Skip to content

Recording of telephone conversation during internal investigation: admissible evidence?

02 February 2012

There are many circumstances in which a financial institution may decide to conduct an internal investigation (eg if there are suspicions of insider dealing, embezzlement or fraud).

The desire to gather evidence as quickly as possible, particularly when the suspected conduct is very serious or when there is a high level of suspicion, might mean managers fail fully to take into account the rules of privacy. However, the consequences of failing to follow these rules scrupulously when gathering evidence may result in a judge declaring a piece of evidence inadmissible. Companies need to be aware of the rules and ensure any investigation is conducted with these factors in mind. A judgment issued on 6 September 2011 by the Criminal Court of Leuven (reference AR 53.99.185/11) gives a good illustration of this in relation to recorded telephone conversations which were used against a manager charged with embezzlement.A company began to suspect that a manager had committed fraudulent acts. It therefore started an internal investigation which revealed that the manager had embezzled approximately EUR 10 million over several years with the assistance of external service providers.

In the context of the internal investigation, the CFO and a member of the audit department recorded certain telephone conversations between the CFO and the external service providers.

The company subsequently filed a claim with the investigating magistrate[1] of Leuven and provided a transcript of the recorded telephone conversations as evidence of the manager’s misconduct. The investigating magistrate decided that there was sufficient evidence to send the case to trial and the prosecutor charged the manager before the Criminal Court of Leuven.

During the trial, the manager argued that the telephone conversations were recorded by a member of the audit department who did not himself participate in the conversations between the CFO and the service providers. While it is legal under Belgian law to record a conversation as a participant, even if the other participants are not aware of it, it is illegal under Article 314bis of the Criminal Code to record conversations without the consent of all participants if the recorder is not a participant in the conversation. The manager filed a complaint against the company for breach of Article 314bis of the criminal Code, invoking the fact that the recorder was a member of the audit department and that this person did not take an active part in the conversation. It is untested under Belgian law whether a staff member of the same company as the participant in the conversation qualifies as a third party to the conversation if the conversation relates to business of the company.

The manager sought to obtain a judgment declaring the recordings illegally obtained as this judgment might then be used in the context of the main criminal case to claim the inadmissibility of the recordings as evidence.

In its judgment dated 6 September 2011, the Criminal Court of Leuven dismissed the manager’s claim on the grounds that Article 314bis only protects the privacy of those who are taking part in the recorded discussion. As the manager himself had not taken part, his privacy was not violated, and the evidence remained valid in the case against him.

However, the case highlights that companies conducting internal investigations should ensure they act with transparency towards the person subject to the investigation or at least ensure that the evidence is collected in compliance with privacy rules. With regard to the recording of conversations, if the person subject to the recording is also the subject of the investigation, the party recording the conversation must either take an active part in it or disclose the recording to the subject of the investigation.

Footnotes

1. Juge d’instruction/onderzoeksrechter.

Further information

The European Finance Litigation Review is a quarterly publication on recent developments in the finance litigation and regulatory sector in key European jurisdictions.  For more information please contact Amy Edwards amy.edwards@alleovery.com.