On 23 October 2012, the UK Ministry of Justice published the Government’s response to the consultation on deferred prosecution agreements (“DPAs”). This confirmed that DPAs will be introduced in England and Wales as an alternative to prosecution of companies for fraud, bribery and money laundering offences. The Government intends to amend the Crime and Courts Bill, which is currently under consideration by Parliament, so that DPAs are introduced from 2014.
A DPA is a written agreement between a prosecutor and a company which allows a prosecution to be deferred and ultimately dismissed if the company abides by the terms of the DPA. The aim of DPAs is to encourage companies to self-report and to give prosecutors another tool by which to hold offending companies to account without the uncertainty, expense and complexity of a criminal trial.
- DPAs available for commercial organisations only – no plan to introduce them for the criminal liability of individuals.
- Available for conduct that predates DPA legislation (provided no proceedings already commenced).
- Director of Public Prosecutions (DPP) or Director of the Serious Fraud Office (DSFO) must personally exercise power to enter into a DPA.
- DPP and DSFO to produce a Code of Practice for Prosecutors on DPAs.
- Preliminary private hearing before a judge to determine whether a DPA would be “in the interests of justice” and whether the proposed terms are “fair, reasonable and proportionate”.
- All DPAs will include a statement of facts and an expiry date upon which the DPA will cease to have effect. Other terms could include a financial penalty, a disgorgement of profits, reparation to victims, and the establishment of monitoring, internal procedures and training.
- Allowance for a reduction in the financial penalty element of the DPA in line with the reductions currently available for a guilty plea on prosecution (up to a third).
- Final DPA to be approved by a judge in open court to ensure transparency. Prosecutor obliged to publish the final agreement as well as details of how the terms of the DPA have been complied with by the commercial organisation at the end of the DPA process, plus details of any breach, variation or termination of a DPA.
- Serious or contested breaches of a DPA will be determined by a judge applying the civil standard of proof. Options on breach include variation or termination of the DPA (i.e. prosecution).
- Admissions made by a company during the DPA process will be admissible in criminal proceedings against that company, but not against individuals. Any material provided by a company during the DPA process could be used against either the company or an individual. The DPA itself and the Statement of Facts will be admissible as hearsay evidence in civil proceedings.
Requiring a judge to determine whether a DPA is appropriate and to confirm the terms of the DPA in open court is intended to ensure full public transparency and to meet criticisms – often based on U.S. DPAs – that DPAs allow prosecutors to circumvent the judicial process by reaching an agreement with a defendant out of court and out of the public eye. DPAs will not be available in every instance. The factors that will determine whether a DPA is appropriate will be set out in a statutory DPA Code of Practice for Prosecutors (the timing of which is not yet confirmed) and are likely to include whether a company self-reported (something the DPAs are intended in encourage), whether remedial action has been taken, the seriousness of the wrongdoing, the extent of the dishonesty, and any impact on third parties.
Incentives for a company to agree to a DPA include: reducing the costs and reputational impact associated with a criminal trial, being subject to a reduced fine, and, perhaps most importantly, not having a criminal conviction, which means that the company would avoid debarment under the EU public procurement rules. However, companies may nonetheless hesitate to self-report and agree to a DPA given that information provided in the DPA process can still serve as evidence in criminal proceedings; that the DPA itself can act as hearsay evidence in civil proceedings; and that the UK Serious Fraud Office has recently signalled a tougher stance by withdrawing its previous guidance on self-reporting in bribery cases. The introduction of DPAs may increase cross-border cooperation by making it easier for prosecutors to coordinate their response to what is often multi-jurisdictional wrongdoing.