Crime Team Newsletter - Fourth Edition
Welcome to the September Edition of the 33 Bedford Row Crime Team Newsletter. It’s hard to believe but Autumn is just around the corner. The impact of COVID-19 on our professional and personal lives abounds and will no doubt continue to do so for some time.
On that theme, and others, we have some very interesting reads this month:
Daniel Walker and Nigel Edwards Q.C. - 'Bounce Back Loan Scheme - Fraud and Money Laundering';
Andrew Kerr - 'CTL applications and COVID-19 ';
Ylenia Rosso - 'Police use of Automated Facial Recognition breaches rights to privacy, data protection and equality'; and
Annahita Moradi - 'Solitary punishment in Young Offenders Institutions '.
Our team continues grow and we have the pleasure of welcoming:
John Black Q.C.
Gul Nawaz Hussain Q.C. [door tenant]
John – Paul MacNamara [door tenant]
Wishing everyone a good month.
[Head of Crime Team]
Bounce Back Loan Scheme – Fraud and Money Laundering
In last month’s article ‘Furlough Fraud- The Coming Storm’, we considered ‘furlough fraud’ scrutiny, investigation and potential charge arising out of the alleged misuse of the Coronavirus Job Retention Scheme (‘CJRS’).
Mirroring developments in that area, it has been widely reported by the national media that two arrests have taken place for suspected fraud regarding the Bounce Back Loan Scheme (‘BBLS’):
- It was reported that on 17th June 2020, following a drugs search, documentation was uncovered that linked two men to an alleged BBLS fraud, amounting to some £500,000. Both men were taken to the police station but have subsequently been released under investigation.
- Following an arrest on 12th August 2020, a woman was arrested for suspected Bounce Back Loan Scheme Fraud to the tune of £110,000.
The latest statistics from HM Treasury show that by 16th August 2020, 1,174,854 loans had been approved totalling £35.47 billion.
This article considers the inevitable parallel between ‘Furlough Fraud’ and ‘Bounce Back Loan Fraud’. The BBLS has been commended by many as providing a real lifeline to small and medium sized businesses during the COVID-19 pandemic. However, (as with the furlough scheme) the ease with which an application can be made and funds granted, renders the scheme susceptible to abuse. Like Furlough Fraud, the fact it may have been abused by some means many others will face the scrutiny of investigation, interview and potential charge.
What is the Bounce Back Loan Scheme?
The BBLS was introduced as one of the measures to assist small and medium sized businesses during the COVID-19 crisis.
The BBLS allows businesses to claim a loan of £2,000 up to a maximum of 25% of their turnover which is capped at £50,000. The loan is guaranteed by the government and for the first 12 months businesses taking the loan would not need to pay any fees and/or interest on it. After the 12-month grace period, the loan would attract 2.5% interest and would need to be paid within 6 years.
The basic application criteria for the BBLS are that:
- the business is based in the UK;
- the business was established before the 1st March 2020; and
- the business has been adversely impacted by the coronavirus.
The application is made to one of the 11 lenders, which include many national banks. As noted on the gov.uk website the ‘lender will ask you to fill in a short online application form and self-declare that you are eligible’.
The simplicity of the application process, the speed at which it is processed and the requirement to simply ‘self-certify’ fulfils the aim of getting funds as quickly as possible to those in need. However, unfortunately, the simplicity of the process has also enabled those who wish to abuse it to do so.
We suspect that banks, who have already begun to close down some business accounts where the only transactions relate to receiving and/or withdrawing BBLS funds, will play a pivotal role (whether they want to or not) in uncovering suspected BBLS fraud.
Bounce Back Loan Fraud
The two cases identified at the outset of this article highlight the type of conduct which will lead to arrest, investigation and potential charge.
We suspect that the most common types of criminality in this area will involve conduct such as:
- A ‘shell’ company being used to apply for a loan, then diverting and/or laundering money through multiple accounts, potentially making use of ‘mule’ accounts, to try and make detection of the source of the payment difficult to uncover;
- Use of fictitious paper trails when ‘self-certifying’ to ensure the maximum loan available is made to them;
- Rogue directors/employees using the business to apply for a loan through newly created business accounts and diverting funds into personal accounts; and
- Organised crime groups paying and/or pressurising vulnerable individuals connected with small and medium businesses with the offer of payment to take out funds on the promise that the loan will be repaid by them when it becomes due.
Given the nature of the conduct is so wide-ranging, the range of offences which could cover such conduct are equally vast - whether aimed at businesses, directors or individuals.
