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Confiscating assets for Indonesia: Interview with Mark Temple KC, H.M. Attorney General of Jersey
Jersey recently announced the successful conclusion of a 10-year asset recovery case against an Indonesian company director convicted of fraud, embezzlement and money laundering, and which involved a luxury apartment in Singapore held through a Jersey trust. H.M. Attorney General of Jersey, Mark Temple KC, won all three appeals at the highest appellate level and is currently negotiating with the Indonesian authorities regarding the return of the funds, minus costs. In this interview with Senior Asset Recovery Specialist Jonathan Spicer, he explains the significance of the final judgement in the context of Jersey’s efforts to address financial crime. The case holds interesting lessons on how jurisdictions can boost asset recovery through both domestic legal reforms and proactive international cooperation. 1\. How did Jersey become involved in this case? Mr Robert Tantular, a former director of two companies that had shares in the now-collapsed Indonesian bank PT Bank Century Tbk, had settled a trust in Jersey in 2004. Named the Jasmine Trust, it owned the shares of a company incorporated in the British Virgin Islands BVI , which in turn owned an apartment in Singapore bought for 7.1 million Singapore dollars over USD 5 million in 2005. In 2009, Indonesia sent a letter of request to Jersey seeking evidence relating to the Jasmine Trust. The authorities were investigating Mr Tantular for fraud and money laundering offences committed in Indonesia. We supplied the requested evidence, in fulfilment of our commitments under international law. 2\. When and how were the assets frozen? In July 2013, the Indonesian authorities sent a second letter of request to freeze restrain assets of the Jasmine Trust – what we call in Jersey a saisie judiciaire. We obtained the order the following month. This was in anticipation of confiscation orders being made against Mr Tantular in the fraud and money laundering proceedings. He was convicted in Indonesia in September 2014. A second saisie judiciaire was obtained in 2014, in anticipation of further confiscation orders in relation to separate criminal proceedings against Mr Tantular for fraud and embezzlement offences. Due to the dates of the offending in these proceedings, the second saisie had the potential to cover earlier gifts to the trust. The Royal Court of Jersey granted the requests to freeze the assets on the basis of the Proceeds of Crime Law 1999 and the Proceeds of Crime Enforcement of Confiscation and Instrumentalities Forfeiture Orders Jersey Regulations 2008, which modify the POCL 1999 provisions relevant to foreign confiscation and forfeiture orders. We call this the Modified Law. The case was hard fought by Mr Tantular and raised several appeals, in the first instance to Jersey’s Court of Appeal. Three judgements of the Jersey Court of Appeal were appealed to the Judicial Committee of the Privy Council, Jersey’s ultimate appellate court. 3\. The trustees challenged the Court’s jurisdiction – on what basis? In the first appeal, the Tantular beneficiaries of the trust argued that because the trust property was in Singapore and held through a BVI incorporated company, Jersey did not have the jurisdiction to order the saisies judiciaires . The Judicial Committee of the Privy Council struck down the appeal, finding that the basis of the Court’s jurisdiction under the Modified Law was a personal one, over persons who were within the jurisdiction of Jersey: i.e. the professional resident trustee. This is an important finding, since the form and structure of the Jasmine Trust – a Jersey law discretionary trust, with a BVI-incorporated company holding assets abroad – is a common one. Such trusts are administered by a Jersey resident trustee that is regulated and staffed by professional directors. This means that all such trusts fall under the Court’s jurisdiction, wherever in the world the property or other assets may be located. The Judicial Committee also held that a wider interpretation of the Modified Law, extending its provisions to assets held by a company in a different jurisdiction and enabling them to be seized through a trust structure based in Jersey, is appropriate since it allows Jersey to provide more effective cooperation for asset recovery. 