HL Deb 24 March 1986 vol 472 cc1184-201

4.34 p.m.

Committee stage resumed.

Clause 18 agreed to.

Clause 19 [Enforcement of other external orders]:

Viscount Davidson moved Amendment No. 26: Page 19, line 33, leave out ("the proceeds of drug trafficking by any person") and insert ("payments or other rewards received in connection with drug trafficking or their value").

The noble Viscount said: This clause makes provision for an Order in Council to be made allowing our courts to restrain and confiscate property needed to satisfy a confiscation order imposed in another country. This will, we hope, form the basis of a range of mutual enforcement agreements, so that orders made by courts here can be enforced against property held overseas. But we believe that some expansion is necessary in the Bill's definition of the types of orders we shall be prepared to enforce. At the moment, Clause 19(1)(b) refers to an order made for the purpose of recovering the proceeds of drug trafficking: it may well be that other countries' legislation, like the Bill at present before this Committee, will allow the recovery of the value of such proceeds, without being limited to the tainted money. We need to reflect that possibility in Clause 19 so that our courts will be able to assist with the enforcement of orders of that type. The amendment has been devised for that purpose. I beg to move.

On Question, amendment agreed to.

Clause 19, as amended, agreed to.

Clause 20 [Order to make evidence available]:

Lord Glenarthur moved Amendment No. 27: Page 22, line 15, after ("discharge") insert ("and variation").

The noble Lord said: The need for this amendment arises out of an improvement made to the Bill in another place.

We originally provided that an order made by a circuit judge requiring the holder of material to produce it to the police or Customs, would allow seven days for compliance, or such longer period as the judge might specify. In another place, it was pointed out that there could be circumstances in which the judge might want—and might think it reasonable—to specify a shorter time; and Clause 20(3) now allows that to be done. In general, the holder of the material will have had an opportunity to be present when the application for the order is heard, and therefore to indicate whether a particular timescale would cause difficulties. But there may be circumstances where an order is made without the holder of the information being present, or where, for whatever reason, the period allowed by the judge for the production of information is genuinely insufficient. There may, for example, be unexpected problems in locating material, or retrieving it from a regional office. In these circumstances, we believe that provision must be made for the holder of the material to seek an extension of the time given to comply, and that is the purpose of this amendment. The procedure will be established by Crown Court rules. I beg to move.

On Question, amendment agreed to.

Clause 20, as amended, agreed to.

Clause 21 agreed to.

Clause 22 [Sections 20 and 21: supplementary provisions]:

Viscount Davidson moved Amendment No. 28:

Page 24, line 10, leave out subsection (2).

The noble Viscount said: In speaking to this amendment, it may also be convenient to discuss Amendment No. 29. These are two straightforward and I trust uncontroversial amendments to remove from this clause elements that have become unnecessary. Subsection (2) at present states that various provisions of the Police and Criminal Evidence Act should apply in relation to customs officers in the same way as they do to the police. Such specific provision is not now needed, because these and other parts of the 1984 Act have now been applied to Customs by Statutory Instrument No. 1800 of 1985, which came into force earlier this year. I am therefore proposing the deletion of subsection (2). The words at the beginning of subsection (3) are a relic from an earlier stage in the drafting of the Bill, and need to be removed. I beg to move.

On Question, amendment agreed to.

Viscount Davidson moved Amendment No. 29: Page 24, line 19, leave out ("In this section and").

On Question, amendment agreed to.

Clause 22, as amended, agreed to.

Clause 23 agreed to.

Lord Denning moved Amendment No. 30:

After Clause 23, insert the following new clause:

("Information on financial transactions.

.—(1) For the purpose of tracing and recovering the proceeds of drug trafficking, the Secretary of State may draw up a scheme requiring banks and financial institutions to report to such authorities as he shall determine any deposit of or transaction in currency exceeding such limit as he shall determine.

(2) If any hank or financial institution reports any deposit or transaction to the authorities in pursuance of such a scheme, it shall be protected by law from any action or complaint by anyone alleging breach of confidence or contract or otherwise.

(3) A draft of such a scheme shall be laid before and subject to affirmative resolution by each House of Parliament.")

The noble and learned Lord said: This is related to the last amendment which we discussed at large, but it is different. In the amendment we discussed before it was entirely voluntary for the banks or financial institutions to report to the chief officer of police their suspicions of drug trafficking. The object of this amendment is to avoid the voluntary nature and to require banks and financial institutions to notify not necessarily a suspicion but large amounts of cash or other property passing through their hands.

The provenance of this provision takes its origin from the United States of America where they have much greater problems than we have with drug trafficking. They have found it necessary to have some such provision as this; namely, that the banks and financial institutions should disclose to the authorities very large sums (because there are often millions of dollars involved) so that they are put on the alert. These too must be put together. I realise that if they are so bound they ought to be protected in regard to any breach of confidence or anything of that kind, and so in subsection (2) there is the corresponding provision for them to be protected against any complaint from a customer or client for giving that information. The next amendment, Amendment No. 31, omits that, but I am sure it ought to be read with this. The primary amendment is Amendment No. 30.

One would like to know how this has worked. I am told by a United States lawyer that there have been prosecutions in the United States of banks who have not disclosed what they ought to have disclosed in regard to such offences, in effect, helping the drug traffickers in that way. Those prosecutions have shown the banks to be guilty; in other words, they are not doing their duty. In the United States that has been felt to be an important way of chasing up these drug traffickers and getting to know the source of the large funds which are passing through the banks' hands.

