At a directions hearing on 15 April 2005 in the appeal of Barry Beardall, the Met was tasked by the judge to establish the reliability of two affidavits. The first was an affidavit sworn in March 1998 and signed by Jennifer Costello, the second an affidavit received by the Met in the post on 14 June 2002. The affidavits were lumped together in the Met’s investigation which concluded that they had disproved the content of the documents but not their authenticity as they had only located copies.
The content of the affidavits differs. The overlay of the second affidavit masks the content of the first with much of the content mentioned in Barry Beardall’s appeal decision coming from the second affidavit:
‘The overall impression presented by both Affidavits is that Mrs Costello is operating as an agent of both HMCE and the Secret Service while working for an unnamed import business. As such she has attended briefings, provided intelligence and apparently acted as a confidante to “Support agents”. As a result of these activities she has gained good knowledge of covert law enforcement techniques and the import of duty payable goods and bonded warehouses.’
On this basis the Met set about ‘tracing and taking statements from family, friends and former work colleagues of Mrs Costello’ to test the authenticity of the content of the documents.’
‘These people have provided valuable lifestyle and background detail that strongly contradicts how Mrs Costello and her life are represented in the affidavits’
They contradicted what was written in the second affidavit because it was a fake. It had no solicitors signature, no stamp. Nobody in their right mind would investigate such a document. Why did the Met use it? The only logical answer must be that its use occluded scrutiny of the first affidavit which had a solicitor’s signature and stamp and signature of Jennifer Costello.
If you read the Costello affidavit (the first affidavit), you will find no mention of Costello working for HMCE or the secret service. Costello just describes gaining knowledge of illegal activities through her close friendship with Bernie Small.
Satisfied with the results of their ‘interim’ ‘inquiry’, the Met decided to leave interviewing ‘a number of witnesses’ who they’d identified. DS Gary Cornell in summing it all up stated, ‘I believe the authenticity of the content of these documents has been disproved”. Questioning of the Met investigators was refused by the judge as was the presence of Bernie Small.
The ground had in fact been carefully prepared to have the judge seemingly without a twinge of conscience declare, ‘Their falsity substantially destroys that aspect of the appellants’ case’
Is there be any truth in the contents of the Costello affidavit?
The affidavit describes how three people, Bernie Small, Anthony Watkins-Burton and Maureen Dunn were involved in what amounts to diversion fraud which was effectively being organised by Customs for official purposes. Customs is said to be ‘the only organisation able to operate freely in this way’ and ‘it was arranged in such a way that it could be denied if there ‘was any leak’. Costello raises the issue of entrapment of people recruited to take part in the frauds.
The document gives rise to three crucial points:
- Could there be any truth in a government agency running such an illegal activity?
- Is there evidence of people being entrapped by Customs?
- Is there evidence of denying/concealing/lying from Customs’?
1) Could there be any truth in a government agency running such an illegal activity?
The period from December 1995 to January 1998 during which Jennifer Costello describes being close friends with Bernie Small covers most of the duration Small was involved in the scam at London City Bond (LCB). Customs declared the fiasco a ‘sting’ but the blowing of almost £2 billion over a period of three/four years for this purpose defies credibility. Red flags were raised from other excise teams within Customs about the mounting losses and yet no one at managerial level and beyond appeared to have lifted a finger to put an end to the frauds. The excuse of not being informed or not knowing about such huge losses by the Excise Board is frankly untenable.
What challenges Customs’ assertion that it was a sting was the fact that before NIS EXCIRT took over LCB, fraud was negligible and as soon as they left the volume of fraud dropped overnight. If there were few fraudsters to begin with, what was the point of carrying out a sting? Saying that you had to run an almost £2 billion loss making sting to catch the big fish when there were hardly any fraudsters to begin with is utterly bizarre but running a covert operation in the guise of a sting to benefit from excise duty is not.
The whole thing burgeoned in 1995 after Bernie Small, NIS EXCIRT, and handler of LCB’s managing director, Alf Allington, had come on the scene. Allington was later to make a 69-page statement admitting that every fraudulent load that left LCB left with the full knowledge and direction of Customs. At the height of the frauds around 50 lorry loads were going out a day. So where on earth did all these fraudsters suddenly come from?
Maybe Customs’ historic drugs stings offer a clue. Customs sent drug liaison officers to embassies round the world to cultivate informants, who would then bring the drugs into the UK under the protection of Customs officers and were then let lose to select their targets setting up deals with dupes while Customs officers waited to grab the them.
As there weren’t many fraudsters around, procuring innocent participants would have had to have been an essential part of Customs’ ‘sting’ as it had been in the drugs cases. And then, where did all the booze suddenly come from to fulfil the fraudsters’ requirements? Were Customs agents bringing it in just as their informants brought drugs into the country.
The Met investigation into this huge loss to the taxpayers took years and ended with no prosecutions with the Met declaring it wasn’t in the public interest to proceed. The Met had bountiful evidence of Customs lying on oath, perverting the course of justice and so on. Their decision makes sense if all those involved at all levels were all doing what was required of them – in other words, obeying orders.
2) Is there evidence of people being entrapped?
