Call for access to accounts

Press, 19 August 1983, Page 5

Call for access to accounts

PA Wellington The committee of inquiry into solicitors’ nominee companies adjourned in Wellington yesterday and will next reconvene in Auckland during the second week of September. The committee of Mr Justice Richardson, chairman; a Wellington lawyer, Mr Malcolm Dunphy, and a Wellington accountant, Mr Robert Pope, was set up by the Minister of Justice, Mr McLay, after the Australian Royal Commission into drug trafficking referred to the “serious abuse of the (nominee company) system by some solicitors” and the use of nominee companies to “launder drug money.” Yesterday it was told by a ' police legal adviser, Superintendent Neville fhadle, that the

needed access to solicitors’ trust accounts.

Legal professional privilege usually stopped the police from tracing funds once they were invested in a solicitor’s trust account, but the police needed access to follow the flow of funds, specially if they were investigating drug money, he said.

Until two years ago there had been no difficulty in getting search warrants for trust accounts.

The police also said that some record of fictitious aliases should be kept when they .were used by clients in solicitors’ trust accounts.

“The way we tend to think of the use of an alias is as a deliberately false or fictitious name,” said Mr Trendle.

“Possibly a separate recording of different names for the same person, as long as it accompanied the trust account itself, might be enough. As long as it was part and parcel of the re-cord-keeping system.” It would fall into the auditor’s broad function to check the record of aliases. The police also suggested that some ethical rule should apply for reporting suspicious cases. When a lawyer received large sums of cash from a client to invest and suspected that it was the proceeds from a crime, the lawyer should be under a duty to ascertain the source of the funds, said Mr Trendlie. “When the circumstahces in which the money was received. indicate ill-gotten

gains and criminal ill-gotten gains, that’s when the duty arises," he said. The Law Society refuted the suggestions, saying that most lawyers saw themselves as being bound by such a duty already.

It was • naive to believe that further rules would provide any solution, said Mr Peter Clapshaw on behalf of the society.

“The particular practices which I believe were of concern to the Stewart Royal Commission were forgery and other matters of that type,” he said.

“If an individual solicitor in a very isolated case is prepared to do that I don’t believe that a regulation is going to make any difference to him.” If were forced by ,<*rules to assume their

clients were not using the correct name and had legitimate funds, they must take on “onerous standards of inquiry.” A written submission presented to the committee from the Government Statistician, Dr J. H. Darwin, asked that nothing inhibits the ability of the Statistics Department from collecting financial statistical information from solicitors’ nominee companies. Proposals on the law and practice of nominee shareholdings in public companies were submitted in writing by the Securities Commission. The chairman of the Securities Commission, Mr C. I. Patterson, said that the law relating to impersonation and forgery seemed “quite unsatisfactory)”