Case No. CO-934-2005-&-CO-3620-2005

“having devised the above mentioned-scheme and artifice to defraud and to obtain money and property by false and fraudulent pretences, representations and promises, and to deprive Natwest and GNW of their intangible right to an employee’s honest services for the purpose of executing such scheme and artifice transmitted and caused to be transmitted by means of wire communication in interstate commerce writings, signs, signals, pictures and sounds, including the following”, [then reference is made to one fax from Houston to London, five communications from the UK to Texas, and one wire transfer from Houston to the Cayman Islands: these communications are represented by the specific charges at counts 1 – 7].38.One of the planks of Mr Jones’ argument in the judicial review is that the Director failed to appreciate or understand that a decision taken by the City of London Police in 2002 not to investigate the allegations against the defendants was based on a “fundamental misunderstanding” of the nature of the case, namely that the crime alleged was a conspiracy to defraud Enron, whereas it was in fact a conspiracy to defraud the Bank. The following events occurring in September and October 2002 are therefore of some importance. 39.First, the City of London Police “Fraud Case Logging system” contains a record of an allegation received on 27 September 2002 to the effect that the defendants had defrauded Enron of $27 million. The record refers to the Texas indictment. Then on 1 October 2002 a City of London Police “New Case Report” was filled out with the same allegation. On 8 October 2002 Detective Superintendent Farrow filled out a crime classification document classifying the allegation as “No Crime” on the basis that “the offence was committed outside the jurisdiction of the police force in which it was recorded”. On 23 October a report was filed with FRED (which I understand to be a police computer record system) with the note “conspiracy to defraud enquiry is being pursued by US authorities”.40.Now I may move forward to 2004. A federal Grand Jury sitting in the Southern District of Texas had returned an indictment charging Fastow on multiple counts, and on 14 January 2004 he pleaded guilty to two counts including conspiracy to commit wire fraud. On the same day he entered into a plea agreement, just as Kopper had done. Amongst many other things he thereby obliged himself (paragraph 7(d)) to “testify truthfully” in any proceedings as directed by the Department of Justice. In a statement exhibited to the agreement Fastow provided “a factual basis for my plea of guilty”. It includes the following:“14. Due to a dramatic increase in the market price of Enron stock, the value of Swap Sub (whose primary asset was Enron stock) had also increased dramatically. I was, however, barred from profiting from any increase in the value of Enron stock held by Swap Sub. In approximately February 2000, I and others, including three bankers employed by NatWest, participated in a scheme to extract this increased value by defrauding Enron and NatWest.15.Enron paid $30 million for the Swap Sub buyout. That price was based on my misleading representation to Enron that the limited partners of Swap Sub had agreed to sell their interests in Swap Sub for $20 million and $10 million, respectively. In fact, NatWest had agreed to sell its interest for only $1 million, not $20 million. I knew that the NatWest bankers induced NatWest to sell its interest in Swap Sub for $1 million at a time they knew the interest was worth significantly more.16.As a result of their participation in the scheme, the three NatWest bankers together received approximately $7.3 million…” February 2004 – May 2005 41.On 13 February 2004 the United States Department of Justice, acting by what was known as the Enron Task Force, submitted a request for the extradition of the defendants to face charges in the United States District Court for the Southern District of Texas pursuant to the Texas indictment. As I have said the request was supported by Mr Hanusik’s affidavit of 21 January 2004 (it seems he swore an affidavit in the case of each of the three defendants: we have that which related to the defendant Darby within Appendix A to the defendants’ solicitors’ letter to the Attorney General of 26 October 2004). The voluminous exhibits include the agreements with Kopper and Fastow, the indictment, the affidavit of Mr Hays of the FBI, and other affidavits. Now, it will be recalled that the United States is designated for the purposes of s.84 of the 2003 Act by order of the Secretary of State. The consequence (see s.84(7)) is that the judge at the extradition hearing was not required by s.84(1) to decide “whether there [was] evidence which would be sufficient to make a case requiring an answer by the person if the proceedings were the summary trial of an information against him”; indeed he was required not to do so. In fact, as District Judge Evans was to state on 15 October 2004, although the case proceeded under the 2003 Act the extradition request had been prepared to meet the requirements of Schedule 1 to the Extradition Act 1989 (“the 1989 Act”), which in effect required material to be produced to show a case to answer. 