In the Media

No case to answer but sent to the US for trial anyway

PUBLISHED July 4, 2006

DAVID BERMINGHAM, Gary Mulgrew and Giles Darby, known as the ?NatWest Three?, are to be extradited to the US, after failing to convince the European Court of Human Rights to postpone their extradition until after a full appeal to that court. The House of Lords the week before refused them leave to appeal.

The men, formerly employed by NatWest, and all UK nationals, have been charged in the US with ?wire fraud? relating to their alleged dealings with a subsidiary of Enron. The extradition request by the US authorities has caused criticism of the UK Government for its perceived capitulation to US demands and a lack of reciprocity in the extradition procedure. 
In another controversial case, former Morgan Crucible chief Ian Norris is being sought by US authorities for price fixing, while Nigel Potter, former chief executive of the leisure group Wembley, is serving a three-year sentence in Pennsylvania after being extradited on charges of attempting to bribe a US government official.

Do these cases represent the start of an attempt by US authorities to become the international prosecutors of white-collar crime? Could more requests be made for the extradition of UK citizens who were not even aware that their actions could constitute a crime in the US?

At the heart of the issue is the Extradition Treaty signed by the UK and the US in 2003, but only ratified by the UK to date. The lack of ratification by the US means that UK requests to the US must be made under the 1972 treaty and supported by evidence of ?probable cause?, while the US, under our Extradition Act 2003 (which reflects the wording of the 2003 Treaty), must only provide the UK authorities with ?information? that would justify the issue of a warrant for arrest. ?Information? can be a prosecutor?s belief as to the facts, and is a significantly lower threshold than ?evidence?, which may require witness statements and supporting documents.

If the US were to ratify the treaty, UK requests to the US would no longer have to be supported by evidence, but by ?information? providing a ?reasonable basis to believe? that the person sought had committed the offence. Ratification of the treaty would not, however, bring an end to requests made by US authorities for UK citizens, and these are likely to continue for white-collar offences. When the treaty was signed, it was lauded as an aid to the ?war on terror?, but Home Office statistics show that, of 46 extradition requests made by the US between January 1, 2004, and April 28, 2006, 19 related to financial crime and just three to terrorism.

The extradition request for the NatWest Three was made despite the bulk of their (allegedly unlawful) conduct taking place in the UK. Their attendance at a meeting in Houston and alleged wire fraud relating to the sending of communications over US computer networks is the basis for the request by US authorities. The three men argued that, if they were guilty of any misconduct (which they deny), it was committed in the UK, affected their UK employer and should be prosecuted here. They even sought a judicial review of the decision by the Director of the Serious Fraud Office not to prosecute them, but this failed.

Mr Norris?s extradition is sought for alleged price-fixing offences, even though such offences did not exist in the UK at the time of the events in question. The extradition request describes the conduct as conspiracy to defraud and perverting the course of justice (both are offences in the UK) in order to satisfy the requirement that the conduct be criminal in both the US and UK before extradition will be granted. The UK courts have yet to consider whether that is a legitimate tactic by US prosecutors.

There can be few large UK businesses operating today that do not have some connection with the US, whether through branches or affiliates, customers, suppliers or through their own e-mail communications being routed through US servers. The actions brought to date show that even a slight connection with the US could be enough to found an action for breach of US laws and expose UK business people to US extradition requests and the significantly longer sentences imposed there for corporate misconduct. Demands for US ratification of the treaty appear to overlook the fact that, even if it were ratified tomorrow, UK citizens would be no safer from extradition than they are today.

This means that businesses must ensure they have adequate procedures in place to assess and manage risk. This should include a culture of employees notifying management or compliance teams as soon as a potential problem arises. It may also mean closer co- operation with domestic and other relevant regulators in order to minimise the risk of action later being taken in respect of a company?s activities. Companies operating internationally, even if only in a modest way must, above all, understand that it is not necessarily sufficient to observe only the laws of the UK. Advice should be taken in other relevant jurisdictions if there are concerns about potential liability.

The author, a partner in Clifford Chance LLP, specialises in regulatory investigations

Who dictated the Treaty?

There?s a clue in the spelling:

  • Article Two Extraditable Offenses (sic) An offense (sic) shall be an extraditable offense (sic) if the conduct on which the offense (sic) is based is punishable under the law in both States . . . (
  • Dictionary: offence or US offense