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Cite as: [2015] EWHC 4111 (Admin)

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Neutral Citation Number: [2015] EWHC 4111 (Admin)
CO/2874/2015

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
DIVISIONAL COURT

Royal Courts of Justice
Strand
London WC2A 2LL

8 December 2015

B e f o r e :

LORD JUSTICE LLOYD JONES
MR JUSTICE COULSON

____________________

Between:
KOTOVA Claimant
v
DIRECTOR OF PUBLIC PROSECUTIONS First Defendant
COMMISSIONER OF POLICE THE CITY OF LONDON Second Defendant

____________________

Computer-Aided Transcript of the Stenograph Notes of
WordWave International Limited
Trading as DTI Global
165 Fleet Street London EC4A 2DY
Tel No: 020 7404 1400 Fax No: 020 7831 8838
(Official Shorthand Writers to the Court)

____________________

Mr Timothy Owen QC and Mr Aaron Watkins (instructed by Byrne & Partners) appeared on behalf of the Claimant
Mr Timothy Cray (instructed by Crown Prosecution Service) appeared on behalf of the First Defendant and Second Defendant

____________________

HTML VERSION OF JUDGMENT
____________________

Crown Copyright ©

    MR JUSTICE COULSON:

    1. Introduction

  1. The claimant is a Russian woman who, in June 2014, was convicted in Russia of one charge of attempted bribery. She was sentenced to five years' imprisonment that was suspended and in September 2014, about three months later, she was released from that suspended sentence pursuant to a general amnesty. The claimant is also the subject of a criminal investigation in the United Kingdom, again in respect of an allegation of bribery. The precise stage reached in the UK investigation was the subject of a dispute with which I deal in section 3 of this judgment.
  2. It is the claimant's case that the maintenance of the UK investigation against her is oppressive and irrational. There are two strands to that argument. The first and the primary ground put forward by the claimant is that, because the circumstances surrounding the bribe which forms the centrepiece of the UK investigation were considered by the Russian court, there is a clear risk of double jeopardy. The second argument which is apparent from the papers (although it was not addressed orally) is that the UK investigation is stagnant and inactive and therefore should not be maintained.
  3. For those two reasons the claimant seeks: (a) a mandatory order requiring the defendants to review any provisional charging decision and/or to discontinue the investigation; (b) a declaration that the defendants' current position is as a result of the defendants' maintenance of an irrational stance; and (c) costs.
  4. Permission to bring these proceedings was granted by Mrs Justice Nicola Davies on 20 August 2014. The defendants failed to serve their evidence in accordance with her timetable. The eventual evidence was served on 17 November. That went not to the double jeopardy point but to the status of the process in the investigation in the UK. The claimant does not object to the admission of that evidence, and this court admitted it earlier today. Similarly, the claimant yesterday made an application to rely on a further witness statement that did go to the double jeopardy point. The defendants did not object to that evidence. Therefore, this court also permitted the claimant to rely on that late witness statement save where it might be said to trespass into areas of expert evidence relating to Russian law which is plainly inadmissible.
  5. I propose to structure this judgment as follows. Section 2 will deal with the Russian proceedings; section 3 will deal with the UK investigation; section 4 will deal with the relevant principles concerned with challenges to prosecutorial decisions; section 5 will consider the double jeopardy point; and section 6 will consider briefly the delay submission. There is a summary of my conclusions in section 7.
  6. 2. The Russian Proceedings

