Setting boundaries for recovery of unlawfully obtained assets

Aug 14, 2016 News

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Consultations on crucial SARA Bill – Pt. 2

By Kiana Wilburg

As consultations continue on the need to establish the State Assets Recovery Agency (SARA), it becomes even more essential for us to gather a fair understanding of some crucial parts of its draft legislation.
Last week, in the first instalment of this series, we discussed at length, some aspects of the provisions of the Bill and the fact that it will seek to make SARA self-funding. In this edition, we will continue on that discussion.
Specifically, Part IV of the SARA Bill contains provisions under which its Director may undertake a civil asset recovery investigation. In this regard, provisions within the Bill address the preservation of property; sets out the circumstances in which disclosures of information may be made to, and by, the Director; and the procedure for commencing civil recovery actions in relation to property obtained through unlawful conduct.
The Bill clearly sets out that conduct is unlawful if it amounts to an offence under any of the laws of Guyana, or if committed overseas would amount to an offence there and under the laws of Guyana.
Speaking with this newspaper on the matter, Head of the State Assets Recovery Unit (SARU), Dr. Clive Thomas said that the Court decides on the balance of probabilities and whether unlawful conduct has occurred. This is also spoken to in Section 16 of the Bill.
The economist explained that a civil recovery investigation is an enquiry into whether property was obtained by or in connection with unlawful conduct, and to facilitate the investigation the Director may apply to the Court for the issuance of one or more of the following orders. These orders include: a Disclosure Order, Customer Information Order, Production Order, Search and Seizure Warrant or an Account Monitoring Order, all of which are available under Part V of the Bill.
However, the Bill sets out that the Director will cease to have access to those powers when proceedings for a recovery order commences in relation to the property in question or where a restraint order applies to the property. It states that a criminal sanction is imposed for any unlawful breach of an investigatory order which prejudices the investigation.
Furthermore, Section 22 of the Bill makes provision for any person to make a disclosure to the Director, if made for the purposes of SARA functions. Also, Section 23 contains a list permitted persons who are obligated to disclose information upon request by, and to, the Director. Dr. Thomas emphasized that according to the Bill, it is a criminal offence to threaten, intimidate or assault any person who makes a disclosure to the Director.

Where the Director considers that there is a risk that property may be dissipated, destroyed or removed from the jurisdiction, the draft legislation states that he will be able to apply to the High Court, without notice, for a restraint order.
But for the order to be granted under this section, the Director must satisfy the court that there are reasonable grounds to believe the property identified in the application has been obtained through unlawful conduct.
The Bill notes that a person claiming an interest in the property can apply to the Court to have the order varied or discharged on grounds set out in section 30 or may, under section 33, apply for living and legal expenses on being able to show there are no other available means.
Dr. Thomas shared that the court may make any ancillary order it considers appropriate, including ordering the holder of a property subject to restraint to provide additional information, on oath, in relation to the property restrained and any other property in which that person has an interest (section 36).
He said that where the restraint order is granted the court may, to ensure its effective management, place the property under the control of an Asset Manager who may be appointed by the court, or on application by the Director.
According to the Bill, an application for civil recovery may be made against any person believed to be holding or have held recoverable property (section 41). It states that a civil recovery order can be made in relation to property subject to a restraint order or to any other property. However, if during the recovery proceedings a person establishes lawful ownership of the property concerned, the property may not be recovered; nor will property be recoverable from persons who are able to prove that they purchased it for full value, in good faith without notice of its unlawful origins, thereby protecting third parties able to claim an interest in the property.
SARU’s Head said that the main stage of the procedure is a hearing before the High Court, commenced as a civil action by summons supported by sworn evidence. In this regard, he referred to the Bill, which states that the Director must serve the summons on the person whom he believes holds the recoverable property and, unless the court dispenses with service, on any other person holding property the Director wishes to include in the recovery action.
He stressed that the burden of proof is on the Director.
“If the Court finds, on the civil standard of the balance of probabilities, that the property was obtained through unlawful conduct, it will give judgment in favour of the Director. Judgment will take the form of a recovery order which vests the title to the property in the State. The Court may adjourn the proceedings if it considers it is the interest of justice to do so,” Dr. Thomas expressed.
He added, “According to the Bill, the Director has capacity to agree a reduced sum in satisfaction of a civil recovery claim. The Director should satisfy himself that the sum is reasonable, having regard to all relevant circumstances, including the chances of recovering the full amount claimed and the time and public funds likely to be expended in attempting to do so.”
“Where the Director, for any reason, decides civil recovery proceedings are not appropriate, he may assume the tax collection functions of the Commissioner-General in relation to a person’s income, profits or chargeable gains where there are reasonable grounds to suspect that they arise from that person or another person’s unlawful conduct.”
However, before doing so, the Director must serve an appropriate Notice to that effect on the Commissioner-General. According to the draft legislation, the notice does not divest the Commissioner-General of the assumed tax function but he must cooperate with the Director.
In addition to third party protections already referred to above, the Bill contains other safeguards to ensure fairness in civil recovery proceedings.
Accordingly, parties are permitted the same rights of appeal as in other High Court actions. Victims of theft are granted protection and if an application for civil recovery is unsuccessful, the court will be able to award compensation for any financial loss suffered by the respondent as a result of the restraint order applying to his property.
Additionally, there is a financial threshold of 10 million dollars below which civil recovery may not be pursued; there is a 12-year limitation period on when civil recovery proceedings can be brought and the Court has an overriding discretion not to make a civil recovery order if satisfied there would be a serious risk of injustice in doing so.

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