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Federal Court of Australia - Full Court |
Last Updated: 24 February 2009
FEDERAL COURT OF AUSTRALIA
Dunn v The Australian Crime Commission [2009] FCAFC 16
APPEAL – written request to Switzerland for assistance in a
criminal matter under the Mutual Assistance in Criminal Matters Act 1987
(Cth) – whether subsequent correspondence between the Swiss Federal
Office of Justice and the Criminal Division of the Commonwealth
Attorney-General’s Department constituted part of the request or
alternatively a new request – whether the failure of
the Commonwealth
Attorney-General or his delegate to sign the subsequent correspondence render
the original request or alternatively
the new request invalid – s 10
of the Act – whether Request, however constituted, was invalid by reason
that it
contained material which was misleading and/or because it failed to
contain material relevant to some of the allegations therein
– whether
primary judge applied a less onerous and incorrect test than required under
s 14 of the Act.
Mutual Assistance
in Criminal Matters Act 1987 (Cth) ss 10(1), 14, 219B, 40(1), 45
Treaty between Australia and Switzerland on Mutual Assistance in Criminal
Matters done at Berne in Switzerland on 25 November 1991, Articles 6 and
7
Mutual Assistance in Criminal Matters (Switzerland) Regulations 1994
(Cth)
Crimes Act 1914 (Cth) s 10
Customs Act 1901 (Cth)
s 219B
Telecommunications (Interception) Act 1979 (Cth)
s 45
Carmody v MacKellar
(1997) 148 ALR 210 referred to
Flanagan v Commissioner of Australian
Federal Police (1996) 60 FCR 149 referred to
George v Rockett
[1990] HCA 26; (1990) 170 CLR 104 referred to
Karina Fisheries Pty Ltd v Mitson
[1990] FCA 154; (1990) 26 FCR 473 discussed
Kennedy v Australian Securities &
Investment Commission [2005] FCAFC 32; (2005) 142 FCR 343 followed
Lego Australia Pty
Ltd v Parlaggio [1994] FCA 1286; (1994) 52 FCR 542 referred to
Lloyd v Costigan
[No 2] [1983] FCA 253; (1983) 76 FLR 279 referred to
GREGORY JOHN DUNN and MISTY MOUNTAIN PTY
LTD (ACN 009 113 759) v THE AUSTRALIAN CRIME COMMISSION, ATTORNEY-GENERAL OF THE
COMMONWEALTH
OF AUSTRALIA and COMMONWEALTH DIRECTOR OF PUBLIC
PROSECUTIONS
VID 341 of 2008
STRACHANS SA V ATTORNEY-GENERAL OF THE COMMONWEALTH OF AUSTRALIA,
THE AUSTRALIAN CRIME COMMISSION and COMMONWEALTH DIRECTOR OF PUBLIC
PROSECUTIONS
VID 340 of 2008
MOORE,
JESSUP & GILMOUR JJ
24 FEBRUARY
2009
MELBOURNE
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AND:
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THE COURT ORDERS THAT:
1. The appeal be dismissed. 2. The appellants pay the costs of the respondents.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal
Court Rules.
The text of entered orders can be located using eSearch on the
Court’s website.
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IN THE FEDERAL COURT OF AUSTRALIA
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VICTORIA DISTRICT REGISTRY
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VID 340 of 2008
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ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF
AUSTRALIA
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BETWEEN:
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STRACHANS SA
Appellant MISTY MOUNTAIN PTY LTD (ACN 009 113 759) Second Appellant |
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AND:
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THE AUSTRALIAN CRIME COMMISSION
First Respondent ATTORNEY-GENERAL OF THE COMMONWEALTH OF AUSTRALIA Second Respondent COMMONWEALTH DIRECTOR OF PUBLIC PROSECUTIONS Third Respondent |
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JUDGES:
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MOORE, JESSUP & GILMOUR JJ
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DATE OF ORDER:
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24 FEBRUARY 2009
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WHERE MADE:
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MELBOURNE
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THE COURT ORDERS THAT:
1. The appeal be dismissed. 2. The appellants pay the costs of the respondents.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal
Court Rules.
The text of entered orders can be located using eSearch on the
Court’s website.
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VICTORIA DISTRICT REGISTRY
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ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF
AUSTRALIA
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BETWEEN:
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AND:
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VID 340 OF 2008
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BETWEEN:
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STRACHANS SA
Appellant |
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AND:
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ATTORNEY-GENERAL OF THE COMMONWEALTH OF AUSTRALIA
First Respondent THE AUSTRALIAN CRIME COMMISSION Second Respondent COMMONWEALTH DIRECTOR OF PUBLIC PROSECUTIONS Third Respondent |
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DATE:
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PLACE:
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REASONS FOR JUDGMENT
Introduction
1 These appeals are from orders dismissing applications challenging the validity of a written request made to Switzerland by a delegate of the Commonwealth Attorney-General dated 16 March 2005 (the Request) in accordance with the Mutual Assistance in Criminal Matters Act 1987 (Cth) (the Mutual Assistance Act) and the Treaty between Australia and Switzerland on Mutual Assistance in Criminal Matters done at Berne in Switzerland on 25 November 1991 (the Treaty) which form part of the Mutual Assistance in Criminal Matters (Switzerland) Regulations 1994 (Cth) ("the Regulations"). The Request was made in the course of what became known as Operation Wickenby, being criminal investigations undertaken by the Australian Crime Commission (ACC) into the conduct of certain persons suspected of having committed serious offences against Commonwealth law. 2 Section 10(1) of the Mutual Assistance Act provides that "A request for international assistance in a criminal matter that Australia is authorised to make under this Act may be made only by the Attorney-General". Section 40(1) provides that the Attorney-General may delegate all or any of his or her powers under the Act to an officer of the Attorney-General’s Department (the AGD), expressly including his or her powers under s 10. 3 The Request asked the Swiss authorities to obtain business records from Strachans SA, an accountancy services firm in Geneva and from Corner Banca SA, a private banking institution based in Lugano. The Request stated that the records were required for "the investigation into, and possible prosecution of," 17 named individuals, including the first appellant, Dunn, who were suspected of tax fraud and conspiracy offences against laws of the Commonwealth of Australia. Misty Mountain Pty Ltd was also named in the Request as trustee for a unit trust which was "beneficially owned by" Dunn. 4 Correspondence in relation to the Request ensued between the Swiss Federal Office of Justice and the Criminal Justice Division of the AGD. The correspondence emanating from Australia in relation to the Request was dated 26 May 2005, 15 November 2005, 7 December 2005 and 2 June 2006 ("the subsequent correspondence"). None of this correspondence was signed by the Attorney General or his delegate. 5 The Request was, in part, executed in June 2005 when the Swiss Authorities searched for and seized, relevantly, certain business records from Strachans SA premises in Geneva. It is not known what records were seized. None have been sent to Australia. To that extent the Request remains executory.
The judgment appealed from
6 The primary judge rejected the appellants’ contention that the subsequent correspondence, including attachments, formed either part of the Request or constituted a new request but concluded that it was merely correspondence which dealt with various aspects of the Request: [23]. Accordingly his Honour concluded that the fact that none of that correspondence was signed by the Attorney-General or his delegate did not offend s 10(1) of the Mutual Assistance Act. 7 The appellant had complained that the Request and the subsequent correspondence contained errors such that Australia had failed to satisfy its obligations under s 14 of the Mutual Assistance Act and Article 7 of the Treaty. The alleged errors included omission of material facts, the inclusion of vague and unsubstantiated allegations and the making of false allegations. 8 To the extent that this complaint relied upon a challenge to the subsequent correspondence as forming part of the Request this was rejected for the same reason as the case concerning non-compliance with s 10(1) of the Mutual Assistance Act. 9 Article 7(1)(b) of the Treaty provides that a request must include "... a description of the essential acts or omissions alleged or sought to be ascertained." The primary judge concluded that this did not create a general obligation of disclosure of "all material facts". The relevant obligation, his Honour found, which was imposed by Article 7(1)(b), did not extend beyond a requirement that the Request describe the essential acts or omissions alleged or which it was anticipated the investigation might ascertain. His Honour was persuaded that sufficient information was provided in the Request to satisfy Australia’s obligations under Article 7(1)(b) of the Treaty.
The Appeals
10 The appellant in VID340 of 2008 is Strachans SA. The appellants in VID341 of 2008 are clients of Strachans SA, who were named in the Request. It is convenient to deal with both appeals together. They substantially overlap. Whilst the primary judge delivered two separate judgments, the reasons for the judgment appealed from in VID341 of 2008 (the Dunn and Misty proceeding) were adopted in the reasons for the judgment appealed from in VID340 of 2008 (the Strachans proceeding). The relevant documents are common to both matters, and the appeal books have been consolidated.
