29 March 2009

Norbert Schlei

Wikipedia, at the time of writing, doesn't have a lot to say about Norbert Schlei.

Schlei's obituary tells us that,

"Schlei had barely moved into his quarters in August 1962 as head of the office of legal counsel just vacated by Katzenbach, when he was put to work. The University of Mississippi had refused to allow James Meredith, a black student, to enroll that fall, and Kennedy sent Schlei to Oxford, Miss., to get Meredith into the school.

Hardly a month later, as the Cuban Missile Crisis developed, Kennedy asked Schlei to study the legal basis for presidential action in connection with Cuba after U.S. surveillance confirmed that Russia was installing surface-to-air missile sites in the Communist island nation. Schlei responded with what became Kennedy’s October justification for a naval quarantine on all offensive military equipment being shipped to Cuba.

There's a lot more, if you follow the link; it'll tell you tales of a brilliant lawyer in the Kennedy administration drafting civil rights bills; going on to other administrations and running for public office.

It then goes on to say that,

"Schlei was acquitted of eight counts, including wire and bank fraud and money laundering, but was convicted by a jury of conspiracy and securities fraud for purportedly helping five others sell $16 billion in fake Japanese government bonds from the mid-1980s to 1992.

He was sentenced to five years in federal prison and lost his license to practice law for 3 1/2 years. But he never went to prison, remaining free on appeal. The 11th Circuit Court of Appeals vacated the judgment and, in 1998, Schlei abandoned motions for a new trial to clear his name. Instead he agreed to a negotiated settlement of a year’s unsupervised probation on one misdemeanor count of conspiracy to possess counterfeit foreign securities, and resumed his law practice in L.A.

So, what were these, "fake Japanese government bonds"?

Well, Schlei explains, "Japan's "M-Fund" Memorandum, January 7, 1991 by Norbert A. Schlei," that they were drawn from the M-fund, "a secret fund of money of enormous size that has existed in Japan for more than forty years. The Fund was established by the United States in the immediate postwar era for essentially the same reasons that later gave rise to the Marshall Plan of assistance by the U.S. to Western Europe, including the Federal Republic of Germany.

At the outset, the Fund was administered wholly by the U.S. with purely advisory input from Japan. Later, however, control over the Fund was allowed to pass into Japanese hands. Under Japanese control, very serious abuses of the Fund have developed, and it is clear today the the Fund has been and is being used in a way that is contrary to the interests of both the United States and Japan.

There is more detail in the link provided.

I bring this to your attention because this story, "The Bond Saga: It Gets More Odd."

Two Japanese/Asian people have been arrested trying to smuggle bearer bonds between Italy and Switzerland. They may or may not be fakes; they appear to have a huge face value. The bonds may or may not have been confiscated by the police. The mainstream media haven't provided any sensible reports of the story.

Another link, FTR #501 Norbert Schlei and the Strange Case of the “57’s”.

From The Times 24 April, 2003.

"In 1995 Schlei’s career received a devastating blow when he was tried and convicted of conspiracy and securities fraud in a bizarre case arising out of the Lockheed scandal, which brought down the Government of Kafeui Tanaka, the Japanese Prime Minister.

Initially, Schlei was sentenced to five years in prison and temporarily lost his licence to practise law. However, he did not serve time, as the Appeal Court threw out the judgment against him. In 1998 he agreed to drop his own motions for a new trial, accepting in a settlement one year’s probation on a single misdemeanour count.

Schlei maintained that he had done nothing wrong in the affair and the Government’s agreement to accept a deal strongly suggests there was some truth in Schlei’s contention that prosecutors had wrongly added him to the list of defendants in order to make the trial more newsworthy.

Schlei’s prosecution arose because he had agreed to negotiate on behalf of wealthy Japanese investors who had bought $16 billion worth of securities that the Japanese Government said were forgeries. Schlei told The New York Times that the securities, not bonds but “certificates of redemption”, were issued by Michio Watanabe, the then Minister of Finance, in 1982, to hide a political slush fund. Schlei was in the process of negotiating with the Japanese Government on behalf of his clients when he was caught in an American government sting operation.

Schlei later suggested — and American academic experts on Japan have endorsed his claim — that the alleged fraud was connected with the mysterious “M fund”, a secret slush fund set up by one of General Douglas MacArthur’s associates during the postwar American occupation of Japan. The M fund initially contained proceeds from the sale of gold, diamonds, platinum and silver that had been plundered by the Japanese forces in conquered countries as well as shares of dissolved zaibatsu corporate conglomerates and “counterpart funds” from sales of American aid to Japan in the postwar years.