This would be a difficult matter to incorporate into our law, and therefore this proposal is not that we should do it as such at the moment, but that a scheme should be drawn up, no doubt in consultation with the banks and with others, saying that they are to report certain sums which have been deposited with them. If they fail to report such things, they will no doubt be made liable and punishable accordingly. It could not be done by amendment to this Bill, but the proposal is that a scheme should be drawn up for the purpose of tracing and recovering the proceeds of drug trafficking. That is the object of it, and I would suggest to the Committee that a scheme such as this, following the example of the United States, could and should be prepared as a further aid to our getting hold of the proceeds of drug trafficking. I beg to move.

Lord Mishcon

When we were considering an earlier amendment, I ventured to say to your Lordships that every conceivable assistance ought to be given within the circumference of acceptable legal propositions to catch the big dealers, and this Chamber and, one hopes, another place will indeed sanction them. That was the background against which I ventured to approach from these Benches Amendment No. 25. That amendment referred to a voluntary scheme which dealt with banks and financial institutions which were permitted to escape from the normal consequences of breach of contract and confidentiality if they endeavoured to assist the authorities. As the noble and learned Lord, Lord Denning, has fairly said, this is a very different proposition. This is mandatory, and when looking at something mandatory upon the banks to disclose confidential information, I beg the Committee to realise what is being done.

4.45 p.m.

Let me take as my first point the fact that your Lordships will see that this mandate upon the banks does not occur only when a charge has been preferred. It is there at any time in connection with drug offences. By way of contrast, the Committee will see at the very outset of Clause 23, where there is provision for disclosure of information held by government departments, that this is only to be effective at any time after proceedings have been instituted against the defendant for a drug trafficking offence. No such words occur in this amendment.

Secondly, the Commitee will find at the top of page 25 of the Bill, in subsection (3), that: An order under subsection (1) above shall not require the disclosure of any material unless it appears to the High Court that the disclosure is likely to facilitate the exercise of the powers conferred on the court by sections 8 to 11 of this Act or on a receiver appointed as mentioned in subsection (1) above". In other words, the learned judge has to be satisfied that the information which is going to be disclosed is going to assist. There is no such provision in this clause.

Before I go on to deal with the ambit of this clause, let me enunciate a principle which I believe the Committee will find acceptable? It is this. It is all very well for Parliament to create a precedent and then say that in the course of discussion it is realised that one is dealing with a very exceptional case. In the course of discussion a section becomes incorporated in an Act of Parliament, with the background that Parliament has said, "This is an extraordinary situation to be dealt with in an extraordinary way".

All too often, when Members of your Lordships' House have endeavoured to fight against what they believe to be an unnecessary exercise of power by the Executive, a Minister with perfect propriety gets up to say, "We have done this once before in the Customs and Excise Act"—or some other Act—"and there is a precedent for it". We must be safeguarded against the reiteration in Parliament at some future date when this extraordinary power is taken, if the Committee passes this amendment, so that it is not to be construed as a precedent. And what a dangerous precedent it is! Confidentiality goes by the board. In a sacred matter as between banker and customer the bank has to disclose amounts of currency above a certain limit deposited with it.

The noble and learned Lord said in the course of his remarks (I took it down) "money or other property". I believe, in fairness, that as this refers only to currency the words "or other property" were not mentioned with the care that we know he always exercises when he makes any utterance at all. It is indeed only currency. But let me tell the Committee, if I may, as a practising solicitor, that there have often been occasions when people have come to me in very personal circumstances—it could be the birth of an illegitimate child; it could be looking after a mistress who has been given up because matrimonial life has been resumed—and cash sums are lodged in a bank account, the owner of that cash not wishing (With great propriety) to have his name disclosed. Under this section matters of that kind will be disclosable.

There is no question of the bank having a suspicion that it has anything to do with drug offences; there is no question of anybody having been charged. The bank will be under a duty to say that yesterday Mr. X lodged into the bank account of Y a certain sum of money or that Y now has a certain sum of money. Is that what we want? If we want it, is it not something that should be left in abeyance, as the noble and learned Lord said, to be dealt with by order or regulation (affirmative, it may be)? Do we not have the courage, if we are to do this, to say exactly what the limit and circumstances are that we have in mind, instead of leaving it to a scheme subsequently drawn up by some government, one knows not where or when, for uses that may be for an entirely different purpose? It could be £10 or £20 or more.

The noble and learned Lord may answer me by saying that we have such a requirement with the Revenue for deposit accounts. May I tell him with great respect that were he to make that point it would not be a valid one, because everybody knows that interest on deposit accounts is liable to tax and that all that the Revenue is doing is seeing that it has the tax that it ought to have? It has nothing to do with a current account cash deposit or something of that kind.

We know what orders and regulations mean. They come before the House. We can do only one thing with them. We can pass them. If there is a government with a sufficient majority they will get them through. But we cannot get up and move an amendment and say that the cost limit is too high or the circumstances too rigorous. We have to vote for or against them or abstain. Those are the only things that we can do.

The amendment is grappling with a difficulty that I know we have, but in trying to deal with a very great problem do not let us go beyond where we should go. I uphold the principle of Amendment No. 25 from these Benches. Speaking personally now—I have no other mandate—I see that there are greater problems created by Amendment No. 30 than ever it will solve.

