“4. Danish authorities are investigating ED&F Man, Mark Whitehead, Victoria Foster and Stephen Hawksworth during the period 2012 to 2015 in relation to allegations of 421 instances of fraudulently reclaimed Danish withholding tax (WHT) to the value of DKK 573 million (£66 million ). The mechanism of the suspected fraud is set out in detail in the application before the court at Appendix A. I now give a brief summary of the information provided by Miss McColl in relation to the fraud in Appendix A. 5. The investigation began as a result of a police report filed on3 May 2018 by the Danish customs and tax administration (SKAT) in respect of the suspected fraud involving individuals, reclaim agents, American pension plans, and a custodian bank ED&F Man. The Danish State Prosecutor for Serious and Economic crime (SEIC) subsequently found that ED&F Man was also named in an earlier report by SKAT of24th August 2016 regarding a suspected tax fraud in respect of the recovery of DKK 573 million. 6. The investigation has shown that the suspects, either themselves or by instructing another provided misleading documentation in the form of dividend credit advice (DCA) forms to the Danish tax agency, which induced them to believe that 36 US/Canadian pension plans were the beneficial owners of the stocks and had had refunds of tax on dividends withheld. No register of ultimate stockholders of Danish stocks exists, and the DCA document issued by ED&F Man contained the name of the Danish company and the amount of tax withheld. The Danish tax agency relied on this documentation to inform them where refunds were due. As a result refunds were paid to ED&F Man when no stock was held.”
“54. The German authorities are investigating a suspected tax evasion in relation to fraud concerning trades of German shares and claims for refunds of German withholding tax between1 January 2009 and31 December 2017 in the sum of Eu 586,336,117 equating to roughly£490 million . There are two Applications: firstly an application to give effect to a European Investigation order (the “EIO”) pursuant to Regulation 39 of the Criminal Justice (European Investigation Order Regulations) 2017 “the 2017 Regulations”, and secondly a section 9 PACE application. 55. On20 November 2020 the local Court in Cologne made rulings granting warrants in respect of searches to premises of ED&F Man, Mark Whitehead and Victoria Foster, listing the information which could be sought. That information is the subject of the EIO. Subsequently the Public Prosecutor in Cologne sought further material which fell outside the scope of the EIO, which is now the subject of the section 9 PACE application. The Public Prosecutor has provided a letter which is Appendix C to the application which sets out extensively the probative value of documents sought, the documents sought on each premises, and the reasons why it is believed that such documents would be on the premises. 56. The applications made by HMRC are therefore for search warrants in relation to a criminal investigation being carried out by law enforcement authorities in Germany, following a request for mutual legal assistance from the Public Prosecutor at the office of Public prosecutions in Cologne. The application made by Miss McColl is supported by the rulings at the local Court at Cologne dated20 November 2020 in respect of ED&F Man, Mark Whitehead and Victoria Foster. To a great extent her statement and Annex A to the EIO repeat the findings of the Court.”
“131. The Danish authorities state that, while they believe for the reasons set out at paragraph 88 that the suspect would not comply / it would be seriously prejudicial to the investigation to issue a Production Order, there is no specific evidence that the suspects would choose not to comply. Further, there is no evidence that ED&F Man nor the three principal suspects have concealed or destroyed evidence. 132. There is no evidence at present to suggest that ED&F Man has deliberately concealed or failed to provide evidence specifically requested by FCA or in the civil suit.”
“the planning and execution of tax-detrimental cum/ex transactions with short sales and related share transactions across the dividend record date - for example the reverse-market-claim strategy, in order to obtain refunds of capital gains tax and solidarity surcharge not previously paid.”
“43. … I do however take account of the further reason given which is the sophisticated nature of the investigation and the involvement of numerous entities and persons, and in particular that a coordinated approach is necessary given the previous regulatory investigation by the FCA. That investigation has produced material and statements which are conflicting, with individual suspects indicating that they are blaming others. In the circumstances a series of production orders would be unlikely to be effective in obtaining outstanding documentation without the risk of destruction of documents.”
