Report on
AD HOC COMMITTEE

Draft Financial Investigations
(Northern Ireland) Order 2001

Report and Proceedings of the Committee (Continued)

290. Prof Dickson: Absolutely, and I am on record as having said that I want the Human Rights Commission to help make Northern Ireland a better society. We share your goal of a more crime-free, paramilitary-free, safer environment for everyone who lives here. Of course we desire that, but we also share the Secretary of State's desire for Northern Ireland to be a model for the world with regard to the protection of human rights. That is why the Human Rights Commission has been established by statute, as has happened in many other countries around the world - and not just in countries emerging out of conflict, but in well established Commonwealth countries such as Canada, New Zealand and Australia.

291. We see it as our duty to draw the attention of decision makers, yourselves included, to the possible human rights implications of certain legislation, but always within the framework of having to strike a balance between the rights of individuals and the rights of society. Yes, I share with you the goal of making Northern Ireland a crime-free society. One could do that quite easily by making it a police state, if you like, but that would be too high a price to pay. One must always strike a balance and, as we have said in this paper and as I have said orally, so much depends on how powers are implemented in practice rather than on how they read on paper. On balance, there is not a lot in this that worries us, but we draw the Committee's attention to a few potential difficulties.

292. Mr Close: I thank you for that. I do not think anyone here would be looking for a police state, and I want to put that clearly on the record. I am concerned because I see this proposed legislation as a precursor to a new proceeds of crime bill, or whatever. The South has the Criminal Assets Bureau, and I shudder to think what the reaction of the Human Rights Commission would be to that if it has these concerns over the Financial Investigations Order. I would like you to reassure me that we are not going to be running up against an absolute brick wall if we try to build upon the 2001 Order.

293. Prof Dickson: I am not totally au fait with the Republic's legislation on this, but I am aware that at a recent conference in Dublin various concerns were expressed by high ranking politicians and lawyers about the compatibility of the legislation on the Criminal Assets Bureau with the European Convention on Human Rights. When the Republic eventually gets round to incorporating the European Convention on Human Rights, the law on criminal assets may well have to be amended to make it compatible.

294. Mr McNamee: I am not against the concept of confiscating the proceeds of criminal activity, and I do not think anyone on the Committee would be. We must not be blinkered on the issue of legislation which is directed towards gathering information that will enable the proceeds of criminal activity to be confiscated.

295. You stated that this lies not in the actual powers but in the exercise of those powers and in how other individuals are affected by them. One may wear blinkers and think that it is fine to investigate a person who is suspected of being involved in criminal activity, but we have to consider the implications for other individuals.

296. We have already heard about the difficulties bank officials face when, for instance, issued with bank circulars. They may be providing information on an individual other than the one on whom the information is being sought. If information is being sought on a John Smith, then information on every John Smith will be released given that this Financial Investigations Order will extend those powers of trawl to other institutions, police officers, Customs and Excise officers, financial investigators and solicitors.

297. In situations where information will be acquired in the course of those trawls, what is your view on the number of people who will have absolutely no connection with the individual being targeted? What is your view on the large amount of information that will be assembled on a particular name and whether that information is manageable? Much of it will be relevant to the individual being targeted. However, what is your view on the number of other people whose information will be disclosed and the potential effect of that?

298. Prof Dickson: There is the danger that you identify, but it can be avoided by careful work by the financial investigators. When they are asking questions of financial institutions or solicitors, they ought to be able to identify in specific detail the person about whom they are asking questions. Therefore there should be little risk of other John Smiths having their private details divulged.

299. Under existing law everyone has a legal obligation to report a crime. If one knows that an offence has been committed, one has a duty to report that. That already goes some way towards protecting society against the illegal money laundering activities that are being carried out through financial institutions, for example.

300. Ms O'Conor: The Proceeds of Crime (Northern Ireland) Order 1996 specifies that anybody who has knowledge or a suspicion that the proceeds of crime are involved in a particular activity has an obligation to report that to the relevant authorities. Therefore it appears that the extension proposed covers something that is already covered.

301. The Chairperson: Leaving aside the problem with solicitors, you do not have a problem or any difficulty with what is proposed. Is it fair to say that your submission highlights potential difficulties in practice?

