Faerman v Director of the Serious Fraud Office

Under Proceeds of Crime Act 2002, a disclosure order may be made in a civil recovery investigation where the statutory grounds are satisfied, even though the investigation’s target is outside the jurisdiction and cannot receive an enforceable information notice. The order must not be treated as authorising an information notice to an overseas person. Removing the penal notice does not convert such a notice into a valid statutory notice or cure the lack of territorial jurisdiction. A voluntary request for information remains permissible. Material non-disclosure on a without-notice application does not automatically require discharge. The court must conduct a broad, merits-based assessment, including the likely result had disclosure been made, bad faith, prejudice and the public interest.

The Serious Fraud Office obtained a property freezing order and a disclosure order under Proceeds of Crime Act 2002 in connection with a civil recovery investigation concerning property in England and suspected proceeds of bribery. The order named Julio Faerman, who was resident in Brazil, and was later amended to permit service through his lawyers.

The SFO served an information notice on Mr Faerman through his English solicitors, with the penal notice redacted, and later withdrew it. Mr Faerman applied to discharge the disclosure order, relying on Serious Organised Crime Agency v Perry, the SFO’s failure to disclose that decision at the original without-notice hearing, and the alleged invalidity of the order. The central issues were whether the order itself was invalid, whether the notice was authorised, and whether material non-disclosure required discharge.

1. The application was dismissed. The disclosure order made under Proceeds of Crime Act 2002 remained in force. No order for costs was made.
2. Serious Organised Crime Agency v Perry established that the authority under s.357 to issue an information notice could be exercised only against persons within the jurisdiction. It did not invalidate a disclosure order merely because the investigation’s target was overseas. The remedy in Perry was a declaration that the order did not authorise notices to persons outside the jurisdiction.
3. The statutory requirements in s.358 were satisfied. The application identified information of substantial value concerning the source and location of recoverable property. The evidence also showed that financial institutions and professional advisers within the jurisdiction were potential recipients. The fact that Mr Faerman was the only named respondent did not mean that notices could be issued only to him. The practice recognised in NCA v Simkus and others supported that conclusion.
4. The SFO acted unlawfully in serving an information notice directed to Mr Faerman while he was in Brazil. Redacting the penal notice did not comply with Perry. The statutory notice was mandatory in character and derived its force from the statutory criminal sanction. Service on Mr Faerman’s solicitors did not alter the fact that the notice was directed to him. The authorities of R (KBR) v SFO and R v Jimenez v First Tier Tribunal concerned materially different statutory schemes and did not assist the SFO.
5. The SFO was entitled to withdraw the notice and make a genuine voluntary request for information. No authority was required for such a request.
6. There had been material non-disclosure because the SFO should have drawn Perry to the attention of the first judge. However, discharge was discretionary rather than automatic. Applying the approach in Brinks Mat v Elcombe, Jennings v Crown Prosecution Service (Practice Note) and NCA v Simkus and others, the order should continue because it would probably have been made had Perry been disclosed, the omission was not in bad faith, Mr Faerman suffered no prejudice, and there was a compelling public interest in maintaining the investigation.

First-instance application to discharge a disclosure order made by Supperstone J on 29 January 2019 and amended by Martin Spencer J on 29 March 2019. The application was dismissed by the Administrative Court.