Cases could be prosecuted under:
- The Fraud Act 2006, with the most obvious example being Fraud by False Representation under section 2. Other offences under the Act could be engaged, including Fraud by Abuse of Position under section 4, Making or Supplying Fraudulent Articles under section 7 and Participating in Fraudulent Business under section 9; and/or
- Money Laundering, under sections 327-329 of the Proceeds of Crime Act 2002.
Each offence involves very careful scrutiny of the alleged wrongdoing combined with the state of mind of the alleged wrongdoer.
The BBLS has provided a valuable lifeline for some small and medium sized businesses. However, given the ease in which an application can be made and the reliance on ‘self-certification’, it is little wonder that we are starting to hear of arrests being made in relation to BBLS fraud.
The pursuit of businesses, directors and individuals who have abused the scheme will mean, as with the conclusions regarding ‘furlough fraud’, that others will get caught up in the scrutiny. It is likely many businesses who have taken out legitimate loans will still face scrutiny, potential auditing and investigation as claims are scrutinised. It is, therefore, of paramount importance that all those who have taken out such loans maintain full and complete records evidencing the claim, receiving of the funds and arrangements put in place to pay back the loan.
Nigel Edwards Q.C.
CTL Applications and COVID-19
In March 2020 the Crown Court came to a halt and our system of trials by jury stopped.
Since then there has been considerable work at trying to re-start them: other venues were proposed, so-called Nightingale Courts have opened – including one in a conference room of the Ministry of Justice this week.
What we now have is all (or mostly) Court centres open and hearing jury trials of around one to two a week. There is also a pilot run by HMCTS to operate Covid Hours: so one Court room will hear a trial between 9am to 1pm, it will then be cleared and cleaned, and a separate trial with a different Judge and staff will hear a second trial from 2pm to 6pm.
This is to try to overcome the backlog which currently stands at around 40,000 cases.
The fact remains though that that is a substantial number of cases, and there is little prospect of overcoming it in the next six months. Furthermore, there is as of yet little guidance on how to cope with multi-handed cases where the rules of 2m social distancing apply in the dock.
Some Courts are doing the only thing they can: adjourn them off until 2022! The rationale being that everything would have returned to normal by then (?).
Where does this leave defendants in custody?
A protocol was agreed between the Senior Presiding Judge, HMCTS, and the CPS at the beginning of Lockdown dealing with Custody Time Limit applications. It is at pains to stress that CTL extensions still lie within the exclusive judicial discretion of the Judge concerned. However, at para. 15 it says this:
The coronavirus pandemic is an exceptional situation and the adjournment of CTL trials as a consequence of government health advice and of directions made by the Lord Chief Justice amounts to good and sufficient cause to extend the custody time limit.
At the beginning of this outbreak I think few of us would disagree, but as the months rolled-by we are increasingly seeing the limits of the state.
Anyone reading this article who has been in practice over the last ten years will have seen that there have been huge reductions in the Ministry spend on justice. A significant number of Courts have closed, and not just old relics to the 19thCentury, but modernised Courts like Blackfriars Crown Court and Camberwell Green Magistrates Court for example.
The Bar Council and Law Society have pointed this out repeatedly. However, the picture emerging is that what with £2 trillion pounds in debt because of Covid-19, HM Treasury is being tight with UK plc.
With that in mind though it came as a welcome surprise when I noted in the 4 August 2020 edition of CrimeLine the Judgment handed down by HHJ Raynor in a case that has not been named yet.
In this case an application to extend the CTL appears to have been made by the CPS in line with the current above-mentioned CTL protocol.
However, the Learned Judge refused the application. At para. 10 of the published rulling he cited Archbold 2020 1-448:
“lack of money provided by Parliament will rarely, if ever, justify an extension of a time limit” In R. (Raeside) v Crown Court at Luton  EWHC 1064 (Admin);  1 W.L.R. 2777, DC, it was added that, in the overwhelming majority of cases (“routine cases”), the unavailability of a judge or a court room will not provide a good and sufficient cause, absent other circumstances; it will only be in a case of real complexity or one that requires a particular judge, such as a High Court judge or a judge authorised to try murder or attempted murder, that the unavailability of a judge or a court room might well, of itself, go a long way to establishing good and sufficient cause.
