Deferred Prosecution Agreements: A Practical Proposal

1

Introduction.

The Irish Law Reform Commission’s Issues Paper on ‘Regulatory Enforcement and

Corporate Offences’ forms part of the Commission’s Fourth Programme of Law

Reform.1 The Issues Paper addresses a range of pressing questions arising out of the

2008 financial crisis pertaining to the adequacy of the criminal law in dealing with

corporate wrongdoing and the enforcement powers of the main economic regulators.

The Law Reform Commission (LRC) seeks views as to the appropriateness and

practicability of legal reform in Ireland. This article seeks to assess the case for the

introduction of a legal instrument known as a deferred prosecution agreement (DPA)

into Irish law. Part 1 of this article will define the parameters of a DPA and consider

whether the model operating in either the United States (US) or the United Kingdom

(US) would be appropriate in this jurisdiction. Part 2 of this article will seek to

determine whether the introduction of DPAs into Irish law would be practically

possible. Finally, Part 3 of this article will consider the type of corporate behaviour

that has been attributed to financial crisis and pose the question as to whether the

introduction of DPAs into Irish law would help to combat such behaviour effectively.

Part 1: Defining Deferred Prosecution Agreements.

(a) Definition of a DPA.

DPAs are defined as, ‘negotiated agreements between a prosecutor and a person –

frequently a corporate body – that is alleged to have committed a criminal offence.’2

DPAs involve the suspension of criminal proceedings by the prosecutor in return for

the corporate body agreeing to cooperate in the investigation of the alleged offence.

The terms of a DPA regularly include a commitment on the part of the corporate body

to a supervised compliance and/or monitoring programme, the payment of a financial

penalty, and an admission of wrongdoing.3 If the corporate body meets the terms of

1 Law Reform Commission, Issues Paper: Regulatory Enforcement and Corporate Offences (LPC IP 8 – 2016). 2 ibid. at 33. 3 O’Reilly T. J, Hanlon P. J, Hall F. R, Jackson L. S, and Lewis R. E, Punishing Corporate Crime: Legal Penalties for Criminal and Regulatory Violations (Oxford: Oxford University Press, 2009). 149 – 150.

2

the agreement for the specified period then the prosecutor agrees not to proceed with

a criminal prosecution for the alleged offence. However, if the agreement is breached

by the body corporate then the prosecutor can proceed with a criminal prosecution at

any time. While DPAs do not usually contain an admission of liability, information

disclosed during the course of negotiations will be available for criminal prosecution

of the alleged offence, should the corporate body breach the agreement.

(b) Rationale for the use of DPAs.

DPAs offer a useful and pragmatic tool to prosecutors in holding corporate

wrongdoers to account. The LRC’s Issues Paper outlines that the attraction of a DPA

is that the agreement can achieve the goals of criminal conviction will avoiding the

risk and cost of a criminal trial.4 Furthermore, DPAs avoid the collateral damage that

can be caused by a criminal conviction such as the collapse of the US accounting firm

Arthur Anderson.5 The criminal conviction proved to be a ‘death sentence’ for the

firm and thousands of employees lost their jobs overnight.6

In addition to this, modern corporate wrongdoing has become increasingly

difficult to identify and existing criminal measures are glaringly inadequate. The

Office of the Director of Corporate Enforcement (ODCE) has highlighted that the

uncertain nature of corporate criminal liability in this jurisdiction means that

prosecuting corporations for economic crime is difficult.7 The sheer complexity and

volume of documentary evidence involved in corporate crime trials are unsuitable for

the traditional jury system.8 Horan notes that in the trial of Anglo Irish executives the

ODCE collated several million files as evidence.9 Furthermore, the length and costs

associated with prosecuting corporate economic crime can be substantial. The well

funded and extensively staffed Serious Fraud Office (SFO) in the UK noted that 4 Law Reform Commission (n 1) at 33. 5 O’Reilly (n 3) at 120. 6 ibid. 7 Office of the Director of Corporate Enforcement, Submission on White Collar Crime (2010) at 10. See also: Law Reform Commission, Report on Corporate Killing (LRC 77-2005). While the Law Reform Commission’s report specifically addressed the issue of criminal liability in the context of an offence of corporate manslaughter, the problem of uncertainty and the difficulty that poses for successful prosecution of an offence are broadly transferable. 8Department of Justice and Equality, White Paper on Crime Consultation Process – Discussion Document No. 3: Organised and White Collar Crime (2011). at 11. 9 Shelley Horan, Corporate Crime (Bloomsbury Professional, 2011). at 17.