302. Prof Dickson: Yes, except that it is not just in relation to solicitors that we have reservations.

303. We have serious reservations, as dealt with in paragraph five of our submission, about the overall compatibility of the legislation with the European Convention insofar as the new Order would permit assumptions to be made about where money has come from when a person has been convicted of relevant offences. Assumptions can be made about where that money has come from and it can be confiscated even though it may have nothing to do with any crime and may be property belonging to a member of the family of the person who has been convicted rather than to him. The McIntosh case in Scotland illustrates the dangers here, and the Government need to be aware of them.

304. The Chairperson: Does that comment relate to article 9 of the Proceeds of Crime (Northern Ireland) Order 1996?

305. Prof Dickson: Yes.

306. The Chairperson: Is there a cloud looming in relation to the application of article 9 as a result of the McIntosh case?

307. Prof Dickson: Yes, and also as a result of the incorporation of the European Convention into our law by the Human Rights Act 1998.

308. The Chairperson: While it has not been challenged here in our courts, is there the potential of a challenge along the McIntosh lines?

309. Prof Dickson: I think so.

310. The Chairperson: That does not specifically relate to the proposed draft legislation here, does it?

311. Prof Dickson: No, it relates to the original Order.

312. The Chairperson: Does the power to obtain a general bank circular exist in Great Britain? Do the police or Customs and Excise have that power there?

313. Prof Dickson: I do not know.

314. The Chairperson: Article 49 of the Proceeds of Crime (Northern Ireland) Order 1996 allows for the appointment of a financial investigator. Does that power exist in Britain? My understanding is that it does not exist in Britain. It is unique to Northern Ireland. Is there any similar power there to that?

315. Prof Dickson: I share your understanding that that provision is unique within the United Kingdom. I do not think that there is a comparable power even under the anti-terrorist laws in Great Britain.

316. The Chairperson: You suggested in your submission that it would be helpful if the Code of Practice was amended in the light of the proposed draft legislation. Do you have any specific amendments to propose, or is it too early to suggest any proposed amendments to the Code of Practice?

317. Prof Dickson: I cannot put forward specific suggestions because we could not get a copy of the Code of Practice prior to today's meeting.

318. The Chairperson: In general terms you are saying that the Code of Practice should be looked at in the light of the draft legislation to see if amendments would be appropriate.

319. Prof Dickson: I think that should happen.

320. The Chairperson: In relation to the general solicitor circular, you have said that schedule 2, paragraph 4 of the 1996 Order preserves legal professional privilege. If a solicitor decides not to comply with the Order on the grounds of professional privilege between himself and his client, is that reconcilable? Is this something that could cause difficulty? If you have a means of preserving professional privilege, how can you then have an Order which, on the face of it, seems to conflict with that professional privilege?

321. Prof Dickson: Representatives of the Law Society could better explain this. However, I understand that there is a difference between the existing confidentiality requirement between lawyer and client and legal professional privilege. The former goes much further than the latter. Under the cover of legal professional privilege, one is only entitled to keep back information in certain very confined situations. Otherwise the duty of confidentiality can be breached.

322. It may be that legal professional privilege does not protect the information which a financial investigator is seeking in non-contentious business such as house conveyancing or the drafting of wills.

323. The Chairperson: What do you mean by non-contentious business?

324. Prof Dickson: I mean business that has nothing to do with a particular dispute. For example, you could engage a solicitor to deal with conveyancing just as you might engage a building society employee. That you have a solicitor, rather than someone else, to do the job might be accidental.

325. The Chairperson: If you engage a solicitor to deal with a legal action against a third party, is that regarded as contentious business?

326. Prof Dickson: Yes.

327. The Chairperson: In that situation, would professional privilege be activated?

328. Prof Dickson: I am not an expert on the law concerning professional privilege. I understand that it bites on the type of relationship in which there is a good reason for a client to have a close and honest relationship with his solicitor, and that that would not obtain in situations in which non-contentious business was being conducted.

329. Mr S Wilson: The more I listen to Prof Dickson, the more I am convinced of my original assertion about this submission. There are two references in the submission to the Code of Practice's probably needing to be amended. You think that the amendment in article 4 should only come into force after the Code of Practice governing the exercise of powers for financial investigators has been amended.

330. In your response to the Chairperson you said that you could not tell the Committee what amendments are required because you do not yet have a copy of the Code of Practice. How on earth can you know that the Code of Practice needs to be amended if you have not seen it? Is this not more evidence of the flavour of your submission?