The Notices of Appeal
11 The notice of appeal in the Dunn and Misty proceeding contains 16 grounds of appeal. The notice of appeal in the Strachans proceeding adopts without specification some grounds from the Dunn and Misty proceeding, and adds two further grounds. 12 The appellants abandoned grounds 10, 11, 12, 13, 14 and 16 in both the Dunn and Misty proceeding and the Strachans proceeding to the extent that those grounds were adopted there. It was submitted in the Dunn and Misty proceeding that ground 8 was not abandoned. However it was not the subject of submissions. It is unnecessary for the disposition of the appeal in that matter for the legal question raised to be answered. 13 There is, as we have indicated, considerable overlap between the various grounds of appeal. The appellants’ submissions identify, as alternatives, two principal arguments in support of their contention that the primary judge erred in concluding that the Request was lawfully made. 14 First, they contend that the subsequent correspondence to the Swiss Federal Office of Justice forms part of the Request. The appellants contend that because the subsequent correspondence was not signed by the Attorney-General or his delegate the Request was invalid as it was not made "only" by the Attorney-General as required by s 10 of the Mutual Assistance Act: grounds 1, 4 and 5. 15 Alternatively, they contend that the subsequent correspondence constituted new and separate requests under the Mutual Assistance Act that were invalid because they were not made "only" by the Attorney-General: ground 6. 16 In addition, in the Dunn and Misty proceeding the appellants also contend that the primary judge erred in:
1. rejecting their submissions that the Request was invalid because it contained material that was misleading or wrong, contained mis-descriptions, and failed to contain material relevant to some of the allegations and assertions made therein;
2. failing to apply the correct test in relation to s 14 of the Mutual Assistance Act.
17 The notice of appeal in the Strachans proceeding contends that, in two specific respects, the Request or the subsequent correspondence was misleading, and therefore invalid. These repeat two of the complaints levelled in the Dunn and Misty appeal. We will deal with the two alternative arguments together and then turn to the question of invalidity said to arise by reason of factual inaccuracies, misdescriptions and lack of full disclosure of relevant material. .
Grounds 4, 5 and 6: The subsequent correspondence was "part" of the Request alternatively a new request or requests
Factual Background
We refer to the above mentioned request. The Examining Magistrate has carefully examined this request and is (sic) the view that it could be executed only partially in its actual state. The request does not fulfil some of the requirements of Swiss law in order to grant the requested assistance.
18 The Request, with parts directed to persons other than the appellants omitted, is set out in Schedule 1 to these reasons. 19 The following background in respect to the subsequent correspondence is not contentious and is largely taken from the reasons of the primary judge at paras [9]-[13]. 20 The Swiss Federal Office of Justice responded to the Request by letter dated 18 May 2005 addressed to Ms Gibbins, a legal officer with the Criminal Justice Division of the AGD who had signed the letter under cover of which the Request had been sent. She was not a delegate of the Attorney-General. The letter was written by Mr Nicolas Bottinelli who wrote:
He drew attention to Article 2 of the Treaty under which Switzerland can refuse assistance in fiscal matters and went on to deal with certain aspects of Swiss criminal law. He continued:
For all the above mentioned behaviour, Switzerland cannot grant assistance. Generally speaking, the Australian request does not fulfil the Swiss requirements under those (sic) aspects:- The request must describe as exactly as possible which fraudulent means were used in order to obtain tax decisions that were illegitimate (sic) favourable for the tax payers; for example: production to the fiscal authorities of false commercial accounts which includes forged bills or false debts;
- The request should also indicates (sic) if the State of Australia was really defrauded, or if it was only an attempt.
Dealing specifically with the allegations made against Mr Dunn, Mr Bottinelli asked "which fraudulent means have been used in order to get the money out of Australia?"
Enclosed is an urgent letter in response to your facsimile dated 18 May 2005 about the mutual assistance request in the matter of Operation Wickenby. In your facsimile you sought clarification of the request in light of the requirements of Swiss domestic law regarding fiscal matters. 2. Attached is a letter from the Australian Crime Commission which clarifies the request. This letter has been drafted in consultation with the Commonwealth Director of Public Prosecutions and the Australian Central Authority, the Attorney-General’s Department. (Emphasis in the original)
21 The formal response to Mr Bottinelli’s letter was made on 26 May 2005. It comprised a covering letter from Ms Gibbins to Mr Bottinelli to which was attached a letter dated 26 May 2005 signed by Mr David Hellings, a Senior Financial Investigator employed by the ACC. It was written on ACC letterhead. The covering letter read, in part:
The ACC has obtained documentary evidence showing that Dunn has prepared false instructions for his accountant concerning the funds sent off shore to Overseas Trading & Promotions and back dating documents thus causing his accountant to prepare false tax returns. The ACC has banking records showing that on 10 January 2003, Dunn’s company Misty Mountain Pty Ltd drew a $100,000 cheque payable to Consolidated Artists, an in-house Strachans service company. The cheque was banked at the National Westminster Bank in London by Phillip De Figueiredo. On 4 February 2003, Dunn and Philip Egglishaw meet in Perth, Australia. A file note of the meeting produced by Egglishaw shows that he sent an instruction to his staff to obtain some more Consolidated Artists letterheads as they needed to sell another script. He also states in the note a copy from the last letter to Dunn regarding the sale of a script. The file note and the payment indicate that the fraudulent behaviour, in paying for a non existent script, took place. When the ACC issues search warrants in the near future in respect of Dunn and his companies, it expects to seize the false invoices in respect of payments to Consolidated Artists and other evidence of his fraudulent instructions. Based on evidence held by the ACC, the ACC believe that Strachans created a false invoice for a film script to allow the payment to falsely appear in the accounts of Dunn’s company as a tax deductible payment for the purchase of a film script when in effect it was just a transfer of money to Dunn’s trust administered by Strachans. Strachans assisted in the creation of false documentation to support the fraudulent deception of the ATO.
22 The attached letter, insofar as it deals with Mr Dunn, advised that:
Please find enclosed a letter and attachments in response to Mr Bottinelli’s letter of 10 October 2005 and the Examining Magistrate’s verbal request made in June 2005. ... I would be most grateful if the letter and attachments are passed to Magistrate Dumartheray as soon as possible. Please contact me if you have any queries or require further information.
23 Further communication between the Swiss Federal Office of Justice and the AGD occurred later in the year. On 10 October 2005 Mr Bottinelli wrote to Ms Gibbins seeking, relevantly, "more details about the modus operandi used by [those allegedly involved in criminal activity] to defraud the Commonwealth". The Attorney-General’s response was provided under cover of a letter, dated 7 December 2005, from Ms Jane Christie, a senior legal officer in the department, to Ms Isabella Fumagalli in the Swiss Federal Office of Justice. Like Ms Gibbins, Ms Christie was not a delegate of the Attorney-General for the purposes of the Mutual Assistance Act. The covering letter read, in part:
This letter is in response to your letter dated 10 October 2005 and the Examining Magistrates (sic) verbal request made in June 2005 to be provided, at a later date, with an update as to the progress of this investigation. It sets out details of the current status of this investigation, answers your queries and seeks your assistance in expediting current proceedings in Switzerland relating to Operation Wickenby. These proceedings relate to documents seized by your office from Strachans SA on 9 & 10 June 2005 in response to a mutual assistance request from the Australian Government.
24 A letter on ACC letterhead dated 15 November 2005 was attached (the November letter). It was signed by Mr Kevin Considine the National Team Leader of Operation Wickenby within the ACC. It was directed to the attention of Mr Bottinelli. It commenced by noting that:
The ACC has banking records showing that DUNN made a $100,000 cheque payable to Consolidated Artists, a Strachans in house company. It is suspected that Strachans created a false invoice for a non existent film script allegedly sold to Dunn or one of his companies to substantiate the payment and the tax deduction.
25 The November letter went on to record that 50 search warrants had been executed in Australia since 9 June 2005 at the homes and business premises of persons under investigation and at the premises of certain accountants and legal advisers. Attached to the letter was a document headed "STATUS OF CRIMINAL INVESTIGATIONS". In a section of the attachment which dealt with Mr Dunn and certain other persons it was recorded that:
DUNN has given instructions to his accountant concerning the funds sent offshore to Strachans and their in house companies thus causing him to prepare incorrect tax returns.
Dunn In addition to his involvement in facilitating transactions for Bartlett, Sayers and Pollock, Dunn appears to have also engaged in a series of fraudulent deceptions to mask the payments he received as fees for the services he provided. Analysis of documentary material seized from Dunn’s business premises shows that he has falsely represented in his accounts payments that he has received from Strachans-related entity, Ambassador Finance (which had been held by Strachans for his benefit) as a loan by Ambassador Finance to his own company. In addition to this false representation, Dunn also falsely claimed interest expenses on the fictitious ‘loan’.
