Court of Appeal: SFO’s refusal to disclose evidence was ‘serious failure’

The decision comes months after the trial of two Serco executives charged with fraud collapsed because of SFO disclosure errors.

The 1996 Criminal Procedure and Investigations Act (CPIA) and supplementary Code of Practice requires prosecutors to disclose any unused prosecution material which might reasonably be considered capable of undermining the case for the prosecution or of assisting the case for the defence.

Natalie Sherborn, white collar crime expert at Pinsent Masons, said the Court of Appeal’s decision served “as a cautionary reminder of the scrutiny to be expected from UK courts on fundamental principles of fairness and the overriding disclosure obligations of law enforcement agencies”.

In his judgment, Lord Justice Holroyde said the SFO’s errors had prevented Ziad Akle from receiving a fair trial.

Akle had been accused of conspiracy to give corrupt payments to an agent of an Iraqi state-run entity in return for contracts and inside information for Akle’s employer, Monaco-based Unaoil.

Unaoil’s owners, Ata Ahsani and his sons Cyrus and Saman Ahsani, were also under investigation by the SFO before their extradition to the US, where they struck a deal with the Department of Justice (DOJ) over the bribery allegations. Ata Ahsani agreed to pay a fine of $2.25 million and faced no further action, while his sons negotiated plea agreements under which they are likely to serve prison sentences of no more than five years.

Basil Al Jarah - Unaoil’s agent in Iraq – pleaded guilty to bribery charges in the UK, which was relied on in Akle’s trial as evidence of a conspiracy to bribe Iraqi officials.

During the course of the proceedings, the SFO had disclosed summaries of unused material to the defence which included references to contacts between the SFO and David Tinsley, a US citizen actively involved in advising the Ahsanis and who had been in regular contact with both Al Jarah and Akle pre-trial.

The defence argued that Al Jarah’s plea and the SFO’s decision not to prosecute the Ahsanis could have been improperly influenced by Tinsley and requested a stay of proceedings and full access to all documents related to Tinsley. The SFO stated it held no material that suggested Al Jarah’s plea was unreliable or that he had been misled by Tinsley.

Akle was subsequently convicted and sentenced to five years in prison.

Akle appealed the decision, arguing that the trial judge ought to have allowed the defence application to stay proceedings; the prosecution had failed to comply with its CPIA disclosure obligations and the judge ought to have ordered further disclosure relating to Tinsley; and the judge ought to have permitted the defence to call evidence which might have proved that Al Jarah was not guilty.

The Court of Appeal ordered the SFO to disclose copies of all Tinsley-related documentation. Akle submitted that the newly-disclosed documents demonstrated that the SFO had agreed to Tinsley's offer of a trade: intelligence from Saman Ahsani and pleas from Al Jarah and Akle, in return for abandoning any proceedings in the UK against the Ahsanis or their companies.

Akle argued that the SFO had accepted that Tinsley would try to persuade defendants - who he did not represent and who his clients were in conflict with - to abandon their not guilty pleas.

The SFO accepted that some of the disclosure decisions "may not have been well-judged" and officials had made a mistake by not "shutting Tinsley down", but argued that there was no deliberate failure to make proper disclosure and no conduct which would have justified granting the exceptional remedy of a stay of the criminal proceedings. The SFO gave no explanation for its refusal to provide the defence with copies of, or access to, the underlying documents.

In his judgment, Lord Justice Holroyde rejected the first ground for appeal but allowed the appeal on the second and third grounds.

He agreed that the SFO had failed fundamentally to comply with its disclosure obligations, calling it a “serious error”. Lord Justice Holroyde noted that if the documents had been available to the defence at trial, they and the judge would have had a much fuller picture and, as a result, Akle did not have a fair trial.

He added: “We are satisfied that the convictions of Akle are not safe. He was prevented from presenting his case in its best light… His convictions must therefore be quashed.” Unusually, the court refused to order a retrial.

The Attorney General’s Office (AGO) has now launched an independent review into the SFO’s handling of the case.

Sherborn said: “The SFO has faced an exceptionally difficult year with the collapse of the Serco trial, high profile civil litigation brought by ENRC and now the successful appeal of this Unaoil conviction.”

“The SFO is well used to calls for it to be disbanded and will point to its successes in respect of deferred prosecution agreements, and the revenues generated as a result, to demonstrate its worth; as well as notable examples over recent years of the deepening of its cross-border relationships with comparable agencies across the world,” she added.

“These remain an essential foundation for one of the SFO's core aims to protect UK markets from UK and increasingly transnational financial crime, however, many will be watching whether the collateral impact of the decision will lead to wider changes by the agency on how it engages with corporates and individuals involved in its investigations. We await the outcome of the AGO’s review with interest,” Sherborn said.

Jonathan Flynn, white collar crime expert at Pinsent Masons, said: “Following the collapse of the Serco trial, the SFO appointed a leading Queen’s Counsel to conduct a review of the disclosure failings. It also announced that it would be reviewing the content of its operational handbook. The SFO perhaps hoped that these measures would enable it to draw a line under the disclosure failings in Serco and move on. The Court of Appeal judgment in Unaoil again raises concerns about the SFO’s approach to disclosure generally”.

“The SFO is not the only prosecution agency that has been criticised for disclosure issues. In January 2020, HM Crown Prosecution Service Inspectorate published a report on the handling by the CPS of the disclosure of unused material in the Crown Court, which noted that, while there were signs of improvement in the CPS’ handling of disclosure, they came from a ‘low baseline’ of performance,” Flynn said.