3

prosecuting a serious corporate crime case cost on average £1.6 million and lasts on

average eight years.10

While it is true that the government has a strong public policy interest in

holding corporate wrong doers to account it may also be as important to influence or

reform the behaviour of the corporation. DPAs as a legal instrument can address both

past corporate misconduct – via remedies such as fines, penalties, and restitution –

and future conduct via forcing the implementation of new corporate structures and

practices.11 The ODCE and Transparency International have both called for the

introduction of DPAs or a similar instrument into Irish law.12

(c) Deferred Prosecutions Agreements in the United States.

DPAs have been a long-standing feature of US financial regulation. 13

However, the LRC’s issue paper is clear that the model of DPAs in operation in the

US would not be appropriate in an Irish context.14 This is largely due the fact that

DPAs in the US are non-statutory and are subject to little judicial oversight and as

such would run foul of the Constitutional requirements for the administration of

justice by the Courts under Article 34 and for trial in due course of law under Article

38.1.15 For this reason it is submitted that the US model of DPAs would not be

appropriate in an Irish context.

10 UK Ministry of Justice, Consultation on a New Enforcement Tool to Deal with Economic Crime Committed by Commercial Organisations: Deferred Prosecution Agreements (2012) Consultation Paper CP9/2012 18. at 12. 11 O’Reilly (n 3) at121. 12 See: ODCE (n 7) at 17; Transparency International, ‘National Integrity Systems: Country Study – Ireland.’ (2012); See also: Remy Farrell, ‘Prosecutors, Regulators, Trial by Jury and the Prosecutor’s Discretion’ Paper presented to the 11th Annual National Prosecutor’s Conference, 24th April 2010. Available at < https://www.dppireland.ie/filestore/documents/PAPER_-_Remy_Farrell_BL.pdf> accessed 1 March 2016. 13 O’Reilly (n 3) at 121. 14 Law Reform Commission (n 1) at 38. 15 See: Gerard Hogan and Gerry Whyte, JM Kelly: The Irish Constitution (4th edn, Tottel Publishing, 2003), at 1042, Article 38.1 has been interpreted by the Courts to embrace an expansive range of both procedural and substantive rights.

4

(d) Deferred Prosecution Agreements in the United Kingdom.

DPAs were introduced in the UK on a statutory footing by Section 45 of the Crime

and Courts Act 2013. The operation of DPAs in the UK is governed by the 2013 Act,

the UK Criminal Procedure Rules and a Code of Practice.16 The 2013 Act restricts the

use of DPAs to serious economic crimes taken on indictment and are only made

available to corporate bodies. 17 The preparation and negotiation of a DPA is

undertaken by either the UK DPP, the Director of the SFO, or any prosecutor

designated under the Act by an order of the Secretary of State.18

In contrast to the US, the negotiation and approval of a DPA in the UK is

subject to a stringent two-stage judicial approval process. Once an agreement in

principle is reached the prosecutor must apply to the UK Crown Court in private for a

declaration that the DPA is ‘likely to be in the interest of justice’ and that the terms of

the agreement are ‘fair, reasonable, and proportionate.’19 If the Court approves then

the parties return to negotiations to finalise the terms of the agreement before

returning to the Court for a public declaration.20 Upon approval of the first ever DPA

in the UK in Serious Fraud Office v Standard Bank Plc.21 the trial judge, Leveson P,

declared that, ‘I am satisfied that the DPA fully reflects the interests of the public in

the prevention and deterrence of this type of crime.’22

It is clear that the UK model of DPAs is altogether more amenable to the

considerations of Irish law. However, the UK model of DPAs is not transferable

without modification. Due to the Constitutional requirements of Article 38.1 it is clear

that any provision for DPAs in this jurisdiction will require judicial oversight.

