Individuals in Cross-Border Investigations or Proceedings: The UK Perspective

16.1       Introduction

In any global investigation there will invariably be individual suspects either located in different jurisdictions, or subject to investigation by authorities from different jurisdictions, or both.

This chapter looks at the key issues that arise when acting for individuals involved in parallel, cross-border investigations or proceedings from the UK perspective.¹

16.2       Extradition

In cross-border criminal investigations suspects are often resident outside of the jurisdiction of those conducting the investigation. As such, a critical question will be whether, and how, they may be subjected to extradition.

The answer lies in the respective legislation of, and arrangements between the requesting and requested states.

The UK position is currently² governed by the EU Framework Decision³ and its obligations are implemented through the Extradition Act 2003 (the 2003 Act).

The 2003 Act is divided into two parts. Part 1 applies to requests made by ‘category 1 territories’ (European Union countries and Gibraltar) by use of the European arrest warrant (EAW) procedure.⁴ Part 2 applies to requests made by, ‘category 2 territories’, namely those other countries with which the United Kigndom has extradition relations.⁵

16.2.1    Extradition from the UK – category 1 territories: the EAW

The EAW is a fast-track procedure that allows the requesting state to secure the return of a requested person quickly and effectively.

The National Crime Agency (NCA) certifies the EAW on receipt from the requesting state before liaising with the Crown Prosecution Service (CPS) for advice on the validity and content of the request.

The statement must identify the offence the requested person is accused of and confirm that the EAW is issued with a view to his or her arrest and extradition for the purpose of prosecution or, where the requested person has been convicted, for the purpose of being sentenced or to serve a sentence already passed. The information must include details such as the requested person’s identity and particulars of the alleged offence or conviction. Failure to comply with these requirements invalidates the EAW.⁶

Following the certification of the EAW, a warrant for the requested person’s arrest is issued. On arrest, the individual will initially be taken to a police station and held there under the provisions of the Police and Criminal Evidence Act 1984 (PACE) and the accompanying Code C. The individual has various rights including the right to have someone informed of the arrest; the right to free independent legal advice; and the right to consult privately with a solicitor. A formal custody record will be opened, detailing key aspects of the detention, but the individual will not be interviewed as it is not the role of the police to investigate the evidence. However, given the significance of identification to the extradition process, finger­prints, non-intimate samples and photographs may be obtained from the individual in accordance with PACE Code D.⁷

Following the requested person’s arrest and initial detention, he or she must be brought before a court⁸ ‘as soon as practicable’ for an initial hearing and fixing of the extradition hearing within the next 21 days.⁹ Depending on the day of the week and time of the arrest, this requirement can mean that the individual spends only a matter of hours in police detention before being brought before the court although, if arrested at the weekend, it can mean spending up to two nights in police custody.

At the extradition hearing the judge must be satisfied that the alleged conduct constitutes an extraditable offence¹⁰ and that no bar to extradition applies (see Section 16.2.4).

Either party may appeal the judge’s decision to the High Court.¹¹ Thereafter, an appeal may be made to the Supreme Court if the matter concerns a point of law of general public importance.¹²

If the judge orders extradition, in the absence of any appeal, the requested person must be extradited within 10 days of the order, or later if agreed with the requesting state.

16.2.2    Extradition from the UK – category 2 territories

Part 2 of the 2003 Act provides for the extradition to those non-EAW territories the United Kingdom has bilateral or multilateral extradition treaties with.¹³

Such territories are usually required to provide prima facie evidence of the case against the requested person; unless they are signatories to the European Convention on Extradition or the United States, New Zealand, Australia or Canada.¹⁴

Requests must be certified by the Home Secretary as being valid before being sent to the appropriate judge.¹⁵ The judge then considers whether there are reasonable grounds to issue an arrest warrant,¹⁶ which include that the evidence produced would justify the issue of a warrant for the individual’s arrest if it was a domestic case.¹⁷

Once an arrest warrant has been issued and executed, the requested person must be brought before the magistrates’ court as soon as practicable. Unless the requested person consents to extradition, the court will fix a date for the extradition hearing, usually within the next two months, and decide whether to grant bail.

The judge must be satisfied that the material provided by the Home Secretary is compliant, including that the offences specified are extraditable, and will discharge the requested person if it is not.¹⁸ The judge will then consider whether any bars to extradition exist (see Section 16.2.4).

In cases where prima facie evidence must be considered, the judge must decide if the evidence supporting the request is ‘sufficient to make a case’. This is the same test that applies in domestic UK criminal proceedings.

Once the judge is satisfied that all the conditions have been met, and that no bars to extradition exist, the matter is referred to the Home Secretary for his or her decision whether to extradite; having considered issues such as the possible imposition of the death penalty.¹⁹ Representations may be made by the requested person to the Home Secretary to be included in the decision.