Lord Harris of Greenwich

Not altogether surprisingly, I take the view rather different from the one that has just been expressed by the noble Lord, Lord Mishcon, who, as always, has spoken in a most persuasive fashion. I am bound to say that he was not so persuasive as to explain to my satisfaction why the dangerous precedent which he saw was being established by the amendment did not apply to Clauses 1, 2, 3 and 4 as well.

As the noble Lord will recall, one of the points that he made on Second Reading was the danger implicit in the Bill of the precedent that was being established. He went on to say, as did my noble friend Lord Hooson, that we may be talking about drug trafficking today but tomorrow we may be talking about complicated fraud cases. Indeed, we read in the press that Ministers are at the moment considering just such an approach for offences outside trafficking in narcotics.

Having pointed out that at first glance there appears to be some inconsistency between the noble Lord's position on this amendment and that which underlines the first part of the Bill, I could perhaps go back to one point made by the noble Lord, Lord Glenarthur when he wound up the Second Reading debate and used the words with which I very much agree. He said: We cannot and dare not be complacent about the threat that the drugs menace poses for the United Kingdom. We must make every possible strong and determined effort, to use the words of the noble and learned Lord, Lord Denning, in his powerful speech, to intensify law enforcement against drug traffickers by attacking their profits and by preventing the laundering of those profits".—[Official Report, 4/3/86; col. 126.] That is precisely the issue that we are discussing today. The laundering of profits, as the noble and learned Lord, Lord Denning, said on an earlier amendment, is absolutely fundamental to the question that we are debating today.

If we want to have an idea of the scale of this traffic we have only to look at an Answer given to me by the noble Lord, Lord Young of Graffham It will appear in Hansard of today's date. In a Written Answer he points out that in the first quarter of 1979 heroin to a value of approximately £775,000 was seized by the Customs and Excise. In the last quarter of last year that figure has risen to £12,519,000.

It would be encouraging to imagine that we were being more successful and that the Customs was able to intercept more heroin coming into this country. In reality, it is probably seizing just about the same proportion of heroin now as it did in 1979. If one tries to make a series of mathematical calculations as to what is the approximate size of the trafficking, as I said on Second Reading, it will be arbitrary. It is foolish to try to be precise in such matters. Nevertheless, in 1984, it is probable that heroin with a street value of about £350 million was introduced illicitly into this country. We are also seeing a rapid growth in the trafficking of cocaine. As a result of the fact that the American market is now saturated with cocaine, entrepreneurs, as I endeavoured to point out on Second Reading, are identifying Western Europe as their target. This huge business is, therefore, expanding at a tremendous rate.

When debating such matters it is necessary to maintain a proper and sensible balance; but it is also right to look for a moment at the problem facing the criminal entrepreneurs who are responsible for organising this trafficking. They have a single problem; it is a substantial one. How are they to launder the massive proceeds from their criminal activities which run possibly into hundreds of millions of pounds? Unless they are prepared to take the immense risks involved in walking around with suitcases with large quantities of bank notes, they have in some way to introduce that money into the banking system. The question is how they will do it.

At the moment we know, as a matter of cold fact, that such people can do it without risk that the transaction will be reported to the authorities. How can that possibly be right? Is it not absolutely essential that when debating such a Bill we do everything that we can to introduce machinery to make their task as difficult as possible? How can it be right not to have some provision making it necessary to report a transaction above a certain level to some public agency? The noble Lord, Lord Mishcon, drew attention to some of the practical problems involved, but one of the points with which he did not deal was what had been the experience of the United States. The Americans have a great deal more experience of dealing with narcotics than we have.

5 p.m.

There is absolutely no doubt, on the part of the Federal authorities, that an essential element of their defences against drug trafficking is the requirement to report cash transactions above a certain level. The Attorney-General of the United States, as I pointed out at Second Reading, made his position on this matter absolutely clear. Indeed, in doing so he announced that the Department of Justice and the Treasury Department were not satisfied with the existing requirements of the Bank Secrecy Act, under which all cash transactions of over 10,000 dollars have to be reported. They have introduced through the chairman of the Senate Judiciary Committee a new Bill which is aimed at strengthening those reporting requirements and the enforcement procedures involved in the Bank Secrecy Act.

When I put this point to the noble Lord, Lord Glenarthur at Second Reading on 4th March, he replied (at col. 126 of the Official Report): … we do not believe that any useful purpose would be served by imposing a requirement on banks and other financial institutions to report large cash transactions. He said that in the United States reporting had been only casually observed. I think that is absolutely true and that is why there have been a formidable number of prosecutions against American banks for failing to report. Indeed, there is little doubt that American banks are now far more aware than they were some months ago of the absolute statutory requirement upon them to live up to the central purpose of this legislation. I think that those prosecutions indicate the seriousness with which the American Government is now attempting to enforce the legislation.

I return to the position in this country. When speaking to the last amendment, the noble and learned Lord referred to the report of the Home Affairs Committee, and I should like to refer to the views of the Parliamentary Under-Secretary at the Home Office, Mr. Mellor, at page 149 of that report, when he pointed out, quite fairly, a number of problems that had arisen in the United States about the reporting arrangements so far as banks were concerned. The points he made were entirely reasonable.

But he went on to say this about the 10,000 dollars reporting requirement, because he was asked by a member of the committee whether we were going to move in the same direction. He said: We certainly considered it. Like all of these arguments, nothing is ever rejected forever. Basically we are producing our first-line proposals. I would not rule out at some future point, if these provisions were not as effective as we would wish, that one would want to return to that". That is Mr. Mellor's view and I agree with it, at least to the extent that he accepts the validity of part of the argument. But what I regret is the fact that he is not prepared to do it now, because I believe that the need for this is clear and urgent.

