PRIVILEGE YOU CAN COUNT ON IN THE WORLD OF FORENSICS
In CCII Systems (Pty) Ltd v Fakie and Others NNO 2003 (2) SA 325 (T), the court ordered the Auditor-General to surrender arms deal investigation documents to an unsuccessful tender applicant. In this case, the Promotion of Access to Information Act 2 of 2000 facilitated the seizure of thousands of confidential documents. Such a result would not be reassuring to the institution that wishes to mitigate the risk of disclosure of private information. Legal professional privilege (“privilege”) provides the assurance that many clients that engage law firms to investigate corruption and similar offences, seek in order to protect this private information.
The five cornerstones of privilege (Schwikkard; Van der Merwe Principles of Evidence (2006) at 135) are the following:
the advisor must be acting in a professional capacity;
the communication must be made in confidence;
the communication must be made for the purpose of obtaining legal advice;
the communication must not facilitate the commission of a crime; and
the client must claim this privilege.
Attorney-led forensic teams investigate economic crime and collect evidence in a manner that focuses on admissibility. Thereafter, they assist clients in instituting civil, criminal, and disciplinary proceedings, as the case may be.
In line with the privilege criteria, the client that mandates this attorney-led team would be entitled to claim privilege for communications with the attorney-led team since:
the forensic team is led by attorneys who are mandated by the client to perform the forensic investigation;
there is a common understanding and communication that the information collated and the working papers prepared shall be confidential;
communications are made with the goal of obtaining legal advice or with potential litigation against the fraudster in mind; and
there is no facilitation of a crime intended.
Privilege allows a client to speak freely to an attorney, and provides the assurance that the client has maximum legal protection against public disclosure of sensitive information. In South African Rugby Football Union v President of the Republic of South Africa 1998 4 SA 296 (T), it was held that the courts can inspect privileged documents where necessary, or where there is some doubt over the privilege claim. In such a case, privileged information may be severed from the unprivileged portions of a document or statement, and only the unprivileged sections revealed. Section 40 of the Promotion of Access to Information Act 2 of 2000 (as amended) upholds privilege through prohibiting access to privileged records. Privilege is seen as a reasonable limitation on the right to access to information contained in section 23 of the Constitution (Jeeva and Others v Receiver of Revenue, Port Elizabeth & Others 1995 (2) SA 433 (E)).
Privilege remains a fundamental right (S v Safatsa 1988 1 SA 868 (A)) which the courts do not typically relax. This was evidenced in Thint (Pty) Ltd v National Director of Public Prosecutions and Others CCT 89/07; Zuma and Another v National Director of Public Prosecutions and Others CCT 91/07. In these cases, the court ordered that “catch-all” authorisations on warrants to search and seize documents that “might have a bearing” on an investigation were unlawful. The judges held that privilege must be claimed for specific documents, and cannot be asserted as a “blanket” claim.
In practice in South Africa, the term “legal advisor” in the context of meeting privilege criteria is interpreted very narrowly and exclusively includes attorneys and advocates. Companies that employ admitted attorneys as in-house counsel can potentially rely on privilege (Mohamed v President of South Africa & Others, 2001 2 SA 1145 (C)) but there are many practical obstacles to ensuring the viability of such a privilege claim and the Supreme Court of Appeal has yet to test this position.
It is common practice for forensic accountants not to provide legal opinion even if there are members of their investigative team who have a legal background. It is doubtful whether privilege could ever be successfully claimed in relation to communications with a non-admitted legal advisor.
Interestingly, whilst candid communications with an attorney are privileged, chartered accountants are bound by the Audit Profession Act 26 of 2005 to disclose “reportable irregularities” discovered during an audit. For the purposes of this act, “audit” includes the giving of an opinion on financial and other information (s1(b)).
International law (Azko Nobel Chemicals Ltd and Another v Commission of the European Communities, T-125 and T-253/03), and particularly American law, supports the narrow application of privilege. In America, in order to ensure that clients can rely on privilege, it is common practice to instruct attorneys in forensic investigations, who in turn enlist the assistance of accountants and IT experts to extend the skills base of a forensic team.
Case law indicates that privilege extends to interpreters, secretaries, candidate attorneys, and other law firm employees (S v Mushimba 1977 2 SA 829 (A)). In General Accident, Fire and Life Assurance Corporation Ltd v Goldberg 1912 TPD 494, the court held that privilege can be claimed:
where the communication made by a third party to the legal advisor or to the client was intended for presentation to the legal advisor; and
where the communication occurred after the contemplation of litigation.
Where attorneys enlist the assistance of non-lawyers in a forensic investigation, whether through an employment relationship, the sub-contracting of individuals, or the mandating of individuals through agency, it can be deduced that privilege applies to communications, working papers and reports of these individuals as:
the communications are submitted to the attorney heading-up the investigation, and
the purpose of these communications includes the collation of evidence, the identification of suspicious transactions, and the quantification of losses for the purposes of probable litigation to be managed by the attorney.
In the USA, almost all forensic investigations are headed up by attorneys. One of the main motivations for this is the need to protect privileged communications and documents. It would certainly benefit all institutions engaging forensic investigators to engage attorneys first. The forensic attorneys can then engage forensic accountants and the disciplines as needed, as part of the investigative team. That way, privilege can be maintained.
Jodi Neu-Ner is a candidate attorney in the White Collar Crime practice area at Bowman Gilfillan.