The judge’s decision to refer may be appealed within 14 days of the date of the decision and thereafter appeals may be lodged with the High Court, or if appropriate, the Supreme Court.

16.2.3    Extradition from the UK – other territories

For countries that are neither category 1 nor category 2 territories, section 194 of the 2003 Act allows the Home Secretary to certify that ‘special extradition’ arrangements have been made between the United Kingdom and that country for the extradition of a person.

These special arrangements must comply with the Act’s Part 2 procedures and apply as for a category 2 territory.

In addition, a territory that is party to an international convention to which the United Kingdom is also a party may, by virtue of section 193 of the 2003 Act, be designated a territory to which Part 2 of the 2003 Act applies.²⁰

16.2.4    Bars to extradition

Under the 2003 Act a properly issued extradition request will be honoured, unless it can be challenged and prevented by one of the bars to extradition.

Sections 11 and 79 set out the bars to extradition for Part 1 and Part 2 requests respectively; these include the rule against double jeopardy, the absence of a prosecution decision, excessive passage of time and the inappropriate age of the requested person.

In addition to these specific bars, there are a number of general bars, dealt with immediately below.

16.2.4.1  The human rights bar

The judge must determine ‘whether extradition would be compatible with the Convention rights’, contained within the European Convention on Human Rights.²¹ A request may be refused where there are substantial grounds shown that the requested person, if extradited: faces a ‘real risk of exposure to inhuman or degrading treatment or punishment’,²² contrary to Article 3; or whether the court considers the interference with the private and family lives of the requested person, and members of his or her family, is outweighed by the public interest in extradition,²³ contrary to Article 8. Arguments under Article 5 (the right to liberty and security)²⁴ and Article 6 (right to a fair trial)²⁵ have also been made in a number of cases.

16.2.4.2  The proportionality bar

This bar applies to EAW accusation cases only.²⁶ When considering a request, the judge may consider the seriousness of the alleged conduct, the likely penalty to be imposed and whether there are alternatives to extradition.

16.2.4.3  The forum bar²⁷

This will be considered where the nature of the criminal conduct means that the alleged offence could potentially be prosecuted in more than one country. This bar is particularly relevant to parallel or cross-border investigations.

The forum bar provides that extradition may be barred if it is considered not to be in the interests of justice; namely where a substantial measure of the criminal activity took place in the United Kingdom and, having regard to ‘specified matters’, the judge decides extradition should not take place.

By virtue of sections 19 (D) and (E) of the 2003 Act, the UK prosecuting authorities can effectively veto a judge barring extradition on forum grounds by the production of a prosecutor’s certificate stating why the corresponding offences will not be prosecuted in the United Kingdom. It may be issued where the prosecution consider there is insufficient admissible evidence; that a prosecution would not be in the public interest; or there are concerns about the disclosure of sensitive material. This certificate may only be challenged on appeal to the High Court where the procedures and principles of judicial review will be applied.

16.3       Asset seizures, forfeiture and recovery

16.3.1    Restraint orders

Individuals subject to criminal investigations or proceedings relating to money laundering may be subject to a restraint order.²⁸ This is an application made by the investigating authority prohibiting the individual from dealing with, or otherwise dissipating, their realisable property and assets²⁹ in advance of any confiscation proceedings.

The authority must show reasonable cause to believe³⁰ that:

• the alleged offender
• has benefited³¹
• from his or her criminal conduct.³²

A restraint order prohibits the suspect from using, or dealing³³ with, his or her assets, other than for reasonable living, business and legal³⁴ expenses, until the conclusion of the criminal investigation or proceedings.

Where a restraint order is obtained, it is likely that relevant banks and other financial institutions will be served with a copy of the order. This is done to ‘freeze’ the suspect’s assets and may also expose him or her to reputational damage.

In practice the authority seeking the restraint order often alleges that the activity being investigated falls within the ‘criminal lifestyle’³⁵ definition. This has the effect of restraining all property obtained by the suspect during the previous six years.

Once an order has been made, a variation³⁶ limiting the value of the assets subject to the order may be obtained which, if granted, can make available some of the accused’s assets.

Where a person anticipates being the subject of a restraint order, it may be possible for the suspect’s or accused’s legal advisers to enter into an undertaking with the investigating authority detailing the extent, and whereabouts, of assets and offering to ring-fence some of these, leaving the balance unrestrained.

