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You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Attorney General of Zambia v Meer Care & Desai (A Firm) & Ors [2008] EWCA Civ 1007 (31 July 2008) URL: http://www.bailii.org/ew/cases/EWCA/Civ/2008/1007.html Cite as: [2008] EWCA Civ 1007 |
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COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
MR JUSTICE PETER SMITH
Strand, London, WC2A 2LL |
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B e f o r e :
LORD JUSTICE LLOYD
and
LORD JUSTICE LAWRENCE COLLINS
____________________
| THE ATTORNEY GENERAL OF ZAMBIA FOR AND ON BEHALF OF THE REPUBLIC OF ZAMBIA |
Claimant Respondent |
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| - and - |
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| MEER CARE & DESAI (a firm) and others |
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| MOHAMMED IQBAL MEER (appeals 1708 and 1709) NAYNESH GUNVANT DESAI (appeals 1146, 1751, 1752) |
____________________
WordWave International Limited
A Merrill Communications Company
190 Fleet Street, London EC4A 2AG
Tel No: 020 7404 1400, Fax No: 020 7831 8838
Official Shorthand Writers to the Court)
Reynolds Porter Chamberlain LLP) for Mr Meer
Nicholas Padfield Q.C., Andrew Veen and Arfan Khan
(instructed by Mr Desai) for Mr Desai
Michael Sullivan Q.C. and Hannah Brown
(instructed by DLA Piper UK LLP) for the Respondent
Hearing dates: 24-27 June, 1-2 July 2008
____________________
Crown Copyright ©
Lord Justice Lloyd:
| Para | |
| Introduction | 1 |
| The two conspiracies | 5 |
| Meer Care & Desai | 11 |
| The grounds of appeal | 13 |
| The proceedings | 16 |
| Mr Meer's main ground of appeal: dishonest assistance | 20 |
| Meer Care & Desai: the firm and its partners | 24 |
| Mr Kabwe and Access Financial Services Ltd | 28 |
| The meeting at the Churchill Hotel | 31 |
| Payments through MCD's client account after the Churchill Hotel meeting | 46 |
| The first payment | 46 |
| The second payment | 53 |
| The first payment from the Zamtrop account | 58 |
| The ledgers | 61 |
| Payments in respect of Harptree Holdings Ltd and Jarban SA | 63 |
| Some other disbursements up to 2002 | 66 |
| The BK payments | 76 |
| Payments and other events after 2001 | 77 |
| The OSS investigation | 83 |
| The position taken in the Defence | 97 |
| Mr Meer's evidence | 103 |
| The judgment | 144 |
| The individual Defendants | 157 |
| Mr Meer | 160 |
| Mr Meer not having told Mr Desai about the Churchill Hotel meeting | 164 |
| Factors relevant to probability | 169 |
| The Churchill Hotel meeting | 177 |
| The first payments into and out of the client account | 185 |
| Disbursements | 192 |
| Payments out after Zamtrop payments in | 203 |
| Harptree Holdings Ltd | 210 |
| Mr Meer's conduct after June 2002 | 220 |
| The Blue Card warnings | 227 |
| The judge's conclusion on the Zamtrop conspiracy | 241 |
| The BK conspiracy | 244 |
| Dishonesty: discussion | 251 |
| The Zamtrop conspiracy: discussion | 271 |
| The BK conspiracy: discussion | 299 |
| Other matters | 301 |
Introduction
The two conspiracies
Meer Care & Desai
The grounds of appeal
The proceedings
Mr Meer's main ground of appeal: dishonest assistance
Meer Care & Desai: the firm and its partners
Mr Kabwe and Access Financial Services Ltd
The meeting at the Churchill Hotel
"(1) XFC asked him to act for AFSL, who would be performing various services for ZSIS, in the receipt and disbursement of Government monies.
(2) He assumed involvement of MCD was required for reasons of discretion in the conduct of the affairs of ZSIS although he does not suggest he was given any explanation for using MCD.
(3) He agreed to assist AFSL (and thus the Republic he believed) in the receipt and disbursement of these monies."
"34. I agreed to assist AFSL (and in turn, Zambia) in dealing with the remittances of these monies for its credit. I had no reason to doubt that AFSL was carrying out work for the Zambian government. I did not inquire into the precise nature of this work. ZSIS was an intelligence service and I assumed that by its very nature, it would not always want its activities to be in the public domain. I knew, for instance, that its expenditure was not subject to parliamentary scrutiny, and that it reported directly to the President. I assumed that the need for discretion in the conduct of its affairs was the reason that monies were remitted to Meer Care and Desai for AFSL's purposes and not directly to AFSL. That is not to say that I thought that either Mr Chungu or Mr Kabwe was engaged in any attempt to conceal the destination of funds from the Zambian authorities. My understanding (from admittedly limited experience) is simply that every intelligence agency (whether MI5/MI6 or ZSIS) conducts its affairs with discretion. To enquire further would have necessitated my questioning the President of Zambia, since he was Mr Chungu's only immediate superior. I trusted Mr Kabwe."
