Doraville Properties Corporation v HM Attorney General

JurisdictionJersey
CourtRoyal Court
JudgeJ. A. Clyde-Smith,Jurats Fisher,Grime,Clyde-Smith, Commr.
Judgment Date22 July 2016
Neutral Citation[2016] JRC 128
Date22 July 2016

[2016] JRC 128

ROYAL COURT

(Samedi)

Before:

J. A. Clyde-Smith, Esq., Commissioner, and Jurats Fisher and Grime

In the Matter of in the Matter of Doraville Properties Corporation and in the Matter of An Application for A Property Restraint Order In Rspect of the Recoverable Property of Mohammed Sani Abacha

And in the Matter of the Civil Asset Recovery (International Co-Operation) (Jersey) Law 2007

Between
Doraville Properties Corporation
Applicant
and
Her Majesty's Attorney General
Respondent

Advocate P. G. Nicholls for the Applicant.

Advocate M. T. Jowitt for the Respondent.

Authorities

Civil Asset Recovery (International Co-operation) (Jersey) Law 2007.

18 U.S.C.A. (United States Code Annotated) section 981(a)(1).

Black's Law Dictionary.

Aschroft v Iqbal 556 U.S. 662 (2009)).

Milne v The Queen [2014] HCA 4.

Director of Public Prosecutions v King [2000] 49 NSWLR 727; [2999] NSWSC 394.

United States v Funds on Deposit at Bank One, Indiana, 2010 WL 909092, (N.D.Ind. Mar. 9, 2010).

United States v Odom, No. No 03cr24-DCB, U.S. Dist. LEXIS 62351.

McGauley 279 F.3d at 70 (1st Cir). 2002.

SOCA v Perry [2013] AC 182.

United Nations Convention Against Corruption.

The Council of Europe Convention on Laundering, Search, Seizure and Confiscation of the Proceeds from Crime and the Financing of Terrorism 2005.

The United Nations Convention Against Transnational Organised Crime 2000.

The United Nations Convention Against Illicit Traffic in Narcotic Drugs and Psychotropic Substances 1988.

AG v Rosenlund and Another [2015] JRC 186.

Saccoccia v Austria 69917/01.

Proceeds of Crime (Enforcement of Confiscation Orders)(Jersey) Regulations 2008.

Showlag v Mansour [1995] 1 AC 431 at 440B.

In re IMK Family Trust [2008] JLR 250.

USA v Abacha [2015] 1 WLR 1917.

Proceeds of Crime Act 2002 (External Requests and Orders) Order 2005.

Dicey, Morris and Collins on Conflict of Laws, 15th edition.

Bujak v Solicitor General [2009] NZSC 42.

HKSAR v Wayland and Anor [2014] HKCFA 51.

Financial Transaction Reports Act 1988.

Re Commissioner of the Australian Federal Police [2012] NSWSC 1533.

Commissioner of the Australian Federal Police v Mulder [2013] NSWSC 993.

Proceeds of Crime (Jersey) Law 1999.

Proceeds of Crime (Cash Seizure)(Jersey) Law 2008.

R v Keith and Ors [2010] EWCA Crim. 477.

United States v Seher 562 F. 3d 1344.

Puche 350 F.3d at 1154.

United States v Funds on Deposit at Bank One, Indiana, 2010 WL 909091.

United States v Odom, No No 03cr24-DCB, US Dist. LEXIS 62351.

Williams and Ors v R [2013] EWCA Crim 1262.

Hearing (Criminal) — application for property restraint order imposed by the Court on 25 February 2014 to be discharged.

CONTENTS OF THE JUDGMENT

Paras

1

Introduction

1–4

2

Background

5–11

3

The Default Judgment

12–15

4

The 2007 Law

16–25

5

Doraville's case in outline

26

6

Expert evidence

27–41

7

Doraville's case in more detail

42–45

8

The Default judgment has not “found” any relevant fact

46–52

9

If it has “found” anything, the US court has not “found” that the Doraville Assets are “tainted property”

53–76

10

Discussion and Decision

77

11

The International Background

78–94

12

Characterisation of proceedings

95–99

13

Was there a finding for the purposes of the 2007 Law?

100–121

14

Tainted property

122–133

15

The Verified Complaint

134–150

16

Property “used in … unlawful conduct”

151–167

17

Article 1 of the First Protocol

168–176

18

Conclusion

177–178

THE COMMISSIONER:
1

The applicant (“Doraville”) applies for the property restraint order imposed by the Court on 25 th February, 2014, under Article 6(3) of the Civil Asset Recovery (International Co-operation) (Jersey) Law 2007 (“the 2007 Law”) to be discharged.

2

The property restraint order was granted in support of asset forfeiture proceedings brought by the United States of America (“the US”), through its Department of Justice, in which on the 6 th August, 2014, it obtained a Default Judgment in rem (“the Default Judgment”) against inter alia all assets held in account number 80020796 in the name of Doraville located at Deutsche Bank International in Jersey (“the Doraville Assets” or “the Bank Account”).

