110,850.08; ii) A bank account in the name of the first appellant containing $162,490.00; iii) A bank account in the name of the first appellant containing $4,963,209.31; iv) The property in Knightsbridge owned by the first appellant, purchased in 2006 for £6,690,000; v) A bank account in the name of the second appellant containing $18,022,907.00; vi) A bank account in the name of the second appellant containing $341, 351.97.

[56]The properties in Eaton Square, York Place and the assets of the Myrose Trust were not identified as relevant property.

[57]Mr. Laiolo concluded Laiolo 1 with a statement of his belief that a confiscation order at a minimum of $390 million (this figure is given as corrected by Laiolo 2) may be made after criminal proceedings in Kuwait; and that the assets were at risk of dissipation if not restrained. He referred to the fact that the appellants had made attempts to move their assets, which were prevented by the Kuwaiti restraint orders and that the first appellant has the financial skill and experience to move money quickly and in ways which may make it difficult to trace.

[58]Laiolo 2 simply confirmed that at its date the appellants were believed to be in the jurisdiction and living at the property in Knightsbridge, and that extradition to Kuwait takes between one and two months to process.

[59]Laiolo 3 dated 27 March 2015 was served with a witness statement from Chris Murphy, another officer of the NCA, dated 31 March 2015. It dealt amongst other things, with events when the first appellant was served the Restraint Order at his Knightsbridge flat on 5 March 2015 by Mr Laiolo. Mr. Laiolo said the first appellant gave him some documents, but they were of poor quality. It was therefore arranged that a solicitor would send better copies. The first appellant said that the allegations against him were unfounded and that he had documents which would prove the legitimacy of all funds. The first appellant also said the $18m balance in his wife’s bank account was the proceeds of the sale of properties bought by her in 1999 for “about 3 or 4 million”.

[60]Laiolo 3 set out further information derived from the Kuwaiti authorities. It said a witness had made detailed statements about the commission payments received by the first appellant in agreement with brokers, when investing PIFSS money in specific accounts outside Kuwait. 10 per cent of the total funds transferred was deducted by way of commission; and of the total sums transferred, 1.5 per cent went to the broker; 8.5 per cent went to accounts held by the first appellant or his wife or an account that either or both or any of their family members controlled and 90 per cent was transferred to the investment company where the investment was to be made.

[61]Laiolo 3 went on to say: “15. The Kuwaitis enquiries also indicate that [the first appellant] concealed assets in his possession in Switzerland behind a complex and secretive structure including a high number of bank accounts. These accounts were mostly opened in the names of offshore companies incorporated in the British Virgin Islands (BVI) or Panama, of which [the first appellant] or his wife are the beneficial owners. Several accounts are in the name of [the second appellant]. None of the accounts currently under investigation are believed to be in the name of [the first appellant].16. Enquiries by the Kuwaitis indicate that monies were also transferred to bank accounts in the United Kingdom, and particularly to bank accounts held at the Ahli United Bank (UK) Plc. in London. An exact figure for those monies cannot be determined at this stage because the matter of tracing those funds is still ongoing.

17. The Kuwaitis suspect that assets were systematically transferred and retransferred among several accounts, via intermediate accounts, in order to conceal those assets. After excluding a very high number of internal transfers identified among the different accounts and among the currencies, the payments (over USD $50,000) received on [the first appellant’s] above mentioned accounts between January 2000 and May 2012 amount approximately to USD $235 million. It appears that those amounts cannot be explained simply by investments, and any interest or profits resulting from such investments were excluded from the calculation of the USD $235 million.

18. Retrocessions, amounting to over USD $10 million per year, were received by [the first appellant] during at least 12 years. The Kuwaitis suspect that they are most likely related to management fees assessed on assets of several billion and that belong to the ISS (sic).

[62]The Kuwaitis repeated that while employed by the PIFSS the first appellant received only a modest salary. They did not think that the second appellant had the means to buy substantial property assets. Their enquiries revealed that the second appellant had received approximately £3.5 million in inheritance from her father between 2009 and 2013. Between 1997 and 2014 (mostly before 2007) she had sold properties in Kuwait for about $200 million.

[63]Laiolo 3 said this (specifically denied by the appellants):- “The Kuwaitis have evidence that during the marriage of [the appellants] he was merely a government employee living within limited means. As a public servant in the PIFSS, he received an average salary that ranged between 2590 KWD and 3925 KWD [approximately £6,000-£9,000 at February 2016 rates] from 1984 to 2004. This payroll is classified as average pay for public servants in similar positions across Kuwait. Checks undertaken with the Ministry of Trade indicate that [the first appellant] did not exercise any commercial or trade activity that would enable him to expand his income. [The first appellant’s] income alone appears to have supported his family (namely his wife and four children) for his wife was a full-time mother and did not work.”