16.3.2     Criminal confiscation

The Proceeds of Crime Act 2002 (POCA) provides for the confiscation of the proceeds of criminal conduct from offenders. CPS guidance states that: ‘Prosecutors should consider asset recovery in every case in which a defendant has benefitted from criminal conduct and should instigate confiscation proceedings in appropriate cases. When confiscation is not appropriate, and/or cost effective, consideration should be given to alternative asset recovery outcomes.’³⁷

Under POCA, the courts can restrain property once satisfied that the property is recoverable:³⁸ that it was obtained through conduct that was criminal under UK law,³⁹ or was criminal under the law in the territory where the acts occurred, and would also be criminal if it had occurred in the United Kingdom.⁴⁰

Even where there has been no criminal prosecution, or a failed prosecution, proceedings for civil recovery, or cash forfeiture, can still be brought.⁴¹

16.3.3    Civil recovery

The authorities can apply for a civil recovery order even when they are unable, or unwilling, to prove the commission of a criminal offence.

They must prove on the balance of probabilities (i.e., the civil standard of proof) that there has been unlawful conduct and that the property to which the application relates is, or includes, recoverable property.⁴² Proceedings are brought in the High Court against any person the authority thinks holds the recoverable property.⁴³

Property may be followed where it remains identifiable. Even where it has been disposed of, it can be followed into the hands of the current holder.⁴⁴ Overseas property can be included where it is possible to identify a ‘connection’ with the United Kingdom.⁴⁵

If the property was obtained in good faith, for value and without knowledge that it was recoverable property,⁴⁶ the property ceases to be recoverable. However, the consideration provided by the purchaser can be followed as representing recoverable property in the hands of the respondent.

Where tainted property has been invested, any profit accruing will also be recoverable,⁴⁷ and, in situations where there is ‘mixed property’, the proportion which is attributable to the recoverable property will represent that obtained through unlawful conduct.⁴⁸

As part of any civil recovery proceedings, a freezing order⁴⁹ may be sought to prohibit any person the order applies to from dealing with any property specified or described within the order (see Chapter 23 on fines, disgorgement, etc.).

The Criminal Finances Bill 2016 (the Bill)⁵⁰ proposes inserting, among other significant proposed amendments,⁵¹ sections 362A to 362H to the POCA 2002, thereby allowing the High Court to make an ‘unexplained wealth order’: defined⁵² as an order requiring an individual to explain, within a specified period, the nature and extent of their interest in specified property,⁵³ and how they obtained it, where it appears disproportionate to their income.

The High Court must be satisfied that the individual is a politically exposed person,⁵⁴ or that there are reasonable grounds to suspect the individual, or a person he or she is connected with, has been involved in serious crime in the United Kingdom or elsewhere.⁵⁵

An interim freezing order can be imposed against the specified property pending a response. Should the individual fail to comply with the order, the property will be presumed recoverable, unless the contrary can be shown.⁵⁶ Where a response is provided, the investigating authority must determine, within 60 days, what, if any, action should be taken in relation to the property, or release it.⁵⁷

16.3.4    Cash seizure and forfeiture

Under section 294 POCA, currency worth £1,000 or more⁵⁸ may be seized if an officer has reasonable grounds for suspecting that it is, or represents, recoverable property obtained through unlawful conduct, or it is intended to be used in unlawful conduct. Currency includes bankers’ drafts and cheques.⁵⁹ People travelling to or from the United Kingdom from a non-EU country carrying currency worth €10,000 or more must declare the cash to UK customs. A failure to do so can lead to a fine of £5,000 under the Control of Cash (Penalties) Regulations 2007.

Cash seized can be detained for an initial period of 48 hours, during which an application for forfeiture can be made. This period can be extended by up to six months on application to a magistrates’ court. Repeated applications can be made up to a maximum of two years.⁶⁰

Seized cash is released once the officer is satisfied that detention is no longer justified or the court orders its release.⁶¹

During any forfeiture proceedings there is no requirement for the officer to prove there has been any criminal investigation, charge or conviction; but the court must be satisfied that the cash seized is derived from, or was intended to be used for, some kind of criminal activity.⁶²

These are civil proceedings⁶³ and the burden of proof is on the applicant ‘on the balance of probabilities’.⁶⁴ In practice, however, it is often seen as necessary for the person from whom the cash was seized to prove its legitimacy. In today’s cashless society, an individual carrying relatively significant sums of cash of itself raises suspicions and the courts have held that requiring an explanation does not amount to a shift in the burden of proof.⁶⁵

Appeals against an order of forfeiture can be made to the Crown Court within 30 days from the order.⁶⁶

16.4       Interviewing individuals in cross-border investigations

Chapter 14 covers in detail the issue of acting for an individual who is being questioned, and the reader is directed to this for a more detailed consideration of the topic.

