SFO takes steps to control the conduct of Corporate Investigations

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SFO takes steps to control the conduct of Corporate Investigations

Published On: 4 July 2016

On 6 June 2016, the SFO issued new guidance on the conduct of compelled interviews conducted under s.2 of the Criminal Justice Act 1987 ("the Act"). The new guidance represents a change of emphasis with the onus placed on the interviewee to justify the attendance of a legal adviser.

When the SFO investigates corporate wrongdoing, it has a number of ways in which it may seek to obtain evidence. One of the most effective routes to find out what has happened is to interview current and former employees of the corporate entity that is under investigation. Where those people are not themselves suspected of criminal wrongdoing, this is done, primarily pursuant to s.2 of the Act.

s.2 gives the SFO the power to compel a person to attend an interview and to answer questions or otherwise provide information. Subject to certain qualifications, it is a criminal offence to fail to attend a s.2 interview, to refuse to answer questions or to provide false or misleading information. The quid pro quo is that whatever you say in a s.2 interview cannot be used against you in criminal proceedings of which you are the subject.

In contrast to other types of interview conducted by the criminal authorities, the interviewee has no right to be accompanied by a legal adviser to a s.2 interview. Up until recently, the SFO would allow a legal adviser to attend provided that, (i) their attendance did not unduly delay or in any way prejudice the investigation; and (ii) the legal adviser understood their role, which is different to the role in interviews conducted under caution. This earlier guidance also provided that lawyers acting for the corporate entity under investigation may ask to be present when the employee is interviewed but that this may not always be appropriate and sometimes there may be a conflict of interests between the employee and the corporate entity.

In 2014, the lawfulness of the SFO's policy on attendance of legal advisers to s.2 interviews was challenged. The SFO had refused to allow GSK's legal advisers to attend s.2 interviews of 3 of its employees. The SFO said that their presence might stand to prejudice the investigation. This was based on two primary concerns, (i) that the employee may be less likely to be candid in their answers to questions, and (ii) that the legal advisers may have a duty to inform GSK of the details of the interview.

In February 2015, the High Court found that the SFO's policy was lawful and further that in this particular instance it had exercised the policy reasonably.

It is fair to say that the SFO was particularly nonplussed by this challenge and promised to issue fresh guidance on the request to be accompanied by a legal adviser to a s.2 interview. It has now done so. On 6 June, the SFO issued 3 pieces of guidance; internal guidance, guidance for the interviewee and guidance for the lawyer representing the interviewee.

The new guidance represents a more restrictive as well as a more prescriptive approach. The following points are to be noted:

  • A legal adviser will be allowed to attend if the SFO believes it is likely that they will assist the purpose of the interview and/or the investigation, or that they will provide essential assistance to the interviewee by way of legal advice or pastoral support.
  • Only in exceptional circumstances will more than one legal adviser be allowed to attend a s.2 interview, and only then solely for the purposes of taking a note.
  • Written notification must be served on the SFO at least 7 days prior to the date of interview, or 3 days after the receipt of the guidance accompanying the s.2 notice (whichever is later) which identifies the lawyer and which sets out the reason why that lawyer's presence would assist the purpose of the interview or would provide essential assistance to the interviewee.
  • The legal adviser is required to provide undertakings that:
    • Their firm does not represent any individual or legal person who is a suspect of the investigation;
    • They will keep all documents provided prior to or during the interview confidential, not disclose them or their contents to a third party without the SFO's authority, not copy those documents, keep them at their offices and return them on request;
    • Not to transcribe or record the s.2 interview and not to disclose the content of that interview to a third party without the SFO's authority.
  • The legal adviser must also acknowledge that whilst it may provide legal advice (with specific mention being made of advice surrounding legal professional privilege), they must not do anything to undermine the free flow of full and truthful information which the interviewee, by law, is required to give.

What is quite apparent from the new guidelines is that the SFO will rarely, if ever, agree to allow the lawyers representing the corporate entity under investigation to attend a s.2 interview of its employees. It will, however, invariably be in the corporate entity's best interests to have legal representation prior to and during a s.2 interview. Consequently, there would appear to be a greater need for corporates who find themselves under investigation to have available a panel of independent legal advisers capable of representing the interests of their employees in s.2 interviews.

It is hoped that the SFO will adopt a practical and pragmatic approach to policing its new guidance. However, it is possible that some issues may arise:

  1. The legal adviser is required to undertake that they do not represent anyone else who is a suspect in the investigation. However, the legal adviser is unlikely to know who the suspects are unless the SFO tell them, which is unlikely. In the circumstances, the best the legal adviser can say is that based on the information available to them, they do not act for any suspects. Further, the law firm may act or have acted for the corporate under investigation in a different capacity. Does this mean the SFO will decide that lawyers cannot act even though there is no basis to suggest there is any risk of information being disclosed to them?
  2. It is for the interviewee to justify that the legal adviser's presence will assist the investigation or them personally. Does the SFO intend to scrutinise the justification provided and make value judgments as to whether the reasons given are sufficiently compelling to allow it? It would seem obvious that the interviewee would benefit from a legal adviser being present. However, the language indicates more than mere benefit is required to be demonstrated. The interviewee must show the legal adviser will "provide essential assistance". It ought not to be difficult to meet this test, but that supposes the SFO does not seek to make it a high hurdle to clear.
  3. One issue that the legal adviser will always be alive to in a s.2 interview is whether the interviewee is at risk of or does incriminate themselves and whether circumstances arise which make it more appropriate for the interview to proceed as an interview under caution. The SFO's guidance recognises this possibility and puts the onus on the SFO to make that decision. However, practically, that is often a decision made in conjunction with the interviewee's legal adviser. Is it now going to be suggested that any such intervention may go beyond the legal adviser's remit such that the SFO may exclude them?

As stated above, the new guidance is primarily aimed at the exclusion of the lawyers representing the corporate entity under investigation. There is no expectation that the interviewee is going to be routinely denied being accompanied by a legal adviser to s.2 interviews. Corporates will, however, need to consider the appointment of independent advisers at an earlier stage than they may have previously considered may be necessary.

DAC Beachcroft's White Collar Crime Unit acts for individuals subject to s.2 interview requests as well as in the exercise by criminal authorities of their of other investigatory and prosecutorial powers.