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	England and Wales High Court (Administrative Court) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Administrative Court) Decisions >> Crown Prosecution Service v Adaka [2007] EWHC 1304 (Admin) (06 June 2007) URL: http://www.bailii.org/ew/cases/EWHC/Admin/2007/1304.html Cite as: [2007] EWHC 1304 (Admin)

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IN THE HIGH COURT OF JUSTICE

		Royal Courts of Justice Strand, London, WC2A 2LL
		6 June 2007

Kenneth Parker QC:

Introduction

1. On 22 February 2005 Reginald Oyiborojaze Adaka ("Adaka") was convicted at Maidstone Crown Court of two counts of money laundering under the Criminal Justice Act 1988 and the Proceeds of Crime Act 2002. He was sentenced to 4 years' imprisonment. Mr Narushima, a Japanese citizen and resident, had been the victim of an "advanced fee fraud", and the first count related to £483, 873 which had been fraudulently obtained from Narushima and paid into an account controlled by Adaka. Mr Lai, a citizen and resident of Canada, had been the victim of a similar fraud, and the second count related to £9,471 which had been fraudulently obtained from him and also paid into the same account controlled by Adaka. Adaka was found not guilty on two further counts of conspiracy to defraud Narushima and Lai of the monies just mentioned.
2. The bank account controlled by Adaka was a company account held at Barclays Bank in the United Kingdom in the name of Omedo Investment Limited ("Omedo"). Adaka was the sole director and shareholder of Omedo. At 25 February 2003 the Omedo account was overdrawn in the sum of about £2,418. On that day, by two transfers, Narushima paid £410,879 into the account. On 3 March 2003, that is, just three clear working days later, three transfers amounting to £335,000 were made out of the account. Two of those transfers are at the centre of these proceedings.
3. One transfer was for £135,100 and the funds were paid into the account held at Barclays Bank in the United Kingdom of Jones-Tech International Limited ("Jones-Tech"), a company registered in Nigeria and owned by the first applicant, Mr Williams, who is a Nigerian citizen and is resident there. By two transfers, dated 4 March 2003 and 13 March 2003 respectively, Jones-Tech paid £205,000 from this account to Austin & Jed, solicitors (who represent Mr Williams in these proceedings). Those funds were then shortly thereafter disbursed in connection with the purchase of a house at 5 Cavendish Place, Deerhurst Road, London, NW2 4DE and the purchase of ten flats at 9 Albert Embankment, London, SE1 7SP.
4. A second transfer from the Omedo bank account controlled by Adaka was for £137,000 and the funds were paid into the National Westminster Bank account in the United Kingdom held by the second applicant, Mr Chukwu, who is also a Nigerian citizen and resident.
5. The third transfer from the Omedo account was for £62,900 and was paid into the account held at Barclays Bank in Jersey by one Chika, about whom little seems to be known and who has not made any appearance in these proceedings.
6. The Crown Prosecution Service ("CPS") maintains that the amounts paid into the bank accounts of Jones-Tech and Mr Chukwu are indisputably the proceeds of crime and that those funds or assets that were derived from them must be confiscated under the applicable legislation. The applicants do not dispute that the funds in question were the proceeds of the frauds perpetrated against Narushima and that the monies had been dishonestly received by Adaka, through Omedo, and had then been transferred shortly thereafter from Omedo to their respective bank accounts. However, both applicants contend that they obtained the monies for full value, having paid an equivalent amount in Nigerian naira at a market rate of exchange. They also contend that at the time of the alleged exchange transactions they did not know, and had no reason to believe, that they were obtaining the proceeds of crime.

The course of the proceedings under the 1988 Criminal Justice Act ("the Act")