[64]It should be noted that evidence later served by the first appellant showed that his salary was at times rather greater than alleged; but it was never close to a level which would have enabled him to accumulate $100 million in Switzerland and $23.5 million in the United Kingdom, and we think it is unnecessary to refer further to this issue.

[65]Mr. Murphy’s statement confirmed that solicitors acting for the first appellant had contacted the Serious Fraud Office on the first appellant’s behalf on 16 February 2015. Mr Murphy also produced some documents from the Swiss proceedings.

[66]The evidence served by the appellants on 2 June 2015 consisted of over 550 pages of witness statements and exhibits. Its aim was to show that both appellants had legitimate ways of accruing their enormous wealth. It was said that the allegations made by the State of Kuwait were made in bad faith and that some of the information given by Kuwait to the Crown Court via Mr. Laiolo was untrue.

[67]The essential response by the respondents in broad terms was that though both appellants claimed to have legitimate sourcesfor the monies that were the focus of the Kuwaiti investigation into corrupt benefits, and for the monies currently restrained, the evidence to support those claims did not provide a clear or full audit trail for the money, and failed to demonstrate (for example) how monies moved between different jurisdictions.

[68]The first appellant listed his other appointments in a way which was largely consistent with the documents obtained from AUB by the Production

[69]A document to support the assertion that he had share options in 1992 is one of the very few financial documents he produced. He estimated that the total remuneration and benefits he obtained from his various boards positions amounted to “roughly $2m per annum”. There was no documentary evidence to substantiate this estimate.

[70]In addition to his income, he said he earned substantial sums by personal investment activity and produces some documents which he said related to that. He said that he received a large sum in compensation in 1983 as a creditor affected by the Souk Al-Manakh crash which, if invested might now be worth in excess of $185 million. He did not say what he did with it only what would have happened if he had invested it. He did not deny the complicated structure of companies which held his family’s assets. He denied that this existed for money laundering purposes and claimed it was a prudent and tax-efficient way of managing their real estate. He did not say why. He said that he has multiple accounts at one bank so that he can segregate assets by currency.

[71]The first appellant alleged the allegations against him were made by his opponents in bad faith. He said the investments could not have been made in such a way as to allow 10 per cent commission to be “skimmed off”. He said the PIFSS is a well-regulated and sophisticated institution with procedures which rendered the alleged conduct impossible. The Kuwaiti authorities suggested that he had suspended the Investment Monitoring Committee at the PIFSS. He described this as preposterous. He contended that the allegations against him were designed to seek revenge for authorising a lawsuit against an investment fund which had overcharged PIFSS for investment fees. The whistle blower, a Dr. Al-Rashed, was associated with the business partner of the man who was responsible for this; and who was removed as head of the fund concerned. He suggested that his wife’s estranged brother has maliciously lied about him to the Kuwaiti authorities.

[72]There is a good deal of evidence given by the first appellant and other witnesses about three allegedly inappropriate transactions effected by PIFSS while he was its Director. These are investments in three derivatives. They have been the subject of reports from SBC Warburg Dillon Read in 1998 and by KPMG dated 8 May 2008. These however, go to the choice of investments by PIFSS, not to the commission skimming and retrocessions which were alleged. Whether the investments were sound or not is no doubt evidentially significant but it does not go to the heart of the allegation. These three investments are said by the original whistle blower to have earned the first appellant $5 million in commission and it is submitted on his behalf that his alleged benefit from commission (and the Kuwaitis case against him) is limited to that sum. We return to that issue at para 1212 below.

[73]Some explanations were given by the appellants for the absence of certain documentation: see para 90 below. We are bound to observe however that given that the first appellant had been involved in litigation in Switzerland over a period of years and had been served with the restraint order in these proceedings three months before he made this witness statement, its lack of detail is quite striking. It is, in reality, a series of bald assertions about the things which matter and is supported by documents only in respect of the things which do not. There are $100 million in Switzerland, $23.5 million in London and a very large property portfolio. Where did it come from?

[74]The second appellant’s witness statement is susceptible to similar criticism. She said that she comes from an enormously wealthy family. She said her father gave her gifts of money, jewellery and property while he was alive. She gave an example, namely the land on which the villa which is the family home in Kuwait is built. She said that he also gave them money to build it. She made it clear that they still own this property, which has accordingly not played any part in the generation of the sums referred to in the previous paragraph. The only gift from her father during his life which she identifies is therefore quite irrelevant. She said that she received about $25 million on her father’s death in 1996. She said that she has used this to pursue a number of lucrative investment activities which have expanded her personal wealth considerably. She said that she held offices in the family business from time to time. She said “I received remuneration for work in the various sections of the business”. She does not say how much.

