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Session 2007 - 08
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Judgments - R (On The Application of Corner House Research and Others) V Director of The Serious Fraud Office


SESSION 2007-08

[2008] UKHL 60

on appeal from: [2008] EWHC 246 (Admin)




R (on the application of Corner House Research and others) (Respondents) v Director of the Serious Fraud Office (Appellant) (Criminal Appeal from Her Majesty’s High Court of Justice)

Appellate Committee

Lord Bingham of Cornhill

Lord Hoffmann

Lord Rodger of Earlsferry

Baroness Hale of Richmond

Lord Brown of Eaton-under-Heywood



Jonathan Sumption QC

Philip Sales QC

Vaughan Lowe QC

Hugo Keith

Karen Steyn

Rachel Kamm

(Instructed by Treasury Solicitors)


David Pannick QC

Dinah Rose QC

Philippe Sands QC

Ben Jaffey

(Instructed by Leigh Day & Co)

Interested Party (BAE Systems plc)

Julian Knowles

(Instructed by Allen & Overy LLP)

Interveners (Justice)

Nigel Pleming QC

Thomas de la Mare

Shaheed Fatima

(Instructed by Mayer Brown International LLP)

Hearing dates:

7 and 8 JULY 2008






R (on the application of Corner House Research and others) (Respondents) v Director of the Serious Fraud Office (Appellant) (Criminal Appeal from Her Majesty’s High Court of Justice)

[2008] UKHL 60


My Lords,

1.  The issue in this appeal is whether a decision made by the appellant, the Director of the Serious Fraud Office, on 14 December 2006, to discontinue a criminal investigation was unlawful. The Queen’s Bench Divisional Court (Moses LJ and Sullivan J) held it to be so: [2008] EWHC 714 (Admin). That court accordingly quashed the Director’s decision and remitted it to him for reconsideration. In this appeal to the House the Director contends, as he contended below, that the decision was not unlawful. Mr Robert Wardle, the Director who made the decision under review, has now been succeeded in his office, but this change of office-holder does not affect the issue to be decided. The respondents are public interest organisations. The House has received written submissions on behalf of JUSTICE.

The facts

2.  By sections 108-110 of the Anti-terrorism, Crime and Security Act 2001 it was made an offence triable here for a UK national or company to make a corrupt payment or pay a bribe to a public officer abroad. The payment or bribe must not be authorised or approved by the officer’s principal. The enactment of these sections gave effect to the UK’s obligation under the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions (1997).

3.  Under section 1(3) and (5) of the Criminal Justice Act 1987 the Director “may investigate any suspected offence which appears to him on reasonable grounds to involve serious or complex fraud", and “may … institute and have the conduct of any criminal proceedings which appear to him to relate to such fraud". In performing his functions the Director is subject to the superintendence of the Attorney General (section 1(2) of the Act). On 29 July 2004 the Director, as authorised by section 1(3), launched an investigation into allegations of corruption against BAE Systems Plc. That company has observed but not participated in these proceedings. No finding has been made against it. One aspect of the investigation concerned what is known as the Al Yamamah contract, a valuable arms contract between Her Majesty’s Government and the Kingdom of Saudi Arabia for which BAE was the main contractor. The contract contained a confidentiality clause binding on both Governments. A valuable extension to the contract, providing for the supply of Typhoon aircraft, was in course of negotiation in 2004-2006. Between 30 July 2004 and 14 December 2006 a team of SFO lawyers, accountants, financial investigators and police officers investigated the allegations of corrupt payments allegedly made by BAE in connection with this contract. During the investigation the SFO issued a number of statutory notices to BAE seeking information and disclosure. The fifth of these notices, issued on 14 October 2005, required BAE to disclose details of payments to agents and consultants in connection with the Al Yamamah contract.

