Serious Fraud Office faces judicial review

Serious Fraud Office SFO

Applications for judicial review (JR) sometimes make for dull reading, but the legal argument put forward in a recent Administrative Court JR application is extraordinary. Or at least the facts of the claim, as stated, are. On behalf of Eurasian Natural Resources Corporation (ENRC) against the Director of the Serious Fraud Office (SFO), the application makes a series of allegations, which if correct, are unprecedented in relation to a UK public agency and what it reveals about the SFO’s relationship with law firms. In short, it paints a picture of alleged cover-up, collusion and, at best, incompetence. At worst, it is deliberate misconduct.

ENRC Ltd – previously listed on the London Stock Exchange as ENRC PLC, a FTSE100 company – has been the subject of a criminal investigation by the SFO since April 2013. The investigation concerns allegations of fraud, bribery and corruption around the acquisition of substantial mineral assets in Kazakhstan and Africa. For the past four years, the head of its investigation team at the SFO has been Case Controller, John Gibson. ENRC has repeatedly raised concerns regarding suspected SFO wrongdoing in relation to that investigation, while the SFO has conceded that those concerns should be investigated comprehensively and in a manner demonstrating independence and impartiality.

Central to the JR claim is the SFO’s appointment of an independent and impartial external team to investigate serious concerns of SFO wrongdoing in connection with that criminal investigation – and its alleged failure to do so. ENRC’s claim is made against the SFO in order “to put its investigation on a proper footing” according to the wording of the application. The claim also asserts that the SFO has not taken the basic steps necessary to meet the normal standards of investigative independence and impartiality by choosing Eversheds Sutherland, a law firm that has already been instructed and is representing the SFO, rather than a new firm to act as independent investigators.

The claim goes further in outlining three “serious concerns of SFO wrongdoing,” which “involve themes regarding collusion and cover-up.”

First, there is alleged wrongdoing by the SFO in relation to its contact and communications with ENRC’s former solicitor “including collusion between SFO staff and the solicitor” about the leaking of confidential information to the press in August 2011, the steps then taken by the SFO, and ongoing collusion with ENRC’s former solicitor throughout the self-reporting process. The solicitor in question is Neil Gerrard, a partner of Dechert.

The second serious concern is that SFO officials “turned a blind eye to the collusion” between its personnel and Gerrard, including how allegations that were set out in a whistleblower letter of July 2012 were then dealt with. This includes failing to maintain records of any investigation or finding, and failing to follow proper procedures in relation to serious allegations of criminal conduct against it and the reasons for those failings.

Finally, and perhaps most significantly, there is alleged wrongdoing by the SFO arising from a manuscript notebook belonging to Keith McCarthy, who was the Chief SFO Investigator in 2011. The notebook covered the key period from 21 July 2011 until his departure from the SFO on 30 November 2011. It is further alleged that the SFO withheld – both from ENRC and, critically, from the Court – the fact that the SFO was no longer in possession of the notebook.

This “unmistakeably raises a theme as to how matters have continued to be dealt with, and questions as to whether collusion has led to cover-up” according to the application.

The claim suggests that this raises significant concerns regarding the SFO’s failure to preserve and produce relevant documents arising from its disclosure exercises over the past three years: ENRC has repeatedly had to identify and request further categories of relevant documents.

The claim further alleges that Mark Thompson, acting Director of the SFO until August 2018 and now Chief Operating Officer, had spoken of keeping the ENRC investigation “off the books with no case drive” and in which he “double-deleted emails from Mr Gerrard.” The claim concludes that “these are alarming features which only serve to reinforce the strength and importance of the first area of concern, as to collusion.”

The review of the investigators’ manuscript, notebooks and their relevance featured in another civil trial, in February 2017, relating to ENRC and legal professional privilege. They formed part of the evidence put before the court by John Gibson and, according to the claim, “the position came to be misleadingly described in evidence to the High Court.” Eversheds Sutherland acted for the SFO in those proceedings in dealing with the topic and presenting the SFO’s position to the Court. “Any inadequacy or inaccuracy in the evidence before the Court, and any failure of due diligence in the preparation and presentation, would necessarily be linked to that firm and its involvement,” states the claim.

And McCarthy’s 2011 notebook? It has been missing since 2012 and “the SFO has known this fact since 2013” according to the claim, which provokes “serious questions about the circumstances in which that notebook has gone missing.” The SFO said that the notebook was signed out in March 2012 by Phillippa Williamson, former CEO of the SFO under Richard Alderman. But, according to the JR, Ms Williamson denies this: they cannot both be right. Ms Williamson also received a controversial redundancy package of over £450,000 when she left the agency a month later.

The SFO has declined to respond to the allegations, while a Dechert spokeswoman said: “We stand by the work we did and look forward to the opportunity of defending it in open court. We note that the criminal investigation by the Serious Fraud Office into ENRC is continuing and deplore ENRC’s attempt to discredit that investigation by seeking now to publicise unwarranted allegations against Dechert and its personnel. We emphatically reject any suggestion of an improper relationship between Dechert and the SFO or that there was any unauthorised disclosure of information to or from the SFO.”

In considering the merits of the arguments put forward, The Administrative Court would seem to have a great deal to consider. Whatever their final decision, the assertions made by ENRC are among the most remarkable ever produced in a judicial review application about a UK prosecution agency and its conduct. Either way, a great deal may hang on the outcome.

 

Dominic Carman

Written by:

Dominic Carman, journalist, writer and legal commentator.
www.dominiccarman.com