In Ireland, a hotelier has initiated a private prosecution against a current and a former employee of an Irish bank. The hotelier was a director and shareholder of two companies which apparently owed a significant amount to the bank. The hotelier allegedly attended a meeting with the bank where he was informed by the bank that it was agreeable to cooperating with the hotelier regarding the realisation of assets. The hotelier alleges that the then employees of the bank had already decided to appoint a receiver over the two companies. A receiver was appointed and the hotelier later initiated a private prosecution for dishonesty offences. The relevant individuals had sought a judicial review of the proceedings and the judge confirmed that the hotelier could launch a private prosecution.
The Law of England & Wales
In the jurisdiction of England & Wales, private prosecutions are a growth area and in certain circumstances, companies and high net worth individuals are initiating proceedings in the criminal courts, and prosecuting individuals or companies who they believe have committed a criminal offence. The growth in this area may be due to the fact that in the age of austerity, regulators have limited resources.
A private prosecution is considered to be a prosecution started by a company or an individual who is not acting on behalf of the police or another prosecuting authority.
For example, in 2011, Virgin Media succeeded in a private prosecution against three men who took part in a fraud which involved selling set-top boxes across the UK. Press articles speculated that the cost of the fraud to Virgin had been approximately GBP 144 million a year. The offenders were jailed.
Private prosecutions can have a wide applicability to offending that can arise in the conduct of business. For example, under the Fraud Act 2006 a person or a company can commit an offence of fraud if they make a false representation in order to gain an advantage. Private prosecutions can also be used to protect intellectual property.
Private prosecutions have several benefits:
- The deterrent effect is massive – individuals face imprisonment or disqualification as a director. Companies and individuals can face confiscation proceedings or debarment from public tender processes.
- A compensation order can be requested at the sentencing stage.
- Depending on the facts of the case, criminal conduct overseas may be caught by the laws of England & Wales.
- A private prosecution is easy to publicise.
- A private prosecution can be concluded faster than civil proceedings.
- A criminal conviction can be evidence in a civil case.
The right to bring a private prosecution is, however, subject to some controls:
- Some offences require the consent of the Attorney General, the Director of Public Prosecutions (“DPP”) or the Director of the Serious Fraud Office before initiating proceedings.
- The DPP has the power to take over a case, although CPS Guidance makes it clear that this will not occur unless there is a need for the CPS to do so. There is no obligation to notify the CPS of a private prosecution.
If the CPS does take a case over, it may seek to discontinue it unless the test under the Code for Crown Prosecutors is met (the “Code”). For a prosecution to continue under the Code, the CPS will examine whether:
- Prosecutors are satisfied that there is sufficient evidence to provide a realistic prospect of conviction against each suspect on each charge.
- If the evidential test is satisfied, whether a prosecution is required in the public interest.
Not all law firms have expertise in both the criminal and civil spheres. Dechert are uniquely placed with experience in both civil and criminal litigation. This allows us to conduct an initial investigation and then advise on whether a civil or criminal process may be a more appropriate method of enforcement. In deciding whether a private prosecution is appropriate, Dechert will refer to the Code.
Dechert’s specialist white collar crime team is led by Neil Gerrard. Neil is a former Metropolitan policeman and has acted as an agent prosecutor for the then Department of Trade and Industry. This experience places him at the cutting edge of this developing area of the law.