On 23 October 2012 the Government confirmed that deferred prosecution agreements (“DPAs”), will be introduced in England and Wales. A DPA is a written agreement between a prosecutor and a company which results in a prosecution being deferred and eventually dismissed if the company abides by certain conditions. DPAs will be available as an alternative to criminal prosecutions of bribery, fraud and money laundering offences. Legislative provisions will be included in the Crime and Courts Bill, which is currently making its way through Parliament, to introduce this new tool. It is anticipated that the Bill will get Royal Assent in March/April 2013, with DPAs in place from early 2014.
“DPAs are the next instrument in the battle against economic crime.” With that, the Government prefaced its response to the consultation on DPAs (the “Response”), confirming that DPAs will be introduced in England and Wales. The Government acknowledged that currently there is little incentive for corporates to self report; facing the prospect of a criminal prosecution if they do so. The Government also reiterated one of the rationales for the introduction of DPAs; to ensure that corporates can be held to account for wrongdoing without the uncertainty and expense that inevitably accompanies a criminal trial. However, the Response was also careful to emphasise that prosecutions will continue to be a priority and DPAs are not a replacement for criminal prosecution.
The Government, in line with the consultation respondents, was clear that DPAs would be used solely, at least initially, in the sphere of economic crime. Only the Crown Prosecution Service and the Serious Fraud Office (the “SFO”) would be able to make use of DPAs and the three main areas of focus will be: fraud; bribery and money laundering.
The Response set out the factors which would be taken into account when considering whether a DPA is appropriate. This, non-exhaustive, list includes: whether a corporate has self-reported; the degree of wrongdoing; the level of dishonesty; any impact on third parties; the corporate’s activities post discovery of the wrongdoing; and their ability to pay.
A number of the more controversial issues were clarified in the Response. There will be early judicial involvement, with the first hearing being held in private before a judge. The judge will decide whether a DPA is appropriate for a particular matter, taking into account the ‘interests of justice’ and whether the emerging conditions of the DPA are ‘fair, reasonable and proportionate’. The final agreement will be approved by a judge and announced in open court.
Various supporting guidance will be drafted. The SFO and the Director of Public Prosecutions will publish a DPA Code of Practice for Prosecutors; the Sentencing Council’s upcoming guidelines on appropriate penalties for offences committed by organisations will be applied to DPAs; and provision will be made on the admissibility, in subsequent criminal proceedings, of material related to the DPA process.
This final issue is one which has received much attention. Corporates are understandably worried that if they offer information on the assumption they are entering into a DPA, they do not want this information, freely proffered, to be used against them in a criminal prosecution. The Government have decided that where a DPA is concluded, admissions made during the DPA process can be used in subsequent criminal proceedings against the corporate, but not against individuals. General material provided in the course of DPA negotiations can be used against both the corporate and individuals. In civil proceedings, the following will be capable of being treated as hearsay evidence; that a DPA has been entered into; the DPA itself; and the agreed statement of facts in the DPA.
The use of disclosed information in subsequent proceedings is likely to be one of the major dissuading factors in the uptake of DPAs. A further consideration, which a number of consultation respondents highlighted, is the link between DPAs and debarment from tendering for public contracts. The Response reassures readers that as the DPA is not a criminal conviction, there will be no automatic debarment under the EU public procurement regime. However, it does concede that DPAs may be a potential factor in deciding whether or not to exclude an organisation from public procurement tenders on a discretionary basis.
More positively, one issue which DPAs will help to address, is the current lack of co-operation between UK prosecutors and those in other jurisdictions. It is hoped that the use of DPAs will allow increased cross-border cooperation, which going forward, will be essential as economic crime continues to occur cross-border.
One final point, which may prove more important than much of the detail above, relates not to DPAs but to the SFO. On reading the response paper, you would be forgiven for thinking that all parties concerned were as enthusiastic as the Government about the introduction of DPAs. But given the SFO’s recent retraction of its guidance on self-reporting and its restatement of its role as an investigator and criminal prosecutor, it will be interesting to see how readily and how frequently this particular ‘instrument’ is used by them ‘in battle.’