  7. Between July 2005 and January 2011 the claimant was a director of the European Bank for Reconstruction and Development ("the Bank"). The Bank has its main office at 1 Exchange Square, London EC2. As the director of the Russian Federation, Belarus and Tajikistan Office at the Bank the claimant had the power either to veto any project in those countries altogether or to delay financing by expressing reservations which then had to be considered by the Bank's board.
  8. In February 2009 a company called Canbaikal Resources made an application to the Bank for a loan of $95 million to finance the development of the Untygeisky and Kulunsky oil fields and the construction of a pipeline. The principal director of Canbaikal Resources was Sergei Chernikov. The application was time-sensitive. For the project to be viable, the money had to be in place by the winter of 2010.
  9. Working with a senior vice-president of the Bank, I A Lebedev, the claimant decided to solicit a bribe from Canbaikal in return for not exercising her power to veto or delay the project which, because of its time-sensitive nature, came to the same thing. The bribe requested by the claimant was in the sum of $1,425,000, with $150,000 being paid as an advance. The claimant solicited this bribe from Mr Chernikov at a meeting on 26 May 2010 at the Djhu-Djhu Restaurant on Smolensky Boulevard in Moscow. Lebedev was also present. Thereafter, as the subsequent judgment of the Russian court put it, the claimant "decided to put Chernikov in such a situation that he would be unable to refuse to make an unlawful payment in order to prevent negative consequences for legitimate interest of Canbaikal Resources". The claimant did this by providing untruthful and damaging information about Canbaikal's finances to the officials at the Bank who were scrutinising the Canbaikal offer. Levedev told Chernikov what the claimant had done. In this way the claimant hoped to make Chernikov - and thus the viability of the Canbaikal proposal - wholly dependent upon her support.
  10. However Mr Chernikov promptly contacted the Bank's compliance office and told them what was going on. Thereafter, as the Russian court put it, he "expressed a false acceptance of her unlawful demands" in order to obtain proof of her illegal actions. Compliance officers were with him when he spoke to the claimant on the telephone and agreed to pay the money she asked for.
  11. As a result of these events, the Russian court was anxious to stress that although the bribe had been solicited and payment had been accepted, no money had actually changed hands. They said, "Kotova and Levedev did not bring their criminal plan to completion due to circumstances outside their control as Chernikov decided not to give money to them but to write a complaint to the Bank which initiated an inquiry into Kotova".
  12. The claimant and Levedev fought their trial between February and June 2014. Moscow District Court produced a lengthy judgment dated 16 June 2014, parts of which we have already referred to. It confirmed that it had been established that the claimant "committed preparation for commercial pay, ie deliberately created conditions for receiving improper financial funds by an official for her actions in the interests of the giver and in connection with her official duties, including pay-off/extortion, however failed to finish the contemplated crime due to circumstances outside of her control". At page 43 of the judgment, when dealing with sentencing, the court noted that the claimant had committed "an unfinished crime [so that] the ..... maximum sentencing cannot exceed of the maximum most strict punishment" under the Russian Criminal Code. It was on that basis that the court arrived at the five-year term.
  13. 3. The UK Investigation

  14. The UK investigation is also concerned with the claimant's improper performance of her role at the Bank. In 2009 Vostok Energy Ltd, a company incorporated in the UK and involved in the oil and gas industry, made an approach to the Bank for funding. In June 2009, finance of $100 million was provisionally approved, being an equity investment of $40 million and a loan of $60 million. At the time that this proposal was being finalised the claimant met the Chief Executive Officer of Vostok, Alexander Kapelson, for dinner. That took place on 15 July, five days after the Vostok project had passed the Bank's final review and two weeks before it was due to be presented to the Bank's board for final approval.
  15. On 16 July the claimant called Alexander Kapelson. On 17 July there was a further call, and two other important things happened. First, the sum of $199,985 was received into the account of a company called Heyburn Investment Inc, a company which had been set up by the claimant some years earlier. The payment was made from the Monaco bank account to which Alexander Kapelson was a signatory and was in the name of a Russian associate of his. Secondly, the claimant sent a written document to the Minister of Economic Development at the Russian Federation announcing her intention to support the Vostok project. The Vostok project was then presented and approved by the Bank on the basis set out above.
  16. Once the Russian investigation into the attempted Canbaikal bribe began, the Bank conducted an internal investigation into the claimant's activities. Documents were found which indicated the sum paid in respect of the Vostok project.
  17. In December 2010 the second defendant in these proceedings formally began its investigation. The features of that investigation included: (a) on 18 January 2011 at a full board meeting of the Bank the Bank agreed to a waiver of the claimant's privileges and amenities and those of her staff; (b) on 24 January 2011 the second defendant executed a search warrant at the claimant's home address in W1 and seized documents in connection with both Vostok and Heyburn Investment, including a statement showing the credit for $195,985 in July 2009; (c) on 4 April 2011 Vostok's solicitors were informed by the City of London Police that they suspected that Alexander Kapelson had made a corrupt payment to the claimant.
  18. A computer search of Vostok's database revealed a number of documents detailing the Monaco account from which the money was paid to Heyburn Investment. On 20 April 2011 search warrants were executed at the address of Dennis Kapelson (Alexander's son) and amongst the items seised were instructions in relation to the Monaco account. At the offices of Vostok a number of bank payment instructions were recovered, amongst which was a wire transfer instruction dated 17 July 2009 for $200,000 to be paid from the Monaco account to the Heyburn Investment account.
  19. On 21 June 2013 at Southwark Crown Court Alexander Kapelson pleaded guilty to an offence of making a corrupt payment, contrary to Section 1 (1) of the Prevention of Corruption Act 1906. He was sentenced to twelve months' imprisonment. The claimant was named in the particulars of the offence on the indictment as the recipient of the bribe. It is the defendants' case that in consequence of these facts the investigation has produced extremely strong evidence against the claimant. The person who made the corrupt payment to her has admitted his guilt and been sentenced. The defendants also submit that the investigation is not stagnant. They say the only bar to the investigation proceeding further is that the claimant has not left Russia since 2010 and there is no prospect of extraditing the claimant from that country because of the Russian state's blanket prohibition on extradition.
  20. 4. The Relevant Authorities

