Alibhai & Ors, R v

Introduction

They have all been granted leave to appeal by the single judge on what we will call broadly grounds of inadequate disclosure, but he refused leave to appeal in relation to other grounds. We have ourselves given leave to argue three other grounds of appeal but the principal arguments on the appeal related to disclosure. It will be necessary to set out the background as shortly as we may.

Prosecution Case

The main categories of the evidence against the appellants were:-

The first phase of the conspiracy started in about September 1998 and ended in about December 1998. In early 1998, using the false identify of “Peter Matthews”, Peter Eliot (who was, in the event, acquitted by the jury) set up a company called PM Metals at the behest of Alibhai and Bakir. PM Metals purported to sell PCS software to the value of over £356,000. PCS was the true source of this software, which was counterfeit. PCS used a company called Oracle Trading Worldwide, which the third appellant Adam Collier purported to run, as a front for supplying counterfeit software to other dealers. Steve Cooke (acquitted at the end of the prosecution case) was a broker for Oracle, who sold counterfeit goods to various customers. Money therefore flowed back from Oracle’s customers to Oracle to PCS and eventually to PM Metals. It was returned to Alibhai and Bakir in cash by Eliot.

The second phase started in about December 1998 and ended in late April 1999, when Eliot went to Canada. In this phase, a company called Essential Options (trading as Precision Multi Media or “PMM”) was the purported supplier. Peter Eliot ran PMM as well as PM Metals. He set it up using the false identity of “Clive Greager”. A company called Wayfarer Ltd, run by the fourth appellant Nathan Dias, purported to buy software from Essential Options and paid over £941,758 to Essential Options. Wayfarer then purported to sell this software to a company called Lothbury Ltd. This company, run by the appellant Collier, replaced Oracle. In this phase of the conspiracy, PCS had dropped out of the picture as a named supplier, although Alibhai and Bakir and PCS were in fact continuing to control the distribution of the counterfeit software. Lothbury purported to sell the counterfeit product to customers. The money therefore went from Lothbury’s customers to Lothbury, to Wayfarer to Essential Options/PMM. Eliot passed most of the money from the Essential Options account back to Alibhai and Bakir in cash.

The third phase began in about April or May 1999. Eliot had disappeared, possibly with some of Alibhai and Bakir’s money. For a short period, in May and June 1999, Nathan Dias did the money laundering which Eliot had been doing. He took cash directly out of Wayfarer. In June and July 1999, a company called Trice took over the role that Essential Options had played. Trice was replaced by a company called JC Ravandi between July and October 1999.

In April 1999 Dan McGrath, who traded from Austin, Texas, flew to the UK to meet Alibhai and Bakir. They decided to do business. PCS sold counterfeit product to McGrath, between April 1999 and June 2000. On 16th June 2000, McGrath was caught by the FBI with a large quantity of counterfeit Microsoft licences in Dallas. He quickly admitted his guilt and told the FBI the licences came from Alibhai and Bakir. He agreed with the FBI to act as an informant. Telephone conversations with Bakir were taped as were meetings with Alibhai and Bakir in July 2000. It was alleged that during recorded conversations in England Bakir offered large amounts of counterfeit product to McGrath. Alibhai and Bakir were arrested on 19th June 2000 in central London in the course of handing over counterfeit material to McGrath.

The counterfeit Microsoft products in which the appellants allegedly dealt were computer discs (“CDs”), key codes unique to CDs or sets of CDs, certificates of authenticity (“COAs”), Multiple Licence Packs (“MLPs”), End User Licence Agreements (“EULAs”), and “Original Equipment Manufacturer” CDs (“OEMs”) which are CDs bundled with their own PCs and sold by large companies with the authority of Microsoft.

The defence case

When he started using the Essential Options account, Alibhai introduced him to Dias who instructed him how the new invoices were to be made out. In the Essential Options period he made all the cash payments to Bakir. The Greager account was set up so as to make the whole operation look more professional in the eyes of the bank. All of the money withdrawn from the Greager account went back to Alibhai.

During the spring of 1999 Eliot decided that he could not go on with the laundering scheme. He told Bakir that any sum he (Eliot) owed was repaid 100 times over. He told Bakir he was keeping £7,000. The last delivery was in April at Legoland when he gave Bakir about £137,000, the proceeds of two cheques which he had laundered. He made out a cheque to himself for £2,000 on 19th April. He took some further monies before going to Canada (on 24th April).

Although at the start of the trial there had been a suggestion of a defence of duress, this was eventually disclaimed by Mr Evans QC on Eliot’s behalf. But Eliot maintained in his evidence that his fear of Alibhai and his associates was a prime reason for his continuing involvement.

Defence of Alibhai and Bakir

In relation to Eliot, Alibhai and Bakir claimed that Eliot was a supplier of software to PCS which they believed to be genuine and that Eliot rendered genuine invoices and payments made for goods supplied. They were not involved with any supplies that Eliot made to others such as Oracle and Wayfarer. They said that Eliot delivered goods to the Barn and they called two witnesses who claimed to have seen such deliveries by Eliot to the Barn.

If Eliot was suggesting that he was pressured into setting up the companies and laundering money, that was denied. Moreover, since Eliot had worked as a police officer and had expertise in personal security, such suggestions were implausible.

The defence suggested that Eliot was running a VAT fraud importing goods from Europe, charging VAT on his invoices, not accounting for it and then “disappearing”. The cash payments that came out of the company accounts were used to buy goods “off record” either in the UK or abroad.

Dan McGrath

He was a dealer in counterfeit software who lived in Austin, Texas and ran a Dallas based company called SoftCenter. He visited England three times before he was arrested on 16th June 2000:-

The extent of McGrath’s dealing with Alibhai and Bakir was a matter of dispute. McGrath maintained that it was quite extensive. He said in his evidence that he had received between 5 – 10 consignments of counterfeit goods from PCS and he gave evidence of the following transactions:-

Between about March and June 2000 McGrath was the subject of an undercover FBI operation in which one Jaworowski covertly recorded conversations with him. On 16th June 2000, in Dallas, he was arrested in possession of about 2,000 counterfeit “multicoloured” EULAs which he was about to sell to Jaworowski. As we have already said, he immediately agreed to co-operate with the FBI and claimed that he had acquired the EULAs from Alibhai and Bakir. He later co-operated with the National Crime Squad (“NCS”). He was issued with a tape recorder by Special Agent Charles Mallery of the FBI and made covert recordings of telephone calls to and from Bakir and of meetings with Alibhai and Bakir between 26th June 2000 and 19th July 2000 when Alibhai and Bakir were themselves arrested.

