Fraud and Financial Regulation

Fraud

Drystone Chambers has extensive experience of acting in high-value fraud cases. We cover not only white-collar crime but also civil fraud, with corporate criminal liability being a particular speciality. We are regularly instructed to advise at the earliest stage of fraud investigations. We offer advice to businesses and individuals in respect of search, seizure and restraint as well as compulsory disclosure interviews. We also act in multi-jurisdictional cases and advise in respect of liability and listing under UN and EU Sanctions.

Members of chambers are ranked as leading individuals in fraud work and have appeared in landmark cases prosecuted by the SFO, FSA and BIS. Recent instructions include:

  • R v M (London City Metals) - Company director alleged to be engaged in processing of stolen metal on an industrial scale.
  • SFO v Kallakis & Williams - Conspiracy to defraud Allied Irish Bank of £740 million secured against "AAA" commercial properties. "Britain’s largest ever mortgage fraud".
  • SAS Fire and Security Systems Ltd. - Conspiracy to defraud and misleading commercial practice - three directors accused of conspiring to defraud by selling £18 million worth of security systems on false pretences to the elderly and vulnerable.
  • SFO v Asil Nadir - the prosecution of the former Polly Peck International tycoon. The defendant was convicted after trial of stealing more than £29 million in this case described as having unparalleled legal and factual complexity.
  • R v Edward Davenport & Others - prosecution of a multi-million advance fee and property fraud perpetrated by the self-styled 'Lord' Edward Davenport and five other defendants. The fraud was perpetrated from 33 Portland Place, the former Sierra Leone embassy that Edward Davenport acquired in controversial circumstances during that country's civil war.
  • FPS v O’Donoghue - "keystroke fraud" conspiracy to defraud the Sumitomo Mitsui Banking Corporation of £239m
  • Re BAe Systems Plc - Advising senior executive of BAe in respect of Serious Fraud Office investigation into Tanzanian radar contract.
  • Re GC - advising UK corporate in respect of investigation of alleged corruption in tendering for MoD contracts
  • SFO v Condon - ‘Independent Insurance’ - prosecution of three executive directors of IIG plc

The banking and financial crises refocused the approach of prosecutors and regulators to take a more assertive approach to financial misconduct. The SFO restated its purpose as an investigator and prosecutor of serious complex fraud, bribery and corruption. The first years of the Director's tenure however have been dominated by protracted investigations of LIBOR and anti-competitive practices. The SFO has lobbied hard for a new corporate offence of failing to prevent economic crime and it would appear that the Chancellor is now prepared to back an amendment to the law modelled on s.7 of the Bribery Act 2010. Having originally distinguished the SFO's role from a regulatory function it would appear that the SFO is keener than ever to set the tone at the top.

The Financial Conduct Authority by contrast has developed a more hawkish prosecutorial role, with market abuse and insider dealing a priority. On the regulatory side it moved away from a culture of so-called "compliance based" supervision which was characterised by box ticking to "supervise pro-actively and to challenge", a strategy which is described as "judgement-led". The experience of many firms has been that engagement with the FCA has become more adversarial in nature and takes a more challenging approach with senior management. Drystone Chambers has the skills and expertise to guide clients through this evolving regulatory landscape and to meet the challenges of prosecution and enforcement with a constructive and robust response.

Financial Regulation

Members of Drystone Chambers have extensive experience in both prosecuting and defending in Financial Regulation cases, from initial advice through to proceedings before the RDC and Upper Tribunal.

The FCA now takes a more proactive role in bringing prosecutions for financial misconduct and makes full use of its wide ranging regulatory powers; it may issue a private warning to an individual who breaches Business Principles, or may to take the matter to the Regulatory Decisions Committee and impose both a financial penalty and prohibition. Members of Chambers advise firms and individuals on how best to meet supervision requirements, and represent those facing enforcement action. We have first-hand experience working with the FCA and its predecessor. Recent work has included assisting the FSA in the first fully litigated land banking trial - the companies involved operated a collective investment scheme without authorisation, contrary to s.19 of FSMA 2000. Over the past two years members of chambers have been engaged by FCA in their investigation into individuals suspected of LIBOR/EURIBOR/TIBOR manipulation at Investment banks.

Our experience across the regulatory environment informs our advice to firms and individuals and offers insight that can make a real difference to the outcome of enforcement proceedings.

The FCA’s remit also extends to criminal proceedings in market abuse cases concerning mis-selling and insider dealing. We preserve a substantial overlap between our regulatory and criminal teams, retaining a deep pool of experience from which we can draw. Our members are able to advise in pre-charge investigations and restraint proceedings and also act for companies and third parties who may be affected by restraint or civil freezing orders. If litigation is unavoidable, our clients have the reassurance of first class advocacy when it matters most.

Sanctions and export licensing

Sanctions regimes have proliferated and evolved over the last 20 years and, whilst the rate of adoption may have slowed, new, targeted, smart sanctions are still being imposed, particularly in relation to the Russian Federation and CIS states.

Despite the landmark deal struck between the G5+1 group and Iran, in Vienna on 14 July 2015, the UK guidance remains not to ‘do business with Iran’. The Joint Comprehensive Plan of Action requires Iran to take certain steps before any sanctions will be relaxed with a view to being phased out.

Members of Drystone Chambers have a long-standing reputation for advising on the implications for business of US, UN and EU Sanctions regimes as well as bringing public law challenges against the listing of persons affected.

UK companies and individuals, particularly those in exposed industry sectors and those working with partners in places that play a secondary role in facilitating sanctions-busting, are increasingly at risk of the attentions of the SFO, BIS (Office of Export Control), HMRC and the Security Service. Drystone has an experienced team of practitioners with the skills to assist businesses and individuals with:

  • Ensuring that they do not fall foul of international sanctions regimes and are compliant with their domestic export licensing requirements;
  • de-listing applications before the Court of Justice of the European Union and the Ombudsman dealing with applications related to United Nations Security Council measures; and,
  • bringing actions for judicial review in the High Court relating to Council of Europe and UN Security Council measures.

Our recent work has included:

  • Advising, in the context of alleged breaches of sanctions and expert licensing restrictions: a UK based manufacturing company in relation to the export of dual-use goods to Iran; and, a UK based software company in relation to the export of cryptographic software to Russia. As external counsel, we advised and supervised corporate internal investigations and designed and implemented compliance programmes to prevent any recurrence of the issues that brought the corporates to the attention of the Security Service and ultimately to HMRC and BIS (ECO). In addition, we have assisted with the negotiation of civil settlements, avoiding criminal liability for the corporate and/or its directors and officers;
  • Advising the SFO in relation to the Iraq ‘Oil for Food’ Programme Inquiry and on behalf of a third party concerning contempt of court / compliance with a freezing order related to the investigation;
  • Advising UAE based entities on sanctions and export licensing issues relating to the provision of services to oil and gas sector entities in Iran;
  • Advising a designated individual on the merits, and on forum, for a de-listing application relating to nuclear non-proliferation;
  • Representing a UK businessman in criminal proceedings, before the Central Criminal Court, arising from the export of materials that were capable of being deployed in a portable ‘dirty’ nuclear device. The case involved numerous mutual legal assistance requests from a number of European jurisdictions. The prosecution was abandoned after legal argument on the fourth attempt to try the defendant;
  • Representing individuals before a number of United Nations Tribunals.
  • Acting in extradition cases concerning the export of dual use goods to Iran (USA v Cheng concerning components for uranium enrichment) and USA (USA v Savage concerning the export of dual use components for assault weapons).