Responding to dawn raids: an introductory guide for sports organisations 

We have been through more doors in the last three months than in the last three years

Nick Ephgrave QPM, Director, Serious Fraud Office 

The powers of the UK's leading criminal enforcement agencies, like the SFO, have been significantly strengthened by two new regimes contained in the Economic Crime and Corporate Transparency Act 2023, which are intended to make it easier to prosecute commercial organisations. Both offences, and how they could impact on sports businesses, have been analysed in previous LawInSport articles by this author.

Criminal investigations for offences including bribery, fraud and tax evasion  undertaken by agencies such as the SFO and HMRC can often start with a dawn raid and, as the quote above suggests, the authorities may now have an increased appetite to launch raids. Raids can often generate very negative media coverage, and this might be particularly acute if a high-profile sports body is involved. Both Newcastle United and West Ham United found themselves in the media spotlight following HMRC raids in 2017.

The Competition and Markets Authority (CMA) also use dawn raids in regulatory enforcement action taken to stop ant-competitive practices such as price fixing. Businesses across many sectors frequently undergo dawn raid training, and this article will look at what a dawn raid is, and how businesses in the sports sector should prepare to mitigate the risks that a dawn raid could present.

What is a dawn raid?

Dawn raids occur without warning and are aimed at securing evidence in circumstances where there is a concern that it might otherwise be destroyed before a full investigation can take place.  Raids place considerable pressure on a business and can take place at multiple locations simultaneously, including residential homes of relevant staff. Individuals may also face arrest and interrogation as part of the process.
Staff who would have to respond to a raid, in particular, in-house legal and compliance teams, must know how to deal with the relevant investigators and what their legal obligations and rights are. 
If a business firm fails to comply with the requirements set out in the warrant or other authority or acts in a way that means evidence is lost or destroyed, significant fines can be imposed, and individuals may face criminal or civil sanctions. For example, the CMA now has increased sanctioning powers allowing it to impose a fixed penalty of up to one per cent of group annual worldwide turnover, and/or a daily penalty of up to five per cent of group daily worldwide turnover.
However, it is important to ensure that the rights of the business are respected, that the investigators do not exceed their powers and that the impact of the raid on day-to-day operations is minimised as far as possible.

Pre-planning

It is advisable that organisations take proactive steps to ensure that that they are able to respond effectively to a dawn raid, should they be subject to one:

• an internal response-team of relevant individuals should be identified including key senior contacts to be alerted in the event of a raid;
• the response team and other relevant personnel should receive specialist training;
• specialist external legal counsel should be identified and their contact details, including emergency out-of-hours numbers, be made easily accessible; and
• a dawn raid response toolkit should be prepared, provided to key personnel and easily available for others to access. This should be directed at the different groups who will have to respond to the raid and set out the process, and any key steps, that must be followed in the event of a raid.

The initial response – reception staff

If possible, move investigators to a private area away from reception and out of view from third parties who may be visiting at the time. They should be told that a senior member of staff has been notified and asked to await their arrival. 

Reception staff should keep conversations with the investigation team to a minimum and not discuss the raid with anyone other than the internal response team.

Key initial steps to be taken by reception staff are:

• alerting the senior members of the internal response team, working their way through the pre-prepared checklist;
• taking a copy of the document(s) that authorise the raid, and sending this to the senior members of the internal response team; and
• preparing a list of the investigators, and their contact details, in particular mobile numbers and taking a copy of their ID cards.

The response team

A senior member of the internal response team should go to reception immediately to meet the investigators, accompanied by another team member to take notes of the discussion.  

The following tasks should be prioritised:

• contact senior management, external counsel and other members of the internal response team;
• establish whether raids are taking place at any other locations and, if so, coordinate the response far as possible;
• ascertain how long it is likely to be before: (i) in-house lawyers; and (ii) external lawyers (if any) can be present;
• carefully check the investigators' authorisation, for example, a search warrant granted by a court  document. Do these stipulate:
  • the correct firm/entity;
  • the correct address (or addresses if the warrant extends to all or multiple firm addresses);
  • that no more investigators are on site than is permitted;
  • the issue and expiry date; and
  • the scope of the search,
• email a copy of the authorisation documents to the external legal team as soon as possible who will confirm the extent of the investigators' powers;  
• appoint a team of "shadowers" to be allocated to every investigator.  They should be briefed as to the limits on the investigators' powers, and should keep a written record of:  what documents (whether hard copy or electronic) and other data have been reviewed; which documents/data have been copied; and any questions asked and the answers given.  
• ensure that members of the firm's internal IT team are available to assist with complying with any IT-related requests; and
• consider the need for, and the content of, any internal messaging. This could include: the need to be cooperative at all times; and not to discuss the fact of the dawn raid with anyone outside of the business.  

There is usually no legal requirement for investigators to wait for the arrival of lawyers or the full response team, and if they refuse to do so then it is important that a delay is not insisted upon as there is a risk that this could be construed as non-cooperation or obstruction.  

If the investigators are not willing to wait for the arrival of the lawyers or the full response team, the investigation should be allowed to proceed, and members of the response team who are available should liaise with others by telephone.  

