Mr Ayoub-Farid Michel Saab v Dangate Consulting Ltd
| Jurisdiction | England & Wales |
| Judge | Mrs Justice Cockerill |
| Judgment Date | 20 June 2019 |
| Neutral Citation | [2019] EWHC 1558 (Comm) |
| Court | Queen's Bench Division (Commercial Court) |
| Docket Number | Case No: CL-2016-000195 |
| Date | 20 June 2019 |
[2019] EWHC 1558 (Comm)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS
OF ENGLAND AND WALES
COMMERCIAL COURT (QBD)
Royal Courts of Justice,
Rolls Building
Fetter Lane, London, EC4A 1NL
Mrs Justice Cockerill DBE
Case No: CL-2016-000195
Mr David Allen Q.C and Mr Jason Robinson (instructed by Quinn Emanuel Urquhart & Sullivan UK LLP) for the Claimants
Mr Steven Kay Q.C and Ms Gillian Higgins directly instructed by the Defendants
Hearing dates: 1, 2, 3, 8, 9 April
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
This slightly unusual case concerns a question of the enforceability by a client of confidentiality obligations against the private investigators retained by it to investigate allegations of regulatory non-compliance.
The Third and Fourth Defendants, Mr Brown and Mr Leighton, are former police detectives who have since specialised in confidential private investigations for an international clientele. In 2014 they were retained by the Claimants, the owners of FBME Bank (“the Bank”/“FBME”) to investigate, following the Cyprus Branch of the Bank being taken under the administration of the Central Bank of Cyprus (“CBC”). That event occurred in the wake of money laundering concerns formally expressed in a notice by the US regulator FinCEN (“FinCEN”).
The document evidencing that retainer, which Mr Brown and Mr Leighton signed, contains strict terms as to confidentiality.
They are now sued by the Claimants in this action because, following the termination of the investigation, they gave documents and/or information derived from their retainer to inter alia the CBC and FinCEN and other law enforcement agencies. It is also said that they gave such information to media outlets and investigative journalists.
The Defendants defend the action on the basis that, while they did make disclosures to regulators and law enforcement agencies, they did this for the right reason; namely because their conclusion was that there was criminality being conducted through the Bank. Moreover they say that they effectively had no option but to assist the CBC. That being the case, they say that they are entitled to invoke the defence of public interest disclosure and also the defence of compulsion of law. They (in essence) deny that their disclosures extended to disclosures to the media or journalists.
I should note one point at the outset. It will be obvious to many readers that there are potential issues as to the proper law of the torts alleged against the Defendants – and the proper law of the breaches of contract alleged. However such obvious potential issues of foreign law formed no part of the debate before me, save in passing as regards the limited question of compulsion of law. The parties both elected not to plead or prove the content of any foreign law. That being the case, I must proceed on the default basis, assuming that the relevant foreign law would be the same as English Law, and I therefore decide the case as a matter of English Law.
I would wish to say that this strikes me as unsatisfactory, given that the questions in issue here are ones on which lines may well be drawn in slightly different places by different legal systems. Consequently the result I reach may be artificial in some respects. It is however the approach which the parties have chosen, following discussion at the Case Management Conferences of the relevance of foreign law, and permission being given to call such evidence.
The trial has been conducted over five days. Mr Farid Saab gave evidence for the Claimants, and Mr Brown and Mr Leighton for the Defendants.
The witness evidence was not entirely satisfactory. Mr Farid Saab was a careful and somewhat defensive witness. It was apparent that his own involvement in the Bank's affairs was in general at the highest level and that he was not necessarily familiar with the areas of detail on which the Defendants had focussed. Mr Brown was, as many individual defendants are, unhappy with the constraints of the cross-examination process, but was polite and tried to answer clearly. He tried to be clear about what he could not recall. However I was persuaded that, as is almost inevitably the case, the clarity of his recollection was somewhat affected by the way that the litigation process had forced him to go over particular areas of evidence repeatedly and by the need to defend his actions. Mr Leighton, although the author of the longest account of the Defendants' work, was barely questioned at all.