[75]She said she owns a 75 per cent share in Discovery International Co Kuwait which last year had revenues of approximately $10 million. This began in 2004. She does not say how she acquired this very substantial asset, of which Mr. Laiolo was not aware. Not a single document has been produced in relation to it, and there is no assertion that any proceeds of it have ended up in Switzerland or the United Kingdom. It is mentioned in one short paragraph of the witness statement. She said she was able to borrow large sums of money on the strength of her family name and “engage in a wide range of lucrative commercial and investment activities”. This was mainly in the real estate sector. She describes her property holdings by reference to the Land Registry documents identifying which properties came from her inheritance and explaining that most of the rest were bought with mortgage finance.

[76]As to the $18 million in her account with AUB, she said that this was the proceeds of sale of part of her property portfolio in December 2014. She had acquired the land in 1999 by way of a mortgage. She repaid the mortgage and sold the land in a number of plots. This produced $17.9 million. She transferred this sum from her account in Kuwait to her account in Bahrain. She then transferred it to her account in London. She did not say why. She said that she also acquired a shareholding in AUB worth $68 million which is currently held by the Myrose Trust. She bought this with a loan from the bank of $25 million which she had now repaid. She also believed that her brother was the architect of the allegations and that he was motivated by greed and resentment.

[77]In our view however, though she produced more substantial documentation than her husband, no coherent efforts were made to trace the flows of money which fund the accounts with which this case is concerned.

[78]The brother of the second appellant (not the one with the grudge) confirmed in his statement that the second appellant had at various times held several board and executive positions at family companies. He did not say what, if anything, she acquired as a result.

[79]Mr. Al-Sarraf a Kuwaiti lawyer, has represented the second appellant’s family since 1982. He asserted that her father was never made bankrupt. He said because of the Souk Al-Manakh crash, the father entered the Difficult Credit Facilities Settlement Programme in 1989 with liabilities of approximately $470 million and assets of $438 million. He was given a protected repayment plan. He died in March 1996 before he had made the required repayments, but that was done by his heirs. This is not the same as bankruptcy.

[80]Mr. Marghany is an Egyptian lawyer who has also acted for the second appellant’s family for some years. He explained how well-connected they are, and gave some of the same information as the first document disclosed in Laiolo 1 referred to at para 51 above. He described the family companies and confirmed that records show that the second appellant has held positions in the group for which she was remunerated. He did not say how much she was paid. He said this:

“I know from the family’s lawyers that [the second appellant] has also pursued her own independent business ventures and investment activities.”

[81]He did not say what exactly she has done in relation to these matters, though he said that he is aware that the second appellant invests heavily in real estate and securities. He did not say how, or who the “family’s lawyers” are. His main purpose was to support the suggestion that the allegations were the work of the estranged brother. He confirmed that this man is in dispute with the rest of the family and said that some assertions appear to have come straight from him “as they echo assertions he either has made or would make in support of his continuing campaign against his siblings.” The most cogent suggestion he made was that the allegation that the second appellant’s father had been bankrupt came from this brother, who had apparently made it before in legal proceedings against his siblings. He then identified some further propositions in Laiolo 3 concerning the second appellant’s late father and his inheritance which, if true, would serve the estranged brother’s aim to minimise the shares of that estate received by the siblings so as to enlarge his own.

[82]None of this explains however, how this brother could have orchestrated the allegations concerning the corrupt commissions earned by the first appellant while employed at PIFSS. It may be there is some false information in the possession of the Kuwaiti authorities emanating from that source, but it is not material which goes to the heart of the investigation.

[83]Mr. Marghany further disputed the account given in Laiolo 3 of the amount of the inheritance received by the second appellant and produced a certificate produced by an Egyptian accountant on which he based this opinion.

[84]Mr. Conway Blake, the appellants’ solicitor in these proceedings made 4 witness statements. The primary purpose of the first and fourth statements was to produce documents.

[85]His second statement gave an account of a conversation between a representative of his firm and “an individual with close knowledge of the functioning of the PIFSS” who is anonymous.

[86]These are civil proceedings and this evidence is therefore admissible by virtue of section 1 of the Civil Evidence Act 1995 (the CEA 1995). Section 4 of the CEA 1995 makes it clear however that the court is not obliged to give it any weight. Where hearsay evidence is anonymous it is impossible to carry out the exercise anticipated in section 4; and in many cases, of which this is one, that will lead to the material being left out of account. For all we know the informant might be the first appellant. Certainly, whoever he or she is, the information given closely supports what the first appellant said. The third witness statement gives an account of a conversation with an anonymous representative of AUB to which similar considerations apply. If AUB is prepared to speak publicly and on the record, what it has to say will carry weight.

