Introduction
(The second reading of the State Assets Recovery Bill No. 2 of 2017 is scheduled for tomorrow’s sitting of the National Assembly)
This commentary has its genesis in a presentation done for the Private Section Commission (PSC) on a draft of this Bill circulated around September 2016. There have been five changes of some substance, the rest being of a minor nature. The five are:
- In clause 1 “Short Title and commencement”, the words “and commencement” have been deleted. Perhaps the Government wishes the Bill to take effect on its assent and gazetting.
- Old clause 43 setting out the procedure for the application for a Civil Recovery Order has been deleted and replaced with a protection for any purchaser acting in good faith who acquires what would otherwise have been recoverable property.
- Old clause 45 providing for the right to recoverable property being automatically transferred to a court-appointed Asset Manager is being amended to delay the transfer until the right of appeals has been exhausted, or expires.
- Clause 70 dealing with offences by financial institutions has been amended to delete the word “summary” in “summary offence” for failure to comply with a requirement imposed upon on the financial institution under a customer information order.
- A new clause 103 General Penalty is introduced.
No explanation has been offered for these changes. The Bill contains 107 sections and one Schedule. Of these more than half replicate provisions of Anti-Money Laundering and Countering the Financing of Terrorism Act, including common concepts such as Restraint Orders; Civil Recovery Orders; Disclosure Orders; Customer Information Order; Production Order; etc. Indeed, some of these can also be found in the Narcotic Drugs Act and the Criminal Law Offences Act.
The statement in SARA’s long title that the Bill is in consonance with the UN Convention Against Corruption is only partly true. Key Convention recommendations such as Article 7 dealing with financing of candidates and political parties, reporting of acts of corruption by public officials (Article 8.4); rules to prevent corruption among members of the judiciary (Article 11.1) and abuse of functions (Article 19) get no mention in this Bill.
Definitional issues
The model for the SARA Bill is an extreme form of asset forfeiture wherein presumption of innocence may no longer apply. Such a presumption is a bedrock principle and underpins the rule of law.
Clause 2 defines “property” very broadly to include eleven (11) types or rights, including “any benefit, income or profits from proceeds of crime or unlawful conduct”. The definition of “proceeds of crime” is that of the Anti-Money Laundering and Countering the Financing of Terrorism Act (AMLCFT Act) which itself is very broad.
Conduct is “unlawful conduct” if it constitutes an offence under any of the criminal, administrative, revenue or any other law of Guyana. This is dangerously wide since some laws do not require conviction but simply state “a person shall be guilty of an offence who contravenes section…” or “It shall be an offence to….”
The Bill sets a very low threshold for an offence to be a serious offence– any offence carrying a penalty of deprivation of liberty of not less than six months is a serious offence. To take some examples from the VAT Act, failure to furnish an import declaration or to provide a tax invoice, or the provision of a tax invoice otherwise than as prescribed, or failure to provide a tax credit note or tax debit note, are all serious offences under the SARA Bill and the AMLCFT Act.
To further confuse matters, “state property” is not defined while the term “property” includes any benefit, income or profits from the proceeds of crime or unlawful conduct. It seems that SARA which currently has no statutory underpinning is acting on the assumption that unassessed tax constitutes state property. This is absurd, false and dangerous.
The Bill establishes a State Assets Recovery Agency whose legal status seems unclear. Statutes establishing bodies usually describe them as a body corporate. This is not the case with SARA, nor is there a board or authority to oversee the work of the management and staff or to offer any broad direction. It is perhaps ironic that the current Administration while in opposition had argued strongly and successfully against the Director of the Financial Intelligence Unit operating as a lone ranger reporting to the Minister of Finance. In the case of SARA, it is infinitely worse.
The Director
The Bill makes the Director – not the Agency – a corporation sole, like the Queen of England or the Bishop of Georgetown. A recent and high profile example of a corporation sole was the National Frequency Management Unit, but notably not the director. The only parallel of a corporation sole in similar asset recovery legislation is, or was, the Director of the Asset Recovery Authority of the UK under their Proceeds of Crime Act. That Authority proved to be a spectacular failure and was abolished after a few years after it was found to cost more – three times as much – than it earned.
A corporation sole is answerable to no one (other than by judicial review), takes directions from no one and can practically do as he pleases. In providing for a deputy to the Director, it appears to have escaped the attention of the draftspersons that there is no deputy Queen or deputy Bishop.
What makes this even more dangerous is that the Director alone decides which operations to mount and worse, he can delegate any of his extra-ordinarily wide powers to any person. He can do “anything” which he considers appropriate, incidental to the discharge of his function. His powers are much wider than of the Director of the Asset Recovery Agency under the UK Proceeds of Crime Act which has provided a limited model for SARA. In the UK, the Director’s functions did not include the recovery of State Property derived from unlawful conduct.
The Director’s powers extend beyond State Property. Clause 44 empowers the Director to include, as part of the civil recovery application, “property, other than State property …”.