“49. I bear in mind that the belief in relation to each suspect must be considered separately and that different conclusions can be drawn even though the applications are made together. I am satisfied that Miss McColl believes that obtaining the material by other methods would be bound to fail for the reasons she gives. In my judgment she is entitled to have regard to the approach taken by all suspects in the statements in the previous FCA investigation. That supports what I consider to be the main underpinning of her belief – the need for a co-ordinated approach to seizing all relevant material from each of the suspects at once, rather than an approach which would allow for selective compliance or destruction of materials.”
“51. I bear in mind the following features of this investigation: the time which has elapsed since the original Danish Police report in 2018, the separate FCA investigation which started in 2017 with interviews in 2018 and 2019 in respect of which limited disclosure has been given by ED&F Man thus far, and the opportunities for the destruction of documents which there have already been. As is accepted in the Application in Section 8 and paragraphs 115-133 the passage of time may mean that documents could have been destroyed already, or may not be at the premises to be searched. Whilst there have been compelled interviews, there appears to have been no previous attempt to obtain documents from the individuals under investigation. On one view, the fact that points made in the Duty of Disclosure section coupled with the fact that no attempt to obtain documents by a production order leaves open the question whether there would be and could be compliance which does not seriously prejudice the investigation. 52. Having considered this aspect carefully, I conclude that at this stage an approach which does not involve a simultaneous co-ordinated [sic] to obtaining of all material may seriously prejudice the investigation. There are different interests which have been expressed in the interviews and statements. Whilst this court has to make its own decision, I have regard to the decision of the Danish court and that the request is being made in relation to a Danish investigation. I note the extent and nature of the material sought which is more extensive than the more limited investigation by the FCA. I conclude that despite the factors set out in the Duty of Disclosure section the significant opportunity which would be given by production order or voluntary disclosure for destruction of extant documentation. The FCA investigation appear [sic] to have proceeded at a leisurely pace, and I consider that service of a Notice in Danish Criminal proceedings may well have a negative effect, not one necessarily prompted by the FCA civil proceedings. I therefore find that service of a Notice may seriously prejudice the investigation.”
“63. Regulation 38(9) provides that the court may issue a warrant in respect of such material if the making of a production order may seriously prejudice the investigation or proceedings to which the European investigation order relates. I have considered the same materials (which are repeated from the Danish application) including the section on duty to disclose and the points made in it, and come to the same conclusion that were production orders to be granted instead of warrants, that may seriously prejudice the investigation to which the Order relates. The cumulative effect of tow [sic] separate investigations into serious criminal matters conducted by the Danish and German authorities gives rise to a significant risk that there would be inadequate disclosure, but more importantly, destruction of documents.”
“74. I bear in mind that the belief in relation to each suspect and each application must be considered separately and that different conclusions can be drawn even though the applications are made together. Nonetheless in relation to this application too, I am satisfied that Miss McColl believes that obtaining the material by other methods would be bound to fail for the reasons she gives.”
“75. As with the Danish application, and for the same reasons, I conclude that at this stage an approach which does not involve a simultaneous co-ordinated [sic] to obtaining of all material may seriously prejudice the investigation. There are different interests which have been expressed in the interviews – and the Court of Cologne has conducted interviews of its own. Whilst this court has to make its own decision, I have regard to the decision of the German Court and that the request is being made in relation to a German investigation. I make the same analysis as for the Danish application, and it is of note that the information provided in respect of this application is more extensive, but shows a pattern of behaviour consistent with the Danish allegations.”
“UK Law • We cannot substantiate that evidence is likely to be destroyed or tampered with by ED&F Man. • None of the natural persons under suspicion are employed with ED&F Man today.”