[87]Mr. Blake ended his statement with a statement of truth and there is no doubt that he had the conversation he recounts with somebody. However whether any of what that person said is true cannot be judged. Certainly it is not verified by any useful oath or declaration which would render falsehood a crime or contempt of court. Two documents were produced by this person to Mr. Blake. One is said to show that the funding of the second appellant’s acquisition of shares in AUB was funded in the way she had described. The document does not achieve this unless explained by the anonymous witness, but we cannot accord that explanation any weight. The second document set out the dividends paid on such shares over the years.

[88]Laiolo 4dated 30 June 2015, stated that Mr Laiolo had communicated with Kuwait about the appellants’ allegations and it sets out their response, amongst other matters. Mr Laiolo concluded he had no reason to believe that the allegations were being pursued for any other purpose other than the legitimate purpose of the prosecution of corruption in Kuwait. He attached a Schedule of Issues arising from the appellants’ evidence which summarised their case in 8 pages. He said the Kuwaitis now had evidence from witnesses which confirm that the source of assets was corruption, and that the second appellant had sought to conceal ownership of assets in the names of third parties. They did not accept that the first appellant had lived an ostentatiously wealthy lifestyle in Kuwait, but rather suggested that he had lived modestly and had concealed his wealth abroad.

[89]The second appellant. On 29 July 2015 the second appellant served a second witness statement as a consequence of the “new basis” upon which the case was said to be put in the Crown’s skeleton argument (the skeleton arguments were exchanged on 25 July 2015).

[90]As explained at para 3939 above, in that skeleton the DPP made it clear that the Crown did not rely on the “second strand” of criminality alleged in Laiolo 1, but on the allegation the first appellant had obtained $390 million by taking commissions while Director of PIFSS. The skeleton referred to Laiolo 1 and 3. It pointed out that the evidence served on behalf of the appellants was not supported by documents where it could have been, and made no reference to the “retrocession” allegation in Laiolo 3 at all.

[91]Despite the reason given for serving the second witness statement, the second appellant only set out a list of frozen assets in Kuwait. These were substantial. There appeared to be $18 million in equity portfolios and $45.5 million in real estate owned by her and $14.5 million by the first appellant. She said that they have tried to get bank statements from the National Bank of Kuwait but had been refused assistance. She said that there are “several USD million in cash in accounts” with that bank.

[92]The first appellant. In his second statement served on 3 August 2015 the first appellant explained the appellants’ connection with Switzerland: the family had been residents of Switzerland since 1990, and permanent residents, since 2000. They owned a number of properties in Switzerland, including the family home in Geneva. It was therefore unsurprising that they had bank accounts there. The statement did not however address the source of their funds there or the matters raised in Laiolo 3: see paras 72 and 60 above.

The August Hearing

[93]The hearing started with Ms Malcolm QC saying that she did not know how the “new allegation of retrocessions”, by which she meant the allegation referred to in Laiolo 3, served on 27 March 2015, was put. She then told the judge that the appellants had renewed their application for disclosure of the Letter of Request, abandoned on 12 May 2015, and it had again been refused by the CPS. The judge offered to deal with that first, but was persuaded to hear the evidence first so that he could consider disclosure of the material from Kuwait from a position of knowledge. The Crown then went through Laiolo 1 which had been before the judge in March, and Laiolo 3 and the judge heard submissions from both sides about the effect of the evidence. He reserved judgment and handed down a succinct written ruling in chambers on 7 August 2015.

The August ruling

[94]The judge observed that the first appellant’s case was that he had particular financial acumen which had enabled him to gain wealth independent of his civil service post while his wife had inherited wealth that she had used to purchase land, sold at a profit and the proceeds paid into her bank accounts. The Swiss accounts held no more than family assets. They had right of residence in Switzerland and thus required those accounts. It would be wrong to conclude that the sums in those accounts and other sums amounted to criminal property. The bona fides of the Kuwaiti authorities was also challenged. Their inability or refusal to give detail as to the alleged criminal activity demonstrated that no crime had been committed. There was also complaint that the CPS had not accused the first appellant of appropriating $10 million by way of kick back until a third statement from Mr Laiolo.

