The Serious Fraud Office has published a code of practice on the use of deferred prosecution agreements (DPA). DPAs are available to public prosecutors in the UK as of 24 February 2014. DPAs can be used for fraud, bribery and other economic crimes. They apply to organisations, not individuals.
Deferred Prosecution Agreements (DPAs) came into force in the UK on 24 February 2014. Under a DPA, a prosecutor charges a company with a criminal offence but proceedings are automatically suspended. The company agrees to a number of conditions, such as paying a financial penalty, paying compensation and cooperating with future prosecutions of individuals. If the company does not honour the conditions, the prosecution may resume. DPAs can be used for fraud, bribery and other economic crimes. They apply to organisations, not individuals.
DPAs, introduced in the Crime and Courts Act 2013, are to be used where the public interest is not best served by mounting a prosecution. Entering into a DPA in the UK is to be a transparent public event, and the process will be supervised by a judge.
Before DPAs entered into force, the director of Public Prosecutions and director of the Serious Fraud Office (SFO) issued a Code of Practice on 14 February 2014 that instructs prosecutors when:
- negotiating a DPA with an organisation
- applying to the court for the approval of a DPA
- overseeing DPAs after their approval by the court, in particular in relation to variation, breach, termination and completion of DPAs.
The Code was promulgated following an extensive consultation carried out over the summer of 2013 (see In context of 10 October 2013 for more information on the consultation process). The Code specifically instructs prosecutors on practical aspects of DPAs, including:
- what factors prosecutors may take into account when deciding whether to enter into a DPA
- what are the procedures to be followed by prosecutors when offering to negotiate, entering into, and when applying for a court approval of a DPA
- how to determine the terms of a DPA, including whether a monitor should be appointed
- how to determine the financial penalty included in a DPA
- how to monitor DPAs and how to act in the event of a DPA breach.
Importantly, the Code clarifies that an invitation to negotiate a DPA is at the prosecutor’s discretion; organisations do not have a right to be invited to negotiate a DPA. In line with previous statements by the director of the SFO, David Green, the Code further emphasises that the SFO and the Crown Prosecution Service (CPS) are first and foremost prosecutors and only in specific circumstances considered appropriate by their directors will they decide to offer a DPA instead of pursuing the full prosecution of the alleged conduct.
Along with the introduction of DPAs, the Sentencing Council recently published its definitive guidelines for sentencing fraud, bribery and money-laundering offences for corporate offences. According to the Sentencing Council, although these guidelines are “not a guideline for DPAs,” which by definition involve no conviction, they “may be used to inform the level of financial penalty that forms part of a DPA”.
The guidelines aim to ensure consistent and appropriate sentencing for these crimes, removing any profit made through the offence and having a real economic impact on the offending organisation, including its shareholders. The guidelines set out ten steps for determining the appropriate sanction.
The guidelines apply to all organisations sentenced on or after 1 October 2014, regardless of the date of the offence.