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EXTRADITION OF COMPANY DIRECTORS |
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The retired chief executive of Morgan Crucible plc, Ian Norris, is appealing to the House of Lords against an order to deport him to the United States on charges of price fixing (Norris v Government of the United States [2007] EWHC 71 (Admin)). The allegations concerned arrangements between companies in Europe, so any involvement in the US was incidental. His appeal is expected to be heard in November. This is the first appeal on proceedings under the Extradition Act 2003 to have reached the House of Lords. However, it is not the first use of this Act against British company directors. Potential future targets include the directors of BAE Systems, BA and four medical equipment companies. The legislation was passed in 2003 under the guise of making it easier to extradite terrorist suspects. A particular issue has arisen out of extradition applications by the US. Most of these applications concern allegations of white-collar crime, and are nothing to do with terrorist activity. The problem is that some foreign countries, including the US, do not need to provide even a good arguable case to a UK court in order for the extradition application to be successful. The British court has very little discretion to refuse these extradition applications. An example of a businessman who has been convicted in the US after extradition is Mr Nigel Potter, a former managing director of Wembley plc. It was suggested to him by a US business contact, in the course of assessing an opportunity in the US, that his company should pay a “bonus” to a third party in the US in order to gain regulatory approval for gaming machines. He and his company sought legal advice and declined to follow this course of action: the bonus was neither offered nor paid. The US federal authorities subsequently investigated the matter and applied for his extradition. Mr Potter went to the US, believing he had done nothing wrong. He was convicted of three charges of “wire fraud”, and is serving three years in a low security jail in Pennsylvania. Wire fraud is a US federal crime and is aimed at offences which cross state boundaries within the US but it also includes international transactions. It is designed to catch people communicating any scheme to defraud or obtain money or property by practically any possible means. So, use of email or the telephone could trigger this offence, even if the person concerned never entered the US. Although the offence is aimed at dealing with criminal behaviour across internal state boundaries in the US, it is now very easy for the US authorities to extend the remit of this offence to business people in the UK because of the UK extradition legislation. As Mr Potter’s case demonstrates, the US Department of Justice is adopting an aggressive approach to white collar crime. Also, the penalties in the US system are much more severe than in the UK (e.g. the maximum sentence for the US wire fraud offence is 30 years). The US system makes extensive use of plea bargaining to induce a guilty plea in return for a lesser sentence, although a defendant is still likely to face a jail term.Perhaps the best-known case of British businessmen who have been extradited to the US is that of the so-called “NatWest three” (R (on the application of Bermingham and others) v Director of the Serious Fraud Office; Bermingham and others v Government of the United States of America [2006] EWHC 200 (Admin)). They have now made a preliminary appearance in court in Houston. They have been granted bail totalling $3 million, but even then only on condition that they reside separately in the Houston area, and that they do not meet together except in the presence of a lawyer. They are also electronically tagged. Their trial is expected to start in January 2008, some 18 months after they were extradited. They are accused of involvement in a financial deal with an Enron executive. Most of the relevant witnesses and documents are in the UK, which hinders the preparation of their defence. If they are convicted, they face a maximum sentence of 35 years in prison. A recent press report indicates that they are entering negotiations for a plea bargain. Since the case of the NatWest three originally came to public attention, there have been some new developments, in that the US Senate finally ratified the extradition treaty with the UK on 30 September 2006. The extradition treaty between the UK and the US was originally signed in 2003, and replaced an earlier treaty. The new treaty required ratification by the legislatures of both countries before it could come fully into effect. The UK brought the treaty into effect in 2003 but there were internal political problems in the US which delayed ratification until 2006. Amongst the problems were that, initially, there was no need for the UK to show that there was a good arguable case against the defendant, the UK does not have a law limiting the time after which a prosecution can be made, and special interest groups in the US argued that the new treaty could allow for political extradition. The formal signing by the UK and US governments took place in April 2007. Prior to this, the treaty was not effective in the US. However, it is still not a level playing field. The UK has to provide a good arguable case to a US court in order to secure extradition of a US citizen. On the other hand, the US only has to show “probable cause” in order to secure extradition of a UK citizen. This could be in the form of an official’s opinion. The treaty defines an extraditable offence as one punishable by a sentence of 12 months or longer, in both countries. Also, the “rule of specialty” can be waived. This allows a person who has been extradited for one offence to be prosecuted for another offence, provided that the country from which he was extradited consents. The issue for the House of Lords to decide in Mr Norris’ case, referred to above, is whether his alleged conduct was a criminal offence in the UK at the relevant time. The High Court held that the alleged conduct could have amounted to the common law offence of conspiracy to defraud (the alleged conduct predated the introduction of a “cartel offence” covering price fixing in UK law, see ¶651). If it is in fact conspiracy to defraud, then the requirement of a minimum sentence of 12 months would be met. However, dishonesty is a component part of conspiracy to defraud and it is not clear that price fixing comes within this definition. (By contrast, the price fixing offence in the US does not require dishonesty.) The House of Lords will have to decide whether the alleged behaviour could amount to the common law offence. In January 2007, the then Attorney General, Lord Goldsmith, announced guidelines on whether an individual should be tried in their own country or extradited. However, these seem primarily to concern the need for early communication between UK and US prosecuting authorities, and the resolution of any disagreements between the governments at senior level. In October, the government announced that there would be new powers for the Home Secretary to veto extradition applications. From November, the Home Secretary is to have powers with the “option to enact” the new veto power. She will be able to make such an order if she decides that a significant part of the alleged conduct occurred in the UK. Alternatively, she could be forced to make such an order by a vote in parliament. This is seen in some quarters as symptomatic of a different attitude to relations with the US being taken by the current government under Gordon Brown. Do these developments indicate an end to the problems surrounding extradition? The answer depends on how the Home Secretary exercises this power, but it seems unlikely that anything short of an amendment of the 2003 Act would work. |
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Spending time in the US: with an appeal to the House of Lords on new extradition procedures pending, this issue’s Focus on… looks at why this issue is so contentious |