If anyone has any doubts about that, he has only to turn to page 126 of the same report of the House of Commons Home Affairs Committee, when Assistant Commissioner Dellow, the head of crime division at Scotland Yard, was being interrogated by members of the committee on exactly this point. Mr. Dellow said: I think that some of the American laws with regard to the notification of the movement of amounts of money over $10,000, the movement of money outside the country, the movement of money backwards and forwards through barriers and so on, although tending to be regulatory and restrictive, I am afraid are the sort of regulations that are going to assist in terms of controlling this sort of money in this country". That is the voice of one of the officers with most detailed knowledge of the drug situation in this country, speaking on behalf of the Metropolitan Police where the problem is perhaps at its most serious. I do not argue for a moment that, because a policeman, however senior his rank, maybe advocates a certain course of action, Parliament should uncritically accept it—of course not. All I am saying—and I hope the Committee will recognise this—is that we are going to take a very substantial risk if we simply ignore what he said.

I return to the point that I made at the beginning of my speech. Large sums of money made as a result of this trading in narcotics are now washing around in this country. It seems to me highly desirable to move in the direction advocated by the noble and learned Lord, Lord Denning, in this amendment, which the noble Baroness, Lady Phillips, my noble friend Lord Hooson and I support, because if we do not seize an opportunity like this when we are discussing this very serious matter it may be some substantial time before Parliament has the opportunity of coming back to it.

Lord Boardman

Your Lordships will remember that I declared my interest in a bank on a previous amendment. May I now sound a somewhat cautionary note in regard to the amendment of the noble and learned Lord? The noble Lord, Lord Mishcon, raised a number of points with which in large measure I am in agreement as regards the problems which arise from the noble and learned Lord's amendment and I would add two further points.

First, we should distinguish between what happens in this country and what happens in the United States. On an earlier occasion, I said that the United States is largely a cashless society. There they have imposed a limit of 10,000 dollars, and above that amount a transaction has to be reported. To place a comparable limit in this country—and I know that the amendment leaves that open—would mean a vast amount of work. The number of transactions of comparable size which take place every day are quite vast. Therefore, the answer might be to raise the limit and have a figure very much more substantial than 10,000 dollars; for example, 100,000. I remind your Lordships that there are some 295 registered banks, 300 bona fide licensed depositories and scores of building societies. Someone who had large sums could, if the limit were raised to £100,000, spread it around, which would not be a vast task, and could thereby avoid reporting.

Another point I would make is that, while reporting in the United States has led to a number of prosecutions, my information is that in many cases the law has been respected more in the breach than in the observance. I am not aware that the legislation has led to tracking down or convicting drug traffickers. My final point is that the amount of bureaucracy that would be necessary would be vast and I ask the noble and learned Lord whom he would expect to monitor his scheme.

Having expressed my reservations, may I tell your Lordships again that if there were a method by which we could eliminate the laundering of money I have no doubt that the financial institutions and the banks would accept a great deal of bureaucracy and a great many handicaps, inconveniences and even breaches of some of the fundamental principles of confidentiality, in order to stamp out the evil trade of drug trafficking? I hope that my noble friend the Minister will feel that before he can accept this amendment he should have further consultations and look at some of the practical problems that would arise from carrying into effect the proposals in this very well-intentioned, but somewhat impracticable, amendment.

Lord Glenarthur

I recall that the noble Lord, Lord Harris of Greenwich, raised this issue during the debate at Second Reading, and the noble and learned Lord, Lord Denning, has now joined him in pressing this point. I fully recognise the force of the point of view of the noble Lord, Lord Harris, that concern about drugs is increasing. The noble Lord has quoted some statistics today which add weight to his words. My noble friend Lord Boardman agreed with him, too, on that point.

This is a question which the Government have considered very carefully in the context of preparing this legislation in the light, among other things, of the comments that were made in the Select Committee report to which the noble Lord referred. We looked at the American experience and thought about the implications for the financial community in this country; and I have to say that we concluded that the results were not likely to justify the degree of effort that would be required for a great many people to operate such a system. Banks in this country frequently receive large sums in cash. In seaside and tourist resorts, just to take two simple cases, or in areas with large numbers of antique shops—these are just examples, and nothing more than that; no relevance is attached to any of them in particular—substantial cash deposits will be specially common. A requirement to report all such transactions would impose a very substantial burden on the banks, as I know my noble friend Lord Boardman will agree, and on some individual branches in particular. I do not believe that it would be right to ask them to shoulder that very heavy burden unless we thought that there would be significant benefits in terms of identifying traffickers and tracing their proceeds.

The noble Lord, Lord Harris, believes that the benefits would exist, but I have to say to him that the practical difficulties and burdens which it would impose are very much along the lines which my noble friend has expressed. Whoever had the task of scrutinising the reports received would find it difficult or impossible to distinguish those which required further investigation from the welter of information that would stream in on deposits of cash arising from perfectly legitimate activities. Indeed, it seems likely that it would be the legitimate cash that would be caught by the reporting requirements. The drug traffickers with whom we are concerned are among the most sophisticated of criminals; I do not think anyone denies that. I cannot believe that they would find it difficult to avoid transactions of a size that would need to be reported. In America, the practice known as "smurfing" has developed, where a number of deposits is made, each just below the reporting threshold. I understand, too, that in America the reporting requirements have in any case been only patchily observed—I know that I said precisely that at Second Reading—even by large and highly respectable financial institutions.

