With the Serious Fraud Office dropping its investigation into LIBOR rigging at Lloyds Banking Group, due to insufficient evidence to take the matter further, Rahman Ravelli’s Aziz Rahman considers what constitutes insufficient evidence and how prosecution allegations can be challenged.

Insufficient evidence has been given by the Serious Fraud Office (SFO) as the reason for it ending its criminal investigation into alleged LIBOR manipulation at Lloyds Banking Group.  At the time of writing, some lines of inquiry remain open but the SFO has made it clear that it lacks evidence to proceed as it had hoped.  It has written to certain individuals to say that they are no longer being treated as suspects.  This is despite the fact that four years ago, Lloyds was fined £105m by the Financial Conduct Authority (FCA) for serious LIBOR and other benchmark failings. It is six years since the SFO began investigating LIBOR fixing; which has so far led to 13 individuals being charged and four convicted.

The traditional view from most lawyers involved in criminal defence is that pre-charge representation is a fire-fighting exercise where the lawyers react to developments from the investigators. They will be present for the interviewing of clients, assist with disclosure demands, advise on the merits of challenging a search warrant and generally inform those they represent of what might happen if the matter gets to charge. 

However, it does not have to be fire-fighting exercise. Sometimes – and, in our experience, increasingly so - solid pre-charge pro-active defending can make the difference between charging and not charging a suspect.  This is especially true where the investigator is also the prosecutor; which is what happens with SFO or FCA investigations. 

Test

There is the well-known test for charging decisions as set out in the Crown Prosecution Service’s (CPS) Full Code Test; i.e. the two stage test:

  1. there must be evidence to provide a realistic prospect of conviction - this involves an analysis of the reliability of the evidence, and
  2. the public interest test.  This test will usually be passed if the first stage is met “unless the prosecutor is satisfied that there are public interest factors tending against prosecution which outweigh those tending in favour.”  

Given the nature of a charge being dropped, it is not easy to point to specific cases. They will, by definition, be un-reported.  But a lack of publicity surrounding such cases should not disguise the fact that the right challenge can, and often will, secure the right outcome for the subject of an investigation.

The key is for such a challenge to erode the chances of the would-be prosecutors believing they can meet the requirements of the Full Code Test.

Challenges

The scope for challenges is wide. A challenge can involve identifying a fault in the investigation. This can be done by disproving an allegation or assumption that is being made by those who would like to bring a prosecution. By questioning the credibility of either evidence or legal arguments that are likely to be used in a prosecution, a defence team can cast doubt among those looking to secure a conviction. Those bringing a prosecution are less likely to go ahead if they are left relying on what could be seen as weak legal argument and / or merely circumstantial evidence.

Similarly, a possible prosecution can be halted by showing that the correct procedures have not been followed. Challenges regarding, to name a few examples, the obtaining of production orders or search warrants, the conducting of a search or the seizure and subsequent handling of potential evidence are all areas where the authorities can and do make mistakes. The key, therefore, is to identify those mistakes, challenge them and use these challenges as part of a wider strategy to apply pressure to the prosecution.

Such an approach can be time consuming: no police force or other investigating agency will be keen to admit that it has made a mistake in the way it has conducted an investigation. But such an approach pre-charge can still be a much quicker and more efficient way of successfully “seeing off’’ a prosecution than a full trial would be.

So, whether the case is a LIBOR investigation, pension fraud or money laundering investigation - or any type of criminal investigation - the potential of breaking the case before it starts is a real live possibility. 

It should, in our view, be something that happens more often – especially as prosecutors are, in our experience, always happy to consider representations made to them on charge.  But, that said, it is never a straightforward or an easy call. For all the emotion that the suspect feels on the topic it is, in the end, a purely forensic judgment.