QUEEN'S BENCH DIVISION
Strand, London, WC2A 2LL
B e f o r e :
THE HON. MR. JUSTICE STADLEN
| Mr. Stephen BURGIN
|Mr. Robert PURCELL
Commission of Police for the Metropolis
Chief Constable for Leicestershire Police
Alstom UK Holdings Ltd
The Director of the Serious Fraud Office
Mr James Eadie QC and Mr Duncan Atkinson (instructed by Treasury Solicitors) for the First Defendant in CO/5723/2010 and the Second Interested Party in CO/6227/2010
Mr Jeremy Johnson QC (instructed by Director of Legal Services, Metropolitan Police and Weightmans LLP) for the Second and Third Interested Parties in CO/5723/2010 and the First and Second Defendants in CO/6227/2010
Hearing dates: 15th April 2011
Crown Copyright ©
The Hon. Mr. Justice Stadlen :
The grounds of challenge
i) The statutory pre-conditions for the grant of the warrants in relation to their residential premises were not made out. As to that (a) there was no record of which (if any) of the three access conditions listed in Section 2(4)(a) of the 2007 Act were made out to the satisfaction of the Court and if the Court was satisfied that any access condition was met there was no record of its reasons for so finding. (b) The Information put before the Court by the SFO in support of the application for warrants did not in any event contain any reasonable grounds for believing that any of the access conditions contained in Section 2(4)(a) was met. (c) The SFO failed to put all relevant information pertaining to the Section 2(4)(a) (access conditions) before the Court but did put some irrelevant information for it: in circumstances where no reasons for the decision to issue the warrant were given, and/or recorded it is impossible to be confident that the Court did not act on the basis of irrelevant considerations.
ii) The warrants are over broad and non-specific; they impermissibly seek any document which evidences possible money laundering offences under the Proceeds of Crime Act 2002.
i) In each case the arresting officer did not have reasonable grounds to suspect the Claimant of the offence for which he sought to arrest him, as required by Section 24(4)(sic) of the Police and Criminal Evidence Act 1984 ("PACE"). Further or alternatively, there was no basis on which the Claimants' arrests could be said to be "necessary", as required by Section 24(4) of PACE.
ii) The arrests were therefore unlawful and a violation of Article 5 ECHR.
iii) It was not necessary or proportionate to place the first Claimant on police bail, which has had serious consequences for him and his ability to conduct business. The decision to bail was therefore unlawful and violated the first Claimant's Article 8 ECHR rights.
i) "For the reasons set out in the first Defendant's summary grounds of defence there were ample grounds to satisfy the District Judge that a warrant should be issued under Section 2(4) Criminal Justice Act 1987.
ii) The warrant issued was not excessively broad.
iii) Although the District Judge should have given reasons for his decision the lack of reasons does not invalidate the decision or the warrant."
"(1)The powers of the Director under this section shall be exercisable, but only for the purposes of an investigation under Section 1 above, in any case in which it appears to him that there is good reason to do so for the purposes of investigating the affairs, or any aspect of the affairs, of any person ...
(3)The Director may by notice in writing require the person under investigation or any other person to produce at such place as may be specified in the notice and either forthwith or at such time as may be so specified any specified documents which appear to the Director to relate to any matter relevant to the investigation or any documents of a specified description which appear to him so to relate; and -
(a)if any such documents are produced, the Director may -
(i) take copies or extracts from them;
(ii)require the person producing them to provide an explanation of any of them;
(b)if any such documents are not produced, the Director may require the person who was required to produce them to state to the best of his knowledge and belief where they are.
(4)Where on information of oath laid by a member of the Serious Fraud Office, a Justice of the Peace is satisfied, in relation to any documents, that there are reasonable grounds for believing
(i)a person has failed to comply with an obligation under this section to produce them;
(ii)it is not practicable to serve a notice under sub-section (3) above in relation to them; or
(iii)the service of such a notice in relation to them might seriously prejudice the investigation; and
(b)that they are on premises specified in the Information,
he may issue such a warrant as is mentioned in sub-section (5) below.
