News Business Crime & Financial Services 14th Feb 2020

Business Crime Group Newsletter

Welcome to the Business Crime Group Newsletter

 

Christopher Coltart QC
Editor

This latest edition of the 2 Hare Court Business Crime Group newsletter is packed with interesting and relevant updates for practitioners working in this field:

 

Merry van Woodenberg considers Unexplained Wealth Orders following the recent decision in Hajiyeva v NCA [2020] EWCA Civ 108, and warns that the Court of Appeal is minded to give the NCA a boost in its interpretation of the legislation.

 

Laura Stephenson revisits the vexed question of LPP, and the extent to which it can properly be claimed in communications which serve more than one purpose. See her excellent analysis of the position following the recent decision in CAA v R (on the application of Jet2.com Ltd) [2020] EWCA Civ 35.

 

Josh Carey reviews the rise in the use by prosecuting authorities of Account Freezing Orders. He highlights the procedural elephant traps that lurk for the unwary, and questions the use of lay magistrates to make orders of this complexity/magnitude.

 

Angus Bunyan reviews the Airbus DPA, which is the latest to be approved by the courts. He tests the proposition that DPAs are working in the way originally envisaged by Parliament. In particular, the seeming inability of the SFO to marry up DPAs with corresponding convictions for individuals is a cause for concern.

 

Last but not least, Brendan Kelly QC and Helen Lavery lament the chronic underfunding of fraud investigations and prosecutions in recent years, and consider what steps might be taken to reverse this trend.

 

 

I hope very much that you enjoy reading these articles. Please feel free to contact the authors directly if you would like to discuss their individual pieces further.  If you would like to discuss the possibility of instructing them, please contact our Director of Clerking, Julian Campbell.

 

Christopher Coltart QC

Christopher is Head of the 2 Hare Court Business Crime & Financial Services Group


 

The Court of Appeal upholds the first Unexplained Wealth Order

Merry van Woodenberg

The first Unexplained Wealth Order (“UWO”) was upheld by the Court of Appeal in the case of Hajiyeva v NCA [2020] EWCA Civ 108. Haddon-Cave LJ granted permission to appeal the substantive Order on the basis that it would be beneficial to have guidance on the scope of the relevant statutory powers. The appeal was before a bench including the Lord Chief Justice, which resoundingly rejected the appeal on every ground. The judgment will undoubtedly bolster the NCA’s confidence in pursuing UWOs.

UWOs were introduced under part 8 of the Proceeds of Crime Act 2002 (“POCA”), by the Criminal Finances Act 2017. S.362A POCA provides for the imposition of a UWO in respect of specified property, requiring the subject of the Order to provide information in respect of that property. If the respondent fails to comply with the UWO within a specified timeframe, the property in question becomes….

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Significant Judgment on Legal Advice Privilege Delivered by Court of Appeal in Civil Aviation Authority v R (on the application of Jet2.com Ltd) [2020] EWCA Civ 35

Laura Stephenson

In Civil Aviation Authority v R (on behalf of the application of Jet2.com Ltd) [2020] EWCA Civ 35, the Court of Appeal examined the scope of legal advice privilege “LAP”. The judgment, published on 28 January 2020, provides important clarification on the application of LAP and is essential reading for companies relying on the advice of in-house legal teams.

Legal advice privilege, as opposed to litigation privilege, as defined in Three Rivers Council v The Governor and Company of the Bank of England (No 6) [2004] UKHL 48, at [50] “…attaches to all communications made in confidence between solicitors and their clients for the purpose of giving or obtaining legal advice even at a stage when litigation is not in contemplation”.

The central issue tackled by the Court of Appeal in this case was whether the “purpose” referred to must be the dominant purpose, where a communication has more than one purpose. The Court also gave helpful guidance on the status of….

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I’m frozen! The rise of the Magistrates’ Court freezing order

Josh Carey

Having had a slow uptake by Public Authorities, in the last six months account freezing orders (“AFO”) have started to come in thick and fast. The main culprits for this rise; HMRC, the SFO and NCA of course.

Legislative Introduction

The much-feared Criminal Finances Act 2017 amended the Proceeds of Crime Act 2002 (“POCA”) to insert Chapter 3B entitled, “Forfeiture of money held in bank and building society accounts” into Part 5 of POCA. The Application for an AFO is made pursuant to ss303Z1. It can be made by an “enforcement officer” (if they are a Senior Officer, or authorised officer) where the officer has reasonable grounds for suspecting that money held in the account is recoverable property or intended for use in unlawful conduct.

However, the test to make an Application for an AFO is found in ss303Z3(2) of POCA. It relevantly states….

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Billions: Airbus and the future of DPA’s

Angus Bunyan

  1. The New Year has brought some much-needed positive headlines for the Serious Fraud Office (‘SFO’) in the form of a record-breaking deferred prosecution agreement (‘DPA’) for bribery against the global aerospace company Airbus SE, but only time will tell whether the authority is able to follow up on this success by securing the conviction of any individuals for their part in the criminality.
  2. This DPA, the seventh agreed since the procedure was introduced in 2013, concludes almost four years of investigation by the SFO into the Dutch-registered firm and was part of a joint probe with the French authorities and run in parallel to US investigations. All three jurisdictions have resolved matters by way of various forms of settlement agreement.
  3. The SFO investigation revealed that, between 2011 and 2015, persons associated with Airbus, not exclusively its employees, offered very substantial bribes to third parties in order to secure orders for aircraft from various airline companies and, in one instance, from the Ghanaian government. The five counts in the (now suspended) indictment charge Airbus with failing to prevent this bribery, contrary to s.7 of the Bribery Act 2010 (‘the Act’).
  4. Dame Victoria Sharpe’s judgment approving the DPA (31 January 2020) is damning in its description of the extent and seriousness of the company’s wrongdoing, describing it as…

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Why has there been a decline in fraud prosecutions?

Last but not least, Brendan Kelly QC and Helen Lavery lament the chronic underfunding of fraud investigations and prosecutions in recent years, and consider what steps might be taken to reverse this trend.

(In) Action Fraud

Why has there been a decline in fraud prosecutions?

Just last week the Director of the Serious Fraud Office slammed the “antiquated” fraud laws which prevent the SFO from effectively prosecuting fraud allegations. The SFO have repeatedly struggled to achieve success in fraud prosecutions. This coupled with the findings of the Sir Craig Mackey’s report into ‘failed’ fraud investigations has led to growing concerns that the UK authorities are letting down victims.

In 2018/19 tax fraud convictions alone decreased by a fifth to just 648, seeing the first reduction in prosecutions since 2014/15. And despite nearly 2,000 fraud offences being committed daily in England and Wales, just one in 50 is prosecuted.

One factor undoubtedly contributing to the reduction in prosecutions is the scarcity of resources available to prosecutors. Complex fraud prosecutions, whether successful or unsuccessful, inevitably come at a significant cost to the public purse and so prosecutions are often rightly reserved to….

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