An individual suspected of criminal activity by the UK authorities who is resident, or temporarily present in the United Kingdom, will be interviewed under caution either on a voluntary basis or under arrest. This is usually done on a voluntary basis unless it is considered necessary to arrest the individual and there are legitimate reasons to justify an arrest; such as a reasonable belief that unless placed under arrest the suspect will abscond from the jurisdiction or will somehow attempt to improperly interfere with the investigation.⁶⁷

Either way, the interview will be conducted in accordance with the procedures laid down in PACE and the accompanying Code C. The suspect has a number of rights, including the right to have a lawyer present.⁶⁸ A lawyer is defined as a UK solicitor holding a current practising certificate or an accredited or probationary representative.⁶⁹ This means that the suspect cannot be represented during the interview by an overseas lawyer. However, the suspect may have an approved interpreter present if he or she does not speak, or has only limited, English.⁷⁰

At the commencement of the interview the suspect will be ‘cautioned’. The caution to the suspect is given in the following terms:

You do not have to say anything. But it may harm your defence if you do not mention when questioned something which you later rely on in Court. Anything you do say may be given in evidence.⁷¹

Not only are a suspect’s answers to questions admissible in any future proceedings, but failure to mention a fact subsequently relied on may give rise to an adverse inference if the court finds that it would have been reasonable in the circumstances for him or her to have answered.⁷²

These rules apply to UK proceedings and the question of whether the interview is admissible in proceedings in any other jurisdiction will depend on the laws of that country. This means that, in cross-border investigations, serious consideration must be given by all of the suspect’s legal advisers prior to any interview in the United Kingdom as to whether his or her answers (or silence) may be admissible in any other investigating jurisdiction and, if so, the resulting potential benefits or disadvantages.

When a suspect is resident in the United Kingdom but is wanted for questioning by an overseas authority, the individual (or his or her legal advisers) may be approached with a request that the suspect travel to the country of the requesting authority for interview on a voluntary basis.

In the absence of any such request, or if it is refused, the requesting authority may be able to gain evidence from the suspect in the United Kingdom through mutual legal assistance (MLA). MLA in the United Kingdom is primarily governed by the Crime (International Co-operation) Act 2003 (CICA).

MLA requests are made through a formal international letter of request, also known as a commission rogatoire in civil law jurisdictions, and the UK Home Office publishes detailed Guidelines on how authorities outside of the United Kingdom can make such requests.⁷³

In brief, an overseas authority can request that a statement be taken from the suspect on a voluntary basis. Alternatively, either where the evidence needs to be taken on oath or where the suspect refuses to co-operate voluntarily, the request can be for the suspect to be compelled to attend court for questioning.

Once before the court, the suspect can then be questioned under oath (although an oath may not be administered if this is allowed under the laws of the requesting state). The suspect retains the right against self-incrimination and may refuse to answer any question.

If a suspect consents to giving the overseas authority a statement on a voluntary basis, or answers questions in court, this is admissible evidence in any future proceedings in the requesting jurisdiction. Again, the question of whether statements are also admissible in proceedings in any other jurisdiction will depend on the laws of that country, and serious consideration must be given by all of the suspect’s lawyers as to the potential implications of this.

There are many occasions when the requesting state seeks to obtain evidence from an individual who is not a suspect in the investigation. In such situations, the same MLA procedures can be utilised in obtaining evidence from a witness or other non-suspect, as explained above.

However, if it is believed that the non-suspect individual will be unco-operative and unwilling to assist in any circumstances other than by compulsion, and assuming that the investigation is into a serious or complex fraud of the type that would fall under the remit of the Serious Fraud Office (SFO), an MLA request can be made of the UK Central Authority⁷⁴ to direct the SFO to obtain such evidence from the individual using its compulsory section 2 powers.

Such requests will be considered by the UK Central Authority. Before being granted, the requesting authority must provide a written assurance that any statement made by an individual pursuant to a compulsory section 2 notice will not be used in evidence against that person in any subsequent prosecution unless evidence of it is adduced by the individual in the prosecution. This assurance is required because the individual has no right to refuse to answer the section 2 questions.

The UK Central Authority’s Guidelines make it clear that the provision of the written assurance does not prevent the statement from being used against any accused person named in the MLA request, but this is subject to any prohibition that may lie against such use of compulsorily obtained statements in the laws of the requesting country.

16.5       Privilege considerations for the individual

Chapter 31 covers the question of privilege and the reader is directed to this for a more detailed consideration of privilege issues.

In the United Kingdom, legal professional privilege (LPP), comprising legal advice privilege⁷⁵ and litigation privilege,⁷⁶ is both a substantive and procedural right that, if established, can be asserted in response to any request for communications or documents. It is ‘a fundamental condition on which the administration of justice as a whole rests’.⁷⁷

It is an essential prerequisite⁷⁸ to a claim for LPP that the material is confidential. This does not, of itself, give rise to LPP, but if the material is not confidential then it cannot be asserted.

