Omar, R. v

Where a defendant controls a company as his alter ego and uses it as a vehicle for fraud, the court may lift the corporate veil. It may then treat the benefit obtained through the company, and assets controlled by the defendant, as his personal benefit and realisable assets for a confiscation order under Criminal Justice Act 1988, section 71.

The court must guard against a serious or real risk of unfairness, including double recovery. Equal division of benefit between co-defendants is not a mandatory rule. A defendant with greater assets is not entitled to a reduced order merely because other participants have fewer assets.

The appellant was convicted at Birmingham Crown Court of cheating the Public Revenue arising from a VAT fraud conducted through a company, Cambridge Computer Supplies Ltd. The company had begun as a legitimate business but was later used as a vehicle for the fraud. The sentencing judge made a confiscation order of £790,649 under section 71 of the Criminal Justice Act 1988.

The appellant appealed only against that order. He contended that the benefit belonged to the company, that company-funded properties should not be treated as his assets, and that the order was unfair in light of his wife’s shareholding and the positions of his co-defendants. The central issue was whether the judge had properly attributed the benefit and assets to the appellant without creating a serious risk of injustice.

1. Appeal dismissed. The confiscation order was within the sentencing judge’s discretion.

2. The company’s legitimate origin did not prevent the corporate veil being lifted. The decisive facts were that the appellant used it for fraud and controlled it as his alter ego. He made the relevant decisions, including decisions concerning the properties. The judge was therefore entitled to treat the benefit obtained while the company participated in the fraud as the appellant’s benefit, and to treat the relevant company-funded properties as assets available to him.

3. The Court applied the fairness principles in R v Benjafield [2003] 1 AC 1099. A confiscation order must not create a serious or real risk of unfairness or injustice. The judge had properly considered double recovery. The recoverable sums ordered against the co-defendants left an unsatisfied balance of benefit greater than the appellant’s assets. There was therefore no risk that the orders would recover more than the benefit from the relevant offence.

4. There was no unfairness in attributing the relevant assets to the appellant notwithstanding his wife’s nominal shareholding. She took no active role in the company or its decisions. Nor was equal division of the total benefit between the three participants required. R v McKechnie and Gibbons [2002] EWCA Crim 3161 showed only that division may be a useful starting point in an appropriate case; it is not the sole permissible approach.

5. The fact that the appellant was ordered to pay more than his co-defendants reflected his greater available assets. The confiscation regime does not require a proportionality exercise reducing an order against an asset-rich defendant because another defendant has insufficient assets.

• Court of Appeal (Criminal Division): By leave of the single judge, dismissed the appeal against the confiscation order: [2004] EWCA Crim 2320.

• Crown Court at Birmingham: Following conviction for cheating the Public Revenue, HHJ Stanley imposed an 18-month sentence and made a confiscation order of £790,649 under section 71 of the Criminal Justice Act 1988.