4.  In response to this notice BAE wrote an unsolicited letter dated 7 November 2005 to the Attorney General, Lord Goldsmith QC, enclosing a memorandum marked “Strictly Private and Confidential". The gist of the memorandum was that disclosure of the required information would adversely affect relations between the UK and Saudi Arabia and jeopardise the Al Yamamah contract because the Saudis would regard it as a serious breach of confidentiality by BAE and HMG. The letter said that the issues canvassed in the memorandum had been discussed with Sir Kevin Tebbit, Permanent Under-Secretary of State at the Ministry of Defence, who on the same date, 7 November, telephoned the Legal Secretary to the Law Officers (hereafter “the Legal Secretary”) to express his view that this was a unique case in which the public interest should be considered at an early stage. The Legal Secretary replied to BAE. He said that the Law Officers were aware of BAE’s letter but had not read the memorandum, that it was not appropriate for representations to be made privately to the Law Officers, that the proper recipient of such representations was the SFO and that the letter and memorandum had been forwarded to the Director.

5.  Mr Cowie, the SFO’s Case Controller, wrote to BAE’s solicitors on 15 November 2005. In his letter he complained of BAE’s failure to comply with the fifth notice and questioned why the pursuit by the SFO of its independent powers of investigation could properly be regarded as a breach of confidentiality on the part of HMG. He made reference to the OECD Convention on Bribery and quoted the terms of article 5 of the Convention:

“Investigation and prosecution of the bribery of a foreign public official shall be subject to the applicable rules and principles of each Party. They shall not be influenced by considerations of national economic interest, the potential effect upon relations with another State or the identity of the natural or legal persons involved.”

Mr Cowie invited BAE’s solicitors to supply any material there might be pertaining to the national interest.

6.  On 15 November 2005 Sir Kevin Tebbit telephoned the Director to tell him that the investigation created a serious risk of damage to important aspects of the UK’s relationship with Saudi Arabia. He suggested that the question of where the balance of the public interest lay should be considered at that stage. The Director considered that if he was to insist on compliance by BAE with the fifth notice he should be in a position to inform the company that its public interest representations had been fully considered with all the relevant authorities. He therefore sought the advice of the Attorney General. On 30 November 2005 the Secretary to the Cabinet asked the Attorney General whether it would be proper for the government to make any representations as to the public interest considerations raised by the SFO investigation and, if so, whether such representations could be made at the investigation stage. The Attorney General said he would consider this and respond. On 2 December 2005 the Attorney General and the Director decided that it would be appropriate to invite the views of other Government ministers, in order to acquaint themselves with all the relevant considerations, so as to enable them to assess whether it was contrary to the public interest for the investigation to proceed. This practice is familiarly known as a “Shawcross exercise", since it is based on a statement made by Sir Hartley Shawcross QC, then the Attorney-General, in the House of Commons on 29 January 1951. The effect of the statement was that when deciding whether or not it is in the public interest to prosecute in a case where there is sufficient evidence to do so the Attorney General may, if he chooses, sound opinion among his ministerial colleagues, but that the ultimate decision rests with him alone and he is not to be put under pressure in the matter by his colleagues.

7.  On 6 December 2005 the Attorney General initiated a Shawcross exercise. The Legal Secretary, on his behalf, wrote to the Cabinet Secretary inviting ministers to provide any information which might be relevant to the decision whether it was in the public interest to continue the investigation. The letter quoted article 5 of the OECD Convention, and referred to the Attorney General’s assurance to an OECD working group evaluating the UK’s compliance with the Convention in 2004 that “none of the considerations prohibited by Article 5 would be taken into account as public interest factors not to prosecute” foreign bribery cases. The letter made clear that the final decision would be one for the SFO and the Attorney General acting independently of government and having due regard to the OECD Convention. The letter was copied to a number of official recipients. On 7 December 2005 the Director spoke to BAE’s Group Legal Director, who wished to make further representations as to the public interest. The Director told him that as BAE was the suspect in a criminal investigation it would be better if he made any representations in writing, by the following day. The Director indicated that since BAE was a suspect he did not think he would give much weight to the company’s views on the public interest in continuing the investigation.