7. On 15 July 2004, that is, pending the completion of the criminal proceedings against Adaka, Mr Justice McCombe made a restraint order under the 1988 Act against Adaka. The order extended to the sum of £137,000 held in the account of Mr Chukwu at the National Westminster Bank, referred to at paragraph 4 above, that sum having been frozen in that account since November 2003. The order also extended to the property at 5 Cavendish Place referred to at paragraph 3 above, as an asset beneficially owned by Jones-Tech or by Mr Williams and allegedly acquired by the proceeds of crime. The application for the restraint order was supported by a witness statement dated 9 July 2004 filed by Mr Robert Alan Wood, a financial investigator of the Kent County Constabulary. Mr Wood had the conduct of the investigation into Adaka, and his witness statement contained a detailed history of the events leading to the prosecution of Adaka. Mr Wood also explained how the funds representing the proceeds of crime were transferred to the bank accounts of Jones-Tech and of Mr Chukwu, and how, in the case of Jones-Tech, those funds were applied to the purchase of properties.
8. On 7 October 2004 the first applicant, Mr Williams, applied to discharge the order of 15 July 2004 in so far as it related to 5 Cavendish Place. This application was supported by a witness statement dated 8 October 2004 filed by his solicitor, Austin Otah of Austin & Jed. On 23 November 2004 Mr Justice Bennett, following a summary hearing, dismissed that application.
9. On 17 June 2005 HH Judge Patience QC, sitting at Maidstone Crown Court, made a confiscation order against Adaka in the sum of £380,866. That sum included the amounts of £135,100 and £137,000, respectively, transferred from Adaka, through Omedo, to the bank accounts of the applicants. The applicants, of course, were not parties to the confiscation proceedings in the Crown Court. Although representations were made that the amounts in question should not be taken into account in the confiscation order, the learned judge ruled that the amounts should be treated as no more than "gifts" by Adaka to the applicants and should according to the terms of the Act be included within the order.
10. On 30 September 2005 both applicants applied in this Court for the discharge of the interim order of 15 July 2004 in so far as that order applied to them. The application of Mr Williams was supported by a further witness statement dated 14 November 2005 filed by Mr Otah of Austin & Jed. These applications first came before Andrew Nicol QC, sitting as a Deputy High Court Judge, on 16 October 2005. Directions for a full trial of the issues were made at that hearing. The matter then came on for trial before me for the first time on 7 June 2006. On the application of both applicants the hearing was adjourned until 6 July 2006. The trial of the applications, which involved a full review of the documentation and extensive oral evidence, took place on 6,7 and 10 July, and 17, 18 August 2006 with final submissions made on 28, 29 March 2007.

The case for Mr Williams

11. Mr Williams made a witness statement which referred to a number of documents, in particular, banking documents. He also gave oral evidence and was extensively cross-examined by Mr Hall, who appeared for the CPS.
12. Mr Williams qualified as a geologist. His company, Jones-Tech, of which he is also managing director, began operations in 1992. Jones-Tech carries on business in oil and gas consultancy and exploration, engineering and property. Jones-Tech has offices in three Nigerian cities and its annual turnover is about $40 million. As was shown by his passport entries, Mr Williams was at the relevant time in 2002/2003 a frequent visitor to the United Kingdom. Mr Nsugbe QC, who appeared for both applicants, submitted that there was nothing in the evidence to suggest that Mr Williams was other than an honest and successful entrepreneur and manager.
13. In his oral evidence Mr Williams explained that Nigerian residents, both private individuals and businesses, had potentially two sources of foreign exchange. First, such exchange could be obtained through official channels, ultimately from the central bank, at an exchange rate that was officially set from time to time. Such foreign exchange was in effect rationed by the monetary authorities and could be obtained, often after a lengthy delay, only on evidence that it would be applied for purposes that could be expected to benefit the Nigerian economy. Secondly, there was a "parallel" or "free" market in foreign exchange. Anyone who had made export sales in foreign currency, or who had sold foreign assets, might offer the foreign exchange for Nigerian naira on the unofficial, but lawful, market. The exchange rate on the parallel market would be set simply by supply and demand, and the rate was typically at a substantial premium on the official rate. This evidence was supported by an expert statement from Dr Ogowewo and by the evidence of other informed witnesses, and was not contested as a general description of how the exchange markets operated in Nigeria at the relevant time.
14. Mr Williams gave evidence that he had for a number of years obtained foreign exchange on the parallel market. Jones-Tech had a company account at Liberty Merchant Bank in Nigeria, and two employees of that bank, Mrs Ohigana Otache and Mrs Linda Emodi, had previously arranged foreign exchange transactions for him through that bank. Mrs Otache and Mrs Emodi had then formed their own foreign exchange brokerage, Ideas & Visions Consultancy Ltd ("IVCL"), located at 109 Awolowo Road in Lagos, through whom Mr Williams had arranged foreign exchange transactions on several occasions.
15. Mr Williams said that on or about 27 February 2003 (that is, the day on which the proceeds of the Narushima fraud reached Adaka's Omedo account at Barclays Bank in the United Kingdom), he approached IVCL to obtain sterling with a view to making a property purchase in the United Kingdom. On 3 March 2003 IVCL informed him that it had obtained £135,100 for him. The seller of the sterling was Prime Time Communications Limited, a Nigerian company. On 4 March 2003 Mr Williams obtained a banker's draft from his bank, Guaranty Trust Bank Plc, in favour of "Prime Communication Limited" in the sum of 29,519,350 naira. The name of the payee was incorrect: the draft was cancelled, the account was appropriately re-credited and a new draft in the correct name was obtained dated 5 March 2003. Mr Williams produced copies of the relevant drafts and his bank statements from the Guaranty Trust Bank Plc to corroborate his account that he had paid full value in Nigerian naira for the sum of £135,100 that he received from Adaka/Omedo. Mr Williams said that Jones-Tech had engaged in other similar purchases of sterling. This was challenged at the hearing but Mr Williams was able at short notice at the hearing to produce documentary evidence in relation to another substantial foreign exchange transaction.
16. In a nutshell Mr Williams averred that from his point of view this had been an entirely normal and unsuspicious foreign exchange transaction. He had dealt only with IVCL, whom he trusted and whose directors had good credentials. The first inkling that he had that anything was amiss was when the CPS brought proceedings under the Act.
17. Mr Williams said that at the relevant time he did not know Prime Time Communications Limited, nor which individuals might be involved with that company. However, when confronted with these proceedings, he made researches to discover more about the transaction. Ohigana Otache, who at the time had been the managing partner of IVCL, said that on 3 March 2003 Mr Uche Ogah, branch manager of the Isolo branch of the Zenith Bank in Lagos, had called her to say that he had sterling to sell on behalf of a customer, Prime Time Communications Limited. Mrs Otache made a statement for these proceedings to that effect, and also corroborated Mr Williams's evidence that the transaction had been arranged through IVCL as broker.
18. This account of the transaction would naturally put the spotlight on Mr Ogah at Zenith Bank. Mr Ogah made a statement in the present proceedings and gave oral evidence. It appeared that the leading light behind Zenith Bank's customer, Prime Time Communications, was one Jude Okonma ("Okonma"). This central, but shadowy, figure made a number of statements in the course of the proceedings to which I shall have to return. However, Mr Williams was able, on his own initiative, to obtain some, but limited, information about Prime Time Communications Limited. He said that he was also able, through Zenith Bank, to obtain copies of the bank statements of Prime Time Communications Limited for the period relevant to the transactions, which he produced in evidence. From those statements it appears that shortly after 5 March 2003 Prime Time Communications made large payments of 17,750,000 naira to each of Workspace Limited, Lolin Ventures Limited, Okechukwu George and Chok Ventures Limited. But at that point the trail grinds into the sand.
19. Mr Nsugbe QC, on behalf of Mr Williams, made a number of points which he submitted were favourable to his client's case. There was no evidence, he contended, that in any way linked Mr Williams with the underlying Narushima fraud. There was no evidence that Mr Williams knew Adaka, or Omedo, or any other of the individuals whose names had come up in relation to the Narushima fraud. On the search of Adaka's home at the time of his arrest a note was found on which was written the name of Jones-Tech and Jones-Tech's bank account details (as well as the bank account details for Mr Chukwu). However, argued Mr Nsugbe, that was consistent with Mr Williams's account, for if Jones-Tech was, through IVCL, the ultimate purchaser of the criminal proceeds held by Omedo, Adaka would need to know the particulars of the accounts to which those proceeds were to be transferred. Nor was there evidence that Mr Williams knew Prime Time Communications Limited, Okonma or even the Zenith Bank manager, Mr Ogah, who was acting for Okonma. Indeed, on the latter aspect the evidence was all the other way.