For all those reasons the Government concluded that it would be undesirable to proceed with a bank reporting requirement here. I recognise that it is an argument different from the earlier argument which the noble and learned Lord, Lord Denning, put forward. I have to say to him that I must resist these amendments. We believe that the powers given by Clauses 20 and 21 of the Bill for the police and Customs to obtain access to information held by banks and others at a very early stage of a drug trafficking investigation will prove a more effective means of identifying and tracing the proceeds of drug trafficking.

I do not think that the noble Lord, Lord Harris, would want me to stress any further the concern that I share with him about the great efforts that have to be made in tackling this terrible problem in every possible way. I agree very much with the noble Lord, Lord Mishcon, that what we are achieving here would not only be impracticable but probably would not have the effect desired because of the way experience has shown it to operate in the United States. With the benefit of my views on that, I hope that the noble and learned Lord, Lord Denning, may feel able to withdraw his amendment.

Lord Harris of Greenwich

Perhaps I may say just two things to the noble Lord, Lord Glenarthur, before the noble and learned Lord replies. Speaking for myself as one of the noble and learned Lord's supporters, I would prefer not to press the amendment today but to wait and see what the Government come up with on the earlier amendment. It does not cover exactly the same ground; it goes far wider—that is certainly true. But I think at that stage we shall be able to form a view, quite bluntly, of whether we are satisfied with the general direction in which the Government are going.

My second point is that in my experience it has been some time since I have heard a Home Office Minister reply to a debate of this kind, on a Bill involving criminal justice policy, basing his argument primarily on the position of the banks—an important point which I admit immediately. The noble Lord did not make a single reference to the attitude of the police. I find that astonishing, but perhaps not altogether surprising given the evidence of Assistant Commissioner Dellow before the Home Affairs Select Committee. He said quite clearly on that occasion that a provision along these general lines was in his view—I do not want to put words into his mouth; the Committee heard the earlier quotation—desirable.

If we do not do it in this Bill we shall come back to it. Indeed, the Parliamentary Under-Secretary who is responsible for Government policy on drugs implied the same thing himself when he gave evidence to the Home Affairs Select Committee. I would far prefer that we continue this debate at a later stage of the Bill when we see what progress we have made on the other questions. I do not know whether my noble and learned ally agrees with me, but I think that that might perhaps be the best way to proceed.

5.15 p.m.

Lord Denning

I thank everybody very much. I quite appreciate the point of my noble friend Lord Mishcon. I hoped that those matters—whether a person had to apply to a High Court judge and get an order from him: whether we could deal with such matters as the banks; whether it should be some or all, and as to the amount and so forth—could be dealt with in a scheme. In other words, it was deliberately vague so as to allow all the details to be worked out later and the objections considered. It will very much need the co-operation of the banks. But, equally, having said that, I thank the Minister for the consideration given by the Home Office to this very problem. It is evidently being looked into very carefully at the moment. I hope they will consider it further. In the light of our progress already on Amendment No. 25, I shall not press Amendment No. 30.

Amendment, by leave, withdrawn.

[Amendment No. 31 not moved.]

Clause 24 agreed to.

Viscount Davidson moved Amendment No. 32:

After Clause 24 insert the following new clause:

("Authorisation of delay in notifying arrest.

.—(1) In section 56 of the Police and Criminal Evidence Act 1984 (right to have someone informed when arrested), at the beginning of subsection (5) there is inserted "Subject to subsection (5A) below" and after that subsection there is inserted— (5A) An officer may also authorise delay where the serious arrestable offence is a drug trafficking offence and the officer has reasonable grounds for believing—

  1. (a) that the detained person has benefited from drug trafficking, and
  2. (b) that the recovery of the value of that person's proceeds of drug trafficking will be hindered by telling the named person of the arrest".

(2) In section 58 of that Act (access to legal advice) at the beginning of subsection (8) there is inserted "Subject to subsection (8A) below" and after that subsection there is inserted— (8A) An officer may also authorise delay where the serious arrestable offence is a drug trafficking offence and the officer has reasonable grounds for believing—

  1. (a) that the detained person has benefited from drug trafficking, and
  2. (b) that the recovery of the value of that person's proceeds of drug trafficking will be hindered by the exercise of the right conferred by subsection (1) above."

(3) In section 65 of that Act (interpretation)— (a) after the definition of "appropriate consent" there is inserted— "drug trafficking" and "drug trafficking offence" have the same meaning as in the Drug Trafficking Offences Act 1986", and (b) at the end of that section there is inserted "and references in this Part to any person's proceeds of drug trafficking are to be construed in accordance with the Drug Trafficking Offences Act 1986".

(4) Without prejudice to section 20(2) of the Interpretation Act 1978, the Police and Criminal Evidence Act 1984 (Application to Customs and Excise) Order 1985 applies to sections 56 and 58 of the Police and Criminal Evidence Act 1984 as those sections have effect by virtue of this section.").

The noble Viscount said: The intention behind this new clause is to minimise the risk that the defendant's property might be disposed of by his family or friends before the High Court has had an opportunity to take action to restrain it.