Privilege generally cannot be overridden, except in limited circumstances where either the client waives their privilege or it is overridden by statute.⁷⁹

LPP prohibits privileged communications or documents from compulsory disclosure and, therefore, questions as regards jurisdiction tend not to arise. Whether a UK court has jurisdiction will be subject to the UK rules of law. The Court of Appeal confirmed this principle when it held that privilege was not lost on the basis that it could not be claimed in another country: ‘The crucial consideration is whether the document and its information remain confidential in the sense that it is not properly available for use. If it is, then privilege in the United Kingdom can be claimed and that claim, if properly made, will be enforced.’⁸⁰

Legal advice and litigation privilege will extend to advice received from foreign lawyers⁸¹ and to documents prepared in connection with proposed or actual litigation in a foreign court.⁸² However, litigation privilege can be lost where, for example, documents are produced in open court thereby losing their confidentiality.

Legal advice privilege only applies to communications⁸³ with independent lawyers, including foreign lawyers, as well as non-qualified individuals acting under directions from a qualified lawyer. The European Court of Justice, in relation to EU competition investigations, has held that communications between a company and its in-house lawyers are not protected by legal advice privilege on the basis that such a position is not deemed sufficiently independent.⁸⁴

However, the reach of legal advice privilege was enhanced in Property Alliance Group v. The Royal Bank of Scotland Plc⁸⁵ when the High Court upheld a claim for privilege in relation to ‘without prejudice’ communications between RBS and the FSA (as it was then) while negotiating an FSA final notice in relation to allegations of LIBOR manipulation. This case was the first in the United Kingdom to uphold a right to prevent the inspection of communications concerning settlement discussions between a company and its regulator in civil proceedings.

When representing individuals, the client is easily identifiable. When representing corporate entities, the ‘client’ is the corporate entity and privilege will attach only to those communications with individuals who are, expressly or impliedly, authorised by the company to give instructions to and receive advice from the instructed lawyer.

Joint privilege can arise where:

• two or more parties retain the same lawyer (joint retainer); or
• the parties have a joint interest in the subject of the communication (joint interest).

When two or more parties retain the same lawyer no confidentiality will be retained as between the parties. The key factor when considering whether joint interest⁸⁶ privilege arises is that the joint interest must exist at the time the communication was created and that the document must have been created in furtherance of that joint interest.

16.6       Evidentiary issues

In complex parallel and cross-border proceedings, a frequent issue when acting for an individual is whether evidence obtained in prior, or contemporaneous, civil proceedings will be admissible in any potential future criminal proceedings.

16.6.1    Evidence obtained in civil proceedings

The disclosure obligation in UK civil litigation requires each party to disclose documents to the other side. Such documents may be of a highly confidential nature and due to the risk of misuse once in the hands of the receiving party, there exists an implied obligation⁸⁷ not to use the documents, or copies of them, or information derived from them, for any collateral purpose.

Under the Civil Procedure Rules, rule 31.22, a party to whom a document has been disclosed may use the document only for the purpose of the proceedings in which it is disclosed. There are three exceptions to this rule:

• the document has been read to or by the court, or referred to, at a hearing held in public (although the court may make an order restricting or prohibiting the use of a disclosed document in these circumstances on application by a concerned party);
• the court gives permission; or
• the party who disclosed the document and the person to whom the document belongs agrees.

In the matter of Tchenguiz v. Director of the Serious Fraud Office,⁸⁸ Edgar J held that, in such cases, the burden of proof lies with the applicant arguing that one of the three exceptions apply. The applicant must show cogent and persuasive reasons as to why the document, or documents, in issue should be released so as to amount to a special circumstance that will permit their release. The judge then provided a number of useful indicators to the circumstances in which permission is likely to be granted by the court for disclosure of documents, including the situation where the documents may reveal criminal conduct.

In the Tchenguiz case itself, the conduct in issue was ‘possible perjury, perjury-type offences or bribery offences’. The court concluded that the exception did apply because ‘if the documents revealed any criminality, then that would be a serious matter . . . and . . . any party who may be a victim of such a possible criminal offence should, in principle, be entitled to obtain legal advice in relation thereto.’⁸⁹

16.6.2    Resulting disclosures and breaches

The principal issue is whether the documents have been disclosed within the definition of rule 31.2.⁹⁰ Practically speaking, this means that in regard to pre-action disclosure for example – where material may be disclosed to avoid unnecessary litigation – documents should only be disclosed upon receipt of a collateral undertaking thereby requiring leave from the court to use the material.

A breach of any such collateral undertaking is a contempt of court (carrying sanctions from imprisonment to a fine) and any attempt at reliance may be restrained by an injunction.

16.6.3    Release of the undertaking for production in criminal proceedings

In Marlwood Commercial Inc v. Kozeny,⁹¹ which concerned the use of documents in connection with a foreign criminal investigation, brought within the jurisdiction by a foreign defendant under compulsion, the Court of Appeal held that in the absence of arguments to the contrary, ‘the public interest in the investigation or prosecution of a specific offence of serious or complex fraud, should take precedence’ over the use of compulsorily disclosed documents.