The fund may have been used by Kodama Yoshio, a war criminal turned US intelligence agent, who is believed to have bribed Japanese officials to purchase F104 fighter aircraft from the Lockheed Corporation.

BM's status as a resident

So what does Binyam Mohamed's residential status mean?

The Times Reports, "[f]or seven years he was held in detention in four countries, claiming that he was tortured brutally in Morocco before being sent to Guantánamo Bay, where his presence as a UK resident caused friction between London and Washington.

Yesterday Binyam Mohamed, 30, arrived back in Britain – where he has no home or family – presenting the Government with a complex security and immigration dilemma.

Mr Mohamed, who was arrested in Pakistan in 2002 on suspicion of plotting to detonate a radioactive “dirty bomb” in the United States, was detained – not arrested – after flying in to RAF Northolt, northwest London, aboard a Gulfstream jet chartered by the Government to fly him back from Cuba.

The Ethiopian-born man who came to Britain in 1994 to claim asylum, was yesterday held under the Terrorism Act 2000 and questioned by the Immigration Service and the Metropolitan Police for five hours.

He was granted temporary admission to Britain for two years. The Home Office must now try to decide how to deal with any application by Mr Mohamed to stay in this country permanently, should he wish to do so.

The point that is of interest in this post is what is meant by resident in the statement, "where his presence as a UK resident caused friction between London and Washington" and throughout most of the reports about him in the media?

The problem is that this aspect of the case seems to be glossed over.

So, what does 'UK resident mean'? I take it to mean, 'someone ordinarily resident in the UK'.

"Ordinarily resident ... [is taken to mean] living lawfully in the United Kingdom voluntarily and for settled purposes as part of the regular order of their life for the time being, whether they have an identifiable purpose for their residence here and whether that purpose has a sufficient degree of continuity to be properly described as 'settled'."

The above paragraph, as explained in A, R (on the application of) v West Middlesex University Hospital NHS Trust [2008] EWHC 855 (Admin) originated from Lord Scarman.

"22 It is common ground that the test for ordinary residence is to be found in the speech of Lord Scarman in R v Barnet London Borough Council ex parte Shah [1983] 2 AC 309. The question was whether five students admitted with time-limited leave to enter for the purpose of study qualified for an award from a local education authority for a first degree course. The qualification was three years' ordinary residence in the United Kingdom. All five had been resident in the United Kingdom for the requisite period but none had the right of abode here. The local education authority had refused to make the award on that ground. Lord Scarman began by observing that "ordinary residence" is not a term of art in English law and that the words should be construed in their statutory context as ordinary words in common usage:

"Unless, therefore, it can be shown that the statutory framework or the legal context in which the words are used requires a different meaning, I unhesitatingly subscribe to the view that 'ordinarily resident' refers to a man's abode in a particular place or country which he has adopted voluntarily and for settled purposes as part of the regular order of his life for the time being, whether of short or of long duration.

Now that that is clear, we can move on to questions as to whether or not BM will be deported, and if he isn't deported; whether or not this situation will begin to accrue rights for others.

27 March 2009

Veritable Necker Cube

How do you see the cube? Does it go back into the page from a face on the left, or does it go back and down from the face on the right? Our brains try to construct a cube from the information available; the information gives our brain these two competing hypotheses which we construct and then flip between them.

This must have been what Mr Peter Prescott QC was thinking about in, Oxonica Energy Ltd v Neuftec Ltd [2008] EWHC 2127 (Pat) when he described a poorly drafted commercial agreement, "[t]hose who draft intellectual property licences may learn something from the misfortune that has befallen the parties to this case. They have entered into a licence agreement that contains a crucial phrase which is exceedingly hard to interpret. I have changed my mind several times about its meaning – it is a veritable Necker cube of licence agreements."

The case is worth reading simply for the well written prose.

After that there are useful points about the interpretation of contracts, eg, "... it does not matter what a party thought an agreement meant when he signed it. Nor does it matter what he was negotiating to get. What matters is what the document would convey to a neutral and reasonable person. But no document, nor any other statement made by human beings for that matter, can properly be understood except in its context." If you are going to take away anything from reading this case, take this one point. I say that because from my experience of business this is the one point that is not understood by lay people. Contracts are cribbed together by executives within companies based upon half understood contracts that have been provided by other business who they've had dealings along with their misunderstandings of the law. This is usually how these sorts of contracts and subsequent litigation are born.

