Cross-border white-collar crime can be notoriously difficult to pursue both for the law enforcement agencies as well as the organisations that suffer the impact and the losses due to criminal activities. As cross-border commercial crime suggests, there are often jurisdictional as well as varying regulatory issues resulting in the perpetrators being able to hide when the law enforcement agencies reach the end of their jurisdiction and have no further powers to compel them to cooperate in an investigation.
A recent development may have an impact on the ability to pursue white-collar crime across borders, creating extended reach and the potential for a greater level of success in bringing the culprits to justice.
The Serious Fraud Office (SFO) - the extension of extraterritorial reach
The Supreme Court heard the appeal of R (KBR Inc) –v- Director of the Serious Fraud Squad relating to the SFO powers with regard to its extraterritorial reach. The issue was whether a Director of the SFO can issue a notice under section 2 (3) of the Criminal Justice Act 1987 (CJA) to a foreign company requesting the production of documents held overseas. The background to the appeal is that KBR Inc. an American based engineering, procurement, and construction company, whose UK subsidiary, KBR Ltd., is under investigation by the SFO, challenged the validity of the section 2 (3) notice that was served on an officer of KBR Inc. during the course of a meeting with the SFO.
The appeal heard at the High Court rejected KBR Inc. challenge and contended that section 2 (3) of the CJA 1987 does have extraterritorial effect relating to documents held and can apply to foreign companies outside the jurisdiction when there is sufficient connection between the company and the jurisdiction. The Court further held that Mutual Legal Assistance (MLA) is not primary but additional to the SFO powers. Furthermore, Section 2 (3) of the CJA 1987 does not require service. The judgment caused a large degree of consternation as the SFO could now speed up the production of documentation and other material, avoiding the slower MLA route, and there was a suggestion that other enforcement agencies may be able to exploit, under domestic law, the same argument to obtain such material held abroad.
KBR.Inc appealed to the Supreme Court arguing that there was a presumption that the CJA 1987 does not convey extraterritorial effect and that it was unlikely that Parliament intended that the SFO should have that power. Furthermore, it was a matter for Parliament and not the Court to resolve.
The SFO suggested that as it had to investigate multifaceted multi-jurisdictional investigations it had to ensure that, in light of the strong public interest globally, it [the SFO] could effectively perform such investigations. Moreover, the SFO is able to prosecute companies abroad under the Bribery Act 2010 and it would be highly unlikely that the SFO would be unable to access materials related to a bribery offence. Therefore Parliament cannot have intended to limit jurisdiction and must have intended section 2(3) was to provide as long a reach as possible. Finally, to regard MLAs as the only means through which the SFO can access documentation held by a foreign company overseas would compromise its ability to conduct effective investigations.
Vincenzo Senatore, a partner, commented "The judgment is yet to be handed down but this case is of significance; if the judgment favours the SFO it will significantly enhance the ability of the SFO in the pursuit of their investigations across borders and into other jurisdictions. It is universally agreed that enforcement agencies should be able to conduct their investigations with speed and efficiency." He further commented "the organisations that knowingly place themselves or evidence beyond the reach of law enforcement agencies may find that they are no longer protected from the effects of white-collar crime by simply stepping into another jurisdiction"
The actual issue that this case throws up is less about hampering law enforcement agencies in their pursuit of white-collar crime - preventing fraud and crime is a global aim; the issue is whether the Courts, rather than Parliament, should confer on the SFO and possibly other UK enforcement agencies, a raft of statutory powers that extend their extraterritorial reach and how such powers will be regarded by other countries.
Originally Published by Giambrone Law, November 2020
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