Co-operating witnesses- a concurrent jurisdiction conundrum: USA v Michael Lynch [2021]

 

Background

On 22 July 2021, District Judge Michael Snow ordered the extradition of former Autonomy CEO Michael Lynch to the US to stand trial on charges of conspiracy, securities fraud and wire fraud in connection with the $11bn sale of the company to Hewlett Packard (‘HP’) in 2011. The US company has brought proceedings against Mr Lynch in the High Court in London for allegedly concealing and misrepresenting the true financial performance of Autonomy prior to the sale.  Mr Lynch had failed in a bid to adjourn the extradition proceedings to await the outcome of the civil case, in which judgment is pending.

Grounds of Opposition

Mr Lynch advanced five issues upon which he sought to resist extradition, namely that:

1. The offences for which he was sought did not amount to extradition offences because the conduct alleged did not occur within the US for the purposes of the Extradition Act 2003, section 137(3)(a), and the conduct alleged, if properly transposed, would not be triable in the UK under section 137(3)(b);

 

2. His extradition would be unjust or oppressive by reason of the passage of time: the conduct alleged dated back to 2009 and the first indictment was not issued until 2018;

 

3. His extradition would not be in the interests of justice under the so-called ‘forum bar’ because the alleged criminal conduct concerned the takeover of a UK company, audited in the UK and applying UK accounting standards, which could be prosecuted in the UK (and was in fact investigated by the SFO). In addition, Mr Lynch is a British citizen with ‘lifelong’ links to the UK;

 

4. If extradited he would face a real risk of treatment contrary to Article 3 of the European Convention on Human Rights (‘ECHR’). In particular, that the provision of healthcare at his post-conviction detention facility would be so inadequate as to amount to inhuman or degrading treatment;

 

5. The extradition request contained material misrepresentations and omissions of fact and completely avoided the fact of the ongoing civil trial before the High Court such as to amount to an abuse of process.

Court’s decision and reasoning

All of Mr Lynch’s arguments were rejected by the District Judge.  On ground one, the District Judge considered that where the “effects of the Defendant’s (‘D’) conduct” were felt in the USA and there had been significant financial and reputational harm caused both directly and indirectly within the USA to HP, this was sufficient for the purposes of section 137(3)(a). Furthermore, when the conduct alleged against Mr Lynch was transposed to the UK, it was capable of amounting to offences under UK law satisfying section 137(3)(b). On ground two, the District Judge concluded that there was no injustice or oppression as a result of the delay by the US authorities.

On ground four, the District Judge accepted that Mr Lynch suffered from various chronic medical conditions but was satisfied, on evidence from a Medical Director of the US Federal Bureau of Prisons, that those conditions would be adequately treated in custody. The District Judge rejected the contrary evidence of a defence expert, who he described as “an unreliable partisan witness” who on occasion presented his evidence “in a misleading way”, adding that he had “significant doubts” that the defence expert was in fact an expert.

On ground five, the District Judge concluded that there was no abuse of process and that the information contained in the particulars was correct and complete.

It was the court’s consideration of ground 3 – the forum bar – in cases where both the UK and US had jurisdiction to prosecute which was particularly interesting and is likely to give rise to further arguments on appeal.

The Forum Bar

Mr Lynch argued that his extradition to the USA would not be in the interests of justice by reason of forum. Under the forum bar, the court was required first to consider whether a substantial measure of Mr Lynch’s alleged criminal conduct was performed in the UK, in other words, whether the UK had concurrent jurisdiction to prosecute Mr Lynch for the same alleged criminality. If so, the court was then required to consider seven ‘specified matters’ to decide whether the extradition of Mr Lynch would be in the interests of justice.

The US Government conceded that a substantial measure of Mr Lynch’s conduct occurred in the UK, therefore the arguments focused on the specified matters, and whether they pointed towards or away from extradition. Dealing with each in turn:

(a) The place where most of the loss or harm resulting from the extradition offence occurred or was intended to occur

The District Judge held that in cases of alleged financial loss and harm, the court must distinguish between how quantifiable loss or damage has been caused and (legally and factually) to whom.  Judge Snow found that the loss was intended to, and actually fell on HP – a US-based entity with predominantly US-based shareholders ­– who had been forced to issue an $8.8bn write-down.  The judge also found that HP had suffered harm far beyond its financial losses, including the need to defend lawsuits, bring civil proceedings, and assist multi-jurisdictional investigations, all of which caused lasting reputational injury.  The District Judge rejected Mr Lynch’s argument that the court was not permitted to consider reputational harm for this purpose, which might be correct when conducting a dual-criminality assessment but not when considering forum.

(b) The interests of any victims of the extradition offence

The court concluded that there was “a clear public interest in the trial of the CEO of a major public company, who was responsible for an alleged fraud causing very significant losses”. Furthermore, that the interests of HP and US investors, as victims of the extradition offence, would not be satisfied by either the outcome of the civil claim, or the conviction of Mr Hussain, Autonomy’s former CFO, currently serving a five-year sentence in the US for his role in the fraud.

