FREDERIKSEN v. DENMARK

FIRST SECTION

DECISION

AS TO THE ADMISSIBILITY OF

Application no. 23012/02
by Frank Clarence Provstgaard FREDERIKSEN
against Denmark

The European Court of Human Rights (First Section), sitting on 16 September 2004 as a Chamber composed of:

MrC.L. Rozakis, President,
MrP. Lorenzen,
MrG. Bonello,
MrsF. Tulkens,
MrsN. Vajić,
MrsE. Steiner,
MrK. Hajiyev, judges,
and Mr S. Nielsen, Section Registrar,

Having regard to the above application lodged on 3 June 2002,

Having regard to the observations submitted by the respondent Government and the observations in reply submitted by the applicant,

Having deliberated, decides as follows:

THE FACTS

The applicant, Mr Frank Clarence Provstgaard Frederiksen, is a Danish national, who was born in 1953 and lives in Haslev. He is represented before the Court by Mr Henrik Karl Nielsen, a lawyer practising in Copenhagen.

The respondent Government are represented by their Agent, Ms Nina Holst-Chritensen of the Ministry of Justice.

The facts of the case, as submitted by the parties, may be summarised as follows.

In the beginning of the 1990s a new concept called “tax asset stripping cases” (selskabstømmersager) came into existence in Denmark. It covered a criminal activity by which the persons involved committed aggravating debtor fraud by buying up and selling numerous inactive solvent private limited companies within a short period, and for the sake of their own profit, “stripping” the companies for assets, including deposits ear‑marked for payment of corporation tax. Often the persons involved systematically acquired the inactive, solvent companies for the companies’ own fund. The persons involved were usually intricately interconnected and collaborated about their economic criminal activities, which concerned very large amounts. According to surveys made by the customs and tax authorities, approximately 1,600 companies with a total tax debt exceeding 2 billion Danish kroner (DKK) were stripped in the period from the late 1980’s until 1994. Following a number of legislative amendments, the trade in inactive, solvent companies largely ceased completely in the summer of 1993.

On 4 June 1993 the tax authorities reported to the police that allegedly the applicant, who worked as an accountant, and a number of other named persons had committed tax asset stripping.

Unknown to the applicant, on 22 April and 25 May 1994 a City Court granted warrants to the police to search inter alia his premises.

On the latter date the applicant was charged with tax asset stripping and the police carried out a search at his premises, and at forty-five other localities, which led the attention to almost five-hundred inactive solvent private limited companies.

It appeared that the largest group of companies were part of a corporate group owned by companies registered in the Isle of Man. Consequently, on 1 July 1994 the authorities of the island were contacted in order to obtain information on the ownership of the group. The request was an informal letter as the Isle of Man has not signed the European Convention on Mutual Assistance in Criminal Matters of 20 April 1959. In August 1994 the authorities of the Isle of Man provided the material which showed that a large part of the funds of some of the groups was transferred to Swiss banks. 

In the spring of 1996 the applicant and two other persons lodged objections with Her Majesty’s Attorney General of the Isle of Man, claiming that the letter of request had been executed without authority. The case was brought before the City Court of Douglas on the Isle of Man, but was dismissed by a decision of 23 August 1999.

In the meantime, on 15 November 1994 the police requested a court order for an international letter of request to Switzerland. By a City Court order of 6 December 1994, upheld on appeal by the High Court of Eastern Denmark (Østre Landsret) on 23 December 1994, the Swiss authorities were requested to grant assistance to procure evidence for the police investigation. In March 1995 the Swiss authorities requested more detailed information. This was submitted by the Ministry of Justice in Denmark in May 1995. By letter of 9 April 1996 the City Court in Korsør (Retten i Korsør) was notified of a decision from the Swiss authorities according to which the letter of request could be substantially accommodated. Due to objections, the international letter of request was tried by three judicial instances in Switzerland. Subsequently, on request of the Swiss examining magistrate a supplement to the international letter of request was submitted in relation to some of the bank accounts concerned. Beforehand, since on 20 September 1996 counsel for the applicant had objected to the supplement, it was approved by the City Court in Korsør on 11 October 1996 and on appeal by the High Court on 29 November 1996. During the summer and autumn 1997 numerous persons were interviewed in Switzerland by the Swiss authorities. The Danish police, the prosecutor and counsel for some of the persons charged in the case were present during some of the interviews. In March 1998 the Swiss authorities sent the investigation material obtained in the case to the Ministry of Justice in Denmark, which forwarded it to the police in April 1998.

