Unexplained Wealth Orders: Banker's wife loses court challenge

Further to our blog in July 2018 on the inception of Unexplained Wealth Orders (‘UWOs’), the recipient of the first UWO has lost her application for the order to be set aside.

In National Crime Agency v Mrs A (Rev 1) [2018] EWHC 2534 (Admin), Mr Justice Supperstone considered whether his without notice order made on 27 February 2018 should continue.

Background

The applicant, who can only be referred to as ‘Mrs A’ due to an anonymity order being granted at the beginning of the hearing (her anonymity has subsequently been lifted) , was the beneficial owner of a company incorporated in the British Virgin Islands called Vicksburg Global Inc (‘VG’).

In December 2009, VG purchased a property for £11.5million. On the same day, a mortgage was secured against the property by way of a charge granted in favour of Barclays Suisse in return for a loan facility for £7,457,000.

In December 2014, VG applied to HM Land Registry to discharge the charge.

Mrs A’s husband, ‘Mr A’, was a chairman of a bank in a ‘non-EEA Country’ and the bank ‘was the largest bank in the country, in which the state had a controlling stake.’ After 14 years at the bank, Mr A was arrested in December 2015 and thereafter charged with various alleged financial crimes including misappropriation, abuse of office, large-scale fraud and embezzlement, all of which related to the bank.

Mr A was convicted in October 2016 after a trial. He was sentenced to 15 years’ imprisonment and was ordered to pay the bank approximately $39million.

Grounds for discharging order

Mrs A’s lawyers advanced the below grounds as to why the UWO should be discharged.

Mr A is/was not a “politically exposed person” (“PEP”).

The NCA seriously mischaracterised Mr A’s role when persuading the court that the “income requirement” was met.

The NCA was wrong to place reliance on Mr A’s conviction in the non-EEA Country in support of the statutory “income requirement” test.

The NCA has not established the “income requirement” to the relevant standard.

The UWO ought to be discharged by virtue of the penal warning (wrongly) attached to it.

The UWO offends Mrs A’s Article 1, Protocol 1 ECHR rights.

The UWO offends the privilege against self-incrimination and spousal privilege.

Given all the circumstances of the case, the court ought not have exercised its discretion to make the order.

The judgment

In respect of the first ground, and despite extensive submissions that Mr A was not a PEP. Mr Justice Supperstone concluded that he was and accordingly therefore, so was his wife, Mrs A.

Under 362B (4) POCA 2002 it is necessary for the Court to be satisfied that the respondent is a PEP or has been involved in serious crime/connected to someone involved (see our previous blog on what the Court needs to be satisfied of before making a UWO).

Mr Justice Supperstone then dealt with the second, third and fourth grounds together as they all related to the ‘income requirement’.

S.362B (3) states the Court:-

“must be satisfied that there are reasonable grounds for suspecting that the known sources of the respondent’s lawfully obtained income would have been insufficient for the purposes of enabling the respondent to obtain the property.”

The NCA resisted those grounds on the basis that:-

Mrs A paid a deposit of at least £4,050,000 towards the purchase of the Property in 2009;
Mrs A appears to have discharged a mortgage of up to £7,450,000 over a period of only five years;
There was reason to suspect that Mr A was her only source of income; and
That (in light of his conviction) any monies originating from Mr A were not lawfully obtained.

Mr Justice Supperstone stated that ground two and three had not be made out and that ‘Ground 4 adds nothing’. He was therefore ‘satisfied that the income requirement is satisfied’.

When considering the fifth ground, the Judge took into consideration the intentions of Parliament when enacting S.326 (c) POCA 2002 together with public interest.

He rejected this ground of challenge on the basis that it is ‘clear from the wording of s.362C that it is concerned with the effect of a UWO in cases of non-compliance…..I do not accept that s.326(c) ousts…..the Court’s power to attach a penal notice to a UWO..’ Furthermore, he averred that ‘there is a strong public interest in ensuring that orders are not disobeyed at the option of a party’.

The sixth ground relates to Mrs A’s Right to peaceful enjoyment of property (Article 1, Protocol 1 ECHR) where the submission was made that the UWO interferes with the interests of both Mrs A and her husband in the “peaceful enjoyment” of their property.

This was not accepted on the basis that ‘the UWO only concerns property in a general sense. Mere [interference] with the enjoyment of property is not sufficient’. The Judge was satisfied that the ‘interference’ was proportionate, and Mrs A was being asked to provide information about one residential property.

Ground seven was predicated on Mrs A’s right to privilege against self-incrimination and spousal privilege. It was submitted that the UWO offends that privilege because Mrs A was subject to an on-going criminal investigation in the non-EEA Country and not only is she at risk from criminal proceedings there but she could be said to be at risk of criminal prosecution in the UK.

There were a number of reasons as to why this ground was not accepted by Mr Justice Supperstone. The primary reasons being that there is no right the invoke privilege with regards to the alleged risk of prosecution for criminal offences outside the UK. Furthermore, Mrs A had not stated which answers to which questions might incriminate her and ‘mere assertion is not sufficient’.

Finally, in respect of the eighth ground, which was a general ground that the Court should not have exercised its discretion in making the UWO, Mr Justice Supperstone stated that he considers that ‘in all the circumstance it was, and remains, appropriate for the order to have be made. The statutory criteria for making the order have been met’.

Comment

The Director of Economic Crime at the NCA has said he is “pleased that the court dismissed the respondent’s arguments” and stressed that they are “determined to use the powers available to us to their fullest extent where we have concerns that we cannot determine legitimate sources of wealth.”

It is clear from this Judgment that Unexplained Wealth Orders are being taken seriously by the Courts however the effectiveness in tackling ‘dirty money’ remains to be seen.

Click here to find out how Brett Wilson NCA and civil asset recovery solicitors can help if you are made the subject of an Unexplained Wealth Order.