26 There was then reference to Mr Dunn having been instrumental in creating certain company structures to assist other named individuals to avoid Australian taxation. They were said to contain a new request under the Mutual Assistance Act as well as new allegations against Mr Dunn. Under the heading "Findings in Australia" it is recorded that:
Pollock The ACC has established that when Pollock sold his business in 1998, the net proceeds of nearly AU$11 million, was paid to entities controlled by Dunn to pay non existent debts. Dunn in turn paid the majority of funds (less Dunn’s fees) to an entity controlled by Strachans on behalf of Pollock. In April 1998, Dunn flew to Jersey and met with Phillip Egglishaw, where he paid Egglishaw a cheque for AU$4.75 million, being AU$3million for Pollock and AU$1.75 million for Dunn. By adopting this method of payment, Dunn and Pollock were able to avoid the scrutiny of Australia’s law enforcement agencies. The ACC has information that suggests these funds were used to acquire shares in a company, MACGROVE INVESTMENTS LIMITED (MACGROVE). The ACC believes that this is a fictitious transaction as the funds are believed to have been immediately moved out of MACGROVE and paid into the Pollock and Dunn associated STRACHANS entities. Pollock’s accountant who is believed to have knowledge of these transactions and investments has not retained any documentation and expressed concerns about them. The ACC has information that suggests that when Pollock wished to bring funds back into Australia, Dunn insisted that a company and a trust be established to conceal the link between the original funds and funds being repatriated to Australia. These funds appear to have been fraudulently represented as an investment by an independent offshore entity in the newly created Australian unit trust. Bartlett & Sayers The ACC has information that confirms that the Strachans administered company, Crossline Overseas Limited, (CROSSLINE) is beneficially held for Bartlett and Sayers and that CROSSLINE has not provided any consideration in exchange for promissory notes, payable on demand, which have a face value of AU$32.4 million. Further evidence has been obtained confirming that the arrangement between CROSSLINE and Bartlett and Sayers is a charade designed to conceal their involvement with the company from Australian authorities. Dunn met with representatives of the Australian Taxation Office on 25 and 26 October 2001 to discuss the promissory notes and Dunn provided them with copies of the promissory notes numbers 5 and 6 ... The copies provided to the ATO did not show the indorsement to Crossline, dated 26 October 2001, and no mention of Crossline was made by Dunn during the meetings. Additional promissory notes were issued on 26 October 2001 which were also indorsed to CROSSLINE and copies of these notes were not provided to the ATO. The ACC has information that suggests that CROSSLINE was not in existence until sometime after 26 October 2001. ... The ACC has established that a legal advisor working for Dunn gave a legal opinion that the arrangement was illegal and she immediately terminated her employment with Dunn. The ACC also has information that suggest (sic) the legal advisors for Barminco also have expressed grave concerns regarding the illegality of the arrangement that Bartlett and Sayers have entered with Dunn and CROSSLINE.
Dunn ... Documentary material seized from Dunn’s business office included several documents which described the purchase of shares in MACGROVE for AU$4.75 million. It is believed that this transaction is fictitious and that these funds of which AU$3 million is Pollocks (sic), was split between Pollock and Dunn and moved to their own STRACHANS associated entities. Analysis of the accounting records seized from Dunn’s business office shows that it would appear that the fictitious film scripts and the AU$4.75 million purchase of shares in MACGROVE have been used to create false entries in his accounting records. Dunn has claimed a 100% write off of the AU$4.75 million investment in shares and it is expected that Dunn may also write off the investments in the scripts to create further capital losses. It is anticipated that these losses will be applied against future taxable capital gains.
27 Under the heading "False or Fictitious Documents produced by Strachans located in Australia" it is said:
The false and misleading documentation so far identified during the course of the investigation has been used by Dunn, Bartlett and Sayers, Pollock and entities under their control to conceal or disguise income and assets by fraudulently representing the funds to be business expenses and loans from independent foreign entities, and also to conceal or disguise the transfer of funds offshore as payments for non-existent expenses or the purchase of non-existent assets. The use of these false documents is likely to have resulted in the underpayment of millions of dollars of income tax.
28 Later in the document under the heading "How False Documents used in Breaking Australian Law" it is said that:
Request for Assistance to Switzerland in the Matter of Operation Wickenby The purpose of this correspondence is to clarify information previously provided in relation to the above request. 2. On 7 December 2005, I sent you correspondence attaching a letter dated 15 November 2005 from the Australian Crime Commission (ACC). The ACC letter and its accompanying document headed "Status of Criminal Investigations" (the Summary), provided a summary of the progress of its investigation. 3. This correspondence was in response to the verbal request from the Examining Magistrate, Mr Dumartheray, in June 2005 and your letter dated 10 October 2005. 4. At page 17 of the Summary, the ACC provided information about its investigations into the alleged sale of two non-existent film scripts to Mr Gregory Dunn (Dunn) or Misty Mountain Pty Ltd, by Consolidated Artists, a Strachans SA in-house company. 5. Subsequent to the preparation of the Summary, the Attorney-General’s Department has received a letter and documents from Dunn and Misty Mountain Pty Ltd’s (Misty) legal representatives Shaw & Associates, regarding this additional information. Following examination of the documents provided by Dunn and Misty’s legal representatives the ACC now provides the following information. 6. Entries have been made in the accounting records of Misty Mountain Pty Ltd recording the purchase of two allegedly non-existent film scripts from Consolidated Artists for $100,000 and $330,000. Other entries record the write-off of the value of those assets to nil. 7. Within the Summary and other documents provided by Australia, it has been said Dunn had claimed tax deductions in respect of funds made payable to Consolidated Artists, a Strachans in-house company. We wish to advise that no income tax deduction has yet been claimed in respect of the payments of $100,000 and $330,000 to Consolidated Artists. 8. However, Dunn’s legal representatives have advised that the sum of $430,000 is recorded in the 2003 accounts of Misty Mountain Pty Ltd as a capital loss on write-off of Capital Assets. The ACC believes that this write-off may be used in the future for taxation purposes. If Dunn purports to sell the alleged non-existent scripts or if the write-off value is confirmed by the declaration of a liquidator, the write off could be utilised against taxable capital gains. 9. The ACC continues to suspect that the payments of $100,000 and $330,000 made to Consolidated Artists were for the purpose of concealing the transfer of funds to accounts offshore for the benefit of Dunn, by representing the transfer as payments for the alleged non-existent film scripts, with the intention of deceiving the Australian authorities. Because no satisfactory explanation has been offered by Dunn as to why he, or associated entities, have purchased at least two allegedly non-existent film scripts from Strachans SA, the ACC has advised that it is continuing with its investigation.
29 By letter dated 2 June 2006 to Mr Bottinelli, Ms Christie corrected some of the information contained in the "STATUS OF CRIMINAL INVESTIGATIONS" document which formed part of the November letter. Ms Christie advised Mr Bottinelli as follows:
30 The letter continued with a request to Mr Bottinelli to pass the information contained in the letter to the Examining Magistrate for consideration by him during his consideration of the Mutual Assistance Request.
The Legislative Framework
[They] include facilitating the obtaining by Australia of international assistance in criminal matters. Under s 7(1), the Mutual Assistance Act applies to all foreign countries. However, s 44 of the Mutual Assistance Act provides that the Governor-General may make regulations prescribing matters necessary or convenient to be prescribed for carrying out or giving effect to the Mutual Assistance Act. Section 7(2) states that the Regulations may provide that the Mutual Assistance Act applies to a foreign country subject to any mutual assistance treaty between that country and Australia that is referred to in the Regulations. In such a case, the Mutual Assistance Act applies subject to the limitations, conditions, exceptions or qualifications that are necessary to give effect to the treaty in relation to that country. Clause 4 of the Mutual Assistance in Criminal Matters (Switzerland) Regulations 1994 (Cth) (the Mutual Assistance Regulations) provides that the Mutual Assistance Act applies to Switzerland subject to such limitations, conditions, exceptions or qualifications as are necessary to give effect to the Treaty between Australia and Switzerland on Mutual Assistance in Criminal Matters done at Berne in Switzerland on 25 November 1991 (the Swiss Treaty).
31 The objects of the Mutual Assistance Act were identified by the Full Court in Kennedy v Australian Securities & Investment Commission [2005] FCAFC 32; (2005) 142 FCR 343 at [9]:
Request by Australia
32 Section 10 provides:
(1) A request for international assistance in a criminal matter that Australia is authorised to make under this Act may be made only by the Attorney-General.
(2) Subsection (1) does not prevent the Attorney-General on behalf of Australia from requesting international assistance in a criminal matter other than assistance of a kind that may be requested under this Act.
Requests by Australia for search and seizure
33 Section 14(1) and (2) provides:
(1) This section applies to a proceeding or investigation relating to a criminal matter involving a serious offence against an Australian law if there are reasonable grounds to believe that a thing relevant to the proceeding or investigation may be located in a foreign country.
(2) If this section applies to a proceeding or investigation, Australia may request the appropriate authority of the foreign country:
(i) a search for a thing relevant to the proceeding or investigation; and (ii) if such a thing, or any other thing that is or may be relevant to the proceeding or investigation is found as a result of the search--the seizure of that thing; and(a) to obtain a warrant or other instrument that, in accordance with the law of the foreign country, authorises:
(b) to arrange for the thing that has been seized to be sent to Australia.
The Treaty
Central Office 1. The Contracting Parties shall each appoint a Central Office for the purpose of this Treaty. Until the relevant Contracting Party designates another authority, the Central Office of Australia shall be the Attorney-General's Department in Canberra and the Central Office for Switzerland shall be the Federal Office for Police Matters of the Federal Department of Justice and Police in Berne. 2. Requests for assistance shall be made through the Central Offices, each of which shall arrange for the prompt carrying out of such requests by the appropriate competent authorities in the Requested State. 3. The Central Offices may communicate directly with each other.