(c) Any belief of a prosecutor that the United Kingdom, or a particular part of the United Kingdom, is not the most appropriate jurisdiction in which to prosecute D in respect of the conduct constituting the extradition offence

This subsection entitles (but does not require), a UK prosecutor to submit to the court his or her belief that the UK is not the most appropriate jurisdiction in which to prosecute the alleged conduct.  In this case, the SFO had investigated parts of the alleged fraud between 2013 and 2015 before ceding jurisdiction to the US authorities.  The SFO prosecutor had submitted a statement in the proceedings setting out the basis for that decision and his belief that the case should be prosecuted in the US.  Of most interest and relevance was the question of whether evidence obtained from co-operating witnesses in the US would be admissible against Mr Lynch in any equivalent UK criminal proceedings.  The SFO’s view was, first, that securing the evidence of the US co-operating witnesses in admissible form was likely to be problematic; and second, that the SFO would have difficulty obtaining all relevant unused material from the US authorities relating to these witnesses (and, it is assumed, other aspects of the US investigation) in order to discharge its disclosure obligations.

The District Judge noted, following existing case law, that he was not entitled to review the SFO’s belief on any grounds other than irrationality, and as the belief was not irrational, it strongly favoured extradition.

(d) Were D to be prosecuted in a part of the United Kingdom for an offence that corresponds to the extradition offence, whether evidence necessary to prove the offence is or could be made available in the United Kingdom

The court held, relying inter alia on the statement from the SFO, that the evidence of the cooperating witnesses was significant, and that it would be difficult to prove the case where that evidence was not available in the UK. It was unclear whether these witnesses would cooperate or could be compelled by US prosecutors to give evidence in the UK and procedures to obtain their cooperation would result in a significant delay. In the view of the SFO, “seeking to ‘convert’ such witnesses into witnesses for the Crown in an English criminal proceeding would give rise to considerable complexity and uncertainty of outcome”.  It was therefore unclear whether the entire corpus of US evidence would be transferable to the UK.

(e) Any delay that might result from proceeding in one jurisdiction rather than another

The District Judge was satisfied that the SFO would take considerable time before it was able to make a decision to charge and that further substantial delays would commence in the UK.

(f) The desirability and practicability of all prosecutions relating to the extradition offence taking place in one jurisdiction

The District Judge accepted, as a matter of public policy, the desirability of co-conspirators being tried in the same jurisdiction. The District Judge recognised that Mr Hussain had already been tried in the US and so could not be tried alongside Mr Lynch. However, as was established in Ejinyere v US [2018] EWHC 2841 (Admin), this section does not require a joint prosecution and, even where joint trials are not possible, there were “benefits from trying all co-defendants under the same law, before the same courts and ensuring that all those convicted are sentenced under the same sentencing regime.” As to Mr Lynch’s complaint that there would be an inequality of arms if he were to be tried in the US because prosecution witnesses had been granted immunity, but his defence witnesses had not the District Judge ruled that it was open Mr Lynch to make an application to the US court for defence witness immunity.

(g) Mr Lynch’s connections with the United Kingdom

The Court agreed that Mr Lynch’s ties to the UK are strong and long-standing, and this factor was an important one weighing against extradition.

However, applying an overall evaluative process of the factors for and against extradition, the District Judge held that extradition to the USA was in the interests of justice and that the forum bar did not apply.

Comment

This case demonstrates that forum arguments are highly fact-sensitive. Introduced in 2013 to address a perceived imbalance in the UK/US extradition arrangements, the forum bar has only been successfully advanced on four occasions. First in the case of the hacker Lauri Love and most recently in December 2020 in the case of Christopher Taylor wanted for fraud and computer offences.

In Mr Lynch’s case, the court’s forum analysis was heavily swayed by the SFO’s belief that the UK was not the correct jurisdiction in which to prosecute Mr Lynch.  That belief, in turn, was strongly influenced by the SFO’s view that it would be very difficult to use evidence from US cooperating witnesses in a UK trial, as well as to discharge its disclosure obligations in respect of those witnesses.  There is no reason to doubt that view, but it illustrates a wider and persistent problem in cases of UK/US concurrent jurisdiction.

First, the US criminal justice system, especially in high-profile fraud cases, is heavily reliant on ‘flipping’ more junior employees into co-operating witnesses through plea bargaining, which in turn is reliant on very high sentences and heavy discounts, both of which are in the gift of the US prosecutor.  The equivalent UK framework, much to the obvious frustration of SFO Director Lisa Osofsky, does not permit such easy ‘flipping’ and the heavy-handed, plea-bargaining tactics employed by US prosecutors are often viewed as coercive and unfair on this side of the Atlantic.  By the same token, disclosure obligations on UK prosecutors can be considerably more onerous than for their US counterparts, especially in relation to the process by which a witness was persuaded to co-operate.  Therefore, it is not hard to understand why the SFO viewed the fact that the US case against Mr Lynch hinged on evidence from co-operating witnesses as potentially an insurmountable barrier to a UK prosecution.

Within the confines of the extradition proceedings, this conclusion and the weight placed on it by the District Judge is hard to challenge.  However, it raises the possibility that the use of co-operating witnesses will be a US ‘trump card’ in concurrent jurisdiction discussions between the respective prosecutors and any subsequent extradition proceedings.  Given the healthy and justifiable aversion within the UK criminal justice system to eye-watering US sentences, over-powerful prosecutors, and coercive plea bargaining, how at the same time can these factors be in the ‘interests of justice’ to support extradition when the defendant could be prosecuted in the UK instead?  This is the conundrum posed by Mr Lynch’s case, which our extradition procedures appear powerless to address.