3

The property restraint order was made in respect of the recoverable property situated in Jersey of Mohammed Sani Abacha and specifically over the Doraville Assets. Under Article 7(5) of the 2007 Law an application to discharge such an order can be made by any person affected by it and in this case the application is made by Doraville and not by Mohammed Sani Abacha.

4

The application is made on the basis that the Default Judgment is not an external civil recovery order for the purposes of the 2007 Law and cannot therefore be registered or form the basis of a property restraint order under the 2007 Law.

Background
5

The application by the US for the Default Judgment was supported by a Verified Complaint (the source for this background) declared under penalty of perjury by Deborah LaPrevotte, a supervisory special agent for the Federal Bureau of Investigation, on 15 th November, 2013. It is alleged that during the military regime in Nigeria of General Sani Abacha, he and his son, Mohammed Sani Abacha, together with their associate Abubakar Atiku Bagudu (and others) embezzled, misappropriated, defrauded and extorted hundreds of millions of dollars from the government of Nigeria, which were then laundered through the US in breach of its money laundering laws.

6

Three schemes are described, of which two are most relevant for the purposes of this judgment. Under the first scheme, known as the Security Votes Fraud, public funds were systematically embezzled from the Central Bank of Nigeria on the false pretence that the funds were necessary for national security. The Verified Complaint talks in terms of billions of dollars being involved. The proceeds were then transported into and out of the US in violation of US law and poured into bank accounts in London. Under the second scheme, known as the Debt Buy-Back Fraud, Nigeria was defrauded of more than $282M by being caused to repurchase Nigeria's own debt for more than double what Nigeria would have paid to repurchase the debt on the open market. The proceeds of these schemes and other criminal activity were used to purchase US dollar denominated Nigerian Par Bonds paid through New York and guaranteed by the US, on which very substantial sums of interest were earned. The interest and proceeds of sale of the Nigerian Par Bonds were paid into the accounts of corporate entities registered in the BVI of which Doraville is one.

7

General Abacha became President of Nigeria through a military coup on 17 th November, 1993, and held office until his death on 8 th June, 1998. His first son, Ibrahim Sani Abacha, participated in these frauds, but died in a plane crash in January 1996. After his death, Mohammed Sani Abacha, who is General Abacha's second son, assumed his role and is alleged to have helped launder more than $700M in cash stolen directly from Nigeria's public coffers. Abubakar Bagudu played an instrumental role in setting up and executing the complicated transactions used to launder the proceeds of the conspiracy. He was a signatory and/or a corporate representative designated on many of the accounts concerned, in particular Doraville's bank accounts. Doraville itself was incorporated on 2 nd July, 1997.

8

On 18 th May, 2003, Abubakar Bagudu was arrested in Houston, Texas on warrants issued by Jersey. He subsequently entered into an agreement with Nigeria and Jersey to return more than $163M of Doraville's assets to the Nigerian government, in exchange for Jersey's withdrawal of its extradition request and the requirement for his return to Nigeria for possible prosecution. He transferred $163M from the Bank Account to Nigeria which, according to him, represented his half of the assets of Doraville, the inference being that the remaining half were the assets of Mohammed Sani Abacha. All of the Nigerian Par Bonds are believed to have been sold or redeemed by 2007, and the current value of the Bank Account is approximately US$287M.

9

It would seem that on 28 th August, 2012, Nigeria made a request to the US for mutual assistance in recovering assets misappropriated from it pursuant to these various schemes and that in turn led to the proceedings which culminated in the Default Judgment being obtained on 6 th August, 2014.

10

In separate proceedings issued by Nigeria in Jersey against Doraville on 11 th May, 2016, shortly before the hearing of Doraville's application to discharge the property restraint order, it is asserted by Nigeria that on 14 th July, 2014, Mohammed Sani Abacha entered into an agreement with it in full and final settlement of all claims between them and under which all assets held in the Bank Account would be transferred to Nigeria. It is alleged in those proceedings that all of the assets within the Bank Account were misappropriated or otherwise unlawfully obtained from Nigeria by Mohammed Sani Abacha, Abubakar Bagudu and others and Nigeria seeks a declaration that the monies held in the Bank Account are held as constructive trustee for Nigeria, or alternatively that it is beneficially entitled to the same. The US has applied to intervene in these proceedings and procedural directions have been given.

11

Advocate Nicholls, for Doraville, informed us that Doraville accepted that the funds within the Bank Account should be remitted to Nigeria and that the proceedings issued by Nigeria in Jersey would not be resisted. Notwithstanding this, he declined, when pressed, to admit on behalf of Doraville, that the funds within the Bank Account constitute the proceeds of crime.

The Default Judgment
12

The US proceedings are proceedings in rem to forfeit...

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