8.  BAE sent a further memorandum to the Director on 8 December 2005. The Cabinet Secretary responded to the Attorney General’s invitation on 16 December, attaching a note which had been seen by the Prime Minister, the Foreign Secretary and the Defence Secretary, and which had their support. The note was largely directed to the importance of the commercial relationship between the UK and Saudi Arabia but also stressed the importance of the UK’s relationship in the context of national security, counter-terrorism and the search for stability in the Middle East. Saudi Arabia was described as “a key partner in the fight against Islamic terrorism". The note accepted that the decision was one for the Attorney General and the Director acting independently of government but asked them to consider the points made in the note.

9.  After receipt of the Cabinet Secretary’s letter and note, Mr Cowie drafted a brief to the Director (copied to Helen Garlick, Assistant Director) dated 19 December. It pointed out that “The SFO must investigate crime. It has a reasonable belief that crime has been committed. It must investigate all reasonable lines of enquiry and do so in the light of our domestic and international obligations". He suggested that article 5 of the OECD Convention (and another instrument yet to be ratified) envisaged an independent role for law enforcement “outside of economic or political considerations". He addressed the question how the public interest in the rule of law might be balanced against economic and political consequences. He went on to question whether the Cabinet had given full consideration to the public interest in the rule of law, the independence of the SFO and the Ministry of Defence Police, all of which could suffer reputational damage if it emerged that an investigation by the SFO had been cut short.

10.  On 11 January 2006 the Director and other SFO officers attended a meeting with, among others, both Law Officers. He expressed his view that the Al Yamamah investigation should continue. The Attorney General reached the same conclusion. By letter dated 25 January 2006 the Legal Secretary informed the Cabinet Secretary that the Attorney General, in consultation with the Director, had concluded that it was in the public interest for the investigation to continue.

11.  The Al Yamamah investigation did continue and in the autumn of 2006 the SFO intended to investigate certain bank accounts in Switzerland to ascertain whether payments had been made to an agent or public official of Saudi Arabia. The SFO had obtained the co-operation of the Swiss authorities. This attempt to gain access to Swiss bank information provoked an explicit threat by the Saudi authorities that if the Al Yamamah investigation were continued Saudi Arabia would withdraw from the existing bilateral counter-terrorism co-operation arrangements with the UK, withdraw co-operation from the UK in relation to its strategic objectives in the Middle East and end the negotiations then in train for the procurement of Typhoon aircraft.

12.  On 29 September 2006 the Cabinet Secretary wrote to the legal Secretary to update him “on some significant recent developments of which we think the Attorney General should be made aware". Reference was made to the public interest considerations canvassed in the Cabinet Secretary’s earlier letter of 16 December 2005, which were said still to apply “and if anything the significance of UK/Saudi co-operation on counter-terrorism and the broader search for stability in the Middle East has become even more compelling". There were said to be strong indications that severe damage to the public interest, over and above the national economic interest, was now imminent in relation to counter-terrorism and the bilateral relationship. The Attorney General showed this letter to the Director at a meeting on 30 September. On 3 October the Legal Secretary replied to the Cabinet Secretary, expressing the Attorney General’s firm view that if the case against BAE was soundly based, which the SFO were reviewing, “it would not be right to discontinue it on the basis that the consequences threatened by the Saudi representatives may result".

13.  The Attorney General was concerned to ensure that the case against BAE was indeed soundly based and so, following the meeting on 30 September 2006, the SFO undertook further work. In particular, the Attorney General considered that evidence needed to be obtained to show who (under the Saudi constitutional arrangements) was the principal contracting party in relation to the Al Yamamah contract and whether the financial arrangements at the centre of the investigation had been approved or authorised by that principal. In a letter to the Legal Secretary after the meeting, the Assistant Director dismissed the Saudis’ reliance on the confidentiality clause in the Al Yamamah contract and asserted that the SFO’s duty was to continue to investigate alleged corruption despite the acknowledged importance to the company and the MOD of maintaining commercial relations with the Kingdom of Saudi Arabia. On 27 November 2006 the Director agreed to try to obtain evidence from Saudi Arabia to address the issue of the principal’s consent.

