20.01.2014 – In view of the recent allegations of match fixing in English domestic leagues (which are dealt with well by Nick Di Marcohere), it is worth considering what mechanisms the authorities may have for recovering the financial gains of sportsmen and the criminals involved in match fixing, spot fixing, or indeed any other manner of crime.
The UK has a particularly robust regime for confiscating assets obtained through criminal activity. This article will consider the nature and mechanisms of asset confiscation; the human rights issues it presents; and how all this relates to sport.
What is the confiscation of assets?
In essence, asset confiscation is the expropriation (seizure) of assets gained through criminal activity. Nikolov, in a 2011 article in the Journal of Money Laundering Control, describes the confiscation of assets as, “irrevocable and unconditional appropriation by the state of property acquired directly or indirectly through criminal or illegal activity“.1
Historically, asset recovery following criminal acts has focussed on offences relating to drugs. The current law stems from the case of R v. Cuthbertson and Others,2 in which the court considered whether it could confiscate monies following a conviction of conspiring to manufacture and supply the drug LSD in contravention of s. 4 of the Misuse of Drugs Act 1971 (‘MODA’). Despite s. 27 MODA prescribing asset recovery of tangible property involved in committing a breach of MODA, it was held that this did not confer jurisdiction to confiscate assets for conspiring to contravene the provisions of MODA. Moreover, s.27 only allowed for the confiscation of tangible property directly involved in the crime in question, precluding the recovery of the profits of crime.
As a result of this perceived injustice, in 1984 the UK Government commissioned the Hodgson Committee Report3 on the Profits of Crime and Their Recovery. An iterative process of legislative change followed through the 1980s and 1990s, broadening the ambit of asset recovery from drugs cases to terrorism cases, to the proceeds of crime more generally. The current regime was instituted by the enactment of ‘one of the world’s most comprehensive pieces of criminal assets legislation’,4 the Proceeds of Crime Act 2002 (‘POCA’). POCA provides the authority and instruments for confiscating the assets of crime; this would include fraud, which is reported as the basis on which players have been arrested in respect of recent football fixing allegations.5
Controversially, and of particular relevance for present purposes, asset confiscation does not require a criminal conviction. Part V of POCA facilitates asset confiscation undertaken on a civil basis, which, naturally, entails the lower, civil burden of proof.6
Asset confiscation is currently managed by the nascent National Crime Agency (‘NCA’),7 who are responsible for the conduct of the criminal investigation into the present match fixing allegations.8 However, owing to Part V of POCA, irrespective of the whether the NCA’s present match-fixing investigations result in criminal convictions, it is within its gift to attempt recovery of any assets it feels able to determine, on the balance of probabilities, have been criminally derived.
How are assets recovered?
Assets can be recovered using four mechanisms:
I. Criminal confiscation;
II. Civil recovery;
III. Taxation; or
IV. Seizure & forfeiture of cash.
Criminal confiscation is achieved through a Confiscation Order, which can be granted on the basis that the defendant has a ‘criminal lifestyle’ and has benefitted from that criminal lifestyle, or if the defendant benefitted from their particular criminal conduct. A defendant is determined as having a ‘criminal lifestyle’ if the offence in question:
(1) is a ‘lifestyle offence’;9
(2) constitutes conduct forming part of a course of criminal activity;10 or
(3) is an offence committed over a period of at least six months and the defendant has benefited from the conduct which constitutes the offence.
Match fixing is unlikely to fall within the ambit of ‘lifestyle offences’;11 however points (2) and (3) will be matters of fact for the court to consider. Point (2) will only apply where, in the proceedings in which the defendant was convicted, he was convicted of three or more other offences. Point (3) is self-explanatory. For both (2) and (3) the defendant must have benefitted at least £5,000 from their criminal conduct.
On this basis, it is conceivable that a match fixer could be held to have a ‘criminal lifestyle’ particularly where, for example, the fixing in question was an ongoing, repeated activity, over the course of a number of matches or seasons. In such circumstances there would be, prima facie, scope for a Confiscation Order to be granted upon a criminal conviction.
However, even if the defendant does not have a ‘criminal lifestyle’, a Confiscation Order can still be made if the court holds that he benefitted from his particular criminal conduct. Furthermore, these matters are to be determined on the balance of probabilities12 rather than on the stricter criminal burden of proof.
If the criminal confiscation regime described above gives an athlete and other participants in match fixing pause for thought, then its controversial civil counterpart should dissuade him from any notion that crime pays.