34 Article 6 provides:
Contents of Requests 1. Requests for assistance shall include: . . . (b) the subject matter and nature of the investigations or proceedings and, except in cases of requests for service of documents, a description of the essential acts or omissions alleged or sought to be ascertained, including the text, or a statement, of the law applicable at the place where the offence was committed; (Emphasis added)
35 Article 7 of the Treaty concerns the content of mutual assistance requests. Article 7(1)(b) provides:
Article 7(4) provides:
4. If the Requested State considers that the information contained in the request is not sufficient in accordance with this Treaty to enable the request to be dealt with, that State may request that additional information be furnished.The Appellants’ Submissions
(a) a request for additional information pursuant to Article 7(4); or (b) on an alternate formulation, a combination of:
36 It is the appellants’ first submission that having regard to ss 10 and 14 of the Mutual Assistance Act the subsequent correspondence was and must be characterised as part of the Request. 37 The appellants submit that "the request" referred to in s 10 of the Mutual Assistance Act must mean the entire request and therefore include anything which "may sensibly be said to form part of the request". First, they say that the subsequent correspondence forms part of the Request because it is clear that each letter forming part of the subsequent correspondence was written in aid of assistance of a kind which may be requested under s 10(2) of the Mutual Assistance Act. Second, they say that if the acts, facts and matters contained in the subsequent correspondence had been included in the original request, it could not be said that such information did not form part of the Request. 38 On the appellants’ case, the subsequent correspondence was prepared and conveyed to Switzerland in circumstances where the Swiss authorities had determined that the information contained in the Request was not sufficient to enable it to be dealt with according to all its terms and had requested that additional information be furnished for that purpose. That determination by Switzerland, and that request for additional information, was initially conveyed to the Australian authorities in Mr Bottinelli’s facsimile letter of 18 May 2005. Further determinations, and further requests for additional information, were conveyed in a verbal request from the Examining Magistrate made in June 2005 and in Mr Bottinelli’s letter of 10 October 2005 (collectively, "the Swiss communications"). 39 The appellants complain that the primary judge should have characterised the Swiss communications as having being made pursuant to the Treaty. He could, they submit, either have characterised them as being one of only two alternatives:
(i) a request for additional information made pursuant to Article 7(4); and also
(ii) a rejection of part of a request made pursuant to Article 8(7).
the relevant obligation, imposed by Article 7.1(b), extends no further than a requirement to describe essential acts or omissions which are alleged or which it is anticipated the investigation may ascertain.
40 The primary judge characterised the Swiss communications as a series of questions in which the Swiss authorities sought "further information about the allegations being made against the applicants and others": [49]. This, they say, was done by his Honour without reference to the legal basis upon which the further information was sought. They submit that the subsequent correspondence was made in aid of and was part of a request under s 14 of the Mutual Assistance Act. 41 They contend that, on its face, the subsequent correspondence supplements the description of the essential acts or omissions that are contained in the Request by not only providing additional information in relation to those acts or omissions but by stating additional acts and omissions said to be relevant to the Request. They say that, consistent with the finding of his Honour [at 49] that:
the subsequent correspondence is the means by which Australia, as the requesting state, "completed" its description of the essential acts or omissions alleged.
42 They submit that the primary judge erred in reaching his conclusion, at [49], that the Request identified with sufficient precision the facts which gave rise to the offences which it was then suspected had been committed. 43 The very existence of the subsequent correspondence, it is said, self-evidently demonstrates that this finding must be wrong. It is fundamental to the appellants’ argument that the second respondent provided the subsequent correspondence in order to comply with its obligation under the Mutual Assistance Act and the Treaty. It is not in dispute between the parties that in June 2005 the Swiss authorities subsequently executed the Request and seized the documentation sought.
The Request
PURPOSE OF THE REQUEST 3. This request asks for business records to be obtained from: (a) Strachans SA, an accountancy services firm in Geneva, and (b) Corner Banca SA, a private banking institution based in Lugano. 4. The material is required for investigation into, and possible prosecution of, the following people for suspected tax fraud and conspiracy offences against the laws of the Commonwealth of Australia: ... (m) Gregory John Dunn
44 The purpose of the Request was expressed in these terms:
SUSPECTED OFFENCES 122. There are provisions within the Australian income tax legislation that apply to international dealings. These include controlled foreign companies, transfer trusts and foreign investment measures. All of the persons listed in paragraph 5 have made false statements in their income tax returns when they indicated "no" in response to the question ‘do you own, or have an interest, in assets located outside Australia which had a total value of A$50,000 or more?’ In knowingly making false statements they have committed a criminal offence, in particular, they have defrauded the Commonwealth or obtained a financial advantage by deception. 123. Up until 24 May 2401, it was an offence against section 29D of the Crimes Act 1914 (Commonwealth of Australia) (Crimes Act) to defraud the Commonwealth. Arranging financial affairs in a way which dishonestly evades tax can amount to defrauding the Commonwealth. The persons listed in paragraph 5 are suspected of having committed offences against section 29D. An offence against section 29D of the Crimes Act carries a maximum penalty of a fine of A$110,000 or ten years imprisonment or both. Section 29D of the Crimes Act still applies to conduct before 24 May 2001. 124. From 24 May 2001 section 134.2 of the Criminal Code Act 1995 (Commonwealth of Australia) (the Code) effectively replaced section 29D of the Crimes Act. It is an offence under section 134.2 of the Code to obtain a financial advantage from a Commonwealth entity by deception. The persons listed in paragraph 5 are suspected of having committed offences against section 134.2 by arranging their financial affairs in a way which dishonestly evades tax. An offence against section 134.2 of the Code also carries a maximum penalty of a fine of A$66,000 or ten years imprisonment, or both. 125. Section 11.5(1) of the Code provides that a person who conspires with another person to commit an offence is guilty of the offence of conspiracy to commit that offence. The maximum penalty is the same as if the offence to which the conspiracy relates had been committed. 126. Australian authorities suspect that the persons listed in paragraph 5 may have conspired to commit offences against Section 29D of the Crimes Act and section 134.2 of the Code. 127. The maximum penalty for conspiring to commit these offences is the same as that for the offences themselves. 128. Up until 1 January 2003, it was an offence against section 81 of the Proceeds of Crime Act 1987 (Commonwealth of Australia) (POC Act) to engage in money laundering. A person engages in money laundering where he directly or indirectly deals with the proceeds of crime, or where he brings into Australia any money which is the proceeds of crime and which he knew was derived from some form of unlawful activity. Section 81 has since been repealed, but still applies to conduct which took place before 1 January 2003. The maximum penalty for an offence against section 81 is A$S200,000 fine or 20 years imprisonment or both. 129. The persons listed in paragraph 5 are also suspected of having breached section 400.4(1) of the Code. Section 400.4 of the Code effectively replaced section 81 of the POC Act. It is an offence against Australian law under section 400.4 of the Code to deal in the proceeds of crime. Where the proceeds of crime amount to A$100,000 or more, the maximum sentence for a breach of section 400.4 is 20 years imprisonment or a fine of A$132,000 or both.
45 The "Alleged Facts" were set out in considerable detail as appears under the general paragraphs at 7-31 and specifically in relation to Dunn and his "associated entity" Misty Mountain, at paragraphs 84-93 in the relevant part of the Request under Schedule 1 to these reasons. These paragraphs describe an investigation by Australian authorities into the use by, amongst others, Dunn for using companies trusts and bank accounts administered by Strachans SA in Switzerland in order to disguise their involvement in tax fraud schemes. 46 "Suspected Offences" set out in the Request were in these terms:
47 The request refers to "the persons listed in paragraph 5", however it seems that it is intended to refer to the persons listed in paragraph 4. This however is of no consequence.
Reasoning
First, under Article 1 of the Swiss Treaty, the Contracting Parties are to grant to each other assistance in investigations or proceedings in respect of ‘offences the punishment of which falls or would fall within the jurisdiction of the judicial authorities of the requesting state’. Thus, it must be shown that there is an investigation or proceeding in respect of offences by Mr Kennedy, the punishment of which falls or would fall within the jurisdiction of the judicial authorities of Australia. Secondly, Art 7(1)(b) of the Swiss Treaty relevantly provides that requests for assistance must include ‘a description of the essential acts or omissions alleged or sought to be ascertained, including the text, or a statement, of the law applicable at the place where the offence was committed.
