CRITIQUE OF THE SARA BILL

CRITIQUE OF THE SARA BILL

The principles of state asset recovery, compliance with the UN Convention against Corruption, reduction of crime are commendable. Civil asset forfeiture, while used in an increasing number of jurisdictions, is more controversial. Non-conviction based forfeiture often places the citizen is a be severely disadvantaged. In the Republic of Ireland where the principle has been relatively successful based on that country s peculiar circumstances, it is widely accepted that there has been a qualitative reduction of certain rights, including due process and compromising the presumption of innocence. Question: Is this a small price to pay for the reduction of crime?

Forfeiture of assets, mostly conviction- based, is not a new concept. Such powers exist under: The Criminal Offences Procedures Act: Cap. 10:01 Summary Jurisdiction Procedures Act: Cap. 10:02 The Customs Act. Cap:82:01 The Hijacking and Piracy Act, Cap 10:08 which provides for forfeiture, restraint orders and civil forfeiture Narcotic Drugs and Psychotropic Substances (Control) Act: Cap 10:10 Anti-Money Laundering and Countering the Financing of Terrorism Act: Cap 10:11

The Model The model for the SARA Bill is an extreme form of asset forfeiture in which the presumption of innocence is at least, reversed. Normally, asset forfeiture legislation can be: Conviction based, distinguishing between conviction based stream but separating indictable but not serious offences from and serious offences; Civil stream, against a person suspected to have committed a serious offence within the past six years, or property suspected of being the proceeds of an indictable offence; and Completely in rem action against property acquired from unlawful conduct. Conduct is unlawful conduct if it constitutes an offence under any of the criminal, administrative, revenue or any other law of Guyana. Some laws do not require conviction but simply states a person shall be guilty of an offence who contravenes section or It shall be an offence to.

Long Title The statement that this Bill is consonant with the UN Convention Against Corruption is true to a limited extent. However, key recommendations in the Convention not reflected in the Bill include Article 7 Public Sector including financing of candidates and political parties, reporting by public officials of acts of corruption (Article 8.4); rules to prevent corruption among members of the judiciary (Article 11.1); abuse of functions (Article 19); etc. Nor is this Bill only about State Property. Clause 44 empowers the Director to include, as part of the civil recovery application, property, other than State property, discovered to have been obtained or derived, directly or indirectly, through unlawful conduct.

Absence of key definitions Despite featuring in the name, state asset is not defined in the Bill. There is no definition of State property, a term used liberally throughout the Bill; or specified property used in clause 18 which gives the Director the power to take action to recover State property.

Powers of the Director Director can do anything which he considers appropriate, incidental to the discharge of his function. Are much wider than of the Director of the Asset Recovery Agency under UK Proceeds of Crime Act. In the UK, the Director s functions did not include the recovery of State Property derived from unlawful conduct. Effectively, the Director can assume functions of Commissioner-General, the Commissioner of Police as well as the Director of Public Prosecutions. Most Frighteningly, the Director can actually contract out the power, functions, and duties conferred on him: Clause 4.

Funds of the Agency The provision granting SARA 25% of its proceeds violates Article 216 of the Guyana Constitution; and Gives the agency a direct interest in the funds raised. In the USA, the Police use this as a main source of funds, a practice that is widely criticised as abused.

The Tax Provisions: Not only contentious but not workable without changes in the tax laws as both Australia and the UK have found. Guyana s tax administration is not similar to the legislation of most other countries that we have reviewed for purposes of this document. In Barbados, the Commissioner can object to a request for information.

The Director Appointment: The Bill proposes that the Director and the Deputy Director will be appointed, and their terms and conditions set, by a simple majority of the National Assembly on the recommendation of the Committee on Appointments. This is an executive function, and compromises the principle of separation of powers. The function of the Appointments Committee of the National Assembly is to make appointments in respect of members of Commission established under the Constitution, not other bodies. That the National Assembly has been employed in such appointments before is not justification for its continuance.

Nature of appointment : The draft makes the Director a Corporation Sole. Corporations Sole have their origin in ecclesiastical law to allow property to move from one office holder to his or her successor. It applies, for example, to the Bishop of Georgetown and to the British Monarch. As a corporation sole, the Director is answerable to no one, although his actions will be subject to judicial review. His/her only reporting obligation is an annual report submitted through the subject Minister. Under the Public Corporations Act, a corporation may be a corporation sole, but not the person who heads it. Almost every corporation formed under the Public Corporations Act was a corporation aggregate. The governing parties, when in opposition, strongly opposed the Director of FIU as an effective corporation sole and replaced it with a ten-member AMLCFT Authority and a further nine ex officio members. A deputy Corporation Sole seems a conceptual impossibility. The Proceeds of Crime Act of the UK, the only other similar legislation making the Director a Corporation Sole, did not have a Deputy. There is no deputy Monarch or Bishop.

Fit and Proper Test: The Schedule to the Bill provides that the person appointed as Director or Deputy Director of SARA shall be a fit and proper person. There are no specifications of what constitutes fit and proper but one of the criteria must include independence and exclude politically exposed persons senior politicians and important political party officials. The application of this test would exclude Professor Clive Thomas, a co-leader of the Working People s Alliance, a party in the ruling coalition.

The Powers and functions of the Director These are incredibly wide. In fact the Director s functions are wider than those of SARA and considerably wider than those specified for the original corporation sole Director in the UK Proceeds of Crime Act.