On 7th July 2000, whilst still in the USA, McGrath returned to PCS, under the supervision of the FBI and the NCS, some 1200 of the multi-coloured EULAs which he claimed to have received from them on 16th June 2000. The pretext for the return was that they were defective. The delivery of the package containing the EULAs was monitored by NCS officers. The arrival of the package at the Barn on 11th July 2000 and its onward journey were monitored by police. A man named Shamoon Alibhai took the package to the La Vina Wine Bar and left it there. Neither the package nor any of its contents were recovered by police. On or about 12th July 2000 McGrath came to England and thereafter recordings were made under the supervision of the NCS. The principal conversations recorded were:-

The prosecution argued that on the tapes Bakir (and on occasion Alibhai) were admitting that some of the transactions described by McGrath had taken place; that there was discussion of the production and export of EULAs; that references to sums of $38,000 (or $38,500) and $88,000 were to the amounts McGrath owed the appellants for the black and white EULAs and the multi-coloured EULAs respectively. On a number of occasions Bakir (and to a lesser extent Alibhai) boasted of sources from which they could obtain counterfeit software, for example from California, the Far East and Ireland. Bakir claimed that he had access to equipment which could add a security identification number to an existing disc and even remove such number, in order to replace it with another. The prosecution argued that the tapes provided compelling evidence that Alibhai and Bakir were offering to provide counterfeit software to McGrath and that their subsequent evidence in court explaining why they had done so and why McGrath had paid $113,500 to Boodle Hatfield were obvious fabrications.

When arrested on 19th July 2000 Bakir was in the course of showing McGrath some counterfeit 2000 Professional discs. The police recovered 3 discs. They were counterfeits. Bakir had on him a genuine COA. This was a COA of the type affixed to a computer in order to certify that the OEM software supplied by the computer manufacturer is genuine. There was no evidence that this COA was stolen. Alibhai had on him a counterfeit multi-coloured EULA.

Although, as we have said, the defendants disputed much of McGrath’s evidence about his dealings, they acknowledged the payment of $113,500 to Boodle Hatfield, explaining it as the down payment by McGrath for two servers which he was going to buy from PCS. McGrath had failed to pay the balance. He attempted to satisfy this debt by providing, in lieu of cash, products (such as EULAs) which Alibhai and Bakir were unable to sell. After his arrest McGrath inveigled Bakir into agreeing to supply counterfeit products by suggesting that he (McGrath) would be able to sell the counterfeits and to pay Alibhai and Bakir the balance of the server debt out of the proceeds. An analysis of telephone records proved beyond any doubt that McGrath had neither recorded nor reported to the FBI a large number of the conversations that he had with Bakir after his (McGrath’s) arrest – the “off record calls”. Thus it was that McGrath had “set up” the appellants in order to curry favour with the authorities. This explained why Bakir could be heard on the tapes offering to supply counterfeit software, although neither he nor Alibhai had ever done so before, and were only pretending to be able to supply such counterfeit products in order to obtain the money which they were legitimately owed by McGrath. Furthermore, the defence submitted that many of the boasts that Bakir made in the taped conversations were obvious nonsense.

The prosecution attacked the story of the sale of the servers as a fabrication. They stressed that there was no reference to the servers on any of the tapes, nor was the sale of the servers to McGrath reflected anywhere in PCS’s VAT or accounting records. The only record of such a sale was a proforma invoice which was faxed to Alibhai and Bakir by the Sayas, family friends of Alibhai, after McGrath had given evidence at the trial. The prosecution case was that this story had been concocted in an attempt to explain away the recorded conversations, that the proforma invoice had been fabricated in an attempt to pervert the course of justice and that the offers to supply counterfeit product were genuine offers which were intended to be performed

The above summary of the evidence is only a condensed version of a highly complex factual case but we consider it sufficient for the purpose of determining the issues that arise in these appeals. It demonstrates the importance of McGrath’s evidence to the Crown’s case, and so the potential relevance of any evidence of any incentive or pressure that might lead him to give untruthful evidence against the appellants. It also shows the basis for the argument advanced on the appellants’ behalf about what material might assist the defence: that information about telephone conversations between Bakir and McGrath, which took place between McGrath’s arrest on 16th June 2000 and his trip to England, would set the context for, and inform the interpretation of, the recorded conversations upon which the Crown relied; that information about McGrath’s other dealings might indicate a source for the counterfeit products that he had other than the defendants; that McGrath’s banking records might undermine his evidence about the extent of his dealings with Bakir and Alibhai.

The appeals

In opening the appeal on behalf of Alibhai and Bakir, Mr Birnbaum QC acknowledged that the Crown had either disclosed or arranged the disclosure by others of an enormous quantity of documents but he maintained that disclosure of some vital documentation never took place or took place so late that the trial could be seen to have been unfair with the result that the convictions of both Alibhai and Bakir were unsafe. This was Ground B of the appeal. There were four particular areas where disclosure was criticised namely-

The final ground of appeal (Ground F) was that the judge should have excluded the evidence of McGrath in whole or in part or should have discharged the appellants at the time when he decided that there was no case to answer against the 5 defendants discharged at the end of the prosecution case.