The case for Mr Chukwu

20. Mr Chukwu is, and has been for some time, a leading political figure in Nigeria. He is the National Vice-Chairman of the Peoples Democratic Party, the ruling political party in Nigeria, a position that he has held since 1999. He also owns a quarry business in Abuja, Nigeria. He was educated largely in the United Kingdom, having obtained, among other academic qualifications, an MBA from Bristol University. His curriculum vitae was initially greeted with some scepticism by the CPS, but it has to be said that such enquiries as were made tended to confirm, rather than undermine, its accuracy. Until 1995 Mr Chukwu was Chairman and Chief Executive of Nigerian Merchant Bank plc, and it was clear from his oral evidence that he had a professional understanding of banking and finance.
21. Mr Chukwu's domestic arrangements would seem somewhat unconventional by ordinary standards. His wife, who made a witness statement and also gave oral evidence, lives in England with four children of the marriage. Mr Chukwu explained that this was for security reasons and because of his wish that his children should be educated in England. All four children were in private education in 2003. Mr Chukwu said that these arrangements required him to transfer substantial sums each year to the United Kingdom and that in 2003 he also funded the acquisition of a family home for his wife and children with a down payment of £70,000. Mrs Chukwu's evidence was generally supportive of Mr Chukwu's account, as were a number of documents relating to the family expenditure in the UK.
22. Mr Chukwu said that he usually obtained foreign exchange through his bank, the African Continental Bank plc ("ACB"). At the time of the impugned transaction in March 2003 the bank manager at ACB was Gabriel Okenwa. At about the beginning of March 2003 Mr Okenwa informed him that £137,000 could be purchased at the rate of 218.50 naira to the pound sterling. In fact IVCL had offered the sterling to Okenwa at ACB. It seems that Okenwa had previously worked at Liberty Merchant Bank plc and therefore knew the directors of IVCL (see paragraph 14 above). Again the seller of the sterling to IVCL was Mr Ogah at Zenith Bank, on behalf of a customer, Joel Industries Limited. Needless to say, the leading light behind Joel Industries Limited was Okonma (see paragraph 18 above).
23. Pursuant to these arrangements Mr Chukwu instructed ACB to raise a draft in the sum of 28,340,000 naira. This draft was paid into the account of Joel Industries Limited at Zenith Bank on 5 March 2003. According to Mr Chukwu a balance of 1,594,500 was paid in cash through Okenwa to the seller's agent. Copies of bank documents evidencing the bank transfer were produced. Mr Chukwu also relied on the evidence of Mrs Otache and Mr Ogah, referred to at paragraph 17 above, which supported his account of the alleged foreign exchange transaction, and on a witness statement from his bank manager at ACB, Mr Okenwa.
24. Again, Mr Nsugbe made a number of general points which he submitted supported Mr Chukwu's case. There was no evidence that Mr Chukwu knew Adaka, or Omedo, or any person who might have been connected with the Narushima fraud. He did not know Joel Industries Limited or Okonma. He did not know Mr Ogah at Zenith Bank or the broker IVCL. The only persons that he dealt with on the transaction were his bank managers in Nigeria and in the United Kingdom, at ACB and National Westminster Bank respectively.
25. Mr Nsugbe also points to the fact that Mr Chukwu maintained from the outset that, from his perspective, the transaction was an ordinary and regular one of foreign exchange and that he had relied throughout on his banker at ACB to ensure that the transaction was above board. On 14 November 2003 Detective Constable Taylor, a fraud investigator of the Kent Police, went with other officers to 46, Langland Crescent, Stanmore, Middlesex HA7 1NG. This was where Mrs Chukwu lived with her children. The Kent Police believed that Mr Chukwu also lived at that address and the officers intended to search the house and to arrest Mr Chukwu if he was there. He was not there but in Nigeria. However, Mrs Chukwu was able to put DC Taylor in touch with him on the telephone. This was the first police contact with Mr Chukwu. DC Taylor in due course reported the telephone conversation to Mr Wood. As emerged clearly from the oral evidence of the officers, the notes of DC Taylor and Mr Wood did not record Mr Chukwu as saying during the course of the telephone conversation that the £137,000 must have been paid into his Barclays Bank account "by mistake". However, Mr Wood in his witness statement of 9 July 2004 (see paragraph 7 above) said that Mr Chukwu had not been able during the telephone conversation in November 2003 to explain why the money had been transferred into the account "unless it was a bank error". This was an unfortunate choice of words. An amount of £137,000 rarely drops mysteriously into a personal bank account, and it would have appeared from Mr Wood's statement that Mr Chukwu, when first confronted with the police suspicions, had no credible explanation for the transfer of the money to his account. In fact it appears that he was seeking to explain that he had obtained the funds in the normal course of business and had relied on his banker at ACB to ensure that the transaction was above board.
26. The evidence also shows that following the conversation in November 2003, and the freezing of the £137,000 in his account, Mr Chukwu took steps in the subsequent months to provide to the Kent Police documents, such as the ACB bank statements, with a view to demonstrating that he had given value for the funds transferred to his account by Adaka/Omedo.

