The Serious Organised Crime Agency v Namli & Ors

In civil recovery proceedings, the claimant must prove on the balance of probabilities both unlawful conduct and that the property was obtained by or in return for it. Serious allegations require careful and critical assessment and cogent evidence, but no criminal conviction is required. A foreign acquittal is not conclusive and is evidence to be weighed with the case as a whole. An English court may reach its own conclusion where there is no procedural link with the foreign proceedings. Unexplained suspicious transactions may support adverse inferences without reversing the burden of proof. For mixed funds, only the portion attributable to unlawful conduct is recoverable. A loan is recoverable only where it was obtained by or in return for unlawful conduct; a mere but-for connection is insufficient.

SOCA sought a civil recovery order under sections 243 and 266 of the Proceeds of Crime Act 2002 concerning approximately US $7 million held by Topinvest Holding International Ltd at Coutts. The funds comprised six credits and subsequent investment profits. SOCA alleged that the money represented proceeds of fraud and money laundering connected with First Merchant Bank, owned and controlled by Mr Namli.

The defendants relied on Mr Namli’s acquittal in Turkey on money-laundering charges, disputed the alleged unlawful conduct, and contended that any tainted funds had been mixed with legitimate property. The central issues were whether unlawful conduct and the necessary causal connection with the credits had been proved, how the Turkish acquittal affected the assessment, whether foreign-law requirements were satisfied, and how loan-funded investment profits should be treated.

Disposition. A civil recovery order was made over the six credits and the recoverable profits, subject to the limited exclusions concerning the Euro account and profits attributable to Coutts loans.

1. Under the Proceeds of Crime Act 2002, the court had to decide on the balance of probabilities whether unlawful conduct had occurred and whether the property had been obtained by or in return for that conduct. The proceedings concerned the property, not merely Mr Namli’s personal wrongdoing. No criminal conviction was required.
2. The Turkish acquittal was not conclusive and created no formal presumption of innocence for the civil proceedings. It was evidence whose weight depended on the reason for the acquittal and the evidence as a whole. The absence of a procedural link with the Turkish proceedings permitted the court to reach its own conclusion. Strong language was permissible provided that the civil standard was applied and the judgment did not impose criminal liability or punishment.
3. The burden remained on SOCA. Nevertheless, the court could draw common-sense inferences from suspicious dealings, untruthful explanations, missing records and a failure to identify an innocent source where the defendant was able to do so. This did not reverse the burden of proof.
4. For foreign conduct, the dual-criminality requirement applied. Although Turkish law had not been proved, applying English law was not wholly artificial. The evidence showed knowing participation in the English, Lepkanich, Bank House and Laconia frauds, and established that the Turkish loan-backs constituted money laundering on the balance of probabilities.
5. Credits 1 to 4 were specifically proved to be recoverable. Credits 5 and 6 were also recoverable because the unexplained transactions, false explanations and surrounding evidence justified the inference that they represented unlawful proceeds. The judge did not decide the wider question whether common-law or equitable tracing principles could fill a proof gap under section 306.
6. Under section 307, profits accruing in respect of recoverable property were recoverable. However, a mere but-for connection did not make Coutts’s loans recoverable. As the loans were not proved to have been obtained by fraud, the profit attributable to the loan-funded investments, and the Euro investment profits, were excluded.