The rise of Confiscation

Proceedings in Private Prosecutions

Regina (Virgin Media Ltd) v Munaf Ahmed Zinga [2014]

EWCA Crim 52

Introduction
1. This is a case that sparked national media attention for a number of reasons. The first
being that it is a private prosecution of a large scale fraud in which the private prosecutor
instigated confiscation proceedings. This prompted a debate on the role of private
prosecutions in today's society and the extent to which these may increase given the
funding cuts to public prosecuting bodies. The question arises as to whether such
prosecutions should increase or whether large corporate bodies are taking on too much
of the power, which should be exercised by the state.

2. Historically private prosecutions have occurred usually in two areas. First, where a
prosecuting body has a particular interest or set of expertise. Examples of this are the
RSPCA and the Post Office. Second, in high profile investigations, such as the family
instituted prosecutions of the Lawrence Murderers, where the police have chosen not to
prosecute.

3. The second issue raised is the interaction between the police and private prosecutors
and whether the police should accept money in return for assisting with the prosecution.
Will this lead to the police diverting resources into cases they are paid for and neglecting
those victims who can't afford it?

4. Third, what is the future of private prosecutions? Will a distinct line be drawn between
the domain of public and private prosecutions or will future legislation be brought in to
further encourage prosecutions, especially by corporates.

5. Forth, to what extent and to whom, is a private prosecutor accountable? Should there be
a move to make them more accountable?

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6. This case provides the frame work for the debate, though it certainly does not provide
definitive answers on all the questions. What is certain is that this is not the end of
private prosecutions in financial crime cases.

Facts
7. Mr Zinga and others sold set top boxes, which unscrambled premium Virgin Media
Limited ("Virgin") television channels without the customer having to subscribe to the
services. Virgin claimed the loss of revenue amounted to 380 million. Rather than
pursue civil proceedings against Mr Zinga, Virgin chose to conduct a private prosecution
against him and one other person for conspiracy to defraud. Both were duly convicted
and Mr Zinga was sentenced to 8 years imprisonment.

8. Virgin enlisted the help of the Metropolitan Police for arrests and obtaining search
warrants. Virgin agreed to pay the Metropolitan Police Authority ("MPA") 25% of any sum
recovered under a Compensation Order. Virgin later abandoned the claim for
compensation and instead began Confiscation proceedings under the provisions of the
Proceeds of Crime Act 2002 ("POCA"). The investigation into the finances of the
appellant was conducted by a team from the MPA. The benefit of the criminal conduct
was found by the Court to be 11.8 million and the available amount was 8,771,300.
The Court made a confiscation order in that sum.

The issues
9. Is a private prosecutor such as Virgin entitled to bring confiscation proceedings, even if it
had no financial or other personal interest in the outcome?

10. The propriety of the agreement with the Metropolitan Police Authority.

The conclusions
The ability of a private prosecutor to bring confiscation proceedings

11. Under section 6 of the Prosecution of Offences Act 1985 a private prosecutor is
permitted to bring "criminal proceedings". Sentencing is part of the criminal proceedings
and it is well established that confiscation proceedings are part of sentencing. There is
nothing in POCA which specifically excludes private prosecutors from instituting
confiscation proceedings.

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12. The relevant section of POCA is section 6 which states that upon conviction, the court
must proceed to consider the making of a confiscation order if the prosecutor... asks the
court to proceed or the court believes it is appropriate for it to do so. Section 6
contains no definition of prosecutor but it is contained within Part 2 of POCA which also
contains section 40(9)(b) which defines a prosecutor as follows:

"references in this Part to the prosecutor are to the person the court believes is to have
conduct of any proceedings for the offence".

13. The court held that this meaning would be the same throughout Part 2 of POCA and
would include private prosecutors.

14. The Court did accept that POCA provided no remedy to a defendant in the form of
compensation for an improper investigation brought by a private prosecutor. However, it
was not accepted that such an omission from the statutory scheme has the consequence
that the term prosecutor in POCA is to be interpreted as excluding a private prosecutor.
Nor was it accepted that because a private prosecutor did not have the power to conduct
a financial investigation into a defendants means and provide a statement under section
16 POCA that it could not institute confiscation proceedings. POCA makes a distinction
between those who can investigate and those who can prosecute; the fact that a
prosecutor cannot investigate does not impair the prosecutor's ability to participate fully
in confiscation proceedings, provided that an appropriate officer, as defined in POCA,
assists that prosecutor by exercising the various investigatory powers.

