Lord Banner
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Lord Banner
“Amendment to the Sentencing Act 2020 to introduce public interest compensation orders(1) The Sentencing Act 2020 is amended as follows.(2) After section 133(b) (compensation orders), insert “, or(c) to make a payment to one or more relevant organisations for public interest or social purposes (“public interest compensation order”).(2) In this Chapter, “relevant organisation” means an organisation listed in Schedule 22A (Relevant organisations for public interest compensation orders).”.(3) After section 135 (making a compensation order), insert—“135A Public interest compensation orders(1) When convicting a person of a relevant offence, the court shall consider whether to issue a public interest compensation order, and what the terms of that order should be.(2) In this section “relevant offence” means an offence listed in Schedule 22B (Relevant offences for public interest compensation orders).(3) The Secretary of State may by order amend the relevant offences listed in Schedule 22B.(4) In determining whether to make a public interest compensation order against an offender, the amount to be paid under such an order, or to which relevant organisation(s) the payment(s) should be made, the court must, in addition to the factor in section 135(3), have regard to—(a) the rights of victims of human rights violations (inside or outside the United Kingdom) to receive effective reparation and remedy,(b) the fact that individuals who are not proven to be direct victims of the offender’s offence may nevertheless be victims of human rights violations to which the offender’s offence is related,(c) the broader impact of the offender’s offence on victims of human rights violations in the United Kingdom or in other countries,(d) where there is a large number of victims of human rights violations to which the offender’s offence is related, the urgency of victims’ needs (which may vary depending on the harms that they have suffered),(e) where the relevant offence is an offence under regulations imposed under the Sanctions and Anti-Money Laundering Act 2018, the purposes of the relevant regulations and any human rights violations arising in connection with conduct that these regulations seek to discourage, and (f) whether it would be appropriate to make another type of compensation order and, if so, whether the offender has sufficient means to pay both orders, as well as the need to prioritise compensation to direct victims of the offender’s offence.(5) If the court considers issuing a public interest compensation order, the court may (but is not required to) ask the Secretary of State to recommend the relevant organisation(s) to which the funds subject to the order should be paid and if the court makes such a request—(a) the Secretary of State shall, within 90 days (the “relevant period”), recommend to the court in writing one or more organisations to which the funds subject to the order should be paid (the “recommendation”) and in doing so, the Secretary of State must have regard to the same factors as under subsection (4) above(b) the court may issue a public interest compensation order after the earlier of—(i) the court having received a recommendation, and(ii) the relevant period having expired,(c) if a recommendation has been made within the relevant period, the court may take it into account in issuing a public interest compensation order but shall not be bound by it.(6) The court may direct that confiscated funds be paid to a relevant organisation subject to such conditions as it considers appropriate.(7) The Secretary of State may by order amend the organisations listed in Schedule 22A and the Secretary of State shall review the organisations listed in Schedule 22A at least annually.(8) If, under subsection (5) above, the Secretary of State recommends one or more organisations that are not listed in Schedule 22B, the organisation(s) recommended by the Secretary of State shall be considered relevant organisation(s) for the purposes of the public interest compensation order at issue.(9) For the purposes of this section, a court may issue a public interest compensation order regardless of whether there is a direct connection between the offender’s conduct and the harm suffered by the ultimate recipients or beneficiaries of the public interest compensation order.”.(4) After Schedule 22 (Amendments of the Sentencing Code and related amendments of other legislation), insert the following new Schedule—“Schedule 22ARelevant organisations for public interest compensation orders1 The following organisations—The Trust Fund for Victims, created by the Assembly of States Parties in accordance with article 79 of the Rome Statute of the International Criminal Court.The Register of Damage Caused by the Aggression of the Russian Federation against Ukraine, established within the framework of the Council of Europe by Resolution CM/Res(2023)3, or any successor body or attached fund.The United Nations Voluntary Fund for Victims of Torture, established by the United Nations General Assembly through resolution 36/151 of 16 December 1981.”.(5) After Schedule 22A (Relevant organisations for public interest compensation orders), insert the following new Schedule— “Schedule 22BRelevant offences for public interest compensation orders1 The following offences to the extent that they are offences under the law of England and Wales—Offences arising under regulations imposed under the Sanctions and Anti-Money Laundering Act 2018.”.”Member’s explanatory statement
This amendment seeks to amend the Sentencing Act 2020. It would allow the courts to award compensation orders not only to individuals but also for public interest or social purposes, thereby enabling the proceeds of confiscated criminal assets to be more readily used to compensate victims of offences under the UK’s sanctions legislation.
Lord Banner (Con)
My Lords, in moving Amendment 417 I will speak to the associated Amendment 419, both in my name and with named support across the Committee. The purpose of these amendments is to provide a clear and easy-to-use legal basis for those found guilty of sanctions breaches and other similar offences to pay compensation in the public interest to specified victims’ organisations listed in the proposed Schedule 22A and any other similar organisations added to that list through regulations.
There is a clear case for legislative intervention in this area. By way of overview, the existing law provides only a very narrow basis for using the proceeds of confiscated criminal assets to compensate victims, and only in straightforward cases. Victims are rarely allocated any share of the sums recovered. Amendments 417 and 419 would empower courts to award compensation for public interest or social purposes, addressing a significant gap in the law by enabling compensation in the more complex cases for which the existing law is ill suited—for example, supporting Ukrainians who are most impacted by breaches of the UK’s targeted sanctions against the Putin regime and its corrupt cronies.
