On April 25, 2013, the UK Parliament passed the Crime and Courts Act of 2013 (the “Act”), which addresses (in Schedule 17) the procedures and requirements for Deferred Prosecution Agreements (“DPAs”) – a popular and effective prosecutorial tool in the US that until now has been unavailable to prosecutors in England & Wales. Though no effective date has been determined for implementation, once formally in force, DPAs will apply to a wide-variety of economic crimes, including accounting fraud and bribery offences.

The introduction of DPAs in England & Wales follows their use for many years in the US, where prosecutors have routinely extracted significant financial penalties and admissions of guilt from companies in exchange for the companies avoiding prosecution. In theory, both sides benefit. Companies avoid the devastating consequences of a public trial and a possible conviction, and the government extracts a financial penalty while avoiding the burden and expense involved in investigating and prosecuting a company. In most instances, prosecutors in the US have utilised DPAs when companies have self-reported unlawful conduct and/or fully cooperated with investigations in exchange for leniency, and it is the Ministry of Justice’s hope that the availability of DPAs in England & Wales will dramatically increase the level of self-reporting here, where until now even the Ministry of Justice agrees that there has been “little incentive” to do so. Whether DPAs will lead to this desired result will depend in large part on whether the Serious Fraud Office (“SFO”) and Crown Prosecution Service (“CPS”) (the “desig¬nated prosecutors” named in the Act) provide guidance to the business community that gives companies confidence that they will be sufficiently rewarded for their cooperation. While it will be several years before we know the actual impact DPAs will have on the number of cases resolved by the SFO and CPS, there is no doubt that the existence of DPAs in England & Wales will dramatically change the way companies evaluate what to do when they discover unlawful conduct, since companies now at least have the option of trying to work out a “criminal settlement” with the designated authorities that may minimise long-term damage to such companies. It goes without saying, however, that ‘falling on your sword’ comes with many risks and pitfalls that companies need to consider.

This article will explain the provisions in Section 17 of the Act as well as the standard DPA terms in the US that will likely serve as templates for prosecutors in England & Wales going forward. We will also provide some practical insight – based on lessons that can be learned from the DPA process in the US – into the issues companies and their attorneys need to consider as they wade into the uncharted waters of cooperating with the SFO in this new era of DPAs.


Law enforcement agencies in England & Wales have long complained that they have a narrow range of tools at their disposal to hold companies accountable for their criminal conduct. Judicial criticism of civil settlements entered into by the SFO, such as in the Innospec and Dougall cases, created a sense of uncertainty and forced the SFO and companies to rethink their approaches to early resolution of corporate criminal matters. The withdrawal of the SFO’s guidance on self-reporting last year, and the SFO’s October 2012 revised statements have created further ambiguity. Companies have no real comfort that self-reporting will lead to a civil resolution of the matter, and so, as a result, they query the attraction of self-reporting when the SFO will offer no guarantees. In response to this criticism, and after observing that the significant increase in self-reporting in recent years in the US is attributed in large part to the fact that US prosecutors routinely use DPAs to settle criminal cases with corporations, the introduction of DPAs in England & Wales began taking shape in early 2012.

In May 2012, the Ministry of Justice released its “Consultation on Deferred Prosecution Agreements,” which made the case for why DPAs would be a useful tool for prosecutors in England & Wales. According to the Ministry of Justice, “DPAs would contribute to a just outcome, enabling prosecutors to secure penalties for and the surrendering of proceeds of wrongdoing, and providing benefits for victims in a way that is sanctioned by a judge, without the uncertainty, expense, complexity or length of a full criminal trial.”

The Consultation also points out that DPAs give prosecutors a tool to avoid the collateral dam¬age that can be caused by a criminal prosecution of a company, such as financial injury to investors, innocent employees and business partners. Also, a criminal conviction for corruption will automatically result in a company being debarred from government contracting in the UK and the European Union, which would be an unwarranted fatal blow for many companies. Along these lines, the Consultation specifically highlighted the backlash that occurred in the US in 2002 when Arthur Anderson LLP – then one of the world’s largest accounting firms – was convicted of obstruction of justice (for shredding files) in connection with the Department of Justice’s investigation of accounting fraud at Enron Corporation. Even before Arthur Anderson was convicted, the indictment itself destroyed Arthur Anderson’s reputation and the market’s confidence in its viability, and the company began winding up its operations soon after indictment – leaving tens of thousands of employees around the world out of work. Had the US government focused on prosecuting individuals and entered into a corporate DPA – which even many prosecutors in the US believe should have happened – the company’s fate likely would have been much different. Instituting DPAs in England & Wales will at least give prosecutors the option of avoiding such draconian results, while still holding a corporation criminally responsible.


