Directors Disqualification and Criminal Investigation

 

There is a very important safeguard contained within the Company Directors Disqualification Act 1986 (“the Act”) that, in theory, protects people who are participants in disqualification proceedings, and whose conduct may amount to criminal conduct.

Section 20 (1) of the Act makes it clear that, when defending an application by the Insolvency Service to disqualify a person as a company director any statements made may be used within in any other civil proceedings. So far, so uncontroversial.

Section 20(2) prohibits the use of any statements made in defending disqualification proceedings and no questioning will be permitted (within those criminal proceedings) –

 

However, in criminal proceedings in which any such person is charged with an offence to which this subsection applies—

(a)no evidence relating to the statement may be adduced, and

(b)no question relating to it may be asked,

by or on behalf of the prosecution, unless evidence relating to it is adduced, or a question relating to it is asked, in the proceedings by or on behalf of that person.

 

However, everything may not be as it appears, and there may be greater dangers for people involved in a directors disqualification investigation.

Firstly, it ought to be bourn in mind that the section 20(2) safeguards only apply to proceedings under the Act. In any usual directors disqualification investigation the Insolvency Service will seek to investigate by means of asking direct questions to the former directors – usually in writing and often in an interview.

The question is: can answers given in that investigation be used in a criminal trial, should events take a horrible turn for the worst? Arguably, it is only those communications exhibited to formal statements of case (within disqualification proceedings) that are protected by section 20(2).

Further, what happens to those answers given in a disqualification investigation that does not result in disqualification proceedings. Arguably, the statements made by the director can still be used in any criminal trial.

It is long suspected that government agencies (including the Insolvency Service and prosecution authorities) speak to each other in an “off-record” way. On the basis that “there is more than one way to skin a cat”, any suggestion of criminal wrongdoing must be approached with the upmost care within disqualification investigations or proceedings, using experienced disqualification and criminal lawyers.

 

To discuss these matters further please contact specialist director disqualification solicitor Stephen Chinnery by email or by telephone on 07460 005 769.