Business Crime – avoiding the Innospec trap

Certainty in an Uncertain World

Companies or company directors confronted with a prosecution require clarity and precision when determining what the outcome of any guilty plea might be.  The criminal courts are, however, an uncertain world.  The following case is an illustration of how, with proper co-operation together with the fullest information being provided to the judge at an early stage, it is possible to obtain a clear understanding of a company’s financial exposure.

OFT v. London North Securities – A way forward

In the recent case of R. (Office of Fair Trading) v. London North Securities I was instructed on behalf of the defendant company and its director who were charged with having carried out a consumer credit business without a licence (contrary to section 39 of the Consumer Credit Act 1974).  The conduct was alleged to have continued over a number of years and yielded a very substantial profit to the company and its director in excess of £1.5 million.

By the time of the criminal proceedings the company had ceased trading and had no assets.  The director had retired.  He, however, had considerable assets.  It became apparent that both sides were amenable to a compromise of the case which would see the company entering a plea of guilty and the director would not be proceeded against.  The parties contemplated a plea to a shorter period of unlicensed business with a clearly defined and agreed quantum of financial benefit.  Any such plea by the company would necessarily tie the court’s hands to disposal by way of fine, confiscation or compensation.  The funds available to the company to pay any such financial penalty were to be made available by the director but would be pre-defined and finite.

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Stamp Duty Avoidance – Caveat Solicitor

  • The SRA could not have made it clearer. It regards a solicitor’s conduct acting in transactions where Stamp Duty Land Tax (SDLT) would otherwise be due as presumptively wrong. This is so notwithstanding that the scheme adopted by the client (whether promoted by the solicitor’s firm or a third party) may not have been successfully challenged by HMRC in the courts.
  • Although there have been a couple of decisions of the SDT/SRA in relation to solicitors acting on transactions where SDLT schemes have been employed (see SRA v. Buckeridge and Heath, 10476-2010 and more recently SRA v. Dlayo 1855-2011), no real challenge of the SRA approach to SDLT mitigation has been mounted. This is a pity.
  • As things stand, it does appear as though the SRA has adopted a “moralistic” stance that is at odds with prevailing legal and academic thought (and which has existed over centuries) that all tax payers have the right to organise their affairs according to law so as to minimise their tax liabilities. In the disciplinary arena, where the SRA has failed to make the grade alleging breach of the core principles for having undertaken transactions which permit the reduction of SDLT, they have sought to spike the solicitor on the trap of alleged breaches of the duty to disclose to the lender that SDLT mitigation has been employed.
  • To the extent that the SRA has sharpened its teeth, then solicitors would be well-advised to take into account the SRA warning notice of the 16th February 2012.  Faced with clients who desire to minimise by lawful means their exposure to SDLT what then is the solicitor to do?  What of the firm that desires, either itself or by association with a promoter of SDLT mitigation schemes, to act on the conveyance for a client who wishes to take advantage of such a strategy?

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Solicitors Regulatory Authority Investigations

  • The SRA has wide powers to investigate, discipline or to apply to the tribunal. The professional, personal and reputational consequences of an investigation are immense. The new Code of Conduct imposes a new regime for the regulation of the profession.
  • Engagement with the regulator requires great care, whether responding to correspondence, informal requests for information, responding to formal notices to produce material or answering questions in informal or formal, recorded interviews.

  • Setting the correct tone and ensuring appropriate co-operation with the regulator is as vital as determining whether any formal notice for the provision of information is lawful or open to challenge.
  • The SRA is clearly interested in flexing both its supervisory and disciplinary muscles.  Investigations, disciplinary action, tribunal hearings and interventions continue apace.

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History of Barristers in the UK

It was in the 13th century when the first lawyers were appointed to plead on behalf of plaintiffs in the Kings Courts, but many would say that the true beginning was in the 14th Century when the four Inns of Court – Lincoln’s Inn, Gray’s inn, Middle Temple and Inner Temple – were established. Barristers originally rented the Temple after the fall of the Knights Templar and the Inns remain in the same spot. Barristers are still ‘called to the Bar’ at ceremonies held at the Inns. Continue reading

The Bribery Act 2010 – Prevention Is Better Than Cure

Businesses should be afraid, in fact they should be very afraid.  On the 1st July 2011 the new Bribery Act came into force.  It takes no prisoners.  No facilitation payments are tolerated.  Any and all corrupt business conduct is criminalised.  And the Bribery Act is international.  It is, like Apple Corporation’s “Cloud”, criminal legislation which hangs over the entire business world.  And the consequence of a conviction for an offence is an unlimited fine.  Like the “Cloud”, when it comes to the financial penalty the sky’s the limit. Continue reading

Guest Blog: The Bribery Act 2010 – The English Are Coming!

