UK Enforcement Update

EXECUTIVE SUMMARY

January

Issue of Privilege in internal investigations considered by the Court of Appeal

In R v Jukes the Court of Appeal held that an interview in an internal investigation was not held for the dominant purpose of litigation. This added to the developing caselaw since SFO v ENRC, which was referred to approvingly in the case of Bilta (UK) v RBS in December 2017. February

Unexplained Wealth Orders

The first unexplained wealth order was secured by the National Crime Agency, targeting high-value properties. Barclays PLC charged Over Qatar Holdings Loan

Barclays PLC has been charged in respect of this loan, the Serious Fraud Office's (SFO) investigation having been ongoing since 2012. First Conviction for an Offence of Failing to Prevent Bribery

In February Skansen Interiors Limited became the first company to be tried and convicted of this offence, while in April two men were imprisoned after pleaded guilty to bribery offences. March

Former Deutsche Bank Trader Pleads Guilty in EURIBOR Prosecution

Christian Bittar pleaded guilty to a conspiracy to defraud, leaving five other former traders from Deutsche Bank and Barclays to stand trial, one of whom has refused to attend. April

Former Autonomy CFO Convicted of Fraud

Shushovan Hussain was convicted in San Francisco of multiple counts of fraud for his role in the misstatement of Autonomy's value prior to its sale to HP in 2011. SFO criticised for disclosure failings

In R (on the application of AL v SFO), the SFO was heavily criticised for its decisionmaking in failing to secure witnesses' first accounts from internal investigations. SFO Challenged on Its Use of Powers to Obtain Evidence from Overseas

In R (on the application of KBR) v SFO the SFO's frequent use of powers to issue Section 2 Notices demanding overseas evidence has been challenged before the High Court. UK Economic Crime Group: Enforcement Update

In this edition of the UK Enforcement Newsletter, we cover: the implementation of Unexplained Wealth Orders, the first conviction in the UK of a corporate for failing to prevent bribery; the SFO's charging decision against Barclays regarding its Qatar Holdings loan; the conviction in San Francisco of Autonomy's former CFO; and developments in the ongoing EURIBOR trial in London.

We also review two recent cases on the development of the doctrine of legal professional privilege in the UK, and two important judicial reviews of the SFO's actions regarding disclosure and the exercise of its statutory powers.

January

Developing the Doctrine of Legal Professional Privilege:

Bilta (UK) ltd & Ors and (1) Royal Bank of Scotland plc (2) Mercuria Energy Europe Trading Limited [2017] EWHC 3535; R v Jukes [2018] EWCA Crim 176; Comments made by the SFO regarding ENRC appeal Bilta & RBS

In May 2017, the High Court released its judgment in SFO v ENRC, which was examined in detail in our June 2017 Newsletter. The judgment has been widely received as a significant narrowing of litigation privilege in the context of internal investigations. The appeal of ENRC is scheduled to be heard in the Court of Appeal in July this year. However, two subsequent cases have illustrated the issues that are developing around litigation privilege. In Bilta v Royal Bank of Scotland, the High Court considered the scope of litigation privilege over documents created in the course of an internal investigation following allegations by Her Majesty's Revenue and Customs (HMRC). In order to claim litigation privilege three criteria must be satisfied: (1) litigation must be in reasonable contemplation; (2) the documents must be created for the sole or dominant purpose of litigation; (3) the litigation must be adversarial (i.e. not investigative or inquisitorial). In Bilta the court considered the second limb of this test. In 2010, HMRC wrote to the Royal Bank of Scotland (RBS) stating that it was investigating carousel intra-community fraud, and that its investigation might affect input-tax that had been claimed from HMRC by RBS. RBS launched an internal investigation and cooperated fully with HMRC throughout. In 2012, HMRC wrote to RBS and said that it was minded to deny RBS £86 million in input VAT, but that its decision had not yet been made. RBS took legal advice, met with HMRC and agreed to provide a full written report. With the limitation period approaching expiry, HMRC protectively issued an adverse finding against RBS, but reassured RBS that this did not constitute its final decision and that it would take account of RBS' written report.

Bilta was threatened with an adverse assessment by HMRC and made allegations of dishonest assistance against RBS. Bilta wrote to RBS and requested documents that had been created during its internal investigation, such as interview transcripts with ex-employees. Bilta argued that when the documents were created litigation with HMRC was in contemplation, but that the documents had not been created for the sole or dominant purpose of litigation, so did not attract litigation privilege.

The Court held that RBS's notes and transcripts of interviews with employees were covered by litigation privilege. It said...