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Corporate Crime & Investigations: SFO to expect interview notes of internal investigations

Posted on 11 July 2018 by Tim Thompson and James Watson

SFO to expect interview notes of internal investigations

The Serious Fraud Office has intimated it will now routinely expect companies to hand over written notes from any interviews carried out as part of an internal investigation. These first account interviews are often conducted by lawyers in order to advise on whether there is evidence of a breach of the law and may be conducted prior to any decision to report to the SFO.

The SFO has always stressed the importance to its criminal investigation of receiving first accounts taken as part of an internal investigation, however the SFO's approach to this category of material has not always been consistent. In some instances the SFO has sought to compel production of the documents, whereas in others it has not. This difference in approach presents a challenge for any company which comes to suspect that its employees may be involved in serious criminal activity, such as bribery, fraud or financial sanctions offences.

The SFO's inconsistent approach

In two ongoing cases the SFO can be seen to have taken what appear to be contradictory positions.

In the SFO investigation into ENRC one category of document which the SFO sought to compel the company to produce was lawyers' notes taken during interviews. The request was resisted by ENRC's lawyers on the grounds of privilege. This position was challenged in the High Court by the SFO. The High Court held that in the ENRC case privilege did not attach to interview notes with third parties because there was a criminal investigation and the court did not agree that necessarily equated to the "reasonable contemplation of a prosecution". The judgment of the High Court was widely criticised at the time and it is far from a certainty that it will be upheld by the Court of Appeal who have embarked on a hearing in the matter.

This approach is in stark contrast to the SFO's position in relation to the investigation into XYZ Ltd. In this case the company was granted a DPA without handing over notes from its internal investigation. Criminal charges were brought against individuals and an application was made by the defendants to the Crown Court for disclosure of these interview notes. This application was denied but as part of the judgment His Honour Judge Testar expressed misgivings about the SFO's position. To alleviate these misgivings the SFO wrote to the lawyers acting for XYZ Ltd to request these notes saying that any claim for privilege was unlikely to succeed in light of the ENRC judgment. This request was refused and the claim to privilege was maintained. The SFO chose not to pursue the matter further or compel the company to disclose the material.

The decision by the SFO not to pursue the company for breach of the duty of cooperation under the DPA was challenged by Judicial Review by one of the defendants (referred to as AL). In these proceedings the SFO's stated position was that XYZ Ltd's claim for privilege was "not obviously invalid".

The court criticised the SFO for a number of failures including applying an incorrect approach to the law in light of the ENRC decision and simply accepting the assertion of privilege made by XYZ Ltd's lawyers which was contrary to the SFO's position that privilege does not apply.

The future for internal investigations

The future position is heavily dependent upon the outcome of the ENRC appeal.

However, for the time being, the criticism in the AL Judicial Review appears to have hardened the SFO's resolve, in expecting those co-operating with its investigation to hand over interview notes and not seek to argue that these documents are privileged. Failure to provide this material could jeopardise the prospects of entering into a Deferred Prosecution Agreement or even result in its termination.

This is a complex area of law which is in a period of flux. The decisions referred to are fact specific. It is therefore highly important that a company which considers it might have bribery issues seeks the appropriate advice from lawyers who have the experience in this field to ensure that any internal investigation is structured correctly.

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