The propriety of the agreement with the Metropolitan Police Authority

15. Virgin entered an agreement with the Commercial Partnership Manager of the MPA and
agreed that the MPA would work in partnership with Virgin by providing a police service
for which it would make a charge which Virgin would pay. In addition the MPA would
accept from Virgin:

16. the unconditional offer of cash donations of 25% of any money returned to Virgin under
a Compensation Order following successful asset recovery work...

17. The donation was to be accepted under s.93 (1) of the Police Act 1996. That section
enables a police authority to accept gifts of money in connection with the discharge of its
functions.

18. Virgin abandoned its claim for a compensation order, the reason given was that it
accepted that compensation could only be ordered where the sum claimed could either

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 readily be quantified or agreed. It was clear that the appellant would not agree and that
quantification was complex.

19. The appellant submitted that the agreement was improper as in effect Virgin and the
Metropolitan Police were agreeing that compensation would be paid to Virgin. It was
contended by Virgin and the Police Commissioner that private prosecutors could not
conduct the requisite financial investigations and it was not in the public interest that a
person convicted of a crime should escape from an effective investigation into the
proceeds of his crime. It was therefore appropriate for the police to assist.

20. In addition, in 2004 the Home Office introduced a scheme known as ARIS to encourage
an increase in the volume and value of asset recovery activity, in particular by supporting
innovation in tackling criminality and by enabling partners to fund an expansion of
financial investigation. Where the prosecutor was the SFO the scheme was described in
the following terms in the case of R v Innospec ([2010] Crim LR 665, [2010] EW Misc 7
(EWCC), [2010] Lloyd's Rep FC 462:

Under what is somewhat surprisingly called an incentive scheme, the proceeds

obtained from a confiscation order are, once collected by the Ministry of Justice,
distributed to the Home Office in accordance with an agreed protocol with HM
Treasury. That confiscation income is then distributed by the Home Office who retain
50% passing 18.75% to the prosecuting authority and 18.75% to the investigating
authority and 12.5% to Her Majesty's Court Service."

21. Virgin and the Commissioner advanced that the agreement was made as Virgin intended
to put the Metropolitan Police in a position similar to that in which they would have been
placed if a confiscation order alone had been made. Under a confiscation order the
police would receive the investigating authority's share under the Home Office's incentive
scheme. It was therefore justifiable. As the agreement had not been sought by the police
and the investigation was not funded by Virgin it did not compromise the independence
of the police nor lead to a more thorough investigation than there would have been in a
case without such a donation.

22. The court concluded at paragraph 52 and 53 that:

"Given the fact that the only benefit of the confiscation proceedings inured to the
benefit of the state as no compensation or other recompense was sought by Virgin,
there is no basis on which it can be contended that the agreement with the
Metropolitan Police Authority gave rise to any abuse of process.

However we would observe that the [initial agreement] did in fact ... provide an
incentive for the police to devote resources to assisting Virgin in their claim for

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 compensation and gave rise to a perception that their independence was being
compromised."

23. The court did state that the issues raised will require careful consideration by the
Association of Chief Police Officers (or its successor national body), the Association of
Police and Crime Commissioners and the Home Office and it is essential that very
urgent consideration is given by the three bodies to the issuing of clear guidance on what
the police may or may not do when approached by commercial enterprises to lend
assistance in the proceedings for confiscation and claims for compensation.

The Debate
24. The court noted that there is an increase in private prosecutions at a time of
retrenchment of state activity in many areas where the state had previously provided
sufficient funds to enable state bodies to conduct such prosecutions. The questions then
arises; is it therefore in the public interest that corporate bodies such as Virgin do step in
and bring prosecutions?