42.On 31 March 2004 the Secretary of State, pursuant to s.70(9) of the 2003 Act, sent the necessary documents to the Bow Street Magistrates Court from which on 16 April 2004 warrants were issued under s.71 for the arrest of each defendant. On 23 April the defendants were produced at Bow Street. The court fixed 15 June 2004 for the commencement of the extradition hearing and the defendants were released on bail. 43.In fact the hearing at Bow Street opened on 21 June. Charges had been prepared to reflect the Texas indictment. Originally they were three in number, but in the event only the first was proceeded with. It charged all three defendants that “between [31 January 2000] and [1 September 2000] [they] conspired together and with others to defraud National Westminster Bank PLC”. On 25 June 2004 District Judge Evans delivered a preliminary ruling upon the question whether the offences specified in the request were extradition offences. (The specified offences were seven counts of “wire fraud” set out in the Texas indictment – each referring to a particular “wire transaction”, and together making up the seven communications to which I have already referred.) The judge directed himself, correctly, that he had to consider only s.137(1) and (2) of the 2003 Act. He found that the Texas indictment identified conduct which occurred in the relevant category 2 territory, that is of course the United States. He stated:“The fact that each of these defendants are [sic] United Kingdom nationals, living and working in England, and that it was a United Kingdom Bank which suffered the loss does not matter. The fact that the conduct of each of these defendants, if looked at individually, might show that, say 95% of that conduct was within the United Kingdom and only 5% within the category 2 territory does not matter. S.137(2)(a) does not require all the conduct to have occurred in the category 2 territory. I am satisfied that s.137(2)(a) is satisfied.”44.Having decided the questions arising under s.78(4) of the 2003 Act in the affirmative the judge was required by s.78(7) to proceed under s.79. He indicated that he would do so at the next hearing. The judge’s rulings pursuant to s.79 were ultimately given on 15 October 2004. 45.On 23 July 2004 the defendants’ solicitors wrote to the Director. This letter marks the first throw in what was to become the judicial review case. After setting out something of the history the solicitors say this:“[W]e invite you to conduct an investigation as to whether or not a prosecution should be brought in the UK against these three clients. It seems to us that in accordance with the comments of the Home Secretary which were widely quoted in the press, namely that the UK would prosecute any alleged offender where there was evidence of an offence having been committed in the UK, … this is exactly what should happen in this case.”A good deal of correspondence with Members of Parliament was entered into on the defendants’ behalf, and the SFO made enquiries of the Crown Prosecution Service. The defendants’ solicitors wrote again to the Director on 25 August 2004. They said, “[S]omeone needs to both investigate and, if appropriate, prosecute these individuals in England”, and pointed out that at the Bow Street court counsel for the United States government had conceded that “victim, conduct and alleged perpetrators were all in the UK, and that there was no doubt that the UK could claim jurisdiction over these matters”. And there is, indeed, no dispute but that the English courts possess jurisdiction to try the defendants on the conspiracy charge framed to reflect the Texas indictment.46.There were some chasing letters from the defendants’ solicitors. The Director sent a substantive reply on 24 September 2004 but that was preceded in time by a “Vetting Note” prepared by the Director and dated 22 September 2004, setting out reasons why he would not undertake an investigation under s.1(3) of the 1987 Act. Some reliance is placed on this by Mr Jones. I should set out these passages:“The losers were Enron and National Westminster Bank…[B]ut for the evidence of the American investigation I cannot see that there would be reasonable grounds for suspecting an offence of serious or complex fraud… The report by RBS to the police makes it clear that there may be a fraud – probably on Enron although possibly too on NatWest but it is clear that at that stage there were insufficient grounds for commencing a criminal investigation in the UK. Even if there were the evidence was in America and it was entirely logical to leave it to the Enron Task Force…Whether Kopper and Fastow would be available to give evidence in the United Kingdom is presumably doubtful but even if they were, are there any public interest considerations which require us to take over this matter with a view to prosecuting in the United Kingdom?I do not think there are. The most compelling argument advanced by [the solicitors] was to quote the Home Secretary… when… he said ‘Had we evidence in this country of a crime committed here then of course the police and the Attorney General would have taken action’. That is of course right and any crime committed in the United Kingdom should be prosecuted if the evidence is available. But here we are dealing with a different matter. We are dealing with a crime that by its nature is committed over more than one jurisdiction. Prosecuting and investigating authorities competing for the right to try it is unlikely to be in the public interest. On the contrary. It is important that we cooperate and coordinate such investigations and prosecutions and, where possible, they are all tried before the same Court. In this case Fastow and Kopper are to be tried in the United States and are able to give evidence against the three above. Any investigation in this country would lead to further delay. I note that the defendants do not admit their guilt.For these reasons I reject this case.”47.The relevant passages in the Director’s reply of 24 September 2004 to the solicitors are as follows:“This is a case where the evidence is to be found in the United Kingdom, Cayman Islands and the United States of America. In particular the other participants