As noted in our previous alert on the subject, link here, Deferred Prosecution Agreements (“DPAs”) will be available for use from 24 February 2014. DPAs provide a mechanism for effectively settling the criminal liability of a corporate entity without prosecution in return for the company agreeing to a number of conditions, e.g. paying a financial penalty, paying compensation or cooperating with the future prosecution of individuals. DPAs are seen as an important tool for prosecutors in tackling serious economic crime in the UK.
On 14 February 2014 the SFO and the CPS published the Deferred Prosecution Agreements Code of Practice, the long awaited final guidance on how the DPA regime will operate. A copy of the final code of practice is available here.
The SFO and CPS have also published their responses to the consultation on the draft code of practice published in June 2013 and those responses are available here.
Between them, the response to the consultation process and the final code of practice deal with a number of issues relating to the implementation of DPAs. Of particular interest for companies considering a DPA are the following:
- The low evidential threshold - one concern raised about the draft code of practice was that the evidential standard for entering into a DPA was too low and could effectively allow the prosecutor to enter into a DPA on the basis of a “hunch”, or on the basis of evidence that might not be sufficient to secure a criminal conviction. Of particular concern was the circumstance (as set out in the draft code) in which prosecutors could offer companies DPAs, when “there is a reasonable suspicion that the commercial organisation has committed the offence and there are reasonable grounds for believing that a continued investigation would provide further evidence within a reasonable period of time so that all of the evidence together would be capable of establishing a realistic prospect of conviction in accordance with the Full Code Test.” In an attempt to deal with this concern, the code of practice now provides that the prosecutor will need to have some admissible evidencesupporting their reasonable suspicion of wrongdoing.
- Self reporting - another concern raised in relation to the draft code of practice was the lack of weighting given to the public interest factors that would be considered by the prosecutor when deciding whether to enter into a DPA, especially the weight that would be given to a self report. Interestingly, the final code now states that “considerable weight” may be given to a genuinely proactive approach adopted by the company’s management, including self-reporting. More generally, the final code of practice places emphasis on the benefits of self reporting. In addition, the code helpfully clarifies that a prosecutor would only expect to be “notified” of wrongdoing at an early stage, which appears to take the emphasis away from the need for a full investigation to have been carried out by the company before contact with the SFO or CPS is made. In relation to information provided by companies as part of the negotiation of a DPA, the code is now in line with the Crime and Courts Act 2013 by providing that companies will only be prosecuted if they know or believe that information they are supplying to the prosecutor is inaccurate, misleading or incomplete.
- The use of employees interviews - a further concern raised in relation to DPAs was the position if employees are compelled to co-operate with their employer’s investigation or risk losing their job, but then that information (i.e. an interview transcript) is passed to the prosecutor by the employer as part of a self-report. In such circumstances the employee may be put in a difficult position in relation to their privilege against self-incrimination. The SFO and CPS’s response to this issue in the consultation response was to simply state that such interviews “would be governed by the laws of evidence which provide the appropriate protections on a case by case basis”.
- Sentencing - the code of practice clarifies the sentencing “discount” that those entering into a DPA may benefit from. The code provides that the extent of the discretion available when considering a financial penalty is broad. A discount equal to that which would be given for a guilty plea will be applied by the sentencing court after it has taken into account all relevant considerations, including any assistance given by the company. The level of the discount to reflect the company’s assistance will depend on the circumstances and the level of assistance given. A financial penalty must provide for a discount equivalent to that which would be afforded by an early guilty plea. Current guidelines provide for a one third discount for a plea at the earliest opportunity.
In summary, the final code of practice provides some welcome clarification prior to the introduction of DPAs, but the real test for DPAs will be their application in practice.