The case for the CPS

27. Mr Hall, appearing for the CPS, naturally put at the forefront of his case the fact that there is no evidence directly to link Adaka/Omedo with the alleged transfers of naira from the bank accounts of Jones-Tech and Mr Chukwu held respectively at the Guarantee Trust Bank plc and at ACB. Even accepting that Jones-Tech paid naira to Prime Time Communications Limited and that Mr Chukwu paid naira to Joel Industries Limited, there is simply no credible evidence to link those entities either to Adaka, Omedo, or any other person who might have been involved in the Narushima fraud. As Mr Wood's evidence demonstrated, there were known links between Adaka and certain individuals, but nothing was unearthed in the criminal investigation in the United Kingdom to link him with any of the actors involved in the transfers of naira from Jones-Tech and from Mr Chukwu. The evidential chain, whatever it might be worth, could not on any view reliably extend beyond Prime Time Communications Limited and Joel Industries Limited and the shadowy figure of Okonma.
28. Mr Hall submitted that the evidence surrounding Okonma was very unsatisfactory. Until the hearing of the applications the position of both applicants was that Okonma would appear as a witness. That indeed would have been an interesting prospect. The documents relied on by Mr Williams contained a copy of a notarised statement dated 14 September 2004 to Jones-Tech from IVCL saying that Mr Ogah (the manager at Zenith Bank) had forwarded to IVCL a notarised statement (which was attached) made by Okonma on 13 September 2004. The provenance of the Okonma statement of 13 September 2004 sits somewhat awkwardly with the oral evidence of Mr Williams and Mr Ogah that the statement had been obtained from Okonma on that same day, 13 September 2004, at a meeting in the offices of Mr Williams/Jones-Tech at which all three were present. In any event, in the statement dated 13 September 2004 Okonma squarely admitted that he knew Omedo and its directors and had had previous dealings with them, and also stated that Prime Time Communications Limited had purchased £135,100 from Omedo and then sold that sterling on to Jones-Tech for 29,519,350 naira. If that evidence were credible, it would of course link Adaka/Omedo to the transfer of naira from the bank account of Jones-Tech at the Guaranty Trust Bank plc, and so tend to undermine a central point in the case for the CPS.
29. However, Okonma did not appear as a witness. No real explanation was given for this omission. Okonma had apparently been cooperative in September 2004. Mr Williams in evidence suggested that Okonma was incommunicado, but Mr Ogah, according to his oral evidence, had seen him on four occasions in 2004 and had managed to take him to see Mr Chukwu in 2005 (although the latter denied any such meeting). Mr Ogah also suggested that Okonma was a "dangerous" figure, in contrast to his evidence relating to the impugned transactions where Mr Ogah had painted him as a respectable businessman and valued client of the Zenith Bank.
30. Furthermore, Mr Chukwu included in the documents supporting his application a further undated statement from Okonma in which by contrast he denied knowing Adaka/Omedo and in which he gives a different account of the transactions. This statement had been faxed from Zenith Bank on 17 June 2005, that is, at about the time of the confiscation hearing in Maidstone Crown Court. Mr Ogah in evidence said that this statement pre-dated the statement of 13 September 2004, but that was not possible because there were references in the statement to exhibits that did not exist in September 2004.
31. A Mr John Benedict, barrister, sought to clear up this confusion. He said, in a witness statement and in oral evidence, that he had been instructed on behalf of Jones-Tech and had obtained from Okonma the undated statement referred to above in December 2004/Jamuary 2005. Mr Benedict said that he immediately appreciated that the statement was untrue, in the light of Okonma's previous admission in September 2004. He, therefore, managed to extract from Okonma in December 2004/January 2005 yet a further statement in which Okonma admitted that he knew Adaka/Omedo and had bought the sterling from Omedo. That further statement, which was in evidence, confusingly bore the date of 19 June 2005, not a date at the end of 2004 or the beginning of 2005.
32. Mr Otah, solicitor for Mr Williams, sought to explain this dating by saying that he had received the statement from Mr Benedict on 19 January 2005, and that he had added a date to the statement to coincide with a contemplated application by Mr Williams to discharge the restraint order, which Mr Otah thought would take place in May or June 2005.
33. Mr Hall submitted that there were a number of "ragged edges" to the version of events given by each applicant. For example, Mr Williams at various times had said that he intended to use the sterling for personal property investment but on other occasions suggested that it was for business purposes. The documents clearly show that Mr Williams was the purchaser both of the flats referred to at paragraph 3 above and of 5 Cavendish Place. There was nothing in those documents as such to suggest that Jones-Tech was intended to be the beneficial owner of the flats or of 5 Cavendish Place, although on Mr Williams's own account Jones-Tech had provided the funds for those purchases. Objectively considered, it looked as if Jones-Tech was financing property purchases for the benefit and enjoyment of Mr Williams in his private capacity. This modus operandi would at first sight appear highly irregular, at least under UK company law (most notably, section 330 of the Companies Act 1985), and could, if Jones-Tech were to become insolvent, be potentially prejudicial to creditors. This was more than a theoretical possibility, because at the time of the transfer of naira from Jones-Tech to Prime Time Communications Limited, Jones-Tech was substantially overdrawn on its account with the Guaranty Trust Bank plc and there was no other documentary evidence concerning Jones-Tech's liquidity at the time.
