Criminal Proceeds (Recovery) Act 2006

On 21 October 2009 the Criminal Proceeds (Recovery) Act came into force. This law enables the government to confiscate property and compel people to provide documents and other evidence even where there are no criminal prosecutions. This is done through the sleight of hand of pursuing the forfeitures as ‘civil’ proceedings.

This dangerous and immoral act is one of an array of intimidatory laws passed since 2002, that constitute the greatest attack on people’s rights and civil liberties ever in New Zealand’s history. The need for such legislation has not been demonstrated – it merely mirrors similar iniquitous legislation passed by Britain, Ireland and Australia.

The law moves the onus of proof from the prosecution (applicant) to the defendant (respondent) – the person whose property is being forfeited needs to prove that it is NOT from the proceeds of crime. It rides roughshod over a whole number of civil liberties, including the right to own property, the right of free speech, the right to silence, the right not to incriminate oneself, the use of confidentiality, and the burden of proof.

The Criminal Proceeds (Recovery) Act 2006

The Criminal Proceeds (Recovery) Act 2006 replaces the Proceeds of Crimes Act 1991. In effect it extends the ability to confiscate property gained for the purpose or resulting from the proceeds of crime. It extends it in three ways:

• It introduces a new type of forfeiture that is not based on criminal conviction but merely strong suspicion that it was acquired through the proceeds of crime.
• It provides a new range of investigative powers to police and a new Office of Criminal Proceeds Prosecution that is independent and not accountable to the Attorney-General, and has all the official powers of the police.
• It moves the burden of proof from the prosecution (or ‘applicant’) to the defence (or ‘respondent’).

This is how the act is explained in the Explanatory Note:

It replaces (the Proceeds of Crime Act 1991) with a conviction-based forfeiture regime limited to instruments of crime (items used to commit or facilitate the commission of criminal activity) and a non-conviction-based confiscation regime to deal with all other property representing the proceeds of crime or assessed to be the value of a person’s unlawfully derived income.

The non-conviction-based regime or civil regime will operate completely independently of any criminal proceedings that may be course or contemplated. Consequentially, the same person may be the subject of both criminal prosecution (including potential forfeiture of instruments of crime) and confiscation action under the civil process.

Necessity for change

There has been a great deal of beat-up in New Zealand about the need to deal with gangs and the proceeds of drugs in New Zealand, as well as the huge estates owned by some of the directors of failed financial organisations. This has led to desire to ‘punish’ those people by taking away their ill-gotten gains.

However the Proceeds of Crimes Act was designed to do that. Anybody convicted of a major crime could have property confiscated if it was shown that the property was owned as a result of or in pursuit of criminal activity. There is little evidence that that act was not working or that further measures were needed. The police needed to successfully prosecute a person for the crime and then show that the property was related to the crime.

Few people would approve of property being confiscated without a conviction taking place.

Civil proceedings

The website www.businessdirectory.com defines a ‘civil case’ as a “lawsuit brought to redress private wrong, such as breach of contract, encroachment, or negligence; or to enforce civil remedies such as compensation, damages, injunctions.” Other definitions emphasis that it relates to “private rights and civil actions”, and the US courts states: “an action brought to enforce or protect private rights’.

It is hard to see how the restraining and forfeiture actions in this Act fit any of the definitions of a ‘civil’ action. In no part of the Act does it state that the State has been materially wronged or needs to be compensated in any way. And there are in the Act none of the safeguards accorded respondents in civil actions. Instead respondents are subject to the same constraints as if they were being prosecuted in criminal courts –search warrants, examination orders, production orders and seizure of property.

The concept of this process as a ‘civil action’ is no more than a convenient fiction to enable the forfeiture to take place against people who have not been charged for any crime.

Civil liberties

The Act rides roughshod over a whole number of civil liberties, including the right to own property, the right of free speech, the right to silence, the right not to incriminate oneself, the use of confidentiality, and the burden of proof.

• The burden of proof. The law moves the onus of proof from the prosecution (applicant) to the defendant (respondent) – the person whose property is being forfeited needs to prove that it is NOT from the proceeds of crime, or or other defences against the case.
• The right to own property. Property in the Act is forfeited not as a result of its being acquired through fraud, but because it was either allegedly purchased using profits from the proceeds of crime, or because it was itself used in criminal activity (‘tainted’ property). In other words the owning of the property is legitimate, even though it may have been acquired as a result of criminal activity. Others who have interest in the property need to prove that their interest was not gained through criminal activity, which puts innocent parties in a position of appellants. People can be deemed to have ownership in property even where they do not have an interest, and the property can be forfeit on that basis.
• The right of free speech. Where there has been a restraining or forfeiture order on their property, the owners of the property are forbidden to mention the fact, except when seeking legal advice.
• The right to remain silent. The defendants or respondents are required to provide evidence and papers that might incriminate them or others. They can be prosecuted for remaining silent.
• The use of confidentiality. The Act requires people having confidential information that will help the case for forfeiture to break their confidence and provide information.

Abuse of powers

1. Director of Criminal Proceeds Prosecution is an independent government agency not responsible to the Attorney-General or to other law-enforcement agencies. It has little supervision of its activities.
2. It has powers to restrain and confiscate property based not on conviction but on suspicion of criminal wrongdoing. The property may be forfeited even where a criminal conviction fails.
3. To gain information to convince the High Court of the need for forfeiture the Director is able to use powers well beyond those available to other agencies in the pursuit of civil matters, and contrary to the Bill of Rights. These include obtaining warrants, issuing restraining orders, requiring documents, obtaining production orders, issuing examination orders, and requiring other people to assist in obtaining the information.
4. Respondents are put in the position of disproving the case brought by the Director – a position that is particularly unfair and invidious because they do not have available to them the same powers, and the case against them is based not around prosecution but suspicion.
5. The confiscation of property can only take place for criminal activity that, if a prosecution was called, would have carried a maximum sentence of at least five years in jail. This would include most activities covered by the ‘anti-terrorism’ legislation, so that the confiscations could ‘legitimately’ be used to prevent protest and remove from protest organisations the means to protest.