The sting and the tale

Quick read

We usually (try to) write notes about interesting new legal cases or, on a particularly racy day, legislation. This piece is neither. But it's an amazing story.

What should a court do when an apparently strong, perhaps unanswerable, claim in fraud relies on knowledge obtained by (thoroughly) unethical means?

This was the difficult question posed to Deputy High Court Judge Stephen Houseman KC in Salinas Pliego v Astor Asset Management 3 Ltd [2025] EWHC 2968 (Comm), a recent Commercial Court decision that reads more like a spy thriller than a typical fraud case.

The underlying fraud

The case involves allegations that Mexican billionaire Ricardo Salinas Pliego and his company were deceived into concluding a Stock Loan Agreement in July 2021. It was alleged that Mr Salinas was fraudulently induced to transfer shares in Elektra (a Mexican company) as collateral, which were then misappropriated by the defendant, Vladimir Sklarov. Sklarov had gained notoriety for perpetrating similar 'stock-lending frauds' in the past. The judge noted there was a good and perhaps strongly arguable case that the fraud claim would succeed at trial. So far, so good.

Enter the operatives

But the fraud allegations became secondary to what happened next. In August 2024, a company associated with the claimants retained BC Strategy, a business intelligence firm, to support the litigation. BC Strategy boasted "a select group of veterans of elite units in the Israeli intelligence community, combined with financial and legal experts".

The engagement agreement outlined BC Strategy's methodology: they would identify "Human Targets" to approach and extract intelligence, create "elaborate, personalized cover stories" for each target, and deploy "field agents" and "operatives" to build relationships and extract relevant information. The claimants refused to disclose how much BC Strategy was paid.

The sting

BC Strategy's 'human target' turned out to be the defendants' litigation solicitor. They lured him into meeting on the false premise that he was pitching for a potential new client, then secretly filmed and recorded the meetings; all the while extracting information about the perceived strengths and weaknesses of the defendants' position, including litigation and settlement strategy. There were three meetings — one virtual and two in person abroad over lunch and dinner with alcohol — totalling about 6.5 hours, during which the solicitor was "skilfully and tenaciously steered" into discussing confidential aspects of his clients' case.

The operative persistently led the solicitor with questions designed to pressure him into privileged territory, and was clearly "very well briefed about the issues in these proceedings". The solicitor was duly lulled into false confidence, sharing personal and privileged information, hoping to win a major new client as a newly-promoted partner. In the defendants' words, the claimants intended BC Strategy to go "privilege hunting".

The Court's response

The claimants accepted the methods were unethical but denied responsibility for the use of such methods (blaming BC Strategy), claimed they gained no unfair advantage, and argued it would be disproportionate to strike out their claim when the defendant had committed significant fraud.

The judge decided that the claimants intended or expected BC Strategy to engage in precisely this kind of unethical conduct, noting there was no evidence they were shocked to receive the fruits of the covert operation. On the contrary, they sought to use it in their summary judgment application.

He held that targeting an adversary's solicitor to extract sensitive information "is anathema to the norms and values of civil litigation" and "offends justice", constituting an abuse of process regardless of whether the information obtained was actually privileged.

Yet the judge did not strike out the entire claim, finding this would be disproportionate where there was a decent prospect of success on the fraud claim and a policy in favour of exposing serious wrongdoing. Instead, he struck out the summary judgment application and indicated the claimants would pay costs on an indemnity basis.

Unfinished business

The judge adjourned key issues to a future 'Information Review Hearing' to determine the precise evidential status of the illicitly obtained information and whether the claimants' possession of it creates a substantial risk of an unfair trial – leaving open the possibility of more severe sanctions including striking out the entire claim.

The judge granted permission to appeal, noting "the interplay between competing policies deserves appellate attention", and candidly observed he may have been "too lenient" on the claimants. So, we may hear this story again. The takeaway is an obvious one. Be careful using 'operatives'. They can ruin a perfectly good case.

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