34. Mr Hall also pointed to some apparent omissions in the documents for the Jones-Tech transaction. There was no note or memorandum of the particulars of the alleged foreign exchange transaction before it was actually executed. There was, therefore, nothing to record the specific amount of sterling to be purchased, the identity of the seller, the rate of exchange or the date of delivery. If the seller had defaulted, or had questioned the amounts to be sold, the rate of exchange or the delivery date, there was no contemporary note upon which the buyer could have relied to establish the terms of the bargain and to assert its rights. The seller for its part was expected to transfer a substantial amount of sterling before receiving naira in payment, but the seller had apparently no note or memorandum evidencing the commitment of the buyer upon which it could have relied if the buyer had failed to honour its part of the bargain. It was also unclear how the buyer learnt that Omedo had transferred the sterling, as the trigger for the payment of naira. Mr Williams said that IVCL informed him of the transfer, but then stated that he had received from Barclays Bank a specific fax to that effect. Mr Ogah said that he had received from Okonma a fax of a bank statement in the name of Omedo showing the transfer of the funds from Omedo to the three payees, including the applicants. But no fax of this nature was produced either by Mr Williams or by Mr Ogah. Nor was there any note evidencing any commission earned by IVCL on this alleged transaction, although such a note was produced by Mr Williams for another foreign exchange deal completed through IVCL.
35. Mr Hall also urged that the Court should be cautious in accepting the portrait of Mr Williams as an honest entrepreneur who would not be involved in money laundering. Jones-Tech had among its clients Carlin International Limited, A.A. Oil Company Limited and the Government of Bayelsa State. The CPS put in evidence a witness statement dated 17 July 2006 by Peter Clark, a financial investigator attached to the Specialist Crime Directorate of the Metropolitan Police Service. Mr Clark said that there was substantial evidence that one Alamieyiesiegha, a former state governor of Bayelsa State in Nigeria, had received in the United Kingdom large corrupt payments made by, or on behalf of, A.A. Oil Company Limited, a company owned by one Abukakar, who also controlled Carlin International Limited. One John Ayeni acted as legal adviser to A.A. Oil, and funds from Ayeni's personal bank account were used to purchase a property acquired by Alamieyiesiegha in the United Kingdom. The same Ayeni had been involved with Mr Williams's property transactions following the transfer of the sterling from Omedo to Jones-Tech. Austin & Jed was itself employed in relation to a property acquired by a company in the United Kingdom of which Alamieyiesiegha was a director, which it was said cast doubt on that firm's skill in screening clients for money laundering purposes.
36. Mr Hall made similar points in relation to Mr Chukwu. Again there was no contemporary note or memorandum to evidence the particulars of the foreign exchange transaction. In Mr Chukwu's case this omission took on a special significance. As set out above, Mr Chukwu paid 28,340,000 naira to Joel Industries Limited, allegedly in exchange for £137,000. However, it was accepted that the exchange rate was 218.50 naira to the £ sterling. There was, therefore, a significant shortfall at that rate of exchange. No contemporary document, of which there were several, referred to this shortfall. The witness statements of Mrs Otache (for ICVL) and of Mr Okenwa (the banker at ACB) did not refer to this discrepancy or offer any explanation for it. Nor did the original witness statements of Mr Ogah (at Zenith Bank where the naira were to be received) or of Mr Chukwu mention the shortfall. None of the correspondence between the parties referred to such a shortfall. However, Mr Ogah in a further statement dated 6 July 2006, and in oral evidence, said that there was an agreed "cash element" of 1,743,640 (about £7,980 at the exchange rate of 218.5 naira/£) which was to be given as cash to Okonma's office assistant "for his family use". Mr Chukwu said in oral evidence that he had been aware of the "cash element" but had simply omitted to mention it previously.
37. There was also conflicting evidence as to how Mr Chukwu knew that the sterling had been paid into his account at the National Westminster Bank. Mr Okenwa in his witness statement said that ICVL informed him that the sterling had been transferred, but Mr Chukwu in his oral evidence gave the impression that National Westminster Bank in the United Kingdom had informed Mr Okenwa. Similarly there was confusion as to whether Mr Chukwu had used the services of ICVL for earlier foreign exchange transactions. In certain letters Mr Okenwa wrote in terms that Mr Chukwu had used ICVL previously, but Mr Chukwu maintained in his evidence that he did not know ICVL at the time and had not knowingly transacted business through that agency. No explanation was given for this confusion.
38. There was also conflicting evidence as to whether Mr Chukwu had met Okonma, the eminence grise behind the companies said to have received the naira from Jones-Tech and from Mr Chukwu. Mr Ogah (Zenith Bank) and Mr Williams gave evidence to the effect that Mr Chukwu had met Okonma, but Mr Chukwu denied any such encounter. In her oral evidence Mrs Chukwu gave a strong impression that the £137,000 was needed as a matter of some urgency to help meet her expenses in the United Kingdom, including the costs of her children's private education. But the funds remained in the account untouched for a very considerable period, which was difficult to reconcile with her account. Mr Hall submitted that the evidence was contrived to lend an appearance of plausibility to the transfer.
39. Mr Hall finally observed that in the case of Mr Chukwu certain important witnesses had not given oral evidence. For example, Mrs Otache (at IVCL) and Mr Okenwa (at ACB) had made statements relating to the alleged foreign exchange transaction but did not appear as witnesses and could not be cross-examined.