Civil recovery requires criminal conduct to be proven on a civil burden; no criminal conviction is necessary. Thus, if the NCA can establish that a participant in match fixing probably committed fraud through match fixing, then they can seek to recover their profits from doing so. Moreover, the burden of proof is reversed, meaning it is incumbent upon the respondent to establish that the assets were derived lawfully rather than the NCA to establish that the assets were derived illegally.
Civil recovery has been used in a variety of circumstances13 including for acquitted defendants;14 following failed confiscation hearings;15 in respect of suspected criminals being out of the court’s jurisdiction for criminal purposes; where suspected criminals cannot be prosecuted owing to insufficient evidence; and where a defendant has died before criminal proceedings can be instigated or concluded. So, it is clear this route to confiscation is wide in scope, as even being found not guilty in a criminal trial may not be sufficient for a participant to retain the profits of fixing.
To compound the detriment to the respondent in an asset recovery case, should the individual in question be unable to legitimize any income, benefit or turnover, these can be taxed at a commensurate level to that if they were to have been acquired through legitimate means. In essence, the NCA can take back the money gained through match fixing and then charge tax on that sum as if it gained through, say, the athlete’s salary.
Seizure and forfeiture of cash
Finally, cash that is recoverable or that is intended for use in criminal conduct can be seized, even if only part of the cash was either in fact or in plans to be part of a crime.
Human rights challenges
The present asset recovery regime has been rigorously challenged in the European Court of Human Rights (‘ECtHR’) but has been shown to be robust remaining relatively unfettered by the ECtHR. In Phillips v. United Kingdom,16 Confiscation Orders were challenged on the basis of the right to peaceful enjoyment of property (Article 1 of the European Convention on Human Rights). The United Kingdom was found not to be in breach. While Article 1 prohibits interference with property, it allows the State to take measures which are in accordance with the law and which are regarded as necessary. Elsewhere, in Assets Recovery Agency v. Jia Jin He and Dan Dan Chen,17 the UK’s actions were regarded as proportionate, and therefore permissible
The reverse burden of proof has also proven contentious. Whilst more obviously and naturally permissible when there has already been a criminal conviction, as noted above, that is not universally the case here. The reverse burden has been challenged under Article 6(2) of the European Convention on Human Rights, which states that everyone charged with a criminal offence shall be presumed innocent until proved guilty according to law. This, too, though, has been dismissed – see for example McIntosh v. Lord Advocate.18
Evidently, there is an incredibly robust and far-reaching regime in the UK for the recovery of the profits of criminal activity. In the view of this writer, the asset recovery regime should be embraced to its fullest extent in match fixing cases, not least to act as a dissuasive means to other athletes who may consider fixing to represent a lucrative supplement to their income. By publically stripping match fixers of the profits of their crimes, the NCA can impart a message that those who cheat the public, sports governing bodies, bookmakers, and ultimately the game that in many cases provides them with a living, will not prosper from doing so. With hope, this will help undermine the appeal of fixing.
The Financial Action Task Force, in their 2009 report Money Laundering through the Football Sector, stated that, “money now exerts a strong influence on the world of sports.” This statement is undeniable. What is paramount is that the impact of money on the game does not undermine its fundamental nature. Fixing is a complicated issue and should have a multifaceted response. Where appropriate, asset recovery must form a part of that.
Unfortunately, fixing is a global issue, and whilst the UK is not exceptional in its ability to recover criminally derived assets, nor is it unique in its ability to do so through civil litigation – the USA, South Africa, Ireland and Australia have comparable regimes19 – this significant weapon in the arsenal with which to fight match fixing is not a found in all jurisdictions.
The Financial Action Task force recommend that, “Countries should consider adopting measures that allow such proceeds or instrumentalities to be confiscated without requiring a criminal conviction“.20 This need is compounded where those counties also have a prevalence of match fixing, as an unforeseen consequence of this recommendation not being heeded is the creation of a lacuna in the battle to maintain sporting integrity.
Christopher studied undergraduate law at the University of Exeter before undertaking a master’s degree in International Banking and Finance Law at the University of the West of England.
He currently works in the litigation team of the business debt recovery department of a major UK bank, and in 2015 will be starting a training contract at a national law firm based in Bristol. His sports law research interest focuses on the nexus of finance and sport, and he has previously been published in the International Sports Law Journal discussing the legal issues presented by UEFA’s Financial Fair Play rules.
Christopher can also be found on LinkedIn here: http://uk.linkedin.com/pub/christopher-flanagan/21/401/246
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