On top of it all, the Director and members of SARA staff enjoy complete and total immunity in respect of any act done in good faith in the performance of their duties.
Appointment
The Bill proposes that the Director and the Deputy Director are to be appointed (and removed), and their terms and conditions set, by a simple majority of the National Assembly on the recommendation of the Committee on Appointments. The function of the Appointments Committee of the National Assembly is to make appointments in respect of members of a Commission established under the Constitution, not executive bodies.
This provision clearly compromises the principle of separation of powers. That the National Assembly has been employed in such appointments before, cannot be justification for its continuation.
There is a fit and proper test for the Director and Deputy Director which should exclude politically exposed persons as defined in the AML/CFT Act. The current de facto Director is such a person and it would be interesting to see how this plays out.
Under clause 106, persons currently employed by SARU will become automatically employed by SARA. It is a matter of public knowledge that SARU has in its employ at least two other politically exposed persons with high connections to Clive Thomas’ WPA.
Amazing powers
The proposed functions and powers of the Director are wider than those of the Agency found scattered throughout the Bill to which clause 6 draws reference while listing the following: investigating whether property or any interest therein constitutes State property; the tracing and identification of property both in and out of Guyana; the tracing of any other benefit by any person in respect of State property; and the instituting and conducting of Court proceedings for the freezing, recovery or protection of State property.
Ironically, the Bill is in the name of the Attorney General who effectively cedes some of his functions and powers to the Director. Currently, civil action by the State is taken in the name of the Attorney General. Under the Bill, the Director can initiate civil proceedings and probably criminal proceedings as well.
Constitutionally, the power to bring criminal action, other than private legal action, vests in the Director of Public Prosecutions. The Bill gives the Director the right to be provided with information from the DPP, the Commissioner General of the GRA, the Commissioner of Police, the Financial Intelligence Unit, SOCU, Bank of Guyana, etc. This section seems to violate not only the respective laws but in the case of the DPP, the Constitution as well.
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 out by the Police.
On the request of the Director, officers of SARA can be designated revenue officers by the Minister of Finance. This gives the Director the power to discharge the functions of the GRA in relation to the Income, Corporation, Capital Gains and Property Taxes as well as process fees. What this means is that the new Commissioner General has to share his powers with the Director. This must rank as legislative madness with the potential for grave abuse.
The Minister responsible for public security is also required to designate named SARA officers on the request by the Director to be given the power of the police and immigration officers. In this regard as well, the Commissioner of Police is bound to provide any assistance the Director requests.
It seems improper and legally impossible for any Minister to exercise a statutory power which Parliament has vested in any body or agency such as the Commissioner of Police or the Governing Board of the GRA.
The reason for according officers of SARA – including office holders of political parties – the powers of revenue officers is not clear. It upends a principle of exclusivity accorded to the tax authorities – and recognised in all existing tax legislation – since Income Tax was introduced in 1929. In effect, there can be three parallel investigations in a person’s tax affairs – by the GRA, SARA and SOCU. Just imagine a person having to deal with these three bodies all at the same time!
Finally, the Director has the power to enter into agreements with foreign states for any purpose under the Act, a power which even Cabinet members do not possess.
When all the powers and functions of the Director 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 of the GRA and the Director of Public Prosecutions all combined.
To make it more interesting, while the GRA can only go back seven years except in the case of fraud, the SARA Bill allows prosecution and recovery of up to twelve years.
Funding
The treatment of the funds of SARA also raises problems. Clause 14 seeks to establish a Recovery of State Assets Fund comprising credits from Civil Recovery Orders and payments made or debts recovered in relation to Civil Recovery Orders made under the Act. Clause 14 (2) sets out as “credits to the Fund” 25% of moneys derived from the enforcement of a Recovery Order; the proceeds of the disposal of property by an Assets Manager appointed by the Court; and income derived from investments of such funds.
Confusion arises when one turns to the Schedule to the Act which contains an entire paragraph to “Financing of SARA” of which the first item is “funds determined by the National Assembly based on a budget tabled by the Director”.
The Funds are at the disposal of the Director for meeting the expenses of SARA, compensating victims who suffered losses as a result of an unlawful conduct; transferring funds to foreign states pursuant to any treaty or agreement; payment for training, legal fees, forensic experts, investigators, receivers and other professionals. Any balance in the Fund is to be paid into the Consolidated Fund.
It is unclear from a reading of clause 14 whether SARA will now become a Budget Agency for purposes of the Fiscal Management and Accountability Act and Article 217 of the Constitution. Maybe different persons drafted the Bill and the Schedule but one would have expected some consistency to the two parts of the same Bill.
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.
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. As noted earlier, the UK experiment was 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. It is also silent on which legislation should take precedence in the several cases of conflicts between legislation.
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.
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. And it was only half as ambitious as the SARA Draft.
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. With so much surplusage, one questions the need for the SARA Bill in its present form.
Regardless of the intentions and motives behind this Bill, it has all the ingredients for the making of a Police state. It should be referred to a Select Committee with access to the best possible legal inputs from persons versed in a range of laws.