Ground B: Disclosure in general

The position of the Crown and third parties in relation to disclosure

Sections 3(6) and 7(5) of the Act provides that material must not be disclosed, as part of primary or secondary disclosure respectively, to the extent that the court, on the prosecutor’s application, concludes that it is not in the public interest to disclose it. Section 15 requires the question of public interest immunity from disclosure to be kept under review by the court. Section 16 provides that where an application for public interest immunity is made and a person claiming to have an interest in that material applies to be heard and shows that he was involved in the prosecutor’s attention being brought to the material, the court should not make an order without giving him an opportunity to be heard. These provisions are of some importance on this appeal because public interest immunity was claimed by the Crown (inter alia) in respect of material in their possession, but originally held by the FBI in Dallas, relevant to the other FBI investigation in respect of which McGrath was also an informant (the Wu investigation). On more than one occasion, Microsoft attended in front of the judge by counsel and were heard when public interest immunity was being considered. This attendance was misleadingly described, by counsel then applying for immunity on behalf of the Crown, as occurring because Microsoft were concerned about commercial confidentiality. This was later corrected by Crown counsel and Jack J recognised, and emphasised, that commercial confidence could not be the basis for a claim of public interest immunity. It was also said by the defence that the judge had afforded access to the victim of the crime in the absence of the defence and that that was improper. In fact both Her Honour Judge Mowat (when she dealt with public interest immunity applications) and Jack J were permitting Microsoft to exercise their right under section 16 of the 1996 Act.

Section 16 of the Act is the only section that refers in terms to a third party rather than the prosecution and does not deal with material in the hands of that third party. Formally, material in the hands of a third party, if it is not volunteered, can only be brought to the attention of a criminal court pursuant to the Criminal Procedure (Attendance of Witnesses) Act 1965 section 2 of which provides that, if the Crown Court is satisfied that a person is likely to be able to give material evidence or produce any document or thing likely to be material evidence, the Crown Court should issue a witness summons directed to that person, requiring him to attend and give evidence or produce the document or thing. This procedure is not altogether satisfactory because:-

It is, however, important to be aware that the Attorney General’s Guidelines of 29th November 2000 (set out in the supplement to Archbold) do have relevant provisions in relation to disclosure of information in the hands of third parties under the heading “Involvement of other agencies”. Paragraph 29 applies to “Material held by Government Departments or other Crown bodies”. The following 4 paragraphs apply to “Material held by other agencies” and provide as follows:-

The formal position at trial in relation to material or information in the possession of Microsoft, the FBI and McGrath personally was, therefore, governed by these paragraphs of the Guidelines. Since it was possible to discern that each of these parties might have relevant material, it is not surprising that both the Crown and the defence attempted to pursue consensual methods of obtaining relevant material. It is, of course, important that victims of fraud should be willing to make relevant disclosure and take efficient steps to arrange such disclosure. The defence now assert that the consensual arrangements proved inadequate and that the defendants should not, therefore, have been tried or, once the jury had been empanelled and it was clear that relevant material was not going to be disclosed, the jury should have been discharged since it was an abuse of process for the Crown to continue to seek verdicts against the defendants. Alternatively, they say that the court should have excluded evidence adduced by the Crown (specifically the evidence of McGrath) upon which the undisclosed material might have an impact and that the Crown should not have been permitted to rely on such evidence. In order to assess this submission it is necessary to set out the history of the relevant disclosure problems as they arose particularly in relation to (1) information about the reasons for McGrath being prepared to inform on Alibhai and Bakir, obtain evidence against them and, in due course, give evidence for the Crown, (2) McGrath’s own business, banking and telephone records and (3) the FBI’s investigation into alleged dealing with counterfeit Microsoft products in California and, in particular, the Wu investigation.

History of Disclosure

On 2nd November (the second day of the trial and before the jury was empanelled) Mr West of the CPS wrote to Mishcon de Reya in the following terms:-

The first five and a half days of the trial were taken up by legal arguments including arguments about abuse of process and public interest immunity. The main thrust of this first of many applications to stay the proceedings for abuse of process was that certain documents had been listed by the Crown in their disclosure of unused material but the Crown had subsequently learnt from Microsoft that Microsoft considered that the documents should not be disclosed to the defendants and so, before any inspection had taken place on behalf of the defendants, the documents were removed from the material available for inspection. Jack J refused the application for a stay for abuse of process observing in his written reasons delivered on 12th November 2001 that there was no evidence of prejudice to the defendants since he was able to decide whether disclosure of these “withdrawn” documents should be given. He did, in fact, order disclosure at a later date and the documents were with the defence by mid-December. Although much was made of this incident both before the judge and before us as showing that the prosecution had allowed itself to be improperly influenced by or indulgent towards Microsoft, no challenge has been advanced to the judge’s ruling, which was clearly correct.

As far as disclosure more generally was concerned, Mr Birnbaum was able to tell the judge on 7th November that he had reached agreement with Mr Hines, counsel whom Microsoft had instructed, through the solicitors Mishcon de Reya, that Microsoft would produce from their files, whether in England or the United States, all material in their possession relating to the defendants and their business entities as well as relating to other named businesses and their principals; they also agreed to produce notes and reports made by Mr Thomas in relation to his liaison with the FBI and the NCS, subject to any public immunity implications, and material relating to the activities of McGrath including “any deal or arrangement made with McGrath or anything provided or offered to him by Microsoft or anyone acting on its behalf”. Mr Hines confirmed that this would be done and that Mishcon de Reya would deal in writing with Mr Birnbaum’s written requests. Documents in the possession of the FBI were agreed to be dealt with in a similar way save that the FBI were to respond through the CPS rather than through their own solicitors or counsel.

Thereafter pursuant to the agreement which had been reached with Microsoft, correspondence took place with Mishcon de Reya but Mr Birnbaum complains that Microsoft never did what they had agreed to do. Nothing had emerged by way of written response by 23rd November (by which time the prosecution had begun to call evidence) when Mr West of the CPS reminded Mishcon de Reya that a definite response (whether “positive or negative”) was awaited from them on a number of matters including material relating to McGrath. Mishcon de Reya replied on 27th November confirming their letter of 6th November and saying that, so far as Microsoft was aware, the CPS was in possession of all relevant McGrath material. They confirmed that again in a letter of 12th December 2001 and, in answer to an express inquiry from the Crown in relation to rewards or expenses paid through Mr Thomas said that no such rewards or expenses had been paid by Microsoft in relation to the case. Between 17th and 20th December Mr Thomas gave evidence in front of the jury and was asked a considerable number of questions about disclosure. On 17th December itself he handed a diary to the CPS 60 pages of which were disclosed. (On the same day the Crown disclosed to the defence McGrath’s own business records consisting of 14,000 pages and 4 hard discs). At the conclusion of his evidence on 20th December the judge asked Mr Thomas to look for any other relevant material. The next day (21st December) was the last sitting day before the court rose for the Christmas recess and Mr Thomas produced 4 further diaries. On the same day solicitors for the defence themselves wrote to Mishcon de Reya expressing concern about the lack of disclosed material that Microsoft had in their possession relating to McGrath and asking them to procure a letter from Microsoft “to the effect that they have provided full and proper disclosure of this material, both to you and to the court”.

