Fraud Newsletter 2 – December 2016

CASES

Corporate LPP in Investigations:

• Solicitor’s notes of employee interview taken as part of a legal advice function are disclosable and not subject to Legal Advice Privilege: employee to be treated as a third party, following Three Rivers (No. 5) [2004] QB 916 [the decision which was criticised by the Lords in Three Rivers (No 6) [2005] 1 AC 610 and Thanki: Law of Privilege];  and see RBS Rights Issue Litigation below:  Astex Therapeutics Ltd v Astrazeneca AB [2016] EWHC 2759 (Ch) (8 November 2016, Judgment of Chief Master Marsh (persuasive not binding authority).

• Astex (above) cited and approved by Hildyard J. upholding Three Rivers No 5 as regards definition of corporate client; the extent of legal advice privilege (LAP); and its application to corporate employees. He refused to allow LAP to cloak interview notes taken by US lawyers which would be covered by US privilege. Herbert Smith for RBS have produced a useful summary. Leave to leapfrog granted on 12 December 2016:  Re RBS Rights Issue Litigation [2016] EWHC 3161 (Ch), [2017] 1 W.L.R. 1991.

Directors’ Liability under POCA for corporate offending: issue of whether controlling directors/shareholders of insolvent company convicted of consenting or conniving as directors in wrongful disposal of controlled waste could be personally liable under POCA for costs of site clean, applying the Petrodel Resources v Prest [2013] 2 AC 415 evasion principle on piercing the corporate veil: Powell (Jacqueline) [2016] EWCA Crim 1043, [2016] Lloyd’s Rep. F.C. 546.

Misconduct in Public Office:

• Inadequate directions to a jury. approach to be adopted where journalists pay police officers for information: France [2016] EWCA Crim 1588; [2017] 1 Cr.App.R. 296(19).
• Judge’s decisions re abuse and the required high threshold of criminality upheld: monies paid to a prison officer by a tabloid: Norman [2016] EWCA Crim 1564, [2017] 1 Cr.App.R. 75(8).

SENTENCING AND CONFISCATION

1. v. Alshateri[2016] EWCA Crim 1266, [2017] 1 Cr.App.R.(S.) (3) (Trade Marks offence): direct extrapolation of figures from the Sentencing Council’s guideline for revenue fraud causes too high a starting point for selling cigarettes with counterfeit branding.

BILLS, STATUTES & STATUTORY INSTRUMENTS

Investigatory Powers Act 2016  (272 sections, 10 schedules, 291 pp)

Some sections in force on 29 Nov 2016, others on days to be appointed. Act updates and revises existing powers. Some greater supervision; warrants issues by Secretary of State will require approval of a senior judge; Investigatory Power Commissioner is given an oversight role. New protections for the press and LPP, and criminal penalties for misuse of the powers:  ss15-60 deal with lawful interception of communications.  Summary in Home Office News Report.

Criminal Finances Bill: (Details and Progress Report), Latest update: New amendment proposes to extend the s241 POCA definition of “unlawful conduct”  to cover gross human rights abuses abroad against e.g. whistle blowers against corruption, illegal activity by officials, human rights activist etc.

Finance Bill 2017: Part 6 seeks to

• Prevent the use of disguised remuneration schemes designed to avoid National Insurance and income tax.
• Introduce a new penalty to those who enable tax avoidance schemes that are later defeated by HMRC.
• Introduce a requirement to correct past failures to pay UK tax on offshore monies policed by sanctions.
• Increase sanctions and penalties for illicit tobacco.

Explanatory Notes have been published.

CONSULTATIONS, GUIDANCE, CIRCULARS AND REPORTS

Corruption: OFSI (Office of Financial Sanctions Implementation) consultation on The process for imposing monetary penalties for breaches of financial sanctions sets out suggested criteria re relevant factors and quantum in imposing financial penalties closes on 26 Jan 2017.

FAFT Mutual Evaluation Report: Anti-Money Laundering and Counter-Terrorist Financing Measures: United States.