Upcoming Mallesons seminarsAll individuals who may be subject to investigations by the Securities and Futures Commission (SFC), including directors and officers of corporations and financial institutions and licensed persons.
What do you need to do?Ensure that you understand the ambit and purpose of the SFC's request for your attendance at interviews and be adequately apprised of your rights at such interviews. Remember your right to claim privilege against self-incriminatory answers and that those compelled answers may be used against you in certain criminal legal proceedings.
Adeline Chin
Partner
Hong Kong
Simon Clarke
(文家立)
The Court of First Instance of Hong Kong has recently held that the right to record oral answers at interviews was implied under the Securities and Futures Ordinance ("SFO") and that it is reasonably necessary for an investigator to insist on an audio recording at interviews.
The decision in A v Securities and Futures Commission & Another is significant as before this ruling, the practice had always been that investigators could not insist an interview be audio or video recorded.
Background
The SFC appointed investigators to look into possible insider dealing by the Applicant in certain listed shares. The Applicant agreed to attend interviews with the SFC investigator and answer questions. He requested the interview be conducted in Putonghua (his native language), or an independent interpreter be present.
The Applicant alleged that the SFC investigator was not a fluent Putonghua speaker and was concerned that the interviewer would not be able to accurately understand and transcribe his answers. The Applicant requested that the questions posed to him and his answers, be recorded in writing.
The SFC investigator proposed that the interview be video recorded or, at the very least, be audio recorded. The Applicant objected to both. The SFC investigator nevertheless insisted on recording the oral answers which led to the Applicant applying for judicial review.
The power to audio record an interview is implied
The Applicant contended that the SFC had no power to insist on the audio recording of interviews because the statute did not expressly allow for this. He accepted however, that an investigator had the power to record an interview, but that it should be restricted to written means, including a simultaneous verbatim transcript by a stenographer.
Reyes J took the view that the SFO impliedly authorises an investigator to record oral answers given at an interview and considered that an audio recording was “the minimum reasonably necessary to ensure a degree of integrity to the interviewing process”. In the circumstances the court held that such power was reasonably incidental and necessary to the SFC's powers to compel a person under investigation to answer questions under the ordinance.
Audio recording an interview does not breach right of privacy
The Applicant also argued that the audio recording was intrusive and in breach of the right of privacy guaranteed by Art. 30 of the Basic Law; Art. 14 of the Hong Kong Bill of Rights and Art. 17 of the International Covenant on Civil and Political Rights.
Reyes J considered a New Zealand High Court case Jaffe v. Bradshaw, which concerned similar circumstances and in which the court examined whether the Serious Fraud Office Act 1990 permitted the videotaping of interviews. The interviewee in that case objected to the videotaping because an adverse impression of himself may be formed from irrelevant factors (such as lighting, camera angle, misframing). The court considered that any potential prejudice arising from a video recorded interview did not counter-balance the use of video as an accurate and effective means of recording an interview.
In the present case, the Applicant did not produce any evidence to show that physically or psychologically the audio recording process was unduly intrusive, stress inducing or likely to cause misapprehension. Reyes J considered that on balance, the use of sound recording was more likely to protect (rather than interfere with) a citizen's well-being. Accordingly, the court rejected the argument that audio recording constituted unwarranted interference with privacy.
Although the court did not have to decide the issue of videorecording, Reyes J commented that he had “deep scepticism over the submission in Jaffe that video-taping may give rise to significant unfair prejudice”.
Commentary
It is too early to tell whether the SFC’s implied powers can be extended to videotaping. It is clear however, that this case heralds changes in the way the SFC conduct interviews. We have seen this in our cases with the SFC who have begun to introduce audio recording at interviews. This clearly raises concerns over the rights of affected individuals in an increasingly aggressive regulatory environment where the SFC's powers are already extensive.
Author
Katherine Newman, Solicitor
In a recent decision handed down in November 2007 - Koon Wing Yee v. the Securities & Futures Commission, the High Court confirmed the SFC’s right to compel a person to attend interviews and to answer questions notwithstanding the answers may incriminate him.
The Court held that as Mr. Koon (the Applicant) had not been charged with any criminal offence at the time of his interview, the “right to silence” afforded under the Bill of Rights Ordinance had no application.
Background
In the course of investigating possible market misconduct, the SFC issued a notice to Mr Koon to attend interviews and answer questions. Mr Koon brought judicial review proceedings against the SFC on the basis that the notice was in breach of the Bill of Rights, which provided that “in the determination of any criminal charge”:
- a person should not be compelled to testify against himself or to confess guilt (Article 11(2)(g)), and
- a person is entitled to a fair hearing by an impartial tribunal (Article 10).
The SFC argued that the proceedings were premature, as no criminal charges have yet been laid against Mr. Koon.
The High Court ruled in favour of the SFC and dismissed Mr. Koon’s application on the following two grounds:
- The Court found that it was bound by a Court of Final Appeal case decided on the same point (“First Ground”).
- Historically, it had always been the position that a person under investigation was obliged to attend to interviews and give answers and since circumstances had not changed, the historical position should be followed (“Second Ground”).
First Ground : decision from upper court
In HKSAR v. Lee Ming Tee & Another the CFA held that the Bill of Rights only applies to persons who face a criminal charge. Saunders J in the present case considered that the CFA decision was conclusive and binding, and because Mr. Koon had not yet been charged with any criminal offence, the Bill of Rights had no application.
Saunders J further considered that if criminal proceedings were commenced against Mr. Koon, his compelled answers were in any event inadmissible by virtue of S. 187(2) of the Securities and Futures Ordinance (“SFO”), which would render his compelled answers generally inadmissible in subsequent criminal proceedings.
Second Ground : historical position
The Court took the view that historically under the repealed s 33 (1) of the Securities and Futures Commission Ordinance, it had always been the position that a person under investigation was obliged to attend interviews and answer questions. The Court of Appeal in R v Securities and Futures Commission Ex Parte Lee Kwok Hung held that the aforesaid provision does not offend either Article 11 (2) (g) or Article 10 of the Bill of Rights.
The current corresponding provision under the SFO is, although less comprehensive, of the same effect of the repealed s 33(1). As the circumstances have not changed since the Lee Kwok Hung case, that judgment should be followed.
Commentary
The Court has once again confirmed the SFC’s powers to compel a person to attend interviews and provide answers under the SFO. It is important to fully appreciate the ambit of this power and its consequence since, if criminal proceedings are to be pursued, any derivative information from the compelled answers are admissible in those criminal proceedings.
Author
Katherine Newman, Solicitor