However, Bisgrove and Weekes highlight that the judicial oversight provided for in

the UK 2013 Act is not merely a review of fair procedure but a separate exercise of

16 Michael Bisgrove, and Mark Weekes, Mark, ‘Deferred Prosecution Agreements: A Practical Consideration’ (2014) 6 Criminal Law Review 416. at 416. 17 Schedule 17 (4) (1) to the UK Crime and Courts Act 2013. 18 Schedule 17 (3) to the UK 2013 Act. 19 Section 45 of and Schedule 17 (7) to the UK 2013 Act. 20 Schedule 17(8)(1) to the UK Act 2013. 21 Serious Fraud Office v Standard Bank Plc: Deferred Prosecution Agreement (Case No: U29150854), English High Court, Queen’s Bench Division (Leveson P), 30 November 2015. 22 ibid. at para 23.

5

evaluative judgment.23 The authors note that his level of review may represent an

‘unprecedented, and possibly unwelcome involvement of the judiciary in approving

executive action.’24 As will be discussed below, the Courts in this jurisdiction have

been extremely reluctant to review a decision of the DPP and as such the level of

judicial oversight provided for in the UK may be a step too far in an Irish Context.

A further issue of concern arises due to the fact that under the UK model the

prosecutor is given a role in determining the level of penalty to be imposed upon an

offender. Bisgrove and Weekes note that this provision appears to infringe upon the

traditionally judicial function of sentencing.25 Article 34 of the Irish Constitution

provides that the imposition of criminal sanctions is a judicial function. While the fine

imposed by the prosecutor under a DPA would not technically be a criminal sanction

it may be subject to review if a Court deemed the figure excessive. Arguably more

problematic from a practical standpoint is that in relation to the nature of fine to be

imposed on the corporate body the 2013 Act provides that it must be ‘broadly

comparable’ the fine that the Court would have imposed following a guilty plea for

the alleged offence.26 As Bisgrove and Weekes point out, compliance with this

provision requires that the likely sentence is predictable.27 Such a provision may

cause problems in Ireland where fines imposed by the Courts are not always uniform

or predictable.

Part 2: The Position of Deferred Prosecution Agreements in Irish

Law

While DPAs do not exist in Irish law many of the elements central to their operation

do exist in this jurisdiction and the criminal legal and regulatory landscape is here

presented as being broadly compatible with their introduction in a modified form.

23 Bigrove and Weekes (n 16) at 426. 24 ibid. at 425. 25 ibid. 26 Section 45 (5) (4) of and Schedule 17 to the UK 2013 Act. 27 Bisgrove and Weekes (n 16) at 421.

6

(a) Corporate Criminal Liability.

It is well-established law in this jurisdiction that a corporate entity can be held liable

for a criminal offence.28 In Ireland corporations are separate legal persons and can be

distinguished from the natural legal persons who make up the corporation.29 Section

18 (c) of the Interpretation Act 2005 allows for a corporate body to be tried for a

criminal offence, both summarily and on indictment, in the same manner as natural

persons. Irish legislation provides for corporate criminal liability in the case of strict

liability offences (usually of a regulatory nature),30 and vicarious liability,31 but also

for criminal offences that require mens rea.32

(b) The Prosecutor’s Discretion.

The central procedural element to the operation of a DPA is the discretion of the

prosecutor not to prosecute the alleged offence as part of the negotiated agreement.

This discretion exists in Ireland and is central to the granting of immunity under the

Cartel Immunity Programme operated by the Competition and Consumer Protection

Commission (CCPC) and the Director of Public Prosecutions (DPP). The decision

whether to prosecute an alleged criminal offence is made at the sole discretion of the

DPP.33 According to the DPP, the decision whether to prosecute an alleged offence is

based upon a consideration of the evidential case against the suspect and whether the

prosecution would be in public interest.34 There seems to be no reason why the DPP

could not, considering the benefits and advantageous of entering into a DPA, decide

that the public interest would be best served by not bringing a criminal prosecution.

