Restraint Does Not Suspend Inflation Adjustment of Criminal Benefit in Confiscation Proceedings

1. Introduction

This judgment establishes that applying an inflation adjustment to criminal benefit is not disproportionate merely because the assets representing that benefit have been frozen by a restraint order and have failed to keep pace with inflation. The adjustment preserves the present monetary equivalent of benefit obtained earlier; it does not require proof that the restrained assets actually generated a corresponding return.

The court heard two unrelated confiscation cases together. The first concerned a former Nigerian state governor convicted of offences arising from extensive public-sector fraud and money laundering. The second concerned a businessman convicted of false accounting, revenue fraud, counterfeit trading and money laundering. Both challenged the application of an uplift for the change in value of money, described in the judgment as “CVM”.

The businessman’s former wife also appealed against the rejection of claims to beneficial interests in two commercial properties. That appeal raised distinct questions about sham transactions, pension trust documentation and the significance of a third party’s decision not to give oral evidence.

The judgment therefore has two principal dimensions: it confirms the compatibility of inflation-adjusted, value-based confiscation with property rights, and it illustrates how courts may look behind documentary ownership when determining third-party interests.

2. Background and Outcomes

The former governor’s appeal

The former governor’s criminal proceeds had been channelled through companies and bank accounts across several jurisdictions. Restraint proceedings began in 2007, with a replacement order made under the correct statutory regime in 2008. Following guilty pleas, he received a custodial sentence in 2012. Confiscation proceedings eventually produced an order for £101,514,315.21 on 21 July 2023.

His appeal concerned only the CVM adjustment. He argued that applying inflation to money held in restrained, non-interest-bearing accounts interfered disproportionately with his property rights. His proposed reduction was approximately £4.3 million.

The businessman’s application

The businessman’s offending occurred between 2003 and 2008. His assets became subject to restraint and management receivership orders in 2010. He absconded to the United Arab Emirates in 2011 and was eventually convicted in his absence in 2023.

The Crown Court assessed his benefit before inflation at £52,793,179.09. Applying CVM increased that figure to £90,503,211.96, the amount of the confiscation order made on 28 August 2025. He challenged both the inflation adjustment and the finding that he had sufficient available assets to meet the order.

His receivership estate included numerous income-producing properties. Its estimated net value was approximately £54.9 million in June 2025. Although substantial rental income had been received, investigation, management and receivership costs had been incurred, and property values had not kept pace with inflation. No criticism was advanced that the receiver had acted improperly.

The third-party appeal

The former wife sought recognition of interests in several assets under section 10A of the Proceeds of Crime Act 2002. The Crown Court accepted her entitlement to half the outstanding equity in the former matrimonial home but rejected her other claims. Her appeal concerned only:

• a claimed 25% beneficial interest in the factory and warehouse premises at 107–109 Fletcher Road; and
• a claimed 50% interest in 5 & 6 Cheapside, a property associated with a directors’ pension scheme.

Summary of the appellate decisions

3. The Statutory Framework

Benefit and available assets are separate questions

The former governor’s proceedings were governed by the Criminal Justice Act 1988, as amended. The businessman’s proceedings fell under the Proceeds of Crime Act 2002 (“POCA”). The relevant valuation provisions were materially identical.

The statutory process distinguishes between:

1. Benefit: the value of property obtained through or in connection with criminal conduct, including the monetary equivalent of a pecuniary advantage.
2. The available amount: broadly, the value of assets available to satisfy the order, subject to the statutory rules concerning priority obligations and tainted gifts.
3. The recoverable amount: ordinarily the benefit figure, reduced where the defendant proves that the available amount is lower.

The prosecution must establish benefit. The defendant bears the burden of proving that the available amount is insufficient. Both questions are determined on the balance of probabilities. The court expressly recorded that the criminal-lifestyle assumptions did not apply in either case.

The inflation-adjustment rule

Section 80 of POCA, corresponding to sections 74(5) and 74(6) of the 1988 Act, generally values benefit by taking the greater of:

• its value when obtained, adjusted for subsequent changes in the value of money; and
• the current value of the property retained, or of property representing it.