331. The bankers - and they have to work with this on a day-to-day basis - said that they could not think of any amendments. You have not seen the Code of Practice yet you think that it needs to be amended. Can you explain that to us?

332. Prof Dickson: I will try to. I was assuming that if changes were being made to the substance of the law, the implementation of which the Code of Practice is designed to give guidance on, it would logically follow that the Code of Practice would need to be looked at, and probably amended, to reflect the changes to the substance of the law.

333. Mr S Wilson: With respect, I would have thought that one of the prerequisites for making any judgement like that would be to look at the current wording of the Code of Practice to see how specific it is. You are telling us that you have not even seen it yet you are saying that it needs to be amended. It comes back to my original assertion that your submission appears to be more interested in guarding what you see as the rights of the people being investigated rather than in ensuring that the proceeds of crime are found by the relevant authorities so that criminals cannot use them. The fact that you said at the start that you were not convinced of the need for this legislation bears that out. If there is one person in this country able to hold on to the proceeds of illegal activities without the police or Customs and Excise being able, under the current law, to get at that money, we should have legislation to deal with that. It is not a matter of there being an upsurge in crime or not. You seem to want to be convinced that we have a crime wave before we act. You also want all these safeguards built in regardless of whether you have read the Code of Practice. I am amazed that this attitude is being adopted by the Human Rights Commission. However, given the decisions made yesterday about criminals - also based on human rights legislation - perhaps I should not be surprised at the apparent favour being shown towards wrongdoers.

334. Prof Dickson: I think that that is a misinterpretation of my written and oral presentations. One of the reasons that we headed the written presentation "provisional" was we had not had sight of documents such as the Code of Practice. You will understand that we were asked to make a submission to the Committee at relatively short notice. There have also been the Christmas and new year breaks. It is difficult to track down these documents. When we track down the Code of Practice we will scrutinise it. When we submit our final views to the Committee, we will say clearly whether or not there should be amendments to the Code of Practice.

335. The Chairperson: In conclusion, the bankers indicated that they were reassured by the Code of Practice and that it was a very important element in their dealing with the implications of the 1996 Order. To be fair to the bankers, I do not think that they have considered the matter of amendments. They neither sought them nor ruled them out.

336. Ms Ramsey: Just to be fair to the Human Rights Commission, the bankers had an input into the consultation process but it did not.

337. The Chairperson: That is true.

338. I thank you for coming this morning. We have had a very useful exchange of views. I also thank you again for your very helpful written submission.

339. Prof Dickson: Thank you, Mr Chairman.

MINUTES OF EVIDENCE

Tuesday 9 January 2001

Members present:
Mr A Maginness (Chairperson)
Mr Bell (Deputy Chairperson)
Mr Close
Mr McNamee
Ms Ramsey
Mr M Robinson
Mr S Wilson

Witnesses:
Mr J Bailie )
Mr N Broderick ) The Law Society of
Mr P Kinney ) Northern Ireland
Mr J Neill )

340. The Chairperson: Mr Neill, your colleagues and you are very welcome to this meeting of the Ad Hoc Committee. We look forward to hearing your views on the matter before the Committee - the draft Financial Investigations (Northern Ireland) Order 2001.

341. As you know, the Secretary of State has, under the Northern Ireland Act 1998, referred this matter to the Committee for our consideration. We are anxious to hear from the Law Society, particularly as article 6 will apply to solicitors. We are keen to hear your views on the other draft articles too. Would you like to introduce your colleagues?

342. Mr Neill: Thank you very much for this opportunity to appear before the Committee. We heard the previous witnesses mention the short amount of time that was available for preparation, but we do have a written document, which I propose to read from and hand in. Although it is an interim document, it will bring the matter forward to a certain extent.

343. We represent the Law Society of Northern Ireland, a professional body which regulates and represents just under 2,000 practising solicitors in this jurisdiction. My name is John Neill, and I am a solicitor in a private practice firm with offices in Belfast and north Down. I am the society's current president. I am accompanied today by two other members of the governing council of the society, Mr Patrick Kinney, who has an interest in human rights and is a partner in a private practice firm with offices in Belfast and Newry, and Mr Nigel Broderick, an experienced criminal practitioner in a firm with offices in Belfast, Newtownards and Armagh. We are also joined by Mr John Bailie, the society's chief executive and secretary and, as such, our senior policy adviser, who is also a qualified solicitor.