In rejecting the application, the Judge observed at para. 25:
- In the current situation, the lack of available courtrooms to hear jury trials for defendants in custody is neither a good nor a sufficient cause to extend the custody time limit in this case;
- The lack of money provided by Parliament to provide sufficient space for trials to be conducted does not amount to a good nor a sufficient cause to extend the custody time limit in this case;
- The delays in bringing cases to trial which are being experienced by the courts will not be alleviated by the current steps that are being taken by Her Majesty’s Court Service;
- The Protocol was a temporary measure;
- The Protocol does not override independent judicial discretion and every case must be decided on its own merits. The Protocol contains rules of practice only and the relevant law is unaffected. The judge responsible for deciding each application will apply the law. In making this ruling I am applying the law.
He then commented:
If sufficient investment had been made to create dozens (not ten) additional courts to undertake criminal trials then the situation regarding CTL extensions might be different. But it is not. The reality is that many defendants in custody will not be tried until well into 2021.
This case is a timely reminder to all parties that CTL applications cannot simply be nodded through, notwithstanding a global pandemic, and notwithstanding any Protocol.
Furthermore, while this is not a binding decision, it is a helpful decision, at least for defence practitioners, that rather persuasively shifts the cause of the backlog away from being the fault of Covid-19, to that of UK Government inaction.
This case also reminds all those defending that when now facing a CTL application, they should oppose, and they now have ammunition to do so.
It is worth remembering that section 22(13) of the Prosecution of Offences Act, 1985 specifically preserves the right of judicial review in a CTL extension decision.
In light of this decision, any defendant who has suffered a CTL extension could bring a JR, as indeed could any prosecutor who has seen their otherwise Protocol compliant application kicked out of court.
Police use of Automated Facial Recognition breaches rights to privacy, data protection and equality.
On 11 August 2020, the Court of Appeal, in the case of R (Bridges) v Chief Constable of South Wales Police & Information Commissioner  1 WLR 672 ruled that the use of automated facial recognition technology (AFR) breaches privacy rights under Article 8 of the European convention of Human Rights, violated data protection laws and that its use by South Wales Police (SWP) inadequately protected against discrimination.
What is AFR?
The case concerned “AFR locate”: a software which captures faces from a CCTV live feed to be compared with biometric data of faces on a “watchlist” of facial images. The technology is deployed by police in areas where they feel crime may occur, such as mass gatherings. The watchlist includes people suspected of having committed a crime, persons of interest for intelligence purposes and vulnerable people in need of protection. If enough of the scanned biometric data captured by the CCTV is similar to that of the image on the watchlist, a similarity score is generated and passed on to an operator to review. If a possible match is confirmed, the police may undertake an intervention and if deemed appropriate, use statutory powers to stop and search or arrest the person.
The algorithm is not perfect; false positives or false negatives can be generated. From an equality perspective, the Court found that SWP could not verify that the software lacked demographic bias.
Facial images that are not matched and biometric templates are automatically deleted. However, CCTV feeds to AFR Locate deployments and match reports (including personal information) are kept for 31 days. Whilst SWP take steps to inform the public of the deployment of AFR locate, the biometric scan takes place without the person’s knowledge or consent.
The police have been trialling the use of AFR Since 2017 and SWP deployed AFR Locate on about 50 occasions between May 2017 and April 2019 at a variety of public events. It is estimated that SWP have scanned about 500,000 people by May 2019 and approximately 61 arrests have resulted from AFR locate’s surveillance technology.
Mr Bridges, is a civil rights activist whose face was captured on Cardiff High Street in 21 December 2017 and at a peaceful protest on 28 March 2018. Mr Bridges claimed that on neither occasion did he see any signage or receive any warning that AFR locate was being deployed.
On 21 December 2017 there were three watchlists which rendered ten possible matches; two were false positives. Of the eight true matches there were two arrests. On 27 March 2018, there were also three watchlists, although these rendered no false alerts and no arrests were made. Mr Bridges was not included on any watchlist.
Mr Bridges was represented by the Human Rights group Liberty. He argued that the surveillance tool breached his rights to privacy and data protection. He also argued that the surveillance indirectly discriminated against people on the grounds of sex and/or race because it produced a higher rate of positive matches for women and black and minority ethnic faces.
Grounds of appeal
In September 2019 the High Court dismissed Mr Bridges’ claim finding that the interference of the technology with Article 8 ECHR was lawful, falling within the ambit of proportionality with what is considered “necessary in a democratic society” (Article 8(2) ECHR).