In the meantime, investigations had been pursued in France, Gibraltar and the United Kingdom. Several hundred court orders were issued, including approximately forty discovery orders against Danish banks. A large number of the said court orders were tried by appeal instances. Furthermore, material was procured from company sellers, the National   Customs and Tax Administration (Told- og Skattestyrelsen) and the National Commerce and Companies Agency (Erhvervs- of Selskabsstyrelsen).

During the investigation, the police was assisted inter alia by a firm of accountants in order to untangle intricate corporate structures and ownership structures of companies and to enlighten tax technicalities as regards numerous financial and liquid transactions.

On 30 November 1998 the Public Prosecution issued an indictment against the applicant and seven co-accused, one of whom died before the trial commenced. The indictment contained six counts of tax assets stripping as to 225 private limited companies, of which the applicant was indicted of five counts involving 157 private limited companies. The indictment was submitted to the City Court of Copenhagen (Københavns Byret) to which, by a final Supreme Court order of 28 April 1998, the case had been transferred from the City Court in Korsør on the latter’s request of March 1997 after having been addressed by the police as to scheduling of court hearings in the case.

In the beginning of 1999 several procedural matters were determined by the City Court of Copenhagen e.g. that the prosecution was allowed to use the material received from the Swiss authorities as evidence in the case, and that an accountant who had assisted the prosecutor was not disqualified from the case. The former issue was appealed against to the High Court, which upheld the decision on 29 June 1999, and leave to appeal to the Supreme Court was refused on 4 August 1999.

On 2 March 1999 a hearing was held in order to plan the course of the proceedings. It appears from the court records that the City Court expected to have premises available in October/November 1999 as it was necessary to lease premises to accommodate the court sitting with lay judges and deputies, seven co-accused, counsel with deputies, and an archive room with space for about 15 sets of exhibits expected to take up 250 A4 binders per set. Counsel requested that the trial be scheduled with two weekly court days in consideration of those accused, who were living abroad.

On 20 April 1999 the City Court scheduled the case for trial every Tuesday and Wednesday starting on 16 November 1999 and ending in June 2001.

Accordingly, in the period between 16 November 1999, when the trial commenced, and 13 June 2001, when the case was set down for judgment, about 105 court hearings were held. The applicant, the six co‑accused, and a very large number of witnesses gave evidence. In addition, statements of accounts and a considerable amount of other documentary evidence were presented including outlines of corporate structures and money transactions. Each set of exhibits for the case took up 270 A4 binders and the court records ran to approximately 1170 pages.

By judgment of 31 August 2001, which ran to 432 pages, the City Court convicted the applicant of tax assets stripping as to an amount evaded for tax purposes calculated at DKK 252,851,859 (equal to approximately € 33,713,581) and attempted tax assets stripping as to DKK 2,714,169 (equal to approximately € 361,889). He was sentenced to six years’ imprisonment and an amount of DKK 1,835,000 was seized. In addition for an indefinite period, he was deprived of his right to establish or to become manager and/or member of a director’s board in a private limited company, or in a company or an association which would require public approval, and of his right to practise as an accountant. The six co-accused were convicted by the same judgment.