Also, the Criminal Justice Act 1987 does not prevent the SFO from disclosing documents received from third parties in response to section 2 notices.⁹² In the Tchenguiz⁹³ case the court confirmed that the SFO’s normal duty of confidence in respect of information obtained pursuant to its statutory powers is overridden in a number of circumstances including when the disclosure is required for the purposes of a criminal prosecution in the United Kingdom, or elsewhere, pursuant to section 3(5) of the Criminal Justice Act 1987.

16.6.4    Use of material disclosed in criminal proceedings in other proceedings

Section 17 of the Criminal Procedure and Investigations Act 1996 (CPIA) provides that there is an implied undertaking that the material and documents disclosed in the course of a criminal investigation and trial will not be used for any purpose other than that for which they were specifically disclosed, namely the trial of the defendant.

The principle of open justice, however, provides that the legal process should be conducted in public and access will be given, therefore, to material and evidence referred to in open court as such material is effectively in the public domain.

It is a contempt of court to knowingly use or disclose an object of information recorded in a document in contravention of section 17.⁹⁴

16.7       Settlement considerations

There will be many occasions during parallel and cross-border investigations and proceedings when a corporate entity will commence settlement discussions with the authorities (be they regulators or criminal enforcement agencies).

Within the United Kingdom, such discussions are most likely to be with the Financial Conduct Authority (FCA), or the SFO, or both, and, as regards criminal investigations, they are most likely to be centred on the possibility of the authorities agreeing to a deferred prosecution agreement (DPA). ⁹⁵

A DPA settlement is only binding upon the authority (usually the SFO) and suspect corporate entity. There is no limitation as to the use that the authority can put on much of the information it obtains during the DPA negotiations in criminal proceedings against others, including individuals employed by the corporate entity.⁹⁶

This means that an employee suspect is at great risk of having his or her position seriously compromised, including a heightened risk of criminal prosecution, as a result of an employer’s settlement negotiations.

If a corporate with which the client is connected enters into a DPA, the client may be named in the statement of facts. The current state of the law is unsatisfactory in that a third party does not have to be notified that he or she may be named in this way. This is in sharp contrast to the protection of third-party rights afforded by section 393 of the Financial Services and Markets Act 2000.

Dependent on the status of the individual within the corporate structure, the corporate entity may well enter settlement negotiations with the authorities without even their knowledge, let alone their input. In such circumstances, there is little that the individual’s lawyers can do.

If the individual is a party to the negotiations, perhaps because of his or her seniority within the organisation, or is at least aware as to their existence, it is open to the legal advisers to approach the company’s lawyers and seek to have some input as to how the negotiations are conducted. Most importantly, this would include what is said about the client and what documentation concerning the client is disclosed to the authority. However, there is no obligation on the company’s lawyers to entertain any such approach. Indeed, they may well argue that to do so would potentially jeopardise their negotiations as being contrary to their obligation to ‘fully cooperate’ with the authority under the joint SFO and CPS Code of Practice.⁹⁷

16.8       Reputational considerations

Throughout any parallel or cross-border investigation or proceeding, there is the constant need for those representing an individual to consider the potential impact that the matter could have on their client’s reputation. Chapter 35 covers the issue of protecting corporate reputation in greater detail.

Reputation may include the client’s professional reputation among his or her peers or wider public reputation; particularly if the client is already a well-known figure. Matters are further complicated because the individual may have a low profile in one jurisdiction, but a high profile in another, or, despite having a low media profile, may have become embroiled in a high-profile investigation.

Recently in the United Kingdom, reputation management has been seen as a distinct professional discipline, with a number of lawyers specialising in the field. They often work together with, rather than in competition to, those from the more traditional public relations firms and consultancies. In any event, those acting for individuals who have reputational considerations, but who lack their own specialised in-house resource, are best advised to turn to one or more of these specialists at as early a stage as possible and integrate them in to the client’s team of professional advisers.

Only through mutual work as part of an integrated team can properly informed consideration be given on the key issues of whether the client’s reputation is at risk and, if so, how it can be best protected without adversely affecting his or her position in the ongoing investigation or proceedings.

At the time of writing the FCA is currently facing nine lawsuits brought by individual traders arising from the publication of final notice reports issued against their former corporate banking employers. The traders complaints are that the reports failed to sufficiently disguise them, or the FCA failed to allow them a proper opportunity to respond to allegations made against them as published within the reports, or both.⁹⁸

These lawsuits follow on from the decision of the Upper Tribunal, in April 2014, that Achilles Macris, a former senior manager at JP Morgan Chase, had been identified, and therefore prejudiced, in not being accorded his third-party rights. The FCA appealed this decision and, in May 2015, the Court of Appeal unanimously found against the FCA. In its judgment, the Court of Appeal held a simple objective test was to be applied when determining whether, in accordance with section 393, matters within a notice issued by the FCA against the bank had identified a person not directly named.⁹⁹

The FCA has now appealed this judgment to the Supreme Court, who heard the appeal on 13 October 2016 and reserved judgment.¹⁰⁰ At the time of writing, the judgment had not been delivered. At a time when the FCA is seeking to improve the culture within the financial services industry, the outcome of this hearing may well set a significant precedent requiring the FCA to reconsider its own enforcement activities.