In the Police and Criminal Evidence Act, people taken into custody have clearly defined rights to have a friend or relative notified of their arrest, and to consult a solicitor. Those are important rights, which Parliament has agreed should be restricted only in very limited circumstances, which are set out in that Act. For notification of arrest or access to a solicitor to be delayed, the offence for which the person has been detained must be a "serious arrestable offence" under the terms of the Act, and this will be the case with the drug traffickers and launderers with whom we are concerned. But before delay can be authorised, there must also be reasonable grounds for believing that the immediate exercise of the suspect's rights would have one or more highly undesirable or prejudicial effects, such as interference with evidence, possible injury to others, alerting other suspects, or hindrance of the recovery of stolen property. We believe that to this list should be added another proper justification for delaying notification of arrest and access to a solicitor: that such notification or access would put at risk the recovery of a person's proceeds from drug trafficking.

There will be occasions when the police or Customs need to effect a person's arrest before they have had an opportunity to seek a High Court order restraining his property. It is not difficult to envisage that a telephone call to the trafficker's wife, brother or friend might give him or her a chance to put some of the defendant's assets beyond the reach of the courts before a restraint order could be made. Consultations with his solicitor could in some cases carry a similar risk.

The effectiveness of the provisions of this Bill would thus be seriously undermined. The Government believe that that is unacceptable and therefore propose that there should be power to authorise delay in such situations, just as there is in the kind of circumstances that I indicated a few minutes ago.

That provision would of couse be subject to the safeguards already provided in the Police and Criminal Evidence Act. Delay would be for a maximum of 36 hours and could only be authorised by an officer of superintendent or equivalent rank. The person detained would have to be told the reason for the delay and it would also have to be noted on his custody record. I believe that the provision is an important one and that it will close a small but significant loophole in our restraint and confiscation procedures. I beg to move.

Lord Wheatley

When we were discussing Amendment No. 25 and the new clause that was introduced by the noble and learned Lord, Lord Denning, I indicated that I shared with all Members in all parts of the Committee an abhorrence of the iniquitous traffic that is continuing at the present time. Before I retired just a few months ago, I was not only in the fortunate position of being able to indicate in the courts of Scotland how the law regarded such traffic with abhorrence and believed that it should be visited with the most condign punishment, but I also had the opportunity, as Lord Justice Clerk, of setting the pattern of the method of disposal.

I say that by way of a preface, lest it be thought that I am in any way trying to ameliorate the strength of purpose behind this amendment or any of the other amendments that we have been discussing. However, I have suggested that it would be undesirable to use a formula that might be applied in other cases where the circumstances did not warrant its use. That point is one that the noble Lord, Lord Mishcon, has reiterated time and time again.

I have suggested that, in conformity with a formula that was used for the Road Traffic Act, instead of using just the words, suspects that any proceeds of drug trafficking", etc., there should be inserted by way of a qualification, modification or addendum the words, or has reasonable grounds for suspecting". I believe that that suggestion found acceptance by the noble and learned Lord, Lord Denning. He indicated that he was prepared to accept it, and the noble Lord, Lord Glenarthur, in winding up, said that that point would be dealt with along with other points that were raised during the course of our debate.

I wish to point out to the Government and in particular to the noble Lord, Lord Glenarthur, that when it comes to Amendment No. 32 it will be observed that the qualification I suggested in respect of the earlier clause has already been adopted by the Government for this clause. Subsection (5A) states: An officer may also authorise delay where the serious arrestable offence is a drug trafficking offence and the officer has reasonable grounds for believing". That is perhaps a more stringent test than reasonable grounds for suspicion, but it is the same principle.

I direct the attention of the noble Lord to the fact that the Government have already accepted that formula in principle in their proposed amendment, when he comes to consider the new clause that the Government have undertaken to consider in relation to the previous amendment of the noble and learned Lord, Lord Denning.

Viscount Davidson

I am most grateful to the noble and learned Lord, Lord Wheatley, for his comments. We shall examine his words very carefully indeed before the next stage of this Bill.

On Question, amendment agreed to.

Lord Glenarthur moved Amendment No. 33:

After Clause 24, insert the following new clause:

("Prohibition of supply etc. of articles for administering controlled drugs.

—(1) After section 9 of the Misuse of Drugs Act 1971 there is inserted the following section— Prohibition of supply etc. of articles for administering controlled drugs 9A.—(1) A person who supplies or offers to supply any article which may be used or adapted to be used (whether by itself or in combination with another article or other articles) in the administration by any person of a controlled drug to himself or another, believing that the article (or the article as adapted) is to be so used, is guilty of an offence. (2) It is not an offence under subsection (1) above to supply or offer to supply a hypodermic syringe, or any part of one. (3) In proceedings against a person for an offence under this section in respect of any article it is a defence to prove that he believed on reasonable grounds that the article was to be used—

  1. (a) in the administration by any person of a controlled drug to another in circumstances where the administration of the drug would not be unlawful under section 4(1) of this Act, or
  2. (b) in the administration by any person of a controlled drug to himself in circumstances where having the controlled drug in his possession would not be unlawful under section 5(1) of this Act.
(4) In this section, references to administration by any person of a controlled drug to himself include a reference to his administering it to himself with the assistance of another".

(2) In Schedule 4 to that Act, after the entry relating to section 9 there is inserted— Section 9A. Prohibition of supply etc. of articles for administering controlled drugs. Summary — — — 6 months or level 5 on on the standard scale, or both.".").

