A compulsory examination is where a securities investigation becomes personal. A fund manager’s accountant, a trustee’s director or a broker who handled a suspicious trade can each be summoned to answer questions in a closed room. Division 2 of Part V of the Securities Commission Act 2015 sets the rules.
The notice to assist and appear
Where the Commission “suspects or believes on reasonable grounds that a person can give information that is relevant to a matter that the Commission is investigating”, it may by written notice require the person to give all reasonable assistance and to appear to be examined orally. The person “is legally bound to answer all questions put to him by the Commission and to state the truth” and “shall not refuse to answer any question on the ground that it tends to incriminate him”.
Three features stand out. The threshold is that the person can give relevant information; the examinee need not be a suspect. The duty to answer is absolute, and the ordinary privilege against self-incrimination is expressly removed. And the obligation extends beyond the hearing room to giving “all reasonable assistance” with the investigation. Failing to appear, refusing to answer or knowingly giving false or misleading information is an offence carrying a fine of up to K2 million or seven years’ imprisonment, or both (section 66(7)). Section 94 separately punishes false or misleading statements in an examination with up to K10 million or ten years, with a defence of reasonable belief in their truth.
How the examination is conducted
The examination takes place in private (section 69(1)). As amended in 2023, section 69(2) restricts attendance to the examiner, the examinee, Board members and Commission staff, anyone the Commission directs may attend, and the examinee’s lawyer. Wilful breach of the privacy rule is an offence (fine up to K500,000 or three years, or both, plus K1,000 a day). The lawyer may be present and, at times the examiner allows, may address the examiner or question the examinee about matters covered, but the examiner can stop a lawyer who is using those rights to obstruct (section 70).
Every statement must be reduced to writing, read back to the examinee, corrected if necessary and signed or thumb-printed (section 66(2) and (4)). If the examinee refuses to sign, the officer endorses the statement with the fact and any reason given (section 66(5)). The signed statement is admissible in any court proceeding (section 66(6)).
Licensed persons face a second form of examination. Under section 67 the Commission may, without prior notice, examine the books, accounts and transactions of any capital market licensee, central depository, depository agent or nominee. Section 68 obliges the licensee and its directors and officers to give full access to books, title documents, securities and cash, and lets an authorised person take possession of them where copying is impractical, where they may be destroyed or where they may be needed as evidence. Refusal is punishable by up to K5 million or seven years, or both.
How your answers can be used
Section 71 lets the Commission use examination evidence to bring civil proceedings under sections 84 or 101, and makes it an offence (up to K10 million or ten years) for anyone other than the Commission to use the record to attack the examinee’s credibility before any finding of guilt. Division 5 (sections 85 to 90) then governs admissibility in court:
- A statement is admissible against the examinee unless it is irrelevant and the examinee objects, is qualified by another statement not tendered, or discloses legally privileged material (section 85). A signed record is prima facie evidence of what it records.
- In proceedings against someone else, the statement may be used if the examinee is dead, unfit, abroad or untraceable, or if no party requires the examinee to be called (section 86).
- The court weighs the statement by how soon it was made after the events, any motive to conceal and the surrounding circumstances (section 87).
- A party intending to rely on examination statements must give 14 days’ written notice, and the other side has 14 days to object in writing (section 88). A Commission report cannot be used against a party who has not had a reasonable chance to study it and cross-examine its authors (section 89).
The constitutional question
Section 37(10) of the Constitution provides that no person shall be compelled in the trial of an offence to be a witness against himself. Section 66(3) removes the privilege at the investigation stage, and section 85 makes the compelled answers admissible against the examinee “in a proceeding”. Section 1(2) of the Securities Commission Act declares, for the purposes of section 38 of the Constitution, that the Act regulates the qualified rights to liberty (section 42), freedom from arbitrary search (section 44), freedom of expression (section 46), association (47), employment (48), privacy (49) and information (51) in the public interest. Section 37 is not on that list, and the protection of the law in section 37 is not a qualified right that section 38 can cut down. Whether a signed statement compelled under section 66 can be tendered in a criminal trial of the examinee consistently with section 37(10) has not been decided in any reported case found for this series. A person examined should take legal advice before the examination and ensure any objection is recorded in the statement.
Refusing to attend or answer is itself an offence, and so is guessing wrongly if the answer is false in a material particular. Say what you know, say when you do not know, and have your lawyer present. The record you sign may follow you into court.
Sources
- Securities Commission Act 2015 — ss 1(2), 66–71 (s 69(2) as amended 2023), 84, 85–90, 94, 101
- Constitution of the Independent State of Papua New Guinea — ss 37(10), 38
Before relying on anything here, read the current text of the Capital Market Act 2015 and check for later amendments. If a decision matters to you, get advice — start with the Office of the Public Solicitor, or find a firm in the law firms directory.