The case resumed on 2nd January 2002 after Mr Thomas had undertaken what the judge in due course found to be a properly conducted search for relevant material. Mr Thomas had indeed found relevant material which included what have become known as “the Dallas e-mails” containing documentation about requests from McGrath for civil immunity from Microsoft if he were to assist them and Microsoft’s response to that request. They included an important report of 8th July 2000 signed by Mr Mueller and Mr Thomas about the whole matter. These documents which were only handed over to the defence at this stage thus contradicted Mishcon de Reya’s assertion in their letter of 6th November and indeed their subsequent assertions that the CPS had all relevant McGrath material. The defence teams were naturally very concerned whether full disclosure had even now been made.

Mr Thomas returned to court with Microsoft’s counsel and gave further evidence explaining (inter alia) why the documents recently disclosed were overlooked (they had been in an e-mail box but not, 18 months later, in a readily recoverable form). On 10th January, in the course of Mr Thomas’s evidence, and thus without being able to consult with him, Mishcon de Reya explained that when conveying the information contained in their letter of 6th November they “took comfort from” the fact that any involvement of Microsoft with McGrath was likely to have been recorded by the FBI or the NCS and disclosed by them. They pointed out that on a proper reading of the report of 8th July 2000, there was no deal with McGrath:-

The next week or so of the trial was occupied by submissions that the trial should be stayed because it was an abuse to let the trial proceed in (inter alia) circumstances where the disclosure provided by the Crown was halting and inadequate, aggravated by what were said to have been untruthful representations of the position by Microsoft through Mishcon de Reya. In the course of these submissions, evidence on a voir dire was given not only by Mr Thomas but also by Mr Finn who, since December 1999 had been Microsoft’s corporate attorney in Paris managing the company’s anti-counterfeiting activities in Europe, the Middle East and Africa. This voir dire occurred because, at the request of the defence, McGrath’s evidence had not been opened to the jury by the Crown pending an application that it be excluded under section 78 of the Police and Criminal Evidence Act 1984. In the course of his evidence Mr Finn gave what can, most generously, be characterised as evasive answers to the question whether there would be likely to have been a file in Microsoft which would include documents relevant to dealing with McGrath. The judge eventually got Mr Finn to admit that a letter from any lawyer of McGrath inquiring about civil immunity would be likely to be kept and Mr Finn identified 3 possible addressees of such a letter. On 24th January the judge orally rejected the defendants’ submissions and refused to stay the proceedings saying that he would give written reasons at a later date. He was, however, sufficiently concerned about the disclosure position to address an order to Mishcon de Reya in the following terms:-

As requested Mishcon de Reya sent an interim report within the 24 hour deadline given by the judge, with substantive reports following on 6th, 7th and 11th February 2002, stating that the only possible documents found which could come within the relevant category were some e-mails found by a Mr Lamagna. Meanwhile on 4th February 2002 the judge delivered his written reasons for rejecting the defendants’ abuse submissions.

The judge set out the history of the case to date, included a reference to his ruling of 12th November 2001 in relation to the abstracted documents and recorded that a satisfactory way forward for disclosure appeared to have been found at the beginning of the trial. He recorded that the jury had heard evidence from Mr Thomas and that, as far as dealings between Microsoft and McGrath were concerned, he had himself heard evidence on voir dire from both Mr Thomas and Mr Finn. He then set out the relevant law on abuse of disclosure in a way that has not been challenged and he referred to the review of the current, not entirely satisfactory, position in relation to documents in the possession of third parties described in paragraphs 185-189 of Chapter 10 of Lord Justice Auld’s Review of the Criminal Courts. He aptly quoted Lord Hope of Craighead in R v Brown (Winston)[1998] AC 367, 380 in relation to any practical difficulties stemming from the duty of disclosure:-

Having made these findings the judge then said this:-

Before us Mr Birnbaum was critical of this ruling of the judge on the basis that having made the adverse findings he did in relation to Mr Thomas, Mr Finn and Microsoft in general, he could not have been satisfied that there had been full disclosure from Microsoft and that this court should be satisfied eitherthat in fact there was an express “deal” by which McGrath was promised immunity so that his evidence became impermissibly tainted or that there had been inadequate disclosure such that it was impossible for the judge and jury below (or, indeed, this court) to assess the pressure operating on McGrath to give evidence for the Crown and, for that reason, the trial should have been stayed as an abuse of process. He said that it was not enough that the defendants could show that pressure was put on McGrath, because disclosure had not revealed the nature and extent of the pressure.

There is no evidence to suggest that there was any formal “deal” to the extent alleged by Mr Birnbaum (for the first time in this court) or at all. The judge summed up to the jury on the basis of the documents that had been disclosed to the effect that the extent to which Microsoft would be prepared to forgo civil proceedings remained to be seen. Of course, that itself constituted pressure but that the jury knew and were able to take into account.

As far as the argument that disclosure had been inadequate is concerned, both the argument and the underlying facts in support of that argument were before the judge. He was critical of Microsoft in the ways which we have indicated. That criticism was merited and we agree with it. The judge nevertheless said that he had no reason to think that there were more documents but that, even if there were, they would not be likely to show any pressure on McGrath of which the defence were unaware. The judge was entitled, in our view, to conclude that the defendants could have a fair trial and we do not see any good argument for overturning that decision.

We have said Mr Birnbaum was critical of the judge’s ruling in the above respects but, in response to our specific questions whether he was submitting that Jack J was wrong to have made the ruling which he did on 4th February, he gave the answer “No”. The submission was rather that it can now be seen, in the light of subsequent events, that it was an abuse to have continued with the trial. Although Mr Birnbaum did not specify quite when the trial ceased to be fair or become an abuse of process, he relied on the following matters:-

Continuing Failure after 4th February ruling

The absence of Mr Finn

The third and fourth matters on which Mr Birnbaum relied constitute Grounds D and E of his appeal and we shall deal with them after considering the law and stating our conclusions on Ground C.