  21. The law relating to challenges to decisions of the Director of Public Prosecutions and the Crown Prosecution Service was set out by the Court of Appeal in R v Director of Public Prosecutions ex p C [1995] 1 Crim App R 136. Lord Justice Kennedy made it clear that the grounds upon which a challenge could be made were very narrow. He identified three possible grounds: (1) because of some unlawful policy; (2) because the Director of Public Prosecutions failed to act in accordance with her own settled policy as set out in the Code; or (3) because the decision was perverse because it was a decision at which no reasonable prosecutor could have arrived. Similarly, in R v Director of Public Prosecutions ex p Kebilene [2000] 2 AC 326, Lord Steyn said that, absent dishonesty or mala fides or in an exceptional circumstance, the decision to consent to the prosecution of a party "is not amenable to judicial review".
  22. More recent cases have focussed on issues arising out of guidance or allegedly unlawful policy. Thus, in A v R [2012] EWCA Crim 434, the Court of Appeal rejected an appeal based on guidance issued by the Director of Public Prosecutions. At paragraph 83 of his judgment the Lord Chief Justice made plain that such guidance did not and could not create any immunity or defence. Similarly, claims in which prosecution policy has been challenged have also been unsuccessful. In S v Crown Prosecution Service [2015] EWHC 2868 Admin there was a challenge to the Crown Prosecution Service policy entitled the Victim's Right to Review Scheme. In that case an original decision not to prosecute S for rape was overturned on the victim's request for the matter to be reviewed. The PQBD rejected the criticisms of the policy made on behalf of S and stressed that the potential grounds of challenge to the Crown Prosecution Service decision to prosecute were narrow and would only succeed "in very rare cases". This approach, which demonstrates the high hurdle that the claimant faces in this case, has been stated in a number of the authorities.
  23. Thus, in A v R, to which we have already referred, the Lord Chief Justice said:
  24. "80 ..... We have detected the development of what may, if not arrested at an early stage, become a new form of satellite litigation, in which the exercise of the prosecutorial discretion is made subject to a judicial review or abuse of process/stay of proceedings argument in the Crown Court.
    .....
    84 ..... In summary, when it is sought to advance an argument for a stay by reference to policy or guidance issued by the Director of Public Prosecutions, by way of emphasis it is worth repeating, first, that the decision whether to prosecute or not must always be made by the Crown Prosecution Service and not the court. The court does not make prosecutorial decisions. Second, provided there is evidence from which the jury may properly convict, it can only be in the rarest circumstances that the prosecution may be required to justify the decision to prosecute."
  25. More recently, in L v Director of Public Prosecutions [2013] EWHC 1752 Admin, a case concerned with the Director of Public Prosecution's decision in two cases not to prosecute, Sir John Thomas (as he then was) said that such applications would succeed "only in very rare cases" and that the likelihood of success in such cases "would be very, very small". He said:
  26. "That is for the good and sound constitutional reason that decisions to prosecute are entrusted under our constitution to the prosecuting authorities, in this case the Director of Public Prosecutions and those who work under him in the Crown Prosecution Service."
  27. Of course it should be stressed that the judicial review hurdle is so high in this sort of case not only because the court does not take the prosecutorial decision but also because the proper forum for abuse of process arguments is the Crown Court dealing with the relevant criminal proceedings.
  28. In the present case there is no challenge to the unlawfulness of any policy or guidance issued by the Director of Public Prosecutions. As I have already noted, the challenge is based on alleged double jeopardy or delay. Moreover it is not a challenge to a decision to prosecute. Unusually perhaps, it is a challenge to a decision to continue the investigation.
  29. 5. Double Jeopardy