48 There was, in this case, for the purposes of s 14(1) of the Mutual Assistance Act, a relevant investigation relating to a criminal matter involving a serious offence against an Australian law and there were reasonable grounds to believe that a thing relevant to the investigation might be located in Switzerland. Importantly, the requirement for "reasonable grounds to believe" is directed to the existence of a "thing relevant to the investigation" and its position location in Switzerland. This requirement is not directed to the existence, or content, or merits of allegations of fact which may or may not constitute a serious offence against an Australian law. 49 Central to the appeal is the contention of the appellants concerning Art 7(1)(b) of the Treaty, to the effect that the Request did not identify, with sufficient precision, the facts which gave rise to the offences which were then suspected of having been committed and until such time as the subsequent correspondence was furnished, the Request was deficient and incomplete to the extent that Switzerland would not have provided the assistance requested. 50 The applicability of Art 7(1)(b) of the Treaty requires to be considered against the provisions of s 7 of the Mutual Assistance Act and cl 4 of the Regulations. 51 Kennedy v ASIC involved, in part, a challenge, as in this case, to a request to Switzerland, under the Mutual Assistance Act as not complying with that Act and the Treaty. The Court concluded that for the purposes of cl 4 of the Regulations the Treaty relevantly imposed two conditions: at [83]. The Court then stated at [84]:
When considering compliance with a treaty, the Court should look to substance rather than form: Harris v Attorney-General (Cth) (1994) 52 FCR 386 at 401. Under the Vienna Convention on the Law of Treaties to which Australia is a signatory ([1974] ATS 2), the terms of a treaty are to be interpreted in their context and in the light of the object and purpose of the treaty. Such an approach requires an analysis of the Swiss Treaty in order to determine its object and purpose and then consideration of the context in which Art 7 is found. Article 1 of the Swiss Treaty states that the contracting parties are to grant each other assistance in investigations or proceedings in respect of offences. Clause 2 of Art 1 specifies the kind of assistance that may be granted. Under cl 3, assistance is not to include extradition enforcement or execution of final criminal judgments. Article 2 provides that assistance may be refused in certain circumstances as follows:
52 As in this case, the appellant in Kennedy v ASIC complained that, in breach of Art 7(1)(b) of the Treaty, the request in question did not contain an adequate description of the essential acts or omissions alleged or sought to be ascertained. In that case it was the inadequacy of the text, or a statement of the relevant law applicable which was the subject of the complaint. 53 The reasoning of the Full Court has direct application to the present case. It was as follows at [94]-[98].
Article 3 provides that assistance may also be refused if it involves compulsory measures. Article 4 imposes limitations on the use of information and material provided pursuant to the Swiss Treaty. For example, the requesting state must not use information or material for a purpose in respect of which assistance would not be granted under the Swiss Treaty. Article 6 provides for the appointment of a central office for the purpose of the Treaty: requests for assistance are to be made through the central offices. Article 7 must be construed in the context of those provisions. The purpose for including, in a request for assistance, a description of the essential acts or omissions alleged or sought to be ascertained, including the text, or a statement, of the law applicable at the place where the offence was committed, is to enable the requested state to make a judgment as to whether assistance should be granted or refused. The relevant requirement of Article 7(1)(b) in the circumstances of the present case was that sufficient information be provided to enable the requested state to make an assessment under Art 2. That being so, it would be immaterial that there may be some technical misdescription of the legislative provisions that created the suspected offences. So long as the description is sufficient to enable the requested state to make an assessment of the nature of the suspected offences, and thus whether Article 2 would be applicable, Art 7(1)(b) will be satisfied. (Emphasis added)• the suspected offence would be regarded by the requested state as a political offence or an offence only under military law;• if the request concerns a fiscal offence;
• if the request relates to an offence in respect of which there has been an acquittal or pardon or the sentence imposed has been served;
• if the results are to be used to prosecute for an offence in respect of which, under the law of the requested state, the person would be immune from prosecution by reason of lapse of time;
• if there are substantial grounds for believing that the prosecution will be on account of race, sex, religion, nationality or political opinions; and
• if the request for assistance would impair the sovereignty, security, public order or other essential interests of the requested state.
54 The substance of the suspected offences included in the Request is set out under para [46] above. The substance of these was sufficiently clear to enable the Swiss authorities to make an assessment that Art 2(b) applied. Switzerland, under that provision of the Treaty, subject to the law of Switzerland, had a discretion to refuse assistance in respect to the Request. The condition of Art 7(1)(b) and thereby the Mutual Assistance Act was accordingly complied with, consistent with the reasoning in Kennedy v ASIC. 55 This was not a case where the Swiss authorities had insufficient information to enable them to conclude that Art 2 had application. They could, at that stage, merely have refused assistance in respect of what was a valid request. Their request in subsequent correspondence was to enable them to comply with Swiss domestic law requirements before they could provide assistance under the Request. The letter of 18 May 2005 from Mr Bottinelli to Ms Gibbins is to that effect. 56 Plainly enough the subsequent correspondence related to the Request. It does not however follow from this that the subsequent correspondence was either part of the Request or a new Request. Article 7(4) of the Treaty expressly envisages that additional information may be requested, relevantly, by Switzerland, where the information in a request is not sufficient in accordance with the Treaty to enable the request to be dealt with. Such was the case here. The additional information was not required to render the request valid, although in some situations that might be the case. 57 As his Honour correctly observed it was of "no moment" that none of the subsequent correspondence was signed by delegates of the Attorney-General, because none of those letters or attached documents constituted requests for assistance under the Mutual Assistance Act. Instead, it "dealt with various aspects of the request but no new request was made": [23]. Such communications between the Central Offices of the two nations are apprehended by Art 6 read together with Art 7(4) of the Treaty. 58 In our opinion the primary judge was correct when he found that the subsequent correspondence from Australia did not form part of the Request. Nor did they individually constitute new requests or in combination a new request under the Mutual Assistance Act. The subsequent correspondence did no more than help the Swiss authorities decide whether they would provide, in full, the assistance sought in March 2005 in the Request. The correspondence involved a proper attempt to clarify and answer questions about the Request, through a process of communication between the two Central Offices of the very kind contemplated and authorised by Arts 6 and 7(4) of the Treaty. The primary judge was therefore correct to reject the submission that the subsequent correspondence was "invalid" because it was not sent by the Attorney-General or his delegate.
Grounds 1, 2, 3, 7 and 9: Alleged factual inaccuracies, mis-Descriptions and lack of full disclosure
59 Grounds 1, 2, 3, 7 and 9 are as follows:
1. His Honour erred in holding that the request was lawfully made.
2. His Honour erred in holding, at [33] to [37] and [40] to [53], that the contents of the request properly complied with the Act (in particular Section 14), the Regulations thereunder (in particular Regulation 4(1)) and the Treaty, when the request
(a) was by both commission and omission misleading;(b) contained material that was wrong;
(c) failed to contain material relevant to some of the allegations and assertions made therein;
(d) failed to contain material relevant to some of the allegations and assertions made therein which material was only contained in the subsequent documentation.
3. His Honour should have held that:-
(i) the original request and the subsequent documentation contained misdescriptions of essential acts and omissions ("the combined misdescriptions") which gave rise to contraventions of s 14 of the Act and Article 7 of the Treaty; and (ii) in part by reason of the combined misdescriptions and in part by reason of what is revealed in the subsequent documentation, there were no "reasonable grounds to believe that a thing relevant to the proceeding or investigation may be located in a foreign country" as required by s 14 of the Act.(a) the request contained misdescriptions of essential acts and omissions ("the misdescriptions") which gave rise to contraventions of s 14 of the Act and Article 7 of the Treaty; and
(b) by reason of the misdescriptions, there were no "reasonable grounds to believe that a thing relevant to the proceeding or investigation may be located in a foreign country" as required by s 14 of the Act;
(c) alternatively:
. . .7. His Honour erred in holding, at [36] and [37], that the request and subsequent documentation (although not amounting to a new and/or separate request or requests, and although such subsequent documentation did not form part of the request) complied with the Act, the Regulations and the Treaty notwithstanding that there were material omissions and errors in the request and in the subsequent documentation.
9. His Honour erred in finding:
1. at [49], that the only relevant obligation of disclosure on the part of the Attorney-General (presumably whether by implication or otherwise) to be found in the Act, the Regulations and the Treaty was "a requirement to described essential acts or omissions which are alleged or which it is anticipated the investigation may ascertain".2. At [49] to [51], in finding that the request complied with such an obligation of disclosure.
60 To the extent that the Request is said to contain the subsequent correspondence it is strictly unnecessary to deal with these grounds given our rejection of that argument. Nonetheless we propose to deal with them. 61 The appellants submit that the Request, assuming that the subsequent correspondence forms part of it, is unlawful insofar as, at least in respect of Dunn and Misty Mountain:
(a) it failed to state that the allegation that the Appellants had lodged a tax return which included a false claim based on an invoice for a film script was an assumption, rather than a fact (and was contrary to the real facts) ;
(b) there was no factual basis for the assertion in the May letter that documentation had been created in connection with a film script to support fraudulent deception of the ATO;
(c) it failed to state that the allegation that Mr Dunn had claimed a tax deduction in respect of interest expenses from a loan from Ambassador Finance was an assumption rather than a fact (and was contrary to the real facts);
(d) it failed to state that the allegation that the Appellants had claimed a tax write-off of an AU$4.75 million investment in shares in Macgrove Investments Limited was an assumption rather than a fact (and was contrary to the real facts).
62 They submit that the unlawfulness arises in that the contents of the Request did not comply with the Mutual Assistance Act (in particular s 14), the Regulations thereunder (in particular clause 4(1)) and the Treaty. 63 It is the appellants’ submission that, in making the misdescriptions and in failing to make the true and proper disclosures referred to above, the Australian authorities failed to comply with their strict duty of full disclosure. The appellants submit that the test to be applied to misdescriptions of the type set out above to which the primary judge referred at [36] must, by necessary implication, be the same test that would apply to a material misdescription in an application for a search warrant. 64 In that analogous context they submit that the applicable test is found in Karina Fisheries Pty Ltd v Mitson [1990] FCA 154; (1990) 26 FCR 473 where the Full Court (Sheppard, Foster and Hill JJ) held, at p 481, that there was "a strict duty of full disclosure of material facts by the Informant seeking a [search] warrant". 65 In the context of a request for mutual assistance, the appellants rely upon Kennedy v ASIC in which they submit the Court drew an important distinction between a "mere" misdescription, which did not affect the validity of a request for mutual assistance, and an operative misdescription which, by necessary implication, would do so. 66 Alternatively, the appellants submit that, by reason of the misdescriptions referred to above, Australia failed to comply with the Treaty and, in particular, with Art 7.