“92. … By paragraph 2(b)(ii) of Schedule 1, the investigating officer must, at the time of the application, believe that other less intrusive methods “were bound to fail”, and, when the application comes [to] the circuit judge, he or she must consider whether the officer so believed. … as HMRC emphasised in its written and oral submissions, the use of the past tense in paragraph 2(b)(ii), appears directed at the officer’s belief at the time of the application. 93. In considering whether the requirements of paragraph 2 have been met, the investigator is obviously not in a position to know for certain what the outcome of any request for voluntary disclosure of documents might be. Nor, in the context of an application for a warrant under paragraph 12, can the investigator know for sure whether a production or access order under paragraph 4 might have been sufficient to secure the documents. Therefore, paragraph 2 cannot, consistently with the purpose of the statute, be read literally: whether a less intrusive measure would, or would not, be “bound to fail” must in the end be a matter of judgment for the investigator, based on his or her knowledge of the investigation so far and the evidence available. It must, in our judgment, be understood to mean that the investigator believes on the basis of the evidence that there is no lesser measure available which is likely to be effective in securing the relevant documents. Plainly, the investigator must have cogent grounds for his belief. In the context of an application for a warrant, where no notice will be given in advance of execution, the belief is likely to be based on the investigator’s suspicion that the relevant material will be disposed of or hidden if advance warning is given, and for that reason, any lesser measure (which would mean that the target is put on notice of the investigation) would be an ineffective means of pursuing the investigation. But, as is clearly stated in R (S), at paras 62–64 and 95–97, a bare assertion of such a belief is insufficient if the basis of that belief is not adequately explained in a focussed application dealing with the actual facts of the case. If the investigator has explained the reasons for so suspecting, in terms that are reasonable and compelling, he or she will have fulfilled the requirement in paragraph 2.”
“Though the material provided appears selective and partly anonymised when produced, it indicates that relevant material was still in the company’s possession recently. It is therefore reasonable to assume the material will still be on the premises at the time of the search.”
“Secondly, the Danish tax authorities have engaged in a civil suit for damages against [ED&F] that is ongoing and recently referred to the UK Court of Appeals. In this civil suit as well as in the appeals case, [ED&F] has provided a number of documents covering the below material categories and years of interest. Though the material produced by [ED&F] appears selective and partly anonymised when presented, it displays that relevant materials was in the company’s possession in recent time. It is therefore reasonable to presume, that the material still is present and available at the premises and therefore should be obtainable in a house search.”
“Preliminary findings of the investigation suggest that a very substantial part of the material related to the activities under investigation were generated, processed and stored via ED&F systems and servers. So far, the investigation has uncovered some files from the systems, but in processed and censured [sic] versions containing small amounts of information, if any at all.”
“FCA has left us with the impression that during the investigation ED&F Man has been disclosing no more than a minimum of information in order to comply with requests from FCA and that ED&F Man has been downplaying the seriousness of the case.”
“(iii) The litigation was brought and aggressively pursued, by a sovereign state with a willingness to expend effectively unlimited resources, as much to set an example to the world and make an example of all those involved (whether said to be guilty of dishonesty or not), that where it believed it had been the victim of dishonest wrongdoing there would be consequences, as to make a financial recovery. It was litigation that was politically as well as financially motivated. (iv) The litigation was the subject of ill-judged public statements by senior Danish politicians appearing to pre-judge the factual issues that would have fallen to be determined by the court. They both confirmed, or reinforced, the impression that there was a substantial political dimension to the bringing and vigorous pursuit of the claims brought here, in particular that their purpose was punishment and deterrence as much as it was financial recovery for the Danish taxpayer, and also involved a degree of ‘playing to the gallery’ in response to the significant media interest this affair has generated in Denmark. …”
“4. In relation to the criminality in Germany I understood this to be captured under Section 370 of their criminal code. Historically, I have worked jointly with German law enforcement in relation to a criminal matter which was also investigated in Germany under Section 370 of their criminal code. I believed this offence to be an ‘umbrella’ offence that captured all elements of tax evasion. I do not believe in the UK we have a direct equivalent however reading the EIO submissions from the Courts of Cologne, it was stated that ’incorrect or incomplete information’ had been provided to German tax administrations. This led me to believe that the German investigation could be captured underThe Fraud Act 2006 , Sections 1 & 2 and thus this is what I approved.”
“1. The issue of a search warrant or a warrant for seizure is a very serious interference with the liberty of the subject. 2. The officer applying for such a warrant must give full, complete and frank disclosure to the magistrate so as to enable the latter to base his decision on the fullest possible information. 3: The court itself must give the most mature and careful consideration to all the facts of the case (see amongst many instances Williams v Somerfield[1972] 2 QB 512 at 518 and Wood v North of England Magistrates' Court The correct name for that case is in fact R (Wood) v North Avon Magistrates’ Court[2009] EWHC (Admin) 3614 per Moses LJ at paragraph 29).”