in the alleged conspiracy – Kopper and Fastow – are to be dealt with in, and are available to give evidence in, the United States. In these circumstances I think it more likely to be in the interests of justice for your clients to be tried in the United States.In the correspondence you quoted the Home Secretary in connection with an entirely different case as saying ‘Had we evidence in this country of a crime committed here then of course the police and the Attorney General would have taken action’. That I am sure is right but… I do not think [the Home Secretary] was necessarily suggesting that an investigation would inevitably follow in every circumstance where [there is] some evidence that an offence has been committed here where the evidence shows that the facts may give rise to criminal offences committed within two or possibly three jurisdictions simultaneously.… The previous involvement of [the SFO] was to assist the United States Authorities in obtaining evidence in this country for the Enron investigation generally. There has been no previous investigation by this Office under s.1 Criminal Justice act 1987 into your clients and my understanding of the position of [the FSA] is that they did not commence an investigation although they did refer the matter to the SEC.In the circumstances I do not intend to commence an investigation under s.1 Criminal Justice Act 1987.”48.The extradition hearing at Bow Street was resumed between 28 and 30 September 2004, when substantial oral evidence was given. Much of it related to the conditions in which the defendants would await and face trial in Texas, and to their personal circumstances. I shall deal with those matters later as necessary. Then, as I have indicated, on 15 October 2004 District Judge Evans delivered judgment giving his rulings on the issues which arose under s.79 of the 2003 Act. I should first cite these introductory passages from the judgment:“The defendants put forward the proposition… that these extradition proceedings ought never to have been brought. The defendants are UK citizens working in the UK, accused of defrauding their UK employers… At any trial it will be necessary to explore whether the value attributed to ‘Swap Sub’, at the time of its sale, was fair and reasonable. The evidence relevant to that is largely to be found in London. Mr Jones… says… these proceedings are an abuse of the processes of the UK court. The UK regulatory and prosecuting agencies are said to have surrendered improperly their statutory responsibilities to [the Enron Task Force].…In my judgment the defence submissions place too great an emphasis on the sale of Swap Sub by the bank, and ignore the very real US links and the conduct which took place in the US. At any trial it will be necessary to consider the defendants’ involvement in Southampton K Co… It seems to me that there is a very real basis, on the facts as alleged, for the case to be tried in Houston. The scheme could not have got off the ground without Fastow, Kopper and Enron’s involvement… Of course, these defendants could have been tried here but it would seem they are not going to be… The reality is that were the SFO now to commence an investigation, then by the time they were ready to launch a prosecution, there would be defence submissions inviting the court to stay the prosecution as an abuse because of what by then would be the considerable delay. Additionally and crucially Kopper and Fastow are important witnesses for the prosecution. They are readily available to give evidence in the States but not in the UK…”Encouraged by counsel the judge proceeded to indicate that he accepted that he should entertain the submissions on abuse – as indeed he had just done – without distinctly holding that he possessed the jurisdiction to do so. We have heard submissions on this issue of jurisdiction, and I must return to it. The judge then went on to consider, pursuant to ss.79(1)(c) and 82 of the 2003 Act, whether on the facts the defendants’ extradition was barred by the passage of time. He held there was no basis on which to conclude that the American authorities had “deliberately engineered” an element of delay so as to be in a position to bring their case for extradition under the 2003 Act rather than its predecessor the 1989 Act. He dismissed other points that were taken by Mr Jones, observing that it was not shown that any defence witness might be unavailable owing to the passage of time, and that assertions of “oppression” were if anything relevant to the argument on abuse rather than delay. Thus he concluded that the defendants’ extradition was not barred under ss.79(1)(c) and 82.49.The judge dealt next with the issue of the proposed extradition’s compatibility with the defendants’ human rights arising under the 1998 Act, as s.87 of the 2003 Act enjoined him to do. He observed that ECHR Articles 5, 6 and 8 were relied on, but noted Mr Jones’ acceptance that he had no case under Article 5 unless he succeeded on Article 8. In relation to Article 6 the judge directed himself that the appropriate question was whether the defendants faced “a clear risk of suffering a flagrant denial of a fair trial” in Texas. He proceeded to discuss the case under a number of heads which at this stage I will merely identify: bail, disclosure/discovery, inadequate time and/or facilities to prepare the defence, representation by counsel, defence witnesses, superseding indictments and specialty, the sentencing guidelines, Fastow and Kopper and their plea bargains, publicity and potential jury bias, and pressure to plead guilty. He referred to the evidence of Mr McNabb, a federal defence attorney who was called as an expert witness for the defendants and opined that they would