CASE OF BECK v. NORWAY
No violation of Art. 6
Nicolas Bratza
8. In the autumn of 1985 the applicant, together with three associates, started a business involving lactic cultures, purportedly for use in the cosmetic industry. It consisted of two limited liability companies, founded respectively in August and December 1985 and named Cosmesin Laboratorieprodukter A/S (“Cosmesin”) and Geneve A/S (“Geneve”). According to the Norwegian courts’ findings in the proceedings referred to below, the business was a fraudulent pyramid scheme by which Cosmesin purchased from a producer in Denmark freeze-dried concentrates of lactic acid bacteria at 100 Norwegian kroner (NOK) per bag (containing 0.5 grams), resold them to Geneve at NOK 240 per bag, which again sold them at the price of NOK 330 per bag to cultivators whom it had recruited, and after 15 weeks bought the cultivated products back at the price of NOK 625. The number of producers increased from 4 at the end of 1985 to 3,205 at the end of January 1987. Payments were made to a company in London. No goods containing the cultivated substances were ever marketed or produced. As of November 1986, the companies stopped bookkeeping. 9. On 27 January 1987 the Consumer Ombudsman (Forbrukerombudet) filed a complaint with the Director General of Public Prosecutions (Riksadvokaten) against Geneve and Cosmesin for defrauding several thousand persons who had invested in products from Geneve. The companies went into bankruptcy in February 1987. Between February and April 1987 the police received 335 complaints from cultivators in various parts of Norway. Further complaints were made in January 1988 and January 1989 respectively by a major bank and the tax authorities. 10. On 29 January 1987 the police interviewed the applicant as a witness, because of his role in the companies. On 30 January 1987 the police carried out searches of premises and confiscations. Such measures, including interviews of the persons involved, continued in February. On 20 February 1987 the applicant was arrested but then released on certain conditions. He then moved to Switzerland and, by a letter of 4 December 1987, his lawyer informed the police of his Swiss address and his preparedness to go to Oslo to meet police investigators if necessary. Throughout 1987 investigations were conducted in Denmark, Sweden and England concerning the companies’ business connections and investments. In April 1989 the police held meetings with Swedish and English police authorities. In October 1991 and April 1992 the police interviewed 12 cultivators. On 29 February 1988 the Probate Court (skifteretten) received the final report from the administrators of the estates of Cosmesin and Geneve. On 26 January 1989, the police received the tax authorities’ report on the tax and value-added tax (“VAT”) offences. 11. After the initial interviews mentioned above, one of the two leading figures in the criminal activity concerned, Mr D.R., disappeared. In November 1987 a search for him with an arrest warrant was made via Interpol. On 7 November 1990 he was arrested by the Spanish police. The Norwegian authorities requested his extradition on 23 November 1990. On 8 July 1991 he was released from custody in Spain, subject to a duty to report to the police. In early February 1992 he was extradited to Norway. 12. Following the issuing of indictments in August 1989, the case was submitted to the Oslo City Court on 4 September 1991. 13. On 19 February 1992 the City Court fixed 5 October 1992 for opening the trial hearing, rather than the earlier date of 22 April 1992, to which objection had been made by defence counsel, whilst accepted by the prosecution. 14. In the final indictments issued on 17 March 1992, the applicant was charged with the offences of serious fraud in relation to amounts totalling approximately NOK 25,000,000 (Articles 270 and 271 of the Penal Code), unlawfully drawing up cheques – in amounts totalling almost NOK 4,500,000 – on behalf of an insolvent company (Articles 285 and 288 of the Penal Code), and having disregarded statutory obligations relating to bookkeeping and the provision of information to the authorities relevant to VAT payments, with the resultant evasion of approximately NOK 3,500,000 (Article 286 of the Penal Code and section 72 of the VAT Act 1969 – merverdiavgiftsloven). After holding a hearing over 20 days in October and November 1992, the City Court, by a judgment of 19 November 1992, convicted the applicant of all but the VAT charges, and sentenced him to 2 years’ imprisonment. As regards sentencing, the City Court noted from the outset that the offences for which the applicant was convicted were punishable by up to 9 years’ imprisonment. It further stated that general considerations of crime prevention suggested