Schedule 17 of the Act sets out in detail the procedures that must be followed with respect to DPAs, as well as the significant oversight and approval responsibilities of the Crown Court – which is a major difference between the nascent English and US systems. Section 17 covers the following key areas:

Who is Eligible. A prosecutor may only enter into a DPA with a corporation, a partnership or an unincorporated association. Individuals are not eligible for a DPA.

What the DPA Will Look Like. The DPA must contain (1) a statement of the facts relating to the alleged offense, (2) the expiration date of the DPA, (3) the amount of any financial penalties, disgorgement, or restitution that will be paid by the company, (4) the consequences should the company fail to comply with the DPA’s terms, (5) any compliance requirements the DPA imposes on the company, and (6) any cooperation obligations the company has while the DPA is in effect. Court Oversight and Approval. The Act contains a prescribed route through which the courts will need to approve any DPA. After negotiations, but before a DPA is finalised, the prosecutor must apply to the Crown Court for a declaration that entering into the DPA is likely to be in the interests of justice, and that the terms are fair, reasonable, and proportionate. Upon application, a private hearing is held and a private determination is given by the Court. Once the Court has approved the tentative agreement, a final agreement is then reached between the parties. Then, another hearing is held at which the Crown Court must declare in open court that the DPA is in the interests of justice, and that the terms are fair, reasonable, and proportionate.

Effect of the DPA. After the finalised DPA has been approved by the Crown Court, the prosecutor must bring a bill of indictment in the Crown Court and publish the DPA. The proceeding is automatically suspended, however, until the expiration of the DPA, at which point the prosecutor must discontinue the case against the company.

Guidance from Prosecutors. The Director of Public Prosecutions and the Director of the SFO must jointly issue a “Code” for prosecutors that provides guidance on how Section 17 should be implemented, including by setting forth what factors prosecutors should use when determining whether to use a DPA in a particular case.


Since the DPA landscape in England & Wales is barren and no guidance has yet been issued by the designated authorities, it is instructive for practitioners to know what terms have become standard in the US, especially since prosecutors in England & Wales will be influenced by the successes of their US counterparts over many years. Specifically, the DPAs entered into by the Department of Justice, with very few exceptions:

  • Have 2-3 year terms;
  • Require companies to admit to conduct outlined in a Criminal Information, which is made public along with the DPA;
  • Impose financial penalties typically at or below the base penalty called for by the US Federal Sentencing Guidelines for the alleged conduct (which has still resulted in companies paying tens or hundreds of millions of US dollars in financial penalties);
  • Require companies to conduct extensive reviews of their compliance programs and implement enhanced compliance programs that meet Department of Justice standards;
  • Require companies to submit periodic reports to the Department of Justice outlining in detail the companies’ efforts to enhance their compliance programs;
  • In egregious cases, require companies to hire independent compliance monitors to oversee the companies’ compliance efforts and report directly to the Department of Justice on the companies’ progress;
  • Require companies to cooperate with other ongoing Department of Justice investigations (for example, investigations against employees or business partners) by providing documents and witnesses, and voluntarily turning over any further evidence a company later uncovers on its own concerning the conduct addressed in the DPA.
  • Apply only to the company, and do not prevent the Department of Justice from investigating, indicting and prosecuting employees.


In the US, when a company pleads guilty, the Court is in control of the company’s sentence to a significant degree. Yet, when a company enters into a DPA, the procedural rules in the US provide little opportunity for judges to inject themselves into the process. This circumvention of judges – which has the effect of giving an enormous amount of leverage to prosecutors during the negotiation of DPAs – is a main criticism of the DPA process in the US that was specifically noted in the Consultation as something that would not be replicated in the UK. Accordingly, as set forth above, Section 17 mandates that the Crown Court assess and determine the rea¬sonableness of DPAs following two hearings, and the Court even has the authority to reject the use of a DPA in a particular case if it is not in the interests of justice. The inclusion of the Crown Court in the process opens the door to several results.

