26 Nov 2015

Caught in the cross-fire: self-incrimination in a regulatory investigation

by Luke Buchanan, James Robinson, Annella Cox

Despite being eroded in some circumstances, the privilege against self-incrimination remains an important protection for individuals in regulatory investigations, but early legal advice is crucial.

In recent years, Australia's regulators have approached corporate investigations with increasing sophistication. They have broad powers to investigate corporate activity, including powers to order production of documents or disclosure of information, to compel individuals to attend examinations, and to commence court proceedings in the case of suspected contraventions of the law.

Despite the focus on corporate conduct, individuals, including directors and officers, are often caught in the cross-fire. Where an individual is required by a regulator or court to give evidence, produce a document or provide information, they should consider whether to claim the privilege against self-incrimination (or the related privilege against self-exposure to a civil penalty) in respect of their responses to the regulator or their evidence to the court.

This article explains when and how individuals can rely on the privilege against self-incrimination and identifies some of its limitations.

What is the privilege against self-incrimination?

The general rule is that an individual is not bound to answer a question or produce a document if the answer or document would have a tendency to expose them, directly or indirectly, to a criminal conviction or a civil penalty. Legislation (for example, the ASIC Act) alters the position in some circumstances.

The privilege helps prevent abuse of power by the state, and reflects the norm that those who allege the commission of a crime should prove their case and be prevented from compelling accused persons to provide evidence against themselves. Importantly, the privilege can only be claimed by individuals; it cannot be claimed by a corporation.

The privilege operates differently depending on whether the documents or information are being sought during a regulatory investigation or during enforcement proceedings in court. This article focuses on the approaches taken by ASIC and the ACCC, in regulatory investigations.

Self-incrimination in an ASIC investigation

Where ASIC is using its powers to compel a person of interest to attend an examination, it is possible that person will be concerned that they might incriminate themselves by answering certain questions on oath or affirmation during the investigation.

In subsection 68(3), the ASIC Act recognises the privilege against self-incrimination and limits the extent to which statements made during the examination or the signing of a record can be used as evidence against the person in a subsequent criminal proceeding or in a proceeding for the imposition of a penalty (although there are exceptions under section 1349 of the Corporations Act for certain types of penalty proceedings such as those seeking a disqualification order or a banning order).

To claim the privilege against self-incrimination during an ASIC examination, the person should say the word "privilege" prior to providing each potentially incriminating answer. It is important to note, however, that under subsection 68(1), the privilege cannot be relied upon as grounds for refusing to give information, sign a record or produce a book to ASIC.

Regardless of whether the privilege is claimed, any admission or document provided by a person might still be used against the company itself, especially if the person is a director or officer of the company.

Self-incrimination in an ACCC investigation

Where the ACCC believes that a person has information relating to a possible contravention of competition laws, it may issue a notice (known as a section 155 notice) requiring the person to furnish information, produce documents or attend an examination. Again, questions of self-incrimination may arise.

As with an ASIC investigation, a person will not be excused from producing a document or furnishing information on the ground that it might incriminate them (or expose them to a penalty). However, any potentially incriminating answer or information provided by the individual cannot be used against them in criminal proceedings (except for specific types), but the statement can be used against the corporation itself, as the corporation cannot claim the privilege.

Self-incrimination in enforcement proceedings

Regulatory investigations sometimes result in regulators seeking criminal sanctions or civil penalties by way of enforcement proceedings in court. Where individuals are to be defendants (or even simply witnesses), issues surrounding the privilege against self-incrimination can arise, and may be complicated by the fact that the corporation and its directors or officers might be co-defendants in the same proceedings. In practice, this may see admissions by the corporation, which cannot claim the privilege against self-incrimination, taint the defences of officers or employees who have claimed the privilege.

Those complexities have led different courts to adopt different procedures in their attempt to protect the rights of the individual in the enforcement context. Courts have been known to relieve defendants from giving discovery or allow defendants to hold off on serving affidavit evidence until after the regulator has closed its case and have granted certificates to witnesses who have established a legitimate claim for self-incrimination privilege.

Nevertheless, the court has to balance the individual's rights against the effective implementation of the regulatory regime. The practical effect is that the privilege is often weakened indirectly, especially if the corporation is ordered to produce documents which tend to incriminate the individual.

Key points to remember about the privilege against self-incrimination

Despite being eroded in some circumstances, the privilege against self-incrimination remains an important protection for individuals in regulatory investigations. By seeking legal advice early, individuals can maximise their level of protection. Likewise, companies should carefully consider their responses to the demands of regulators and courts, to avoid any unnecessary exposure of officers or employees.

  1. The privilege against self-incrimination can only be claimed by individuals, not by corporations.
  2. Even where the individual successfully claims the privilege, any admissions they make can amount to an admission by the corporation, especially if the individual is a director or officer of the corporation.
  3. The privilege only protects against self-incrimination, so can only be claimed by the person providing the incriminating information. As a result, information provided by one person who has claimed the privilege can be admitted as evidence in subsequent proceedings against another person, who is not protected by the privilege.
  4. To maximise the chance of making a successful claim of privilege against self-incrimination, individuals should avoid voluntarily providing information or documents to a regulator (which has the effect of waiving the privilege). Instead, the individual should ask the regulator to issue a Notice compelling the individual to comply.
  5. Where possible, corporations under investigation should try to avoid taking steps which incriminate individuals. If the corporation discloses evidence which may incriminate the individual, then that evidence can be used against the individual.
  6. In the case of Notices issued by ASIC or the ACCC, individuals must still disclose the information being sought, even if they make a successful claim for self-incrimination privilege. However, a claim for privilege may limit the extent to which ASIC or the ACCC can use that evidence against the individual in criminal or civil penalty proceedings.
  7. Courts are usually concerned to preserve an individual's privilege against self-incrimination, but in practice, the privilege against self-incrimination is sometimes weakened as the courts strive to balance the rights of the individual against the need to effectively implement the regulatory regime.


You might also be interested in...


Related Knowledge

Get in Touch

Get in touch information is loading


Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this communication. Persons listed may not be admitted in all States and Territories.