Corker Binning partner comments on new SFO guidelines re DPAs

David Corker comments on the new SFO guidelines re DPAs on Reuters, in The Daily Telegraph and in Fraud Watch.

British prosecutor sets high hurdle for company plea-bargaining

By Kirstin Ridley

LONDON | Thu Jun 27, 2013 6:42pm BST

(Reuters) – Britain’s top prosecutor, which faces an uphill struggle to improve its chances of nailing corporate fraudsters, has laid out tough guidelines for companies seeking to avoid court with new U.S.-style plea bargaining deals.

In a draft code of practice published on Thursday, the Serious Fraud Office (SFO) said companies were unlikely to qualify for so-called Deferred Prosecution Agreements (DPA) if they delayed reporting wrongdoing, showed repeated or engrained misconduct or failed internal compliance programmes.

David Green, who has overhauled the SFO since he took over as chief in April 2012, has vowed to prosecute where he can and has already scrapped guidelines issued by his predecessor Richard Alderman designed to give companies discovering corruption comfort they might avoid prosecution if they step forward.

Some lawyers argue that companies discovering corruption might already be opting against reporting their findings to authorities for fear of prosecution.

“In the real world, corporates want certainty and the SFO wants results,” noted James Carlton of law firm Fox Williams.

“It is currently hard to see how these opposing desires can be easily reconciled.”

But DPAs, which are expected to be introduced in the UK from next February, will offer another tool for prosecutors struggling to bring to book corporate wrongdoers who rely on the cost and complexity of cross border investigations to evade justice.

DPAs involve charging a company with a crime but suspending proceedings in return for a range of sanctions that can include a fine, compensation and monitoring.

CODE

The SFO said a company might avoid trial if it had been “genuinely proactive” since discovering misconduct, where misconduct was isolated, had occurred some time ago, might have been committed by a “rogue director” and was reported promptly.

However, if firms provide inaccurate, misleading or incomplete information to secure a DPA, the SFO wants to be able to instigate fresh proceedings for the same offence.

Like their U.S. counterparts, English DPAs will need to be sanctioned by a judge to ensure they are in the public interest. David Corker of law firm Corker Binning said that the key section of the proposed code entitled the SFO to decide whether to offer DPA negotiations without independently determining the strength of evidence, which he called a “flimsy foundation”.

He added that recent U.S. DPA settlements also showed “unhealthy competition” amongst prosecutors to prey on companies they believe will pay up and never go to trial.

HSBC (HSBA.L) was fined $1.9 billion in December as part of a DPA with U.S. authorities investigating its Mexican and U.S. operations.

Despite the imminent arrival of DPAs, Green has conceded it can be hard to prosecute companies in Britain because of high legal hurdles.

In English law, a corporation is only criminally liable if bosses – the “controlling mind” – are culpable.

A new Bribery Act has introduced an offence of “failing to prevent” bribery, but this does not yet extend to other criminal offences.

“English law on corporate liability means the corporate itself rather than individuals will rarely be criminally liable,” noted Allen and Overy’s litigation partner Arnondo Chakrabati.

“The company will therefore have little incentive to enter into a DPA.”