A recent ruling by the Supreme Court has restricted the powers of the Serious Fraud Office (‘SFO’) under Section 2 of the Criminal Justice Act 1987 (‘the Act’).

Hamraj Kang of Kangs Solicitors provides a brief commentary on the recent decision.

The team at Kangs Solicitors is highly accredited for advising corporate and individual clients in relation to every aspect of SFO investigations.

The team is led by Hamraj Kang who is ranked as a ‘star individual’ for financial crime investigations by the leading legal directory Chambers & Partners.

For an initial no obligation discussion, please call our VAT Team at any of our offices detailed below:

The Ruling | KRB v SFO | Kangs SFO Defence Solicitors

The SFO is afforded powers under Section 2 of the Act to compel corporate bodies and individuals to attend compulsory interviews and to deliver up documents and electronic material relevant to the investigation.

In KRB v SFO, the SFO sought to use its powers under Section 2(3) of the Act to compel a foreign company to provide documents held outside the UK.

The SFO issued the Section 2 Notice requiring KRB (‘the company’) to provide material held overseas. The company sought to challenge this requirement by way of a Judicial Review arguing that the SFO had exceeded its powers.

The Supreme Court upheld the appeal by the company and ruled that overseas material held by the company need not be handed to the SFO.

The company had never conducted business in the UK and did not have a registered office in the UK. In a previous ruling, the Divisional Court had ruled that the SFO was entitled to seek production of material from a foreign company which was held outside the UK if the company had a sufficient connection to the UK. The Supreme Court ruled that there was no basis for reaching this conclusion.

The Supreme Court found that it could not have been the intention of Parliament, in passing the Act, to bestow power on the SFO enabling it to compel a foreign company to produce documents and electronic material held outside the UK.

The Implications | What Now For The SFO?

Clearly, the Supreme Court ruling has significantly curtailed the investigatory powers of the SFO which will be disappointed with the decision.

Given the number of cases investigated by the SFO involving foreign companies and evidence retained in foreign jurisdictions, this ruling will take some digesting by the SFO.

The decision is likely to have a significant impact on:

  • the way the SFO conducts future extra-territorial investigations, and
  • current ongoing investigations where material held by a foreign company outside the UK has already been delivered to the SFO as a result of a Section 2(3) Notice being served on that foreign company.

Widely regarded as a ‘watershed moment’, this Supreme Court decision will require the SFO to make significant changes to its investigatory techniques.

Foreign companies now have protection afforded by the Supreme Court ruling, being no longer faced with the threat of compulsion to produce such material and the accompanying fear of criminal prosecution for failing to comply.   

In future, when the SFO continues to ‘evidence gather’ in foreign jurisdictions it will have to rely on the traditional ‘mutual legal assistance’ mechanisms in place between countries. The mutual legal assistance approach to evidence gathering will neither be as quick and efficient as a legal requirement to comply with a Section 2(3) Notice nor will it necessarily result in the production of all the material being sought by the SFO.

It is arguable that the Act has lost its efficacy and requires updating given that the number of multi-national investigations conducted by the SFO is now significantly higher that it was when the Act was passed. Any changes would inevitably require an Act of Parliament.

How Can We Assist? | Kangs Section 2 Notice Solicitors

Upon receipt of any form of Section 2 Notice from the SFO, it is advisable to seek immediate specialist advice. 

We appreciate that if a foreign company has already complied with a Section 2(3) Notice and provided material from overseas to the SFO urgent advice will be required. 

The team at Kangs Solicitors is well equipped to assist with all aspects of SFO investigations including representing corporate/individual clients in relation to:

Who Can I Contact? | Kangs Fraud Investigations Lawyers

We welcome new enquiries by telephone or email.

Our team of lawyers is available to meet at our offices in London, Birmingham or Manchester or, alternatively, we are happy to arrange an initial no obligation meeting via telephone or video conferencing.

For initial enquires please contact:

Hamraj Kang
hkang@kangssolicitors.co.uk
07976 258171 | 020 7936 6396 | 0121 449 9888

Tim Thompson
tthompson@kangssolicitors.co.uk
020 7936 6396 | 0121 449 9888

John Veale
jveale@kangssolicitors.co.uk
0161 817 5020 | 0121 449 9888