If the investigators insist on starting to review documents before either the internal or external lawyers arrive, seek to agree a methodology with them in particular that:

• the investigators will not take any steps (prior to the lawyers/response team's arrival) beyond those necessary to ensure that all relevant data is safely secured); and, if that is not possible,
• identifying categories of low-risk material that are within the scope of the authority, but which are unlikely to contain privileged or confidential material.  Let the investigators work through this material until the lawyers/response team arrive.

Some key (but non-exhaustive) points to remember:

Do:

• inform the investigators that you have contacted your lawyers (whether internal or external or a combination of the two) and have asked them to attend and advise you during the investigation;
• try to delay answering any questions (other than straightforward administrative queries) until a lawyer is present;
• seek immediate legal advice if at any stage you are uncertain as to your rights and responsibilities; and
  try to get the investigators onside. Offer water/tea/coffee.

Don't:

• be hostile to investigators;
• obstruct the investigation by refusing to cooperate;
• allow any investigator to be unaccompanied on the premises at any stage;
• try to destroy, delete or hide any documents or files (whether paper or electronic); and
• tell anyone outside the firm (other than the firm's professional advisers) that the investigation is taking place or discuss any aspect of it.

Preparing for the inspection/review

In preparation for when the investigators start reviewing material, the response team should carry out the following tasks:

• seek to ensure that the investigators work in a private area away from personnel or third parties;
• agree that electronic data will be imaged on site but reviewed elsewhere; and
• if hard-copy material is involved, allocate a photocopier and printer which is available for use by the investigators under the supervision of the response team.  

Do not attempt to shred, delete, close down, remove or hide any hard copy documents or electronic files or documents at any time during the raid, or allow anyone else to do so. There are criminal sanctions and/or financial penalties for such actions.

Managing an on-going dawn raid

The detailed rules governing the powers of the investigators will vary depending on which law enforcement agency body is carrying out the raid and the type of underlying investigation. This information will be included in the authorisation documents presented by the lead investigator on arrival at the premises.

Review and copying data/documents

Generally, the investigators will have the right to require any documents to be produced which they consider to be relevant to the subject matter of the investigation (as specified in the authorisation documents). They will also have the right to copy those documents or remove originals. This can include hard-copy and electronic documents, such as emails and documents stored on desktops, laptops, mobile phones or any other electronic data storage devices. The investigators should, where possible, be asked to take copies rather than originals. If they insist on removing originals, copies should be retained.

Throughout the raid, shadowers should keep a detailed record of all documents reviewed and copied by the investigators, including the keyword search terms used by investigators. 

The investigators are likely to be able to rely on wide "seize and sift" powers allowing them to seize relevant material and review it later. For example, investigators could copy the entire hard drive of a computer and remove that copy to be reviewed later. This can result in irrelevant documents or legally privileged material being seized because the investigators are not required to check each individual document before they take it away. If appropriate, investigators should be put on notice that data may contain privileged or disputed material.

However, it may be preferable to allow the review to be undertaken later, as this may mean the investigators can leave your premises more quickly.  

The investigators may well also bring forensic IT experts or hardware with them so that they can run review or imaging software. It is therefore important that there are senior members of the IT team, or external experts, available to assist the investigators with any IT-related issues. They should also ensure that only data authorised by the warrant is copied, and in a way that protects your system from damage.  

Privileged and irrelevant documents

Investigators will not normally be permitted to require the production of, or inspect, documents which are not relevant to the subject of the investigation, nor are they entitled to documents which are legally privileged under English law.  

As a general proposition, no law enforcement agency, regulator or court can require a person to provide either information or documents which are the subject of legal professional privilege. Privileged material can be gathered if investigators are exercising seize and sift powers, but that does not override the protection afforded by privilege.  

If specific documents are legally privileged, the investigators are not ordinarily entitled to read or take copies of them. If there is any dispute or doubt as to the claim to privilege, special arrangements should be made to deal with privilege claims. This may involve disputed material being separated in a secure way for subsequent inspection by independent counsel to assess claims for privilege. 

Power to ask questions

The investigators may have powers to ask individuals for explanations about potentially relevant documents. Refusal to answer may result in significant sanctions being imposed on the firm and/or the individual.  

However, questions from the investigators are ordinarily subject to the privilege against self-incrimination and the legal professional privilege exception so that it is not necessary to give answers if either privilege applies.  

Questions should be limited to assisting investigators in understanding the documents before him/her. They should not be about new issues or seeking new information beyond that contained in the document. You should ask that a lawyer is present for any interviews and/or questioning and, if necessary, request that interviews don’t start until the lawyers arrive.  

PR/communication strategy 

Any regulatory reporting obligations will need to be carefully considered and acted upon within relevant time limits. 

Careful consideration will also be needed when dealing with any press inquiries about the raid.  Internal messaging may similarly be needed and again must be carefully thought through.

Conclusion

As the Entain plc Deferred Prosecution Agreement showed, sport is not immune from criminal enforcement action. If the authorities are committed to increasing the frequency of dawn raids, sports organisations may form attractive targets if wrongdoing is suspected. Dawn raids do pose significant risks, and like businesses in many other sectors, commercial sports organisations should have plans in place to enable them to respond to raids in a way that minimises any disruption and damage to their business. 

This article was first published on LawInSport.