Although the Defendants were represented at trial by counsel, they have conducted the bulk of the preparation for the trial themselves. It is fair to say that while not formally being in the position of litigants in person (indeed they had the benefit of representation by a very experienced leading and junior counsel, for whose assistance I am most grateful) they have not had available to them the wealth of resource upon which the Claimants have been able to call.
I will deal with the issues under the following headings (references are to paragraph numbers below):
The Facts
| The Facts | 12 |
| The Engagement of the Defendants | 18 |
| The Investigation | 31 |
| The Disclosures | 56 |
| The Hollingsworth allegations | 78 |
| Disclosure to Media | 89 |
| Asia Sentinel | 93 |
| Buzzfeed | 98 |
| Private Eye | 106 |
| The issues in summary | 117 |
| The “other” obligations: Obligations 2–5 | 119 |
| The Public Interest Defence | 126 |
| General Principles | 126 |
| Initial conclusions on potential ambit | 137 |
| The effect of the QE Engagement Letter | 143 |
| Public Interest disclosure: Disclosures to CBC and FinCEN | 155 |
| Compulsion by Law | 190 |
| Conclusions | 197 |
| Post Script: The Prince Jefri Point | 200 |
The Bank was, until its liquidation in 2017, an international bank incorporated under the laws of the Republic of Tanzania. It carried out the bulk of its business through a branch in Cyprus (the “Cyprus Branch”). The Claimants were at all material times the ultimate owners of the Bank.
On 15 July 2014, the US Treasury's Financial Claims Enforcement Network (“FinCEN”) issued a Notice of Finding stating there were reasonable grounds for designating the Bank, its branches, subsidiaries and offices, as an institution of “ prime money laundering concern” (the “FinCEN Notice”).
The FinCEN Notice stated inter alia as follows:
“This document provides notice that …. FBME … is a financial institution operating outside of the United States of primary money laundering concern …
II. The extent to which FBME has been used to Facilitate or Promote Money Laundering in or through Cyprus and Tanzania
1. FBME facilitates Money Laundering, Terrorist Financing, Transnational Organised Crime, Fraud Schemes, Sanctions Evasion, Weapon Proliferation, Corruption by Politically-Exposed persons and other Financial Crimes.
FBME facilitated a substantial volume of money laundering through the Bank for many years.
FBME is used by its customers to facilitate money laundering, terrorist financing, transnational organised crime, fraud, sanctions evasion and other illicit activity internationally and through the U.S financial system.
FBME performs a significant volume of transactions and activities that have little or no transparency and often no apparent legitimate business purpose.
Through relationships developed by FBME's management since at least 2006, as well its large shell company customer base, FBME facilitates the activities of international terrorist financiers, organised crime figures and money launderers.
For example, since at least early 2011, the head of an international narcotics trafficking and money laundering network has used shell companies' accounts at FBME to engage in financial activity.
In late 2012, the head of the same international narcotics trafficking and money laundering network continued to express interest in conducting financial transactions through account with FBME in Cyprus.
Separately, in 2008, an FBME customer received a deposit of hundreds of thousands of dollars from a financier for Lebanese Hezbollah.
FBME also facilitates financial activity for transnational organised crime. As of 2008, a financial advisor for a major transnational organised crime figure who banked entirely at FBME in Cyprus maintained a relationship with the owner of FBME.
FBME facilitated transactions for entities that perpetrate fraud and cybercrime against victims from around the world, including in the United States. For example, in 2009, FMBE facilitated the transfer of over $100,000 to an FBME account involved in a High Yield Investment Programme (“HYIP”) fraud against a U.S person. In July 2012, the FBME customer operating the alleged HYIP was indicated in the United States District Court for the Northern District of Ohio for wire fraud and money laundering related to HYIP fraud.
FMBE has processed payments for cybercrime networks. In September 2010, FBME facilitated the unauthorised transfer of over $100,00 to an FBME account from a Michigan-based company that was the victim of a phishing attack. Several FBME accounts have been the recipients of the proceeds of cybercriminal activity against U.S victims. For example, in October 2012, an FBME account holder operating a shell company was the intended beneficiary of over $600,00 in wire transfers generated from a fraud scheme, the majority of which came from a victim in California. ….
2. FBME's weak AML controls encourage use of the Bank...
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