Leave to appeal was granted on 5 grounds on that basis that the High Court erred in its conclusions that:
- SWP used AFR locate lawfully under Article 8 ECHR,
- SWP properly engaged the principle of proportionality under Article 8(2) of the ECHR
- SWP adequately carried out a relevant data protection impact assessment prior to the use of the technology in accordance with Section 64 of the Data Protection Act (DPA) 2018
- The Divisional Court need not reach a conclusion on the question of whether SWP had in place an “appropriate policy document” within the meaning of Section 42 DPA 2018.
- SWP complied with the Public Sector Equality Duty (PSED) under Section 149 of the Equality Act 2010.
The appeal was successful on grounds 1, 3 and 5 but failed on grounds 2 and 4.
Ground 1: The Court found fundamental deficiencies in SWP’s policies governing the use of AFR locate. Specifically, the Court found that the governing framework did not “sufficiently set out the terms on which discretionary powers can be exercised by the police and for that reason do not have the necessary quality of law” and that the police’s discretion to use the technology was unlawfully broad.
Ground 2: The Court found that since ground 1 was successful it need not, in theory, address the question on proportionality. Nevertheless, it chose to do so and found that the divisional court applied a correct weighing exercise in balancing the interests of Mr Bridges and that of the wider community. It found that the impact on each of the other members of the public present at the same events as Mr Brides in December 2017 and March 2018 was “negligible”. It emphasised that the test was not mathematical; just because Mr Bridges felt the impact does not mean other persons were also affected. Accordingly, the surveillance was not disproportionate.
Ground 3: Section 64 of the Data Protection Act states that 'Where a type of processing is likely to result in a high risk to the rights and freedoms of individuals, the controller must, prior to the processing, carry out a data protection impact assessment.' This must include, amongst others, an assessment of the risks to the rights and freedoms of data subjects and the measures envisaged to address those risks. The Court found that the DPIA failed to adequately assess either.
Ground 4: Section 42 of the DPA 2018 was not in force at the time Mr Bridges submitted his claim and therefore the law could not be violated in this respect.
Ground 5: Section 149 of the Equality Act 2010 states that a public authority must, in the exercise of its functions, have due regard to the need to eliminate unlawful discrimination, harassment and victimisation and other conduct prohibited by the Act. One way of having such “due regard” is to “remove or minimise disadvantages suffered by persons who share a relevant protected characteristic that are connected to that characteristic”. The Court found that it could neither be proved that AFR locate was inherently biased nor that generated results would not be biased. The automatically deleted images could not be analysed for potential bias and SWP could not establish the dataset on which AFR locate was trained. Accordingly, SWP could not establish whether there was any potential for a demographic imbalance in the relevant training data. As a result, SWP’s use of AFR locate was not PSED complaint.
The Judgments’ impact
The Court’s ruling relates only to the way SWP have used the surveillance technology; AFR locate technology has not been banned. Indeed, whilst Liberty calls this landmark ruling “ground breaking” and “a major victory in the fight against discriminatory and oppressive facial recognition”, the SWP seem determined to continue using the technology once a law-abiding policy for its use can be established. The SWP have publicly stated that there “is nothing in the Court of Appeal judgment that fundamentally undermines the use of facial recognition to protect the public. This judgment will only strengthen the work which is already underway to ensure that the operational policies we have in place can withstand robust legal challenge and public scrutiny.” It is clear therefore that the fight against intrusive technology is far from over.
Solitary Punishment in Young Offenders Institutions
Concerns are rife about the practice of subjecting children to solitary confinement in young offender institutions (YOIs). This is defined by the UN’s ‘Mandela rules’ on the standard minimum treatment of prisoners as the ‘confinement of prisoners for 22 hours or more a day without meaningful human contact’. Official reports of children being separated from their peers and having their access to meaningful contact, adequate healthcare and activities severely restricted strongly indicate that the UK may be implementing practices that meet the definition.
The case of AB
AB had a traumatic childhood of physical and emotional abuse – including witnessing domestic violence and his uncle’s fatal overdose. He was eventually diagnosed with ADHD, PTSD and conduct disorder. In and out of care, it was no surprise when he ended up at Feltham Young Offender Institute. Prejudice and deficiencies in the welfare and criminal justice systems frequently churn out care leavers and mental health patients as criminals. Underfunding and prevalent attitudes that young people in care are already on a pathway to delinquency mean that children like AB start off with an uphill battle.
At Feltham, AB found himself locked up alone in a cell for more than 22 hours a day and separated from his peers for more than 100 days in total. In January 2019, the court of appeal confirmed that his isolation breached human rights law because the correct procedures were not followed.