The City Court rejected the applicant’s complaint that the length of the proceedings had exceeded a reasonable time, finding among other things:

“In count I, count II A and count IV a large number of companies have been traded. The structure included foreign companies with impenetrable ownership structures, and money transactions have mainly taken place in Switzerland. These circumstances are a good reason for a lengthy investigation. Thus, the right to a trial within a reasonable time ... has not been violated.”

By notice of appeal of 7 September 2001 the applicant appealed against the judgment to the High Court of Eastern Denmark. The co-accused also appealed against the judgment, and by notice of appeal of 1 October 2001 the prosecution cross-appealed.

During pre-trial reviews held on 2 and 26 November 2001 the High Court stated that the trial could start in May 2002, however since several counsel were prevented by other trials until the autumn 2002, the trial was set to commence on 18 September 2002.

From that date and until December 2003, approximately 75 court hearings were held.

During a hearing on 19 June 2003 the applicant stated that he did not have the mental energy required to be present. Also, he wished that one of his two counsel be released. The High Court stated that the medical certificate that had been submitted by the applicant was inadequate, and it thus requested that the applicant submitted a more detailed one. The following day the High Court assigned another attorney as co-counsel for the applicant. Hearings scheduled for 27 and 28 August, and 3, 4, 10 and 11 September 2003 were cancelled due to pleaded illness on the applicant’s behalf, and his counsel requested an adjournment of the case for at least four months. The issue of the applicant’s illness was discussed, and a medical certificate was submitted to the Medico-legal Council (Retslægerådet) for an assessment. On the basis of the latter’s opinion, on 17 September 2003, the High Court found that the applicant had no lawful cause for being absent from the trial. Since then the applicant appeared before the High Court.

Court hearings scheduled for 12, 13, 19, 20, 26 and 27 November, and 3 and 4 December 2003 had to be cancelled in that in the period from 6 November 2003 until 2 December 2003 a claim by one of the co‑accused, joined by the applicant, had to be determined, namely as to whether the presiding judge in the High Court should vacate his seat on the bench due to disqualification. The question was answered in the negative by the High Court on 10 November 2003, and leave to appeal against this decision to the Supreme Court was refused by the Leave to Appeal Board (Procesbevillingsnævnet) on 2 December 2003.

During the following court hearing on 10 December 2003 counsel for the same co-accused claimed an adjournment of the trial due to his client’s illness. Thus, hearings scheduled for 10, 11, 17 and 18 December 2003 had to be cancelled. The court hearings ended in January 2004. Before the High Court the applicant, the six co-accused, and sixty-six witnesses were heard. Also, statements during the City Court trial from twenty-nine witnesses were read out. In addition, statements of accounts and a considerable amount of other documentary evidence were presented, including outlines of corporate structures and money transactions. Each set of exhibits for the case took up 127 A4 binders and the court records ran to approximately 550 pages. By judgment of 5 April 2004, which ran to 101 pages, the High Court upheld the City Court’s judgment.

Also, the High Court rejected the applicant’s complaint that the length of the proceeding had exceeded a reasonable time. It stated inter alia:

“Counsel have claimed, as [they did] before the City Court, that Article 6 § 1 of the European Convention on Human Rights has been violated due to the extension of the trial’s duration.

The prosecution has contested that there has been a violation of Article 6 § 1.

As a starting point, a length of proceedings in a criminal trial, which last almost ten years - from charges and searches in 1994 – presumably entails a breach of the  requirement of a trial within a reasonable time as set out in Article 6 § 1 of the Convention. Thus, it is incumbent on the authorities to prove that the duration was reasonable, and that the case proceeded with duly expedition without the existence of any “dead periods”.  In this assessment, the nature of the case and its importance, its complexity, and the conduct of the accused and that of the authorities must be taken into account.

A chronological account of the proceedings has been submitted before the High Court.  ... 

