Bark & Co Solicitors London: Deferred Prosecution Agreements
Post on 01-Jul-2015
DESCRIPTIONThe director of the Serious Fraud Office (SFO) and the Solicitor General, Edward Garnier QC, have recently made no secret of the fact that they consider the criminal justice system to be incapable of dealing with corporate prosecutions in a way that refects commercial realities.
- 1. Bark & Co Solicitors London: Deferred ProsecutionAgreements- Bark & Co Solicitors
2. Pressbox (Press Release) - The directorof the Serious Fraud Office (SFO) andthe Solicitor General, Edward GarnierQC, have recently made no secret of thefact that they consider the criminaljustice system to be incapable of dealingwith corporate prosecutions in a way thatrefects commercial realities. 3. The blunt impact of a prosecution of acompany has the impact of damaginginnocent parties including employees,shareholders and creditors. Garnier cited thecautionary example of the ill-effects ofprosecution caused to Arthur Andersen,eventually acquitted on charges ofobstruction of justice by the US SupremeCourt, many years after the allegations haddestroyed the company. 4. US prosecutors have a tool at theirdisposal, the deferred prosecutionagreement (DPA), which is being toutedas a viable alternative to the presentoptions of either prosecution or civilrecovery. Much of the impetus for thereform has been caused by the difficultiesfaced by the SFO when they sought toprosecute Innospec. 5. The SFO effectively had alreadyagreed with the company, pre-sentencing, the nature of the sentencein return for a guilty plea. This wascriticized by Thomas LJ who remindedthe SFO that it is for the Judge todetermine sentence at his discretionand especially that any plea must berigorously scrutinized in opencourt. 6. The US ApproachIn the US, DPAs are considered a hugelyimportant weapon in the armoury of a highlysuccessful prosecutor the Department ofJustice, which entered into nine DPAs in 2009.The DPA does pretty much what it says on thetin, deferring criminal prosecution pendingcertain terms and conditions being agreed (andadhered to) and fled in a formal indictment atcourt. 7. Typical conditions are that prosecution isdeferred for two - three years with the paymentof a fine commensurate with the FederalSentencing Guidelines, disgorgement of profits,a clear out of implicated directors, a possiblepull-out from the market in which thewrongdoing is admitted, and the possibleinstruction of a court appointed monitor wherethe corporate does not have proper anti-corruption procedures presently in place. 8. The appointment of monitors has beenparticularly contentious in the US where therehave been allegations of a lack of transparencyin their appointment, cronyism and high cost.The costs charged by monitors is particularlyeye-watering to UK onlookers. Innospec werecharged $50m for the corporate monitor(described by the sentencing Judge as anoutrage), agreed as part of their DPA in theUS. 9. Are DPAs Right for the UK?As it stands in the UK, the SFO has found itdifficult, time consuming and costly to prosecutecorporates in the UK for bribery and related offencesas well as occasionally stymied by politicalinterference. It is unlikely to find it any easier underthe Bribery Act. It should also be noted that the SFOhas been given no new money to prosecute offencescommitted under the Bribery Act. DPAs wouldtherefore be a godsend. Corporates for their part mayaccept their criminality more readily should they begiven the option of accepting a DPA as opposed tobeing prosecuted with all the economic damage thatwould entail. 10. Explicit in the agreement of the DPA isthat the company is properlyprosecutable (ie, the identificationprinciple is met) and the course ofconduct meets the criminal test forprosecution ie, this isnt a civil recoveryunder Pt.5 of POCA. 11. Thomas LJ again commented in his Innospecjudgment that matters involving corruptpayments will rarely be appropriate to the dealtwith by a civil recovery order. One wonderswhether the judiciary will be resistant to DPAswhich explicitly admit criminality but wherepenalty may be considered tantamount to a civilrecovery order. 12. What Will DPAs Look Like?The mechanics of DPAs are a long way from beingironed out. The DPAs must have the publics confidenceand, in the words of Garnier be policed and controlledby the judiciary. In the event that an offence is eitherdetected, perhaps through a whistleblower, or self-reported and the SFO considers aDPA may be an appropriate resolution, the Judge willbecome involved early, and before charges are broughtto scrutinize any propsed agreement. This will beproblematic. 13. However, Judges in the criminaljustice system are already accustomed toproviding early input in sentencing, throughthe procedure of Goodyear indications. Insuch cases where an individual is consideringpleading to agreed facts he may request a-binding indication on sentence in open court,with reporting restrictions, from the trial Judge.Once given an indication, the defendant is notcommitted to pleading. 14. It will be the type and severity of thesentence that will be the most contentiousaspect of DPAs and the most at risk toaccusations of a lack of transparency. Inaddition, it is essential for the corporates legalteam to be able to advise with a degree ofreasonable certainty what the likely sentencewill be. The US has a system by whichsentence can more or less be worked out ona calculator that is an anathema to Judgeshere. 15. In light of the Grazia Report, a number of guidelineswere introduced in this area (eg, Attorney GeneralsGuidelines on Pleas, and the SFO Guidelines on SelfReporting), which are instructive for advisers andclients. Inthe absence of settled Court of Appeal case law oncorporate sentencing, properly debated and approvedsentencing guidelines (related to the guidelinesalready issued by the sentencing council for theft andstatutory fraud offences) setting out procedure andfactors affecting sentence would be helpful inanswering criticism of a lack of transparency as wellas assisting parties to the DPA. 16. Finally, it will be important that it is madeexplicit that while DPAs may prove analternative to prosecution for corporates,where individual criminality is committed (asis necessary for the corporate to meet theidentification principle), DPAs will not provideimmunity to those directors deserving ofprosecution.We consider that as with most USdevelopments in business crime, DPAs arelikely to prove popular over here with theSFO. 17. The principal question exercisinglegislators will be how to ensure thatDPAs have the publics confidence thatthey are fair and just while ensuring thatJudges concerns will be met and thesacrosant principles underpiningsentencing will not be underminded. 18. Is using the F word to an officerof the law now acceptable?22 November2011 NoComment By Sarah Lewis 19. Our changing attitude towards badlanguage was highlighted last week inHarvey v DPP, AC, 17 November 2011which confirmed that, whilst it is anoffence to use threatening, abusive orinsulting words and behaviour, swearingat police officers is not a crime becauseof cers hear foul language all toofrequently to be harassed, alarmed ordistressed by it. 20. This is decision overturned the public orderconviction of Denzel Harvey, a young suspectwho repeatedly said the F word while beingsearched for drugs.Harvey was standing witha group of people outside a block of flats whenhe was approached by police officers who toldhim that they wished to search him. Hisresponse to the officers was, F this man. Iaint been smoking nothing. He was warnedabout his behaviour and threatened with anarrest under s 5 Public Order Act 1996. 21. When the search revealed nothing, hecontinued, Told you, you wouldnt find f all.He was further warned and then, when askedif he had a middle name, he replied, No, Ivealready fing told you so. Harvey wasarrested for a s 5 offence, and subsequentlyconvicted before the Magistrates Court whoheld that there were people around who dontneed to hear frightening and abusive wordsissuing from young men despite there beingno evidence that anyone, officer or otherwise,was in fact caused harassment, alarm ordistress.