344. Given the limited time available to everyone, our purpose today is to address the main policy issues raised by the proposed Order. Following this meeting, we intend to provide the Committee with a formal note which will record the main points made in this presentation and deal with any other points that the Committee may wish to raise with us today. Due to time constraints, the Committee may find it most beneficial if we concentrate upon those aspects of the proposed Order on which we can offer some experience and expertise from a professional perspective.

345. In essence, these provisions will impinge on the relationship between any client and his or her solicitor. For ease of reference I refer you at this stage to article 6 of the Order and the comments in the Explanatory Document, with which you are all familiar.

346. I want to begin by making one point clear. The Law Society of Northern Ireland does not condone the activities of criminals, nor do we have any interest in affording protection to drug barons, terrorists or racketeers. We therefore understand and appreciate the objectives and sentiments which lie behind the proposed legislation.

347. However, we are obliged to draw attention to the right of every citizen to due process and equal treatment before the law. The reservations we have about these proposals are relevant to every Committee member and his or her constituents. The proposed Order will further encroach upon the principles of solicitor/client confidentiality and legal professional privilege. These principles do not afford privilege to lawyers - they provide vital protection to individual citizens. Solicitor/client confidentiality and legal professional privilege are of a different order to other forms of confidentiality not recognised by law.

348. A solicitor is in the unique position of being unable, as a matter of both professional and legal obligation, to disclose any information about a client's affairs without a waiver by the client or on foot of a clear and lawful authority to do so. These protections have not been devised by accident, or by lawyers for lawyers. They are characteristic of all developed, democratic legal systems over many centuries. The issue is not about encroachment on lawyers' territory.

349. It is the right, which each of you has, to consult your legal adviser about your personal business confident in the knowledge that the privacy of that consultation will be respected and will not lightly or arbitrarily be overridden. These principles have evolved, under judicial supervision, over the years so as to prevent excesses such as furtherance of criminal interests. The principles do not provide carte blanche for criminals.

350. Let me cite one of the authoritative legal statements of the principle.

"The principle is that a client must be able to consult his lawyer in confidence. The client must be sure that what he tells his lawyer in confidence will never be revealed without his consent. Legal/professional privilege is, therefore, much more than an ordinary rule of evidence limited in its application to the facts of a particular case. It is a fundamental condition on which the administration of justice, as a whole, rests."

351. Against this background the first point we wish to make about the draft Order is that little objective justification for the introduction of these further measures, or for the selection of Northern Ireland for special treatment in this respect, has been presented to date. The Proceeds of Crime Order, which is to be amended by the proposed Order, represents a series of extensive powers already available to the investigating authorities. It is notable that the Explanatory Document refers to the fact that the provisions of the 1996 Order have been used to good effect. The powers therein are widely recognised as draconian, but the present provisions have the merit of being applied throughout the United Kingdom and have built-in safeguards.

352. A significant extension of these powers is now proposed by the Government, and it seems clear that the level of protection generally and against abuse of the additional powers to be conferred on the investigating authorities is less than that given by the safeguards which apply at present under the Proceeds of Crime Order. For example, I draw attention to the powers conferred by article 6 of the proposed Order. From the Explanatory Document it is clear that the purpose of these provisions is to enable speculative trawls to obtain information about transactions conducted generally by solicitors for clients. The operation of these provisions will almost certainly involve infringe- ments of confidentiality and privacy, not just of the person under investigation but of those persons with whom the person under suspicion has had legal dealings.

353. It would appear that once appointed the special financial investigator is to have an extensive range of discretionary powers. These are speculative in nature, and irrespective of the provisions of any Code of Practice, it is clear that the investigator will have a high degree of personal discretion in the exercise of these powers. It is notable that the exercise of these powers is not made subject to any form of independent judicial oversight by which that exercise might be challenged or issues of legal privilege resolved.

354. There are indications that the measures have been proposed in response to views expressed by the law enforcement agencies and on the basis of a study. The proposals have been prepared without any input from the Law Society. We make this point about the value of prior consultation because this would have allowed an exchange of information and experience about the operation of the present provisions and evaluation of any problems and the exploring of alternative means by which the concerns of the authorities might be addressed.