Reasoning
Alleged Factual Inaccuracies and Misdescriptions
67 Section 14 of the Mutual Assistance Act sets out a procedure by which the Attorney-General may request the appropriate authority of a foreign country to obtain a warrant or other instrument that authorises the search for and seizure of a thing relevant to a criminal proceeding or investigation. Section 14(1) provides that the procedure is available if:
1. there is a proceeding or investigation relating to a "criminal matter";
2. that proceeding or investigation involves a "serious offence" against an Australian law; and
3. there are reasonable grounds to believe that a thing relevant to the proceeding or investigation may be located in a foreign country.
It is a misconception of the function of a Royal Commissioner that before he can invoke his inquisitorial powers there must be before him material probative of the facts the very existence of which his commission has directed him to investigate ... [T]he respondent has not made a finding which may be tested against the presence or absence of relevant evidence. He is making an inquiry. Even the absence of evidence cannot properly inhibit the making of such an inquiry. (Emphasis added)
68 "Criminal matter" is defined in s 3 of the Mutual Assistance Act to include "a criminal matter relating to revenue (including taxation and customs duties)". "Serious offence" is defined in s 3 to mean an "offence", the maximum penalty for which is death or imprisonment for not less than 12 months. 69 There is no definition in the Mutual Assistance Act of the word "investigation". However, s 3 defines "criminal investigation" to mean "an investigation into an offence (whether the offence is believed to have been committed, to be being committed or to be likely to be committed)". 70 The term "criminal investigation" is not used in s 14 of the Mutual Assistance Act. However, the primary judge was, in our opinion, correct in concluding that the phrase "investigation relating to a criminal matter" comprehends a wider range of activities than those falling within the defined concept of a "criminal investigation". That follows from the width of the words "relating to": [38]. As the primary judge observed "all that is required is that there be in existence a bona fide investigation which is designed to determine whether or not such offences have been committed": [39]. 71 Section 14 of the Mutual Assistance Act founded the making of the Request irrespective of the truth or accuracy of the allegations that were under investigation, because there can be an "investigation into a criminal matter" even if it is ultimately established that no crime has been committed. As a Full Court of this Court held in Lloyd v Costigan [No 2] [1983] FCA 253; (1983) 76 FLR 279 an investigation can occur even in the complete absence of material that is probative of wrongdoing. The Full Court said at pp 281-282:
72 It is not necessary for this Court to determine the precise width of the phrase "investigation relating to a criminal matter" because, whatever the precise extent of that phrase, there was such an investigation in this case. The primary judge found that "the evidence clearly establishes that the mutual assistance request was made to assist in the conduct of the criminal investigation known as Operation Wickenby": [38]. In so finding, his Honour accepted the evidence of Mr Outram, a senior ACC officer: [41]. 73 Accordingly, even assuming that the Request had contained errors of the kind about which the appellants’ complain, that would be irrelevant to the validity of the Request, because the power to make the Request did not depend upon the accuracy of the statement of the factual matters that were under investigation. Indeed as Art 7 of the Treaty discloses "the essential acts or omissions" need merely be "alleged" or "sought to be ascertained". The latter category contemplates an investigation where there is, at the time of making the request, no or insufficient evidence, even to support the making of allegations. Kennedy v ASIC does not assist the appellants in this respect.
Alleged lack of full disclosure
... (T)he primary question here is not whether the informant was under an obligation to disclose to the justice a particular fact, but whether the statements in the Information were sufficient to satisfy the requirements of s 10(1).
74 Karina Fisheries (1990) 26 FCR 478 at 481, upon which the appellants rely, by analogy, concerned a search warrant under the former s 10 of the Crimes Act 1914 (Cth). The Full Court concluded that there was a "strict duty of full disclosure of material facts" to the issuing justice analogous to that applying to an ex parte applicant for equitable relief in private litigation. The appellant further contends that the same result follows from Art 7 of the Treaty. 75 In Lego Australia Pty Ltd v Parlaggio [1994] FCA 1286; (1994) 52 FCR 542 Beaumont and Whitlam JJ in a joint judgment, again dealing with s 10 of the Crimes Act concluded there was no such general duty of disclosure. As their Honours observed at 555:
... s 44(1) of the TI Act specifically empowers a judge to require further information to be given in connection with an application for a warrant. The existence of this power suggests that there may well be matters not disclosed to an issuing judge that he or she nevertheless might reasonably consider material and in respect of which he or she might reasonably require the applicant to provide further information. For these reasons, in our view, there is no general duty of the kind described by the applicant ...
76 Flanagan v Commissioner of Australian Federal Police (1996) 60 FCR 149 concerned a warrant issued under s 46 of the Telecommunications (Interception) Act 1979 (Cth). The Full Court came to the same conclusion as the Court in Lego, and again emphasised that any duty of disclosure depends for its existence upon the legislative scheme of the relevant statute. 77 Analogously, in Carmody v MacKellar (1997) 148 ALR 210, which concerned warrants under s 45 of the Telecommunications (Interception) Act and listening device warrants issued under s 219B of the Customs Act 1901 (Cth), Black CJ, Lindgren and Sackville JJ observed at p 242 that:
Ground 15
The objective circumstances sufficient to show a reason to believe something need to point more clearly to the subject matter of the belief, but that is not to say that the objective circumstances must establish on the balance of probabilities that the subject matter in fact occurred or exists: the assent of belief is given on more slender evidence than proof. Belief is an inclination of the mind towards assenting to, rather than rejecting, a proposition and the grounds which can reasonably induce that inclination of the mind may, depending on the circumstances, leave something to surmise or conjecture.
82 The appellants contend that the primary judge erred in finding that "the Australian investigators were seized of a good deal of information which pointed to the strong possibility that documents ... were likely to be found in the premises occupied by Strachans SA and Corner Banca in Switzerland": [44]; because in so doing he applied "a less onerous and incorrect test" than is required by s 14 of the Mutual Assistance Act. 83 The power conferred by s 14 of the Mutual Assistance Act arises only if there are "reasonable grounds to believe that a thing relevant to the ... investigation may be located in a foreign country". 84 In an analogous context, in George v Rockett [1990] HCA 26; (1990) 170 CLR 104 at 116 the High Court said:
85 As the primary judge pointed out, the High Court has cautioned against adopting paraphrases of the statutory language, and emphasised that the words "reasonable grounds to believe" should be given their ordinary meaning: [43]. The words do not pose an "onerous test". 86 The use by the primary judge of the phrase "strong possibility" at [44] needs to be seen in context which is found in the reasons at [40]-[43]. It cannot be doubted that his Honour was considering the meaning and application of the words "reasonable grounds to believe that a thing relevant to the ...investigation may be located in a foreign country". His Honour specifically referred, twice, at [41] to what was "believed" by Mr Outram, the ACC Executive Director, Operational Strategies. In context, it is clear that the primary judge’s finding at [44], represents his Honour’s conclusion in relation to the operation of the test set out in s 14. 87 That conclusion was clearly open, given the material seized from Mr Egglishaw, a principal of Strachans, which was summarised in paragraphs 8 to 30 of the Request. The affidavit evidence of Mr Outram supported the existence of reasonable grounds to believe that things relevant to the investigation of a criminal matter would be located in Switzerland. Mr Outram was cross-examined.
Additional Grounds in Strachans Proceeding
2. In addition, his Honour erred:
88 In addition to the grounds addressed above, the Appellant in the Strachans proceeding advances two further grounds of appeal, being:
(i) was a material fact relevant to the jurisdiction of the Attorney-General to make a request in respect of H and C; and (ii) was in any event a material fact which should have been, but was not, disclosed in the request;(a) in finding, at [10] that the Attorney-General was not under an obligation to disclose to the Swiss authorities the residential status of H and C when making the request and, by implication, that the residential status of H and C was irrelevant to the request;
(b) in finding, at [11], that the request did not contain misleading information in so far as it implied that H and C were Australian residents when, in fact they were not Australian residents for all or part of the period referred to in the request;
(c) in finding, at [12] to [16], that the November letter did not suggest that a letter dated 1 February 2005 from Barminco Investments Pty Ltd’s legal advisers was wrongly described as a "False or Fictitious Document(s) Produced by Strachans".
3. His Honour should have held that:
(a) the Attorney-General was under an obligation to disclose to the Swiss authorities the residential status of H and C when making the request;
(b) the residential status of H and C:
(c) the request contained misleading information in so far as it implied that H and C were Australian residents when, in fact, they were not Australian residents for all or part of the period referred to in the request;
(d) in the November letter, a letter dated 1 February 2005 from Barminco Investments Pty Ltd’s legal advisers was wrongly described as a "False or Fictitious Document[s] produced by Strachans.
