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47/10 10 May 2010
The OFT has decided to withdraw its criminal proceedings against four current and former British Airways executives for price-fixing.
The decision follows the discovery last week of a substantial volume of electronic material, which neither the OFT nor the defence had previously been able to review. Given that the trial had already begun and the volume of material involved, the OFT accepts that to continue with the trial in light of this unforeseen development would be potentially unfair to the defendants.
The previously undisclosed electronic material includes e-mails sent or received by Paul Moore, one of the former employees of Virgin Atlantic Airways, whose evidence the jury was due to start hearing today. An initial review of the material indicated that almost all of it was of no relevance to any of the issues in the case and that it did not fundamentally undermine the prosecution's case. However, in light of rulings made by the trial judge last Friday, the OFT has concluded that it would not be realistic to request an adjournment of the trial, which the late disclosure of the additional electronic material would otherwise have necessitated. Following the OFT's decision, the four defendants were acquitted by the jury at a hearing at Southwark Crown Court this morning.
Counsel for one of the defendants suggested in court today that these proceedings should never have been brought. It was made clear in court that the OFT disagrees with this. Prior to the initiation of the criminal proceedings and throughout those proceedings, the OFT has applied the Code for Crown Prosecutors, a fundamental principle of which is that Crown prosecutors must at all times act in the interests of justice. The full Code test imposes upon the prosecution a two-stage test: firstly, an assessment of the evidence and whether it provides a realistic prospect of conviction, and secondly, whether a prosecution is in the public interest. This test was applied before the initiation of these proceedings, and continued to be applied by the OFT throughout. The prosecutions would not otherwise have been brought.
The events leading to today's decision date back to the early stages of the OFT's investigation which started in 2006 and was the OFT's first major criminal investigation to be launched on the basis of an application for immunity. In the early stages of the investigation electronic material was provided to the OFT by Virgin Atlantic pursuant to its obligation as a leniency applicant to provide the OFT with continuous and complete cooperation. The omission from this material of a significant number of emails only came to light after the start of the trial. Had the omission been uncovered earlier, the OFT believes there is every prospect that the trial would have been able to proceed.
The OFT acknowledges responsibility for its part in this oversight, which occurred at a time when the UK criminal cartel regime was still relatively new and the OFT's approach to the handling of leniency applications in the context of parallel criminal and civil investigations was still evolving. Since then the OFT has also prepared detailed internal guidance on criminal procedures and developed its forensic IT capability and experience. The OFT has also made a number of appointments to strengthen its criminal investigation and prosecution functions and - independently of this case - is in the process of further strengthening its capabilities in this area through two senior investigator and criminal lawyer appointments.
Today's decision by the OFT and the circumstances that have necessitated it also raise a number of important issues as regards the way in which the OFT interacts with leniency applicants and their advisers, including how it obtains electronic material and other evidence from them.
The OFT has already addressed a number of these issues - as reflected, for example, in changes already made to its published leniency guidance - and will reflect further on the revised guidance and any other lessons arising from this case.
The OFT will also be reviewing the role played by Virgin Atlantic and its advisers in light of the airline's obligations to provide the OFT with continuous and complete cooperation. This may have potential consequences for Virgin's immunity from penalties. However, no inferences or conclusions should be drawn at this stage regarding the outcome of that review. Moreover, no adverse decision affecting Virgin Atlantic's immunity status would be made without having provided Virgin with an opportunity to make representations on the matter.
Today's decision relates only to the criminal proceedings against individuals. The OFT has no reason to believe that the issues that have now arisen in those proceedings will have any impact on the OFT's civil case (save possibly as regards Virgin Atlantic's immunity, as above), as this concerns the conduct of the companies involved rather than the alleged dishonesty of individuals.
The OFT's commitment to investigating and prosecuting those who engage in criminal cartel activity is unaffected by today's decision. This commitment is underlined by the staffing and procedural developments outlined above.
The OFT expects to make a further statement once it has had a chance to respond in court tomorrow to statements made today by defence counsel.
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