14.  To that end, the Director held the first of three meetings with HM Ambassador to Saudi Arabia (Sir Sherard Cowper-Coles) on 30 November 2006 to explore with him the possibility of obtaining evidence on this issue. At this meeting the Ambassador told the Director that the threats to national and international security were very grave indeed. He said that “British lives on British streets were at risk".

15.  At the beginning of December 2006 the Director and his case team proposed to explore whether BAE might plead guilty to corruption on what was called a “limited basis". This proposal was discussed with the Attorney General, who had no objection, but on 5 December it was suggested to the Director (and he agreed) that the Prime Minister should be informed of this changed approach. On the same day Prince Bandar, National Security Adviser to the Kingdom of Saudi Arabia, met officials of the Foreign and Commonwealth Office in Riyadh.

16.  On 6 December 2006 the Director agreed with the Legal Secretary what the latter should say to the Prime Minister’s Private Secretaries, and later that day the Legal Secretary telephoned the Director to say that he had approached the Prime Minister’s Office and been told that the Prime Minister wished to make further representations before BAE was approached. This caused some delay and the Director put off a proposed visit by the SFO to BAE.

17.  The further representations made by the Prime Minister were set out in a “personal minute” from the Prime Minister to the Attorney General dated 8 December 2006. The Prime Minister asked the Attorney General to consider again the public interest issues raised by the ongoing investigation. In his letter the Prime Minister expressed his judgment, based on evidence and the advice of colleagues, that recent developments had given rise to a real and immediate risk of a collapse in UK/Saudi security, intelligence and diplomatic co-operation, which was likely to have seriously negative consequences for the UK public interest in terms of both national security and the UK’s highest priority foreign policy objectives in the Middle East. The Prime Minister expressed strong support for the OECD Convention, but considered that his primary duty was to UK national security, and on that basis urged the Attorney General to consider the public interest in relation to the pursuit of the investigation. The papers attached to the Prime Minister’s minute were: (1) a note dated 23 November 2006 on the value of Saudi co-operation in the field of counter-terrorism by Sir Richard Mottram, Permanent Secretary for Security, Intelligence and Resilience in the Cabinet Office, which drew on material from the Secret Intelligence Service and the Security Service, and (2) a letter dated 24 November 2006 by Sir Peter Ricketts, Permanent Under-Secretary at the FCO, on the importance of Saudi Arabia to the UK’s efforts to win peace and stability in the Middle East. It was arranged that the Director should attend at the Attorney General’s office on Monday 11 December to read the Prime Minister’s minute. Before that meeting, on 8 December, the Director had a second meeting with the Ambassador, who confirmed his view of the damage to national security which any continuation of the investigation would in his assessment inevitably cause. He said that lives were at risk.

18.  On 11 December the Director met the Legal Secretary and read the Prime Minister’s minute and its attachments. On the same day the Prime Minister and the Attorney General met. The effect of the meeting was summarised in a letter dated 12 December from the Prime Minister’s Principal Private Secretary to the Legal Secretary. The Attorney General pointed out that he had to weigh the points in the Prime Minister’s minute against other considerations. He was concerned that halting the investigation would send a bad message about the credibility of the law in this area, and look like giving in to threats. He felt justified, however, in questioning whether the grounds for the investigation were soundly based and in exploring legal options for resolving the case as quickly as possible. The Prime Minister felt that higher considerations were at stake, as indicated in his minute. It was important that the Government did not give people reason to believe that threatening the British system resulted in parties getting their way. But the Government also needed to consider the damage done to the credibility of the law in this area by a long and failed trial, and its good reputation on bribery and corruption issues compared with many of its international partners. The Prime Minister recognised that supervision of the investigation was a matter for the Attorney General but considered this the clearest case for intervention in the public interest he had seen. The Attorney General said he would consider the Prime Minister’s representations, with due regard to the need for separation between law and policy. The Director did not attend this meeting and did not see a copy of the letter until after he had made his decision on 14 December.