[95]The Crown’s stance was that the Kuwaiti request must be the foundation for the need to restrain the alleged offenders’ assets. The finding of the $100 million in Switzerland had strengthened the Kuwaiti belief that a crime had been committed and caused them to review their approach to the investigation and widen its scope. The lack of detail was because the investigation was continuing and developing in the light of material released to the Kuwaiti authorities by the Swiss court in the relatively recent past. The judge’s experience was that it was common place for the requesting authority to alter the focus of the allegation as the investigation continued and this was bound to involve some twists and turns. It might be that the investigation had been lengthy but the appellant had lived as a free man in Kuwait up until November 2014.

[96]The judge approached matters applying the civil burden and reminded himself of the conditions in Article 7 of the 2005 Order.

[97]He said as follows. The first condition under Article 7 is that the Court is satisfied that: i) Relevant property in England and Wales is identified in the external request – this had been done and was identified in the restraint order. ii) A criminal investigation had been started in the country from which the external request was made with regard to an offence – the judge had been informed that an International Arrest Warrant had been issued for the appellants and that there were restraint orders already in force in Kuwait and Switzerland. iii) There was reasonable cause to believe that the alleged offenders named in the request had benefited from their criminal conduct – the judge made such a finding. He said this:- “Although the alleged offenders have provided information to assert the legality of their holdings in Switzerland, I am unable to find that this controverts the Kuwaiti accusations. I do not find that there is any evidence of bad faith on the part of the Kuwait authorities. I appreciate that this is an extreme measure: very considerable sums are at stake whatever the outcome of the final proceedings. But it is not as if the sums are confiscated. The Restraint Order made by this court will always be subject to review at the request of the alleged offenders and any effluxion of time would weaken the Kuwaiti Government position. In the circumstances I am not prepared to discharge the existing restraint order. Nor am I prepared to make an open ended order. I invite representations as to duration but for the present the order will continue for 6 months expiring on February 6th 2016 unless renewed. Any further application to vary or discharge the order, appoint receivers or any enforcement proceedings should be listed before me or in my absence the Resident Judge.”

Discussion

[98]The arguments mounted before us for the appellants were almost as wide-ranging as those made to the judge. However, the questions we have to address are whether the appeal should be allowed on the limited grounds on which permission was given and, at least initially, whether there is arguable merit in the grounds for which permission was refused. We deal first with the grounds on which leave was given, which were limited by the single

judge in this way:

“…the judge said nothing to indicate that he considered whether the assets seized in Switzerland were sufficient to cover the Kuwaiti Government’s claim. I therefore consider that part of ground 3 is arguable; see paragraphs 29-31 of the Perfected Grounds of Appeal.”

Also, the judge did not in terms deal with the allegation of misinformation/lack of disclosure (ground 5). I do not consider that his finding that there was no evidence of bad faith is a response or at any rate a full response to this allegation since a lack of disclosure on an ex parte application need not result from bad faith…”

Ground 3

[99]The core issue raised here is one of sufficiency, in particular it is argued that the respondent’s case on benefit was confusing, but the judge failed even to address the question of whether assets sufficient to satisfy any future Kuwaiti confiscation order were already restrained worldwide.

[100]In this context it is submitted that the case presented varied widely as to the underlying criminal conduct and the benefit said to inure, and a range of different figures were put forward in relation to three different strands of conduct - the Al-Rashad allegations from 2008, that relating to commission payments and the retrocessions. It was in those circumstances important for the judge to identify which figures he accepted, so it could be seen whether the assets already restrained were sufficient to cover the Kuwaitis’ claims.

[101]We accept that the judge should have addressed the issue of sufficiency specifically in his judgment. We do not however consider that his failure to do so, is a ground for allowing this appeal. Nor do we accept the underlying complaint as we perceive it to be, that the judge gave no reasons, because there were none that could be given. In our view, the judge’s reasons for his decision on this aspect of the case are apparent when the material is reviewed as a whole, and properly support his conclusions; and it follows that the reasons challenge under this ground must fail: see English v Emery v Emery Reimbold & Strick [2012] 1 WLR at para 26.

[102]The judge was undoubtedly fully alive to the appellants’ argument on sufficiency, about which he was addressed in detail by Ms Malcolm QC. At that stage her submission was that the amounts already restrained were sufficient to satisfy any future Kuwaiti confiscation order because the Kuwaitis’ allegations were confined to the allegations made by Dr Al-Rashed ($5.5 million) and/or the retrocessions ($120 million).

[103]Mr Hall QC made it plain, however, that the DPP’s case was not so confined: see further paras 121 to 123 below. Indeed, on the question of sufficiency, he invited the judge to focus on the “scale of the money in Switzerland” namely the $235 million – and the fact there was nothing in the appellants’ evidence to answer what was said about that money. There is no doubt that this was the judge’s focus too. He said for example: at p.125 “So, much of the strength or weakness of this application in relation to a much smaller amount is the sheer volume of the amount in Switzerland…”

[104]This can be seen not only from what he said at the hearing, but is also tolerably clear from the judgment itself, which said amongst other things:

“Although the alleged offenders have provided information to assert the legality of their holdings in Switzerland, I am unable to find that this controverts the Kuwaiti allegations.”