“Subject to the de minimis principle, which common sense requires, I conclude that a search has exceeded the purpose for which the warrant was issued … when material which does not satisfy those criteria has been seized”
“45. It is conceded on behalf of the Chief Constable that each of the warrants was defective on the first ground. It is further conceded that the effect of section 15(1) is to render the entries onto property and the searches unlawful. In the circumstances of the present case, however, it is submitted on behalf of the Chief Constable that the breach was technical only. The claimant was himself present at the search which took place in his own home. He would have had no difficulty, if it was relevant, in discovering the identity of the officer who made the application. No prejudice has resulted to the claimant from the fact that the officer was not named in either warrant. I accept these submissions. Section 15(1) in its terms operates to render interference with the claimant’s property under the authority of the warrant unlawful but it does not render the warrant itself unlawful. The claimant is seeking discretionary relief from the court. It is most improbable, in my view, that on this ground a court would make an order quashing the warrant after its execution.”
“48. In my judgment the only ground of challenge to these warrants which has legal merit is the omission of DI Kennedy’s name as the applicant on the face of the warrants. It is my view that the breach of section 15(6)(a) was so technical that in the circumstances of the present case there is no prospect that the court would use its discretionary powers either to quash the warrants or to make a declaration of invalidity. …”
“4) There can be no general, still less universal, rule, but, in a case such as the present where a search is to be conducted of the premises of a professional man where items subject to LPP may be encountered, no harm would be done by an express exclusion for such items. Indeed, it might be better if the warrants in this case had included such wording. That said, the absence of an express exclusion for items subject to LPP does not require the quashing of a warrant which is otherwise appropriately drafted. As already underlined, an exclusion of this nature is simply making express that which is in any event implicit.”
“2. The first set of access conditions is fulfilled if— (a) there are reasonable grounds for believing— (i) that an indictable offence has been committed; (ii) that there is material which consists of special procedure material or includes special procedure material and does not also include excluded material on premises specified in the application, or on premises occupied or controlled by a person specified in the application (including all such premises on which there are reasonable grounds for believing that there is such material as it is reasonably practicable so to specify); (iii) that the material is likely to be of substantial value (whether by itself or together with other material) to the investigation in connection with which the application is made; and (iv) that the material is likely to be relevant evidence; (b) other methods of obtaining the material— (i) have been tried without success; or (ii) have not been tried because it appeared that they were bound to fail; and (c) it is in the public interest, having regard— (i) to the benefit likely to accrue to the investigation if the material is obtained; and (ii) to the circumstances under which the person in possession of the material holds it, that the material should be produced or that access to it should be given.” (i) that an indictable offence has been committed; (ii) that there is material which consists of special procedure material or includes special procedure material and does not also include excluded material on premises specified in the application, or on premises occupied or controlled by a person specified in the application (including all such premises on which there are reasonable grounds for believing that there is such material as it is reasonably practicable so to specify); (iii) that the material is likely to be of substantial value (whether by itself or together with other material) to the investigation in connection with which the application is made; and (iv) that the material is likely to be relevant evidence; (i) have been tried without success; or (ii) have not been tried because it appeared that they were bound to fail; and (i) to the benefit likely to accrue to the investigation if the material is obtained; and (ii) to the circumstances under which the person in possession of the material holds it, that the material should be produced or that access to it should be given.” 182. Schedule 1, paragraph 12: “If on an application made by a constable a [judge] — (a) is satisfied — (i) that either set of access conditions is fulfilled; and (ii) that any of the further conditions set out in paragraph 14 below is also fulfilled in relation to each set of premises specified in the application; or (b) is satisfied— (i) that the second set of access conditions is fulfilled; and (ii) that an order under paragraph 4 above relating to the material has not been complied with, he may issue a warrant authorising a constable to enter and search the premises or (as the case may be) all premises occupied or controlled by the person referred to in paragraph 2(a)(ii) or 3(a), including such sets of premises as are specified in the application (an “all premises warrant”).” (i) that either set of access conditions is fulfilled; and (ii) that any