West Law Report

Director entitled to drop bribery investigation

Posted in House of Lords (case), Times Law Report by mrkooenglish on August 1, 2008

From The TimesJuly 31, 2008

Director entitled to drop bribery investigation
House of Lords
Published July 31, 2008
Regina (Corner House Research and Another) v Director of the Serious Fraud Office
Before Lord Bingham of Cornhill, Lord Hoffmann, Lord Rodger of Earlsferry, Baroness Hale of Richmond and Lord Brown of Eaton-under-Heywood
Speeches July 30, 2008

Where he took the view that protecting the lives of British citizens outweighed the public interest in pursuing an investigation into allegations of corruption, the Director of the Serious Fraud Office had been entitled to exercise his discretion to discontinue the corruption investigation following threats by a foreign state as to consequences affecting national security if he did not do so.

The House of Lords allowed the director’s appeal from the Queen’s Bench Divisional Court (Lord Justice Moses and Mr Justice Sullivan) (The Times April 16, 2008) who on an application by Corner House Research and Campaign Against Arms Trade for judicial review, had quashed his decision.

Mr Jonathan Sumption, QC, Mr Philip Sales, QC, Mr Vaughan Lowe, QC, Mr Hugo Keith, Miss Karen Steyn and Miss Rachel Kamm for the director; Mr David Pannick, QC, Miss Dinah Rose, QC, Mr Philippe Sands, QC and Mr Ben Jaffey for the claimants; Mr Nigel Pleming, QC, Mr Thomas de la Mare and Miss Shaheed Fatima for JUSTICE, intervening by written submissions; Mr Julian Knowles for BAE Systems plc, interested party, by written submissions.

LORD BINGHAM said that sections 108 to 110 of the Anti-terrorism, Crime and Security Act 2001 made it an offence triable here for a UK national or company to make a corrupt payment or pay a bribe to a public officer abroad.

That gave effect to the UK’s obligation under the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions (1997).

Under section 1(3) of the Criminal Justice Act 1987 the director “may investigate any suspected offence which appears to him … to involve serious or complex fraud”. In performing his functions he was subject to the superintendence of the Attorney-General: section 1(2).

In July 2004, the director, at the material times Mr Robert Wardle, had launched an investigation into allegations of corruption against BAE. One aspect of the investigation concerned the al-Yamamah contract, between the UK and the Kingdom of Saudi Arabia involving BAE.

In response to a statutory notice requiring it to disclose details of payments to agents and consultants in connection with the contract, BAE had written on November 7, 2005, to the Attorney-General, Lord Goldsmith, QC, that disclosure of the information would adversely affect relations between the UK and Saudi Arabia and jeopardise the contract.

Article 5 of the OECD Convention provided: “Investigation and prosecution of the bribery of a foreign public official shall be subject to the applicable rules and principles of each party. They shall not be influenced by considerations of national economic interest, the potential effect upon relations with another state or the identity of the natural or legal persons involved.”

His Lordship referred to ensuing communications and meetings and said that in January 2006, in a meeting with, among others, both Law Officers, the director had expressed his view that the investigation should continue. The Attorney-General had concluded that that was in the public interest.

It had continued, and in the autumn of 2006 the SFO had intended to investigate bank accounts in Switzerland to ascertain whether payments had been made to an agent or public official of Saudi Arabia.

That had provoked an explicit threat by the Saudi authorities that if the investigation were continued, Saudi Arabia would withdraw from the existing bilateral counter-terrorism co-operation arrangements with the UK, withdraw cooperation from the UK in relation to its strategic objectives in the Middle East and end negotiations for the procurement of Typhoon aircraft.

After referring to further communications and meetings, his Lordship said that on December 14, the director, taking the view that continuing the investigation would risk serious harm to the UK’s national and international security, had announced in a press release that he had decided to discontinue it: “This decision has been taken following representations that have been made both to the Attorney-General and the director … concerning the need to safeguard national and international security. It has been necessary to balance the need to maintain the rule of law against the wider public interest. No weight has been given to commercial interests or to the national economic interest.”

The Attorney-General had made a statement in Parliament the same day (Hansard HL Debates, cols 1711-1713), referring to the strong public interest in upholding and enforcing the criminal law, in particular against international corruption, but also to governmental views expressed “that continuation of the investigation would cause serious damage to UK/Saudi security, intelligence and diplomatic cooperation, which is likely to have seriously negative consequences for the UK public interest in terms of both national security and our highest priority foreign policy objectives in the Middle East”.

He had pointed out that article 5 of the Convention precluded him and the SFO from taking into account considerations of the national economic interest or the potential effect on relations with another state and added that they had not done so.

The Divisional Court had held that in yielding to the Saudi threat the director had ceased to exercise the power to make the independent judgment required of him by Parliament. There had been no sufficient appreciation of the damage to the rule of law caused by submission to a threat directed at the administration of justice.

That court had laid down the principle that submission to a threat was lawful only when there had been no alternative course open to the decision-maker.

His Lordship said that the objection to that principle was that it distracted attention from what, applying well settled principles of public law, was the right question: whether, in deciding that the public interest in pursuing an important investigation into alleged bribery was outweighed by the public interest in protecting the lives of British citizens, the director had made a decision outside the lawful bounds of the discretion entrusted to him by Parliament.

Authority made it plain that only in highly exceptional cases would the court disturb the decisions of an independent prosecutor and investigator.

The evidence made it plain that the decision to discontinue the investigation had been taken with extreme reluctance. The director had not surrendered his discretionary power of decision to any third party, although he had consulted an expert source and the Attorney-General.

The issue was not whether his decision had been right or wrong but whether it was one that he had lawfully been entitled to make. In the opinion of the House it had been. It might be doubted whether a responsible decision-maker could, on the facts before him, have decided otherwise.

As to article 5 of the Convention, an unincorporated treaty provision not sounding in domestic law, the director had publicly claimed to be acting in accordance with it.

In Parliament on February 1, 2007, the Attorney-General had said (Hansard HL Debates, col 378): “I do not believe that the Convention does, or was ever intended to, prevent national authorities from taking decisions on the basis of such fundamental considerations of national and international security…”

It was unnecessary and undesirable to decide whether that was so.

Lord Hoffmann agreed; Lord Rodger delivered an opinion agreeing with Lord Bingham and Lord Brown; Lady Hale delivered an opinion concurring in the result; Lord Brown delivered an opinion agreeing with Lord Bingham.

Solicitors: Treasury Solicitor; Leigh Day & Co; Mayer Brown International LLP; Allen & Overy LLP.

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