A claim has been recently filed in the UK courts by Shose Sinare, a former senior manager at Stanbic Bank, Tanzania (part of the Standard Banking Group). The claim is against the High Court of Tanzania and Standard Bank for failing to allow her an opportunity to respond to allegations of misconduct reported within the recent DPA between Standard Bank and the SFO and bears various similarities with the ongoing litigation against the FCA detailed above.

At present, it seems the outcome of the Supreme Court hearing in the Macris case will dictate how such matters may be settled in the United Kingdom.

Notes

1. Whereas England and Wales share a common legal system, there are certain substantive and procedural differences in the Scottish and Northern Irish systems. This chapter focuses on the English and Welsh legal system but identifies any significant differences with the other UK systems.
2. It remains to be seen how the position will change as a result of the UK’s Brexit referendum vote to leave the EU.
3. 2002/584/JHA.
4. Extradition Act 2003 (Designation of Part 1 Territories) Order (SI 2003/3333).
5. Extradition Act 2003 (Designation of Part 2 Territories) Order (SI 2003/3334).
6. Section 2, the 2003 Act.
7. Section 166 to 168, the 2003 Act.
8. In England and Wales, cases are heard at the Westminster Magistrates’ Court, in Scotland cases are heard at the Sheriff Court in Edinburgh and in Northern Ireland, cases are heard by designated county courts or resident magistrates.
9. Section 3 and section 4, the 2003 Act.
10. Sections 64 and 65, the 2003 Act.
11. Sections 26 to 29, the 2003 Act.
12. Section 32, the 2003 Act.
13. A list, as of 5 January 2016, of category 2 territories is provided here: https://www.gov.uk/guidance/extradition-processes-and-review.
14. http://www.coe.int/en/web/conventions/full-list/-/conventions/treaty/024/signatures?p_auth=4WJ8nibX.
15. Section 69 and 70, the 2003 Act.
16. Section 137 and 138, the 2003 Act.
17. Section 71, the 2003 Act.
18. Section 78, the 2003 Act.
19. Section 93, the 2003 Act.
20. SI 2004 No 46, the Extradition Act 2003 (Parties to International Conventions) Order 2005: provides that a state will only be designated a category 2 territory in this way in relation to conduct to which the convention applies, e.g., drug trafficking offences in contravention of the UN Convention against Illicit Traffic in Narcotic Drugs and Psychotropic Substances.
21. Sections 21(1), 21A(1)(a) and 87(1), the 2003 Act.
22. Soering v. United Kingdom (1989) 11 EHRR 439.
23. HH v. Deputy Prosecutor of the Italian Republic, Genoa (2012) 3 WLR 90 – summarised conclusions of Baroness Hale re: case law interpreting Article 8.
24. Shankaran v. India (2014) EWHC 957 (Admin).
25. Vincent Brown aka Vincent Bajinja, et al v. The Government of Rwanda, The Secretary of State for the Home Department (2009) EWHC 770 (Admin).
26. Section 21A, the 2003 Act.
27. Section 19B and 83A, the 2003 Act; not in force in Scotland.
28. Section 41 POCA.
29. Section 83 POCA; property is free unless there is a relevant court order in respect of it, or it has been forfeited – section 82 POCA.
30. Section 40 POCA: sets out five conditions that must be satisfied to allow the Crown Court to restrain realisable assets.
31. Section 76(4)-(6) POCA.
32. Section 76(1) POCA.
33. Irwin Mitchell v. Revenue & Customs Prosecutions Office [2008] EWCA Crim 1741.
34. Section 41(4) POCA – prohibits the use of assets to cover legal expenses incurred in relation to any restraint proceedings; however, civil legal aid is available.
35. Section 75 POCA.
36. Section 42(5) POCA.
37. http://www.cps.gov.uk/legal/p_to_r/proceeds_of_crime_act_guidance/.
38. Section 304 POCA.
39. Section 241(1) POCA.
40. Section 241(2) POCA.
41. Olupitan v. DARA [2008] EWCA Civ 104.
42. Smith, Owen and Bodnar on ‘Asset Recovery – Criminal Confiscation and Civil Recovery’, 2nd Edition, Oxford University Press.
43. Section 243 POCA.
44. Section 304 POCA.
45. Section 47 Crime and Courts Act 2013, inserting new section 282A POCA and Schedule 7A POCA.
46. Section 308 POCA.
47. Section 307 POCA.
48. Section 306 POCA.
49. Section 245A POCA.
50. http://www.publications.parliament.uk/pa/bills/cbill/2016-2017/0097/17097.pdf (as amended on 23 November 2016). At the time of writing, the Bill is going through the parliamentary process and may yet be amended.
