First conviction under section 2 CJA 1987 overturned – RPC Analysis

On 16 September 2024, the first conviction for failure to comply with a notice to provide documents or information required by the Serious Fraud Office ("SFO") was overturned by Judge Nicholas Rimmer at Southwark Crown Court. Although this case was highly fact specific, it may result in a less enthusiastic approach towards pursuing such convictions in the future.

Background

In December 2018, Anna Machkevitch, daughter of Eurasian Natural Resources Corp ("ENRC") co-founder Alexander Mashkevich, was issued with a notice to produce specified documents under section 2(3) of the Criminal Justice Act 1987 ("Section 2 Notice"). This notice was issued in the context of the SFO's investigation into allegations of bribery, fraud, and corruption at ENRC. Although Ms Machkevitch was not a suspect in the ENRC investigation, section 2(3) enables the SFO to compel any person to produce documents which it believes relates to any matter relevant to its investigation. 

On 30 January 2020, Ms Machkevitch was found guilty of failing to comply with the SFO's Section 2 Notice and was ordered to pay a £800 fine, a victim surcharge of £181 and the SFO's legal costs. 

This conviction was significant for company officials and third parties who work closely with companies and may find themselves subject to a Section 2 Notice, as it highlighted the SFO's willingness to charge and prosecute witnesses for failing to comply with a Section 2 Notice. It is worth noting that although Ms Machkevitch did eventually supply the documents to the SFO after being charged, the SFO continued to pursue a conviction. The prosecution was presumably intending to send a clear message about the consequences of non-compliance with Section 2 Notices and the importance of cooperating with SFO investigations generally. 

Why was the conviction overturned?

In May 2022, following a civil claim made by ENRC against its former law firm, the SFO and others, Mr Justice Waksman ruled that both ENRC's solicitor and senior officers at the SFO had breached their respective duties during the investigation into ENRC. The court found that the SFO officers had accepted information from ENRC's solicitor knowing that he was unauthorised to give the information and that in doing so, he would be acting against his client's best interests. The court ruled that the SFO had induced the solicitor's breaches of contract and had displayed "bad faith opportunism". Subsequently, in August 2023, the SFO dropped its criminal investigation into ENRC citing "insufficient admissible evidence to prosecute". 

Ms Machkevitch appealed her 2020 conviction for breach of the Section 2 Notice. Ms Machkevitch's legal counsel argued that the judge's findings against the SFO in the ENRC claim "nullified the legitimacy of the prosecution against Anna Machkevitch". The reason for this being that for there to be a conviction under section 2 of the Criminal Justice Act 1987 there must be a related investigation and had the SFO not breached its duties, there would have been no investigation into ENRC. 

The court granted Ms Machkevitch leave to appeal and the SFO offered no evidence to oppose the appeal acknowledging that there was "no realistic possibility of conviction". On this basis, the court allowed the appeal and overturned Ms Machkevitch's conviction. 

What next?

This case will likely have limited application to future convictions under section 2(3) because only in very rare circumstances will the investigation be invalid from the start. It is also important to note that section 211 of the Economic Crime and Corporate Transparency Act 2023 (ECCTA) will empower the SFO to compel a person to provide documents during its pre-investigation stage in cases of suspected bribery, corruption, or fraud. Meaning the SFO will not be required to lodge a formal investigation before it issues a Section 2 Notice. 

Analysis by:

Sam Tate – Sam.Tate@rpc.co.uk 

Oluchi Nnadi – Oluchi.Nnadi@rpc.co.uk

If you want to know more about corruption, fraud and bribery please contact our White Collar Crime team.