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Paulo Maluf v Attorney General of Jersey
Kathryn Purkis and Sarah Nibbs review the recent Court of Appeal decision in the Maluf case in which Crill Canavan acts for The Federal Republic of Brazil and the Municipality of Sao Paulo.
Paulo Maluf is a Brazilian politician who is under investigation in Brazil for fraud on a massive scale. Last year the Jersey Attorney General gave a dossier of material garnered here to Brazil to assist in the criminal prosecutions against Maluf. On 19th March 2007, the Court of Appeal upheld the decision of the Royal Court to order disclosure of documents relating to bank accounts held by companies associated with Maluf, for the purposes of providing crucial evidence to Brazil for asset recovery claims against Maluf and others.
There was good evidence before the Royal Court of the original frauds in Brazil. But although there was a strong inference that there are now funds in Jersey derived from those frauds, the definitive link has not (yet) been shown: the money was routed via Switzerland (and other places) and the Swiss documents are not yet available for scrutiny.
Disclosure orders will in principle be granted by the courts where any person, albeit through no fault of his own, gets mixed up in, and thereby facilitates, the wrongdoing of another. Once this occurs, a duty will usually be imposed on him by law to assist the person who has been wronged by providing such information as to the wrongdoers or the wrongdoing.
Many points were taken on appeal, but the Court had only one real concern. There was no obvious case authority on the standard to which a court must “be satisfied that a defendant has become mixed up in alleged wrongdoing.” The absence of a direct connection between the money (allegedly) in Jersey and the losses in Brazil meant that it was not obvious that the banks had actually become “mixed up” in the frauds. If the accounts had contained funds from a clean source, how could it be said the banks were “mixed up” in fraud?
The Court of Appeal took the opportunity to clarify the law. It noted that Jersey has a reputation as a major financial centre which might suffer “if it were not willing to assist victims of wrongdoing to obtain redress”. Ultimately, the Court was satisfied that a “reasonable suspicion” that the banks were innocently mixed up in Maluf’s alleged wrongdoing was sufficient. This test was satisfied on the evidence and disclosure was ordered.
The Companies’ application for leave to appeal to the Privy Council was refused. However, they obtained a stay of the order for disclosure to apply for leave to appeal to the Privy Council - a graphic example of how the trial process can be delayed by a wealthy defendant with sophisticated lawyers. Fortunately their Lordships have encountered their like before!