What to do next if the inspector calls – dawn raids and unannounced visits

Last month it was reported that the SFO had not conducted any ‘dawn raids’ in the 12 months to 31 March 2012, a statistic which compares dramatically with the average of around 50 a year in the three preceding years. The reason for the impasse has been attributed to the implications of mistakes made in the Tchenguiz brothers investigation but this has been denied by the SFO. Whatever the reason, such news serves as a reminder of the investigator’s favoured technique of acting without prior notice to obtain evidence from a suspect or custodian of material that might be relevant to an investigation.

The power of search under the authority of a warrant granted by a court is one which the SFO holds in common with almost all investigative agencies. In fact, while the SFO has not used its powers of search over the last year or so, the FSA has conducted more searches than it used to, in line with its credible deterrence strategy. The police and HMRC will often use search warrants as well as knocking on doors to gain information without using statutory powers. Different investigating bodies have alternative powers which can be used instead of search warrants; the SFO section 2 Notice, for example, which may be exercised without notice and requires no judicial involvement. It may require answers to questions and production of documents on a “here and now” basis. The FSA has similar powers while HMRC and the police are constrained to apply to a court for a statutory production order.

In some cases you may be compelled to answer questions under a statutory notice served without notice. You are always entitled to take legal advice before answering questions. In any situation where you are faced with investigators seeking to obtain documents, information or answers to questions, there are some important guiding principles to follow.

Check the legal power – In many cases there will be a warrant or similar document from which you can establish the powers being exercised, the details of what is being sought and you can check that the right address is on the document! Some investigators, such as the FSA or HSE, do not need a warrant for some unannounced inspections – always get the officer to explain the power they are exercising and provide any documents to which you are entitled.

Consider business continuity whether during the search or following it – Investigators should be sympathetic to your need to keep the business running while they conduct their investigation. For example, offer them an empty meeting room to use as a hub. Many agencies are entitled to ‘seize and sift’ but if you are able to manage the situation, you should consider whether there are ways that material/equipment essential to the day to day running of the business can be dealt with without it being removed.

Make sure they only inspect what they are entitled to – In some cases, personal or confidential material may be excluded from search powers and legally privileged material will almost always be. You may have obligations to clients/customers to retain their records confidentially and not all investigative powers trump those obligations. But remember:

Do not obstruct the investigators – You may commit a serious criminal offence and the investigators will pursue the search in any event.

Always get legal advice – The above demonstrates the need for advice dealing with the particular circumstances of your investigation. It is a hugely stressful experience and can have important implications for your role in an ongoing investigation. Ideally, you will have a prepared strategy for dealing with an unannounced visit by investigators. However, if you are taken by surprise, it is vital that you obtain legal advice as soon as possible about the scope of the search warrant or other power being exercised and take steps to manage it effectively.

You can contact Corker Binning 24 hours a day via our office number 0207 353 6000. Our lawyers are experienced in dealing with dawn raids/unannounced visits of all kinds. See FSA investigations, business crime and fraud, and insider dealing and market abuse for more information.