4\. You challenged the decision to allow the mortgage holder to assign their rights of security to a third party – why? The Court of Appeal had accepted Mr Tantular’s proposal that Credit Suisse, as the mortgagee of the Singapore apartment, could assign its rights under the loan agreement to an old family friend in Indonesia. I appealed the decision on the grounds that the proposed assignment to the old family friend could have facilitated a breach of the saisie judiciaire . There was a risk of the assets being dissipated. The Privy Council agreed. First, because the Jersey Courts would not have control over the individual in Indonesia, in contrast to the Jersey-based trustee. Second, because there is a big difference between Credit Suisse, a regulated global financial institution that is obliged to assist in criminal proceedings, and an old family friend who was an unregulated individual and may choose to frustrate the process. Winning the appeal closes the door to creditors assigning their rights of security in property subject to a saisie judiciaire to third parties, when there is a risk that the assignment would interfere with the administration of justice. 5\. Your second appeal concerns liability for costs. What does this highlight in terms of international cooperation for asset recovery? I appealed the Court of Appeal’s judgement that Indonesia should be jointly and severally liable for costs in relation to certain of the proceedings. To me, this struck fundamentally at the system of international cooperation in criminal matters. Jurisdictions choose to help each other as a sovereign act on the basis of comity and reciprocity, and in accordance with the relevant international conventions. The idea that a jurisdiction that requests assistance could expose itself to the risks of a cost order in long, complex and expensive litigation seems an important impediment to the smooth functioning of mutual legal assistance. This is particularly the case for jurisdictions whose financial resources are not significant. The judgement of the Judicial Committee of the Privy Council removes any doubt that it is the Attorney General who brings the proceedings on their own behalf. In this case, it was for the benefit of Indonesia, but Indonesia was not a party to the proceedings and there was no basis for making it liable for costs. Foreign jurisdictions seeking mutual legal assistance from Jersey or other jurisdictions should not need to fear exposure to cost risks. 6\. What can other jurisdictions take away from this case? Cases like this may be lengthy, but they are helpful in testing and strengthening domestic legislation around the freezing, confiscation and return of proceeds of crime. For example, in 2021, following earlier decisions in this case, we modified our legislation regarding beneficial entitlement of trusts and the five-year period for gifts to trusts. The issue of jurisdiction appeal 1 is of fundamental importance to Jersey as much of our business is derived from overseas, and much of it is held in trust structures. It will have parallels in the legislation of other jurisdictions. The assignment of security point appeal 2 , and the costs point appeal 3 are of general importance to most jurisdictions in their efforts to provide mutual legal assistance in cases of asset recovery. Cases like this are also helpful in demonstrating the need for a policy-based approach to asset recovery: developing, evolving and interpreting laws that support the important policy objective of confiscating and returning proceeds of crime. 7\. What message does this case send regarding the use of financial institutions and trusts in Jersey for the laundering of criminal proceeds? The message is one that is strongly in favour of law enforcement and the use of regulated entities in the jurisdiction. Rapid handling of mutual legal assistance requests, and the fact that assets are concentrated in the hands of a regulated, Jersey-based trustee, made it possible to provide evidence to Indonesia and to lock down the assets before they were dissipated. The case has shown the effectiveness of Jersey’s proceeds of crime legislation as regards the restraint of criminal proceeds and the enforcement of foreign confiscation orders at the highest appellate level. It also shows Jersey’s determination to assist overseas authorities in asset recovery cases – that we are prepared to fight for over 10 years and to the highest appellate court level to confiscate the proceeds of crime for the benefit of the victim states.
