In a case that could have far-reaching consequences, the High Court has sided with the Serious Fraud Office (SFO) in its attempt to obtain private documents held by mining company Eurasian Natural Resources Corporation (ENRC). ENRC crashed out of the FTSE 100 almost four years ago amid allegations of fraud, bribery, and corruption in connection with its activities in Kazakhstan and in Africa.
The SFO launched a criminal probe and a civil case in an effort to access material that the company claimed was covered by legal professional privilege i.e. litigation privilege or legal advice privilege — or both. In her judgement Mrs Justice Andrews ruled broadly in favour of the SFO, deciding that the majority of the documents in question were not covered by privilege, and could, therefore, be obtained by the SFO. According to the court, privilege could apply only if ENRC anticipated actual criminal prosecution. Justice Andrews also added that legal professional privilege protects documents prepared with the sole or dominant purpose of conducting litigation, and not documents produced to enable advice to be taken in connection with anticipated litigation.
The ruling is seen as vindication of the approach of SFO director David Green, who has waged a long war against what he sees as unjustified claims of legal privilege. However, the founding partner of the law firm which acted for ENRC, Graham Huntley, has branded the decision 'unprincipled and illogical'. The ruling essentially means that companies can no longer assume that private documents, including interview records used for internal investigations, will be protected by legal privilege. This is because companies will have to show that such records were created for the ‘dominant purpose’ of future litigation, which in many instances will be impossible to achieve. It was also surprising that the judgment noted that the opening of a criminal investigation does not automatically mean that adversarial litigation is in reasonable contemplation. The outcome of this case will consequently have profound implications on the practice of corporate internal investigations.
The judgement also provided new details about the SFO’s formal investigation into ENRC, including its preparation for possible dawn raids. Indeed, in a witness statement from one of ENRC’s solicitors, it was revealed that the company was braced for a raid following the Kazakh allegations. As questions were raised by MPs in 2011 over a separate ENRC matter, the company’s head of compliance said in an internal email, “I predict a sh*tstorm and a SFO dawn raid before summer’s over. The companies’ books and records will be the first port of call”. The company has denied any criminal wrongdoing and plans to appeal.
Companies can no longer assume that private documents, including interview records used for internal investigations, will be protected after a High Court ruling this week, lawyers have claimed. In a judgment handed down on Monday, on which reporting restrictions were lifted yesterday, Mrs Justice Andrews favoured the Serious Fraud Office in its bid to obtain documents held by mining company Eurasian Natural Resources Corporation (ENRC). The ruling means internal documents relating to criminal investigations could now be used to assist prosecutions. The SFO has alleged fraud bribery and corruption against the London headquartered multinational in relation to its activities in Kazakhstan and Africa. The company denies wrongdoing.