    5.1 The Relevant Authorities
  30. The decision in Connelly v Director of Public Prosecutions [1964] AC 1254, and the subsequent decisions which followed it, established two circumstances in English law that defend the principle of double jeopardy: (a) following an acquittal or conviction for an offence which is the same in fact and in law (autrefois acquit or convict); and (b) following a trial for any offence which was founded on the "same or substantially the same facts" where the court would normally consider it right to stay the prosecution as an abuse of process and/or unless the prosecution can show special circumstances why another trial should take place.
  31. The leading case on the second element noted above is Fofana and Belise v Deputy Prosecutor Thubin [2006] EWHC 744 Admin In that case European arrest warrants issued against the applicants for fraudulent conduct involving a French company called Serviware were set aside on the basis of double jeopardy. There, the applicants had been the subject of a specific indictment involving one transaction in the United Kingdom, again relating to Serviware. The European arrest warrants concerned a longer and ongoing course of criminality, amounting to a continuing offence. It included the United Kingdom offence. Lord Justice Auld concluded that there was a risk of double jeopardy. At paragraph 27 he said:
  32. "27 However, in the circumstances of this case the contrast in extent and seriousness between the two sets of proceedings, the extradition criminality confined, as Mr Caldwell acknowledged, to fraud against Serviware, would not be so great. A hypothetical attempt to prosecute both men again in this country on a broader charge based on both Serviware transactions, would, in my view, be vulnerable to the court directing a stay as an abuse of process."
  33. I note that what Lord Justice Auld called an 'unhappy feature' of the case was that the Crown Prosecution Service proceeded with their narrowly confined prosecution in the full knowledge of the pending and more broadly based extradition proceedings. Thus, the court concluded that although the extradition offence was not based on exactly or partly the same facts as those charged in the indictment at Southwark Crown Court "there would be such a significant overlap between them as to require the district judge to stay the extradition proceedings as an abuse of process". Lord Justice Auld then went on in paragraph 29 to take into account as part of his decision the fact that the Crown Prosecution Service had gone ahead with their own prosecution in the knowledge of the potential effect that that would have on the wider proceedings.
  34. The principal issue for this court is whether the claimant faces a real risk of being tried in the United Kingdom for an offence for which she has already been tried and punished in Russia or whether there is such a significant overlap between the two offences that a further trial in the United Kingdom was an abuse of process.
  35. 5.2 Preliminary Issue
  36. However before I consider that question, it is necessary to deal with a preliminary point raised by Mr Owen QC on behalf of the claimant. He said that no decision had been taken on the double jeopardy issue so that initially the right course was to refer the matter back to the first defendant for a decision. Mr Cray, on behalf of the defendant, said that the evidence was plain that a decision had been taken to continue the investigation, notwithstanding the Fofana point and nothing more was required.
  37. Mr Cray relied on the letter from the first defendant dated 3 February 2015. It is unnecessary to set out the whole letter. The relevant section starts at four paragraphs from the end of the first page and is in these terms:
  38. "There were in effect two investigations within the UK: one relates to the bribe where payment was not completed (the Canbaikal bribe), whilst the other relates to a bribe which was paid (the Kapelson bribe). The latter forms the basis of the ongoing investigation.
    Within the sentencing remarks there is reference to unfinished criminal acts as being central to the Russian investigation. It appears to me that the Russian court was only concerned with the Canbaikal bribe where payment was not completed whereas the bribe which was the subject of our ongoing investigation was paid and received. It appears that Judge Gurov has used the limited details of the Kapelson bribe to show that the actions of Miss Kotova were not limited to the attempted bribe for which he had sentenced her and Mr Levedev. He did not, on the face of it, take account of the second bribe which was made to Kapelson which is the position we adopt at present in the absence of any other evidence to the contrary."
  39. On the basis of that letter, we accept Mr Cray's submission. That letter is a decision on the point of double jeopardy. It has been considered, and the decision has been taken to continue the investigation.
  40. In his submissions in reply on that point, Mr Owen submitted that it was not enough. And, indeed, he said that parts of the letter were wrong and that therefore the decision was perverse. It seems to me that that pre-supposes that Mr Owen's interpretation of the Russian court's judgment - that is to say his case about significant overlap - is right. So it still means that the court has to move on and consider that issue.
  41. 5.3 Is there a significant overlap?
