Second Standing Committee on Statutory Instruments, &c.


Tuesday 7 March 1989



£4.35 net

Members who wish to have copies of the Official Report of Proceedings in Standing Committees sent to them are requested to give notice to that effect at the Vote Office.

No proofs can be supplied. Corrigenda slips may be published with Bound Volume editions. Corrigenda that Members suggest should be clearly marked in a copy of the report—not telephoned—and must be received in the Editor's Room, House of Commons,

not later than

Tuesday 14 March 1989


HMSO publications are available from:
HMSO Publications Centre HMSO Bookshops HMSO's Accredited Agents
(Mail and telephone orders only) 49 High Holborn, London, WC1V 6HB (01) 873 0011 (Counter service only) (see Yellow Pages)
PO Box 276, London SW8 5DT 258 Broad Street, Birmingham, B1 2HE (021) 643 3740
Telephone orders (01) 873 9090 Southey House, 33 Wine Street, Bristol, BS1 2BQ (0272) 264306 and through good booksellers
General enquiries (01) 873 0011 9–21 Princess Street, Manchester, M60 8AS (061) 834 7201
(queueing system for both numbers in operation) 80 Chichester Street, Belfast, BT1 4JY (0232) 238451
71 Lothian Road, Edinburgh, EH3 9AZ 1031) 228 4181
Printed in England and Published by
Her Majesty's Stationery Office ISBN 0 10 992089 9


The Committee consisted of the following Members:

Chairman: Mr Geoffrey Lofthouse

Ashton, Mr. Joseph (Bassetlaw)

Bermingham, Mr. Gerald (St. Helens, South)

Bonsor, Sir Nicholas (Upminster)

Brandon-Bravo, Mr Martin. M (Nottingham, South)

Brown, Mr. Michael (Brigg and Cleethorpes)

Carlisle, Mr. Kenneth (Lincoln)

Corbett, Mr. Robin (Birmingham, Erdington)

Gilmour, Sir Ian (Chesham and Amersham)

Graham, Mr. Thomas (Renfrew, West and Inverclyde)

Maclennan, Mr. Robert (Caithness and Sutherland)

Mills, Mr. Iain (Meriden)

Patten, Mr. John (Minister of State, Home Office)

Sedgemore, Mr. Brian (Hackney, South and Shoreditch)

Sims, Mr. Roger (Chislehurst)

Temple-Morris, Mr. Peter (Leominster)

Vaz, Mr. Keith (Leicester, East)

Warren, Mr. Kenneth (Hastings and Rye)

Wheeler, Mr. John (Westminster, North)