On one hand, companies will benefit by the involvement of the Crown Court if it rejects some of the standard provisions in DPAs in the US (which prosecutors will likely try to incorporate in DPAs here), rejects prosecutors’ attempts to expand on the terms in US DPAs, or takes a “company friendly” approach to what appropriate financial penalties should be. The sentencing council of England & Wales is set to publish guidelines to assist the Court in adopting a consistent, fair and proportionate approach to the approval of DPAs. In practice, the hope is that the Court will scrutinise DPAs to ensure there is an element of harmony in the approach adopted against all companies to avoid some being dealt with more harshly than others without justification.

On the other hand, the involvement of the Crown Court will be a negative for companies if judges develop a practice of rejecting DPAs as too lenient – or if certain judges exercise their authority to reject the use of DPAs altogether in some cases. This is not out of the realm of possibility, since courts in the UK have historically been critical of many of the civil settlements struck by the SFO and their terms. With this possibility at least on the table, the risk for companies is that, if a Court were to reject the use of a DPA altogether or if the Court demanded terms that a company will not agree to, a company that self-disclosed wrongdoing would then be subject to prosecution for the admitted conduct. Schedule 17 has some protections for companies in the event a DPA is not finalized and approved – for example, drafts of the proposed DPA cannot be used against the company – but there is no statutory provision preventing the SFO from continuing to investigate and prosecute a company. Also, this possibility may stifle companies whose conduct is extremely egregious from self-reporting, since those companies may be concerned that the Crown Court will find particularly heinous conduct unworthy of a DPA, regardless of what penalties the company is willing to pay.

In either case, based on previous form, UK judges will closely examine any deal with the SFO or CPS in order to ensure that the interests of justice are served, and justice is seen to be done by the public. This activism by judges would also be in line with the trend in the US – where in several high-profile cases US judges have injected themselves in the process in order to push back on what they perceived as “sweetheart” deals for companies – even though there is no actual law or procedural rule in the US giving judges the authority to do so. (In the US, courts are required to address motions relating to a DPA’s implications on a corporation’s right to a speedy trial, but there is no procedural rule explicitly giving courts the authority to approve or reject DPAs). For example, in relation to the US$1.92 billion settlement agreed between the Department of Justice and HSBC Holdings Plc to avoid a criminal prosecution for money laun¬dering, U.S. District Court Judge John Gleeson has asserted he has the authority to approve or reject the deal, and he appears to be seriously considering rejecting the deal on the basis it does not satisfy the public interest – over the objections of the Department of Justice and HSBC to his purported authority. Similarly, in 2010, U.S. District Court Judge Emmett Sullivan held a multi-day hearing concerning the appropriateness of a DPA between the Department of Justice and Barclays Bank Plc before he eventually ruled on the actual issue before him, which was a request for an extension of time for Barclays’ right to a speedy trial. Not willing to be permanently extricated from the case, Judge Sullivan ordered that periodic status conferences will be held concerning the status of the DPA. On the civil front, last year U.S. District Court Judge Jed Rakoff declined to bless a US$285 million civil settlement between Citigroup and the U.S. Securities & Exchange Commission concerning the alleged sale of “toxic” mortgage bonds by Citigroup. Judge Rakoff’s position was that the US$285 million settlement was “nei¬ther reasonable, nor fair, nor adequate, nor in the public interest”.


What Will Cooperation Credit Look Like?

The Director of the SFO, David Green QC CBE, has in recent pronouncements not offered particularly appetising carrots to encourage companies to self-report, preferring the stick approach. In October 2012, the SFO markedly shifted away from its previous perceived stance, and that of Mr Green’s predecessor, that coming clean would lead to a civil resolution of matters. Historic guidance on self-reporting was discarded by the SFO and it indicated that self-reporting alone will not automatically mean a prosecution is avoided. Mr Green more recently on 26 March 2013 stated that the SFO would no longer “strain every sinew” to deal with a company on a civil basis if it self-reported. The public interest test in deciding whether to prosecute was in reality the determining factor (provided the evidential standard is met).

One of the main factors that will weigh against corporate self-disclosures is the fact that, once a company self-reports and the wrongdoing is exposed, the SFO is in the driver’s seat and the company loses control of its fate for the most part. Many companies – especially when DPAs are in their infancy in England & Wales – will be rightfully concerned that the SFO is going to strive to be as tough or tougher than its US counterpart. In light of this understandable concern, if the SFO wants to achieve increased self-disclosure, it must provide clear guidance regarding how companies will be treated and what comfort they can expect in exchange for their cooperation.