89 It is the appellant’s submission that the misdescriptions in the Request and/or in the subsequent correspondence invalidate the Request or, at the very least, those parts of the Request that relate to H and C and/or to Strachans SA. 90 The appellant submits that the test to be applied to misdescriptions of the type set out above and to which his Honour referred at [36] must, by necessary implication, be the same test that would apply to a material misdescription in an application for a search warrant. 91 To make good this submission the appellant in the Strachan proceeding repeats the submission made by the appellants in the Dunn and Misty proceeding in relation to misdescriptions and an asserted duty of full disclosure. Our reasons for rejecting those submissions apply equally in respect to these further grounds.
The residency of H and C: Grounds 2(a), (b) and 3(a)(b)
92 The appellant argued before the primary Judge that the Request implied that both H and C were residents of Australia for tax-paying purposes whereas, for many years, H and C were not residents of Australia; and it submitted, mistakenly, that the tax consequences of that non-residency were such that the breaches of Commonwealth law alleged against H and C could not have been committed. 93 Such an "implication", if it matters, that H and C were Australian residents during the period of interest to Australian authorities, was open. The information provided by the ACC to the Swiss authorities in the November letter shows that H declared himself to be resident in Australia for the financial years ending 30 June 2003 and 30 June 2004, while C declared himself to be resident in Australia for the financial years ending 30 June 1995, 2000, 2001, 2002, 2003 and 2004. The last two tax returns lodged by each of H and C showed each to have declared himself to be resident in Australia for at least the two years preceding the sending of the Request. Accordingly, at the time that the Request was prepared, it would have been accurate to state that H and C were resident in Australia. 94 On the other hand the Swiss authorities, it appears, did not read the Request as containing that implication, for in their letter of 10 October 2005 they sought clarification concerning the residency status of H and C. The ACC responded to that request in November 2005. Before the primary Judge, the appellant accepted that the ACC’s response was accurate: [9]. 95 Whether the implication did or did not arise is of no relevance. For the reasons we have already given we are satisfied that the Request complied with both the Mutual Assistance Act and the Treaty.
False and misleading documents: Grounds 2(c) and 3(c)
Letter dated 1 February 2005 from Barminco Investments Pty Ltd’s legal advisers to Strachans outline that customers will pay invoiced amounts into the bank account Strachans will open for Barminco and 25% of the payments are to be retained in the account and the balance forwarded to the bank account of Barminco in Australia.
Orders Sought
101 Each appeal should be dismissed with costs.
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I certify that the preceding one hundred and one (101) numbered paragraphs
are a true copy of the Reasons for Judgment herein of the
Honourable Justices
Moore, Jessup and Gilmour .
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Associate:
Dated: 24
February 2009
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Solicitor for the Appellants:
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Iles Selley Lawyers
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Counsel for the Respondents:
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Mr P Hanks QC with Dr S Donaghue
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Solicitor for the Respondents:
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Australian Government Solicitor
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SCHEDULE 1
TO THE COMPETENT AUTHORITY OF
SWITZERLAND REQUEST FOR ASSISTANCE IN A CRIMINAL MATTER
This is a request by Australia for assistance in a criminal matter, made
under the Treaty between Australia and Switzerland on Mutual Assistance in
Criminal Matters done at Berne on 25 November 1991. Such a request may be
made by the Attorney-General of Australia or a person authorised by
him.
PURPOSE OF THE REQUEST
3. This request asks for
business records to be obtained from:
(a) Strachans SA, an accountancy services firm in Geneva, and
(b) Corner Banca SA, a private banking institution based in Lugano.
4. The material is required for investigation into, and possible prosecution of, the following people for suspected tax fraud and conspiracy offences against the laws of the Commonwealth of Australia:
...
(m) Gregory John Dunn
5. The material may also be used in possible action by Australian
authorities against these suspects to recover proceeds of
crime...
ALLEGED FACTS
Background
7. Australian authorities are investigating a number of Australian
residents for using companies, trusts and bank accounts administered
by
Strachans SA, an accountancy services firm in Switzerland, to disguise their
involvement in tax fraud schemes and money laundering.
8. In February
2004, Philip Egglishaw, one of the principals of Strachans, travelled to
Australia. While in Australia, the ACC compelled
Egglishaw to produce documents
and his personal computer and to attend an ACC hearing to answer questions. From
this, the ACC learnt
that Stachans administers various companies, trusts and
bank accounts based in foreign countries on behalf of, and for the benefit
of, a
number of Australian residents and their families.
9. The ACC believes
the services provided by Strachans enable Australian residents to:
(a) accumulate substantial assets overseas in companies and trusts hidden behind an impenetrable veil of incorporation(b) create misleading documents which assist in defrauding the Commonwealth of Australia, and
(c) access their funds administered by Strachans from anywhere in the world by the use of debit or credit cards linked to bank accounts opened and operated for them by Strachans outside Australia, including at Corner Banca, SA in Lugano, Switzerland.
10. Based on the information obtained from
Egglishaw, the ACC commenced criminal investigations into suspected fraud and
money laundering
by a number of Australian residents who have utilised the
services provided by Strachans and Corner Banca.
Strachans
S.A.
11. Strachans is an accountancy services firm in Switzerland.
The address of Strachans
is:
Rue de la Croix-d'Or 6-8 P.O. Box 3641
1211 Geneva 3
12. Strachans. is the registered business name of
Strachan Services Limited, a multi-discipline corporation of qualified
accountants,
bankers and professional trustees formed by Strachan & Co.,
Chartered Accountants (established 1947). Strachan Services Limited
is based in
Jersey.
13. The three principals of Strachans are: (a) Philip Jepson Egglishaw
(b) Terrence A Jehan, and
(c) Richard Eggtishaw.
14. Strachans employs Philip E De Fgueiredo as the manager of the Company
and Trust Administration Department.
15. The ACC believe that the main
service provided by Strachans is that of administering companies and trusts
domiciled in various
tax haven countries in such a way as to prevent regulators
and law enforcement agencies from connecting transactions and investments
made
in the names of those companies and trusts to their beneficial owners. Strachans
conducts its business using a number of in-house
companies.
16. The ACC
believe that Strachans operate in the following manner. Acting on instructions
from a client, Strachans establish a trust
that owns shares in a company. The
company is usually incorporated in the British Virgin Islands. The trustee and
shareholders
of the various entities are usually Strachans' in-house companies
that specialise in performing administrative services. The use
of the trust
hides the name of the ultimate beneficial owner of the company and the person
giving instructions to the trustee. The
ACC believe that the dominant purpose
behind using Strachans services to administer entities on behalf of clients is
to remove any
evidence of association, benefit or control with or by natural
persons with the entities. For some companies, Strachans appear to
maintain
effective control by holding signed, undated directors resignations and share
transfer forms.
17. The ACC have a copy of the following Strachans
promotional booklets:
(a) Trusts: A Simple Concept
(b) Tax
Planning and Offshore Administration, and
(c) Choosing the Right
Jurisdiction.
18. The booklet entitled ‘Trusts. A Simple
Concept’ explains how to use trusts to avoid paying taxes and duties. It
also
explains how trusts can be set up to ensure the identity of the settlor,
the trustees and the beneficiaries are completely private.
In essence by owning
shares in a company via a trust it is possible to keep the identity of he true
beneficial owner of the company
secret. The booklet outlines the general
financial and tax advice provided by Strachans as being of the type `aimed at
minimising
(or avoiding altogether) the impact of Income Tax; Capital Gains Tax;
Death Duties; Gift Taxes; Wealth Taxes; Exchange Controls;
Probate Formalities;
Inheritance Laws'.
19. The booklet entitled ‘Tax Planning and
Offshore Administration’ explains how Strachans can assist clients to form
companies in areas where disclosure of the beneficial over is not required (for
example, the British Virgin Islands).
Philip Egglishaw
20. Philip Egglishaw currently resides in Geneva, Switzerland.
Egglishaw's role with Strachans is to travel overseas and meet clients
to update
them on their company and trust structure, their assets, and to receive
additional instructions from the client. A number
of clients visit Strachans
while they are overseas. Egglishaw has travelled regularly to Australia since
1986.
21. On 14 February 2004, Egglishaw travelled from Los Angeles to
Australia on a European Union passport. Upon arrival, Egglishaw spoke
to his
brother, Richard Egglishaw by telephone, who informed him that authorities in
both Jersey and Switzerland had attended the
Strachans offices and seized
business records at the request of Australian authorities. Egglishaw went
straight to a hotel in Melbourne
and requested a shredding
machine.
22. ACC investigators executed a search warrant in Egglishaw's
hotel room in Melbourne. ACC investigators asked the hotel not to
supply
Egglishaw with a shredding machine prior to the search warrant being
executed.
23. The ACC seized documents about current and previous
businesses involving Australian clients. Some documents had been torn up
and
placed into waste paper bins. The ACC also copied the contents of Egglishaw's
laptop computer.
24. On 16 February 2004, Egglishaw was subject to an ACC
examination about his business activity involving Australian based clients.
