Intelligence-led investigation

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Transcript Intelligence-led investigation

ICN Cartel Workshop
2013 South Africa
Plenary I: Alternative Means of Cartel
Detection (AGENCY ONLY)
Stephen Blake
Senior Director - Cartels and Criminal Enforcement
UK Office of Fair Trading
● Investigating cartels – challenges:
- Limited value of traditional sources of information
• Complainants
• Economic and market data analysis
- Need for ‘inside’ information
● Limitations of leniency
- Dependent on cartelists’ perception of the risk of detection absent
- Tend to catch ‘late stage’ or failing cartels and to miss cartels
involving smaller businesses
- Jury hostility to testimony of immunised offenders
● Other sources of intelligence
Building an in-house intelligence function
● Developing ability to make use of the full range of
investigative tools
- Including covert surveillance and other intelligence gathering
● Key steps
- Hiring staff with an intelligence background and experience
• Including appointing the OFT’s first Director of Investigations
and Criminal Enforcement
- Training existing staff
- Developing partnerships with the police and other criminal
enforcement agencies
Sources of intelligence
● Cartels Hotline
- Usually the first point of contact between members of the public /
company employees and OFT
● Informant rewards
- Up to £100,000 for information about cartel activity
- Amount will depend on:
• value of the information
• the amount of harm to the economy and consumers which the
information has helped us to stop and/or has helped disclose
• the effort invested by the informant, including the level of risk
Sources of intelligence (2)
● Other sources of intelligence
- On-line open source information services, including Companies
House, FAME, market reports, trade press and newspaper archives
- Market studies or merger inquiries
- Intelligence from other UK enforcement agencies: Police, the
Serious Fraud Office, the National Crime Agency, Trading
Standards Services (including shared use of the MEMEX
intelligence tool), the Financial Conduct Authority and the sectoral
regulators (OFGEM, OFWAT, CAA, OFCOM, ORR, Monitor)
- Information sharing with EU and other overseas competition
authorities (subject to restrictions on disclosure and use)
Developing intelligence (1)
● Under the Regulation of Investigatory Powers Act 2000
(RIPA) the OFT can:
- undertake covert surveillance
- acquire communications data from communications service
- task covert human intelligence sources (CHIS) to establish or
maintain a relationship to obtain information covertly
● RIPA provides a legal basis for the interference with
the rights of individuals to respect for their private and
family life, home and correspondence
- Protected under the European Convention on Human Rights,
Article 8 and Article 12 of the Universal Declaration of Human
Developing intelligence (2):
Covert surveillance (may be ‘directed’ or ‘intrusive’):
‘any surveillance which is carried out in a manner calculated to
ensure that the persons subject to the surveillance are unaware that
it is or may be taking place’
Directed surveillance is surveillance which is covert, but
not ‘intrusive’, and undertaken:
- for the purpose of a specific investigation or specific operation
- in such a manner as is likely to result in the obtaining of private
information about a person, and
- otherwise than by way of an immediate response to events or
circumstances the nature of which is such that it would not be
reasonably practicable for an authorisation… to be sought for the
carrying out of the surveillance
Developing intelligence (3):
Intrusive surveillance is covert surveillance which:
- is carried out in relation to anything taking place on any residential
premises or in any private vehicle, and
- involves the presence of an individual on the premises or in the
vehicle or is carried out by means of a surveillance device
Installing a surveillance device will also usually involve
property interference, requiring authorisation
Communications data is information relating to the use
of a telecommunications system or postal service
- Includes subscriber details and details of telephone calls made
- Does not include information relating to the content of a
Developing intelligence (4):
A CHIS is a person who establishes or maintains a
personal or other relationship for a covert purpose and
uses it to:
- obtain information
- provide access to information, and / or
- covertly disclose information obtained
Developing intelligence (5): use of
● RIPA powers only used for the purpose of cartel
investigations (criminal or civil)
● Use of directed surveillance and CHIS must be:
- necessary for the purpose of preventing and detecting crime, or
- in the interests of the economic well-being of the United Kingdom,
- proportionate to what it seeks to achieve
● Acquisition of communications data, intrusive
surveillance and property interference can only be
used in criminal cases
Developing intelligence (6): use of
● Key considerations - necessity and proportionality
- could the information reasonably be obtained by less intrusive
- ‘collateral’ intrusion
● CHIS – welfare and security
- Duty of care
- Confidentiality - normally used for intelligence, not evidence
- Handling of expenses and rewards
● Avoiding ‘unauthorised’ activity
- CHIS – importance of mutual trust
- Authorisation will not extend to the commission of offences
Developing intelligence (7): oversight
● Use of the OFT’s investigation powers under RIPA is
closely regulated
- Regular inspections by the Office of Surveillance Commissioners
(and, as regards communications data, the Interception of
Communications Commissioner’s Office)
● Higher level powers (intrusive surveillance and
property interference) require authorisation by the
OFT Chairman and prior approval of the Surveillance
- Other powers may be authorised by an OFT director responsible
for cartels and criminal enforcement
● Use of RIPA powers also subject to Codes of Practice12
Intelligence: analysis and
● Creation of ‘problem profiles’ summarising
intelligence received
- ‘Sanitised’ as necessary to protect confidential sources
● Drives strategic and tactical tasking within the
intelligence and investigation teams
- May be shared with other agencies: e.g. if the intelligence reveals
other criminality
● Assessment of the quality and reliability of the
intelligence obtained
● Decision whether to open a formal investigation or to
undertake further intelligence work
Early results (1)
● Still early days
● Reduced reliance on leniency
- Almost half of all new OFT cartel investigations opened in the last
three years have been intelligence-led
● OFT increasingly thinking and behaving like a
mainstream criminal enforcement agency
- Co-ordination and joint working with the Police and other
enforcement agencies
- Also undertaking bigger operations: e.g. inspections at the end of
2012 involved deployment of 70 investigators across five sites
throughout the UK, the arrest of four individuals and coordination
with six police forces
Early results (2)
● Leniency
- Remains the main tool for detecting cartels – critical that leniency
remains attractive to potential applicants
- Track record of successful intelligence-led enforcement should
also increase incentives to apply for leniency
● Even in intelligence-led investigations, leniency can
still be a useful source of evidence/ corroboration
● Also, in leniency cases intelligence techniques may be
used to develop a case before it goes overt
● Economic and market data analysis
- Still a valuable source of additional information – including to
inform prioritisation decisions
The future
● This time next year the UK’s Office of Fair Trading will
have been replaced by a new Competition and Markets
Authority (CMA), bringing the OFT and UK Competition
Commission together
● Enforcement, including cartel enforcement, will remain
a key priority for the new authority
● Reforms to cartel offence should mean that a higher
proportion of criminal investigations result in
● Additional funding to support cartel enforcement has
been announced from 2015
Any questions?
ICN Cartel Workshop
2013 South Africa
Plenary I: Alternative Means of Cartel
Detection (AGENCY ONLY)
Stephen Blake
Senior Director - Cartels and Criminal Enforcement
UK Office of Fair Trading