As discussed above, Schedule 17 mandates that the Director of Public Prosecutions and the Director of the SFO issue guidance on, among other things, what factors prosecutors should use when determining whether to use a DPA in a particular case. If the SFO really wants to incentivise self-disclosure, which is of course desirable, perhaps it should go even further and use this opportunity to provide very detailed guidance along the lines of the Department of Justice’s very transparent Principles of Federal Prosecution of Business Organizations, which effectively makes the use of DPAs (or non-prosecution agreements) the default scenario when a company has self-disclosed and/or fully cooperated with the Department of Justice. Therefore, at a minimum, the SFO’s guidance should confirm that DPAs will be the default prosecutorial tool when companies (a) self-disclosed wrongdoing, (b) already had a robust compliance program in place that was circumvented by employees, (c) proactively enhanced their compliance programs in response to their discovery of unlawful conduct, and/or (d) took swift action to punish individual wrongdoers.

Moreover, the SFO should also use the guidance as an opportunity to let companies know how self-reporting and cooperation will translate into penalty reductions. As set forth above, the Department of Justice typically agrees to assess a penalty at or below the baseline that would be imposed on the company if it were convicted of the alleged conduct. Without clear guidance on whether similar financial rewards will be given to companies in England & Wales, companies may remain hesitant to pursue the path to self-disclosure, especially if they think they are likely to prevail at trial.

The Consequences of Not Being Able to Get a Global Deal

Another major factor presently weighing against self-reporting is that a multi-national company that self-reports wrongdoing to the SFO, such as a violation of the Bribery Act of 2010 that took place abroad, exposes itself to being investigated and potentially prosecuted in multiple countries based on the self-incriminating admissions publicly disclosed in the DPA. For example, if an employee of a UK company that happens to have issued securities in the US bribed a public official in Brazil, the negative consequences of a self-disclosure in the UK would include, among other things, (1) the company being subject to an expensive and burdensome investigation in Brazil and the US, (2) the company being prosecuted in Brazil and the US, and/or (3) the company being civilly penalised in Brazil by, for example, having government contracts voided and business permits withdrawn.

Unfortunately, unless and until the Ministry of Justice strikes some sort of cooperation agreement with other countries that would prevent ‘double jeopardy’ scenarios for companies that self-disclose, which there is no indication will ever come to pass, there is simply no good answer for a company that is put in such a predicament.


One of the main things companies in England & Wales need to consider when it comes to voluntarily disclosing wrongdoing is that, if prosecutors there follow the lead of their US counterparts, they will not simply strike a deal with a company that is willing to open up its cheque book and buy itself out of trouble. Rather, the DPA is going to come with an added cost: cooperation.

What ‘cooperation’ means to prosecutors in the US is instructive, since UK prosecutors will likely take a very similar approach. In the US, prosecutors are more than willing to use DPAs to resolve cases, but they will only do so if they are confident that the company has put all its cards on the table and has been transparent. Where there has not been a self-disclosure, ‘cooperation’ means (at a minimum) producing all the documents and witnesses asked for by investigators or prosecutors – both before and after the DPA is executed. However, in many cases, especially when a company has discovered unlawful conduct and has decided to self-disclose what it discovered, a company will be expected to share the results of the internal investigation that led to the self-disclosure with prosecutors and voluntarily turn over the relevant documents. While sharing the results of an internal investigation comes with risks, such as privilege waivers, companies and their lawyers must recognise that in most cases disclosing the details of an internal investigation is the only way to convince prosecutors not to conduct a second investigation.

To this end, a company considering self-reporting needs to take a step back and consider very carefully whether it is confident that a prosecutor is going to view the internal investigation as credible such that he or she is willing to rely on its results when negotiating the DPA with the company. While prosecutors are certainly not going to accept a company’s report as the final word on what occurred and they will certainly request additional information, such as additional docu¬ments or witness testimony, a company that can demonstrate it conducted a robust and credible investigation on its own is very likely to avoid a full-blown investigation by prosecutors.

When to Disclose?

In the US, prosecutors urge companies to make a voluntary self-disclosure as soon as they become aware of potential wrongdoing, and UK prosecutors are likely to expect the same. Most companies understandably feel more comfortable, however, conducting at least some investigation before contacting the government so that at a minimum they have some idea what they are talking about when they make the disclosure and are not mistakenly ‘blowing the whistle’ on themselves based on bad internal information. In the end, if a company is inclined to make a voluntary disclosure, it should do it as soon as it is comfortable.