Payments through MCD's client account after the Churchill Hotel meeting
The first payment
The second payment
"I have a number of payments to make, but I am not quite sure whether there is enough money left for this. Please advise as soon as further funds are received, which should be any time now."
The first payment from the Zamtrop account
The ledgers
| Ledger number | Date opened | Name on account / currency |
| 2535/2 | January 1992 | FM Kabwe sterling |
| 2535/1 | November 1995 | FM Kabwe Commercial $ |
| 2535/3 | November 1999 | [not identified in evidence] |
| 3344/1 | April 1997 | Harptree sterling |
| 3388/1 | June 1997 | Harptree Holdings dollar |
| 3388/2 | April 1998 | Harptree Socomer project |
| 3475/1 | July 1997 | Horizon |
| 3519/1 | November 1997 | Motor City |
| 3556/1 | December 1998 | AFSL general dollar |
| 3556/2 | August 1999 | AFSL general 2 dollar |
| 3673/1 | November 1998 | AFSL general sterling |
| 3760/1 | May 1999 | Lottery Management Co |
| 3762/1 | May 1999 | Systems |
| 3800/1 | July 1999 | A B Hayward Ltd |
Payments in respect of Harptree Holdings Ltd and Jarban SA
"The client has request for some money from Jarban which I asked Mr Standaert to arrange. The amount sought ($100,000) was about BF 4 million but Jarban at this point can only afford BF 2 million (approx $54,000). The recommended way of getting this money to the client (if not the only way) is for you to write to the bank in Luxemburg (I think you may be the only signatory) to ask them to remit BF 2 million (or USD equivalent) to your account here. After the funds are with you, we can then transfer to Zambia through Access. Sorry for the bother with this one."
Some other disbursements up to 2002
"It has been decided to support Mr Koshy with a further advance of GBP10,000.00 which he desperately needs today. Kindly effect this payment on our behalf."
| Date | Bank | Amount ($) |
| 20/12/99 | Banco di Lugano | 59,100 |
| 20/12/99 | Julius Baer | 89,000 |
| 22/12/99 | Corner Banque | 300,000 |
| 24/12/99 | Julius Baer | 50,000 |
| 28/12/99 | Banco di Lugano | 59,100 |
| 5/1/00 | Banco di Lugano | 900 |
| 5/1/00 | Julius Baer | 40,000 |
| 5/1/00 | Banco di Lugano | 50,000 |
In each case the details of the credit were that the payments was "from one of our customers" or words to similar effect, with no indication of identity, nor did Mr Meer make any enquiry as to the identity of the payer. They are not said to have been of Government money.
The BK payments
Payments and other events after 2001
The OSS investigation
"(1) UNUSUAL SETTLEMENT REQUESTS - Settlement by cash of any large transaction involving the purchase of property or other investment should give rise to caution. Payment by way of third party cheque or money transfer where there is a variation between the account holder, the signatory and a prospective investor should give rise to the need for additional enquiries.
(2) UNUSUAL INSTRUCTIONS - Care should always be taken when dealing with a client who has no discernible reason for using the firm's service e.g., clients with distant addresses who could find the same service nearer their home-base; or clients whose requirements do not fit into the normal pattern of the firm's business and could be more easily serviced elsewhere.
(3) LARGE SUMS OF CASH - Always be cautious when requested to hold large sums of cash in your client account, either pending further instructions from the client or for no other purpose than for onward transmission to a third party.
(4) THE SECRETIVE CLIENT - A personal client who is reluctant to provide details of his identity. Be particularly cautious about the client that you do not meet in person."
"Solicitors should also be alert to any proposals which are an attempt to use the solicitor's firm for nothing more than banking services."
Annex H includes the following paragraph (iii) as one of several illustrations of cases where cause for concern is likely to arise:
"a well-established wealthy client proposes that your firm be involved in a new venture whereby sums will be held on account for the client. Upon probing and considering the details, the underlying cause for concern is that there do not seem to be any legal services being performed or required as would be expected in the normal course of a solicitor's practice."
"I had always assumed that because it was [ZSIS] they did not want the money to go to them directly. [AFSL] acted for [ZSIS] in Zambia and I think the intelligence services – this is what I was told – that the intelligence services did everything via their office in Lusaka. Now whether it was … for secrecy reasons or what, I really do not know. I am assuming that it was."
