Department of Trade and Industry inspectors are allowed to continue their inquiries into a company's affairs under sections 432 and 442 of the Companies Act 1985 after it is clear that criminal offences have been committed provided that their interviews are conducted independently of the prosecuting authorities and in a fair and unobjectionable way.
The Court of Appeal (Criminal Division) dismissed appeals by Ernest Walter Saunders, Anthony Keith Parnes, Isidore Jack Lyons and Gerald Maurice Ronson, save for allowing Lyons's appeal on one count.
The four appellants were convicted in 1990 of offences arising from a share support scheme during Guinness plc's takeover of Distillers plc. In 1992 their cases were referred to the Court of Appeal on the ground that certain documents, relating to other bid situations in the City, had not been disclosed. The appellants also argued that: 1) interviews by DTI inspectors under the Companies Act 1985, in which the defendants were deprived of protection against self- incrimination, should have been excluded at their trial under section 78 of the Police and Criminal Evidence Act 1985; and 2) having regard to the evidence between the appointment of the inspectors in November 1986 and the appellants' arrests in October 1987, the Companies Act procedure had been misused to allow the inspectors to be "evidence gatherers" for the prosecuting authorities and that the inspectors' inquiry should have given way to a police investigation by February 1987.
Jonathan Caplan QC and Justin Cole (Vernor Miles & Noble) for Saunders; Nicholas Purnell QC and Clare Montgomery (Peters & Peters) for Parnes; Anthony Scrivener QC and Mark Ellison (Stephenson Harwood) for Lyons; John Mathew QC and Ian Gatt (Mishcon de Reya) for Ronson; Sydney Kentridge QC, Elizabeth Gloster QC, Victor Temple QC and Richard Gillis (SFO) for the Crown.
Lord Taylor, CJ, giving the court's judgment, said that Parliament had, by part XIV of the Companies Act, overridden the principle of self- incrimination. The court's duty was to apply our domestic law which was unambiguous. It could not be right for a judge to exclude evidence of interviews simply on the ground that Parliament ought not to have countenanced the possibility of self-incrimination. The admission in evidence of answers which Parliament had said might be admitted could not be regarded as unfair per se under section 78 simply because of inherent features of the statutory regime under which they were obtained.
However, in considering whether the application of the statutory regime created any unfairness, a judge could have in mind that under that regime there was an obligation to answer the inspectors' questions on pain of sanctions.
Turning to whether there was a misuse of the Companies Act procedures, there was nothing improper in the holdings of meetings attended by the DPP, DTI and inspectors. In a complex affair, there needed to be some co-operation between the inspectors and the prosecuting authorities to evaluate the material unearthed. Parliament had provided for inspectors in the field of company fraud to operate under the regime of the Companies Act and for answers elicited to be admissible in criminal proceedings. It was not improper for the prosecuting authorities to permit that regime to take its course up to the point when they considered a police investigation should sensibly be started.
Having considered the evidence between November 1986 and October 1987 to allow the inspectors to continue their inquiry and to bring in the police only in May 1987 was a proper course subject to two essentials: 1) that the inspectors were left to conduct their inquiries and interviews independently without instruction, briefing or prompting by the prosecuting authority; 2) that the interviews were conducted fairly and unobjectionably.
Having seen all the documents there was no abuse of process or improper "collusion". There was nothing which rendered the admission of the inspectors' interviews unfair.
It was submitted that the undisclosed material went to the issue of dishonesty and showed that behaviour akin to that of the appellants occurred elsewhere in the City. Assuming the documents should have been disclosed, no prejudice was in fact suffered by any of the appellants by the non-disclosure.