The noble Lord said: In moving this amendment, it may be convenient to discuss with it Amendments Nos. 43, 44, and 45. This proposed new clause meets an undertaking given in another place, and repeated by me during the debate on the Second Reading of this Bill, to introduce a provision to ban the sale of drug paraphernalia. The immediate cause for public concern was the open sale of cocaine kits, which have appeared in the shops in central London and elsewhere. But we believe that the new provision should cover articles that may be used for the administration of any controlled drug: there is no good reason for simply confining it to cocaine.

Your Lordships will also see that we propose that the new offence should cover individual items sold for the administration of a controlled drug, and not simply combinations of items, or kits. It would, I think, be anomalous and unacceptable to say that items could be sold separately for the administration of a controlled drug, but could not be sold together. Moreover, "combination" is a difficult concept to define with precision. There are some articles made up of several parts that might reasonably be viewed by a court either as a single item or as a combination of items. To confine the new offence to "combinations" of items would therefore leave its scope unclear.

An essential component of the proposed offence, however, is belief on the part of the supplier that the article or articles he sold would be used for the administration of a controlled drug. The burden will be on the prosecution to establish such belief beyond reasonable doubt. This will, in our view, adequately safeguard the position of honest shopkeepers, who might inadvertently and in good faith sell an item that is in fact to be used for drug taking, and whom nobody wants to see put at risk by the creation of this new offence.

There are a couple of other points that I should draw to your Lordships' attention. We are providing in subparagraph (3) a defence for the supplier if he believes on reasonable grounds that the items he sells will be used for administering a drug for medical purposes. And in subparagraph (2), we are specifically excluding from the scope of the offence hypodermic syringes, or any parts of them, such as hypodermic needles. Although that latter point may appear in some ways to go against the purposes of the new clause, it is done for a good reason. It is important because of the increased risks of AIDS and hepatitis that could result from re-use of those items. The new offence is to be triable in magistrates' courts, and the maximum penalties will be six months and/or a fine of level 5 on the standard scale, which is currently £2,000.

While I am asking the Committee to agree to this new clause, I should mention that my right honourable friend the Home Secretary is considering the possibility of extending the scope of the offence to cover items used to prepare drugs for administration, as well as those used for administering drugs. The cocaine kits that have caused so much public concern recently usually contain only one item that is used for administering the drug: all the rest are used for preparing it. If that one item—the tube—were to be removed from the kits and sold separately, we could easily see the appearance on sale of "cocaine preparation kits", which would be just as offensive as the kits currently in the shops.

Provided the burden remained clearly on the prosecution to establish the necessary degree of belief on the part of the supplier as to the intended use of the articles he was selling, we do not believe that such an extension would threaten the position of honest shopkeepers. My right honourable friend, in considering that possibility further, would be interested in any views your Lordships might wish to express at this stage, and if he concludes that an extension on the lines I have described is desirable, we shall table a further amendment on Report.

The amendment proposed provides that the new offence will be created for Scotland and Northern Ireland as well for as England and Wales. I hope that the Committee will agree also to a necessary consequential amendment to the Title of the Bill. I beg to move.

Lord Mishcon

I immediately rise to give my wholehearted support to this amendment and to the extension mentioned by the noble Lord the Minister. I have received a letter, as I believe the Minister has, from the Retail Consortium—and it is very worthy of that organisation—saying that it wholeheartedly supports the amendment and feels that the ingredient of mens rea, to which the noble Lord referred, is an adequate and proper safeguard for the innocent shopkeeper. Otherwise, it supports the amendment and it is much to its credit that it does.

5.30 p.m.

Lord Denning

I support the amendment but I should like to strengthen it a little. I would not leave it at believing that it was to be "adapted", and so on, or having reason to believe, or suspecting. It will be hard to prove the belief. We have had it in the Salmon Bill and in other cases. Do not leave it to having to prove belief. Having had "reason to believe" or suspect should be brought in; otherwise, he will get away with it.

Lord Harris of Greenwich

Speaking on behalf of my noble friends and myself, I agree that it will probably be sensible to move in the direction foreshadowed by the noble Lord, Lord Glenarthur. I think it might create certain evidential problems, but nevertheless I believe it is right to do it for the reasons he indicated.

I too have had a letter from Mr. McNally on behalf of the Retail Consortium, as have some of my noble friends. I think, with the noble Lord, that it is extremely praiseworthy that it has approached the matter in this way. It was a very responsible act on its part and we should all pay tribute to it for having done so. Having said that, I think a further amendment on the lines foreshadowed by the noble Lord is probably a sensible proposal.

Lord Glenarthur

I am grateful to the two noble Lords and the noble and learned Lord for their comments. I entirely share their sentiments about the Retail Consortium. It is a responsible attitude to take and I am glad that it has been able to approve of what we are doing.

As regards strengthening the clause further in the way suggested by the noble and learned Lord, Lord Denning, it is a matter which I shall certainly reflect upon. I am not quite sure of the relevance of the words that he chose to suggest—"reason to believe"—and I can see that they would have the effect of strengthening the clause. However, I shall consider his proposal to see what can be done, but without commitment.

On Question, amendment agreed to.

Clauses 25 to 27 agreed to.

Clause 28 [Interpretation]:

Viscount Davidson moved Amendment No. 34: Page 27, line 14, leave out ("(d)") and insert ("and includes a person doing the following, whether in England and Wales or elsewhere, that is").