The Law

Before going further, it is right to acknowledge, as Mr Birnbaum does, that the prosecution and indeed Microsoft did disclose an enormous amount of documentation before and during the trial. We also record Mr Birnbaum’s proper acknowledgement that counsel and CPS lawyers acting for the prosecution went to great lengths to meet the defendants’ requests of them with regard to disclosure. This is no answer to the appeal if nevertheless there were failings that resulted in an unfair trial and unfair convictions, but it does put the criticisms that were made into their proper context

We agree with Mr Birnbaum’s proposition to this extent: in a case where a complaint is made of non-disclosure of documents, it is not always necessary for an appellant to demonstrate that the disclosure of the material would have affected the outcome of the proceedings. As was observed in R v Ward, (1993) 96 Cr App Rep 1 at page 22:-

However, Mr Kirby, while asserting that in fact the defendants had been prejudiced by failings in the disclosure process and that it could be demonstrated that the outcome of the proceedings might have been affected by them, advanced a bolder submission than Mr Birnbaum: that the history of disclosure in this case had so tainted the trial process that the proceedings were an abuse and they should have been stayed. He cited in support of this argument such authorities as R v Horseferry Road MC ex p. Bennett, [1994] 1 AC 24 (in which Lord Griffiths said at page 62C, “…if it comes to the attention of the court that there has been a serious abuse of power it should, in my view, express its disapproval by refusing to act on it”) and Early, [2003] 1 Crim App Rep 288, 295, [2002] EWCA Crim 1904 (in which the Court referred to the possibility of the prosecution case being regarded as “tainted beyond redemption, however strong the evidence against the defendant may otherwise be”).

We recognise that there may be cases in which the conduct of the prosecution or the exercise of power in order to advance the prosecution might be so disgraceful as to require the court to exercise its discretion to stay the proceedings. However, in our judgment an order on this basis would not have been remotely justified here. This is not a case in which it could fairly be said that the prosecution themselves behaved dishonourably or abused their power. The real problem was that potentially relevant documents and information were not in the possession of the prosecution but in the hands of third parties, namely the FBI, Microsoft and McGrath or his lawyers, and the judge was concerned to ensure that nevertheless the defendants were tried fairly and their defence was not wrongly obstructed by want of disclosure by third parties.

Mr Kirby’s response to this was a rather sweeping attack upon the way that the case proceeded. He asserted that McGrath deliberately misled the judge, counsel and his FBI handlers, and that Microsoft and the FBI had engaged in unworthy conduct by withholding evidence and “arguably consciously” misleading the court. We have not found it easy to discern the structure Mr Kirby’s argument, but identify two points, only to reject them:

We do not consider that there is a proper basis for the first point. Undoubtedly Microsoft and the FBI co-operated closely with the NCS. This was inevitable, and desirable, in a case of this kind. Some criticisms made by Mr Kirby (such as his criticism of Microsoft’s attendance upon PII hearing) were misconceived. Some (such as the fact that Microsoft provided storage facilities for goods that had been sized) were trivial. Some (such as his claim that Microsoft had paid for flights made by NCS officers) were unsupported by evidence. Assertions such as that Microsoft were allowed to “help determine the strategy of the investigation” were too vague to be meaningful. A few matters identified by Mr Kirby, for example the fact that apparently Microsoft officials had access to covert recordings made by McGrath, were more worthy of comment, but could not support the suggestion that they resulted in the FBI or Microsoft assuming extensive disclosure obligations to which they would not otherwise have been subject.

The trigger for the provisions of paragraphs 30-33 of the Attorney General’s Guidelines is suspicion on the part of the investigator, disclosure officer or prosecutor that a third party has material or information that might be disclosable if in the possession of the prosecution. Material in the possession of a prosecutor is not disclosable simply because it is or might be relevant to an issue in the case. As Lord Bingham said in R v H, [2004] UKHL 3 at para. 35:-

Secondly, even if there is the suspicion that triggers these provisions, the prosecutor is not under an absolute obligation to secure the disclosure of the material or information. He enjoys what might be described as a “margin of consideration” as to what steps he regards as appropriate in the particular case. If criticism is to be made of a failure to secure third party disclosure, it would have to be shown that the prosecutor did not act within the permissible limits afforded by the Guidelines.

In saying this, we are not ruling out the possibility that in an extreme case it might be so unfair for a prosecution to proceed in the absence of material which a third party declines to produce that it would be proper to stay it, regardless of whether the prosecutor is in breach of the Guidelines. Nor do we lose sight of the fact that in this case Microsoft did not stand upon what might be their legal rights but agreed to make disclosure and indeed, through Mishcon de Reya, were required by the Judge to do so. We have already referred to the Judge’s observation in his reasons of 4th February 2002 that “Microsoft has always accepted that it should give appropriate disclosure”. Nor can the defendants (or the Crown) be criticised in a case like this for proceeding on the basis that Microsoft would give the disclosure that they had indicated that they would provide and that the Judge directed. However, in so far as Dias, though Mr Kirby, suggests that the trial was unfair because of breach of the Guidelines, it is important to bear in mind the limits upon what was required of the prosecutor under the Guidelines.

We shall consider later in this judgment the submission, which Mr Birnbaum also made, that there was not proper compliance with the Attorney General’s Guidelines in relation to the Wu investigation. It suffices to say here that when the extent of the prosecutor’s obligations under the Guidelines are examined, on no view was there so comprehensive a breach of them as to justify a stay of these proceedings unless the trial process was therefore too unfair for the verdict to be safe.

We turn now to the specific complaints.

Conclusions on Inducements (Ground C)

Thirdly Microsoft had the right to bring civil proceedings against McGrath. Microsoft was only prepared to say that their pursuit of civil proceedings (and indeed the exercise of the right to ask the prosecutors in the Federal criminal proceedings to seek restitution) would be directly linked to the extent and success of his cooperation with the prosecuting authorities. That again was before the jury and the judge reminded them of the position in his summing-up.