(5) The warrant referred to above is a warrant authorising any constable -
(a)to enter (using such force as is reasonably necessary for the purposes) and search the premises; and
(b)to take possession of any documents appearing to be documents of the description specified in the information or to take in relation to any document so appearing any other steps which may appear to be necessary for preserving them and preventing interference with them.
"(2) If a constable has reasonable grounds for suspecting that an offence has been committed, he may arrest without a warrant anyone whom he has reasonable grounds to suspect of being guilty of it. .
(4)But the power of summary arrest conferred by subsection (1), (2) or (3) is exercisable only if the constable has reasonable grounds for believing that for any of the reasons mentioned in sub-section (5) it is necessary to arrest the person in question.
(5)The reasons are -
(e)to allow the prompt and effective investigation of the offence or of the conduct of the person in question "
The search warrant claim
The absence of reasons challenge
(1) The person or persons against whom an order has been made are entitled to know why it is made:
(2) The requirement to give reasons should help to ensure that a judge does, as he must, address each of the statutory requirements before making the order, and
(3) If it is necessary to review an order in this Court reasons will be of great assistance. We will know why the Judge decided as he did" (per Kennedy LJ at Page 8).
"(29) The requirements which have to be met for the issue of a search warrant, whether under section 8 of PACE or under Schedule 1 thereto may seem numerous and onerous. But, as the courts have repeatedly emphasised, that is only to be expected when a police officer is seeking authority to enter a person's home or other premises without that person's consent and to search for and seize items present there. It has rightly been described as a draconian power (see R v Guildford Magistrates' Court, Ex p Primlaks Holdings Co (Panama) Inc  1QB 261, 271), and as Latham LJ put it in Redknapp v Commissioner of Police for City of London  1All ER 229, para 13: "The obtaining of a search warrant is never to be treated as a formality. It authorises the invasion of a person's home." It was said by Bingham LJ in R v Lewes Crown Court Ex p Hill (1990) 93 Cr App R 60, 66 a special procedure case, that
"The 1984 Act seeks to effect a carefully judged balance between these interests and that is why it is a detailed and complex Act. If the scheme intended by Parliament is to be implemented, it is important that the provisions laid down in the Act should be fully and fairly enforced. It would be quite wrong to approach the Act with any preconception as to how these provisions should be operated save in so far as such preconception is derived from the legislation itself. It is, in my judgment, clear that the courts must try to avoid any interpretation which would distort the parliamentary scheme and so upset the intended balance. In the present field, the primary duty to give effect to the parliamentary schemes rests on circuit judges. It seems plain that they are required to exercise those powers with great care and caution. I would refer to the observation of Lloyd LJ in R v Maidstone Crown Court, Ex p Waitt  Crim LR 384 where he said: 'The special procedure under section 9 and Schedule 1 is a serious inroad upon the liberty of the subject. The responsibility for ensuring that the procedure is not abused lies with circuit judges. It is of cardinal importance that circuit judges should be scrupulous.'"
(30) These and other authorities emphasise the vital importance of the role of the judge who is being asked to issue a search warrant. It is his task to be satisfied that the statutory requirements have been met. In the words of Judge LJ in R (Bright) v Central Criminal Court  1WLR 662, 667:
"It is clear that the judge personally must be satisfied that the statutory requirements have been established. He is not simply asking himself whether the decision of the constable making the application was reasonable, nor whether it would be susceptible to judicial review on Wednesbury gounds (see Associated Provincial Picture Houses, Ltd v Wednesbury Corporation  1KB 223). This follows from the express wording of the statute, 'If a circuit judge is satisfied that one of the sets of access conditions is fulfilled'. The purpose of this provision is to interpose between the opinion of the police officer seeking the order and the consequences to the individual or organisation to whom the order is addressed the safeguard of a judgment and decision of a circuit judge."
Although Faisaltex was concerned with the issue of a search warrant under Section 8 of PACE or Schedule 1 thereto, the principles set out are in my view of equal application to the issue of a warrant under the 1987 Act.
