In a judgment that will have significant repercussions for internal corporate investigations, and corporates seeking to enter into a Deferred Prosecution Agreement (DPA), the SFO was criticised by the High Court for failing to challenge sufficiently a company’s assertion of legal professional privilege over the product of an internal investigation (R(AL) v Serious Fraud Office [2108] EWHC 856).
The dispute at the heart of the claim related to first account material provided by four employees of a company, XYZ Ltd, which was to become the subject of an SFO investigation. The company appointed outside lawyers to conduct an internal investigation into allegations that certain of its executives had been paying commission to agents or employees of foreign customers to secure business. The interviews were integral to the decision taken by the company whether or not to self-report to the SFO. Although there were no transcripts of the interviews, detailed notes were taken of them by the lawyers.
In light of the interviews, and other information discovered during the course of the investigation, the company instructed its lawyers to self-report to the SFO. As part of its investigation, the SFO sought copies of the detailed notes of the interviews. The request was declined by the company’s lawyers, asserting that they were protected from disclosure by legal advice and/or litigation privilege. However, the company’s lawyers offered to engage in a “proffer session” during which an oral summary would be read out to the SFO, which could be recorded and transcribed. The SFO acceded to the request. The SFO subsequently entered into a DPA with the company.
The Claimant (AL), one of the executives interviewed as part of the internal investigation, was subsequently charged by the SFO. He sought copies of the detailed internal interview notes from the SFO, rather than the summaries recorded during the oral proffer session. The SFO wrote to the company requesting the detailed interview notes, but the company continued to assert that they were protected by legal professional privilege. The company noted that the judgment in SFO v Eurasian Natural Resources Limited [2017] EWHC 1017 QB (“ENRC”), in which it had been held that notes of conversations between legal advisers and employees of the company to obtain information from which legal advice would then be given were not themselves subject to privilege,was under appeal and that it would be precipitate to proceed on the basis that the judgment was correct. In light of the company’s response, the SFO decided not to pursue the request for disclosure.
Ultimately, the Court dismissed the claim for judicial review, concluding that there were alternative remedies for AL available in the Crown Court, namely, an application for a witness summons against the company or, failing that, an application to stay the proceedings as an abuse of process. The High Court was nonetheless critical of the approach taken by the SFO. Although strictly obiter, in giving judgment Green J addressed in detail the obligations of both the SFO and corporates in respect of disclosure.
The most notable conclusions were that:
- The law in respect of legal professional privilege is settled. In the absence of proceedings reasonably contemplated, litigation privilege does not apply to first interview notes.
- ENRC is a correct statement of the law. It has been endorsed by the Court of Appeal Criminal Division in R v Jukes [2018] EWCA Crim 176 and must be followed by any judge sitting in the Crown Court.
- It follows that the reasonable contemplation of a criminal investigation does not necessarily equate to the reasonable contemplation of a prosecution (ENRC at para 154).
- Criminal proceedings cannot be reasonably contemplated unless the prospective defendant knows enough about what the investigation is likely to unearth (ENRC at para 161).
- The SFO was wrong to accept the company’s assertion of legal professional privilege.
- In the context of this case, the SFO did not have a broad discretion as to whether to take further steps to obtain the notes. Whilst there is a margin of appreciation afforded to the SFO, the position was not comparable to a decision to prosecute. The discretion as it applies to disclosure is circumscribed by Article 6 of the ECHR, the common law right to a fair trial, and by the Attorney General’s Guidelines.
- In the context of DPA, where the SFO has the benefit of a contractual obligation to cooperate from the corporate, its duty to any individual may require it to enforce the obligation to compel the provision of information held by the corporate if it is material to the individual defendant’s case.
- The SFO had failed to address the issue of whether the proffer amounted to a waiver of legal professional privilege, in so far as it existed.
The High Court left the SFO and corporates in no doubt as to the robust approach it will take to assertions of legal professional privilege in the future. In particular, legal advisers undertaking internal investigations in which they interview employees of a client will not be able to claim privilege in relation to those interviews simply because of their relationship to the client in question, or to avoid handing over their notes of such interviews through the “highly artificial” expedient of providing oral summaries. Equally, the SFO will need to consider what the implications will be for the prosecution of any individual when agreeing and then enforcing the terms of any DPA. What the effects of this decision will be on the SFO’s wider approach to criminal proceedings where a DPA exists remain to be seen.
Jonathan Hall QC and Adam Payter acted for the SFO in the judicial review proceedings.