The legal issue

40. Formally, the applicants have made applications under section 77(7) of the Act to discharge the order of 9 July 2004 in so far as it applies to the sum of £137,000 held by Mr Chukwu in his bank account at Barclays Bank and to the property at 5 Cavendish Place. Notwithstanding the finding of HH Judge Patience QC in the Maidstone Crown Court that the assets in question were "gifts" and thus formed part of Adaka's "realisable property" under section 74 (1) of the Act, the applicants may invite this Court to discharge the order of 9 July 2004 on the ground that the disputed assets are not part of Adaka's realisable property: see Re Norris [2001] UKHL 34; [2001] 1 WLR 1388.
41. The CPS in turn formally seeks from the Court a declaration that the disputed assets do form part of Adaka's realisable property, with a view to enforcing the confiscation order made by HH Judge Patience QC.
42. It seems to me that the burden is on the CPS to show, on a balance of probabilities, that any property is realisable property within section 74 of the Act. Normally it would discharge that burden by showing that property was "held by the defendant" (section 74 (1) (a)). In this case the property is not held by the defendant Adaka, but the prosecution claim, and must prove to the same standard, that the property is held by a person:

"to whom the defendant has directly or indirectly made a gift caught by this Part of this Act" (section 74 (1) (b))

43. At paragraph 1 of his final submissions Mr Hall accepted that the CPS does have the burden of showing that the assets in this case were gifted by Adaka, directly or indirectly, to the applicants.