Although principally directed at the challenge to the width of the warrants, in my view Kennedy LJ's observations are a further example of the court being prepared in an appropriate case to draw an inference from the contents of the Information relied on in support of an application for a search warrant that the reasons why the issuing judge decided to issue it were that he was satisfied that on particular evidence contained in the Information identified grounds entitling the applicant to the issue of a warrant were satisfied.
The lack of reasonable grounds challenge
The omission of relevant information challenge
The inclusion of irrelevant information challenge
The overbroad and non-specific warrant challenge
(i)Any documents relating to the arrests and searches in Switzerland and France in 2007 and 2008.
(ii)Documents relating to all consultancy agreements entered into by any Alstom company and any apparent third party consultant dating from 2000.
(iii)Any document relating to a consultancy agreement between Alstom TD Power Electronic Systems Ltd, and Linisfare Holdings Ltd in connection with a contract with the state owned Power Grid Corporation (PGC) of India for the Sasaram project in India; and
(iv)any document which evidences possible money laundering offences under the Proceeds of Crime Act 2002.
"A warrant [under Section 2 CJA 1987] needs to be drafted with sufficient precision to enable both those who execute it and those whose property is affected by it to know whether any individual document or class of documents fall within it.
.I consider that there are in principle objections to the specifying of the documents by reference to an 'investigation'. The scope of the investigation will be described, as apparently it was in this case, in the Information, and may be clarified as it was here, by the terms of the request to the Director. However, the Information and the request will not necessarily have been seen by all those executing the search and certainly not by the person whose premises are being searched. How are they to understand whether a particular document was relevant to the investigation? A warrant should be capable of being understood by those carrying out the search and by those whose premises are being searched without reference to any other document."
"(5) When there is an ongoing investigation into, for example the affairs of a company such as EPRS, which appears to have been at the centre of a fraud, it will always be difficult to say precisely what documentation of value to the enquiry may be recovered from those who are justifiably suspected of being in contact with the main target company, but nevertheless the warrant needs to be drafted with sufficient precision to enable both those who execute it and those whose property is affected by it to know whether any individual document, or class of documents falls within it. If that is done it seems to me that the specificity required will be no less than would be required for a notice under Section 2(3) were it practicable to serve such a notice, and although the terms of the warrant may be wide it will not simply be fishing if it is directed to support an investigation which has apparent merit." (1325 D - E at para 24(5)).
(a) any documentation and correspondence relating to the VAT registered businesses suspecting of being involved in VAT fraud offences.
(b) Any records relating to bank building society or any other financial institution accounts controlled or operated by Paul Dacosta & Co, any of the individual partners of Paul Dacosta & Co, PDC Management Ltd and/or any other business believed to be controlled by any of the individual partners of Paul Dacosta & Co.
(c) Any computer equipment, computer discs and any of the specified information held on any form of computer storage medium.
(d) Any other items or information which reasonably appears to the officers to be evidence in relation to suspected VAT fraud offences which appear to be of a serious nature."
The warrant stated that any officer who entered the premises under its authority: "may seize and remove any documents or other things whatsoever found on the premises which he or she has reasonable cause to believe may be required as evidence for the purposes of proceedings in respect of a Value Added Tax fraud offence which appears to him or her to be of a serious nature". (Paragraph 7)
"In my judgment the complaints in relation to the width of the warrants are misconceived. Of necessity the warrant does not set out in detail why the Deputy District Judge was satisfied that there were reasonable grounds for suspecting that a fraud offence of a serious nature (which in an indictment might be charged as more than one offence) had been committed. That detail was in the Information, but it was with that in mind that he authorised Mr. Dougal and other officers to enter the specified premises and search them "for evidence relating to the commission of this offence" including the items set out in the four lettered paragraphs of which complaint is made. They are all introduced and governed by the words which I have emphasised, so, for example, to any officer who was properly briefed, there would be no doubt as to the identity of the VAT registered businesses suspected of being involved in VAT fraud offences, and not all documentation and correspondence relating to those businesses could be searched, only that capable of constituting evidence relating to the commission of the suspected offence. The same limitation applied to all four lettered paragraphs, and because of the limited life of PDC Management Ltd it provided a relatively short time frame which did not need to be otherwise specified." (Paragraph 18)
The arrest claim
(1)It must be shown that the arresting officer suspected that the person arrested was guilty of an offence.