If the judge had said something like “for the reasons given by Mr. Hall QC in his skeleton argument and oral submissions I find that the appellant’s evidence does not rob the Kuwaiti case of force to an extent such that the order should be set aside” this would have made what was the position even clearer.

[105]If the judge accepted, as we think he did, that the relevant figure to consider was the $235 million in Switzerland, it followed that the discrete sufficiency challenge mounted by the appellants went nowhere.

Ground 5

[106]The annex to the appellants’ skeleton argument prepared for the inter partes hearing listed a number of what are described as major inaccuracies and misstatements, designed so it is said to show that neither appellant could possibly be legitimately wealthy. The appellants question how the Kuwaiti authorities came to make these misstatements and why these were not dealt with explicitly by the judge.

[107]We think that the judge could perhaps have said a little more (but not much more) about the allegations of “misinformation” in the 7th August 2015 judgment. However in our view, the substance of the appellants’ argument is unpersuasive. In essence, it depends on the assertion that the appellants’ case (that they were fabulously and independently wealthy etc.) was uncontested and/or correct; and to the extent that the respondents suggested otherwise, the judge was misinformed. However it is not right to say either that the appellants’ evidence was uncontested or that the judge (who was obviously not bound to accept what the appellants said) failed to consider this aspect of their case, which was explored at length at the hearing.

[108]We would add that the appellants did not serve their evidence opposing the continuation of the restraint order until 2 June 2015; and when it was served, a considerable number of the documentary exhibits were in Arabic (and not translated). In correspondence, they then refused to agree to give the CPS more time to respond to that evidence. As a result, the CPS stated in terms that the evidence in response would be limited, and would deal with the reasons why in principle it would be wrong for the external order to be discharged at that stage. These matters were all dealt with in Laiolo 4, in which Mr Laiolo described the investigation as a complex and unfolding one, and said, “in broad terms, the [appellants] claim to have legitimate sources for the monies that are the focus of the Kuwaiti investigation into corrupt benefits obtained by [the first appellant]…The evidence to support those claims does not, however, provide a clear and full audit trail for the money, and fails to demonstrate (for example) how monies moved between different jurisdictions.” The judge obviously accepted this, and as should be apparent from what we have already said, we think he was entitled to do so.

[109]The issue of culpable non-disclosure (as distinct from misinformation) as argued before us has focused on two particular matters, which it is said should have led to the discharge of the order. First, on the fact that the court was told the appellants’ father had died a bankrupt, when it is asserted he had in fact left an estate of many hundreds of millions of dollars. Secondly, on a particular transaction undertaken by the second appellant on 21 January 2015, which was put forward to support the case that there was a risk of dissipation, even though, it been specifically approved by the Kuwaiti Attorney General.

[110]The respondents accept that the judge was told at the ex parte hearing that the second appellant’s father was bankrupt when he died in March 1996, whereas in fact he was the subject of debt and other proceedings, akin to what were described as Chapter 11 proceedings (see para 79 above). However, we do not consider the error to be a material one. The question at issue was whether there was a credible explanation for the second appellant’s apparent wealth apart from that alleged by the Kuwaiti authorities. In our view, the material before us (including some of the ‘fresh evidence’ which both sides invited us to look at for this very limited purpose) does not demonstrate that the Kuwaitis sought to present a false picture to the court. On the contrary, it supports the Kuwaiti case against the appellants, which is that the bankruptcy proceedings prevented the disposition of the father’s estate at a time when the second appellant purchased property worth many millions of dollars; and thus, that the monies used for these purchases could not have been derived from any inheritance from her father.

[111]The judge was also told at the ex parte hearing (in Laiolo 1), that on the 19 January 2015, two days before she left Kuwait, the second appellant had tried to liquidate shares for $4.9 million, that the shares were in fact cashed, but by the time the transfer of monies was to have taken place, the restraint order had been made, and consent to effect the transaction was therefore refused. This was one of the matters relied on in support of the case on risk of dissipation.

[112]However, the funds were in fact required to service a pre-existing loan; and as a result, the Attorney General of Kuwait subsequently gave permission for the transaction to take place. As a result of what the appellants said about this in their evidence served on 2 June 2015 (that the Attorney General had “exceptionally” allowed the frozen funds to be used in this way) the CPS sought further clarification from the Kuwaiti authorities. This was provided in an email to the CPS dated 28 July 2015. However we are told in a witness statement from Ms Sternberg of the CPS that the email was then over looked by her. This meant Mr Hall QC did not know the correct position at the inter partes hearing, nor did the judge.