Role of Ministers The Minister of Finance is authorized under Clause 9 (1) of the Bill, on a request from the Director, to designate the Director and other named officers of SARA, as persons having the powers of a revenue and customs officer. Under the Guyana Revenue Act, the power to appoint revenue and customs officers vests in the Guyana Revenue Authority. Proposed provision is either an amendment by implication or disregards that Act. It seems improper and legally impossible for a Minister to exercise a statutory power which Parliament has vested in the Governing Board of the GRA. Similarly, the Minister responsible for public security is now being conferred with powers to designate the Director and other named officers of SARA as persons having the powers of police officers and immigration officers. Parliament has conferred the power to appoint police officers and immigration officers on the Police Service Commission and the Commissioner of Police. The objection in relation to the GRA applies to this provision as well.

The Director of Public Prosecutions (DPP) Article 187 confers on the DPP exclusive powers to institute, undertake and discontinue criminal proceedings against any person before any court. Article 187 (4) provides that in the exercise of these powers, the Director shall be subject to the direction or control of no other person or authority. The mandatory requirement of clause 11 that the Director of Public Prosecutions inform the Director of any criminal investigation or criminal proceeding involving State property which may become subject to forfeiture, confiscation or civil recovery, seems to be in violation of 187 (4). The requirement in clause 23 that the DPP disclose information relating to any unlawful conduct, tax or financial impropriety of any person seems similarly unconstitutional. The mandatory requirement of clause 11 that the Commissioner of Police inform the Director of any criminal investigation or criminal proceeding involving State property which may become subject to forfeiture, confiscation or civil recovery, seems to remove any exercise of judgment in connection with investigations being carried by the Police.

When all the powers and functions of the Director (summarised in Part 1) are taken as a whole, together with the status of corporation sole, the Director has more powers and is subject to fewer restrictions, than the Commissioner of Police, the Commissioner General and the Director of Public Prosecutions.

Conclusion The proposed Bill seeks to achieve far too many objectives: the reduction in crime, recovery of State Assets and the introduction of a system of civil asset forfeiture. The consequences of this over-ambitious approach are a frightening array of overlapping laws, concentration of power, violation of the Constitution and constitutional principles, violation of the standing orders of the National Assembly, and a potential reduction of the civil liberties: due process and the presumption of innocence. Imposing a lower burden of proof on the Director in a case involving confiscation of property, than in a criminal case, can put citizens in a serious disadvantage against the State, depriving him of the very funds he ought to need to prove his innocence. The Bill contains some striking similarities with the Proceeds of Crime Act 2002 of the UK, an Act that created the Asset Recovery Agency with a Director as a Corporation Sole. That Act has been a major failure and has been effectively abolished. The Bill is seriously and conceptually flawed. It appears that the drafter was not sufficiently familiar with Guyana s Constitution, its statutes and certain applicable legal principles. The method of appointing the Director and his Deputy and his appointment as a corporation sole show a lack of understanding of important principles. This was compounded by some unfortunate drafting errors. The powers given to a single person, with no reporting obligation other than an annual report to the National Assembly, free to conduct any operation he chooses and the manner in which the operation is executed, with the power to delegate his almost limitless powers to any person, makes for a very dangerous scenario. There are overlaps with several main pieces of legislation and functions. The possibility of SOCU, other investigative branches of the Police, SARA and the DPP engaging in simultaneous exercises is real. The Bill is silent on whether anyone, and if so who, must give way.

Conclusion Since the introduction of Income Tax in 1929, the stages of self-assessment, a Notice of Assessment, Objections and Appeals to the Courts of Guyana have protected the taxpayer and his property. Who honestly believes that SARA can do what the Commissioner General and his considerable staff cannot do? Is SARA to employ hugely expensive forensic accountants and tax lawyers who have to familiarise themselves with basic charging principle or the assessment year. The changes proposed in this Bill are serious and fundamental. The necessary redraft is not for any single individual. Legal principles and practices in operation for more than a century will be affected by this Bill, if passed as is. Nor is this work for a Select Committee, unless it receives the best possible legal inputs from persons versed in a range of laws. Failure to consider the range of implications and overlaps will not only guarantee legal challenges but lead to a repeat of the experiences of the UK where that state s Asset Recovery Agency cost more than three times more to maintain than it brought it. And it was only half as ambitious as the Sara Draft. I support the imperative of recovering State assets from politicians, public officials and the private sector who unlawfully enriched themselves. I support strong measures against tax frauds. I also support the civil asset forfeiture concept. But extending these to all forms of a loosely defined concept of unlawful conduct is a step far too steep. It is dangerous and unworkable. Barbados, so very often a model for this Region, may be a good start to identify protective provisions which such legislation should contain and the Commonwealth of Australia and its many states and territories as a source for civil assets forfeiture legislation. Finally, to show its commitment to the UN Convention against Corruption, the Government would score highly if it introduces legislation on donations to political parties and candidates called for by the Convention.

Recommendations Place further consideration of the draft Bill on hold. Articulate policies and set objectives of what the Government seeks to achieve. Set up a small team, possessing and having access to relevant skills and expertise, to consider how best to achieve the objectives. In this regard Hong Kong adopted an informed model, including a study and publication done in Hong Kong in 2006, entitled Civil Forfeiture for Hong Kong? : A Discussion Paper of the Hong Kong Civil Forfeiture Project. Meanwhile the State can use existing mechanisms, including the Guyana Revenue Authority, the Double Taxation Treaties (Canada, UK and CARICOM) and the Tax Information Exchange Agreement with the USA, to pursue suspected acts of illicit enrichment misfeasance and other violations using both the civil and criminal avenues. Remove overlapping functions between SARU and SOCU to make investigations more transparent and effective.