R v Secretary of State for the Home Department and Another, ex parte Fininvest SpA and Others

Wednesday 23 October 1996

This motion involves a wide ranging series of challenges directed at the implementation by the United Kingdom authorities of an Italian letter of request. The applicants are respectively Fininvest S.P.A., a large Italian corporation with interests in advertising, publishing and broadcasting; Mr. Confalonieri, Fininvest's president since 1991; and Mr. Berlusconi, Fininvest's previous president and their principal shareholder, a Member of the Italian Chamber of Deputies, Leader of the Forza Italia political party and, from March to December 1994, Prime Minister of Italy.

The applicants and others are alleged by the Italian prosecuting authorities to be involved in a huge fraud, a fraud whereby at least Lire 100 billion (about £51 million sterling) has been surreptitiously removed from Fininvest and used for criminal purposes. Prosecutions are already afoot against Mr. Berlusconi respectively for bribing Revenue inspectors (Proceeding No. 12731/94) and for making illicit donations of Lire 10 billion to Mr. Craxi, the former Prime Minister and Leader of the Italian Socialist Party (Proceeding No. 9811/93). Such donations were illicit because they were made without proper authority of Fininvest's Board of Directors and without proper records; Italian law requires transparency of political payments both from donors and recipients.

The applicants and others are now being investigated too in relation to other offences involved in this overall fraud, notably offences of false accounting within the Fininvest Group whereby the source of these large sums was concealed.

It was in connection with these investigations that the Secretary of State for the Home Department received from the Public Prosecutor in Milan a letter of request dated 21st March 1996, supplemented by a further letter dated 9th April 1996, sent under the provisions of the European Convention on Mutual Assistance in Criminal Matters 1959 (the 1959 Convention), implemented in the United Kingdom by the Criminal Justice (International Cooperation) Act 1990 (the 1990 Act).

By that letter the Italians requested assistance in obtaining documents relevant to the allegations of false accounting, in particular documents held by C.M.M. Corporate Services Limited (CMM) at an address in Regent Street. CMM is a company founded by Mr David Mills, a solicitor and now a partner in Messrs. Withers.

The request was referred by the Home Secretary to the Director of the Serious Fraud Office (the SFO) under section 4 (2A) of the 1990 Act (introduced by amendment by the Criminal Justice and Public Order Act 1994).

The SFO implemented the request under their powers contained in the Criminal Justice Act 1987 (the 1987 Act), similarly amended in 1994 to provide for a section 4(2A) reference by the Home Secretary. They did so in part under section 2(4) of the 1987 Act by seeking and obtaining a search warrant authorising entry to CMM's premises to search there for specified documents, and in part under section 2(3) of the 1987 Act by serving upon Mr. Mills a notice requiring him to produce specified documents. Seven days was initially allowed under the section 2(3) notice, a period since from time to time extended whereby the notice still remains outstanding.

The search warrant was issued by the Bow Street Metropolitan Stipendiary Magistrate on 15th April 1996 and executed that day with the full cooperation of CMM. The documents removed were (with the consent of the applicants' then solicitors) examined by representatives of the Italian authorities to ascertain which were relevant and which were required for transmission to Italy. Some of the documents taken have since been returned to CMM; the rest were sent by the SFO to the Home Secretary. None, pending this challenge, have been transmitted to Italy. The Italian representatives, however, have communicated certain information as to their contents to the Italian prosecuting authorities whereby certain further arrests have since been made.

The present challenges are directed:

1. to the Home Secretary's decision to refer the request to the SFO;

2. to the SFO's decision to seek a search warrant;

3. to the Bow Street Stipendiary Magistrate's decision to issue the warrant;

4. to the terms of the section 2(3) notice;

5. to the transmission of information by the Italian representatives to their prosecuting authority.

The grounds of these challenges are many and various. Some go to more than one of the steps under attack. Principally, however, they are three-fold, concerned respectively with:

(a) the width of the request (and, in turn, of the warrant and notice),

(b) the justifiability of seeking (and issuing) a search warrant, and

(c) the question whether this case involves political offences.

It is time to set out the material parts of the main statutory provisions in play, providing as these do the essential framework within which all these challenges fall to be considered.

First, section 4 of the 1990 Act as amended:

"4. (1) This section has effect where the Secretary of State receives

(a) from a court or tribunal exercising criminal jurisdiction in a country or territory outside the United Kingdom or a prosecuting authority in such a country or territory; or

(b) from any other authority in such a country or territory which appears to him to have the function of making requests of the kind to which this section applies,

a request for assistance in obtaining evidence in the United Kingdom in connection with criminal proceedings that have been instituted, or a criminal investigation that is being carried on, in that country or territory.

(2A) Except where the evidence is to be obtained as is mentioned in subsection (2) below, if the Secretary of State is satisfied -

(a) that an offence under the law of the country or territory in question has been committed or that there are reasonable grounds for suspecting that such an offence has been committed; and

(b) that proceedings in respect of that offence have been instituted in that country or territory or that an investigation into that offence is being carried on there,

and it appears to him that the request relates to an offence involving serious or complex fraud, he may, if he thinks fit, refer the request or any part of the request to the Director of the Serious Fraud Office for him to obtain such of the evidence to which the request or part referred relates as may appear to the Director to be appropriate for giving effect to the request or part referred.

(5) In this section 'evidence' includes documents and other articles."

Next, section 2 of the 1987 Act, as amended:

"(1B) The Director shall not exercise his powers on a request from the Secretary of State acting in response to a request received from an overseas authority within subsection (1A)(b) above unless it appears to the Director on reasonable grounds that the offence in respect of which he has been requested to obtain evidence involves serious or complex fraud.

(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 on 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

(a) that -

(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 subsection (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 subsection (5) below.

(8A) Any evidence obtained by the Director for use by an overseas authority shall be furnished by him to the Secretary of State for transmission to the overseas authority which requested it."

The Secretary of State's decision to refer the request to the SFO is attacked on two main grounds. First it is said that the request was not properly to be regarded as one "for assistance in obtaining evidence" (my emphasis); rather, it is said, the request invites merely an extensive fishing...