355. As it is, the Northern Ireland Office has produced an Order about which, for the reasons I have mentioned already, we have reservations.

356. We are concerned that these measures are to be limited to Northern Ireland and will be taken forward by way of the Order in Council procedure. First, in respect of the use of the Order in Council procedure, the effect will be to preclude the same degree of parliamentary debate and amendment that would apply to a Westminster Bill. The decision to legislate by way of this unsatisfactory method is perhaps harder to understand in the light of the fact that the Government have signalled an intention to bring forward during this parliamentary session a Westminster Bill, which will deal broadly with the same issues. There is a reference within the Explanatory Document to a consultation exercise on the report Recovering the Proceeds of Crime. The Government propose to legislate in respect of that report. It is understood that it appears viable for that Bill to be used to deal with any legislative amendments for Northern Ireland which are considered necessary in due course.

357. It seems inappropriate that, without any persuasive justification, the Government propose to legislate exceptionally in respect of the criminal justice system in Northern Ireland at this time. Media coverage of the proposed Order suggests that the Government consider the introduction of these provisions on general solicitor circulars as paving the way for the introduction of similar measures in the rest of the United Kingdom. If this is so, we suggest that the Government should make this clear.

358. Our other main concerns are twofold. First, the Government's assertion that the proposed legislation complies in all respects with the terms of the European Convention on Human Rights may not be well founded. Secondly, the effect of the amendments to the 1996 Order now proposed appears to be to make client information available to the financial investigator retrospectively. On commencement of the proposed Order, it will be possible to have an inquiry on a transaction which was entered into by an individual prior to the introduction of this legislation on the basis that his/her confidence with his/her solicitor would be respected and preserved by law.

359. In conclusion, it may be helpful to summarise for the Committee the position of the Law Society of Northern Ireland at this stage, pending discussions with the Northern Ireland Office and preparation of a further detailed submission as part of the current formal consultation progress. We invite the Committee to consider supporting the position of the Law Society in the following respects: first, to acknowledge the importance of safeguarding the public interest in the principles of solicitor/client confidentiality and legal professional privilege; secondly, to have regard to the importance of those principles, to affirm that they should not be interfered with lightly without careful consideration of other options or without the provision of effective safeguards; thirdly, to accept that any legislation on the lines proposed should not be carried forward or, at a minimum, implementation of the provisions affecting solicitor/client confidentiality and legal professional privilege take place before full and meaningful consultation between the Northern Ireland Office and the Law Society. Furthermore, if and when legislation on these matters is brought forward, it should not be by way of Order in Council. Finally, legislation on these matters should not be applied to Northern Ireland on a selective and experimental basis.

360. I hope that the Committee finds these observations of some interest and value when assessing the proposed Order. These reservations are not being expressed in the interests of lawyers. They are in the interests of anyone who needs to consult a lawyer, secure in the knowledge that his confidence will be respected.

361. The Chairperson: The 1996 Order appears to protect professional privilege. Do you consider this proposed amendment as conflicting with that protection of professional privilege?

362. Mr Kinney: One of the concerns we have about the provisions of the 1996 Order is that the definition of legal professional privilege is not the widest definition of that term. It is confined to the privilege that attaches to High Court proceedings. The definition of legal professional privilege, as it has evolved over centuries of judicial consideration, is much wider. It applies to advice supplied by a lawyer to his client and the circumstances in which a client should approach a lawyer to seek such advice. The protection afforded by the 1996 Order is not complete. This draft legislation goes further in that it requires specific information from solicitors which may well conflict with that principle of privilege and certainly with the principle of confidentiality.

363. The Chairperson: Can you explain the demar- cation between professional privilege and confidentiality?

364. Mr Kinney: It is difficult to find an accurate and precise demarcation between the two areas. We have a professional obligation of confidentiality towards our clients in all respects. When people consult a solicitor, they should feel that they have the right to consult that solicitor and have none of their business divulged to anyone. As Mr Neill mentioned, there are restrictions, both professionally and legally, on that right to confidentiality or privilege. For example, if there were any question of furthering criminal intent, that would not be covered by privilege or confidentiality. Where the precise boundary between confidentiality and privilege lies is not clear. That is why so much of this has come before the courts at all levels, up to the House of Lords, and it has been considered judicially on many occasions. What is clear is that when someone consults a lawyer and seeks advice, information given in relation to the seeking of that advice is privileged information.

