Challenging Witness Credibility

The SFO has been criticised for its use of an expert witness
in trials.  Aziz Rahman examines how the SFO
can be challenged over its use of such witnesses.

The Serious Fraud Office (SFO) has found itself at the
centre of a controversy over its use of an expert witness.

Saul Haydon Rowe was used by the SFO to explain the
complexities of LIBOR to the judge and juries in four prosecutions. For this work, he was reportedly paid more
than £400,000 by the SFO.

But two former LIBOR traders have sent reports to the
Metropolitan Police about the conduct of Mr. Rowe. The complaint is that he mis-represented his
expertise and broke specific rules on the disclosure of his source. Before and
during the cases, it is alleged that he sent text messages and emails in which
he made comments about his lack of expertise or asked for help from
associates.

Tom Hayes, a former UBS and Citigroup trader jailed in 2015,
and Ryan Reich, an acquitted former Barclays trader, allege that Rowe, the
SFO’s chief banking witness, might have misled the SFO, the defence, judges and
juries during four criminal trials. They are calling on the police to determine
whether Rowe perverted the course of justice, perjured himself or committed
fraud by false representation or failing to disclose information.

Rowe, a former trader, denied in court earlier this year
that he had misled the SFO and jurors about his expertise.

Challenging

While we are far from knowing definitively what the outcome
of this will be, it shows that there is always scope for challenging the SFO –
even after a case appears to have been concluded.

There can be little doubt that the SFO puts a great deal of
time and effort into investigations. But
that does not mean that everything it does is faultless. There will always be
the potential for challenging the way it has conducted an investigation – at
any stage in its development.

The case of the Tchenguiz brothers is a perfect example.

Tchenguiz

R (R. Tchenguiz & R20 Ltd) v Serious Fraud Office &
Others [2012] EWHC 2254 (Admin) was two joined judicial review actions that
resulted in search warrants being quashed and the court heavily criticising the
SFO.

The actions concerned two brothers, Robert and Vincent
Tchenguiz, who were wealthy, well-known businessmen. The brothers had banked with the Icelandic
bank Kaupthing; which provided them with substantial business loans. In 2008, Kaupthing collapsed and a committee
was set up to ensure the return of as much of the debt owed to the bank as
possible.

This committee instructed a large UK based accountancy and
insolvency practice, Grant Thornton, to investigate on its behalf. The Grant Thornton report suggested that the
lending by the bank to the brothers’ interest was highly irregular: that no
proper due diligence had been carried out and that senior management at the
bank had manipulated financial data to allow excessive lending to take
place.

In 2011, the SFO became involved and was provided with a
copy of the Grant Thornton report. A
formal investigation commenced which led to the SFO producing its information
to a judge sitting at the Old Bailey to secure search warrants. The brothers’ premises were searched and they
were both arrested.

The Judicial Review challenges which followed examined in
detail the complex commercial arrangements that the brothers engaged in with
the bank. The court was heavily critical of the SFO’s over enthusiasm in
presenting the case to the Old Bailey judge when applying for search warrants.

The judge who issued the warrants had not been told that
Grant Thornton were acting for Kaupthing in litigation. This meant that the
expert was simply not independent and the SFO had failed to secure independent
verification of their evidence.

Rules

The Criminal Procedure Rules 2015 tightened up on the rules
regarding experts. There is now an
explicit duty on expert witnesses to actively assist the court by complying
with the court’s directions and informing the court of any significant failure
to comply with such directions.

The fact is that the more complex the investigation, the
more likely it is that the investigators will make incorrect assumptions or make
procedural errors. The increased use of
experts at the pre-charge stage is not always a safety net for the prosecution
and can, in fact, lead to problems.

As ever, early vigilance is where the seeds for success are
sewn. A defence team has to view the SFO’s use of expert witnesses as an area
which could provide sufficient grounds to challenge the assumptions being made
by investigators.