What would flabbergast this sort of thinking appears a bit later in the case when our attention is drawn to what Lord Hoffman said in Mannai Investment Co Ltd v. Eagle Star Assurance (see Oxonica for links to Bailii),

"[the] ancient fallacy which assumes that descriptions and proper names can
somehow inherently refer to people or things. In fact, of course, words do not
in themselves refer to anything; it is people who use words to refer to things.

Going on to say,

"a failure to distinguish between the meanings of words and the question of what would be understood as the meaning of a person who uses words. The meaning of words [as found in dictionaries and grammars] is part of the material which we use to understand a speaker's utterance. But it is only a part; another part is our knowledge of the background against which the utterance was made. It is that background which enables us, not only to choose the intended meaning … but … to understand a speaker's meaning, often without ambiguity, when he has used the wrong words."

The case goes into greater details regarding the interpretation of contracts using as an example what one would make of Mrs Malaprop.

A must read.

(One last point, the case appeared a number of months ago but I didn't think that the blog would be complete without it. Realising that I don't have any readers, I'm using this space as an open notepad.)

22 March 2009

Tax Avoidance

"... tax evasion is crminal finacial planning carried out to avoid the payment of a tax that has already fallen due, whereas tax avoidance is a legitimate financial estate planning carrried out to prevent a tax from falling due in the first place."

Todd & Watts Cases and Materials on Trusts by Gary Watt p21.

We seem to forget that every one of us avoids taxation. We buy duty free goods, we pay tax at the rates set by the State rather than paying more than those rates; yet we seem to scream when other people avoid paying taxes that they don't have to pay, eg

"Fear, revenge and ingenious tax deals – life on the top floor at Barclays"

""Hidden away on the top floor of 5 The North Colonnade sit the formidable Barcap SCM (Structured Capital Markets) team, ... [a] team of some 110 people with the sole purpose of structuring tax-aggressive transactions to avoid tax not only for Barclays but also for banks and companies across the world ..."

If this sort of thing bothers you, go to your nearest inland revenue and ask them what forms you need to fill in so that you can pay tax at double the current rate. If you don't, you're just like the rest of us, people who avoid paying tax if they can help it.

14 March 2009

Huey, Dewey and Louie

Huey, Dewey and Louie are three chaps who, in the early nineties, were set to appear in court in connection with an alleged GBP ten million customs fraud. They were said to have imported alcohol from Eire to the UK and evaded tax and duty on it, according to a report that can be found via Lexis Nexis (or you would be able to do so if I told you the names of the accused).

The story goes that on the way to the court - literally while they were walking up the steps - the case was dropped. One of the three, whose lawyer had told him to pack a toothbrush because he wouldn't be going back home, was so relieved at hearing the news that he spent the next three days in the pub.

All very entertaining and such ... but why was the case dropped?

Well, I don't know.

Also, I don't know the mechanism as to how.

How is it possible to be set in the frame for a GBP 10 million fiddle such that you're on the way to the court with your toothbrush in your top pocket and then suddenly, you're sinking pints in your favourite boozer?

Upon consideration of the date and the geography of the alleged offence the negotiations for the Good Friday Agreement sprung to mind. Perhaps a trial of this nature would have interfered with that? I don't know whether or not this had anything to do with it ... but this hypothesis has a ring of plausibility about it.

I thought that this would make an interesting story; if I could get to the truth of what happened, perhaps I could get the story published somewhere other than the blogosphere.

Freedom of Information requests were sent to HMRCs and the Attorney General's Office.

Both were to no avail.

For me, this story has a number of constitutional implications: one safeguard that helps to ensure that justice is being done, is the right for a member of the public to begin a private prosecution. I can't find any evidence of the dropping of the case being reported in Lexis Nexis Butterworths; that is, I'm not sure whether or not the dropping of the case was published in the local newspapers. I only heard the story by word of mouth at a party. So, how can this safeguard be implemented?

Another constitutional aspect to the case is that of scrutiny - the reason for dropping the case is still not known. Was a Shawcross exercise conducted with the result that the Attorney General intervened? Was there some other mechanism set forth?

What would historians make of the case? Or more precisely, how could they make anything of the case if there are no records for them to scrutinize?

Lastly, how common is this sort of thing?

03 March 2009

Conspiracy to aid and abet, is it an offence?

In Kenning, R. v [2008] EWCA Crim 1534 Lord Phillips said,

"...we endorse the court's conclusion that an agreement to aid and abet an offence is not in law capable of constituting a criminal conspiracy under section 1(1) of the 1977 Act."

There isn't a lot to say about the case. The thought that people can be charged under non existent laws (cf Hidden Laws) is fascinating from a distance; frightening up close.