Date confirmed for the introduction of deferred prosecution agreements
A statutory instrument, introduced just before Christmas (and available by clicking here), confirmed that Deferred Prosecution Agreements (DPAs) will be available in the UK from the 24th February 2014.
Many readers won’t need to be reminded that a DPA (defined here) is a voluntary agreement between a prosecutor and a commercial organisation where a prosecutor will not immediately proceed with criminal charges against an organisation pending successful compliance with a range of conditions, for example the payment of a substantial penalty, requirements to make reparation to victims and to participate in monitoring for a set period. A judge will oversee the development of the agreement to ensure it is fair and in the interests of justice, and the final agreement will be made in open court. If, at the end of the deferral period, the organisation has fulfilled its obligations, there would be no prosecution on the charges laid and thus the company would not be formally convicted. If the organisation fails to meet its obligations, the prosecutor could seek to prosecute the original offences. More information can be found in an earlier article from our Fraud Group’s newsletter, available here.
Of interest to commercial organisations will be how prosecutors in the UK, particularly the SFO, plan use DPAs. Some indication may be gleaned from Alun Milford, General Counsel at the SFO, in his speech of October 2013 given to the World Bribery and Compliance Forum. A copy is available on the SFO’s website; it serves as useful background reading.
What’s not to like?
The wording of the current guidance allows the SFO to enter into a DPA if:
“there is a reasonable suspicion that the commercial organisation has committed the offence and there are reasonable grounds for believing that a continued investigation would provide further evidence within a reasonable period of time so that all of the evidence together would be capable of establishing a realistic prospect of conviction in accordance with the Full Code Test.”
There is, therefore, a real danger that a company could be invited to enter into a DPA on the basis of evidence that might not be sufficient to secure a criminal conviction.
In the UK, there will be judicial oversight of the entire process. It is understood that four High Court judges have been appointed specifically to deal with DPAs. Overall, the success of DPAs in the UK will depend on the approach that the judiciary takes to a proposed agreement; a judge may take the view that a defendant company, with the benefit of expert advice, needs only a light touch judicial oversight to ensure that the process is fair to both sides. On the other hand, if the judiciary want it to be agreed on different terms that will reduce the control that the SFO and corporate defendants have.
Code of Practice
In addition, the SFO has confirmed that the Director of the SFO and the DPP will release the Code of Practice in early February before DPAs become available. This follows a joint consultation on the draft Code of Practice last year. The Code will supplement the statutory provisions on the DPA process by setting out the decision making process to be followed by the DPP and the Director of the SFO when agreeing to a DPA and providing guidance for the rest of the process. 2 Hare Court will provide a further update once the Code of Practice has been published.
Finally, last Friday (31st January) the Sentencing Council published sentencing guidelines for companies convicted of fraud, bribery or money laundering. These guidelines for corporate offenders, which will take effect in October 2014, are being published to coincide with the introduction of DPAs on 24th February. (Sentencing guidelines relating to individuals will be published later in the year – we’ll be issuing a further update then).
These latest guidelines will clearly be of interest to a corporate entity considering whether to enter into DPA negotiations, as they will affect the prospects of agreement being reached.
If you would like to discuss any of the issues raised in this post, please feel free to comment below, or you can contact Kate directly.