This is deliberately not a calculation of the actual investment performance of the particular assets. If property appreciates faster than inflation, its higher current value may govern. If it stagnates or falls in value, the inflation-adjusted acquisition value ordinarily remains the relevant measure.

Proportionality

Section 6(5) of POCA requires a confiscation order only if, and to the extent that, requiring payment would not be disproportionate. That proviso was inserted by the Serious Crime Act 2015 following the Supreme Court’s decision in R v Waya.

The equivalent protection applies under the older legislation through section 3 of the Human Rights Act 1998 and Article 1 of Protocol 1 to the European Convention on Human Rights (“A1P1”). The Court of Appeal accepted that the proportionality protection under the two regimes was equivalent in application and effect.

4. Precedents and Their Influence

R v Waya [2012] UKSC 51 [2013] 1 A.C. 294

This was the central authority. It established that confiscation legislation must operate proportionately to its legitimate objective of removing the fruits of crime. In a mortgage-fraud case where the loan had been fully repaid, confiscating the loan itself would have gone beyond that objective. The appropriate focus was the benefit obtained from using the dishonestly secured finance.

Importantly, the Court of Appeal applied the whole of that reasoning, not merely its protection against excessive recovery. The decision also confirms that benefit generally remains benefit after it has been spent or lost, that legitimate assets may satisfy an order, and that criminal expenses are not ordinarily deductible. The defendants’ argument failed because restraint-induced underperformance was not analogous to restoring benefit to the victim.

R v Andrewes [2022] UKSC 24 [2022] 1 WLR 3878

This decision supplied the court’s principal synthesis of the proportionality authorities. It emphasises that proportionality is not an unrestricted judicial discretion to impose whatever outcome appears fair.

The case concerned employment obtained through a fraudulent curriculum vitae. Its significance here was the recognition that value supplied to the employer matters when assessing whether confiscation would produce an impermissible recovery. The Court of Appeal contrasted that situation with restrained property: freezing assets does not confer their value on the victim or otherwise restore the criminal benefit.

R v May [2008] UKHL 28 [2008] 1 AC 1028

This authority supported the underlying structure of the confiscation regime. A confiscation order is a personal monetary obligation, not necessarily an order transferring identified criminal property. Its discussion of joint receipts, successive receipts and gross benefit also explains why a proportionate order may exceed the offender’s retained net proceeds.

The present judgment builds on that distinction: measuring historic benefit is different from asking what a particular account or property is worth today.

R v Rezvi [2002] UKHL 1 [2003] 1 AC 1099 and R v Ahmad [2014] UKSC 36 [2015] AC 299

These authorities helped identify the legislation’s legitimate purposes: depriving offenders of criminal gains and communicating that crime does not pay. The court nevertheless distinguished deterrence from the regime’s essential purpose, which is removal of the pecuniary benefits of crime. Inflation adjustment serves that central purpose by maintaining the real value of the benefit to be recovered.

R v Smith (David) [2001] UKHL 68 [2002] 1 WLR 54

This was especially important to the argument about loss of control. The offender obtained a pecuniary advantage by avoiding excise duty on smuggled cigarettes. Subsequent seizure of the cigarettes did not retrospectively eliminate that advantage.

The decision also explained that subsequent destruction, damage or seizure generally does not erase the value obtained earlier. Its approval in R v Waya demonstrated that this principle remained compatible with proportionality. It defeated the proposition that benefit must be reduced whenever an offender involuntarily loses the ability to use the relevant property.

R v Islam [2009] UKHL 30 [2009] AC 1076 and R v Kakkad [2015] EWCA Crim 385

These cases applied the same general principle in circumstances involving seized and forfeited drugs. They reinforced the distinction between obtaining benefit and subsequently retaining or enjoying it. The court used that distinction to explain why lawful restraint does not, by itself, require a reduction in the inflation-adjusted benefit figure.

R v Harvey (Jack) [2015] UKSC 73 [2017] AC 105

This decision illustrated the different position where benefit is calculated gross of VAT but the VAT, or its equivalent, has been paid to HMRC. It belongs to the narrow group of cases in which proportionality prevents recovery that fails to recognise value already returned to the relevant recipient.