  42. In my judgment the necessary element of overlap that was found to exist in Fofana is not present here. There, the UK offence was within the ongoing offence that was subject of the European arrest warrant. Here, there is no ongoing offence. There were two separate bribe offences. I note in particular the following: (a) the claimant was charged in the Russian proceedings with one offence only (the attempted bribe in respect of the Canbaikal project); (b) the claimant was convicted of that one offence only; (c) the claimant was sentenced for that one offence only; (d) the sentence of the Russian court was expressly said to be half of that which would have applied for a completed offence. That was because it was an attempt only. An attempted bribe is an apt description of the Canbaikal transaction because the person from whom the bribe was solicited went to the authorities and no money changed hands; (e) the Vostok bribe never formed part of the charge or conviction in the Russian court; (f) the Vostok bribe was not taken into account in sentencing because it was a completed offence and the sentence was for an attempt only; (g) an attempted bribe was not an apt description of the Vostok bribe because the transaction was completed by a payment to the claimant's company.
  43. On the face of it, therefore, the double jeopardy rule is of no application. If the claimant returned voluntarily to the UK and proceedings were brought, she would not, in my view, be in danger of being tried and punished for something for which she has already been tried and punished in Russia.
  44. On analysis, the highest that it can be put is that the Vostok bribe was referred to at various times in the judgment of the Russian court. Many of those references appear to go to the background only, and dealing with the claimant's ongoing criminal activities. They related to her course of conduct. In a case in England and Wales they might be regarded as matters of bad character or they might be regarded as matters of corroboration. They were plainly considered by the court, but they were not integral either to the conviction or the sentence. One example of this perhaps is useful. From page 41 onwards in the Russian court's judgment there is some material about the Vostok bribe. It is plain on a reading of that judgment that that material is there to deal with one strand of the claimant's defence. The claimant claimed that the investigation of her position at the Bank was driven by the political struggles there and the desire of the Bank's top management to incriminate her because she was a potential candidate for the position of vice president of the Bank.
  45. The court considered and rejected that defence. Instead, they found that the claimant's dismissal from her position at the Bank was not as a result of some internal political struggle but it resulted "from her abusing of her official authority in her personal mercenary interests". It is in that connection therefore that some detail is set out in respect of the Vostok bribe.
  46. There is one final aspect of the double jeopardy argument with which we must deal. Yesterday, the claimant sought to rely on a witness statement from a Major Oxana Kurmangaleeva dealing with the investigation in Russia into the claimant's conduct. The first point to make about that evidence is that the major is unable to help with any aspect of the trial or the judgment but she accepts that she played no active role at the trial stage. Her evidence on that topic, such as it is, is speculation. The aim of the major's statement appears to be to focus on the indictment. She says that the investigating team, of which she was part, considered including the Vostok allegation in a draft indictment. She goes on to say:
  47. "The indictment reflected all the information collected on those matters in the course of the investigation ..... The objective of this was to enable the trial court to consider all those matters on a freestanding basis and independent of the main charge on Canbaikal."
    The indictment is twenty-four pages long.
  48. On analysis, I conclude that the major's evidence does not take the matter any further. As I have already explained, the Russian court did indeed consider the other matters arising out of the Bank's investigation into the claimant, not as part of the main case but by way of background. That was, as the major herself puts it, "independent of the main charge on Canbaikal". Furthermore, whatever the draft indictment may have said, the completed version of the indictment makes it clear that it relates to one offence only committed "in complicity with Igor Levedev". That is the attempted Canbaikal bribe. Lebedev had no involvement with the Vostok bribe. The indictment also states that the claimant "has committed an attempted crime". Again, that must be the attempted Canbaikal bribe. The "circumstances of the crime" set out in the next two pages of the indictment are all about Canbaikal. There is no mention of the Vostok bribe there at all. Moreover under the heading "Material Evidence" the critical matters set out are all about the Canbaikal bribe. There is no mention of the Vostok bribe until the seventeenth out of eighteen bullet points which together cover five closely-typed pages.
  49. Accordingly, the major's evidence about the indictment does not modify in any way the analysis which I had previously set out. The two bribes were and are different offences.
  50. 5.4 Conclusions on the Double Jeopardy Point
  51. In my view therefore, for the purposes of this judicial review, there is no double jeopardy. The claimant was charged in an indictment and convicted at trial of one attempted bribe in connection with the Canbaikal project. She has never been charged in Russia with any bribe or corruption charge in connection with Vostok Energy. The recital of the facts concerned with the Vostok bribe, in the judgment of the Russian court, was designed to demonstrate the falsity of her defence that she was removed as director of the Bank for political reasons rather than her criminality and was also part of the relevant background.
  52. The sort of significant overlap referred to in Fofana is absent here. I, therefore, reject the first ground of the application for judicial review.
  53. 6. Delay