One approach often used in the US and the UK is for a company to provide prosecutors with a very general notice at the very outset of its internal investigation that it is aware of possible unlawful conduct and will report back once the company has investigated the matter further. In many cases, prosecutors will not launch an independent investigation based on this notice, since the company’s notice could be a “false alarm” that prosecutors do not want to devote valuable resources to investigating. One benefit of this approach is that if a company does voluntarily disclose unlawful conduct later, a company will certainly get “cooperation credit” for having kept the prosecutors apprised every step of the way. An added benefit to this approach is that it avoids a scenario in which a whistleblower beats the company to the punch and reports alleged unlawful conduct to prosecutors, which has the potential to taint the prosecutor’s perception of the company from the outset. Therefore, while providing an ‘initial notice’ to prosecutors carries some risks, often times it is a prudent first step that will pay dividends when the time comes to negotiate how much ‘cooperation credit’ the company will receive.


While the main negotiating point of a DPA is of course the financial penalty the company will pay, a review of US DPAs reflects that a great deal of effort should be spent framing how the DPA itself is going to be presented to the public, since the public disclosure of wrongdoing that will accompany a DPA raises several public relations concerns for companies.

From a public relations perspective, the government will want to tout its victory and be seen as tough on crime. However, companies also have a vested interest in (a) downplaying the impact of the DPA and the unlawful conduct on the company, (b) highlighting their cooperation efforts, and (c) generally sending the message to the public and the company’s stakeholders that the company got a good deal, they cleaned house, and are prepared to move on. If done right, both sides can achieve their goals.

Section 17 mandates that a Criminal Indictment be filed after the DPA is approved by the Crown Court, and that the DPA describe the unlawful conduct. But, the DPA negotiation process avails companies the opportunity to negotiate the language of these documents (as well as any press releases and other public statements that will be made concerning the matter) to temper how the unlawful conduct is presented to the public, and they need to take advantage of it.


In cases where a company cooperates with the SFO – either before or after a DPA is finalised – the company will be essentially serving up a case against individual employees on a silver platter. In many cases, companies will not find this result objectionable, since an employee who engaged in criminal conduct has already had (or should have had) their employment terminated and been dealt with harshly by the company, and incriminating an employee will make the company seem cooperative. On the other hand, an employee’s prosecution, especially if the company has a high profile, has the potential to damage the company, even if the company itself is not on trial. The decision to ‘feed an employee to the sharks’ is a very fact-specific inquiry, and but one more of the worst-of-many-evils that companies need to assess when deciding whether to self-report. While there can be benefits, sacrificing employees may not satisfy a prosecutor and seeing ‘blood in the water’ may embolden a prosecutor to pursue a case against the company more aggressively.

Also, in certain circumstances a company may want to at least try to extract a concession from the Ministry of Justice that company employees will not be separately prosecuted unless new information surfaces that was unknown to the SFO at the time the DPA was executed. Such a term is likely to be met with sharp resistance from the SFO (and the Crown Court). But, unless the forthcoming SFO guidance essentially takes such a term off the table, practitioners should not rule out the option of at least trying to negotiate such a term should the circumstances warrant.


There is little doubt that the introduction of DPAs in England & Wales will change the law enforcement landscape over the next several years. How judges will handle their oversight responsibilities and whether the Ministry of Justice’s main goals of increasing self-reporting and efficient settlement of criminal cases against corporations (with big fines) will be achieved, however, is far from certain. Another key issue in play is that the SFO is under pressure to be publicly seen to combat corruption, either by flexing is prosecutorial muscle pursuant to what is the potentially very potent Bribery Act, or using its new tool, DPAs, to punish corporate wrongdoing.

Will specific guidance and ‘fair and reasonable’ settlements during DPAs’ infancy sufficiently entice companies to come forward and fall on their sword? Or, will the SFO push for large financial penalties in DPA negotiations that will stifle self-reporting? Will the SFO strike DPAs with companies which did not self-report, but which cooperated after being caught? And, if so, will that practice entice companies to run the risk of getting caught, since they may be confident they will be able to avoid prosecution by cooperating after the fact? The forthcoming guidance from the SFO will be invaluable in answering some of these questions, but the true impact of DPAs will not be known for many years as these issues begin to play out, the guidance is supplemented by actual cases, and the DPA landscape begins to take shape.

For companies that are considering self-reporting in the near future, there is simply no way to dip their toes in the water to see what it is like. Rather, they need to be willing to take a very big plunge, and all eyes will be on the first companies who do so.