Yes, but Customs had ways and means of stifling exposure of entrapment in trials. To avoid any sensitive disclosure coming to light Customs preferred a defendant to plead guilty. To do this they might offer to drop charges against a related co-defendant or omit certain evidence; they might portray a minor defendant in a much more serious role or they might load the charges bringing in conspiracy which can carry a very heavy prison sentence.
If Customs couldn’t get their way, and they believed defence might hanker after sensitive disclosure, Customs could get the judge to slam PII on it and, as is well-documented, Customs didn’t always give the judge the full picture. Customs trials are absolutely riddled with PII applications.
Another way was to manipulate the trial process by weakening the role of the prosecutor so that no proper scrutiny of prosecution witnesses was made allowing those involved in fraud to give evidence as in the London City Bond scam. Keeping disclosure under continuous review was an important part of the prosecutor’s role but it was taken over by prosecution counsel and the NIS, who controlled the release of sensitive information. If you control disclosure, you are in a very good position to control the outcome of the trial.
According to Barry Beardall he was unable to mount an argument for entrapment during his trial for conspiracy to evade excise duty because not only did Customs fail to bring Watkins-Burton, a co-conspirator to stand trial but they refused disclosure on him in spite of many requests. Similarly, in R V Early & Others, an LCB appeal, appellants put forward the fact that if proper disclosure had been made during their trial, arguments in relation to entrapment could have been made.
Five of the defendants in the 2002 pre-trial hearing at Liverpool Crown Court in front of Judge Grigson raised the issue of entrapment. Gordon Smith, a senior Customs lawyer who dealt with LCB cases being prosecuted from the Manchester Office gave evidence over 11 days in the abuse argument not for the prosecution but for the defence. According to the Guardian of 26 November 2002, ‘He provided a damning 331-page witness statement for the defence. He says: “It became apparent to me that there had been gross deceit on the part of [a special unit of the NIS] and senior members of the NIS.”
‘Mr Smith said he was not speaking out because he thought the 15 defendants involved in the Liverpool hearing were innocent, “but because I believe innocent people might be convicted through the wrongful acts of officers within the NIS who thought or decided that important ‘guidelines’ could be forgotten, ignored or disregarded … by law enforcement officers who would be able to remain above the reaches of the law.”
In a memo given in evidence, he said that he suspected: “The board, top officers in the NIS, counsel and the solicitor’s office were now seemingly caught up in an unbelievable conspiracy to pervert the course of justice.”
The fifteen defendants walked free after Customs decided to offer no evidence in the proceedings at the end of which, Judge Grigson praised Gordon Smith commenting, ‘When he reads what has happened here today, he may take a grim but justified feeling of satisfaction.’
However, in the following inquiry into the LCB scam, Mr Justice Butterfield noted, ‘If the proceedings before Mr Justice Grigson had continued it was the intention of the prosecution to call a number of witnesses all of whom, it was anticipated, would have given evidence that contradicted Gordon Smith’s account. As the prosecution decided to offer no evidence almost at the outset of its case, those potential witnesses have been denied the opportunity to give their accounts. It would be as unfair to condemn them unheard as it would be unfair to reject Gordon Smith’s allegations on the basis of written statements made by those who challenge his account of events.’
So why did Customs decide to offer no evidence at the pre-trial hearing? As Gordon Smith’s accusations were pivotal in reopening the abuse of process application, surely it would have been essential to contradict his allegations that there was in effect a conspiracy to pervert the course of justice particularly as Smith was a senior lawyer who had been working on excise fraud cases.
3) Could there be any truth that if there was a leak in Customs/NIS being involved in excise fraud ‘it was arranged in such a way that it could be denied?
There’s overwhelming evidence that Customs/NIS did everything possible to cover up their involvement in excise fraud. Even when the dam was about to burst on the LCB scam, the priority for the NIS, Solicitors Office and above was to keep the lid on the fact that Alf Allington was a participating informant. The memorandum of 2 February 1999 cited in the Early appeal judgment of 2002 from Maureen Dunn to her senior John Flood demonstrated that it was clearly known to C & E lawyers in February 1999 that Alfred Allington was not a trade source. Maureen Dunn was the senior solicitor in charge of the London-based prosecutions.
In early March 2000 Gordon Smith was told that Allington was to be presented to the defence as a trade source but to the judge it would be disclosed in a PII application that he was rather more than a source. Trial after trial the NIS had lied on oath and misled the court.
Butterfield had been very protective of Customs in stating that they didn’t get the opportunity to respond to Gordon Smith’s allegations. He also said that other than Gordon Smith’s allegations
‘there is still no basis for concluding that any Customs officer committed any offence, or acted dishonestly, in relation to the Commissioners or did not believe they had the right to act as they did.’
Customs officers had lied on oath; they had perverted the course of justice. Why was it possible they believed they had the right to act as they did? Was it because they had been given this right to act in such a manner from above? Allington stated that all his lies were approved or known to be untrue by Customs. Is there then some truth in the fact that Customs, as described in the affidavit, was acting officially?