28 See: Thomas B. Courtney, The Law of Companies (3rd ed, Bloomsbury Professional, 2012) at 175. 29 Salomon v Salomon & Co Ltd [1876] AC 22. 30 See: Safety, Health and Welfare at Work Act 2005. 31 See: Section 6 (6) of the Competition Act 2002. 32 See: Criminal Justice (Theft and Fraud Offences Act 2001; Competition Act 2002; Prevention of Corruption (Amendment) Act 2010. 33 Dermot Walsh, Criminal Procedure (Dublin: Thomson Round Hall, 2002) at 609. 34 See: The Director of Public Prosecutions, Guidelines for Prosecutors (Revised November 2010) Available at < https://www.dppireland.ie/filestore/documents/GUIDELINES__Revised_NOV_2010_eng.pdf> Accessed 4 March 2016. at 55.

7

In the exercise of her discretion the DPP enjoys partial immunity from judicial

review.35 It is clear that should the DPP make a decision not to prosecute an alleged

offence in pursuance of a DPA the judiciary will be extremely reluctant to review that

decision36 unless that decision was reached mala fides.37 In the exercise of her

discretion the DPP is preforming an executive function and it would be improper for

judiciary to interfere with this decision on constitutional grounds.38

Exceptional circumstances for review may arise under the Constitutional

requirements of Article 38 of fairness and fair procedures. In the case of Eviston v

DPP39 the Supreme Court held that where the DPP communicated to a suspect

unequivocally that they would not be prosecuted for an alleged offence and no new

evidence comes to light or the circumstances do not change, then it would be a breach

of fair procedures for the DPP to reverse her decision and initiate a prosecution.40 In

light of this, should the DPP negotiate a DPA in this jurisdiction the final decision not

to prosecute should only be communicated to the corporate body at the very end of

the DPA process.

(c) DPA and Offences: General, Summary, and Indictable.

It is submitted that the use of DPAs should be restricted, as in the UK, to criminal

offences concerning serious economic crime. This is due to the challenges posed to

prosecuting corporate economic crime discussed in Part 1 not being replicated in less

serious offences and in other criminal offences generally.41 In the context of this

35 Micheál O’Higgins, ‘Reviewing Prosecution Decisions’, Paper presented to the 9th Annual National Prosecutors Conference, 24th May 2008. Available at<https://www.dppireland.ie/filestore/documents/PAPER_Micheal_OHiggins_BL.pdf> Accessed 2 March 2016. at 2. 36 See: Dunphy (a minor) v DPP [2005] 3 IR 585; Cunningham v President of the Circuit Court [2006] IESC 51, [2006] 3 IR 541; H v DPP [1994] 2 IR 589. 37 State (McCormack) v Curran [1987] ILRM 225 at 237. 38 DC v DPP [2005] 4 IR 281. 283. Per Denham J: ‘The Constitution and the State, through legislation, have given to the respondent an independent role in determining whether or not a prosecution should be brought on behalf of the people of Ireland. The respondent having taken such a decision, the courts are slow to intervene.’ 39 [2002] 3 IR 260. 40 ibid. 41 See: UK Ministry of Justice, Deferred prosecution agreements: Government response to the consultation on a new enforcement tool to deal with economic crime committed by commercial organizations (2012) CM 8463. at 6. This is the same reason given by UK Ministry of Justice in their response to the consultation paper on DPAs.

8

jurisdiction it is submitted that DPAs should only be available for indictable offences

under the statutory provisions concerning corporate fraud42 bribery and corruption,43

insider dealing and market abuse, 44 all category 1 and 2 offences under the

Companies Act 2014,45 and the common law offence of conspiracy to defraud.46 It is

further submitted that it would be inappropriate to make DPAs available in cases of

corporate manslaughter.

The use of DPAs for summary offences is inappropriate for a number of

reasons. First, in order for DPAs to function effectively there needs to be a credible

threat that the corporation will suffer significant consequences as a result of

conviction. Should DPAs be used for summary offences the suspected corporation

would have little incentive to seek a DPA given the substantial disclosure

requirements. Second, the jurisdiction of the District Court is ill equipped to handle

cases of complex corporate crime. If a level of judicial oversight comparable to the

UK is going to be adopted in this jurisdiction then it is essential that the trial judge is

experienced in dealing with cases of corporate crime in order to be in a position to

review the terms of the DPA, even if no prosecution is being pursued. Furthermore,

the District Court may refuse jurisdiction if the Court is of the view that a Superior

Court would be better able to deal with the issues of the case.47 Thirdly, summary

offences are by their very definition ‘minor’48 or ‘less serious’49 in nature. The

purpose of a summary trial is for the expedient disposal of offences that are not

sufficiently serious to warrant a formal trial.50 Corporate economic crime is a serious

issue and to allow the use of DPA for summary offences would send the wrong

message to corporate offenders.