[113]Ms Malcolm QC submits the judge should have dealt with what the appellants said about this matter at the hearing; though this point has been overtaken somewhat by her submission that in any event, in the circumstances as they are now, the restraint order should be discharged without more on the ground of material and culpable non-disclosure.

[114]It is obviously unfortunate that the information given to the court at the ex parte hearing was incorrect, and that the CPS, through what we accept was inadvertence, did not correct the position at the inter partes hearing. But we do not consider this is a matter which justifies the step we are invited to take.

[115]The importance of the obligation of candour in applications of this nature was underlined in Re Stanford International Bank and anor at para 191 for example. However, the court’s approach to non-disclosure of material facts is the same as to the prosecution’s failure to inform the court why it fears that assets will be dissipated. The fact that the prosecution acts in the public interest, militates against the sanction of discharging an order if, after consideration of all the evidence, the court thinks an order is appropriate. That is not to say that there could never be a case where the prosecution’s failure might be so appalling that the ultimate sanction of discharge would be justified: see Jennings v Crown Prosecution Service (Practice Note)

[2005] EWCA Crim 746

[2006] 1 WLR 182

at paras 54, 56-57, 62, 64 and 67.

[116]As Mr Hall QC submits, in this case there were a cluster of strong factors that suggest there was a real risk of dissipation. The way it was put below was that given the dishonest nature of the offending (embezzlement alleged on a massive scale) and the sophistication of the money-laundering operation, plus the fact that the appellants had resisted the release of the Swiss material, and were now out of Kuwaiti jurisdiction and subject to national and international arrest warrants, plus the matters referred to in Laiolo 1 at paras 81 to 93, there was a real risk of dissipation if the order was not maintained.

[117]The transaction in question was a relatively small part of this overall picture. In the event, having carefully considered the matter, we are not satisfied there was any evidence of bad faith either on the part of the Crown or the Kuwaiti authorities. Nor do we consider the non-disclosure could be characterised as sufficiently serious to justify the ultimate sanction of discharge. Looking at the matter realistically, in our judgment, the non-disclosure does not call into question or undermine what the judge was told about the risk of dissipation, or the basis on which he was asked to act, and would not have made, and should not now make any difference to the outcome in this case, where the public interest in maintaining the order is clear.

[118]In relation to the grounds on which permission was refused (Grounds 1, 2 4 and parts of Ground 3) the single judge’s reasons for refusing permission to appeal were these: “The Judge’s ruling shows that he was well aware of the nature of the Applicants’ case and the vigour with which it was maintained (see p.3 third paragraph and p.4 “the alleged offenders’ case”). His ruling also shows that he was well aware that the CPS’ case had changed and that there was a lack of specificity as to the alleged criminal conduct of the Applicants. From his experience of restraint applications he found this “commonplace” (see pp.4-5 “the CPS response”). The judge made specific findings as to the three conditions which had to be satisfied. With regard to the third requirement (that there is reasonable cause to believe that the Applicants have benefitted from their criminal conduct) he noted that they had provided information to support the legality of their holdings in Switzerland but did not consider that it controverted the Kuwaiti allegations (see p.5) Whilst the judge’s reasons for making the restraint order are concise and to the point they show that he addressed his mind to the opposing cases and that he considered and found established the three necessary conditions. They do not reveal any error of law. I therefore refuse permission to appeal on grounds 1, 2 and 4. I am also unpersuaded that the judge’s failure to deal with the Applicants’ renewed application for disclosure of the Letter of Request invalidated his findings as to the required three conditions and the exercise of his discretion to grant the restraint order.

[119]We can deal briefly with these further grounds since in short, we agree with the reasons for refusal given by the single judge. We take each of those grounds in turn.

[120]Ground 1 Like the single judge, we would describe the judgment as concise, but subject to the sufficiency/non-disclosure issues covered by Ground 3 in part, and Ground 5, we think it was none the worse for that. As we have already said, the decision followed a full day’s hearing, where the issues were explored in depth; and the case was also fully set out on paper by both sides. The Crown contended that the appellants’ evidence was unconvincing, it lacked detail and basic support, and failed to address the true case against the appellants. We have already referred to what was said about the deficiencies in the appellants’ evidence in Laiolo 4.

