Additional Powers of SFO in Overseas Corruption Investigations

January 26, 2009

Extended powers were given to the Serious Fraud Office in July 2008 which augment section 2 of the Criminal Justice Act 1987 in cases involving overseas bribery and corruption. The amendments to the 1987 Act were inserted by the Criminal Justice and Immigration Act 2008, Section 59 (1) and (2), which came in to force on 14 July 2008.

Section 2 powers allow the Director of the SFO to require persons to produce documents and/or answer questions once a serious or complex fraud investigation has commenced under Section 1 of the Act. The new power, inserted as Section 2A of the Criminal Justice Act 1987, grants the Director the ability to use these powers at a 'pre-investigation stage' in relation to overseas bribery and corruption matters.

The effect is to allow the SFO to gather evidence in order to make a determination whether it wishes to open an investigation or not. For practical purposes, this will give the SFO an increased opportunity to screen allegations it receives and gather evidence for that purpose. Previously, section 2 powers could only have been used by the SFO once it was satisfied that there was sufficient evidence to embark upon an investigation.

It is important for recipients of a section 2 Notice to seek legal advice wherever this is practicable. Important sanctions exist where persons fail to comply with Notices. The changes to the 1987 Act mean that it may now be particularly important in corruption cases to establish with the SFO whether their exercise of Section 2 powers is as a consequence of an investigation having been commenced under Section 1, or whether it is part of a screening process using section 2A.

At present section 2A applies only to cases involving overseas bribery and corruption. However, it remains to be seen whether the 1987 Act powers are further extended to cover other serious fraud cases in due course.

Please contact a member of the Bindmans Business Crime Unit for further information on this subject.

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