Jersey recently announced the successful conclusion of a 10-year asset recovery case against an Indonesian company director convicted of fraud, embezzlement and money laundering, and which involved a luxury apartment in Singapore held through a Jersey trust. H.M. Attorney General of Jersey, Mark Temple KC, won all three appeals at the highest appellate level and is currently negotiating with the Indonesian authorities regarding the return of the funds, minus costs.
Mark Temple KC, Attorney General of Jersey
In this interview with Senior Asset Recovery Specialist Jonathan Spicer, he explains the significance of the final judgement in the context of Jersey’s efforts to address financial crime. The case holds interesting lessons on how jurisdictions can boost asset recovery through both domestic legal reforms and proactive international cooperation.
1. How did Jersey become involved in this case?
Mr Robert Tantular, a former director of two companies that had shares in the now-collapsed Indonesian bank PT Bank Century Tbk, had settled a trust in Jersey in 2004.
Named the Jasmine Trust, it owned the shares of a company incorporated in the British Virgin Islands (BVI), which in turn owned an apartment in Singapore bought for 7.1 million Singapore dollars (over USD 5 million) in 2005.
In 2009, Indonesia sent a letter of request to Jersey seeking evidence relating to the Jasmine Trust. The authorities were investigating Mr Tantular for fraud and money laundering offences committed in Indonesia. We supplied the requested evidence, in fulfilment of our commitments under international law.
2. When and how were the assets frozen?
In July 2013, the Indonesian authorities sent a second letter of request to freeze (restrain) assets of the Jasmine Trust – what we call in Jersey a saisie judiciaire. We obtained the order the following month. This was in anticipation of confiscation orders being made against Mr Tantular in the fraud and money laundering proceedings. He was convicted in Indonesia in September 2014.
A second saisie judiciaire was obtained in 2014, in anticipation of further confiscation orders in relation to separate criminal proceedings against Mr Tantular for fraud and embezzlement offences. Due to the dates of the offending in these proceedings, the second saisie had the potential to cover earlier gifts to the trust.
The case was hard fought by Mr Tantular and raised several appeals, in the first instance to Jersey’s Court of Appeal. Three judgements of the Jersey Court of Appeal were appealed to the Judicial Committee of the Privy Council, Jersey’s ultimate appellate court.
3. The trustees challenged the Court’s jurisdiction – on what basis?
In the first appeal, the Tantular beneficiaries of the trust argued that because the trust property was in Singapore and held through a BVI incorporated company, Jersey did not have the jurisdiction to order the saisies judiciaires.
The Judicial Committee of the Privy Council struck down the appeal, finding that the basis of the Court’s jurisdiction under the Modified Law was a personal one, over persons who were within the jurisdiction of Jersey: i.e. the professional resident trustee. This is an important finding, since the form and structure of the Jasmine Trust – a Jersey law discretionary trust, with a BVI-incorporated company holding assets abroad – is a common one. Such trusts are administered by a Jersey resident trustee that is regulated and staffed by professional directors. This means that all such trusts fall under the Court’s jurisdiction, wherever in the world the property or other assets may be located.
The Judicial Committee also held that a wider interpretation of the Modified Law, extending its provisions to assets held by a company in a different jurisdiction and enabling them to be seized through a trust structure based in Jersey, is appropriate since it allows Jersey to provide more effective cooperation for asset recovery.
4. You challenged the decision to allow the mortgage holder to assign their rights of security to a third party – why?
The Court of Appeal had accepted Mr Tantular’s proposal that Credit Suisse, as the mortgagee of the Singapore apartment, could assign its rights under the loan agreement to an old family friend in Indonesia.
I appealed the decision on the grounds that the proposed assignment to the old family friend could have facilitated a breach of the saisie judiciaire. There was a risk of the assets being dissipated. The Privy Council agreed. First, because the Jersey Courts would not have control over the individual in Indonesia, in contrast to the Jersey-based trustee. Second, because there is a big difference between Credit Suisse, a regulated global financial institution that is obliged to assist in criminal proceedings, and an old family friend who was an unregulated individual and may choose to frustrate the process.
Winning the appeal closes the door to creditors assigning their rights of security in property subject to a saisie judiciaire to third parties, when there is a risk that the assignment would interfere with the administration of justice.
5. Your second appeal concerns liability for costs. What does this highlight in terms of international cooperation for asset recovery?
I appealed the Court of Appeal’s judgement that Indonesia should be jointly and severally liable for costs in relation to certain of the proceedings. To me, this struck fundamentally at the system of international cooperation in criminal matters.
Jurisdictions choose to help each other as a sovereign act on the basis of comity and reciprocity, and in accordance with the relevant international conventions. The idea that a jurisdiction that requests assistance could expose itself to the risks of a cost order in long, complex and expensive litigation seems an important impediment to the smooth functioning of mutual legal assistance. This is particularly the case for jurisdictions whose financial resources are not significant.
The judgement of the Judicial Committee of the Privy Council removes any doubt that it is the Attorney General who brings the proceedings on their own behalf. In this case, it was for the benefit of Indonesia, but Indonesia was not a party to the proceedings and there was no basis for making it liable for costs.
Foreign jurisdictions seeking mutual legal assistance from Jersey or other jurisdictions should not need to fear exposure to cost risks.
6. What can other jurisdictions take away from this case?
Cases like this may be lengthy, but they are helpful in testing and strengthening domestic legislation around the freezing, confiscation and return of proceeds of crime.
For example, in 2021, following earlier decisions in this case, we modified our legislationregarding beneficial entitlement of trusts and the five-year period for gifts to trusts.
The issue of jurisdiction (appeal 1) is of fundamental importance to Jersey as much of our business is derived from overseas, and much of it is held in trust structures. It will have parallels in the legislation of other jurisdictions. The assignment of security point (appeal 2), and the costs point (appeal 3) are of general importance to most jurisdictions in their efforts to provide mutual legal assistance in cases of asset recovery.
Cases like this are also helpful in demonstrating the need for a policy-based approach to asset recovery: developing, evolving and interpreting laws that support the important policy objective of confiscating and returning proceeds of crime.
7. What message does this case send regarding the use of financial institutions and trusts in Jersey for the laundering of criminal proceeds?
The message is one that is strongly in favour of law enforcement and the use of regulated entities in the jurisdiction. Rapid handling of mutual legal assistance requests, and the fact that assets are concentrated in the hands of a regulated, Jersey-based trustee, made it possible to provide evidence to Indonesia and to lock down the assets before they were dissipated.
The case has shown the effectiveness of Jersey’s proceeds of crime legislation as regards the restraint of criminal proceeds and the enforcement of foreign confiscation orders at the highest appellate level.
It also shows Jersey’s determination to assist overseas authorities in asset recovery cases – that we are prepared to fight for over 10 years and to the highest appellate court level to confiscate the proceeds of crime for the benefit of the victim states.
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