The case has necessitated investigation of entangled constructions of companies and group of companies with associations abroad. Furthermore, it has required an extremely comprehensive accountant work to go through the complex financial circumstances of the case and untangle the money transactions for each company. Thus and necessarily, it had to take some time to work up the investigation material and consider the matter of indictment in the case. The Danish authorities have had no influence on the proceedings in Switzerland as to the international letter of request, or on the process on the Isle of Man. The High Court finds that the general investigation; the consideration of the case; the work on accounting matters; and the determination of procedural questions; all have moved forward in parallel, thus avoiding any dead periods during the investigation, during the periods of scheduling of the trial or during the proceedings before the City Court and the High Court.

Accordingly, making an overall assessment, the High Court finds that the length of the proceedings does not entail a breach of the accused’s rights under Article 6 § 1 of the Convention.”

On 19 April 2004 the applicant requested that the Leave to Appeal Board grant him leave to appeal against the High Court judgment to the Supreme Court (Højesteret). The case is at present pending before the Leave to Appeal Board.

COMPLAINT

The applicant complains under Article 6 § 1 of the Convention that the criminal charge against him has not been determined within a reasonable time.

THE LAW

Complaining that the criminal charge agasint him has not been determined within a reasonable time the applicant relies on Article 6 of the Convention, which in so far as relevant, reads as follows:

“1. In the determination of...any criminal charge against him, everyone is entitled to a fair...hearing within a reasonable time by [a] tribunal...”

(a) Period to be taken into consideration

In the opinion of the Government the proceedings commenced on 25 May 1994, when the applicant was charged and a search was carried out at his premises.

The applicant submits that the proceedings commenced on 4 June 1993, when the tax authorities reported him and others to the police.

The Court considers that the applicant was not substantially affected by the proceedings until 25 May 1994.

The proceedings are still pending before the Leave to Appeal Board.  Thus, presently the proceedings have lasted more than ten years and three months.

(b) Reasonableness of the length of the proceedings

From a general point of view the reasonableness of the length of the proceedings must be assessed with reference to the complexity of the case, the conduct of the applicant and that of the authorities before which the case was brought (cf. Pélissier and Sassi v. France [GC], no. 25444/94, § 67, ECHR 1999-II).

Complexity of the case

The Government submit that the criminal proceedings were extremely complex as concerns facts, law as well as procedural issues.

The applicant disagrees. He maintains that the “criminal activities” were limited to activities connected with his work as an accountant for companies, and that the number thereof does not in itself result in the case being complex.

The Court reiterates that the scale and complexity of a criminal case concerning fraud, which is often compounded further by the involvement of several suspects, may justify the extensive length of proceedings (see, among other authorities, C.P. and Others v. France, no. 36009/97, § 30, 1 August 2000; Hozee v. the Netherlands, judgment of 22 May 1998, Reports of Judgments and Decisions 1998-III, p. 1102, § 52; Wejrup v. Denmark (dec.), no. 49126/99, ECHR 2002-IV, and Petersen v. Denmark (dec.), no. 6315/02, 13 May 2004).

In the present case the applicant, being an accountant, and six co‑accused were convicted of tax assets stripping relating to numerous private limited companies and corporate groups. The applicant and the co-accused were intricately interconnected and had collaborated about the economic crime. As regards the applicant the amount evaded for tax purposes was calculated to DKK 252,851,859 (equal to approximately € 33,713,581) in addition to the amount of DKK 2,714,169 (equal to approximately € 361,889), which concerned his attempted tax assets stripping. Before the City Court each set of exhibits for the case took up 270 A4 binders due to the considerable amount of documentary evidence including outlines of corporate structures and money transactions. The court records ran to approximately 1170 pages.

The Court reiterates that the High Court in its judgment 5 April 2004 emphasised that the case had necessitated investigation of entangled constructions of companies and group of companies with associations abroad, and that it had required an extremely comprehensive accountant work to go through the complex financial circumstances of the case and untangle the money transactions for each company.

Furthermore, the Court recalls that investigation had to be carried out on the Isle of Man, in Switzerland, France, Gibraltar and the United Kingdom, and that several hundred court orders were issued, including approximately forty discovery orders against Danish banks, and that often procedural questions were determined by several court instances, in Denmark as well as abroad.