not have a fair trial in Texas. The judge said of him:“I felt that rather than give disinterested evidence he was (maybe unconsciously) pressing home the defence agenda. It must be rather depressing for him to practice [sic] as a defence attorney in the Federal Courts when he is of the opinion that fair trials and justice are not available.”50.The judge’s conclusions on Article 6 and 8 are somewhat conflated. He said:“I accept the defendants could have been prosecuted in the UK. There was, however, no obligation to prosecute them in the UK. They are not going to be prosecuted in the UK. There is a good and proper basis for prosecuting them in the US. The process of extradition is ‘necessary in a democratic society’ and proportionate.Whether considered separately or in combination the arguments put before me fail to identify a clear risk to these defendants of suffering a flagrant denial of a fair trial.”The judge lastly returned to the abuse issue and stated his conclusion that there had been no manipulation of court processes nor any improper motive on the part of the prosecutor, and hence there was no abuse. He duly sent the case to the Secretary of State under s.87(3) of the 2003 Act for his decision whether the defendants were to be extradited; a decision that would not be made (after the grant of successive extensions of time under s.99(4)) until 24 May 2005. 51.The judge’s rulings given on 21 June and 15 October 2004 are the subject of appeal by Mr Jones for the defendants pursuant to s.103 of the 2003 Act.52.On 26 October 2004 the defendants’ solicitors wrote to the Attorney General. The letter, written on leading counsel’s advice, quotes a newspaper article concerning the Abu Hamza case in which it was stated, “[the Attorney General] is understood to favour trials in the British jurisdiction if the evidence justifies them”. There is then a recital of some of the history of the matter, followed by the contention (under the heading “The lacuna in the Extradition Act”) that“[t]he 2003 Act has removed the general discretion of the Home Secretary as to whether an individual should be extradited. It has not replaced this discretion with a power in the courts to insist on a UK trial.”A transcript of the Bow Street proceedings is enclosed, together with copies of correspondence with the Director and other letters. Trenchant and detailed complaints are made of the Director’s decision not to conduct an investigation under s.1(3) of the 1987 Act. The underlying theme is that it is quite wrong for the defendants to have to face trial in the United States; if they are to be tried at all, it should be in England, and the Attorney is invited “to take action to ensure that this happens”. 53.The Attorney General’s office replied on 16 December 2004, shortly indicating that the Attorney did not consider that “it would be right to interfere with the statutory process that is now under way”, that is, the Secretary of State’s awaited decision whether the defendants were to be extradited. There is a further letter from the Director, to the defendant Darby’s Member of Parliament, dated 23 December 2004. It was stated that the accusation was of a conspiracy to defraud “not only the NatWest Bank… but also Enron…”, and “[w]ithout the evidence provided by the United States there would be insufficient grounds for an investigation in this Country” – propositions hotly contested by Mr Jones in the judicial review. Finally, the Director acknowledged that he owed a duty to take the ECHR into account in making any decision, but“I do not think a refusal to investigate an offence in itself contravenes your constituent’s human rights. Whether the extradition is in breach of [the ECHR] is a matter for consideration by the Home Secretary.”54.The application for permission to seek judicial review of the Director’s decision not to open an investigation under s.1(3) of the 1987 Act was lodged on 14 February 2005. Mr Jones has made an unnecessary mystery about what actually constituted the decision. He says it was “a decision of unknown date in early December 2004, communicated in letters of 16 and 23 December 2004”. These are the letters respectively from the Attorney, and to the MP, which I have described. In fact it is perfectly clear that the decision was communicated by the Director’s letter of 24 September 2004. There is no fresh decision by the director thereafter, and no judicial review of any putative or actual separate decision by the Attorney General.55.As I have said permission was granted by David Steel J and myself on 7 April 2005 to seek judicial review of the Director’s decision. Then on 24 May 2005 the Secretary of State issued his decision on the question whether under s.93 he was required to order the defendants’ discharge or their extradition. The defendants had made extensive representations to the Secretary of State who in turn had sought and obtained responses from the American authorities. It was contended for the defendants that there were no or no sufficient specialty arrangements in place, and that their extradition would violate their rights guaranteed by ECHR Article 8. The Secretary of State concluded against the defendants on both issues and accordingly ordered their extradition pursuant to the request. That decision is appealed pursuant to s.108 of the 2003 Act.56.There are some other matters of fact. They relate in particular to the conditions in which the defendants if extradited would await and face trial in Texas, and their personal circumstances, and also certain communications from the American authorities received since the Secretary of State’s decision of 24 May 2005. It is convenient to deal with these in the context of the issues to which they are relevant.