There are therefore two questions and, in our judgment, only two questions. First, is it likely that there was inadequate disclosure that makes it arguable that the position in relation to the pressures on or the inducements given to McGrath, as put before the jury, was a misleading one so that it was an abuse of process to try the appellants? Secondly, if the true position was as it emerged in evidence, should McGrath’s evidence have been excluded from the jury’s consideration?

The judge considered the first question on the information he had available in his ruling of 4th February. We have already said that we do not criticise his ruling that at that time there was no abuse. Nothing happened later with regard to disclosure that would make it an abuse.

With regard to the second question there was an application made to exclude McGrath’s evidence on the basis of what had been disclosed in relation to the pressures on him or the inducements given to him. Since this was based on the same material the judge had had to consider on the abuse application, but framed as an application made pursuant to section 78 of the 1984 Act, the judge dealt with it briefly rejecting it on 14th February 2002. That was an exercise of discretion on his part and we consider that his decision cannot be criticised. Ground C of the individual grounds is therefore rejected.

McGrath’s own dishonesty and concealment of material (Ground D)

McGrath’s banking records had been asked for by the defence as early as April 2001; a few extracts were eventually provided, but for the most part, they never materialised. The judge was never asked to make a specific order: the defence understood that they would be forthcoming, and in any case it is difficult to see quite what application might have been made. The potential relevance of the records is said to be twofold: first they might throw light upon the extent of dealings between McGrath and the defendants (or their companies) before McGrath’s arrest: if his records did not show relevant payments, it would cast doubt upon his account of how many consignments he had received. Secondly, Mr Birnbaum submitted that the documents might have shed a flood of light in respect of McGrath’s business dealings. In particular he mentioned that according to McGrath he made payment for some supplies from PCS to a dealer based in California called Bronco Kuo, from whom he obtained supplies, some of which were counterfeit, from late 1998 or early 1999; and he then submitted that the banking records might have thrown light upon this (prima facie remarkable) evidence. In a ruling on 16th May 2002 Jack J said this:-

We do not accept the submission that the banking records would have thrown significant new light upon McGrath’s dealings, either generally or in relation to Kuo Bronco. Typically banking records record the financial implementation of trading transactions rather than describe the nature of the transactions. It is McGrath’s trading records rather than his banking records that would be expected to indicate the nature of his dealings. The force of the complaint about the banking records really rests upon the first point of potential relevance.

As far as that is concerned, Mr Mehigan acknowledged that he could not seek to uphold the judge’s observation about the records that had been produced not having been referred to or analysed. The fragments that were produced were insufficient to demonstrate a significant absence of payments by McGrath. It is impossible to say that if fuller records had been disclosed the defence would not have been able to point to the absence of payments to Alibhai or Bakir or their companies. However, that would more obviously have gone to discredit McGrath’s honesty in his evidence, to which the jury cannot really have given credence even before the summing up, than to any real issue in the case. More importantly, these were not documents in the possession of the prosecutor or even in the possession of the FBI or Microsoft. The highest that any criticism of the prosecution can be put is that they did not take any formal steps to obtain the full bank records. Like the defence, they seem to have regarded it as wiser to rely upon the indications given by McGrath that the records would be provided. In these circumstances, it does not seem to us that there is any basis to conclude that the prosecution, even assuming that they suspected that the bank records might be disclosable if in their possession, did not give the question the consideration required by paragraph 30 of the Attorney General’s guidelines. Nor can we accept that non-disclosure of these records could reasonably be supposed to have affected the overall fairness of the trial or the safety of the verdicts.

McGrath’s telephone records might have had greater significance. Before the trial the telephone records of Bakir had been disclosed and they showed calls made by him to McGrath between 16th June 2000 and his arrest. There was also disclosure of some of McGrath’s records but not for the period when calls were to be covertly recorded and, importantly, not McGrath’s telephone records for the period between his arrest on 16th June 2000 and his arrival in England. On 23rd June McGrath was issued with recording apparatus to record telephone conversations made with Bakir and not only authorised to use that apparatus but required to record all calls made to Bakir. We were informed that there was a difference of practice between the FBI in this case and the NCS in the handling of participating informants who record conversations with suspected criminals. In England the NCS only issue recording equipment when a telephone call is about to be made by the participating informant; NCS officers will themselves monitor and then take the recording equipment away until it is next needed, instructing the informant to make no calls without their knowledge and to respond to incoming calls by saying that the call will be returned as soon as possible. Thus any contact other than a brief acknowledgment of an incoming call should be recorded. The FBI, however, are prepared to leave the recording equipment with the informant merely instructing him to make no outgoing call without recording it and giving instructions as to incoming calls in similar terms to the NCS instructions.

Be all that as it may the defence were aware from Bakir’s telephone records (which had been disclosed before the beginning of the trial) that McGrath and Bakir had spoken on the telephone on three occasions (all on 21st June) before the recording equipment had been issued and on three occasions after the equipment had been issued and thus in breach of the FBI requirement that all telephone calls with Bakir should be recorded. When McGrath was being cross-examined defence counsel thought (because this was the information which had originally been provided to them in error by Mr Mallery the FBI Special Agent responsible for dealing with McGrath on a day to day basis after his arrest) that the recording equipment had been issued on 19th June and thus all six calls were in breach of the FBI instructions. It was, unfortunately, only later that it emerged that McGrath was in fact given the recording equipment on 23rd June. The three calls on 21st June 2000 lasted some 30 minutes in total. The later three calls were only some ten minutes in total. Upon the information that the defence had when they were cross-examining McGrath, it appeared that his response that he might have failed to record the odd call was obviously inadequate. When Mr Mallery’s error came to light, this point lost much of its sting. There is no suggestion that Mr Mallery did more than make an honest mistake, but we accept that this, together with the fact the none of McGrath’s telephone records were produced until after the conclusion of his cross-examination, did affect the course of Mr Birnbaum’s cross-examination of McGrath, who was, as the judge said, the most important prosecution witness.

A second unfortunate aspect of these matters is that it was left to McGrath to disclose his own telephone records and when he came to give his evidence he asserted that he had given them to his attorney, Mr Gibson. They only emerged after he had given his evidence and the following could be seen:-

After McGrath and Special Agent Mallery had given evidence, Mr Birnbaum mounted another application to discharge the jury on the basis:-

Mr Benson QC for Alibhai at trial supported Mr Birnbaum’s submissions but relied also on the absence of McGrath’s telephone records and banking records for which an oral request had been made on 18th February but had been overlooked. The judge commented on the need for requests to be made in writing but said that the records were being obtained and that it remained to be seen what the records would show when they were produced.