Having regard to these circumstances, the Court finds it clear that the investigations and the court proceedings were relevant, time‑consuming and difficult. Thus, for the purposes of Article 6 of the Convention the case was particularly complex.

The applicant’s conduct

In the Government’s opinion the applicant’s conduct has to some extent been a contributory cause to the length of the proceedings, because the crimes that he committed rendered it necessary to carry out comprehensive and time-consuming investigation in Denmark and abroad, in addition to thorough reviews of large accounting material. Also, the Government find that the applicant contributed to the length of the proceedings by lodging objections to the letters of request to the Isle of Man and to Switzerland, and by causing the cancellation of several hearings before the High Court due to his pleaded illness.

The applicant disagrees and recalls that his objections to the letter of request to the Isle of Man was initiated subsequent to the termination of the investigation there and thus could not have delayed the proceedings. As to the investigation in Switzerland the applicant alleged that it had no relevance for his case, and finally as to his illness he submits that the last hearing was in any event scheduled to take place in January 2004.

In the Court’s view the use by the applicant and the co-accused in the present case of foreign companies and bank accounts, notably on the Isle of Man and in Switzerland, obviously had the purpose of concealing the tax asset stripping. Therefore, unavoidably, the clearing up of the crimes became difficult and time-consuming. Thus, although it cannot be said that the applicant’s use of available remedies or his illness prolonged the criminal proceedings against him inappropriately, the Court finds that to some extent he has been a contributory cause to the length of the proceedings.

Conduct of the national authorities

The Government find that no criticism can be made of the time spent by the police in connection with the investigation and consideration of the question of prosecution, notably because it was necessary for the police to conduct a very extensive and complex investigation involving complex corporate structures and bank transfers, also abroad. Also, taking into consideration the nature, scope and complexity of the case they find that the proceedings before the courts were accomplished within a reasonable time and that there were no periods of inactivity.

The applicant submits that the investigation in Switzerland unnecessary delayed the proceedings with at least two years and that solely the Government are responsible for this.  Also, he points out that it took more than two and a half year from the City Court in Korsør in March 1997 was addressed by the police as to the scheduling of court hearings in the case until the court hearings actually commenced before the City Court in Copenhagen in November 1999. Moreover, eight months expired before the latter City Court was able to find appropriate facilities for the trial. Finally, the applicant maintains that counsel for the co-accused alone were responsible for the delay that occurred from May 2002 until September 2002 before the High Court.

The Court reiterates its finding that the proceedings commenced on 25 May 1994. The Court notes that the applicant was indicted on 30 November 1998. Consequently, the period of investigation by the police and the legal evaluation by the prosecution lasted four years, six months and five days. Such a period may appear excessive. However, it reiterates that the investigation of the entangled constructions of companies and money transactions required an extremely comprehensive accountant work and that the case involved the applicant and six (originally seven) co‑accused, whose roles were closely interconnected.

As regards the investigation abroad, notably in Switzerland, which lasted from the beginning of 1995, when the international letter of request was sent to the Swiss authorities until March 1998, when the Swiss authorities sent the investigation material obtained in the case to the Ministry of Justice in Denmark, the Court finds that this delay cannot be imputed to any action or omission on the part of the Danish authorities, but is a consequence of a system of mutual assistance as it operates in many countries and under which the requesting State is dependent on the co‑operation of the State to whom the request has been sent. The delay which occurred should therefore be considered as a part of a recognised system which unfortunately is time-consuming and thus, at least on the basis of the facts submitted by the parties, as unavoidable (see e.g. Sari v. Turkey and Denmark, no. 21889/93, § 92, 8 November 2001 and D. v. Germany (dec.), no. 11703/85, Decisions and reports (DR) 54, p. 116).

