Michael Bowes QC and Eleanor Davison in panel discussion with SFO and DoJ on corporate internal investigations

Michael Bowes QC chaired a discussion between senior prosectors and defence practitioners to discuss the controversial topic of corporate internal investigations. Eleanor Davison was a member of the panel, which included the Director of the SFO, David Green QC, Harry Chernoff, an assistant US attorney at the DoJ and Judith Seddon, a partner at Clifford Chance. This was a “closed” seminar organised and recorded by Global Investigation Review. The transcript and the overview article have now been published in GIR online and will feature in the next edition of its magazine. A full list of panel members and the overview article appear below.

Chair

• Michael Bowes QC, joint head, Outer Temple Chambers

Speakers

• Harry Chernoff, assistant US attorney, Southern District of New York, Department of Justice
• Eleanor Davison, barrister, Outer Temple Chambers
• Marianne Djupesland, senior public prosecutor, Økokrim, Norway
• David Green QC, CB, director, Serious Fraud Office, UK
• Amanda Raad, partner, Ropes & Gray, London & New York
• Norbert Reifferscheidt, senior prosecutor, Department of Economic Crimes, Cologne, Germany
• Judith Seddon, partner, Clifford Chance, London

GIR investigations roundtable: overview by Michael Bowes QC and Eleanor Davison. Published by GIR on Thursday, 23 July 2015.

Michael Bowes QC and Eleanor Davison of Outer Temple Chambers provide a summary of the GIR corporate internal investigations roundtable debate.

All roundtable participants agreed that a company has a right to investigate its internal affairs and may have a duty to do so, which may result in disclosure to a regulator or the market.

State prosecutors in the UK, the US, Germany and Norway do not have a legal power to control or intervene in an internal investigation, nor do they want one. That said, all agreed state prosecutors in fact influence the conduct of the investigation by virtue of their position, assisted by a company’s desire or need to be a “good corporate”. The US Department of Justice (DoJ) will never tell a company how to conduct its investigation, but most are done with any eye to cooperation with government authorities. The defence view was that dialogue with the state prosecutor is generally sensible.

Moving on to the dangers or risks to a criminal investigation posed by an internal investigation, there was a gulf between the views of the state prosecutors and those experienced in representing corporates. David Green QC referred to the potential dangers of the internal investigation “churning up the crime scene”. This includes first statements of witnesses which may be “somewhat less than full and accurate” than if they took the form of a verbatim transcript. Judith Seddon, Amanda Raad and Eleanor Davison felt these risks were overstated, particularly in relation to a witness’s first account. Harry Chernoff said that if the DoJ wanted to interview a witness first, there would be a frank exchange of views if the company appeared unwilling to let it do so.

The panel discussed whether it would be best for a company’s lawyers simply to obtain a verbatim transcript of a witness’ first account. Again, views differed between the prosecutors and defenders. Those defending felt that their views and comments on a witness’ credibility were useful (albeit privileged). Harry Chernoff’s view was that a defence lawyer’s views on credibility were not very helpful. David Green QC, Harry Chernoff, Norbert Reifferscheidt and Marianne Djupesland all agreed they wanted unvarnished facts and not opinions.

We then moved to the particularly controversial issue of witnesses’ accounts and privilege. There was a sharp distinction drawn between a record of the “pure facts” which may not be privileged and a summary which included the defence lawyer’s comments, over which privilege is claimed. Even in relation to a transcript, issues of privilege may arise in the US, because of the way in which the underlying documentation was prepared or the order in which questions were asked. Judith Seddon emphasised the rationale for privilege: so that the company may communicate frankly with its lawyers and receive appropriate advice. David Green QC’s view was that if the interview contained only facts and not any advice sought or given, then the interview is not privileged. Harry Chernoff said that the US position was more complicated, in that it could be argued the formulation of the questions reflected an attorney-work product. Marianne Djupesland said the question had not yet been tested to the end in Norway. She made the point that an internal investigation would not be of much use for prosecutors if they are not allowed to see the material. Norbert Reifferscheidt said that, in his experience in Germany, companies did not refuse to hand over witness interviews.

We discussed the potential dangers arising out of a criminal prosecution in which a witness’ first account is not disclosed to the defence. It was agreed the risk existed, though it was felt that (in the UK at least) the trial process would find a suitable way through. Ultimately, a UK court will have to rule on the issue of privilege relating to a witness’s first account to a company’s lawyers conducting an internal investigation.

When asked whether there was scope for a memorandum of understanding between various countries in relation to the conduct of corporate internal investigations, the view was that this was too aspirational, given the differences in the various legal systems.

Overall, the participants felt that the balance of interests between the prosecuting authority and the company conducting its internal investigation was “about right”. It seems that state prosecutors achieve much of what they want by influence rather than direct control and on the whole, companies want to be recognised as “good corporates”. The real area of tension in the UK and possibly in the US is over-privilege – and in the UK that issue is still awaiting a determinative decision in the courts.

News 27 Jul, 2015