The
ACC questioned Egglishaw about the reason he immediately asked the hotel for a
shredding machine. Egglishaw said that he had
requested the machine be brought
to his room because of concerns about his identity and possible identity crime.
25. The ACC believe that:
(a) Egglishaw was untruthful to the ACC when he stated that he had requested a shredding machine because be was concerned about identity crime
(b) Egglishaw requested the shredding machine because his brother told him that Australian authorities were investigating one of Srachans' Australian clients and Swiss authorities had seized material from Jersey and Strachans, and
(c) Egglishaw intended to shred documents in his possession because he did not want Australian authorities to know that Strachans was operating a number of companies and trusts on behalf of other Australia clients.
26. As stated in paragraph 15,
Strachans conduct their business s through a number of in-house companies. A
number of these companies
are used by Strachans to provide legitimate services.
However, others have been specifically named to convey a false impression
as to
the services they actually provide. The names of the in-house companies are
listed at Attachment A.
. . .
28. Documents obtained from Egglishaw's personal computer indicate
that Strachans routinely conduct transactions on behalf of clients
that were
likely to be part of tax fraud and/or money laundering arrangements.
Correspondence found on Egglishaw's computer chow
that Strachans have advised
clients on how to disguise taxable income as loans, an inheritance or other
forms of non-taxable payment.
Strachans have also arranged back to back loans
using the client's own funds and the production of invoices for non-existent
services.
29. These sorts of transactions are conducted with the
assistance of Strachans in-house companies. These companies are named in a
way
to give an impression that they perform a particular service for a fee, for
example, Pall Mall Finance Company (financing) or
Overseas Trading &
Promotions Ltd (invoicing) but in fact they are used by Strachans clients to
conduct transactions with themselves
and create false impressions.
30. Documentation and testimony obtained from Egglishaw links over 100
Australian taxpayers and intermediaries to a larger number
of offshore companies
and trusts managed on their behalf by Strachans. The intermediaries as are
usually Australian based accountants
or solicitors.
31. A schedule that
was recovered from Egglishaw listing the Australian clients and the
intermediaries provides a key link that identifies
the offshore companies and
trusts that Strachans operates on behalf of individual clients. Each entity
operated by Strachans is given
a name and a four figure reference number. The
names of the individual clients believed to be involved in criminal activity
are.
. . .
(l) Gregory John Dunn
32. Each of these clients and their respective
entities are discussed in detail below...
Gregory John Dun; Murray
Cordon Pollock, Peter Mervyn Bartlett and Ronald George Sayers.
84. Strachans documents show that Strachans has administered the
following entities on behalf of Gregory Dunn;
(a) Brodie Trust (4246), and
(b) Macgrove Investments Limited (4171).
85. Dunn is an independent consultant who develops and implements
tailored financial planning schemes for a small group of high wealth
clients
involved in the mining industry. Dunn has introduced a number of his clients,
including Murray Pollock, Peter Bartlett and
Ronald Sayers to Strachans who
have, supplied them with company and trust structures.
86. Dunn has been
involved in an income dissipation arrangement which uses a chain of trust
distribution. The chain of trust distribution
generally ends with trusts which
do not lodge tax returns with the ATO, or if lodging tax returns with the ATO,
do not disclose the
distribution or a trust base in offshore jurisdictions.
Dunn has also designed deduction creation arrangements involving changes
in
trust appointers and sale of shares in trustee companies.
87. Entities
associated with Dunn that participate in the arrangements usually receive trust
distributions from client entities which
are paid to Dunn in the form of fully
franked dividends. For the 2002, 2003 and 2004 income tax years he has only
returned income
of A$30,000 while being able to remit millions of
dollars- to overseas bank amounts.
88. Banking records show
that:
(a) between March 2003 and September 2004, Dunn remitted A$1,900,000 to the Strachans in-house company, Overseas Trading and Promotions, care of the National Westminster Bank PLC, 200 Pentonville Road, London, account number 1600 1082 03458. Each transfer has been noted pay PDEF/ 4246 which is interpreted to mean Strachans employee Phil De Figueiredo and 4246 is the reference number for the Brodie Trust operated on behalf of Dunn.(b) between April 2001 and November 2004, Dun remitted A$2,876,000 to an account named Gregory Dunn and Mariluz Masamayor care of the Thai Farmers Bank, 400 Phahon Yothin Avenue, Bangkok, Thailand, account number 2722561980. The majority of these transfers state that the purpose of the payment is to build a house in Hua Hin, Thailand.
. . .
90. On 4 February
1998, Egglishaw met with Dunn and Pollock in Australia. Egglishaw’s notes
of the meeting state:
91. Omni Trustees is a Strachans in-house company.
92. Pollock sold two businesses as mentioned in Egglishaw's memo and the
income of the companies was distributed to the Jedmore Unit
Trust which in turn
distributed income to another Australian trust that did not declare the income
to the ATO. The person operating
this Australian trust was convicted and jailed
in 2004 for defrauding the Commonwealth in another matter.
93. The ACC do
not know how Dunn and Pollock transferred the money to the trusts administered
by Strachans. However, enquiries by
Australian authorities show that on 24 June
2002, the Strachans in-house company Roker Trustees (Switzerland) Limited
transferred
A$2,091,939 from the Deutsche Bank, Jersey, to the Corner Bank,
Lugano, Switzerland, on behalf of the Brodie Trust...
THE SWISS CONNECTION
119. Australian authorities believe that:
(a) Strachans' office in Geneva holds the original files and other associated files, emails, compact discs, hard drive files, diaries, letters, faxes, company documents, and other material relevant to the persons listed in paragraph 5, ...
120. This material will assist Australian
authorities in proving that the persons listed in paragraph 5 are the actual
beneficiaries
of the funds being held in the companies and trusts identified as
being administered by Strachans on their behalf.
121. More specifically,
Australian authorities believe that the material held by Strachans and Corner
Banca in Switzerland will;
(a) provide information that will corroborate the information already obtained and
possibly lead to the prosecution of offenders and other evidentiary leads(b) identify the nature and extent of money laundering and tax fraud activity as well as methodologies used by the persons listed in paragraph 5 and their associates and co-offenders if any, and
(c) provide investigative leads that will identify the proceeds of crime.
SUSPECTED OFFENCES
122. There are provisions within the
Australian income tax legislation that apply to international dealings. These
include controlled
foreign companies, transfer trusts and. foreign investment
measures. All of the persons listed in paragraph 5 have made false statements
in their income tax returns when they indicated "no" in response to the question
‘do you own, or have an interest, in assets
located outside Australia
which had a total value of A$50,000 or more?’ In knowingly making false
statements they have committed
a criminal offence, in particular, they have
defrauded the Commonwealth or obtained a financial advantage by
deception.
123. Up until 24 May 2001, it was an offence against section 29D of the
Crimes Act 1914
(Commonwealth of Australia) (Crimes Act) to defraud
the Commonwealth. Arranging financial affairs in a way which dishonestly evades
tax can amount to defrauding the Commonwealth. The persons listed in paragraph
5 are suspected of having committed offences against
section 29D. An offence
against section 29D of the Crimes Act carries a maximum penalty of a fine
of A$110,000 or ten years imprisonment or both. Section 29D of the Crimes
Act still applies to conduct before 24 May 2001.
124. From 24 May
2001, section 134.2 of the Criminal Code Act 1995 (Commonwealth of
Australia) (the Code) effectively replaced section 29D of the Crimes Act. It is
an offence under section 134.2 of the Code to obtain a financial advantage from
a Commonwealth entity by deception. The
persons listed in paragraph 5 are
suspected of having committed offences against section 134.2 by arranging their
financial affairs
in a way which dishonestly evades tax. An offence against
section 134.2 of the Code also carries a maximum penalty of a fine of
A$66,000
or ten years imprisonment, or both.
125. Section 11.5(1) of the Code
provides that a person who conspires with another person to commit an offence is
guilty of the offence
of conspiracy to commit that offence. The maximum penalty
is the same as if the offence to which the conspiracy relates had been
committed.
126. Australian authorities suspect that the persons listed
in paragraph 5 may have conspired to commit offences against Section 29D
of the
Crimes Act and section 134.2 of the Code.
127. The maximum
penalty for conspiring to commit these offences is the same as that for the
offences themselves.
128. Up until 1 January 2003, it was an offence
against section 81 of the Proceeds of Crime Act 1987 (Commonwealth of
Australia) (POC Act) to engage in money laundering. A person engages in money
laundering where he directly or indirectly
deals with the proceeds of crime, or
where he brings into Australia any money which is the proceeds of crime and
which he knew was
derived from some form of unlawful activity. Section 81 has
since been repealed, but still applies to conduct which took place before
1
January 2003. The maximum penalty for an offence against section 81 is
A$200,000 fine or 20 years imprisonment or both.
129. The persons
listed in paragraph 5 are also suspected of having breached section 400.4(1) of
the Code. Section 400.4 of the Code
effectively replaced section 81 of the POC
Act. It is an offence against Australian law under section 400.4 of the Code to
deal
in the proceeds of crime. Where the proceeds of crime amount to A$100,000
or more, the maximum sentence for a breach of section
400.4 is 20 years
imprisonment or a fine of A$132,000 or both.
130. Extracts of the
relevant legislation are at Attachment E.
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