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Madoff data can be extradited back to US

High Court says legal interest trumps data protection

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Data which is protected by the Data Protection Act can be transferred to the US to help in the investigation of companies run by Bernard Madoff, the High Court has said. The transfer would usually be barred but is justified in this case, the Court said.

The Data Protection Act (DPA) forbids the export of personal data to countries where privacy protection is poor. Data cannot be sent outside of the European Economic Area except to countries which are deemed to have 'adequate' data protection. The US is not one of those countries.

Irving Pickard has been appointed by the New York Courts to conduct the liquidation of Bernard L Madoff Investment Securities, the investment vehicle formerly run by Madoff that is behind a $50 billion fraud.

Pickard and joint provisional liquidators (JPL) in the UK applied for permission to send data relating to a UK Madoff company, Madoff Securities International Limited, to Pickard in New York.

The transfer would usually be barred by the DPA but it does have some exceptions. Data can be transferred, it says, when "the transfer is necessary for reasons of substantial public interest" and when "the transfer is necessary for the purpose of, or in connection with, any legal proceedings (including prospective legal proceedings)".

"I am satisfied that it is in the public interest for an alleged fraud on this scale and of this complexity to be investigated, and on the evidence before me I am therefore satisfied that transfers of the information scheduled to the draft order are necessary for reasons of substantial public interest," said Mr Justice Lewison in the High Court.

The Court found that the exception relating to legal proceedings was also relevant.

"The unravelling of the fraud will undoubtedly involve legal proceedings. Indeed … there are two such proceedings already on foot, namely the liquidations both in New York and in this country, and the establishment of legal rights will no doubt be necessary in order to wind up the affairs of both companies in an orderly fashion," said Mr Justice Lewison. "It is therefore the case, on the basis of the evidence before me, that [some of the legal exceptions] are also satisfied."

The Court's ruling related to specified information, but the UK liquidators had also asked the Court to allow them the discretion to send any further information they saw fit to Pickard in the future.

Mr Justice Lewison refused to issue the blanket permission for more data to be sent.

"That form of order relates to information which is unspecified and which gives to the joint provisional liquidators the discretion or the ability to make a valued judgment as to what they consider to be necessary," he said in his ruling. "I do not consider that the court should make a blanket order of that kind without knowing what it is that it is being asked to authorise."

Copyright © 2009, OUT-LAW.com

OUT-LAW.COM is part of international law firm Pinsent Masons.

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