"Hold on. When you say these are government moneys, I cannot agree with you because I don't know if these are government moneys. These are Access moneys. Moneys came in to us for the credit of Access. It doesn't come to us to say here is money that is government money and so therefore Access will tell you what to do with it. It doesn't happen like that. Whatever money comes to us came for the credit of Access, so when you are trying to tell me that these are moneys that came from government, for government, I really don't know. As far as I am concerned, my client was not government, my client was not the State Intelligence Service, my client was Access and I was acting for Access. Now moneys came in for the credit of Access and we disbursed those funds on the instructions of our client, so I think you are wrong when you say thee moneys that came in was from government for government."
"Mr Fletcher: I am just dealing with that unusual instructions – this is the part that deals with clients who have got no discernible reason for using the firm's services, distant addresses and things like that. If I was going to summarise what you have said to us this morning so far, the reason that they have used you effectively – the client being Access – is that they have got a longstanding relationship with you, you have known the person for a long time and that there were problems with the exchange controls in Zambia.
Mr Meer: And a hedge against inflation
Mr Fletcher: And a hedge against inflation and [some] belief that the secret service of Zambia are involved somewhere along the line
Mr Meer: Certainly for the Zamtrop
Mr Fletcher: And that is why they can't be seen to be sending money back to themselves essentially. It has got to go through a third party. So you have had no suspicions about that at any other point at all?
Mr Meer: No suspicions whatsoever and none even after I met the director of the Intelligence Services."
The position taken in the Defence
Mr Meer's evidence
"Zambia had been very good to me, and Zambia gave me my start in life, and I was prepared to help Zambia as much as I could."
"Judge: As I understand it, at the meeting you were told that AFSL would be acting for ZSIS, and you were not told what they would be doing for ZSIS, and there appears to be no definition of what services you are to provide. You are simply going to do what they ask you to do, and you do that without enquiry because you trust the people who are sitting across the table from you. That is the position isn't it?
Mr Meer: That is the position."
"The money always came from Meer Care & Desai and we remitted those funds from the credit of AFSL. I am not following your question. If you are saying that there was money being rerouted back to Zambia in order to break the chain, I don't think that can be correct. I was receiving monies from the Zamtrop account in London. I did not know the source of their funds. My client was Access and I was sending money on to them. They were based in Zambia and it was only natural and not unusual for me to send money to them."
"Mr Meer: The money belonged to Access. The monies that I had received was money for their credit in respect of services that they had performed, I believe, or I assumed, for ZSIS.
Judge: So it was money for past services that they had received?
Mr Meer: It is difficult for me to say whether they were for past services or not, but it was for the work that they had done for ZSIS."
"Mr Sullivan: Well, it comes back to his Lordship's question, which I think you haven't answered. What service was it that you were providing to Access?
Mr Meer: My Lord, the majority of my practice is an African-orientated practice. I do a lot of things on behalf of a lot of clients from that part of the world, which strictly does not fall within the work of a solicitor, and I think, in my witness statement, I have given you various examples, my Lord, of the type of things I have been called upon to do so on the behalf of clients. These are all established clients of mine. They are not clients that I acted for for the very, very first time. There are many occasions when I am asked to do things on behalf of clients – clients of long standing – I have acceded to those requests.
Judge: Well, I don't think that is an answer to Mr Sullivan's question either. All I can see at the moment is that the service, so-called, involves your client account being made available for monies to be put in, the source of which you don't question, and then to be paid out to people, the purpose for which you don't question either?
Mr Meer: Yes, that money came from a reputable source, my Lord, and I did not question where the money came from. I received it on behalf of my client and I disbursed it in accordance with the instructions that I got.
Judge: So the service then is simply to receive money without asking where it comes from, and disburse it, as told, without enquiring what is the purpose of the disbursement, isn't it?
Mr Meer: My Lord, I did know where the money was coming from. It was coming from the Zamtrop account in most of the cases. It was coming from Zanaco in London, and it was coming for the credit of my client.
Judge: Well, I have a bit of a problem with who is your actual client at the moment, given your answer at 136 where you say it was money for the Zambian State Intelligence Services. It can't be both AFSL and ZSIS money, can it?
Mr Meer: No, my client always was AFSL. I received no instructions for ZSIS. I had no contact with ZSIS except Mr Chungu at that meeting in London.
Judge: But that makes your answer to Mr Uddin not correct, doesn't it, at page 136, line 14? That answer gives the impression that AFSL was simply being used as a conduit to hide the fact that it was really ZSIS money?
Mr Meer: No, Sir. ZSIS was never my client, Sir. If that is the impression that has been created, then that is wrong.