51. Proposed amendments fall within Part 1 of the Bill dealing with investigations, money laundering, civil recovery, and enforcement powers and related offences.
52. Proposed amendment at section 362A(3) POCA.
53. The High Court must be satisfied that the individual holds the specified property and its value exceeds £100,000; it does not matter whether the property was obtained before or after the relevant section comes into force.
54. The Bill refers to the Fourth EU Money Laundering Directive indicating a PEP includes ministers, members of Parliament and senior judges, plus family members and close associates.
55. Proposed amendment at section 362B POCA.
56. Thereby reversing the burden of proof in such proceedings – proposed amendment at section 362C(2) POCA.
57. Proposed amendment at section 362D POCA.
58. Proceeds of Crime Act 2002 (Recovery of Cash in Summary Proceedings: Minimum Amount) Order 2006 (SI 2006/1699).
59. Section 289(6) POCA.
60. Section 295 POCA.
61. Section 297 POCA.
62. R v. Muneka [2005] EWHC 495 (Admin): the prosecution need not identify the particular criminal activity or the source of the cash; all that is required is that, on balance, the source of the money was a criminal offence, or was intended to be used for a criminal offence.
63. R (Mudie) v. Dover Magistrates’ Court [2003] EWCA Civ 237: the blameworthiness of the person from whom the property was seized is not of itself an element in what has to be proved and therefore the proceedings do not amount to the bringing of criminal proceedings.
64. Butt v. HMCE [2001] EWHC 1066.
65. Muneka [2005] EWHC 495 (Admin).
66. Section 299 POCA.
67. Section 24 and Code G PACE.
68. Paragraph 6, Code C PACE.
69. Paragraph 6.12, Code C PACE.
70. Paragraph 13, Code C PACE.
71. Paragraph 10.5, Code C PACE.
72. Section 34, Criminal Justice and Public Order Act 1994.
73. https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/415038/MLA_Guidelines_2015.pdf.
74. The UKCA is the Home Office department responsible for receiving, acceding to and ensuring the execution of MLA requests in England, Wales and Northern Ireland. Her Majesty’s Revenue and Customs (HMRC) is responsible for MLA requests in England, Wales and Northern Ireland relating to tax and fiscal customs matters. The Crown Office is responsible for MLA requests in Scotland, including devolved Scottish matters.
75. Communications between lawyer and client for the purpose of giving or receiving legal advice.
76. Communications between a client or his or her lawyer and third parties for the purposes of litigation.
77. R v. Derby Magistrates, ex p B [1996] 1 AC 487.
78. Three Rivers District Council v. Governor and Company of the Bank of England (No. 6) [2005] 1 AC 610 (HL).
79. Bowman v. Fels [2005] 1 WLR 308.
80. Bourns Inc v. Raychem Corp [1999] 3 All ER 154 (CA).
81. R (on the application of Prudential plc) v. Special Commissioner of Income Tax [2011] 2 WLR 50.
82. Re Duncan [1968] P 306, 313; Minnesota Mining & Manufacturing co v. Rennicks [1991] FSR 97.
83. Must be a communication, or a document that reflects a communication – any preparatory material not communicated to the lawyer may not be privileged.
84. Akzo Nobel Chemicals Limited and Akcros Chemicals Limited v. Commission of the European Communities, Case C-550/07P.
85. [2015] EWHC 1557 (Ch).
86. Commercial Union Assurance Co plc v. Mander [1996] 2 Lloyd’s Rep 640, 646, 648.
87. First formally recognised in Alterskye v. Scott [1948] 1 All ER 469.
88. [2014] EWHC 1315 (Comm) at paragraphs 19-25.
89. [2014] EWHC 1315 (Comm) at paragraph 22.
90. A party discloses a document by stating that the document exists or has existed; Smithkline plc v. Generics (UK) Ltd [2003] EWCA Civ 1109.
91. [2004] EWCA Civ 798.
92. Tchenguiz v. Director of the Serious Fraud Office [2013] EWHC 2128 (QB).
93. Ibid.
94. Section 18, CPIA.
95. Schedule 17, Crime and Courts Act 2013.
96. Paragraph 13(6), Schedule 17, Crime and Courts Act 2013.
97. Paragraph 2.8.2(i), DPA Code of Practice, Crime and Courts Act 2013.
98. Section 393, the Financial Services and Markets Act 2000.
99. Macris v. The Financial Conduct Authority [2015] EWCA Civ 490.
100. FCA v. Macris UKSC 2015/0413.