of the further conditions set out in paragraph 14 below is also fulfilled in relation to each set of premises specified in the application; or (i) that the second set of access conditions is fulfilled; and (ii) that an order under paragraph 4 above relating to the material has not been complied with, 183. Schedule 1, paragraph 14: “The further conditions mentioned in paragraph 12(a)(ii) above are— (a) that it is not practicable to communicate with any person entitled to grant entry to the premises; (b) that it is practicable to communicate with a person entitled to grant entry to the premises but it is not practicable to communicate with any person entitled to grant access to the material; (c) that the material contains information which— (i) is subject to a restriction or obligation such as is mentioned in section 11(2)(b) above; and (ii) is likely to be disclosed in breach of it if a warrant is not issued; (d) that service of notice of an application for an order under paragraph 4 above may seriously prejudice the investigation.” (a) that it is not practicable to communicate with any person entitled to grant entry to the premises; (b) that it is practicable to communicate with a person entitled to grant entry to the premises but it is not practicable to communicate with any person entitled to grant access to the material; (c) that the material contains information which— (i) is subject to a restriction or obligation such as is mentioned in section 11(2)(b) above; and (ii) is likely to be disclosed in breach of it if a warrant is not issued; (d) that service of notice of an application for an order under paragraph 4 above may seriously prejudice the investigation.” 2017 EIO Regulations 184. Regulation 38 “Search warrants and production orders: nominating a court (1) This regulation applies if it appears to the central authority that in order to give effect to the European investigation order it will be necessary for a court to issue a warrant or, as the case may be, make a production order under regulation 39. (2) Where it appears to the central authority that the condition in paragraph (3) is met, it may by notice nominate a court to issue a warrant or make a production order. (3) The condition is that the conduct in relation to which the European investigation order was issued would, if it had occurred in the relevant part of the United Kingdom, constitute an indictable offence under the law of that part of the United Kingdom. …” 185. Regulation 39 “Search warrants and production orders: giving effect to the European investigation order (1) Within a period prescribed by rules of court, the nominated court must give effect to the European investigation order by issuing a warrant authorising a constable— (a) to enter the premises to which the European investigation order relates and search the premises to the extent reasonably required for the purpose of discovering any evidence to which the order relates, and (b) to seize and retain any evidence for which that constable is authorised to search. (2) But in relation to England and Wales and Northern Ireland, so far as the European investigation order relates to excluded material or special procedure material, the court must give effect to the order by making a production order (subject to paragraph (8)). … (8) The nominated court may issue a warrant under paragraph (1) in respect of excluded material or special procedure material only where— (a) a person has failed to comply with a production order made in respect of the same material (whether or not the court also deals with the matter as a contempt of court), or (b) it appears that one or more of the conditions in paragraph (9) is satisfied. (9) The conditions are that— (a) it is not practicable to communicate with any person entitled to grant entry to the premises; (b) it is practicable to communicate with a person entitled to grant entry to the premises but it is not practicable to communicate with any person entitled to grant access to the material; (c) the material consists of information which— (i) is subject to a restriction on disclosure or obligation of secrecy under the law of the issuing State, and (ii) is likely to be disclosed in breach of it if a warrant is not issued; (d) the making of a production order may seriously prejudice the investigation or proceedings to which the European investigation order relates.” (a) to enter the premises to which the European investigation order relates and search the premises to the extent reasonably required for the purpose of discovering any evidence to which the order relates, and (b) to seize and retain any evidence for which that constable is authorised to search. (a) a person has failed to comply with a production order made in respect of the same material (whether or not the court also deals with the matter as a contempt of court), or (b) it appears that one or more of the conditions in paragraph (9) is satisfied. (a) it is not practicable to communicate with any person entitled to grant entry to the premises; (b) it is practicable to communicate with a person entitled to grant entry to the premises but it is not practicable to communicate with any person entitled to grant access to the material; (c) the material consists of information which— (i) is subject to a restriction on disclosure or obligation of secrecy under the law of the issuing State, and (ii) is likely to be disclosed in breach of it if a warrant is not issued; (d) the making of a production order may seriously prejudice the investigation or proceedings to which the European investigation order relates.”