  54. This can be dealt with much more shortly. It is said in the papers that the investigation against the claimant is stagnant and has been so delayed that it is oppressive and should be brought to an end by the court. In my judgment this argument does not get off the ground for two reasons. First, I have already explained that the court will only interfere in prosecutorial decisions in very rare circumstances. On the basis of the factual summary noted above, there is no way in which the delays in this case could be said to be so exceptional or oppressive that they warrant judicial review proceedings.
  55. Secondly, I do not accept as a matter of fact that the investigation is stagnant. It is as a matter of fact essentially complete. The person who accepted the Vostok bribe - the person who made the Vostok bribe to the claimant - has already pleaded guilty and has been sentenced. The only reason the claimant herself has not yet been charged in the UK is that she cannot be extradited from Moscow and has not voluntarily returned. That cannot be said to be the fault of the defendants.
  56. 7. Conclusion

  57. For the reasons that I have set out above, if my Lord agrees, I would dismiss this application for judicial review.
  58. LORD JUSTICE LLOYD JONES: I agree.
  59. MR CRAY: May we have our costs?
  60. LORD JUSTICE LLOYD JONES: Are you asking us to assess those costs summarily?
  61. MR CRAY: An interim costs schedule, I think, has been submitted.
  62. LORD JUSTICE LLOYD JONES: I have the claimant's schedule but not the defendants'. We can share. (Pause)
  63. MR JUSTICE COULSON: It is in the total sum of 5,666. Is that right?
  64. MR CRAY: It is an interim figure. I am told it does not include the costs of today. We could supply - if the court is inclined to make the order - a final figure within twenty-four hours.
  65. MR JUSTICE COULSON: Mr Owen, what do you say about the principle of it?
  66. MR OWEN: I have not seen the costs schedule at all. But as a matter of principle, plainly - - sorry, we have apparently received it. I have not seen it. Can I deal with it as a matter of principle? In normal circumstances clearly I would accept costs follow the event. There is however a somewhat unhappy history of the CPS's involvement in these proceedings which the court may consider makes it inappropriate for the normal order to follow; so that is my primary submission. In other words, there should be no order as to costs. If however the court considers, well, you got the documents two weeks ago and you have still carried on, the court could make a limited award purely from that date. Accordingly, no costs up to that point. Therefore, effectively it would be the costs of today. That is my submission.
  67. LORD JUSTICE LLOYD JONES: We consider that the defendants should have their costs in their entirety. It would not be appropriate to make any deduction from those costs in respect of the late service of evidence. However we are unable to embark on summary assessment because the schedule which has been provided by the respondents is incomplete. In those circumstances we make an order for detailed assessment.
  68. We are very grateful to counsel for their interesting submissions.


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