Just as defendants in the excise duty/drugs trials hadn’t received proper disclosure, crucial evidence was kept back from Butterfield’s inquiry. Customs held onto the LCB Spine, ‘Customs’ own detailed internal analysis of the LCB fiasco, charting from day one key events with comments on where mistakes might have been made.’ Guardian of 23 March 2005
Far worse was their failure to hand over a three-page informant record document which showed that Alf Allington had been a registered informant since 1994. In “The Guardian” 9 February 2004, the document had been discovered by a team of Scotland Yard detectives investigating allegations that Mr Allington and Customs officers had committed perjury. If Mr Justice Butterfield had had the document, surely there could have been no way he would have been able to conclude that he could find no evidence of criminality by Customs.
Then we come to the epitome of state corruption, the planting of the police informant, Derek Haslam into Barry Beardall’s defence team. Beardall was granted a representation order and Legal Services Commission Funding when he was given leave to appeal ‘to enable further enquiries to be made with regard to the Costello affidavit and the allegations therein.’ Haslam was instructed by Beardall’s solicitor to find out all he could about Watkins-Burton and not, in fact, to investigate the Costello affidavit.
Interestingly, in what appears to be a letter dated 24 June 2004 from Haslam to Beardall’s solicitor on the Ciaran Goggins blog under the title of the post, ‘Operation Gestalt and Asil Nadir”, Haslam wrote that Watkins-Burton may not be easy to trace as he is believed to use a number aliases and the possibility he may still be receiving certain levels of protection from his past contacts within government agencies.
What did the informant, Haslam, come up with? In Beardall’s words, ‘The report was in fact devastating to my appeal as Mr Haslam had suggested I was the author. Any basic investigation would have shown this to be a ludicrous suggestion as the first affidavit had been used in a trial going back to 2001 involving a Michael Villiers.’
What can we garner from all this?
The Costello affidavit dated 24 March 1998 bears a genuine solicitor’s signature and stamp. The Met made little if any reference to its content focusing on the second, quite obviously false affidavit. They ignored what should have been crucial to their investigation, research into the close friendship between Costello and Bernie Small, not just a prominent figure in the affidavit but in the actual LCB scam. Instead they set about interviewing friends and family of Jennifer Costello based on a false premise. They didn’t even interview the person they knew to be the first in possession of the affidavit, thereby failing to follow the trail to establish authenticity.
Costello describes the operations discussed by Small and Watkins-Burton as not being ‘investigations into the evasion of duty but entailed organising duty evasion using companies which were under the control of Mr Small, and which Watkins-Burton had set up.’ Though the Met made enquiries with HMCE and Watkins-Burton, which they said contributed to their conclusion that the documents were false, they failed to interview those who had been convicted of excise fraud in the LCB scam. Surely, anyone with a degree of curiosity would want to know where the sudden influx of fraudsters had come from.
Costello says she ‘was in no doubt that they were actively organising the purchase of goods from France, Spain and Belgium into the United Kingdom.’ The Met doesn’t appear to have made inquiries into this either and so who was bringing/organising all the booze into the UK to supply the LCB ‘sting’ remains a mystery.
In Beardall’s trial ‘the prosecution case was that between July 1998 and February 1999 the appellants and their co-accused conspired together with Anthony Watkins-Burton, Cornelius Post and Hendrik Van Dooren and others unknown to evade duty payable on spirits. A substantial operation was conducted by HM Customs and Excise (“C & E”) and was known as Operation Crystal. It involved about a hundred consignments of duty-suspended spirits which left a bonded warehouse (“bond”) in Molembergnatie (‘MBG’) in Belgium. The consignments were imported into the United Kingdom under cover of Administrative Accompanying Documents (‘AAD’) showing a UK bonded warehouse as the destination. Many of the consignments were diverted prior to arrival at the bond, thereby avoiding payment of duty. AADs returned to MBG to indicate that spirits had reached their correct destinations were falsified. About twenty-five consignments were seized either at Dover or at their destination. Duty due was about £7.2m and the amount evaded about £5.5m’.
Although Watkins-Burton was eventually convicted of conspiracy to evade excise duty and sentenced to 6.5 years, eighteen months after his co-conspirators, he failed to join Beardall and the other conspirator in the appeal. Some disclosure was made during Beardall’s appeal and of great interest is the Sugrue Note containing a note prepared by a customs officer from NW IMPEX in which the officer refers to Watkins-Burton as being based in Brussels and having connections/office at the British Embassy and appearing to be some sort of agent. He does, however, admit the story is very confused. Customs’ excuse given at Beardall’s appeal for not producing this note crucial to an argument for entrapment at his trial was oversight.
To sum up there could well be truth in Customs running diversion frauds as there isn’t any other logical explanation for the huge loss in LCB scam. There’s evidence of people being entrapped by Customs and there is most certainly evidence of denying/concealing/lying from Customs. Moreover, there is a deep suspicion that the actions Customs, the Met and the judiciary were synchronised in order to bring about the dismissal of Beardall’s appeal, which leaves us in the position of not knowing whether all the Costello affidavit’s content, some of the content or none of the content is true. But we do know that Customs & Co in resorting to subverting an appeal using such underhand methods brings one to the conclusion they have a lot to hide.