Smarter use of confiscated assets would multiply their impact
Within days of Russia’s illegal invasion of Ukraine, Western governments imposed unprecedented economic sanctions against the Russian state and certain Russian oligarchs. They are now working to identify and freeze assets linked to sanctioned individuals and entities – a magnificent challenge in itself. Expectations are already skyrocketing as regards the potential of confiscating these assets, and politicians make strong statements about how they should ultimately be used. This has put a political spotlight on a debate that has long been on the agenda of asset recovery discussions: how should recovered assets be utilised? This is not only a legal but at least as much a political issue, because international treaties are not specific in this regard. The public are often cynical when faced with claims of recovered assets which are allocated to the general budget with little or no oversight. Sometimes, the speculation is that the same recovered assets have been diverted for the benefit of individuals rather than the collective good. Recognising this risk and the public expectation, countries that return or receive recovered assets have tried various schemes over the years to safeguard and maximise their use. None of these discussions has been plain sailing, also because each case of asset repatriation is very different – legally, technically and politically. In countries that we support through our International Centre for Asset Recovery, there have been some really interesting and innovative initiatives to utilise assets: For pandemic-struck hospitals In Kenya, as pandemic-related pressure mounted on the country’s health system, the Office of the Director of Public Prosecutions and the Ethics and Anti-Corruption Commission handed over 20 billion Kenyan shillings approximately USD 18 million at the time to the Ministry of Health to equip the countries’ hospitals with equipment. Formally handed over at a ceremony to which the media were invited, the money came directly from confiscated proceeds of corruption. So in this case, the recovered assets were not only put to good use in the fight against Covid-19. The action also helped to demonstrate how corruption hurts citizens, and in turn how recovering stolen assets can benefit citizens – and to right a wrong of which Kenyan citizens have been the victims. For student bursaries The Kenyan example triggered a great deal of interest in the region in how recovered proceeds of corruption could be tangibly and visibly utilised. Next, in February 2022, the Zambia Anti-Corruption Commission publicly handed over USD 57,000 USD and 65.3 million kwacha approximately USD 3.6 million of recovered funds to the Ministry of Education. Both the Minister and the President committed to utilising these funds for bursaries to enable under-privileged students to complete university education. Here, too, citizens who are the primary victims of corruption are the ones to feel the direct benefit of asset recovery. To strengthen criminal justice institutions Internationally recovered proceeds of corruption have been used in similarly positive ways. An interesting example comes from Peru, which in 2020 signed a tripartite agreement with Switzerland and Luxembourg in relation to around USD 26 million in repatriated assets that had been stolen through corruption under the regime of former President Fujimori. Under this agreement, these assets are now being used to strengthen the country’s criminal justice and asset recovery institutions. Peru’s proposal to use the funds in this way goes straight to the core of the problem – corruption – and will help multiply the impact of the returned funds. The agreement also contains provisions that will ensure transparency and accountability in the use of the funds. For intensive care units and Covid-19 relief Another interesting example is the asset-sharing agreement signed in March 2022 between Kenya and the Bailiwick of Jersey to repatriate GBP 3 million to Kenya. This was the culmination of a multi-year investigation and prosecution which led to the confiscation of funds from a Jersey-registered company, Windward Trading. It was the Windward Trading case that had originally triggered the development of the Framework for the Recovery of Funds from Crime and Corruption in Kenya FRACCK , which was signed by the Governments of Kenya, Jersey, Switzerland and the UK in 2018. The purpose of the agreement is to streamline the repatriation of funds to Kenya and to ensure that they will be utilised in line with national development priorities. The agreement also provides for the monitoring and evaluation of the use of returned funds. In this first utilisation, under the Kenya–Jersey agreement, the recovered assets are to be used to acquire medical equipment for intensive care units and to assist families adversely affected by the pandemic. Similar to the Covid-19 use of domestically repatriated funds, citizens will be able to experience the direct impact of successful anti-corruption enforcement. Considering the causes, consequences and victims of corruption There are other examples where recovered assets have been used in innovative and interesting ways, and more in the pipeline. What these examples all have in common is that careful consideration was given to either the root cause of corruption Peru or to the harm caused by corruption and their victims Kenya, Zambia . The international cases Peru and Kenya have also benefited greatly for a collaborative attitude of both requesting and requested states. The recovery of stolen assets is of course about the money. But just as much it is about what we sometimes refer to as the “soft assets”. Namely, that citizens benefit from the enforcement action and the original negative impact of corruption is at least somewhat countered. In time, the rule of law, trust in government and effective public services are restored. The above examples provide some food for thought for countries grappling with the question of how best to employ recovered proceeds of corruption and other crimes. The answers they come up with may be different, but what’s important is that all sides – including citizens – get the clear sense that something good came out of the bad.
