In SFO's pursuit of ENRC founder's daughter, conviction meant everything
02 Apr 2020 12:47 pm by Annie Robertson
Is the bark of the UK's Serious Fraud Office worse than its bite? Observers might be forgiven for thinking so, given the trifling fine handed to a billionaire's daughter for refusing to hand the SFO evidence in a corruption probe.
Anna Machkevitch was fined just 800 pounds ($1,040) after being convicted last week of failing to comply with a Section 2 notice under the Criminal Justice Act 1987, which compels individuals to produce documents or information.
In theory, it's an offense punishable by up to six months in jail and an unlimited fine, and the 37-year-old daughter of Eurasian Natural Resources Corporation co-founder Alexander Machkevitch is the first person the SFO has taken to court for the offense in three decades.
On face value, then, the fine could easily be seen as measly, and a signal that judges will look leniently on Section 2 offenses. But that would be to miss the big picture.
Consider the context
Machkevitch found herself served with a Section 2 notice in 2018, in connection with the increasingly complex saga of the SFO's seven-year probe into suspected corruption at ENRC, in which her father is a suspect. The miner faces allegations, which it denies, that it was involved in fraud, bribery and corruption in the Democratic Republic of the Congo between 2009 and 2012.
Her conviction is just the latest event in a series of legal disputes between the SFO and the company since the corruption investigation began in 2013. It is remarkable in one particular way, however: While she was the first person to face charges in connection with the probe, she herself isn't a suspect.
The SFO had ordered her to provide copies of her father's electronic diary, which were held by her London-based business, ALM Services UK. She was eventually charged for failing to comply last June, and although she provided the documents required three weeks later, the SFO followed through with its prosecution.
In her defense at a hearing in early January, she complained she had been caught in the crossfire of the SFO's chase of ENRC, and explicitly accused the agency of having an "ulterior motive".
She had been "singled out for prosecution" despite not being a suspect in the SFO's investigation of ENRC, she told the court, and her prosecution was "tainted by bias" as it had come in the wake of a damages claim of 70 million pounds by ENRC against the SFO in March 2018. That was related to a claim that a lawyer representing ENRC had leaked information to the SFO.
The SFO rejected her arguments, insisting that it had simply intended to make an example of someone who had deliberately refused to comply with a Section 2 notice, as intended by lawmakers in granting the power of enforcement. "Power without teeth is no power at all," the agency argued.
Importance of conviction
That power has never been fully exercised by the SFO before.
Machkevitch is the only person to be prosecuted through the courts by the SFO for a Section 2 offense in 26 years, despite the agency serving an average of 800 notices a year. In the year from March 2017 it served 1,032. Charges were laid against only one other individual — Larry Trachtenberg, in 1994, in the wake of the Maxwell scandal — but he was subsequently acquitted by a magistrates' court.
Such figures suggest that the SFO does not have a problem with compliance. In court last month it may have rejected suggestions that its pursuit of Machkevitch was "disproportionate, unreasonable or wholly out of the ordinary," but perhaps only in a technical sense that it was within its powers to prosecute.
In plain sight is that the prosecution was a means to an end, sending a clear signal to ENRC and its executives that the SFO is serious in its mission to complete its investigation and is not intimidated by counter-claims and legal battles on the sidelines.
After all, just charging Machkevitch was enough to unlock the information the agency wanted: She was charged on June 14 last year and handed over the documents requested on July 14.
In this context, the fine amount was incidental, the conviction was everything. Some explanation for the fine's modest level, incidentally, can be found in the specifics of the case: in his ruling on Jan. 30, district judge John Zani said he believed some fault for her non-compliance lay with lawyers on whom she'd relied.
"She took advice, I don't know what that advice was, but the documents were not forwarded, as a result of which I have found her guilty… The seriousness has to be put in light of that conduct globally," he said. Zani did not provide guidance regarding the scale of financial penalty in relation to future breaches.
In terms of a financial price to pay, though, there is a sting in the tail, as Machkevitch was ordered to pick up the tab for the SFO's prosecution costs, which will likely dwarf the fine itself.
Contrary to the SFO's claim, observers might be wise to consider this case as potentially very much out of the ordinary.
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