When the telephone records did come forward, Mr Birnbaum and Mr Benson made yet another application to discharge the jury. The judge refused that application on 25th April on the basis that the earlier situation “still pertained”. In his oral reasons he referred to the bills showing calls to Bakir, Dudley and Wu (but did not mention Tariq Alibhai). In dismissing the application he referred to the bills underlining Mallery’s failings (1) failing to record his instructions to McGrath about telephone calls and (2) failing to record calls that he received from McGrath. The judge gave written reasons on 7th May pointing out that the effect of the new material was to enlarge the case of McGrath’s dishonesty, a case which the defence said was already well-established. We agree. The picture does not seem to us materially different in any way from the position as it was at the time when McGrath was cross-examined. It is not easy to see what further mileage could have been made with a witness (whom the defence were saying was palpably dishonest in any event) by virtue of the calls to Dudley, Wu and Tariq Alibhai. None of the new material was so unpredictable that the judge’s decision (1) to refuse the further application to discharge the jury and (2) to continue the trial could be said to be wrong.

It is also important to put this point in perspective. Mr Birnbaum submitted that the absence of telephone records deprived the defence of the opportunity of deciding on a fully informed basis whether to seek a voir dire but the defence made no application that their cross-examination of McGrath should not begin or should not conclude before the telephone records were produced. In the absence of special circumstances, a defendant who proceeds on this basis cannot wait and see what the records reveal when they are produced and then apply for the jury to be discharged (or complain that he would have applied for such discharge at an earlier stage) any more than he can submit to this court that the jury should have been discharged when he made no application to that effect to the trial judge, see R v Mullen [1999] 2 CAR 143, 158B. The most he is entitled to do is to apply for the witness to be recalled. Mr Birnbaum says that he did make such an application, albeit without enthusiasm since McGrath had already given evidence for 14 days, of which 9 days had been taken up by cross-examination. In his written ruling the judge said:-

Untimely disclosure of the California investigation together with Public Interest Immunity previously claimed (Ground E)

It was, of course, the case that the FBI in California were gathering a considerable amount of material in relation to the Wu investigation. Eventually an indictment was prepared for a California prosecution which charged no less than 17 defendants. The prosecution did not consider that the California material would be likely to have any relevance to the issues that were likely to arise in the English prosecution against Alibhai and Bakir and took no steps to obtain possession of the California material. Accordingly, no application was made for public interest immunity in relation to any California material.

On 27th April 2003 Ms Wu (and about 30 other people) were arrested in California. On 29th April the judge lifted his PII order and ordered disclosure of all the FBI Dallas material relating to Ms Wu in the possession of the prosecution. Thereafter the prosecution disclosed a large amount of California material relating to the Wu investigation including, in particular, about 30 tapes of conversations between McGrath and Ms Wu. This led to yet another application to discharge the jury on the basis:-

The judge rejected these submissions. He set out the principles on which he had acted in offering immunity to that part of the Dallas material which revealed that McGrath was an informer in the Wu investigation. Those principles were, in our judgment, correct and in accordance with the authorities mentioned in para. 12-36 of Archbold (2004) about protecting the identity of informers. The fact that an informer is acting at the behest of a foreign investigatory body rather than the English police force is something to be taken into account but where that investigatory body is acting in a case such as this, the reasons of public policy in protecting informers must be as compelling as with informers within the jurisdiction. That is all the more so in the case of trans-national crimes such as dealing in counterfeit software.

The judge then examined 8 particular documents of which Mr Birnbaum submitted he could have made use in cross-examination and concluded that none of them could have improved the defence position.

Mr Birnbaum then criticised the prosecution for not having obtained possession of all the California material and considered whether it should be disclosed to the defence, for not having obtained sufficiently detailed information to enable such consideration to be given. Here paragraph 30 of the Attorney-General’s Guidelines in relation to material held by third parties becomes potentially relevant. We will not set it out again. But it only operates where the investigator, disclosure officer or prosecutor suspects that a third party has material or information which might be disclosable if it were in the possession of the prosecution. In the present case there was no such suspicion; there was, therefore, no reason to consider whether it was appropriate to seek access to the material. The judge’s decision on this was as follows:-

We agree. It is, moreover, not irrelevant to observe that, once the material was fully disclosed and examined by the defence, it turned out that there was in fact nothing relevant in any event. In those circumstances, even if Mr Birnbaum’s criticism had any substance, no prejudice has been suffered in fact.

It was Mr Birnbaum’s submission to us that it was not appropriate to afford PII to a separate ongoing investigation in which a witness in pending English proceedings was an informer, because the inducements in relation to such investigation would be part of the overall inducement or a pressure operating on the witness. That cannot be accepted on the facts of this case. The inducement or pressure operative on McGrath relating to his evidence against Alibhai and Bakir is, of course, relevant, but cannot be said to have been affected substantially or indeed, in our judgment, at all by his participation in the Wu investigation. Ground E of the appeal is therefore rejected.

It will be apparent from what we have already said that Ground F is rejected also.

Direction to the jury in relation to McGrath (Ground H)

Now that we can see the case as a whole, we think that the judge cannot be criticised for declining to accede to Mr Benson’s submissions. There is no suggestion that the jury were having any difficulty following the evidence. It is very much for the judge in charge of the trial to tailor his directions to the jury he has come to know over the trial. He was clearly right to have given the strong warning he did about McGrath’s evidence. We can well understand him thinking that singling out parts of the evidence which could support the evidence of McGrath would not be likely to have assisted the defendants, in any event. Such a direction could have been very damning and wisely the judge did not give it. Ground H is rejected.

The appeal of Collier

When the case was opened to the Jury, the indictment, which contained just one charge and which had previously been amended, was as follows:

Section 5.1 of the Indictments Act 1915 provides that “Where, before trial, or at any stage of a trial, it appears to the court that the indictment is defective, the court shall make such order for the amendment of the indictment that the court thinks necessary to meet the circumstances of the case, unless, having regard to the merits of the case, the required amendments cannot be made without injustice.” The first argument advanced by Mr Gadsden on behalf of Collier is that the indictment opened to the Jury was not defective, and therefore the Court had no power to amend it.