There are very few moments in the law when you are truly flabbergasted, last week I was struck sideways by one of them when attending the Manhattan conference on Expanding Worldwide Corruption Standards, which featured many of the leading lights who were familiar from my time litigating white collar crime in the UK.

When drafters of UK legislation start speaking of ‘the need for a worldwide cohesive attack on corruption committed nearly exclusively by multinationals and their executives’, the world better take heed. The US lawyers, used to dealing with the DOJ sat idly by and made trite comments on the brevity of the Bribery Act, and how attractive it looks. Reading the materials provided as somebody who spent a decade litigating crime at the highest levels in the UK, I was aghast at the lack of definition, winced at the broad scope of extraterritoriality, and paled at the impact that this piece of legislation could do in the wrong hands.
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Transatlantic Blogs – The Bribery Act

The news of the Bribery Act 2010 is spreading.  Members of the SFO and other luminaries recently spoke at a presentation in Manhattan and the possible consequences for international business are only slowly becoming apparent in the USA.  Given the ‘extraterritoriality’ provisions, one would have expected the new laws to have been announced to the business community to the accompaniment of trumpets!

 

The firm of Garson, Segal, Steinmetz, Fladgate LLP are based in Manhattan.  Their senior partner is Robert Garson.  They specialize in a number of areas including corporate law, IP and international dispute resolution.  Together we are undertaking a review of the law on both sides of the Atlantic in a series of blogs.  The first one, entitled The Bribery Act 2010 – the English Are Coming! is now published.

 

More will follow and we hope that these articles will provide an interesting and useful guide to the profound and important changes which will result as a consequence of this legislation.

 

 

Barristers Chambers in London

Tim Kendal practices from the chambers of William Clegg QC. This famous barristers chambers in London is named 2 Bedford Row, and enjoys a continuing reputation as a criminal fraud powerhouse. The chambers itself covers many aspects of prosecution and defence, ranging from fraud and serious crime, civil asset recovery and financial services regulation, right through to environmental enforcement and sports law.

Tim’s year of call was 1985, and for over 25 years he has served UK corporations and individuals. Being part of a barristers chambers in London is essential for Tim maintaining his local and international reputation, and serving all clients efficiently. John Grimmer is Tim’s senior clerk. Paul Rodgers handles Tim’s regulatory and direct access barrister services. Both can be contacted through chambers.

More about the Barristers Chambers of William Clegg QC

The chambers website runs a regular blog, with articles and thoughts of current members regarding legal developments and cases.

Conspiracy and Criminal Lifestyle II – When does the clock stop?

The fashion for drafting imprecise conspiracy dates was already popular prior to the enactment of the Proceeds of Crime Act 2002 (POCA).  After 2002 the fashion became a prosecutorial “must”.  A strongly held and widespread belief sprang up within prosecuting authorities that if a defendant was convicted on a conspiracy count drafted with start and finish dates spanning a time period greater than 6 months then the lifestyle provisions of POCA (and in particular section 75(2)(c)) would bite.  The believed consequence was that the State would, on conviction, preserve the opportunity of recouping a greater financial payment by way of confiscation than otherwise would be the case.

Much anxious effort has rightly been expended by the defence when carefully drafting bases of pleas the better to ensure that the “lifestyle” provision in section 75(2)(c) will have no application in a particular case. But what about cases either upon conviction by the jury or where there has been no written or agreed basis of plea? Continue reading

Conspiracy and Criminal Lifestyle I – what’s in a date?

The Six Month Rule

Section 6(4) of the Proceeds of Crime Act 2002 (POCA) provides that the sentencing court must consider if a defendant has a criminal lifestyle and if he does, to determine whether he has benefited from it.  If he has, then the court must go on to determine the recoverable amount and make a confiscation order in that amount.  This can have far- ranging and serious consequences for the defendant – both in financial terms and in relation to any sentence of imprisonment in default of payment.

Section 75(2)(c) of POCA  provides that a defendant will have a criminal lifestyle if, and only if, the offence of which the defendant was convicted is an offence committed over a period of at least six months and the defendant has benefited from the conduct which constitutes the offence.

But how should the court approach a case where the indictment count is alleged to have lasted for a period greater than 6 months, but the defendant’s part in the conspiracy lasted for a period shorter than 6 months?  For instance, in a long-lasting conspiracy to smuggle drugs or tobacco which has a number of defendants some of whom only join the conspiracy for a short time, what matters more – the period of time for which the conspiracy lasted from first to last, or just the shorter period of time for which a particular defendant was involved?  Is that shorter involvement to be considered a “criminal lifestyle” opening up the defendant to an enormous confiscation order? Continue reading