25. There is clearly a public interest in bringing to justice those who are committing criminal
acts. A large-scale fraud such as this is not only damaging to public confidence but also
to the economy. The pursuit of confiscation goes someway to compensating society for
these crimes. If the state is unable or unwilling to devote resources to pursuing such
criminals such highly organised criminal activity continues unpunished. When many large
corporations are coming under fire for tax avoidance, excessive salaries and a general
lack of philanthropy this could be an appropriate way for them to contribute to society.

26. Many disagree however. The Guardian quotes Labour MP Tom Watson as saying "This
sounds like emerging two-tier policing where corporate interests can buy the time of the
police, leaving those who can't offer remuneration losing out. This is creeping
privatisation with big business hiring police powers." 1

27. The Telegraph notes that it appears highly unusual for private payments to be made by
victims in active investigations. It quotes Shami Chakrabarti, director of Liberty, as
saying: "Times may be tough but that's no excuse for turning the police into hired guns
for those wealthy enough to pursue crimes against them.

1
http://www.theguardian.com/uk-news/2014/jan/29/metropolitan-police-virgin-media-lord-chief-justice (last accessed 09 March
2014)

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 "Taking a percentage of a victim's remuneration is bad enough but even worse is the
thought of those in greatest need of protection being turned away in favour of those
who can afford to pay." 2

28. It will be interesting to see the police guidance on this issue and how the court's advice is
followed. This could prove to be a valuable revenue stream for a struggling police but at
what cost? In our view there is likely to be a line where an abuse of process has
occurred.

29. In our view the heart of this debate is how you safeguard the interests of justice and the
wider public interests as a whole. Is it really in our interests to privatise prosecutions en
mass? Are the savings worth it, or would it cause real long-term damage to the image of
justice in this country?

30. The comments and debate set out in this case, of the deal done between the police and
private prosecutions over how the proceeds of crime will be proportioned, are particularly
interesting. The court found that in this case there was no abuse of process in the way
the deal was done, but there is likely to be a line somewhere.

31. It is easy to foresee a situation where areas of private prosecutions, particularly for
corporate orientated offences, are delegated out to private companies, in return for part
of the proceeds of crimes to be passed back to the police and to save police costs.
Where should the line be drawn in both the interest of justice and the public interest as a
whole?

32. This case also raises the issue of whether it is right that only the police can investigate
the financial dealings of a defendant, even if a private prosecution was carried out, as it
is clear the a private prosecutor is able to purse confiscations proceedings.

33. Though the law is presently clear that no private investigation can take place, it is likely
that there will be future debate on this issue. It is likely that it will be argued that it is in
the public interest where private prosecutions take place that the prosecutor should be
allowed to carry out a financial investigation. This would save the public purse, as well as
reward the private prosecution. If this is done it is likely that there would be a provision
that a significant amount is paid into government funds.

34. Though this might be an attractive policy for the police, private enterprise and the
popular media, it does raise very serious fairness issues, and invasion of privacy issues.
To what level would the private prosecutor be accountable? Would their decisions be

2
http://www.telegraph.co.uk/news/uknews/law-and-order/9046679/Virgin-Media-secretly-pays-police-for-fraud-
investigation.html (last accessed 09 March 2014)

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 vulnerable to scrutiny via Judicial Review? Would allowing private financial
investigations, to the level of current confiscation investigations, be a step too far? If
private information is gathered in a confiscation investigation, how would the private
information of an individual be held?

35. The above issues will continue to be debated, and will only grow with the increased
pressure on police forces to cut their budgets, while continuing the current standards of
policing. Indeed at least one new law firm has been formed to cater specifically for this
type of prosecutions.

Conclusion
36. For the majority of the questions raised in this case we do not have answers yet.
Financial private prosecutions are largely untested grounds. There are a large numbers
of unanswered questions in the current regime and a huge array of possibilities in how
private prosecutions and confiscations might develop.

37. It will be crucial that the accountability of private prosecutors increases. As yet this is an
area which has not been definitely tested due to the limited amount of prosecutions
historically, but it is an issue which needs to be explored further.

38. Our Chambers will continue to prepare and to be prepared to deal with these types of
proceedings, both for the prosecution and the defence. If you have any questions related
to defending or prosecuting a private matter, please feel free to contact us.

5th May 2014

Barnaby Hone and Alice Carver

ONE PAPER BUILDINGS, Chambers of Karim Khail Q.C.

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