(2)It must be shown that there were reasonable grounds for that suspicion.
The question whether the first condition is satisfied turns on a subjective enquiry into the state of mind of the arresting officer. The question whether the second condition is satisfied turns on an objective enquiry as to the reasonableness of the grounds which were in the mind of the arresting officer at the time of arrest.
" the test which Section 12(1) of the Act of 1974 laid down is a simple but practical one. It relates entirely to what is in the mind of the arresting officer when the power is exercised. In part it is a subjective test because he must have formed a genuine suspicion in his own mind that the person has been concerned in acts of terrorism. In part also it is an objective one, because there must also be reasonable grounds for the suspicion which he has formed. But the application of the objective test does not require the court to look beyond what was in the mind of the arresting officer. It is the grounds which were in his mind at the time which must be found to be reasonable grounds for the suspicion which he has formed. All that the objective test requires is that these grounds be examined objectively and that they be judged at the time when the power was exercised.
This means that the point does not depend on whether the arresting officer himself thought at that time that they were reasonable. The question is whether a reasonable man would be of that opinion, having regard to the information which was in the mind of the arresting officer. It is the arresting officer's own account of the information which he had which matters, not what was observed or known to anyone else. The information acted on by the arresting officer need not be based on his own observations, as he is entitled to form a suspicion based on what he has been told. His reasonable suspicion may be based on information which has been given to him anonymously or it may be based on information, perhaps in the course of an emergency, which turns out later to be wrong. As it is the information which is in his mind alone which is relevant however, it is not necessary to go on to prove what was know to his informant or that any facts upon which he based his suspicion were in fact true. The question whether it provided reasonable grounds for the suspicion depends on the source of his information and its context, seen in the light of the whole surrounding circumstances." (298 A-E).
"Many other examples may be cited of cases where the action of the constable who exercises the statutory power of arrest or of search is a member of a team of police officers, or where his action is a culmination of various steps taken by other police officers, perhaps over a long period and perhaps also involving officers from other police forces. For obvious practical reasons police officers must be able to rely on each other in taking decisions as to whom to arrest or where to search and in what circumstances. The statutory power does not require that the constable who exercises the power must be in possession of all the information which has led to a decision, perhaps taken by others, that the time has come for it to be exercised. What it does require is that the constable who exercises the power must first have equipped himself with sufficient information so that he has reasonable cause to suspect before the power is exercised." (301G 302 A).
" I suggest that in a case where it is alleged that there has been an un- lawful arrest there are three questions to be answered:
(1) Did the arresting officers suspect that the person who was arrested was guilty of the offence? The answer to this question depends entirely on the findings of fact as to the officer's state of mind.
(2) Assuming the officer had the necessary suspicion, was there reasonable cause for that suspicion? This is a purely objective requirement to be determined by the judge if necessary on facts found by the jury.
(3) If the answer to the two previous questions is in the affirmative, then the officer has a discretion which entitles him to make an arrest and in relation to that discretion has being exercised in accordance with the principles laid down by Lord Greene, MR in Associated Provincial Picture Houses Ltd v Wednesbury Corporation  1.K.B. 223 (pages 20-21 of the transcript)."
"POWER OF ARREST
Section 24 of the Police and Criminal Evidence Act 1984 (as substituted by section 110 of the Serious Organised Crime and Police Act 2005) provides the statutory power of arrest (see also PACE Code G)
If a constable has reasonable grounds for suspecting that an offence has been committed, he may arrest without warrant anyone who has reasonable grounds to suspect of being guilty of it (section 24 (2) PACE).
This power of arrest is exercisable of all only if the constable has reasonable grounds for believing that for any of the reasons mentioned in sub section (5) (see below) it is necessary to arrest the person.
