The Crime and Courts Act 2013 received Royal Assent on 25 April 2013, dealing with matters as diverse as drug-driving, self-defence and community penalties. A less familiar topic, tucked away in Schedule 17 of the Act, is deferred prosecution agreements (“DPAs”) which have the potential to change dramatically the relationship between corporates and prosecutors, and raise as much as £60m in annual penalty income for the Government according to the MoJ’s Impact Assessment
When the DPA provisions are brought into force, they could be offered to corporates, partnerships and unincorporated bodies (but not individuals) for a plethora of specified economic crimes including bribery, corruption, fraud, money laundering, tax and duty evasion, theft and financial market misconduct. DPAs will also be possible for historic offences – those which took place before the DPA legislation comes into force
Under the DPA procedure, the Director General of the SFO or the Director of Public Prosecutions will charge the organisation. However, the proceedings will automatically be suspended as part of a written and binding agreement which must include a statement of facts and may include a financial penalty, compensation for victims, disgorgement of profits, implementation of a compliance programme, co-operation with an investigation into the alleged wrong-doing and payment of the prosecution’s reasonable costs in relation to the DPA.
To ensure transparency, the Director General of the SFO and the DPP must publish a Code giving guidance on the principles to be applied when deciding whether a DPA would be appropriate, and it is anticipated that a draft of the Code will be subject to a public consultation exercise. Judicial agreement must be obtained, both at preliminary and final stages, that a DPA is in the interests of justice and that the terms are fair, reasonable and proportionate. Only when the Crown Court approves the DPA will it become binding. If approved, the DPA will be published.
DPAs will remain in force until their expiry date, at which time the prosecutor will give notice to the Court that it does not want to pursue the prosecution. Once discontinued in this way, it will not normally be possible to bring fresh proceedings for the alleged offence. However, if the organisation breaches the DPA whilst it is still ongoing, the prosecutor may apply to the Court for a declaration – on the balance of probabilities – that a breach has occurred. In these circumstances, the DPA could be terminated, rendering the organisation liable to prosecution for the offence.
If such a prosecution does take place, the statement of facts forming part of the broken DPA will be treated as an admission by the organisation. In all likelihood, this will include admissions proving the central elements of the alleged offence, making conviction a forgone conclusion. Conversely, and as an incentive to enter into DPA negotiations, the legislation restricts the use which a prosecutor can make of information provided by an organisation during the course of negotiations that do not subsequently result in a Court-approved DPA.
Although currently restricted to economic crime, the Government has held out the possibility that DPAs could eventually be extended to other forms of corporate wrongdoing such as corporate manslaughter, health and safety offences and environmental offences.
It remains to be seen whether the practice of DPAs will receive as warm a corporate welcome as did their initial announcement. The SFO asserts that it is greatly enhancing its intelligence capacity, and organisations which do not seize the initiative and self-report wrongdoing (to increase the prospects of resolving the matter by way of a DPA) may find themselves subject to a criminal investigation leading to an actual prosecution and the attendant risk of conviction.
Nevertheless, a decision to enter into such a DPA, with the admission of wrongdoing that this will entail, may well expose organisations to civil claims from victims arising out of the same facts. Further, it is unclear how entering into a DPA here would protect an international company from prosecution for the same wrongdoing in other jurisdictions where the principle of res judicata may not apply. In such circumstances, a company will no doubt seek to enter into a DPA in this jurisdiction as part of a so-called “global settlement” of investigations in other jurisdictions.
It also remains to be seen what stance the prosecuting authorities will adopt towards individuals implicated in the criminality. Will we see situations where companies are dealt with by way of a DPA but its directors with potential personal criminal liability being prosecuted, with the authorities seeking to use the company’s DPA admission in evidence?
The DPA provisions of the Crime and Courts Act 2013 are expected to come into force in early 2014.