The government have confirmed that they will be introducing Deferred Prosecution Agreements (DPAs) and amendments have been tabled to the Crime and Courts Bill currently going through Parliament to bring them into force. The present estimation is that they will commence in 2014 after guidance has been prepared as well as additions to the Criminal Procedure Rules.
Investigations and trials are expensive, particularly at a time when law enforcers are themselves having to substantially reduce budgets. The budget of the Serious Fraud Office (SFO), for example, has been slashed by over a third in the last four years. DPAs would be a pragmatic way of bringing the dishonest to account without costly, time-consuming and protracted criminal litigation.
The government see DPAs as the "next instrument" in the battle against economic crime and will provide prosecutors with an extra tool to tackle economic crime. Their response to the recent consultation on the introduction of DPAs is that: "economic crime by commercial organisations does serious damage both to its immediate victims and the economy, costing billions of pounds to the taxpayer and to those directly affected. This government is clear that white collar crime is just as serious as any other kind of offending and needs the same tough response."
DPAs do already exist in the USA, recent figures show that forty six were introduced in a two year period with an average financial penalty of $95m. However, the system there is different, and the government recognise that the penalty levels here will not be of that order.
On the face of it DPAs will certainly be an attraction for the boardroom. If there has been any dishonesty they will give certainty, no conviction against the company and provide damage limitation. Inevitably a commercial decision may be taken in some circumstances. Those who can enter into a DPA with the SFO or the Director of Public Prosecutions (DPP) will either be a corporate entity, a partnership or an unincorporated partnership. Individuals cannot do so and therefore cannot avoid the risk of prosecution for any crimes they may have committed.
The government agree that the first hearing when the possibility of a DPA will be discussed will be in private. However, any final agreement will have to be made public, thus ensuring transparency. The test will be that the court will have to agree that entering into a DPA is likely to be in the interests of justice and the proposed terms are fair, reasonable and proportionate. The DPA may require an organisation to pay a financial penalty as well as compensation, to disgorge any profits, donate money to a charity or third party, cooperate in the investigation and implement a compliance programme. The court can impose other requirements and there will be a time limit to meet such demands and rectify problems within the organisation. A discount for early admission will be made similar to that given in the court for a guilty plea.
Any DPA will have to be approved by the court and should there be any breach the court can bring it to an end leaving the SFO free to proceed with a criminal prosecution.
DPAs will be available for misconduct which is said to have taken place before the legislation is passed. Careful consideration will have to be given to self-reporting and commencing in the negotiations at the outset. Potential corporate defendants will be watching developments closely to see how the first DPAs are received. If they are successful it may just be a matter of time before they lead to the introduction of multinational agreements in courts, for example, in the US as well as in Britain and may well extend to individuals.