Mr. M. D. Hamlyn, Committee Clerk

3 Second Standing Committee on Statutory Instruments, &c. Tuesday 7 March 1989


Draft Drug Trafficking Offences Act 1986 (United States of America) Order 1989

10.30 am

The Minister of State, Home Office (Mr. John Patten): I beg to move, That the Committee has considered the draft Drug Trafficking Offences Act 1986 (United States of America) Order 1989. You will recall, Mr. Lofthouse, that the Drug Trafficking Offences Act 1986 went through the House without any Division. It had all-party support, which was reflected in the other place, and we were grateful for the co-operation of the official Opposition. The order will reflect the spirit in which that legislation was passed. There can be little doubt that action to tackle money laundering is now one of the most important features of the fight against drug trafficking internationally. There is, throughout the world, growing recognition that following the money as it wends its way across the world is one of the best ways of leading to the downfall of internationally organised drug trafficking. By following the financial trail, investigators can catch up with major culprits much more swiftly. Taking action to deny convicted traffickers their proceeds will be a considerable deterrent. A leading case last week in Reading Crown court led to the confiscation of £1.7 million. Other Governments are drawing on our experiences and introducing similar legislation. We have also taken a lead in advancing the international co-operation which is essential if this part of legislation is to be effective. In the past year, the Government have concluded four international agreements for tracing, freezing and confiscating the proceeds of crime involving Australia, the United States of America, Canada and the Bahamas. There is a considerable need to track the money that is laundered through those countries. Under an agreement, the United Kingdom and the United States undertake to assist each other in securing the restraint and confiscation of the proceeds of drug trafficking. The draft Order in Council, enables us to give similar assistance in return. The order designates the United States, enabling our High Court to exercise the powers of restraint and confiscation in the Drug Trafficking Offences Act 1986 in response to applications made on behalf of the Government of the United States. In practice, to ensure consistency and correctness, such applications will be made by 4 the prosecuting authorities in Britain after the United States' request for assistance has been carefully scrutinised in the Home Office and checked to see that it meets the requirements spelt out in the agreement and appears to meet the requirements of the law. Whether it meets the requirements of the law is a matter for the High Court. In applying the powers in the 1986 Act, the draft order makes some modifications, as is permitted by the enabling power in section 26. Those modifications reflect the fact that United States procedures are in some respects formally different from our own although they do not differ in substance. For example, its definition of the institution of criminal proceedings is different from ours in form although not in effect. United States confiscation orders normally specify the property to be recovered whereas ours refer to a sum of money. The modifications made by the order are set out in schedule 1, and the Act as modified is set out in schedule 2. It is important to emphasise that those modifications in no way affect or weaken the safeguards in the Drug Trafficking Offences Act 1986 for individuals. All members of the Committee must share the view that novel powers, however necessary, should always be applied with care for the rights and liberties of the accused or convicted person. Great care has been taken to maintain the checks and balance in the Act. First, there are the safeguards in the enabling power, in sections 26 and 26A of the 1986 Act. An order may be registered and enforced in the High Court only if it is shown to be an order made by a court, for the purpose of recovering the proceeds of drug trafficking. The order must not be subject to appeal, and the person against whom it was made must either have appeared in the proceedings or have had the opportunity to contest it. Where the Higher Court is invited to make a restraint order, it must be shown that proceedings have been instituted in the designated country—in this case, the United States—which may result in a confiscation order being made. Secondly, the safeguards in the body of the Act are preserved in their application by the draft order. A restraint or charging order must be notified to any person affected by it and all those affected have a right to apply at any time for the order to be varied or discharged. Where a confiscation order is to be enforced, no property may be realised until people with an interest in it have had a chance to make representations to the court. The High Court and any receiver it appoints must exercise their powers strictly with a view to recovering property which is liable to be recovered under the order, and so as to enable other parties who may become caught up in the proceedings to retain their interest. These are necessary safeguards balancing necessary powers. There were carefully debated when the original Act as considered, they are preserved in the order and they have received all-party assent. Of the necessity of the powers, there can be no doubt. The order, if approved and made, 5 would have an immediate beneficial impact on the work being done to curb this pernicious traffic around the world and would mark a notable step forward in the campaign against international drug trafficking. I commend the order to the Committee.

10.38 am

Mr. Robin Corbett (Birmingham, Edgbaston): I thank the Minister for reminding the Committee that the 1986 Act received cross-party support, and rightly so. It was a big step to take, but the whole House felt that it was right in the circumstances to turn the law on its head. In that spirit, on behalf of the Opposition, I welcome the order, extending as it does in both directions the long arm of the law in relation to those convicted of drug offences across the Atlantic. We know from the report of the Select Committee on Home Affairs and others that drug trafficking is a global international business. It must be right for Governments to act to reduce the number of safe havens where traffickers can launder and store the proceeds of this vile trade. I remember, when the Select Committee made a visit to New York, being told by someone from the drug enforcement agency that what gets up the nose of those convicted of drug trafficking is not so much the loss of the money as when the police or drugs enforcement agency go into a property and start seizing jewellery, furs, cars and yachts. That hits them where it hurts. I wonder whether the Minister can tell us about the prospects for other bilateral agreements. What stage have we reached in reported negotiations with the Swiss? There have been reports that they are willing to assist with restraint and confiscation orders. One estimate puts the haul tucked away in numbered accounts and vaults in Zurich at about £10 billion. That is extremely important. Will the Minister assure us that every possible, sensible step in terms of training, equipment and manpower is being taken to protect the front doors at the ports of entry while we are opening the vaults through the courts? We need sufficient manpower of the right calibre in place at the points of entry. The front door must not be left unguarded. Are there enough specialist, trained police who can find their way through the financial mazes when trying to establish the ownership of sums or property held by the courts following conviction? The Minister is probably aware of a new threat that makes the order all the more important. Another designer drug has been developed in the United States and it rejoices under the name "Crank". It is easily made and the ingredients are freely available, but they are also highly volatile. It can be made in flats, as factory premises are not needed. The Select Committee on Home Affairs reported to the House the absolute certainty that developments of that type in the United States will find their way across the Atlantic into the United Kingdom and Europe. That marks a change from the traditional route of drug smuggling, which previously began in some counties in south-east Asia and Latin America. The risk to smugglers will be cut down if the drugs are carried less far. 6 The importance of the order is underlined also by the third edition of the report called "Tackling Drug Abuse". It was published in June 1988 and showed that the amount of cocaine seized by Customs had trebled between 1984 and 1986. Another substantial rise in seizures was forecast for 1987. Over the past five years, the number of seizures has risen fourfold and the quantity seized has gone up tenfold. In 1986, the quantity seized was 37 per cent. up on 1985. That shows the size of problem. The rising rate of seizure does not mean that it is the success that, at first sight, it appears to be. More is being seized simply because more is being smuggled into the country. Experts believe that only 10 per cent. of drugs are detected by the best enforcement steps and there have been arguments about whether the figure is too high. Customs and the police have an enormous and serious job to do and orders such as this are needed to ensure effective international co-operation at all levels. We are a long way from being able to claim success in the fight against drug smuggling and the drug abuse associated with it. Orders such as this remind us of the seriousness of the problem, thereby renewing our determination to convict traffickers and relieve them of the treasure that they have gained from this vile trade.