[121]There was a great deal of material put before the judge, to some of which we have referred, perhaps at undue length. However we do not think the judge was obliged to recite it – still less to make findings of fact that might have to be made at a criminal trial. The fact that the parties addressed the evidence at length did not mean the judge was obliged to do so. As Mr Hall QC submits, the nature of reasons that need to be given depends on the statutory context. The judge was determining whether to make a temporary order, which he recognised was a draconian one, on the basis of the statutory criteria in Article 7 of the 2005 Order. He accurately summarised the essential points of the case made before him by each side; and succinctly summarised his conclusions. The short reason for his conclusion was that he accepted the evidence put forward by the respondents surmounted the requirements for the making of a restraint order and he also concluded it was not undermined by the evidence presented by the appellants. The judge was not required to address the minutiae of the argument before him, but to deal with the essential issues and state the reasons for his conclusions, which in our judgment he did.

[122]Ground 2: The argument here is that the judge misstated or incorrectly summarised the Kuwaiti case against the first appellant; and in particular that he misunderstood and/or conflated the various strands of the allegations made by the Kuwaiti authorities, and thus misdirected himself on the evidence.

[123]The appellants had obtained and attached to the statement by Mr Blake, the original complaint by Dr Al-Rashed, the whistleblower which alleged that losses of $390 million had been caused to PIFSS by the first appellant and that the first appellant had earned commissions of $5.5 million as a result of three investments in 1988-90. The appellants rely on this statement, together with certain observations made at the hearing of 30 July 2015 by Mr. Hall QC to found an argument that the allegations by the Kuwaiti authorities related only to the three investments in 1988-90 and to the retrocessions amounting to “at least” $120 million over a ten year period; and not, as the judge described it, to the arrangement for improper commissions to be paid by brokers over a number of decades.

[124]We reject this submission, which we note has obvious similarities to one considered, but rejected by the Swiss Supreme Court: see para 18 above. Merely because the original whistle blower in 2008 only knew of $5.5 million in commissions did not mean that this was the limit of the Kuwaiti case in 2015. Plainly, it was not. That is not what Mr. Laiolo said; nor did it reflect the case put in argument. In our judgment, the judge accurately set out the allegation supported by Mr. Laiolo in his witness statements and, in March 2015, orally on oath, and the contrary is not arguable.

Ground 3 (those parts where permission was refused)

[125]We need not address the submission made in the appellants’ written grounds, that there was no criminal investigation in Kuwait, within the meaning of Article 7(2)(b) of the 2005 Order, since it was not pursued in argument.

[126]Ms Malcolm QC did submit however that the judge was wrong to find that that there were reasonable grounds to suspect that the appellants (and in particular, the second appellant) had benefited from criminal conduct, having regard to the lack of detail provided to the court about the allegation being investigated in Kuwait and the evidence underlying it. It is said for example that no single fraudulent transaction had been identified; the investigation depended on the existence of large sums of unexplained money and the judge ignored the fact that there was no evidence that the second appellant had ever received any monies into any account from her husband.

[127]Ms Malcolm QC does not identify any error of law in the judge’s approach. Her case must therefore be that no reasonable judge could have found on the evidence, that there were reasonable grounds to believe that the appellants had benefited from the criminal conduct alleged.

[128]In our judgment however, the judge’s decision on benefit in relation to both appellants was one which was properly open to him on the facts, and the contrary is not arguable. It is to be observed that although in his second witness statement, the first appellant explained something of his family’s connection to Switzerland, neither appellant gave any explanation for their participation in the “complicated web” as it was described, of accounts and assets in Switzerland, or the movement of $235 million including through accounts in the second appellant’s name (see para 60 above). Nor did they deal with the proceedings in Switzerland. As Mr Hall QC rightly accepted before the judge, it was not for the appellants to prove a negative. Nonetheless, in terms of rebutting the Kuwaiti evidence, as he pointed out, they had put in nothing of any weight on the other side of the scale.

Ground 4

[129]The assertion here is that there was a mistake of law in maintaining the restraint order obtained on 5 March 2015. The appellants submit that whether or not the restraint order was appropriate as at 30 July 2015, the change or substantial shift in the factual basis for the request since the restraint order was imposed on 5 March 2015 (including specifically as to the extent of the benefit) meant it was wrong in law to maintain that order at the later hearing. We do not agree. There is nothing unusual in a case of this nature developing as the judge himself said. This did not mean that it was wrong to make the ex parte order in the first place, or then later that it was wrong to maintain it.

Order

see para 51 above. He said that these appointments generated “millions of dollars over time”. He confirmed that Laiolo 1 was accurate in its account of his income from AUB and AGC Equity Partners. He said he received some share options which he cashed in in March 1993 for $1.4 million.

Cited in 1 later judgment

Attorney General v Jonathan Reid and 3 others (Bahamas) 2024