Partner Bambos Tsiattalou comments on SFO’s attempt to flout jurisdiction rules in Compliance Week, 08 February 2021.
Read Bambos’ full comments in Compliance Week here.
Bambos’ comments were also published in International Accounting Bulletin, 09 February 2021, here.
In another blow to the agency’s credibility, the U.K.’s Serious Fraud Office cannot attempt to force foreign companies to hand over evidence held overseas, according to a recent court ruling.
Bambos commented “The Serious Fraud Office (SFO) has and has always had available to it the ability to request mutual legal assistance from foreign governments. Despite this, the SFO have sought to rely on Section 2(3) of the Criminal Justice Act 1987 (a section 2 notice) to compel foreign companies to provide to them foreign documents held outside the UK. In the case against KBR, the Supreme Court has, quite rightly, ruled against the SFO deciding that it was highly unlikely that Parliament intended Section 2 notices to be used in this way. This makes sense given that the SFO would have no legal authority in the jurisdiction in which the documents were held and would also have no jurisdiction over the foreign registered company.
“In Judgment Lord Lloyd-Jones stated: –
“‘It is to my mind inherently improbable that parliament should have refined this machinery as it did, while intending to leave in place a parallel system for obtaining evidence from abroad which could operate on the unilateral demand of the SFO, without any recourse to the courts or authorities of the state where the evidence was located and without the protection of any of the safeguards put in place under the scheme of mutual legal assistance.’
“The ruling provides some protection to foreign companies from being forced to comply with a section 2 notice and will not only affect how the SFO deals with future extraterritorial investigations, especially that following Brexit it no longer has access to European Investigation Orders, but also questions the status of all foreign documents already provided by companies under a section 2 notice which were provided under the threat of criminal prosecution had they failed to do so.
“Given the multinational nature of the world we now live in and the breaking down of borders by the electronic age in which we operate, section 2 of the Criminal Justice Act 1987 is clearly out of date. For now, mutual legal assistance, which itself is in need of reform, is the correct route to follow to obtain foreign documents from companies in foreign jurisdictions. The SFO will have to think again about how they operate in this area and its reliance on section 2 notices in these circumstances.”