One year on, HM Inspectorate of Prisons (HMIP) found that ‘over half of children in YOIs … reported that they had been kept locked up and stopped from mixing with other young people as a punishment, including time spent in a segregation unit or in their own room’. It stated: ‘Nearly all separated children spent long periods of time in their cell without any meaningful human interaction. [Some] were unable to access the very basics of everyday life, including a daily shower and a telephone call. In the worst cases children left their cells for just 15 minutes a day.’
The government has denied placing children into solitary confinement. But the children’s commissioner has said, ‘Our research suggests that the conditions some children are exposed to do fit the definition.’ Locked away in segregation units – including one described by HMIP as ‘not suitable for children’ and ‘dark and oppressive’ with ‘dirty’ cells – it is hard to escape the conclusion that children are indeed being subjected to solitary confinement.
Prevention not punishment
The separation of children has a strong potential for triggering or exacerbating mental health issues and rage. This makes little sense when considering the primary aim of youth justice, which is not to punish children but to prevent recidivism. Children are by definition not mature – and this is reflected in their decision-making ability in development. Since children are more susceptible to making mistakes, youth justice must operate, where possible, to give them a meaningful chance to move on and succeed in life.
This cannot be achieved by separating a child, so that their access to other people, education and healthcare may be severely restricted, and they may be traumatised or re-traumatised by the experience of segregation. Indeed, HMIP’s 2020 report identified a key concern that the arrangements for separating children in YOIs did ‘not safeguard children’s well-being’.
One cited example of poor healthcare involved eight children with mental health presentations. Together, they served a total of 373 days of separation pending their transfers to hospital. During this time, none received the therapy they needed.
The HMIP report also noted that medics and managers sometimes failed to conduct daily and weekly checks on separated children. At Feltham, there was a lack of evidence of daily checks by managers or healthcare staff on four separated children at risk of self-harm or suicide. Even when such checks were made, ‘nurses often did not insist on the cell door being opened during their visits’.
On the issue of ‘meaningful contact’, HMIP inspected 57 children’s files. It found information missing from four files, such that it was impossible to draw any reliable conclusions from them. In over half of the remaining files, the child reported having no daily contact with unit staff. These findings present major concerns about the safeguarding of these and other children.
Meaningful contact, according to the guidance document on the Mandela rules, refers to ‘the amount and quality of social interaction and psychological stimulation which human beings require for their mental health and well-being. Such interaction requires the human contact to be face to face and direct (without physical barriers) and more than fleeting or incidental’.
Yet, one child told HMIP, ‘Staff literally open your door for two seconds to give you your food.’ Another said, ‘Some staff just forget about me and ignore me and then give me a yellow card for using my bell.’ A third child reported on the consequences of seeking meaningful contact with peers: ‘I have a behaviour target to stop shouting through my door to the other boys on the unit, which I think is really unfair ’cause it is literally my only chance to chat to anyone. We’re not arguing or anything, we’re just chatting, having a joke and checking up on each other.’
Transparency and accountability
Isolating children poses major health and safety risks. This renders consistent and accurate record keeping and information sharing crucial to help provide a basic line of defence. Without conceding the legitimacy of child segregation, adequate administrative systems – and staff compliance with them – would at least allow children’s welfare to be closely monitored.
According to the HMIP report, however, arrangements for separating children were generally so poor that managers could not find out ‘how many children [were] separated or for how long, or what interactions, education or healthcare input they have received’. This casts major doubt on the inspected YOIs’ administrative systems and their commitment to transparency and accountability. The lack of secure paper trails through which shortfalls could be identified and investigated, begs the question: if managers could not always access such basic data, how could anyone else?
Earlier this year, the former justice minister, Wendy Morton, responded to the damning HMIP report. She argued that separation may sometimes ‘be necessary to prevent someone seriously hurting themselves or others’ but conceded that the state was ‘failing some of the children’. It is yet to be seen whether the government’s promises to do better are more than fig-leaf responses to an ongoing scandal.
As a criminal defence barrister, I have seen the realities of the UK’s statistics on the demographics of criminalised children. My clients often fit at least one of these categories: care leaver, mental health concerns (diagnosed or not), and BAME or low-income background. With austerity and a criminal justice system imbued with prejudice, I have little faith that violations will stop with the case of AB.
Annahita Moradi reports for the Red Pepper on the treatment of children in YOIs. This article was published by, and is the property of, the Red Pepper.