New Green Corruption case study: Hout Bay and the illegal lobster trade – recovering illicit proceeds of IUU fishing and wildlife trafficking
We have just released a detailed case study on the prosecution of a South African fishing company, Hout Bay Fishing Industries, and efforts to recover the company's illicit assets. Published under our Green Corruption programme, the case study is authored by Advocate Caroline Dutot of Ardent Chambers, Jersey, with contributions from Howard Sharp, QC. The company was accused of overfishing lobster and other protected fish in deliberate breach of government-established quotas, leading to what environmental experts claimed was a free fall in lobster numbers. Until the criminal investigation commenced, large quantities of illegally caught lobster and fish were exported from South Arica to the USA, generating vast profits for the company that were stashed in complex offshore legal structures. The case study contains numerous important lessons for those seeking to follow the money in large wildlife trafficking or related cases of environmental crime. Read it here: Hout Bay and the illegal lobster trade: a case study in recovering illicit proceeds of IUU fishing and wildlife trafficking .
Landmark case in Jersey upholds Attorney General's powers to obtain key documents for investigations into financial crime
We congratulate Jersey's Attorney General, Robert MacRae QC, for his success in a landmark case that has upheld the Attorney General’s powers to obtain documents by compulsion in cases of suspected serious or complex fraud. The Privy Council ruled in favour of the Attorney General in the Volaw/Larsen case, in which the defending company had refused to provide documents required for a fraud investigation on the grounds that this violated its privilege against self-incrimination protected by Article 6 of the European Court on Human Rights. Headquartered in London, the Privy Council is the final court of appeal for the Crown dependencies of Jersey, Guernsey and the Isle of Man. Seven justices were present on the panel of the Privy Council during the hearing, as opposed to the usual five, indicating the significance of the issues at stake. Jersey’s Attorney General, Mr Robert MacRae QC said: "I welcome the successful outcome in these long-running proceedings which upholds the legality of our statutory framework in Jersey. This framework gives effect to our international obligations as a global finance centre to assist other countries in combatting fraud and financial crime, such as money laundering and tax evasion. "The Privy Council has confirmed the powers of the Attorney General and the Comptroller of Taxes to compulsorily require the production of pre-existing documents where it is suspected that serious or complex fraud may have been committed or where information relevant to the administration or enforcement of the tax laws of a partner jurisdiction is held in Jersey.” More information See the official judgement and press release issued by the Judicial Committee of the Privy Council. Jersey became a core donor to the International Centre for Asset Recovery ICAR in 2018, joining the UK, Switzerland, Liechtenstein and Norway.
FRACCK agreement with Kenya illustrates that partnership is essential when the disposal of confiscated assets should benefit development
The Framework for the Return of Assets from Corruption and Crime in Kenya FRACCK , agreed and signed by the Governments of Kenya, Jersey, Switzerland and the UK in 2018 with support from the Basel Institute's International Centre for Asset Recovery ICAR , is already generating strong interest for its "innovative" and "novel" approach to asset return. These were the words of Brigitte Strobel-Shaw, Officer-in-Charge of the Corruption and Economic Crime Branch of the UNODC, during a May 7-9 International Expert Meeting on the Return of Stolen Assets. The FRACCK sets out good practices for the return of stolen assets to Kenya. It encourages transparency and accountability, as well as the use of returned assets to advance sustainable development and benefit citizens. Read more about it here. At the meeting in Addis Ababa, co-hosted by UNODC and the Governments of Switzerland and Ethiopia, participants commented positively on how FRACCK establishes clear communication channels and shared principles for the return of assets between jurisdictions. ICAR has been advocating for these principles ever since asset recovery was made a fundamental principle of international law under the UN Convention against Corruption UNCAC . Indeed, FRACCK demonstrates how Article 57 paragraph 5 of the UNCAC can be implemented in practice. The Article encourages States Parties to conclude agreements or mutually acceptable arrangements for the final disposal of confiscated property. Gretta Fenner, Managing Director of the Basel Institute and ICAR, highlights that "the FRACCK shows how meaningful disposal of confiscated property is in the interest of both requesting and requested party. It is not a topic that should oppose these parties, but instead bring them together." ICAR experts continue to participate in the working group and support the parties in implementing the FRACCK on a case-by-case basis, including for high-profile asset recovery cases such as Anglo Leasing and Windward Trading Ltd. The agreement is open for signature by any other interested jurisdiction and the concept could well be replicated and adapted to other contexts. Photo courtesy of the Government of Jersey.