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18 Oct 2011

Negotiated justice – a light at the end of the tunnel for both sides?

The Solicitor General is conducting a preliminary consultation about the way in which an English version of Deferred Prosecution Agreements (DPA’s) might work.  This is good news because such agreements do have a valuable role to play in law enforcement where investigation budgets are tight and it is also good news for companies who often need a way out of a costly and uncertain criminal investigation.  But the debate must be fully informed.  The public needs to know what is being contemplated.  How far will the government go in protecting the public interest in exposing corporate wrongdoing?  To what extent will it protect the rights of individual employees caught up in corporate investigations?

Such agreements have become common in US corporate crime cases, particularly those involving foreign corruption.  The Solicitor General wants to see whether a version of the US model can be imported into English criminal law, and the Director of the Serious Fraud Office (SFO) is, not surprisingly, a supporter of this initiative.  Businesses and their lawyers are also supportive, but more cautiously so.  Much will depend on what exactly is proposed and at what stage such agreements can be made.

In England, the SFO has been busy in the last few years concluding both civil and criminal agreements aimed at compromising or settling criminal investigations.  These compromises, for like it or not that is exactly what they are, have been highly controversial.  Notable among them were the BAE Systems case which ended in a plea to a minor offence under the Companies Act in a major corruption investigation.  Similarly, in the Innospec case there was significant judicial criticism about the apparent attempt by the parties to fetter judicial discretion in the sentence to be imposed in a transatlantic settlement deal to conclude criminal corruption cases against the company in the US and the UK.

There are obvious criticisms of corporate defendants being able to literally buy themselves out of prosecution and that, bluntly, is what a DPA entails.  The proposed English model would ensure that the judiciary was involved in approving a package of measures to accompany the agreement to defer prosecution.  Companies would be expected to admit to agreed facts in support of an allegation of criminal conduct.  For this they would not be prosecuted, on payment of a financial penalty and on satisfaction of other conditions such as, for example, full and complete co-operation with the investigation, remedial steps and restitution or compensation.

Whilst DPA’s in the US can apply to individuals, at least in theory, the proposals in England are currently limited to companies.  This would not prevent individuals within a company negotiating the indirect benefit of a decision not to prosecute them through a corporate DPA.  Indeed in all the civil recovery “deals” done recently by the SFO, no UK prosecutions of individuals have taken place.   However, where prosecutions of individuals are based on evidence gathered by a company and handed to the SFO as part of a DPA, it may not be easy to ensure that any subsequent criminal trial is fair. That much emerged from the failed prosecution of the BA executives in the OFT’s first contested cartel prosecution last year.

There is a long way to go in shaping the English model for DPA’s but it is likely to become a feature of corporate criminal law enforcement one way or another. The important thing is to make sure that giving prosecutors a new power to enter DPA’s is not driven purely by pragmatism and cost saving.  Somewhere along the line justice must be done and be seen to be done!

Corker Binning is a law firm specialising in fraud, company investigations and general criminal work of all kinds. For more information, call us on 0207 353 6000.

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