The Court finds that the facts of the case do not disclose that the investigating authorities or the prosecution acted inappropriately or otherwise failed to perform their duties with due diligence after the applicant became involved.

The indictment was issued on 30 November 1998 and judgment was passed by the City Court on 31 August 2001. The proceedings thus lasted approximately two years and nine months.

The Court recalls that several procedural matters were determined as from the beginning of 1999 until August 1999. Moreover, during a hearing held on 2 March 1999 in order to plan the course of the proceedings the City Court expected to have premises available in October/November 1999 as it was necessary to lease premises to accommodate the court sitting with lay judges and deputies, seven co-accused, counsel with deputies, and an archive room with space for about 15 sets of exhibits expected to take up 250 A4 binders per set.

In the light of the complexity of the case the Court finds that this period of prolongation is not in itself sufficiently long for raising an issue in respect of the length of the proceedings. In any event the Court considers that practical issues unavoidably arise when scheduling a trial of such dimension, not least in respect of the actual fixing of dates for the hearing. Such does not depend on the courts alone; due regard also has to be had to counsel and their availability. The Court reiterates in this connection that  counsel for the applicant and the co-accused requested that the trial be scheduled with two weekly court days in consideration of those accused, who were living abroad. Accordingly about 105 court hearings were held in the period between 16 November 1999, when the trial commenced and 13 June 2001, when the case was set down for judgment. The latter was pronounced on 31 August 2001.

Thus, in view of the expected duration of the trial and the unavoidable difficulties which have to be taken into consideration in a trial of that size involving six co-accused, the Court finds that the length of the proceedings before the City Court was not unreasonable.

The High Court received the applicant’s appeal on 20 September 2001 and judgment was passed on 5 April 2004. The proceedings before the High Court thus lasted approximately two years and six months.

The Court notes that in November 2001 the High Court stated that the trial could start in May 2002, however since several counsel were prevented by other trials until the autumn 2002, the trial was set to commence on 18 September 2002. More than 75 hearings were held from the latter date until January 2004, during which the applicant, the six co-accused, and sixty-six witnesses were heard. Also, statements during the City Court trial from twenty-nine witnesses were read out. In addition, statements of accounts and a considerable amount of other documentary evidence were presented including outlines of corporate structures and money transactions. Each set of exhibits for the case took up 127 A4 binders and the court records ran to approximately 550 pages.

Furthermore, the Court observes that at least six court hearings were cancelled in August and September due to the applicant’s pleaded illness, until the High Court found on 17 September 2003 that he had no lawful cause for being absent from the trial. At least eight court hearings had to be cancelled in November and December in order to determine the claim from one of the co-accused that the presiding judge in the High Court should vacate his seat on the bench due to disqualification. Subsequently, another four court hearings had to be cancelled due to illness on behalf of the said co-accused. Thus, altogether eighteen court hearings had to be cancelled in the period from August until December 2003. On 5 April 2004 the High Court pronounced its judgment, which ran to 101 pages.

Referring to its finding above as to the expected duration and the practical issues, which unavoidably arise when scheduling a trial of such dimension, and reiterating that the proceedings at no time lay idle, or was adjourned for a reason for which the national authorities should bear responsibility, the Court finds that the length of the proceedings before High Court cannot be criticised.

On 19 April 2004 the applicant requested that the Leave to Appeal Board grant him leave to appeal against the High Court judgment to the Supreme Court (Højesteret). The case is at present pending before the Leave to Appeal Board, before which the proceedings have lasted approximately five months. This period cannot be criticised.

Overall assessment

In the above circumstances, and although the length of the proceedings presently have lasted approximately ten years and four months, they do not, in view of their magnitude, disclose to the Court such periods of inactivity which could bring the proceedings at variance with Article 6 § 1 of the Convention. It follows that the application is manifestly ill-founded within the meaning of Article 35 § 3 of the Convention.

For these reasons, the Court by a majority

Declares the application inadmissible.

Søren NielsenChristos Rozakis
RegistrarPresident

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