Decision

44. In reaching my decision I must consider each applicant, and the evidence relating to each applicant, separately, although it should be clear by now that there are strong common strands in the transactions put forward by the applicants and upon which they both rely.
45. It seems to me that there are essentially three hypotheses that could be applied to both applicants, having regard to the common features of their cases. First, the applicants, as they put forward, entered into normal foreign exchange transactions in the ordinary course of business, not knowing that the sterling funds which they were buying were the fruits of fraud, and they later discovered to their dismay the truth about the source of the funds.
46. Secondly, it might be the case that the applicants received from Adaka/Omedo funds which they knew or suspected were the proceeds of fraud, and they gave no value in naira for such funds. On that hypothesis they were either themselves involved in the Narushima fraud, and were receiving some part of the benefit of that fraud, or were at least (no doubt for some reward) assisting the primary fraudsters to launder the proceeds of the fraud. Adaka himself was convicted of money laundering, the jury not being satisfied so that they were sure that he was a primary party to the fraudulent scheme. The applicants then created false documentation and gave false evidence that they had bought the Omedo funds for naira in a legitimate foreign exchange transaction.
47. The third hypothesis is a variant on the second. The applicants, appreciating that their receipt of the Omedo funds might at some point come under the spotlight, executed a parallel, but entirely fictitious, transfer of naira in Nigeria. The transaction would be fictitious because some means would be devised in advance to ensure that the naira of which they were ostensibly divesting themselves would return at the end of the carousel either to themselves or to persons whom they controlled. This would obviously be a sophisticated operation.
48. I take the second hypothesis first. It seems to me, as Mr Nsugbe submitted, that the weakness of the CPS case on this hypothesis is that there is simply no evidence to suggest that either of the applicants were involved in the Narushima fraud or knew any of the persons connected with that fraud. In particular, there is no link between either applicant and Adaka/Omedo, other than the one mentioned at paragraph 19 above, for which Mr Nsugbe's explanation appears reasonable.
49. The timing of the alleged foreign exchange transactions might raise suspicions but it could fairly be said that the timing was driven essentially by Adaka's need to move the Omedo funds as quickly as possible and that the applicants were unfortunately and fortuitously at the end of the consequent sale. It is also true that Jones-Tech transferred the funds out of its account with some alacrity, but again the transfers were carried out in a way that did not make tracing particularly difficult. Mr Chukwu by contrast retained the Omedo funds in his bank account for several months, although he had opportunities to move the funds in a way that would have evaded the reach of the authorities in the United Kingdom. The conduct of Adaka himself shows that those receiving the proceeds of crime have a strong motive to move the funds very quickly and to obtain substitute assets that are difficult for the authorities to trace or seize.
50. I also have to take some account of the apparent standing of each applicant. Neither has any conviction for serious criminal conduct. Mr Williams seems to carry on his business affairs in a somewhat unorthodox and irregular fashion (see paragraph 33 above), but he was the sole shareholder in Jones-Tech and I cannot properly infer from his apparent treatment of his creature as a private fiefdom that he would engage in fraud on the scale of the Narushima operation or be engaged in money laundering. It may also be that a cloud hangs over some of his customers, but there is nothing to suggest that he or Jones-Tech was involved in any corrupt dealings in Bayelsa. Mr Chukwu appears to have an exemplary background and is obviously a person of considerable political standing in Nigeria.
51. The second hypothesis does also point to a plot of grand deception on the Court. It seems to me that the banking documents relied upon by each applicant bear the hallmarks of authenticity. The random check on the authenticity of a further transaction carried out by Jones-Tech (see paragraph 15 above) tended to corroborate Mr Williams' account. The banking documents were also supported by the witness statements of Mrs Otache (ICVL), Mr Okenwa (ACB) and Mr Ogah (Zenith Bank), each representing the financial entities alleged to be concerned in the chain of funds transfer. I see the force of Mr Hall's point that he did not have the opportunity to cross-examine Mrs Otache or Mr Okenwa. However, Mr Ogah did give evidence and he supported the basic account of the applicants. I found his evidence regarding Okonma unsatisfactory, but I accept his basic description of the transactions. Similarly, both applicants were prepared to come to Court to stand by their version of the transactions. Although it is difficult to be confident in such assessments, each of them came across in their different styles as seeking to give a truthful account and as genuinely concerned to defend their reputations against the serious attack which the CPS case implies.