It therefore supported the court’s distinction between restoration and mere diminution: restrained assets that have failed to appreciate have not thereby been restored to anyone.

R v Barwick [2001] Cr App Rep (S) 129

This authority confirmed the defendant’s burden under the older statutory regime to establish that the available amount is below benefit. It supported the court’s treatment of asset insufficiency as a distinct evidential question, rather than a reason to alter the statutory valuation of benefit.

Snook v London and West Riding Investments Ltd [1967] 2 QB 786

This provided the governing definition of a sham: acts or documents intended by their participants to present an appearance of legal rights and obligations different from those actually intended.

It was decisive to the third-party ownership dispute. The question was not simply whose name appeared on the paperwork, but whether the participants genuinely intended the former wife to possess the rights of beneficial ownership.

R v Forte [2020] EWCA Crim 1455 [2021] 4 WLR 26

This authority supported the treatment of the former wife’s failure to give oral evidence. Where the existing evidence supports an inference and a party is well placed to explain the facts, the absence of an explanation may leave that inference unrebutted.

The judgment did not treat silence as an automatic substitute for proof. The prosecution retained the burden of disproving the claimed interests; the absence of testimony was considered against an existing evidential foundation.

5. Why Inflation Adjustment Remains Proportionate During Restraint

A. The adjustment preserves value rather than inventing profit

The central reasoning appears in paragraphs 31 and 47–53. Confiscation values the benefit when obtained, but the payment order necessarily comes later. Inflation adjustment connects those two dates by translating the original benefit into its current monetary equivalent.

The defendants characterised the uplift as money they had never earned and could not earn while their assets were frozen. The court rejected that premise. CVM is not interest, an assumed investment return or an additional criminal receipt. It is a measure of the real value of the benefit already obtained.

For that reason, the relevant comparison is not between inflation and the performance of an individual bank account, shop or investment property.

B. Subsequent control is not the basis of liability

The court identified several respects in which the position flowed from the defendants’ own choices: obtaining criminal proceeds, selecting the form in which to hold them, creating a risk of dissipation, concealing assets and resisting confiscation.

A non-interest-bearing account, for example, was ordinarily the form in which the defendant had chosen to place the proceeds before restraint. The restraint order then preserved the assets in support of the statutory recovery process.

But choice was not the sole foundation of the decision. The authorities also establish that involuntary loss or destruction generally does not undo an earlier benefit. Consequently, the defendants could not succeed simply by showing that restraint removed their later freedom to invest.

C. Restraint is a consequence of criminal conduct, not restoration

A restraint order prevents dissipation so that a later confiscation order can be effective. It does not itself return the benefit to the victim or discharge the defendant’s liability.

This distinguishes restraint from repayment, restitution or an equivalent transfer of value. There was therefore no double recovery of the kind recognised in the proportionality authorities.

D. Asset-market risk does not determine historic benefit

Property prices and rental markets do not necessarily track the Consumer Price Index. The court treated that divergence as part of the ordinary risks associated with holding assets.

The law does not guarantee that the property selected by an offender will preserve the purchasing power of the benefit originally obtained. A fall in its real value does not, without more, make inflation-adjusted confiscation disproportionate.

E. Other available assets may meet the order

The former governor argued that he would have to fund the uplift from assets other than the restrained balances. The court regarded that as inherent in a value-based regime. Available assets may be lawfully acquired; they need not represent the original proceeds.

The important qualification is that the recoverable amount remains subject to the statutory available-amount rules. The judgment does not abolish that protection. It rejects an attempt to reduce benefit merely because particular proceeds have underperformed.

F. Proportionality concerns the payment obligation

The businessman correctly argued that section 6(5) applies to the final recoverable amount, not merely to an intermediate benefit calculation. The court agreed with the legal proposition but found no substantive error.

Because the Crown Court had found sufficient assets to meet the full benefit figure and had expressly considered the proportionality of requiring full payment, the suggested distinction did not affect the result.

6. Application to the Individual Confiscation Cases

The former governor: an additional evidential obstacle

The appeal failed on the legal principle, but the evidence also undermined the claimed reduction.

