CASE UPDATES  FSA POWERS TO PROSECUTER. v. Rollins [2009] EWCA Crim 1941 (CA) Lord Justice Richards introduced the case by stating that: The central issue in these appeals is whether The Financial Services Authority (“the FSA”) has power to prosecute offences of money laundering contrary to sections 327 and 328 of the Proceeds of Crime Act 2002 (“POCA 2002”).   The appellants contend that the FSA’s powers to prosecute criminal offences are limited to the offences referred to in sections 401 and 402 of the Financial Services and Markets Act 2000 (“FSMA 2000”), which do not include offences under POCA 2002.  The FSA contends that its powers are not limited in that way and, in particular, that as a body corporate with legal personality it has the common law power to bring prosecutions in respect of other offences. 

In relation to the FSA being limited in its prosecutorial functions to the money laundering provisions of the FSMA pursuant to sections 401 and 402, the Court held that: Section 1(1) of FSMA 2000 does not state that the FSA’s functions are to be limited to those conferred on it by or under the Act.  The section simply states that the FSA is to have those functions.  Nor do the other provisions of section 1 or schedule 1 restrict the powers of the FSA in such a way as to deprive it, or to prevent it from performing, functions other than those conferred on it by or under the Act.  Section 1(4), which refers in the context of the Banking Act 2009 to functions of the FSA “whether generally or under this Act”, plainly contemplates that the FSA has wider functions.  In any event, if the legislative intention had been to cut down the powers of the FSA so as to limit it to the functions conferred by or under FSMA 2000, clear and express language would have had to be used for the purpose; and in the absence of such language the statute cannot in our view be interpreted as having that effect.

In addition to finding for the FSA on the Appellant’s argument, the Court also held that: For our part, we can see no reason why the general right of private prosecution should not be enjoyed by the FSA.  The right is not excluded by FSMA 2000 or any other statutory provision to which our attention has been drawn, and the powers conferred on the FSA by its Memorandum of Association are easily wide enough to cover the institution of criminal proceedings within the scope of its objects.  The sufficiency of the powers conferred by the Memorandum was true even under the April 2000 version (paragraph [6] above), but it is put beyond any possible doubt by the width of clause 3(A) and (B) of the February 2001 amendment (paragraph [7] above). 

SENTENCING UPDATE CONFISCATIONR. v. Mejia [2009] EWCA Crim 1940 Mejia and Sneath appealed against the valuation of their benefit from their convictions for conspiracy to supply cocaine.  The Appellants had imported wooden doors impregnated with 17.34 kg of cocaine at 100% purity with a minimum value of £537,540.  Lord Justice Richards summarised the involvement of the Appellants as follows: Sneath had travelled to Panama where he purchased the doors and arranged their importation.  On their arrival in the United Kingdom he took part in their delivery to his home address and then drove them to the premises where the cocaine was to be extracted.  Mejia pleaded guilty on a written basis of plea (not accepted by the Crown) to the effect that his role was inter alia to “caretake” the rented storage premises, construct a sterile section there and obtain supplies (i.e. for the extraction process); but he was not involved in arranging the importation of the doors or in their physical importation or delivery to the premises or in the actual extraction of cocaine.  He was seen coming away from the premises just before they were raided by the police, and the prosecution case was that he had been present at the time of delivery of the doors and the commencement of the extraction process. 

The Court held that the first ground of Appeal: that the drugs could not lawfully be sold and therefore had no real value had been “demolished” by the House of Lords in R. v. Islam.  Both Appellants advanced arguments that the property was not cocaine, but cocaine-impregnated doors; that no market for cocaine-impregnated doors had been established and accordingly no value could be attached.

Mejia advanced additional grounds on the basis that he had not “obtained” the property and it was oppressive to instigate the confiscation procedure because the importation was a failure and no benefit had arisen.

The Court held that: The first, and in our view insuperable, problem about all those submissions is that they were not advanced in the confiscation proceedings in the Crown Court.  The defence case before the judge was limited to the submission that illegal drugs could have no market value because they could not lawfully be sold.  Once the judge had ruled against that submission there was no further material dispute, it was accepted to follow that the total benefit was £537,540, based on the value of 17.34 kg of cocaine at 100% purity.  In our judgment, it is not open to the appellants to adopt an altogether different approach in the Court of Appeal, advancing an entirely fresh set of submissions of the kind we have outlined.  Had it been argued before the judge that the relevant property was cocaine-impregnated doors rather than cocaine, or that the true value was the invoice value of the doors or the purchase cost of the cocaine, or that Mejia did not obtain the property at all, the Crown would almost certainly have led additional evidence on the points in issue and the judge would have made relevant findings of fact. Similarly, if arguments had been advanced as to disproportionality or abuse of process, that too would have affected the shape of the hearing before the judge and he would have made relevant findings.  It is simply too late to raise such matters for the first time on an appeal.

As to the first ground of Appeal, the Court held that It is absurd to suggest that no value is to be attached to a product containing 17.34 kg of pure cocaine, brought into this country for the very purpose of extracting the cocaine and selling it on.  The valuation figure was therefore upheld as correct.  The Court also rejected the that one should take the invoice price of the doors (which was no doubt a fictitious figure in any event) or the cost price of the cocaine in Panama.  The relevant question is the market value of the property in the United Kingdom, not its cost at source.

As to the additional ground regarding “obtaining” the Court held that the fact of possession [in that Mejia was sentenced for his organisational role, orders that he gave to others and his assistance in the preparation of the environment in which the drugs were to be extracted] does not necessarily give rise to a finding of obtaining, but it seems to us that the particular circumstances point strongly towards such a finding in this case.

 As to the issue of whether instigation of confiscation proceedings was oppressive, the Court held that: The Draconian nature of the confiscation regime has long been recognised, but its validity has been upheld.  On the proper application of the legislative provisions, Mejia clearly obtained a benefit.  The fact that the property triggering that benefit was subsequently seized and the conspiracy was unsuccessful does not mean that his crime had “no product” or that the confiscation order was disproportionate or oppressive or operated as a fine.