The reason why it is necessary to arrest [Mr. Stephen Rex Burgin/Mr. Robert Michael Purcell] is to allow the prompt and effective investigation of the offences because it is necessary to obtain evidence by questioning them. It is also believed that [Mr. Stephen Rex Burgin/Mr. Robert Michael Purcell] may contact co-suspects or conspirators, or contact witnesses or destroyed evidence.
GROUNDS FOR ARREST
The Serious Fraud Office and the Office of the Attorney General in Switzerland are investigating a group of companies known as the Alstom group. Each authority is investigating allegations of wide-scale bribery of public officials across the world by company officials and employees of the ALSTOM group. It is suspected that ALSTOM Network UK Ltd, a UK company, has made illicit payments by means of bogus consultancy agreements solely for the purpose of bribing public officials overseas to win contracts. It is believed that numerous agreements were negotiated by senior sales personnel in the power, transport and other sectors of the ALSTOM group. Enquires have established that the ALSTOM group has operated over 600 bank accounts. Payments totaling £81 million has been traced through 3 of those accounts since 2003, two companies which are suspected of having acted as bogus consultants."
"Mr. Stephen Rex Burgin is the UK Company President of Alstom UK Ltd, and has been since 8 January 2008/5 June 2008. In records obtained from Companies House Mr. Burgin is shown to be Country President of various other Alstom companies. He is the "figurehead" for the Alstom group in the UK and is included in the list of Directors who attended a board meeting to approve the 2009 annual accounts of Alstom Network UK Ltd.
Given his role and responsibilities in the company it is believed he is implicated in suspected offences of bribery and corruption contrary to S.1 Prevention of Corruption Act 1906 conspiracy to make payments in the form of bribes, and false accounting contrary S.17 Theft Act 1968, money laundering contrary to S.327, 328 and 329 Proceeds of Crime Act 2002."
"Mr. Robert Michael Purcell is the Finance Director of Alstom Network UK Ltd and was appointed on 27 March 2009. In records obtained from Companies House Mr. Purcell is shown to have been a Finance Director of various other Alstom entities since 1 October 2008. He has signed off the annual accounts of Alstom Network UK Ltd in April 2009". It then continued in the same way as the document relating to the first Claimant.
(i)the SFO and the Office of the Attorney General in Switzerland were investigating a group of companies known as the Alstom group;
(ii)The investigation involved allegations of wide-skill bribery of public officials across the world by company officials and employees of the Alsltom group;
(iii)It was suspected that Alstom Network UK Ltd had made illicit payments by means of bogus consultancy arrangements solely for the purpose of bribing public officials overseas to win contracts;
(iv)It was believed that numerous agreements were negotiated by senior sales personnel in the power, transport and other sectors of the Alstom group;
(v)Enquiries had established that the Alstom group had operated over 600 bank accounts and that payments totaling £81 million had been traced through three of those accounts since 2003 to companies which were suspected of having acted as bogus consultants;
(vi)Mr. Stephen Rex Burgin was the UK Company President at Alstom UK Ltd and was the figurehead for the Alstom group in the UK;
(vii)In the light of Mr. Burgin's role and responsibilities in the company it was believed that he was implicated in suspected offences of
(a)bribery and corruption contrary to section 1 of the Prevention of Corruption Act 1996;
(b)conspiracy to make payments in the form of bribes;
(c) false accounting contrary to section 17 of the Theft act 1968;
(d)money laundering contrary to sections 327, 328 and 329 of the Proceeds of Crime Act 2002;
(viii)It was considered by the SFO that it was necessary to arrest Mr. Burgin in order to allow the prompt and effective investigation of the offence because it was necessary to obtain evidence by questioning him and because it was believed that he might contact co-suspects or conspirators, or contact witnesses or destroy evidence;
(ix)The SFO would review the case following Mr. Burgin's interview. The investigation was complex, involving numerous companies both within and outside the United Kingdom and tracing payments through over 600 bank accounts. It was likely that the investigation would be protracted. Accordingly, it would be appropriate to release Mr. Burgin on police bail to return to a police station on 22 September 2010 (i.e. approximately 6 months after his arrest and interview).
Additional defences raised by the Commissioner and the Chief Constable
The Rt. Hon Lord Justice Laws: