Durant Inter. Corporation v AG and Fed Rep of Brazil
| Jurisdiction | Jersey |
| Court | Royal Court |
| Judge | Deputy Bailiff |
| Judgment Date | 19 January 2006 |
| Neutral Citation | [2006] JRC 5 |
| Date | 19 January 2006 |
[2006] JRC 5
ROYAL COURT
(Samedi Division)
M. C. St. J. Birt, Esq., Deputy Bailiff, and Jurats Allo and Newcombe.
Advocate G. S. Robinson for the Applicants.
W. J. Bailhache Q.C., H.M. Attorney General in person.
Advocate N. M. C. Santos-Costa for the Second Respondent.
Investigation of Fraud (Jersey) Law 1991.
Criminal Justice (International Co-operation) Law 2001.
Evidence, Proceedings in Other Jurisdictions (Jersey) Order 1983.
Benyon on Statutory Interpretation (4 th Edition) at page 255.
Seward v The Vera Cruz [1984] 10 App Cas 59 at 68.
Acturus Properties Limited v Attorney General [2001] JLR 43.
R v Secretary of State for the Home Department ex p Zardari, [unreported 11 th March 1998].
Abacha v Secretary of State for the Home Department [2001] EWHC Admin 787.
R (Evans) -v- Director of the Serious Fraud Office [2003] 1 WLR 299.
Hilsenrath v Attorney General [2005] JRC 096.
Dylan Creaven v the Criminal Assets Bureau [2004] IESC 92.
R C Energy Financing Team Ltd v Bow Street Magistrates Court [2005] EWHC 1626 (Admin) 22 July 2005.
Jones & Doobay on Extradition and Mutual Assistance (2005 Edition) at para 20–057.
R v Secretary of State for the Home Department, ex p Doody [1994] 1 AC 531 at 560.
Buttes Gas & Oil Co v Hammer (No's 2 & 3) [1982] AC 888.
Associated Provncl Picture Houses Ltd v Wednesbury Corp [1948] 1 KB 223.
Introduction
This is an application for judicial review of a decision of the Attorney General made in connection with a request by the Federal Republic of Brazil for assistance concerning certain criminal investigations in Brazil. The relief sought is an order that the Attorney General should disclose to the applicants the two letters of request from the Federal Republic and an order that the deadline given by the Attorney General for the applicants to make representations as to whether he should accede to the letters of request should be extended.
Leave to apply for judicial review was granted by me on 28 th September (having heard from both parties) and, in the unusual and exceptional circumstances of this case, I acceded to the Federal Republic's request that it be joined as a party. That decision has had certain consequences. Some of the material contained in affidavits sworn on behalf of the applicants and the Attorney General refer to material which is not yet known to the Federal Republic and will only become known to it if the Attorney General accedes to the letters of request. Clearly it would be wrong for the Federal Republic to see material to which it may ultimately not be entitled and accordingly redacted versions of the affidavits have been supplied to the Federal Republic. In the circumstances we propose to deal with the facts and arguments in such a way as not to disclose, so far as possible, information which has not yet been made available to the Federal Republic.
The Court heard argument on 30 th November and reserved its decision on the first issue. This judgment contains the Court's decision on that issue. However the Court ruled that, if it were to refuse to order disclosure of the letters of request, it would not extend the time for the applicants to make representations. This was because the applicants had had ample time to make representations on the basis of the information presently in their possession. There was no reason why they should not undertake that exercise in the period between the date of the hearing and the date of our decision. If the Court were to side with the Attorney General, there would be no more material to come and there would therefore be no reason to extend the period. Conversely, should the Court side with the applicants, the Court would ensure a reasonable period of time between the provision of copies of the letters of request and the expiry of the deadline for representations. In short, the Court emphasised to the applicants that, if they wished to ensure that they had the opportunity of making representations in the event of the Court deciding against them on the first issue, they should do so immediately.
(i) The investigations in Brazil
The applicants are BVI companies with bank accounts and other assets in Jersey. There are grounds for believing that they may be connected with the family of Mr Paulo Maluf (“Mr Maluf”), who is a prominent figure in Brazil, having had a career in public life as well as being a successful businessman. In particular he was Mayor of the city of Sao Paulo between 1993 and 1996. In 2002 he ran for the office of Governor of the State of Sao Paulo and in 2004 he ran once again for Mayor, but he was unsuccessful in both cases. Although he is now 74 he apparently remains active in politics.
No doubt because of Mr Maluf's prominence, the matter has been widely reported in the Brazilian media and there have been numerous newspaper articles and reports on television and radio. It is accepted that, in the early years, there were indiscretions by Brazilian officials which gave rise to these reports.
The Attorney General has described the general nature of the investigations in Brazil in letters dated 12 th May 2005 and 5 th July 2005 to Messrs Bailhache Labesse, acting for the applicants, and in two affidavits by Crown Advocate Whelan, who is employed in the Law Officers' Department. From the information before the Court there would appear to be investigations into four separate areas relating mainly to the period between 1993 and 1996 when Mr Maluf was Mayor of Sao Paulo. It is not necessary to go into any detail but in brief summary they are as follows:-
(ii) Requests to other jurisdictions
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(i) The Avenue Agua Espraiada. This relates to a public works contract for the construction of the Avenue Agua Espraiada. It is alleged that Mr Maluf and others were guilty of corruption and money laundering in relation to this contract. It is said that Mr Maluf procured that sub-contractors should issue fraudulently inflated invoices that did not correspond to work actually done. It is said that up to US$195 million may have been falsely invoiced and the proceeds then divided between Mr Maluf and his co-conspirators with Mr Maluf's share being passed to bank accounts in Switzerland and then Jersey which were ultimately held for the benefit of him and his family. At the time of the letters of request the above matter was at the investigative stage but in September 2005 criminal charges were brought against Mr Maluf, his son Flavio, a Mr de Oliveira and a Mr Alves.
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(ii) The Ayrton Senna Tunnel. This involved another public works contract for the construction of this tunnel. The allegation is essentially identical to that concerning the Avenue Agua Espraiada, namely that sub-contractors presented inflated invoices, the surplus then being divided between Mr Maluf and the others involved. The total amount over-invoiced in this case is said to amount to some US$105 million. Again it is said that Mr Maluf's share has been parcelled out to various entities on his behalf in Switzerland and then Jersey. This matter remains at the investigative stage.
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(iii) The municipal bonds case. The allegation in this case is that in 1994 Mr Maluf, with the aid of others, fraudulently issued municipal public debt instruments. It is alleged that false information was provided to the Senate to obtain official authorisation to issue these instruments for approximately US600 million, which was higher than the actual debts which had to be paid. The instruments were then traded on a secondary market and the ‘profit’ laundered through accounts of individuals or companies who lent their accounts for this purpose, and the money was then transferred abroad. Indictments in this case were issued in 1997 against Mr Maluf and two of his assistants, namely the former Secretary of Finance and the former Budget Supervisor for the Municipality of Sao Paulo. The case against Mr Maluf was dismissed on the grounds that the limitation period had expired. The decision at first instance to this effect was given in October 2001 and was upheld by the Superior Court of Justice in December 2004. As we will mention later, it is apparently the case that, under Brazilian Law, the relevant limitation period is reduced by half in the case of persons over 70. However, the case against the two co-accused continues.
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(iv) The capital flight case. This involves alleged offences against the National Financial System, in particular the transfer of funds abroad without authorisation and the retention of those funds without declaration to the relevant federal authority. These allegations relate to bank accounts allegedly held in Switzerland by Mr Maluf and other members of his family; it is further alleged that some of these accounts were closed in 1996 or early 1997 and the proceeds transferred to banks in Jersey. According to the affidavit (which was produced on behalf of the Federal Republic) of Mr de Grandis, the federal prosecutor with responsibility for these various investigations, indictments in this case were laid against Mr Maluf and other members of his family in November 2004.
In 2002 the Federal Republic sent a letter of request to Switzerland. The request was made in connection with the first three criminal investigations mentioned above and sought details of bank accounts in Geneva. Mr Maluf and various entities challenged the decision of the Swiss authorities to give assistance. On 11 th February 2004 the First Court of Public Law in Geneva dismissed the challenge and held that the letter of request could be acceded to. The judgment is exhibited to the affidavit of Crown Advocate Whelan and has...
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