28 November 2007

David Abrahams, the Labour Party and the Proceeds of Crime Act 2002

It has widely been accepted (including by Gordon Brown) that it is illegal to disguise the source of donations made to a political party. Various people have raised the spectre of money laundering, so I thought it might be helpful to set out how a money laundering offence might have taken place, given the facts we know about David Abraham's donations to the Labour Party.

Under the Proceeds of Crime Act 2002 ("POCA") it is an offence for a person to "become concerned in an arrangement which he knows or suspects facilitates (by whatever means) the acqusition, retention, use or control of criminal property by or on behalf of another person" (section 328) and under section 329 "A person commits an offence if he: (a) acquires criminal property; (b) uses criminal property; (c) has possession of criminal property".

It seems to me that the donations became criminal property when they passed from Mr Abrahams to Mrs Kidd and Mr Ruddick with the intention that they be passed to the Labour Party as donations with the purpose of disguising their source, because under section 340 of POCA, criminal property is defined as any property that you "know or suspect" is or represents the benefit of "criminal conduct".

The penalty - up to 14 years in prison and an unlimited fine.

UPDATE (29-11-07): In response to this post, Head of Legal has responded in the comments of his own blog as follows: "I think talk of POCA is wild, too, Danvers. In what sense was the money the proceeds of crime? How did it represent the benefit of criminal conduct? If Janet Kidd told Labour the money came from Abrahams - and Peter Watt did know that - then she acted lawfully, and so did Abrahams. And so did Peter Watt in accepting it. Nobody gets the money by doing anything unlawful. What was unlawful was wrongly reporting the agent as the donor."

My response was: "I am not sure it is as simple as that. If Kidd/Abrahams donated the money to Labour and told Labour (i.e. Watt) that it was Abraham's money but that it should be reported as Kidd's money, they (all three of them) are setting out to breach the PPERA. My understanding of POCA is that just about any transfer of cash in furtherance of a crime constitutes an ML offence. It could be argued that the cash became tainted with criminality the moment it was transferred to Kidd for the purpose of disguising its true origins for the purposes of a declaration under the PPERA.It would be the same if an employer and employee were deliberately cheating on Income Tax and giving the difference to a political party - and the political party knew about the scheme. To be fair, I think to prosecute under POCA would be unfair, but the police love using it to stitch up the nearest and dearest of the real offenders, once they have touched the tainted cash."

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