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.