Judge: You see, it is being put to you there – and you answer affirmatively – that the purpose of the exercise is simply to disguise that the ZSIS money is ZSIS money, isn't it? It is to hide the fact that ZSIS is involved. That is what you are saying to him, isn't it?
Mr Meer: I was assuming, my Lord. My Client always was – and I will stand by this – were AFSL. My instructions always came from AFSL. The money that I received was for their credit and belonged to them, my Lord."
"Judge: Is that the truth of the matter, then, that you simply did not ask? You did not check? You simply allowed your client account to be used as they thought was appropriate, without making any enquiries?
Mr Meer: I did not make any enquiries.
Judge: So they came to you at the meeting and they said, "We want to run money through your client account. It is all very secret. "And you said, "Fine!"
Mr Meer: No, they did not say that, my Lord.
Judge: They gave you the impression it was secret. They didn't then say it was secret. You formed the view that because it was secret, you simply accepted it was secret, legitimate. You didn't know where the money came from. As regards an ultimate source, you didn't know where it went, and you didn't make any enquiries at all, or check anything? That's right, isn't it?
Mr Meer That is correct, my Lord. The money I knew came from the Zamtrop account.
Judge: Yes, but you did not know how it got into the Zamtrop account?
Mr Meer: No, I did not, my Lord.
Judge: And you did not know where it was going? You simply didn't ask.
Mr Meer I did not ask."
"Mr Meer: I did not look at it that way, my Lord.
Judge: Isn't the reality, Mr Meer, you did not look at it any way? You just had Mr Kabwe who you knew and Mr Chungu who you knew was the ZSIS man and that was enough for you? You did nothing else. What they said went. Isn't that the position?
…
As I understand your answers, you really have no idea about the transactions, have you? You have no real idea who the money belongs to. They simply used your account as they wanted?
Mr Meer: With the valuable benefit of hindsight, I see, yes, that I was being used.
Judge: I understand why you might say that, and am very careful not to apply hindsight or rules which have been firmed up, and that is a question which I have to decide. But the reality is, Mr Meer, that you simply took their word for it, that what they were doing was legitimate and you had no idea what they were doing? Isn't that right?
Mr Meer: That is correct, my Lord."
"Mr Sullivan: You understood that the $250,000 that you received, as we have looked at, was the first payment which had been made pursuant to the arrangement which you had made at the Churchill Hotel with Mr Xavier Chungu and Faustin Kabwe?
Mr Meer: Not at that time, my Lord. I cannot recall if that is what I perceived."
…
"Mr Sullivan: You had agreed only a short while earlier with Mr Xavier Chungu and Mr Faustin Kabwe to receive monies from Zanaco. So did it not occur to you that these were monies – given that you received no other monies from Zanaco, that these were monies received pursuant to that agreement?
Mr Meer: Not really. I was told by Mr Kabwe to expect these funds. They could have come from anywhere. But he identified the bank in his letter to me. Whether it was in pursuance of his arrangement with Mr Chungu, I really don't know."
"Judge: It's like all your other assumptions. If they tell you to do it, you don't ask why. To talk colloquially, you just ask "How high?" don't you? That is what I understand your evidence to be. You did not question any one of these transactions at all?
Mr Meer: My Lord, I had implicit trust in Mr Kabwe. I had known him for such a long time. I didn't think it was necessary for me to ask. I trusted him."
"Judge: But these were monies which you had received further to the Churchill Hotel Agreement. You must have questioned, given that you knew the source of monies to be the Government monies, ZSIS monies, "What on earth am I doing remitting $50,000 to a Midland Bank account in Covent Garden, London, England?" Did you ask yourself that question?
Mr Meer: No, I did not.
Judge: Did you ask what possible Government purpose might be served by this remittance?
Mr Meer: I did not, my Lord.
Mr Sullivan: Let us look at the fourth----?
Judge: Sorry, why did you not ask that question?
Mr Meer: I did not think it was necessary my Lord. I thought I was being asked to remit funds to one of AFSL's clients. It must have been a commercial transaction, my Lord.
Judge: We explored this yesterday. Yesterday, you said the purpose of the arrangement was so that ZSIS could do things secretly and keep it in confidence. I understand that to mean that you believed that what you were being asked to do was to facilitate ZSIS operations. Is that right?
Mr Meer: That is correct.
Judge: These are manifestly not ZSIS operations, are they?
Mr Meer: I have no idea. I, I agree with you. It does not look like it, my Lord.
Judge: At some point in time, it must have surely occurred to you – from example, when you were asked to pay university fees and the like – what on earth has this got to do with ZSIS operations? It must have occurred to you?
Mr Meer: Honestly, it did not