It is established by authority that the power to amend indictments is not confined to cases in which there are formal defects in the wording of a count. It was said by the Court of Appeal in R v Pople[1951] 1 KB 53, 54 (reported sub nom. R v Smith (1950) 34 Cr. App. R. 168, 176) that “… any alteration [of an indictment] in matters of description, and probably in many other respects, may be made in order to meet the evidence in the case as long as the amendment causes no injustice to the accused person”. This passage was cited with approval in R v Radley (1973) 58 Cr. App. R. 396 in which Lord Widgery CJ said (at page 402) that, “one ought to give a fairly liberal meaning to the language of section 5”. In R v Stanley The Times, 9 December 1998, it was said “the Court of Appeal had given a wide meaning to the word “defective” in section 5(1) so as to render indictments capable of deciding the issue that properly should be determined between the Crown, on the one hand, and the defendant on the other”.

In this case the judge accepted the submission on behalf of Collier that the particulars in the indictment set out what was agreed between the defendants, rather than overt acts which were done in furtherance of their agreement. He also accepted that there was no case that would stand analysis that Collier had knowledge of agreement to import goods. Accordingly, if it was an essential part of the conspiracy alleged against him that goods should be imported, the prosecution’s evidence did not support the charge. The judge therefore considered, in light of such cases as R v Patel 7 August 1991, 89/4351/SI, unreported, cited Archbold (2004) para 34-16, whether an agreement for importation was an essential part of the conspiracy in the sense that without it the agreement would have been for a different scheme, and concluded that the element of importation was not essential in that sense. However, he also thought that “the position was not clear on the face of the indictment”.

We consider that the judge rightly concluded that the indictment was defective within the wide meaning given to that expression in section 5 of the Indictments Act 1915. First, as indeed Mr Gadsden had argued before the judge, the prosecution evidence did not support that allegation made in the indictment against him, and specifically did not support an allegation of knowledge on his part of an agreement to import. This seems to us to mean that the indictment was defective, as that term is interpreted in the authorities to which we have referred, whether or not the judge was right to conclude that the allegation of an agreement to import was not an essential part of the conspiracy. Secondly, we are inclined to the view that the indictment could properly be said to be defective because it was not clear and did not properly place before the jury the issue between the Crown and the defendants. However, it is not necessary for us to decide whether this latter criticism of the indictment does truly identify a “defect” in it, and since we have not been referred to any authority that distinctly deals with this, we prefer to rest our decision on the first point.

This amendment to the indictment was made some 6 months after the trial had started. However the Act allows amendment “at any stage of a trial”. Moreover the judge concluded that it could be made “without injustice”. He was entitled to do so. Before us, it was suggested that there was injustice in two respects. First, it is said that the amendment was unjust because it deprived Collier of a cast-iron answer to the charge as put against him when the prosecution case was opened and presented. Given that it was open to the jury to conclude (as the judge had concluded) that an agreement to import was not an essential ingredient of the conspiracy charged, Collier did not have a cast-iron answer to the charge. But in any case it is not an injustice that a defendant is deprived of an answer to a charge which but for the defect in the indictment he would not have had.

Secondly, it is said that because the indictment before amendment alleged an agreement to import, the prosecution adduced evidence relevant to that part of the allegation which the defendants might otherwise have been able to have ruled inadmissible. However, as the judge observed in his reasons delivered on 30th April 2002 the complaint about the allegation of importation was one which had not occurred to those representing Collier (or to those representing other defendants) until they were preparing their submissions at the end of the prosecution case. The judge cannot be criticised for concluding,

We reject that argument that the judge should not have ordered the amendment to the indictment.

Mr. Gadsden also argued on behalf of Collier that the indictment as amended was defective. His submission was that at the end of the prosecution case the Crown’s evidence demonstrated separate and distinct conspiracies: first a conspiracy, which did not involve McGrath and which came to an end in the autumn of 1999, directed to the distribution in the United Kingdom of counterfeit software by way of compact discs; and secondly a conspiracy which did involve McGrath and did not begin until the Spring of 2000, directed to procuring the manufacture of counterfeit licences and exporting them to the United States. The complaint is that the indictment alleges one conspiracy whereas the evidence demonstrates two (or possibly more than two) conspiracies.

The Crown’s case was indeed that there was only one conspiracy. It was recognised that the overall conspiracy involved arrangements, to which some of the conspirators might not have been party, to advance some particular part of the scheme. The judge when considering this point and deciding that the Crown were entitled so to present their case, drew an analogy with a conspiracy to commit robberies in which, “There may be lesser or ancillary conspiracies to obtain the guns, or the get-away vehicles. There may be conspiracies to launder the proceeds. Others may be involved”. The judge’s approach is consistent with authority. In R v Coughlan (1976) 63 Cr. App. R. 33, a case concerning defendants who conspired to cause explosions, the Court said this (at page 35):-

Collier’s appeal is therefore dismissed.

Conclusion

10The appeals have, nevertheless, shown the difficulties that can arise when material relevant to the case for the defence, is in the hands of third parties, particularly if those third parties are the victims of a fraud allegedly perpetrated by the defendants. If such frauds are to be effectively prosecuted, it is important that the victims (as indicated in the body of our judgment in paragraphs 33 – 36) should not only be willing to disclose relevant material comprehensively and promptly but also take all proper and efficient steps to bring about that disclosure. Mere commercial confidentiality does not give rise to the right to withhold information or documents. If Microsoft had appreciated this at an early stage of the prosecution (which was to a large extent for their benefit) we are confident that the trial would not have been so prolonged and that much public money would have been saved.

10We cannot part from the case without paying tribute to the judge for the incisive, yet courteous, way he managed what on any view must have been a most difficult trial and to the jury for their apparently continuing enthusiasm to resolve the issues with which they were confronted. It is a serious question whether any members of the public should be subjected to the pressure of a trial lasting 156 days and we are not surprised that the judge excused them from service for the rest of their lives.