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Ian Mason is a solicitor in the litigation department of Travers Smith Braithwaite.
The ruling by the European Court of Human Rights that the UK government had violated Ernest Saunders' right not to incriminate himself has been portrayed, at least by the media, as the latest in a series of failures in the prosecution of serious fraud. However, a closer examination of the judgment indicates that the terms of the ruling are more limited.
In 1986 the DTI appointed inspectors pursuant to sections 432 and 442 of the Companies Act 1985 to investigate the affairs of Guinness. As part of their inquiry, the inspectors interviewed Saunders nine times. During his criminal trial, transcripts of his interviews with the DTI inspectors were read out to the jury by the prosecution. Saunders was convicted and sentenced to five years imprisonment, later reduced on appeal.
On 17 December 1996 the European Court of Human Rights held that Saunders' right not to incriminate himself under Article 6 of the Convention for the Protection of Human Rights had been violated. He had been required to answer the inspectors' questions under legal compulsion, and the use of his statements in criminal proceedings interfered with his right to a fair trial. It was irrelevant whether any of the statements he made were self-incriminating.
The court emphasised that Saunders' complaint was confined to the use in his criminal trial of the statements obtained by the inspectors. His complaint was not concerned with the applicability of Article 6 to the DTI inspectors' procedure. The court recognised that the functions performed by DTI inspectors were essentially investigative, not determinative.
There is an important distinction between the investigation of fraud and its pros- ecution. The ruling impacts upon the latter, not the former. A DTI investigation may have many results: the use of material obtained for the prosecution of criminal offences may be one, but the material might also be used as the basis for a winding up petition.
Similarly, the ruling should have no direct impact upon other bodies with investigative functions, such as the London Stock Exchange's inquiries into insider dealing.
The battle against fraud following the Saunders' ruling has not been lost. For investigators the message is "business as usual". The DTI is, however, considering whether reform of the Companies Act legislation is necessary, so it is appropriate to await developments.