Against that overview, I turn to the main features of the existing law to demonstrate why they do not go far enough. First, compensation orders under the Sentencing Act 2020 are designed to compensate direct victims of criminal conduct. Where a conviction has been secured, the court is empowered to order the offender to pay compensation for any personal injury, loss or damage arising from the offence in question. The courts have, however, held that these kinds of compensation orders are intended only for clear and simple cases, where there is an obvious direct victim and the amount of compensation can readily and easily be ascertained. Thus, for example, a builder may take a £15,000 deposit to complete building work for a home owner and fraudulently make no attempt to carry out the work. There is a clear victim and a clear loss: the home owner and the £15,000. The compensation order is well suited to handle that sort of case.
By contrast, a court is highly unlikely to be able to make a standard compensation order in a sanctions breach or similar case. Sanctions breaches are rarely clear and simple cases because, by the nature of the offence, the consequences are wide reaching, and they can violate the rights of a large number of people. Victims of the breach, or indeed the precise loss or damage suffered, will typically be very difficult to identify or quantify with the necessary precision required by the current law.
Courts are ill equipped to handle victim compensation in such cases, given the vast and multifaceted harms at issue and the indirect connection between the harms and the sanctions breach. The NGO Redress has advised that its experts are not aware of any single sanctions breach case in the UK in which the court has issued a compensation order for victims. I would be interested to know whether the Minister can provide us with any such examples. Such compensation orders are simply not suited to complex economic crime, such as sanctions offences.
The second area of the existing law is confiscation orders under the Proceeds of Crime Act 2002. In the event of a conviction, the court can order the confiscation of a portion of an offender’s assets, provided they have been found to have benefited from their criminal conduct. These confiscation orders are intended to deprive the defendant of the proceeds of the crime, rather than to compensate victims. The amounts confiscated are usually paid to the Government’s bank account and then sometimes shared across certain government departments and arm’s-length bodies. No amount is typically paid to victims, subject to very limited exceptions.
The third category of the existing law is forfeiture orders, also under the Proceeds of Crime Act 2002. In this respect, agencies such as the National Crime Agency, HMRC and the Serious Fraud Office, among others, can institute civil forfeiture proceedings in some situations, in which a court may issue a forfeiture order in respect of funds associated with unlawful conduct. Here too, however, the law is inadequate to deal with sanctions breaches. There is a statutory requirement for funds that have been forfeited under such an order to be paid, again, to the Government’s general bank account, with very limited exceptions relating to situations where someone can show that the amount belongs to them and that they were deprived of it by the offender’s unlawful conduct. Again, that is ill suited to the sanctions context.
Pulling this together, I suggest that, unless the law is changed, in the vast majority of cases judges will have no real ability to award compensation to the victims of sanctions and associated crimes. Not a penny will go to the very people most harmed by the criminal violation in question, not because they are undeserving or have not suffered a harm, but simply because there is a gap in the law that means their position cannot be addressed. This shortcoming is increasingly indefensible in the current world in which we live and will only grow as the UK rightly takes more sanctions enforcement action, most immediately in the context of Ukraine but also in any future cases.
Dealing with the context of Ukraine, the UK positions itself, quite admirably, as a global leader on Russian sanctions. Some 3,000 targets have been sanctioned to date. Yet, when it comes to enforcing these sanctions and penalising any breaches of them, it is the UK, not the victims, that retains the proceeds. Having dedicated unprecedented diplomatic and financial resources to seeking to bring an end to Putin’s war for the benefit of the Ukrainian people, it is striking that the courts have practically no legal basis to channel any of the proceeds of Russian sanctions breaches to Ukrainian victims, whom the sanctions programme is ultimately intended to protect.
I turn to alternatives. In correspondence between Redress and the Home Office, which I have seen, the Minister referred to other amendments proposed to the Bill to ensure that the uplifts to existing confiscation orders can similarly be redirected. However, these are subject to the same or similar limitations as the existing law. In particular, the limitation of the concepts of victim and loss being narrowly defined means that redress is not available for indirect victims. It is that gap that my Amendments 417 and 419 are intended to address.
In the light of that, I stress that my challenge to the Minister is a constructive one, because I want to put on the record the personal experience I have of the deeply conscientious engagement he has had on matters of Ukraine that I have raised with him. I thank him publicly for that, as I have done privately. Can he offer a cast-iron guarantee that the existing law, coupled with any proposed amendments the Government are putting forward, goes as far as Amendments 417 and 419, or does he accept that there is a gap? If he does, can he explain the justification for it? I beg to move.
Lord Alton of Liverpool (CB)
My Lords, it is a great pleasure to follow the noble Lord, Lord Banner. I have signed Amendments 417 and 419. The noble Lord has made a powerful, constructive and eloquent case for we should try to tackle the public interest compensation orders and deal with the gap that is left by confiscation orders, compensation orders and forfeiture, which he mentioned in his speech.
Lord Banner (Con)
I thank the Minister for his comments, and indeed all speakers. The force of the unanimity on this issue across the Committee is telling. I hope it is the beginning of the momentum that my noble and learned friend Lord Garnier called for.
With respect to a couple of points the Minister mentioned, the proposal would not distract from the existing law because it applies only to relevant offences, which are defined in the amendment as, essentially, sanctions and money laundering. The option of a public interest compensation order would not be available for the dodgy builder-type case that I outlined before. It would not, in fact, distract from direct victims but, in precisely those kinds of offences where the existing law is inapt, it would provide for a remedy for victims. It is true that this category is relatively narrowly defined, but it is precisely that category of offences where the law is currently deficient.
I therefore urge the Minister and officials to give this further consideration. If he is not sick of meeting me on Ukraine-related matters, I am very happy to meet him again to talk through how the wording could perhaps be tweaked to deal with some of the issues he has outlined. If we cannot reach agreement, I would be inclined to bring this back on Report, and/or in the context of the Victims and Courts Bill, as my noble friend mentioned. Against all that background, for now, I beg leave to withdraw the amendment.