52. I agree with Mr Hall that there were some apparent omissions in the documentation (see paragraphs 38 and 40 above). However, the evidence was that the immediate parties to the transfers knew each other well and trusted the counter party. For example, Mr Williams had dealt with IVCL on previous occasions and knew Mrs Otache from her time at the Liberty Merchant Bank. Mrs Otache could vouch for Mr Williams's probity and reliability to Mr Ogah at the Zenith Bank, and Mr Ogah in turn knew Mrs Otache and could rely on her endorsement of Mr Williams. Similarly, Mr Chukwu was a well-known figure and Mr Okenwa at ACB could vouch for his reliability to Mr Ogah at Zenith Bank.
53. It is also true that conflicting accounts were given on the question of how Jones-Tech and Mr Chukwu learnt that the Omedo funds had been transferred to their accounts at Barclays Bank and the National Westminster Bank respectively. However, these bank accounts were held by Jones-Tech and Mr Chukwu. They would have had no difficulty in ascertaining from the banks that the money had been transferred and the only practical problem was to ensure that Mr Ogah at Zenith Bank was informed so that he could instruct ICVL to take steps to obtain payment of naira from Jones-Tech and Mr Chukwu. That would seem to me a relatively straightforward procedure which could practically be achieved in various ways. I do not, therefore, find it surprising that Mr Williams and Mr Chukwu had difficulty in recalling what precise method was used on this occasion.
54. What I find of more potential significance was the fact that Mr Ogah at Zenith Bank was selling sterling on behalf of Okonma but failed to carry out any proper investigation of the source of the sterling. Okonma's companies Prime Time Communications Limited and Joel Industries Limited were the ostensible sellers of the sterling. There was nothing sinister as such in the identity of the sellers, but the source of the sterling was neither Prime Time Communications nor Joel Industries. The source was Omedo, owned by Adaka. There was no obvious connection between Omedo and either Prime Time Communications or Joel Industries. Mr Ogah knew nothing about Omedo and made no proper enquires of Okonma as to who Omedo might be, and how Okonma came to be dealing with it. However, neither applicant dealt directly with Okonma or Ogah. Jones-Tech dealt with IVCL and Mr Chukwu dealt with Okenwa at ACB. There was no reason why either applicant should have sought to carry out checks on the source of the sterling. It seems to me that each was entitled to assume that IVCL and Okenwa respectively had carried out the necessary checks, and that IVCL and Okenwa were also entitled to assume that Mr Ogah had satisfied himself about the source of the sterling.
55. As to the third hypothesis, the strongest support would come from the matters set out at paragraph 27 above. If the transfers of naira were fictitious, it would not be surprising to find no link with Adaka/Omedo for there would have been no such link. Secondly, the evidence concerning Okonma (see paragraphs 28 - 32 above) would also fit this hypothesis. Once the phoney foreign exchange transactions were uncovered, Okonma would become a central figure. It might then be prudent to have two witness statements and to decide later how the Okonma card should be played. If he gave evidence that he knew Adaka/Omedo, that would lead to awkward questions about the relationship. If he denied knowing Adaka/Omedo, that would leave an unexplained gap in the chain between the transfer of naira and the transfer of sterling from the Omedo account to the accounts of the applicants. In the end both statements are tendered, Okonma is not called but is painted as a rogue, and the position is left confused.
56. The apparent omissions in the documentation would also be consistent with this hypothesis: those who engage in phoney transactions could be expected to overlook certain procedures that are followed in genuine transactions. The alleged "cash element" (see paragraph 36 above) would also be consistent: if a transaction were phoney, the fictitious seller of sterling would not be overly concerned if there was what seemed a small shortfall. A real seller on the other hand would find the shortfall significant and press for further payment.
57. However, the third hypothesis also requires a finding of fraud on the part of each applicant, and, for the reasons already given, I am not convinced that the evidence as a whole would justify my reaching that conclusion. It also seems to me that the third hypothesis would require a considerable degree of sophistication and some degree of complicity on the part of Mrs Otache, Mr Ogah and Mr Okenwa. I heard Mr Ogah as a witness. As I have said, I accept his basic account of the transactions. I would not be prepared to hold that he had been complicit in a scheme of such blatant fraud as would be required by this hypothesis. As to the evidence relating to Okonma, the witness statements were confusing, but Mr Benedict gave an explanation, which I accept, of how conflicting statements came into being; and Mr Otah explained how the date came to be improperly attached to the statement dated 19 June 2005, evidence which I find credible.
58. I therefore reject the second and third hypotheses. It seems to me that the CPS, on the evidence taken as a whole, have not shown on a balance of probabilities that either applicant received the Omedo funds as a gift. On the contrary, on that evidence, it would seem to me more probable that each applicant did pay a sum in naira as consideration for the receipt of the Omedo funds.
59. For these reasons I allow the applications made by both applicants and dismiss the application for the declaration sought by the CPS.