A global finance firm whose employees were arrested during a ‘malicious’ Rangers fraud probe want a multi-million compensation settlement from Scotland’s prosecution service.
Duff & Phelps – who are based in New York – believe the Crown Office should compensate them for ‘reputational damage’.
The company has instructed the Dean of the Faculty of Advocates – Roddy Dunlop QC – to pursue the action at the Court of Session in Edinburgh.
The firm believes that it has suffered significant lost earnings since two employees – David Whitehouse and Paul Clark – were wrongfully arrested.
The two men – who have already secured £21m in damages from prosecutors – were appointed administrators of Rangers in February 2012 as the club entered a financial crisis.
They were accused of wrongdoing but prosecutors had no “probable cause” to arrest them and they were eventually acquitted with other businessmen who were involved in the club.
Former Lord Advocate James Wolffe QC also apologised to the pair “for a very serious failure in the system of prosecution”.
Now, Duff & Phelps – which has around 5000 employees in 30 different countries – is also seeking compensation for the Crown’s actions.
On Thursday, the case called before judge Lord Tyre. During the hearing, which was held using video conferencing technology, Mr Dunlop said that he believed his client had the right to sue.
He said: “The defender is getting at ‘we didn’t prosecute you Duff & Phelps so where’s the beef?’
“The answer to that we give in our outline argument. In my submission, that is a crisp question of law.”
The latest action is the latest development in a long running controversy involving prosecutors and those who were arrested during a police investigation into businessman Craig Whyte’s takeover of Rangers.
The club’s assets were sold to a consortium led by the businessman Charles Green, who went on to become Rangers’ chief executive.
He received a £6.4m settlement from the Crown Office last week for being wrongly prosecuted.
Business expert David Grier, who was a special adviser at Duff & Phelps at the time of the takeover was also arrested but later cleared. He is currently seeking a £9m settlement from the Crown Office and Police Scotland.
Lord Tyre also concluded earlier this year that prosecutors had “no probable cause” to prosecute him.
The head of the Crown Office at the time was Lord Advocate Frank Mulholland QC. How now sits as a judge – Lord Mulholland.
Court papers state that Duff & Phelps are currently seeking £25m from the Crown Office.
However, this figure may change – as Duff & Phelps have appointed an expert to submit a report to the court about the impact of the investigation on the business’ turnover.
On Thursday, Mr Dunlop told the court that he wished to use information obtained from the litigation raised by Mr Whitehouse in the current action.
However, he said he is unable to do that without the approval of the Crown Office and the judge as he risked placing himself in contempt in court.
He said: “I know all of the documents from the Whitehouse litigation.
“But we can’t simply use it because at least on one view we put ourselves in contempt in (of) court. Your lordship will know that we simply cannot do that.
“So, those instructing me have been asking for sometime about what the attitude of the Lord Advocate (is) to this.
“I would welcome some clarity from that – either from my learned friend now or whether from those who are instructing him if they can confirm the position.”
Douglas Ross QC for the Crown Office told the court that it was his client’s position that Mr Dunlop make a formal motion to the court.
The motion will focus on whether the information obtained from the Whitehouse case could be used in the current case.
He added: “The material which it is understood the pursuer seeks access to is extensive and includes sensitive material.
“Others notably who are accused of maleficence which the pursuer characterises in its note of proposal as criminal may have an interest. Careful consideration should be given to the basis on which access is sought and the matter should, in my submission, be under the control of the court.”
Lord Tyre continued the case to a hearing later this year. It is expected to take place in November 2021.
He added: “I will fix a procedural hearing in 12 weeks time – that takes us to the middle of November.”
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