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Rapid Response Team: 0800 559 3500
Switchboard: +44 (0)203 947 1539
Rapid Response Team: 0800 559 3500
Switchboard: +44 (0)203 947 1539

Understanding SFO Investigations: Damage Limitation Strategies & Expertise

Author: Azizur Rahman  14 June 2013
6 min read

Property tycoon Vincent Tchenguiz is seeking £200M damages from the Serious Fraud Office (SFO) over a controversial series of raids. The Tchenguiz saga emphasises the importance of knowing the law regarding raids – and the rights it gives you.

Vincent Tchenguiz is a busy man and a very rich one. But despite this, he is chasing the SFO for £200M damages over the way he was treated in one of their investigations. The entrepreneur believes he suffered a number of injustices in connection with his arrest and the high-profile investigation into him in relation to the collapse of the Icelandic bank Kaupthing. Trespass and false imprisonment are alleged in his claim which, if successful, would be the biggest ever pay-out by the SFO and would place in serious jeopardy its ability to keep functioning.

The SFO dropped its investigation into Mr Tchenguiz and his brother Robert in 2012. It followed a lengthy legal battle over whether the correct search warrants were used during raids. Last year, the High Court ruled that the SFO used misrepresentation to obtain search warrants unlawfully for the homes and businesses of the Tchenguiz brothers. At the time of the March 2011 raids, the brothers’ properties were searched by 135 SFO investigators and police officers. Since then, the SFO has apologised to the brothers and admitted that it mishandled the case; stating that “serious mistakes were made in connection with the application for search warrants’’. But it looks set to contest Vincent Tchenguiz’s legal claim for damages, which is at least partly based on him suffering “significant business losses, arising directly from the unlawful actions of the SFO’’, according to papers he has filed at the High Court.  The papers allege that the SFO was guilty of “deliberate acts and / or omissions which were wrongful and brought about by the SFO in abuse of its office.’’ In its defence, SFO lawyers have filed papers that argue the case for damages is “wholly inadequately pleaded’’ and contains a “level of generality which makes it impossible for the SFO to understand the specific allegations which are made, or to investigate the enormous losses supposedly suffered by the claimants.’’ The SFO accepts that while mistakes were made the investigation was “well justified’’ and rejects what it says are “allegations that the SFO acted with malice and / or bad faith’’.
Vincent Tchenguiz’s case is likely to be heard in tandem with that of his brother, who is seeking damages of £100M. If and when the cases come to court there are sure to be claims made by both sides that will raise a few eyebrows and fill many newspaper column inches. But perhaps the most important thing that the cases will highlight is the vital importance of knowing the law as it relates to raids.

Regardless of which investigating authority plans it, a raid is designed and executed with the intention of finding evidence that can help further their enquiries. The authorities have considerable powers to seize documents and computer data. What is crucial is knowing what powers the raiders have and what powers you have as the person being raided. Only then, as Vincent Tchenguiz would surely agree, will you have a chance of preventing the investigating authority running roughshod over you and your business. Most search warrants for raids are issued in accordance with the Police and Criminal Evidence Act 1984 (PACE) and the conduct during searches is governed by PACE’s Code of Practice B. There are a number of procedural rules to be followed but generally speaking there have to be reasonable grounds for believing that an offence has been committed and that there is material on the premises likely to be of substantial value to the investigation.

Taking the time to recognise the law as it applies to raids and put procedures in place to reflect this may seem tiresome but it can pay dividends should a raid ever occur. If those figures in a company that would come into contact with those carrying out the raid are properly advised and briefed about what action to take, it can go a long way to preventing the raiders taking more than they are entitled to under the legal provisions that relate to a raid. Making sure that senior management, IT staff, accountants and even the receptionist or security guard know exactly what they should do can help reduce the chances of raiders leaving with everything. If that happens, it leaves those that were raided with nothing that they can use to either keep functioning as a business or defend themselves as an investigation unfolds.  For example, if a business is raided it is essential its staff know how to check whether the raiders have valid legal authority to carry out the raid. As many legal challenges as early as possible can help the person being raided stand their ground and defend what is theirs. Everything from checking that the search warrant was issued properly, that  raiders have permission to raid that particular premises through to making sure that the raiders are exactly the people named on the mandate can ensure a company is not taken for a ride by overzealous investigators. For example, in R (Cook) V Serious Organised Crime Agency 2011, the seizure of computers and documents was rendered unlawful because raiders failed to leave schedules to the warrant at the premises, as required by law. Requesting a little time for a company’s legal representative to be present also seems like a perfectly logical action to take. But often it does not occur to people in the heat of the moment, as they struggle to come to terms with the fact that they are being raided.

Making copies of documents that are about to be taken in a raid, taking notes of any questions asked and following the raiders as they search a premises are common sense procedures. But it is still vital that they are adhered to if the person being investigated is to defend themself as vigorously as possible against any accusations and charges that may follow. As important is the issue of legal privilege. Only the company lawyer will be sure exactly what documents or data are legally privileged and it is incredibly important that the legal representative makes clear to raiders what is privileged – confidential communications between a client and their lawyer – and what is not. If privileged material is mistakenly taken by raiders it may well be that the owner may be able to mount a legal challenge to have it returned. For example, we at Rahman Ravelli are currently assessing an authority’s right to examine and use as evidence 1.5 terabytes of data that was seized from one of our clients. Yet it would be far less stressful and time consuming – and potentially less damaging to any future defence case - if the raiders were always prevented from taking them in the first place and given the reasons why they could not take them. Only by using the law effectively from the announcement of any raid – or even before any announcement is made – can a person have any realistic hope of defending their business and the data that relates to it. Without it, a company struggles to keep operating effectively. And with raids often leading to a company losing customers, many face an even bigger struggle if they have to keep limping on while documentation they both need and are entitled to sits in an investigator’s office.

Informed, expert legal advice is the best and the only way to make sure raiders do not abuse their position and take more than they are entitled to when they come knocking. Such advice can be taken at any stage but ideally it should be sought whenever the slightest suggestion of an imminent raid is detected. The right legal advice can help someone recover items that were taken unlawfully in a raid and – as has already happened in the case of the Tchenguiz brothers – challenge the grounds for search warrants being issued by a judge. It can also help a raided person mount the strongest and most appropriate defence to any charges that follow a raid. Such advice, it must be remembered, will make it possible to devise and introduce new compliance procedures to prevent the alleged wrongdoing happening again. It can even help review the evidence and chain of events to determine exactly what drew the authority’s attention to the company that was raided. But such advice is undoubtedly most valuable before any raid has taken place.

The Tchenguiz brothers may have deep pockets and prove more than capable adversaries for the SFO when their cases come to court. There is no doubt that their legal claims could prove a major problem for the SFO. It carried out no other raids for 12 months after targeting the Tchenguiz brothers in raids that a High Court judge has already branded “wholly unsatisfactory’’. The brothers’ approach may not come cheap. They are not the first and will not be the last to sue over a raid. But they are a big-money reminder of how legal expertise can be used to defend a person’s rights in a raid. And that expertise can be more valuable the earlier it is employed in the chain of events that relate to a raid.

Azizur Rahman C 09369

Azizur Rahman

Senior Partner

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Aziz Rahman is Senior Partner at Rahman Ravelli and its founder. His ability to coordinate national, international and multi-agency defences has led to success in some of the most significant corporate crime cases of this century and top rankings in international legal guides. He is recognised worldwide as one of the most capable legal experts regarding top-level, high-value commercial and financial disputes.

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