The noble Viscount said: Although Clause 28 provides that the new laundering offence created by Clause 17 is to be a "drug trafficking offence" for the purposes of this Bill—so that confiscation procedures will apply to the offenders—it is felt that to say in the Bill that drug trafficking means (that is, is synonymous with) money laundering is an undesirable use of language. To avoid stretching the words, while enabling benefits from earlier and overseas laundering to be taken into account in the confiscation order, the proposed amendment provides that laundering shall be included in the notion of drug trafficking. I beg to move.

On Question, amendment agreed to.

Lord Glenarthur moved Amendment No. 35: Page 27, line 17, leave out ("of the proceeds of drug trafficking by him") and insert ("person of the other person's proceeds of drug trafficking").

The noble Lord said: I have already spoken to this amendment. I beg to move.

On Question, amendment agreed to.

Lord Glenarthur moved Amendments Nos. 36 and 37: Page 27, line 19, at end insert ("person"). Page 27, line 21, leave out from beginning to ("benefit") and insert ("the other person's disposal or are used for the other person's").

The noble Lord said: I have already spoken to these amendments. I beg to move them together.

On Question, amendments agreed to.

Viscount Davidson moved Amendment No. 38: Page 27, line 26, at end insert— ("(aa) an offence under section 20 of that Act (assisting in or inducing commission outside United Kingdom of offence punishable under a corresponding law).").

The noble Viscount said: Section 20 of the Misuse of Drugs Act makes it an offence to take action in the United Kingdom to assist or induce the commission of a drug trafficking offence overseas. We believe that where a person has made money from such assistance or inducement it should be confiscated in the same way as it would be if he had assisted in the commission of a drug trafficking offence here. The amendment therefore adds these Section 20 offences to the list of offences which will in future give rise to confiscation orders. I beg to move.

On Question, amendment agreed to.

Lord Glenarthur moved Amendment No. 39: Page 28, line 23, at end insert— ("(3A) References in this Act to anything received in connection with drug trafficking include a reference to anything received both in that connection and in some other connection.").

The noble Lord said: I have already spoken to this with Amendments Nos. 1 and 2. I beg to move.

On Question, amendment agreed to.

Lord Glenarthur moved Amendments Nos. 40 and 41 Page 29, line 24, leave out ("making") and insert ("having made"). Page 29, line 26, leave out paragraph (f) and insert— ("(f) the satisfaction of a confiscation order made in the proceedings (whether by payment of the amount due under the order or by the defendant serving imprisonment in default).").

The noble Lord said: It may be for the convenience of the Committee if I move Amendments No. 40 and 41 at the same time. Subsection (9) of Clause 28 contains a lengthy list of possible ways in which proceedings may be concluded. We should like to clarify this list in two ways. First, we need to allow for the possibility that the court may not sentence an offender, or make a confiscation order, immediately upon conviction, but may require him to return to the court on a subsequent occasion. The first amendment is designed to cover that situation. The second amendment reflects the possibility that in some cases—we hope not too many—the defendant may choose to serve a period of imprisonment in default rather than pay the amount needed to satisfy the confiscation order. Once he has served such a period of imprisonment, clearly the proceedings must be regarded as at an end. I beg to move.

Lord Mishcon

May I put just a brief question? Has the noble Lord considered, and if not is he prepared to consider, whether in this class of offence where we are making exceptional laws it would not be proper to give no alternative in regard to a confiscation order and to serve a term of imprisonment in default? One of the matters raised on Second Reading, I remember, was that there are many people who would prefer a term of imprisonment and come out with their ill-gotten gains in their millions. One wonders, therefore, whether the confiscation order should not be an order made by the court without any alternative being given to the defendant.

Lord Glenarthur

That is certainly a matter upon which I shall need to reflect and seek advice. I undertake to do precisely that.

Lord Harris of Greenwich

Before we move from that point, obviously one would, like the noble Lord, Lord Glenarthur, want to consider this matter before coming to a firm conclusion. However, I think there is significant merit in what the noble Lord, Lord Mishcon, said. There are—and one is talking about very substantial sums of money—some people who would far prefer to serve a sentence of imprisonment. However, the noble Lord says that he will reflect on this issue, and perhaps after he has done so he will correspond with us. It may well be that we are entirely mistaken, but we should like to think about it and we should be aided in doing that were we to have some helpful advice from the noble Lord.

Lord Glenarthur

I shall certainly do my best to provide helpful advice before the next stage of the Bill.

On Question, amendments agreed to.

Clause 28, as amended, agreed to.

Clause 29 agreed to.

Clause 30 [Short title, commencement and extent]:

Lord Glenarthur moved Amendment No. 42: Page 30, line 7, leave out ("27") and insert ("25")

The noble Lord said: This is simply a drafting amendment. I beg to move.

On Question, amendment agreed to.

Lord Glenarthur moved Amendment Nos. 43 and 44:

Page 30, leave out line 12 and insert— (" (3) Subject to subsection (4) below, this Act")

Page 30, line 13, at end insert— (" (4) Section 16 of this Act extends also to Scotland and section [Prohibition of supply etc. of articles for administering controlled drugs] extends also to Scotland and Northern Ireland.")

The noble Lord said: I have already spoken to these amendments. I beg to move them together.

On Question, amendments agreed to.

Clause 30, as amended, agreed to.

In The Title:

Lord Glenarthur moved Amendment No. 45: Line 3, after ("trafficking") insert ("to make provision about the supply of articles which may be used or adapted for use in the administration of controlled drugs")

The noble Lord said: I spoke to this amendment earlier. I beg to move.

On Question, amendment agreed to.

House resumed: Bill reported with the amendments.