For four Nigerian accounts within one benefit item, the agreed CVM uplift was only £10,265.17. It was unclear when effective local restraint had prevented their use or precisely which period the uplift covered.

The much larger argument concerned seven accounts holding approximately £12.5 million at a later stage of the laundering process. Those balances were not the benefit sums to which CVM had been applied. The relevant benefit had instead been valued when proceeds were originally received into three other accounts in 2006.

The appeal thus confused later traceable assets with the original receipts forming the valuation base. This distinction is practically important: an inflation challenge must identify the actual benefit calculation and the period of indexation, not merely a later account containing related funds.

The businessman: receivership expenses and rental income

The businessman’s further arguments did not establish disproportionality. The court rejected the contention that rent increases followed by CVM adjustment amounted to double counting. The adjustment applied from receipt of the rent; an increase in rental levels before receipt was a different matter.

Nor did properly incurred receivership expenses justify reducing the uplift. No allegation was made that the receiver had exceeded his powers or breached his obligations. The estate’s performance reflected property-market conditions and legitimate management costs.

The court also emphasised responsibility for delay. The businessman accepted that the prolonged proceedings could properly be attributed to his own conduct. The court similarly attributed the former governor’s lengthy delay to his persistent resistance to confiscation.

The businessman: unidentified available assets

The challenge to the available-assets finding was not arguable. The court referred to identified assets of £74,949,980.40, while acknowledging disputes over some ownership, and upheld the inference that further assets existed.

That inference rested on the scale and international structure of the laundering, the businessman’s prolonged comfortable life abroad without access to the restrained estate, his lack of cooperation and the trial judge’s detailed knowledge of the evidence.

The receiver’s inability to identify every asset did not reverse the statutory burden. It remained for the businessman to prove that his available resources fell below the benefit figure. He had not done so.

7. Third-Party Interests: Substance Over Documentary Appearance

The factory premises

The court upheld the finding that the former wife’s registered interest in 107–109 Fletcher Road was a sham in the sense identified in Snook v London and West Riding Investments Ltd.

The conclusion depended on a cumulative assessment, including:

• the businessman’s control of the business and use of relatives’ names in corporate and property arrangements;
• the former wife’s admitted lack of involvement in business affairs;
• substantial repairs arranged and funded without consulting the supposed family owners;
• insurance arrangements that did not reflect their asserted ownership;
• the limited rental income received, which did not demonstrate enjoyment of a genuine ownership share; and
• the failure of the other registered family members to claim interests after receiving statutory notices.

Registration before the indictment period did not establish genuine ownership. The issue was whether beneficial rights had ever been intended, not whether the paperwork predated the offences charged.

The court acknowledged that family gifts, estate planning or redistribution of family wealth could explain registration in other circumstances. It held that those possibilities were inconsistent with the particular evidence here. The decision is therefore not a presumption that family-held property belongs to a convicted relative.

The pension-scheme property

The claim to 5 & 6 Cheapside failed for additional documentary reasons. The title and borrowing documents identified the former wife as a trustee; they did not establish that she was a beneficiary or owned half the equity personally.

The available interim trust deed provided benefits for qualifying employees who became members. It was conceded that the former wife was not an employee and had not been intended to perform a director’s functions. On the evidence and scheme terms, she was not within the relevant beneficiary class.

The definitive trust deed had not been produced, and other documents contained unexplained inconsistencies. The court questioned whether the arrangement genuinely operated as a pension scheme but expressly declined to make unnecessary findings about its overall validity or tax purpose.

The proper lesson is narrower than any general rule about directors’ pensions: trusteeship, signature of borrowing documents and registration of legal title do not themselves establish beneficial entitlement. That entitlement must be demonstrated from the governing arrangements and evidence.

The absence of oral evidence

The prosecution retained the burden of disproving the claimed beneficial interests on the balance of probabilities. The court nevertheless upheld the judge’s treatment of the former wife’s decision not to testify.

Her written evidence did not explain how genuine beneficial ownership had arisen. She had an opportunity to address the evidential concerns and was personally placed to explain the arrangements. Her decision not to do so left supported inferences unanswered.

