Yesterday the Ministry of Justice published the Government's response to the consultation on Deferred Prosecution Agreements (DPAs). The response recommends changing the law to allow the prosecuting authorities to enter DPAs with companies who admit to economic crimes.
DPAs act as a form of plea bargain, allowing a company to escape prosecution if it admits wrongdoing, takes corrective action and pays a penalty. The idea is to encourage self-reporting of corporate economic crimes such as fraud, bribery and money laundering and to ensure fines are paid in the UK rather than overseas. The Government's aim is to ensure that the prosecuting authorities are made aware of more crimes and obtain better evidence of them.
Some of the interesting conclusions of the consultation include:
- The key principles for the DPA process are transparency and consistency so that a company entering the process has a clear indication of the likely terms.
- DPAs will not be offered to individuals.
- DPAs will only be offered in relation to economic crimes (however the list of crimes included in the definition of economic crimes will be kept under review).
- A DPA Code of Practice for Prosecutors will be drafted by the Director of Public Prosecutions and the Director of the Serious Fraud Office. This supporting guidance will be the subject of a further consultation.
- The DPA process will continue to be the subject of judicial scrutiny throughout the process. A Crown Court Judge will decide in private at a preliminary hearing and at a final hearing whether the DPA is "in the interests of justice" and "fair, reasonable and proportionate". No further guidance on the application of these tests will be given.
- The limit of a one third penalty reduction for entering a DPA remains.
- The existing prohibition on judicial review of the decisions of the Crown Court Judges on matters relating to trial on indictment remains.
- DPAs are to be offered alongside existing criminal and civil approaches. Civil Recovery Orders will continue to be appropriate in cases where a criminal enforcement sanction is not pursued or available. However the Government's response states that "in the majority of cases of economic crime we do not consider that civil recovery provides a tough enough response to wrongdoing or justice for victims of the unlawful conduct."
The Government will now introduce legislation to bring DPAs into effect in England and Wales, yesterday they tabled amendments to the Crime and Courts Bill, which is currently making its way through Parliament.
The Government's response to the consultation is disappointing in that it has failed to recognise the need to incentivise commercial organisations to self-report wrong doing. The DPAs proposed will give a maximum penalty reduction equivalent to the reduction available for pleading guilty to an offence at the earliest opportunity. Whilst it is true that the organisation who enters a DPA avoids a criminal conviction, the reputational damage of a public DPA is still likely to be significant. We hope that the supporting prosecutorial guidance will provide further insight into the approach that the prosecutors will take to companies who come forward to voluntarily admit wrong doing.
For commentary and updates on enforcement see our Enforcement Trends Table.
You may also be interested in ourSFO Investigations Tracker.