10.45 pm

Mr. John Patten: I warmly welcome the remarks of the hon. Member for Birmingham, Erdington (Mr. Corbett) and the spirit in which he made them. There is a genuinely bipartisan desire in the House to tackle the problems of drug abuse, to provide the law enforcement agencies with the necessary power and to protect the rights of individuals. It is a difficult balance to strike, but there is no evidence that the 1986 Act has not produced the goods. The hon. Gentleman asked about bilateral agreements with other countries, particularly Switzerland. There is a strong feeling in Europe that we should wait for a multilateral agreement—a "Waiting for Godot" strategy. Multilateral agreements take a long time to work out. My right hon. Friend the Home Secretary, with his experience in the Foreign Office as a Minister of State, takes a different view. He has decided not to wait for multilateralism to "Rule OK" and aims to conduct as many bilateral negotiations as possible with individual countries. He has managed that quite succesfully so far. With the Swiss, it happened purely by coincidence. Tomorrow morning, my right hon. Friend the Home Secretary and the Swiss ambassador will sign an agreement in London committing the United Kingdom and Switzerland to co-operate in tracing, freezing and confiscating the proceeds of drug trafficking. I am sure that the Committee will welcome that. Last month, a similar agreement was signed, committing the British and Spanish Governments to further co-operation. Progress is going well also with the Swedes. We have opened negotiations with other countries— 7 which had better remain nameless because negotiations are still in progress. We are hoping to make bilateral agreements with European countries through which drugs travel. That is not to say that we are not enthusiastic proponents of Europe-wide multilateral agreements, but if we were to wait for them, we should wait a long time. It is right to take the action that we have. Regarding resources for dealing with the drugs problem in this country, the National Drugs Intelligence Unit is working well and has had substantial increases in its resources over the years. There have been no complaints from those involved. The hon. Member for Erdington raised the important point about whether the police forces have the necessary expertise to deal with financial investigation, which is exceptionally complex by anyone's standards. The courts can appoint receivers, but the police investigation must take place at an earlier stage. All police forces and regional crime squad drugs units have officers trained in dealing with financial investigations in drug cases. There is not a force or a regional crime squad that does not have capability. 8 The hon. Member for Erdington referred to designer drugs coming into the country. We tend to catch up a year or so later with what is happening in the United States. There is an odd regional pattern in this country. I visited Wales last week and the drugs problem there is a mirror image of the drugs problem in London, not this year, but three or four years ago. There is a diffusion of new drugs throughout the country. However, thanks to the 1986 Act, some remarkably successful prosecutions have been brought. Since the Act become operative on 12 January 1987, £5 million of assets have been confiscated and £10 million of assets are currently frozen, pending the hearing of the trials. Although the hon. Gentleman is right to say that it is difficult and foolish to shout about success, considerable progress has been made.

Question put and agreed to.

Resolved. That the Committee has considered the draft Drug Trafficking Offences Act 1986 (United States of America) Order 1989.

Committee rose at eleven minutes to Eleven o'clock.


Lofthouse, Mr. Geoffrey (Chairman)

Bonsor, Sir Nicholas

Brandon-Bravo, Mr.

Carlisle, Mr. Kenneth

Corbett, Mr.

Gilmour, Sir Ian

Mills, Mr. Patten, Mr. John

Sims, Mr.