The court treated this as an evidential assessment consistent with R v Forte, rather than a freestanding rule that non-attendance or silence defeats a third-party claim.

8. The 2026 Amendments: No Different Result

The defendants relied on amendments made by the Crime and Policing Act 2026 as indicating a legislative “direction of travel”. The court rejected that argument. The confiscation orders fell to be considered under the law applicable when they were made, and the older Criminal Justice Act regime had not received equivalent amendments.

New section 7(8): temporary holding or limited control

This permits a reduction in specified circumstances where the statutory amount would be unjust. The court distinguished that discretion from the mandatory protection against disproportionate orders. It doubted whether restraint would engage the provision and held that, even if it did, limited control would not automatically make the uplift unjust.

New sections 80(3A) and 80(3B): sale and destruction

These alter valuation in specified sale and court-ordered destruction situations but expressly retain inflation adjustment. The court considered the destruction provision inconsistent with an argument that CVM depends on the defendant’s continuing ability to use the property.

The uncommenced exclusions concerning property given up or seized

A further amendment would exclude specified property restored, surrendered, seized and retained, or paid as compensation. It had not been brought into force. The court saw its rationale as preventing payment twice, not as supporting a general exemption for restrained assets.

These observations did not constitute an application of the new provisions to the appeals. Their future interpretation remains a separate question.

9. Impact and Limits of the Decision

Confiscation calculations

The judgment provides clear authority against removing CVM solely because proceeds have been restrained, earned no interest or appreciated more slowly than inflation. It applies across both statutory regimes considered.

It also reinforces the distinction between benefit and asset sufficiency. A defendant who says the available amount is lower must prove that proposition rather than rely on the performance of selected restrained assets.

Proportionality arguments

The decision confirms that proportionality is a structured limitation tied to the purpose of confiscation, not a broad licence to adjust orders for perceived hardship. Restoration and equivalent transfers of value remain especially important because they can make further recovery excessive.

However, the court did not hold that restoration exhausts every possible case of disproportionality. Nor did it decide the consequences of proven receiver misconduct or materially different circumstances involving responsibility for delay. Both defendants’ delay was attributed to their own conduct, and no receiver misconduct was alleged.

Third-party claims

Future claimants should expect scrutiny of the practical rights they were intended to enjoy, not merely their appearance on title or corporate documents. Evidence of acquisition, funding, management, income entitlement and the governing trust terms may be decisive.

Equally, the outcome does not authorise routine disregard of family ownership, companies or trusts. The findings rested on the particular evidence of sham arrangements. The judgment’s references to disregarding the corporate veil should not be read as establishing a general new veil-piercing doctrine.

10. Complex Concepts Simplified

Value-based confiscation

A requirement to pay the monetary value of criminal benefit, rather than simply surrender the particular property originally obtained.

CVM uplift

An inflation adjustment translating an earlier benefit into present-day money. It is not interest or a promised investment return.

Restraint order

An order freezing dealings with assets to preserve them for possible confiscation. Freezing is not itself repayment or confiscation.

Management receivership

Court-authorised management of restrained assets, potentially including investigation, rent collection and property administration.

Proportionality under A1P1

The requirement for a reasonable relationship between interference with property and the legitimate objective of removing criminal benefit.

Legal and beneficial ownership

Legal ownership concerns formal title. Beneficial ownership concerns entitlement to the property’s economic benefit. A trustee may hold title without owning the benefit personally.

Sham transaction

An arrangement intended to present rights different from those the participants actually intend to create. An unusual family arrangement is not necessarily a sham.

Double recovery

Recovery that fails to recognise benefit already restored or equivalent value already supplied, potentially going beyond the legitimate purpose of confiscation.

11. Conclusion

The central rule is that restraint does not suspend inflation adjustment. Confiscation measures the real present value of benefit obtained through crime; it does not guarantee that the assets representing that benefit will generate enough growth to meet the resulting liability.

The judgment also confirms that third-party property claims depend on genuine beneficial entitlement. Documentary title, trusteeship and family relationships cannot replace evidence of the rights actually intended. All challenges failed, leaving both confiscation orders and the disputed third-party determinations intact.