365. Mr S Wilson: Let us imagine that a solicitor was with a client and that during the course of the discussion it became clear that the client was seeking advice on an illegal activity that he had been involved in. Let us say that it was something about money and that it became clear to the solicitor that this money had been obtained illegally. Are you obliged, as the bankers told us they are obliged, to report that immediately to the police?

366. Mr Kinney: My understanding is that, under the terms of the 1996 Order, if I have any suspicion regarding any transaction that comes to me in the course of my business, I have an obligation to report it. A provision within the Order also says that if legal professional privilege applies, I must not disclose it. However, in circumstances such as you have given, where there is a clear criminal intent and no doubt about it, then it should be disclosed.

367. Mr S Wilson: I suppose confidentiality has already been breached anyhow. Is what we are looking at not simply an extension of that, namely that the police or Customs and Excise will be able to seek to obtain information? On quite a number of occasions, Mr Neill spoke about a speculative trawl. Our understanding from both Customs and Excise and the police - the police are the ones who have been exercising the power so far - is that this is not speculative at all. They must have built up a case and they must have come to the point where they know that they need further information. They must then convince a County Court judge. The judge, who, the police told us, carries the can at the end of the day, questions them fairly closely before allowing them to set up the investigation. Given all of the safeguards, do you not agree that it is wrong to describe this as speculative? The police have already built up a body of evidence. They have to show that they are pursuing a case and need this additional information. Surely this is not a matter of confidentiality such as was described earlier on; rather it is an extension of their means of obtaining information which would help where a crime is already suspected anyhow?

368. Mr Kinney: There are two answers to that, a general answer and a more specific one. The general answer is that a fundamental plank of our legal system is that conversations and other communications between a legal adviser and his or her client are privileged and should be confidential. It is important to remember this. Any alteration of that principle should be looked at very carefully and should be proportionate.

369. To be more specific, I used the phrase "speculative trawl" because that is what is happening. This is a general circular to solicitors, not a request to a particular solicitor for information. A circular is sent in the hope of trawling some information. I think the word "trawl" is used in the Explanatory Document.

370. The police and the relevant authorities do have powers under the 1996 Order to seek production orders which give them the power to seek particular information about particular clients. That can be very broadly phrased. A production order can be phrased to encompass all dealings by a particular person in an office. One of the safeguards that the 1996 Order provides is that, if there is any concern that privilege is being affected, an application can be made by a solicitor to the judge who made the order. He can do this without reference to the client, because the privilege attaches to the client and not to the solicitor, and we have a duty to the client to protect that. We can apply to the judge to express our concerns, and the judge can then make a decision on what is or is not properly covered by the production order.

371. There are already systems in place for dealing with such situations, and we think that this is speculation on how the information is being sought.

372. Mr Close: I would like to raise the issue of privilege as I am a bit confused about it. Is information the same as suspicion when privilege relates to information which you may have obtained through your relationship with your client? Your suspicion might be based not on information that you have gained from your client, but on common sense.

373. If an individual's lifestyle is far above what he can possibly maintain on his legal income - he might be on the dole - you may well have the same suspicion about that individual as I would have. Does your privilege extend to suspicion?

374. Mr Kinney: We are addressing two different, although related, issues and I think you are quite right to draw the distinction. You are quite right that there is an obligation to report one's suspicion. Suspicion can arise from any number of a client's activities which cause one concern. The obligation to disclose that comes under the 1996 Order. That is different from having possession of communications which may be considered privileged, because they have been handed to a solicitor to provide advice to the client. There is a distinction between the two areas.

375. Mr Neill: It is often a matter of degree. When one has a suspicion one can face agonising decisions on whether one is under an obligation to report it to the authorities or whether it is on the other side of the dividing line. Like so many things in the law there is a balancing act to be done.

376. The Chairperson: Mr Kinney raised an interesting point about the general solicitor circular. Say, for example, that all banks are informed that there is a "Joe Smith" living at such-and-such an address and are asked to trawl on him. Is a general solicitor circular similar?

377. There are in Northern Ireland, I imagine, about 1000 firms of solicitors. Does that mean that those 1000 firms would be told to trawl their records to see if there is a Joe Smith at such-and-such an address? Is that how it works in practice?