42 See: Criminal Justice (Theft and Fraud Offences) Act 2001. 43 See: Prevention of Corruption (Amendment Act 2010) 44 See: Section 1368 of the Companies Act 2014. 45 See: Section 871 (1) and 871 (2) of the Companies Act 2014 46 See: Criminal Justice (Theft and Fraud Offences) Act 2001. 47 See: DPP v Mc Nicholas trading as John Joe Mc Nicholas Plant Hire & Ors [2011] IECC 2. 48 Article 38.2 of the Constitution provides, ‘Minor offences may be tried by courts of summary jurisdiction.’ emphasis added. 49 DDP (n 34) at 9. 50 See: Clune v DPP [1981] ILRM 17.

9

(d) Who Should Negotiate a DPA?

The legal effect of Article 30.3 of the Irish Constitution and the Prosecution of

Offences Act 1974 is that all offences other than those of a summary nature are

brought at the fiat of the DPP.51 As such the negotiation of a DPA for an indictable

offence will undoubtedly need the involvement of the DPP. However, the DPP has

no investigatory function and in the context of a DPA it would be hard to see how the

process would work in practice if it were confined to the competence of the DPP.52 In

contrast, regulatory bodies such as the ODCE and the Central Bank have robust

investigatory powers,53 are well versed in the issues of corporate economic crime, and

are already empowered to prosecute offences summarily.54 For these reasons it would

be more appropriate for a DPA to be negotiated by the DPP in conjunction with an

appropriate regulatory authority and an Garda Síochána.

The operation of the CIP by the DPP in conjunction with the CCPC under the

Competition Act 2002 provides a useful example of how such a collaborative

arrangement would work.55 Under the CIP Applications for immunity are made to the

Commission who is empowered to fully investigate the alleged offence and to then

make a recommendation to the DPP to grant immunity if appropriate.56 The DPP

makes the decision whether to prosecute or not and therefore remains independent in

the discharge of her prosecutorial function. 57 Both the CCPC and the DPP are obliged

to consult the CIP guidelines document throughout the process.58

51 Article 30.3 of the Irish Constitution provides, ‘All crimes and offences prosecuted in any court constituted under Article 34 of this Constitution other than a court of summary jurisdiction shall be prosecuted in the name of the People and at the suit of the Attorney General or some other person authorised in accordance with law to act for that purpose.’ 52 Walsh (n 32) at 606. 53 See: Section 949 of the Companies Act 2014; See: Section 22 of Central Bank (Supervision and Enforcement) Act 2013. 54 See: Section 949 of the Companies Act; See: Section 14 (4) of the Central Bank and Credit Institutions (Resolution) Act 2011. 55 For a review of the programme see: Terry Calvani, and Kaethe M. Carl, ‘The Competition Act 2002, ten years later: lessons from the Irish experience of prosecuting cartels as criminal offences’ (2013) 1 (2) Journal of Antitrust Enforcement 296. 56 See: The Director of Public Prosecutions, Cartel Immunity Programme (Updated 22 January 2015). Available at < https://www.dppireland.ie/publications/category/21/cartel-immunity-programme/> Accessed 1 Marh 2016. 57 Shelley Horan ‘The Fight Against Cartels: Criminal Prosecution for Cartel-Conduct in Ireland ‘ (2009) 16(8) Commercial Law Practitioner 174. at 178. 58 DPP (n 56).

10

It is submitted that should a DPA model be introduced in this jurisdiction on a

statutory footing it would be relatively straightforward to establish a collaborative

enforcement arrangement comparable to the CIP. In the context of the offences

outlined above the ODCE and the Central Bank would be the appropriate regulatory

authorities to negotiate a DPA in conjunction with DPP and an Garda Síochána. The

ODCE already negotiate compliance agreements on a non-statutory basis and have

called on the government to permit the establishment of joint investigation teams for

white-collar crime offences. 59 Similarly the Central Bank already operates a

settlement procedure under its administrative sanction procedure for regulated

financial service providers that demonstrates the core competences required for the

negotiation of a DPA.60

(e) An Irish Formulation for DPAs.

