The Serious Fraud Office and Director of Public Prosecutions have this morning commenced their public consultation on the draft Prosecutors’ Code of Practice relating to Deferred Prosecution Agreements (“DPAs”) with the Sentencing Council issuing its own simultaneous consultation regarding the anticipated sentencing guidelines for economic crimes. For the Serious Fraud Office’s and Sentencing Council’s press releases click here and here.
The Sentencing Council’s guidelines aim to ensure that courts apply sentencing consistently across a varied range of offences (fraud, money laundering and bribery), and also seek to take into account more fully the impact on victims of financial crimes. These guidelines will also eventually serve to assist both prosecutors and corporates in determining the appropriate level of financial penalties under a DPA. The Serious Fraud Office (“SFO”) and the Director of Public Prosecutions (“CPS”) are required to produce a joint Prosecutor's Code of Practice pursuant to the Crime and Courts Act 2013 setting out their approach to the use of Deferred Prosecution Agreements in any given case.
The Crime and Courts Act 2013 sets out the requirements and procedures for DPAs which have so far been unavailable to prosecutors in England and Wales while used for many years by their US counterparts. Under a DPA, a company that has engaged in unlawful conduct can avoid prosecution in exchange for and compliance with certain promises which may include, amongst other things, either an admission of guilt, payment of compensation to a victim and/or a financial penalty, thus leading to a situation of mutual benefit whereby the company avoids a public trial and possible conviction while the government avoids the expense of prosecuting a company.
DPAs are most commonly utilised in the US by prosecutors where companies have self-reported their unlawful conduct (or otherwise fully cooperated with investigations in return for leniency) and the dramatic increase in self-reporting in the US in recent years has largely been attributed to this routine use of DPAs. It is hoped that the availability of DPAs in England and Wales will lead to an increase in corporate self-reporting, as it has most recently been perceived that there is little incentive to do so, certainly in light of the SFO’s October 2012 statements and the withdrawal of the SFO’s guidance on self-reporting last year. Companies have queried why they should self-report when the SFO offers no guarantee that such action will result in the avoidance of a criminal prosecution; the US offers more certainty in this regard, hence the upward trend in DPAs.
The availability of DPAs would give companies the option to negotiate a settlement with the “designated authorities” (namely the CPS and SFO) which may help to minimise the long-term damage that would inevitably result from a full criminal trial. Furthermore, DPAs will enable prosecutors to avoid collateral damage, such as financial injury to investors and innocent employees, which could result from the criminal prosecution of a company.
The draft Prosecutors’ Code should begin to clarify whether the mechanics of DPAs will provide enough certainty to ultimately encourage self-reporting. The designated authorities are specifically seeking views on eight points covered in the draft Code, including the circumstances when a prosecutor should consider a DPA, the criteria to apply when making a decision and the disclosure approach envisaged.
The consultation on the draft Prosecutors’ Code closes on Friday 20 September 2013. The Consultation on the Sentencing Guidelines closes on 4 October 2013.
Click here for our in-depth article on the proposed implementation of DPAs in the UK and comparison with the US approach.