378. Mr Kinney: That is our understanding of it. At this stage, as was highlighted by Mr Neill in his presentation, we have not been involved in any consultative process with the Northern Ireland Office. We are simply going on the information we have been provided with, and that is our understanding of how it would work in practice.

379. The Chairperson: It would be a difficult exercise to inform and check up on all those firms. It seems an impractical sort of order to give.

380. Mr Broderick: The legislation assumes that every solicitor's office will have exact information on each client and that information will be retained for a number of years. Each office is run on an individual basis, but there is a certain amount of over-emphasis on the fact that solicitors may or may not have all these records.

381. The Law Society shares your concern that this information may not be available or may be difficult to obtain. It places individual solicitors under a very onerous obligation. However, that does not take away from the general point, and we emphasise this at the end of our submission. This is not about lawyers' difficulties with the legislation; it is about every one of us around this table. This is about clients' confidentiality not the lawyers'. We are more concerned with the implications for clients than the implications for lawyers.

382. Mr Bailie: There are just under 600 solicitors' firms in Northern Ireland at present. As regards your point about the logistics or practicalities of implementing this legislation, we are operating on the basis of the information we have. The word "trawl" - a fishing term - is the word used in the Explanatory Document.

383. With regard to the way in which it will operate, we are referring to the terms of draft article 6 and the amount of discretion that appears to be conferred on the financial investigator. There is a process whereby, in order to get a financial investigation underway, there has to be a court's approval. These are wide ranging, non-specific powers which confer a great deal of discretion on the individual investigator without any opportunity for any formal review or oversight by a judge.

384. The Chairperson: The financial investigator will be appointed by application to a court. A County Court judge will look at the application and agree to the appointment. Then the financial investigator in the exercise of his power can send a general solicitor circular to solicitors in order to conduct a trawl. He will not have to go back to the court to get another order. He will be able to do that if he feels it is the right thing to do.

385. Mr Bailie: That is our understanding.

386. Mr Neill: On that point the understanding is that the application is made ex-parte, in other words unilaterally by the authorities without any particular target having the opportunity to make representations at that stage. Thereafter, there may be a complete lack of control or supervision.

387. The Chairperson: I can understand its being made ex-parte, in the sense that if somebody is engaged in crime, you do not want to be tipping that person off. However, once an order has been granted by a County Court judge, is there any provision in the 1996 Order for the named person to appeal against that order once that person is under investigation and knows about it?

388. Mr Broderick: There would be the normal legal remedies such as challenging by way of a judicial review.

389. The Chairperson: But apart from that?

390. Mr Broderick: That would be the main focus. If a final order is made, then obviously the first application is ex-parte. I am thinking about an application specified, not to a solicitor but to a specific defendant in a criminal case.

391. Once the order is made, that person is involved in an interlocutory order - that is the first step. That person would then have the opportunity to account for what he says are legitimate funds. He can then submit a replying affidavit. That application to court takes on its own life, usually at the end of the criminal proceedings. That can form the basis of an open hearing before the court. Each party can make representations, which is more like a hearing than an appeal. The initial step is taken without his knowledge.

392. The Chairperson: Are you referring to a situation begun after a criminal conviction has occurred?

393. Mr Kinney: Mr Chairman, I would like to help clear up some of the confusion about this matter. Provisions in the 1996 Order allow for a County Court judge to make specific requests for information - for example, an application by the RUC. This is a "production order" which is served on a solicitor asking for the production of documents or information. There is provision in the Order for a solicitor to go to that judge or to another County Court judge to open the issue of privilege if he or she is concerned about it, as I said earlier. If your initial question was addressed to the new draft Order, however, to my knowledge there is no provision in the 1996 Order that will capture the powers of the financial investigator. You could ask for a judicial review application in relation to the initial appointment of that officer. Once the financial investigator starts to use his wide discretionary powers, you have no effective recourse to a court to ask for further assistance.

394. The Chairperson: Does the production order relate to an individual solicitor as opposed to solicitors at large?

395. Mr Kinney: Yes. I am not aware of any situation where a trawl or general production order can be made. It is normally addressed to one or perhaps two or three firms of solicitors.