19.  The Attorney General decided that in discharge of his function of superintending the SFO he should himself review the case in detail, with the benefit of full briefing from SFO investigators and lawyers, sight of the underlying material and advice from independent leading counsel. His review was carried out over the period 12-14 December 2006 and involved the consideration of many files.

20.  On 12 December the Director attended a third meeting with the Ambassador. Also present were the Solicitor General and the Legal Secretary. The Ambassador repeated his view that the risk of Saudi Arabia withdrawing its co-operation with the UK in countering terrorism was real and acute. He expressed the view that there was a real threat to British lives.

21.  On 13 December 2006 the Director attended a meeting with the Attorney General, the Solicitor General, the Legal Secretary and Helen Garlick (the Assistant Director). She made a record of the meeting the next day. In answer to a question from the Attorney General, the Director said that in the last few days representations on public interest had been made with renewed and increasing force by HM Ambassador. If further investigation would cause such damage to national and international security he accepted that it would not be in the public interest. What he could not accept was the view that there was insufficient evidence to continue, although he would wish to consider that aspect and explore it with counsel. The Attorney General then asked Helen Garlick for her view. She replied that the SFO had never sought to place the interests of the investigation above those of national and international security. While the SFO was qualified to make judgments on the law and evidence, on questions of national security it had to take the advice of others. The SFO’s only source was the Ambassador, but he had said that “British lives on British streets were at risk". If the Saudi action caused “another 7/7” how could the SFO say that its investigation, which might or might not result in a successful prosecution, was more important? The Attorney General expressed doubts (not shared by the Director) about the strength of the case, and was recorded by the Assistant Director as being “extremely unhappy at the implications of dropping it now". The Attorney General and the Director agreed that the latter should reflect on his decision overnight.

22.  The Director discussed the matter further with his case team that evening. On the morning of 14 December he confirmed to the Legal Secretary that his conclusion remained the same: that in his view continuing the Al Yamamah investigation would risk serious harm to the UK’s national and international security. He accordingly decided that the Al Yamamah investigation (but not other investigations pertaining to BAE) should be discontinued. His decision was announced in a press release the same day. It read:

“The Director of the Serious Fraud Office has decided to discontinue the investigation into the affairs of BAE SYSTEMS Plc as far as they relate to the Al Yamamah defence contract with the government of Saudi Arabia.

This decision has been taken following representations that have been made both to the Attorney General and the Director of the SFO concerning the need to safeguard national and international security.

It has been necessary to balance the need to maintain the rule of law against the wider public interest.

No weight has been given to commercial interests or to the national economic interest".

The Attorney General made a statement in Parliament the same day. He referred to the strong public interest in upholding and enforcing the criminal law, in particular against international corruption, and also to the views of the Prime Minister and the Foreign and Defence Secretaries as to the public interest considerations raised by the investigation. They had, he said,

“expressed the clear view that continuation of the investigation would cause serious damage to UK/Saudi security, intelligence and diplomatic co-operation, which is likely to have seriously negative consequences for the United Kingdom public interest in terms of both national security and our highest priority foreign policy objectives in the Middle East. The heads of our security and intelligence agencies and our ambassador to Saudi Arabia share this assessment.”

The Attorney General pointed out that article 5 of the OECD Convention precluded him and the SFO from taking into account considerations of the national economic interest or the potential effect upon relations with another state, and added that “we have not done so".

The judgment of the Divisional Court