Corporate Prosecutions


On Monday 30th November 2015 The President of The Queen’s Bench Division (The Rt. Hon. Sir Brian Leveson) sitting in The Crown Court at Southwark approved this jurisdiction’s first deferred prosecution agreement [DPA] upon the application of the SFO in respect of potential proceedings against Standard Bank PLC for failing to prevent bribery contrary to s.7 of The Bribery Act 2010.

DPAs are one of many things which this jurisdiction has imported from the USA where they have been used widely for many years by the U.S. Department of Justice [USDOJ] and the U.S. Securities and Exchange Commission.

However a recent announcement suggests that there may be a change of emphasis afoot on the other side of the pond. A policy memorandum from the USDOJ signed by Deputy Attorney General Sally Yates, regarding the prosecution of individuals in corporate fraud cases, “Individual Accountability for Corporate Wrongdoing” (“the Yates Memorandum”), has been heralded as a sign of a new resolve at the USDOJ, and follows a series of public statements made by USDOJ officials suggesting that they intend to adopt a more severe stance towards individual corporate criminals, not just corporate entities.

Though much of the Yates Memorandum is not new, it has been suggested that “corporations and their executives should take close note of [the] USDOJ’s increasing and public focus on individual prosecutions.”

The 11 statements of principle contained therein are as follows:

  1. Corporations should not be treated leniently because of their artificial nature nor should they be subject to harsher treatment. Vigorous enforcement of the criminal laws against corporate wrongdoers, where appropriate, results in great benefits for law enforcement and the public, particularly in the area of white collar crime;
  2. Generally, prosecutors should apply the same factors in determining whether to charge a corporation as they do with respect to individuals. Thus, the prosecutor must weigh all of the factors normally considered in the sound exercise of prosecutorial judgment;
  3. The nature and seriousness of the crime, including the risk of harm to the public from the criminal misconduct, are obviously primary factors in determining whether to charge a corporation;
  4. A corporation can only act through natural persons, and it is therefore held responsible for the acts of such persons fairly attributable to it. Charging a corporation for even minor misconduct may be appropriate where the wrongdoing was pervasive and was undertaken by a large number of employees, or by all the employees in a particular role within the corporation, or was condoned by upper management. On the other hand, it may not be appropriate to impose liability upon a corporation for the single isolated act of a rogue employee;
  5. Prosecutors may consider a corporation’s history of similar conduct, including prior criminal, civil, and regulatory enforcement actions against it, in determining whether to bring criminal charges and how best to resolve cases;
  6. In determining whether to charge a corporation and how to resolve corporate criminal cases, the corporation’s timely and voluntary disclosure of wrongdoing and its cooperation with the government’s investigation may be relevant factors;
  7. The existence of a compliance programme is not sufficient, in and of itself, to justify not charging a corporation for criminal misconduct undertaken by its officers, directors, employees, or agents;
  8. Prosecutors may consider the collateral consequences of a corporate criminal conviction or indictment in determining whether to charge the corporation with a criminal offence and how to resolve corporate criminal cases;
  9. Non-criminal alternatives to prosecution often exist and prosecutors may consider whether such sanctions would adequately deter, punish, and rehabilitate a corporation that has engaged in wrongful conduct;
  10. Once a prosecutor has decided to charge a corporation, the prosecutor at least presumptively should charge the most serious offence that is consistent with the nature of the defendant’s misconduct and that is likely to result in a sustainable conviction;
  11. In negotiating plea agreements with corporations, as with individuals, prosecutors should generally seek a plea to the most serious, readily provable offense charged.

It is self-evident that no body corporate ever acted dishonestly without human input; as the USDOJ memorandum puts it “a corporation can only act through natural persons.”  Such behaviour, for example dishonesty, is human behaviour, the domain of its employees or directors.

So whilst an appetite to pursue corporates (as demonstrated by the DPA announced in November) is one thing the new focus Stateside gives rise to two important questions which will undoubtedly come to the fore in this jurisdiction before long:

  • Is there a likelihood of prosecutors indicting corporates in this country as opposed to agreeing not to prosecute them? and;
  • Is there an appetite in this jurisdiction to prosecute the men (and it invariably is men) at the top of these organisations as opposed to bringing middle management before the courts?

Just as corporates and those who run them have been put on notice over there it is highly likely that before too long similar considerations will apply over here.