396. The Chairperson: Article 6 of this draft Order would make it general.

397. Mr Kinney: That is correct - it would be a blanket application to solicitors' firms for unspecified information.

398. Mr McNamee: You have said that under the 1996 Order specific requests can be made for information. If, as Mr Kinney has said, there are concerns about confidentiality or privilege, they can be raised in a court. Under the proposed Financial Investigations Order there is no recourse for dealing with concerns regarding confidentiality or privilege. I note that the Law Society was not consulted about the Order.

399. Mr Kinney: That is correct.

400. Mr McNamee: Do you feel that it should not be introduced as an Order in Council? The point has been made that this is specific to Northern Ireland, as opposed to any other part of the United Kingdom. A study was done on the effects of the Proceeds of Crime Act 1996. Has the Law Society had access to or any participation in that study?

401. Mr Kinney: We have seen nothing of that nature.

402. Mr McNamee: I would like to inform you of the difficulties this may present. The Explanatory Document states that

"solicitors increasingly specialise in their areas of practice and therefore there is a growing likelihood that the solicitor who represents the defendant in the criminal proceedings will not be the solicitor used by the defendant to carry out a property transaction for him."

Perhaps you could comment on that point.

403. You have mentioned the blanket trawl of solicitors which would be available under this Order and the investigator's extensive discretion. Do you envisage its affecting people other than the individual identified? For instance, if an investigator required information on a named individual, irrespective of any address provided or held, would the sole focus be on a name? You are concerned about people with the same or a similar name whose solicitors will have to release information to the investigator though their clients may not be the people identified as the targets of the trawls. However, given its wide nature, how many totally unconnected people might be drawn in? How many solicitors will face the issues of privilege and confidentiality even though their clients may not be the people targeted?

404. Mr Broderick: Perhaps I might address that question. We share the concern that the trawl is highly speculative. There could be countless people with similar names. It is difficult to give an exact figure, but if only a name is given, the numbers could run into hundreds. These people's personal details and confidential transactions - quite legitimate business - would be disclosed to other parties though the individuals might have legitimate reasons for keeping their matters private. Our concern is that dealing simply with a name will jeopardise the duty of confidentiality quite rightly placed upon us as solicitors.

405. The first point you touched on was the assumption made in the Explanatory Document that Northern Ireland firms increasingly have a degree of specialisation. We do not share that assumption. Northern Ireland is a very small jurisdiction where most, if not all, practices are of a general nature. There are very few, if any, practices specialising in a particular area of the law. Though a firm like my own has a large amount of criminal work, it continues to deal with a vast array of other legal issues. With respect, no firm can afford to specialise in one particular area.

406. Since we are a small jurisdiction, a solicitor will very often know - or know of - his client before he comes through the door. The situation is different to that which perhaps obtains in England, where there is a far larger population, some of which is transient, and where one might be approached by people from different ethnic backgrounds. That is not a problem that we have in Northern Ireland. Most of us would say that we know our clients and their backgrounds and would have an idea of where their funds were coming from.

407. Mr Bailie: By "consultation" we mean consultation prior to the framing of legislation rather than the presentation of legislation based on certain assumptions. We do not merely mention consultation as a semantic point, for it would allow examining assumptions made about the legal profession in particular, and our experience of the Order's operation, as well as taking into account that of the prosecutors. That is what has been missing from this equation and the preparation of the legislation. That is why we specifically request the Committee to endorse our view that the Northern Ireland Office should now enter into full and meaningful discussions with the Law Society to establish whether these powers are necessary and to allow us to see whether these concerns might not be addressed in a way that is less offensive to solicitor/client confidentiality.

408. Mr Kinney: In conclusion, perhaps I might add a further point in response to the Assemblyman's question. The issue of people with like names is not the only way in which confidentiality could be breached. It is foreseeable that, on many occasions, third parties involved in dealings would also have to be identified to fulfil obligations to the financial investigator. For example, in a conveyancing transaction, if one party is suspected of some kind of illicit behaviour, it is foreseeable that the police may wish to know the name of the other party in the transaction to see if he is in any way connected. I see that kind of information as also being a risk. People who have no connection with any illicit affairs of any kind may clearly have their confidentiality breached.

409. The Chairperson: I do not think there are any further questions. I should like to thank you once again for coming. Thank you for the submission you have made. We look forward to reflecting on the written copy which you will be leaving with us. The presentation and discussion have been very useful.

410. Mr Neill: Thank you very much, Mr Chairman and Committee members.

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