Whose statement is it? Scope of privilege against self-incrimination limited

In the first court case heard under the Competition Ordinance ("Ordinance"), the Competition Tribunal ("Tribunal") has made an important clarification concerning the applicability of privilege against self-incrimination ("PSI") to companies.

Companies and individuals touched by investigations should ensure that it is clear from the outset in what capacity they are attending interviews or providing information, and ensure that each party receives independent legal advice if and when necessary.

In this case, the respondent companies argued that statements made to the Commission by its employees pursuant to a "section 42 notice", compelling them to answer questions in connection with an investigation, should not be disclosed in the proceedings on the grounds of PSI.

Based on a number of factors (set out below), the Tribunal decided that PSI could not be claimed by the companies as the employees had given the statements in their personal capacity and not as representatives of the company. The statements were therefore admissible because the employees' statements could not be attributed to the company and were not self-incriminating for the company.

Background

This was an application brought by two respondent companies in connection with proceedings commenced by the Competition Commission (the "Commission") for suspected bid-rigging. The Commission alleged that Nutanix co-ordinated four "dummy" bids to assist BT's bid in response to an invitation to tender from the HK Young Women's Christian Association for the supply and installation of an IT server system. Nutanix had an interest in the success of BT's bid because BT proposed the use of a Nutanix system.

Nutanix and BT requested that certain employee statements in the Commission's Originating Notice of Application be struck out because they allegedly self-incriminated the companies. The statements were made by employees of Nutanix (Mr A) and BT (Mr B and Mr C) in section 42 interviews, under which they were compelled to answer questions in connection with the Commission's investigation.

The Decision

Under Section 45 of the Ordinance, a person is not excused from answering any question on the grounds that to do so might expose the person to a financial penalty or criminal proceedings, but no statement made by that person in answering any question is admissible against that person in those proceedings.

The companies argued that section 45 of the Ordinance should apply, making the relevant statements inadmissible in the main proceedings, because the employees' statements incriminated the company. In the case of Mr A, the specific question put before the Tribunal was whether he had made the incriminating statements in interview on behalf of the company or in his personal capacity? In other words, was Mr A the same "person" as the incriminated company for the purposes of section 45?

Nutanix argued that Mr A had represented the company throughout the Commission's investigations, highlighting that the Commission had corresponded with Mr A at his work address, including sending the section 42 notice to him there. The company also pointed to the fact that Mr A had the same legal representation as the company.

The Tribunal however sided with the Commission in finding that the request to attend before the Commission was made personally to Mr A, finding that "where a s.42 notice is issued to a natural person, his obligation to attend before the Commission is personal to him."

Nutanix and BT ran a second argument that if the conduct of the employees could be attributed to the companies, as per the Commission's arguments, then the responses given by those same people in the investigation should also be attributed to the company. They argued that a company can only be represented by an employee and that the Commission was seeking to impose their behaviour on the company in relation to the alleged illegal conduct and so the same should be done for the interviews.

The Tribunal disagreed. They found that because the s.42 notices were addressed to the employees personally, they could not be seen to have been acting on behalf of the companies at the interview. The Tribunal accepted that the Commission has the power to compel anyone to attend and when it is personally addressed then that is the person who is being compelled to attend.

The Tribunal noted that, factually, the employee could have already left the company and still would have been asked to interview. It just so happened that he was still at the Company and that is why it the notice was addressed to him there. The Tribunal also pointed out that the employee was not incriminating himself with the statements he made in the interview. He was essentially a witness to the illegal activity of the Company. This raises a further issue (not apparently raised with the Tribunal) that section 45 expressly provides that PSI does not apply if the evidence is adduced, or a question relating to it is asked, by the person claiming privilege or on that person’s behalf. On this basis the protection afforded by the section is severely limited.

Ultimately, the message from the Tribunal was – the privilege can only be claimed by the person who is likely to be incriminated. As quoted by the Tribunal:

"the privilege can only be claimed by the person who is likely to be incriminated […] if people choose to conduct their affairs through the medium of corporations, they are taking advantage of the fact that in law those corporations are separate legal entities, whose property and actions are in law not the property or actions of their incorporators or controlling shareholders. […] controlling shareholders cannot, for all purposes beneficial to them, insist on the separate identity of such corporations but then be heard to say the contrary when discovery is sought against such corporations."

Last Word

It is worth remembering that, in the context of investigations of this nature, whilst the right to PSI can be exercised, there are limitations to its applicability and in any event, where it does apply, the relevant authority is likely to find other means of obtaining the same evidence and reaching the same conclusion – such as by obtaining the testimony of other prosecution witnesses, documentary records and circumstantial evidence incriminating the witness or other parties.

Against this background, it is important that companies and individuals alike understand in what capacity they attend interviews or provide information, and ensure each party receives independent legal advice if and when necessary.


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