that economic offences of the kind at issue warranted a severe penalty. As it appears from its reasoning, the City Court found the defendants’ conduct particularly reprehensible and emphasised that the suffering which they had caused to innocent cultivators must be viewed as an aggravating factor in sentencing. The City Court then went on to consider the question of mitigation, having regard to the following three factors: “With the exception of D.R., the accused were of a young age at the time of the commission of the proscribed conduct. ... There were thus important years for settling down which elapsed between the criminal acts and judgment in the case. Furthermore, the Court attaches some weight, albeit not a great deal, to the fact that the offences were committed at a time when banks were somewhat uncritical about giving loans. ... In the court’s view, had greater caution been displayed, the pyramid scheme would have been revealed earlier. Finally the court attaches weight, to a not insignificant degree, to the fact that a long time has elapsed since the acts were committed. The prosecution transmitted the case to the Oslo City Court in December 1991 and final investigations concerning one aspect of the case as important as the value of the cultivators and their possible use went on as late as the first semester of 1992. Although it is correct that D.R. stayed abroad over long periods, the court could not see how this could justify the delays in the investigations. It is understood that the delays in the investigation were caused by a change of investigators in the case. Notwithstanding that weight must be given to the long time that has elapsed since the acts were committed, the court finds that the sentencing must be severe.” Two other co-defendants, including Mr D.R., who were considered to have played a more prominent role in the proscribed activity, were sentenced to 3 years’ imprisonment. 15. On 28 December 1992 the applicant sought to appeal to the Supreme Court, alleging a procedural error in the first instance proceedings and requesting a new trial. On 29 April 1993 the Appeals Selection Committee of the Supreme Court (Høyesteretts kjæremålsutvalg) admitted the appeal in as far as it concerned the procedural matter. In the proceedings before the Supreme Court the applicant in addition asked for a reduction in sentence. After taking evidence on 14 December 1993 and holding a hearing on 6 September 1994, the Supreme Court rejected the appeal on 13 September 1994. As regards sentencing, it recalled that the City Court had taken into consideration as a mitigating circumstance the long time which had elapsed since the incriminated conduct. The Supreme Court held that, although more time had elapsed since the City Court’s judgment, it saw no reason for reducing the sentence. 16. The Code of Criminal Procedure (Act of 26 May 1981 No. 25), Chapter 18 on Criminal Investigation, contains the following provisions: Article 226 “The purpose of the investigation is to obtain the necessary information for deciding whether an indictment should be preferred, and to serve as preparation for the trial of the case. ... If a specific person is under suspicion, the investigation shall seek to clarify both the evidence against him and the evidence in his favour. The investigation shall be carried out as rapidly as possible and in such a way that no one is unnecessarily exposed to suspicion or inconvenience.” Article 249 “The question of preferring an indictment shall be decided as soon as the case is sufficiently prepared for this purpose.” 17. In the proceedings before the Court, the Government drew attention to certain case-law of the Norwegian Supreme Court, according to which a 64-year-old man had been sentenced to 8 years’ imprisonment for gross fraud and gross embezzlement totalling NOK 5 ,000,000 (Norsk Retstidende – “Rt”1964, p. 773); a man without a previous criminal record had been sentenced to 6 years’ imprisonment for economic crimes, including gross fraud, amounting to NOK 100,000,000 (Rt 1990, p. 641); a person had been sentenced to 4 years and 6 months’ imprisonment for gross fraud amounting to NOK 9,500,000 (Rt 1992, p. 106), and a person had been sentenced to 3 years’ imprisonment for gross fraud amounting to NOK 1,200,000 with respect to over 20 victims (Rt 1992, p. 1016). The applicant drew the Court’s attention, inter alia, to Supreme Court rulings in which a lawyer’s secretary had been sentenced to 1 year and 4 months’ imprisonment for gross fraud and embezzlement with respect to NOK 1,100,000 (Rt 1995, p. 1962) and another decision where two men, aged 43 and 28, with previous criminal records, had been sentenced to 8 months’ imprisonment for gross tax fraud amounting to NOK 1,500,000 (Rt 1995, p. 250).