Home / Articles & Publications

Discovering 'Whodunnit' In Three Acts

by Michael Oliver

This year [2000], three significant events will take place that will each have potentially far-reaching effects on the detection and prosecution of white-collar fraud.

The first is the Data Protection Act (DPA) 1998, which will come into force on 1 March. This builds on the 1984 Act, but extends not only the safeguards for individuals, but the categories of exemptions from the need to comply.

The 1984 Act did not cover data held and processed manually, leading to the creation of many a deliberately prehistoric card-index.

Now all data, however stored, will be brought within reach of the Act. The police and other criminal investigating bodies retain their exemption, which is extended to include, for example, journalists, where a public interest can be shown.

The second of these developments is the much-heralded Human Rights Act (HRA) 1998. Already in force in Scotland, the Act will come into force south of the border on 2 October.

In one sense the Act is already effective because it is retroactive, so that everything relevant to the Convention done today can be looked at again from October. There is no time limit.

The Act brings into our domestic law the key provisions of the European Convention on Human Rights which was adopted in 1950. The UK was one of the first countries to ratify it, but, as it was never before made part of our domestic law, it has always been necessary for UK courts to decline to apply it even where it could be reasonably guessed that the House of Lords itself would be overturned when the matter was taken for review at Strasbourg.

Now these points can be taken at first instance in any court or tribunal. This can save anything up to six or more years of waiting to argue the points of the Convention.

If primary legislation is incompatible with the Convention, the courts must follow the current statute. If it is possible to interpret a statute compatibly with the Convention, the HRA says that the English court should give effect to it in a way that is compatible "so far as it is possible to do so".

However, the Lord Chancellor is on record as saying: "The Bill would, of course, permit UK courts to depart from existing Strasbourg decisions and, on occasion, it might well be appropriate to do so, and it is possible that they might give a successful lead to Strasbourg. For example, it would permit the UK courts to depart from Strasbourg decisions where there has been no precise ruling on the matter."

This is an example of the 'margin of appreciation by which signatories are given some leeway in interpreting the Convention depending on their own individual national circumstances.

The third significant event is the Freedom of Information Bill, currently at the committee stage in Parliament. This is intended to dovetail with the DPA, and each has been drawn with a close eye on the HRA and the Convention. Increasingly, policy-makers and practitioners are using the phrase 'Convention-proof'.

No one knows the precise effect the new legislation will have on the prosecution of white-collar fraud, but there is a lot of anxious preparation going on.

The response of the police has been at the level of the Acpo (Association of Chief Police Officers), which has set up a unit in Cheshire to deal with all aspects of police work. It is currently conducting a series of audits of all aspects of police work and methods.

The Acpo is cautious in disclosing the results, saying it does not want to give ammunition to the defence when it believes that it has become largely Convention-compliant. It has looked at covert policing; it has not yet tackled economic crime and data protection issues, but these are pencilled in for the future.

In practice, the ACPO is likely to take a lead from the Serious Fraud Office (SFO) when it comes to fraud investigations and prosecutions. The SFO has set up its own unit and has predictably concentrated on specific areas of evidence and procedure, while placing a generally greater emphasis on the need to give reasons for all of their actions.

They have looked at matters of disclosure of unused material (an area that might be very much open to challenge under the Article 6 ';fair trial'; principle that there should be 'equality of arms'; between the prosecutor and the accused) and the difficulties they face by the ruling of the European Court of Human Rights (ECHR) in the case of Saunders v UK ([1997] 23 EHRR 313). The ruling renders evidence obtained by questioning a suspect compulsorily under, for example, company and insolvency legislation, as inadmissible in criminal proceedings.

In a current SFO prosecution, the defence is expected to argue the same point under section 78 of the Police and Criminal Evidence Act.

The SFO is also looking at defence case statements under the Criminal Justice Act of 1987, and the same principles will apply to the like requirement under the Criminal Procedure and Investigations Act 1996.

We are in a slight lull at the moment, with much teaching and learning going on, but not much use being made of the Act before it comes into force.

This state of play comes about because the House of Lords reversed the decision in R v DPP ex parte Kebilene (The Times, 2 November, 1999).

The Court of Appeal had held that the decision to prosecute before 2 October under legislation that was almost bound to fall foul of the Convention after 2 October was reviewable; it was expected that this decision would have the effect of immediately opening the floodgates.

The House of Lords said the decision to prosecute in those circumstances was not reviewable. Its ruling would not affect the discretionary power of a judge to refuse to admit evidence under section 78.

The Saunders case illustrates one feature of the HRA when it comes into force. The case has already been decided in Europe, in effect deciding that the domestic appeal rulings were wrong.

Under the usual English approach to legal development, once the Act is in force, that would have been the end of the matter, since a precedent would have been set by a superior court and would be binding. However the ECHR does not operate by precedent in the same way.

The same facts that led the court to rule one way in 1990 can lead to a different result in 2000. The Convention is widely described as

'a living instrument'. The result of this new freedom to depart from precedent is that there is a real opportunity now for English judges to influence the shape of the developing law in a way they have been cut off from doing in the past.

What they must be guided by is not so much previous case law, but the wording of the Convention itself and the justice of the instant case. In any case, it is likely that there will not be a right or wrong answer to a particular problem, but rather a decision based on the balance between competing interests, often argued under different articles of the Convention.

The police and other investigating bodies are exempt from the provisions of the DPA when investigating and prosecuting crime, but that might not stop a defendant arguing that the exemption is too sweeping on the basis that the exemption is disproportionate to the purpose to be achieved.

It will then, under the HRA, be for the English courts in the first instance to decide whether the DTA, or any part of it, is compatible or not with the Convention.

The police themselves may have an exemption under the DPA, but many of the bodies from which they get their information, such as financial institutions, do not.

If there are problems ahead for the police in accessing information from these traditional sources, the position is made far more problematic in the case of some of the new technologies.

In particular, there will be a need for an international attempt to regulate and preserve data traffic on the internet.

Discussions are continuing between the EC and the US Government to identify "Safe Harbour Principles"; one of the subtexts is: how to prevent fraud in such an unregulated medium while preserving the safety of personal information.

The issues are enormous, and any solution implies a degree of co-operation which will have to match the expansion of the traffic itself.

That means also that action will have to be taken quickly, and if the past is anything to go by, much crime will have been committed before international agreement can be reached.

It is the HRA and the ECHR that must guide English judges through the uncharted waters ahead.

This article, originally by Michael Oliver, appeared in Legal Week, 3 February 2000.

3 February 2000

Top of page