UK Law: Deferred Prosecution Agreements Appear a Step Closer

Deferred prosecution agreements (DPAs), whereby a prosecution for corporate crime is suspended in return for a promise of good behaviour, a possible fine and other conditions, appear likely to be introduced next year in the UK under a provision of the Crime and Courts Act 2013. The Serious Fraud Office and Director of Public Prosecutions on 27 June published a draft code of practice for prosecutors addressing a number of concerns regarding adoption of such US-style deals, bringing the use of DPAs closer. Under the draft code, deals to defer prosecutions for offences such as corporate bribery will be transparent and supervised by a judge.

Supporters of DPAs have argued that the availability of such deals will encourage self-reporting of corporate misdeeds and save the expense of lengthy investigations and prosecutions. Critics, on the other hand, have expressed concern about transparency, as well as the resulting implication that corporations can and will receive lighter touch treatment than individual wrongdoers. Other commentators decry this development as the inevitable next step in the ongoing criminalisation of corporate law.

Under the proposed code, an invitation to negotiate a DPA “is a matter for the prosecutor’s discretion”. Nevertheless, the exercise of that discretion will be informed by several tests. First there must be sufficient evidence to convict, or “at least 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”. Second, deferrals must also meet a public interest test. “A prosecution will usually take place unless there are public interest factors against prosecution which clearly outweigh those tending in favour of prosecution”. Public interest tests against prosecution, for example, include the offending management taking “a genuinely proactive approach” to reporting and remedying the matter, “including the compensation of victims”.

The guidelines further state that deferrals must be subject to judicial oversight, but they also concede that when a court approves a DPA, a private hearing “is likely to be almost always necessary” because of uncertainty of the outcome. “For the parties to make an application in open court which was refused might lead to the uncertainties and destabilisation that private preliminary hearings are designed to avoid”. Nevertheless, the court has traditionally been highly protective of its judicial prerogatives, and can be expected to be anything but a rubber stamp for deals cut in private.

The guidelines on transparency also require prosecutors to ensure that a full and accurate record of all negotiations is prepared and retained. “Meetings between the parties should be minuted and the minutes agreed and signed”.

As can be seen, there are a number of competing policies that need to be reconciled. Yet one more step has now been taken toward the implementation of DPAs as an additional option to address perceived corporate crimes such as bribery, money-laundering, fraud and corruption.

Consultation and public comment on the draft guidelines will remain open through 20 September.

Topics:  Corporate Fraud, Crime and Courts Act, Criminal Prosecution, Deferred Prosecution Agreements, Fines, Negotiations

Published In: Business Organization Updates, General Business Updates, Criminal Law Updates, Finance & Banking Updates, Securities Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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