In consideration of the Irish legal and regulatory landscape the following

recommendations are made;

1. DPAs should be established in this jurisdiction on a statutory footing in a

manner broadly comparable with the UK Crimes and Court Act 2013 to be

jointly operated by the DPP and an appropriate regulator.

2. In conjunction with the statutory intervention a Code of Practice should be

introduced to guide prosecutors and regulators in the negotiation of DPA.

3. DPAs should only be made available to corporate bodies and be limited to

indictable offences listed above in Part 2 Section (c).

4. The statutory instrument should provide for Superior Court jurisdiction

comparable to such provision in Section 11 of the Competition Act 2002 for

judicial oversight.

59 See ODCE (n 7) at 10: See also Remy Farrel Remy Farrell, ‘Prosecutors, Regulators, Trial by Jury and the Prosecutor’s Discretion’ Paper presented to the 11th Annual National Prosecutor’s Conference, 24th April 2010. Available at < https://www.dppireland.ie/filestore/documents/PAPER_-_Remy_Farrell_BL.pdf> accessed 1 March 2016, for a view that regulatory bodies should be able to prosecute offences on indictment. 60 See Central Bank, Outline of the Administrative Sanction Procedure. (2013) Available at <https://www.centralbank.ie/regulation/processes/EnfI/asp/Documents/Outline%20of%20the%20Administrative%20Sanction%20Procedure%20-%202013%20-%20for%20publication.pdf > Accessed 5 March 2016.

11

5. Judicial oversight should be limited to review of the terms of the DPA on

grounds of fair procedures and for a declaration that the agreement is fair, just,

and reasonable.

6. The statutory intervention should clearly outline how financial penalties are to

be calculated and the severity of fines imposed under a DPA should be linked

to the corresponding statutory provisions.

Part 3: DPAs and the Financial Crises.

(a) The 2008 Financial Crises.

In the aftermath of the financial crisis there is a growing recognition of the severe

economic, social, and cultural harm that can be caused by corporate economic crime.

The three governmental reports commissioned in the years following 2008 provide an

evaluative framework for identifying and understanding the factors that contributed to

the crises.61 Both the Honohan and Nyberg Report detail a litany of corporate

governance failings within many of Ireland’s largest banking institutions. The Regling

and Watson Report identified specific and serious breaches of basic corporate

governance principles as a contributing factor to the Irish banking crises.62 The

Nyberg report detailed a lack of proper risk evaluation procedures, a lack of internal

compliance procedures, and a culture of “relationship lending” that led to the rapid

deterioration in the quality of the bank’s loan books.63

However, the governmental reports demonstrate that the corporate governance

failings in many of Ireland’s banking institutions did not occur due to lack of law but

rather due to a lack of enforcement and implementation of the existing legal

61 See: Klaus Regling, and Max Watson, A Preliminary Report on The Sources of Ireland’s Banking Crisis. (2010); Patrick Honohan, Report to the Minister for Finance by the Governor of the Central Bank – The Irish Banking Crisis: Regulatory and Financial Stability 2003-2008. (2010); Peter Nyberg, Report of the Commission of Investigation into the Banking Sector – Misjudging Risk: Causes of the Systemic Banking Crisis in Ireland (2011). 62 Klaus Regling, and Max Watson, A Preliminary Report on The Sources of Ireland’s Banking Crisis. (2010) at 35. 63 Peter Nyberg, Report of the Commission of Investigation into the Banking Sector – Misjudging Risk: Causes of the Systemic Banking Crisis in Ireland (2011). at iv.

12

framework.64 The Regling and Watson report concluded that the structure of financial

regulation in Ireland was less important than ‘the way in which supervision was

implemented in practice.’ This lack of robust enforcement was in keeping with the

“Principles Based Regulation” adopted by the financial regulator. Furthermore, the

Nyberg report identified a fear of fear of litigation – the legal cost and reputational

damage entailed – as a factor in the reluctance of the regulator to adopt a tougher line

to enforcement.65

(b) DPAs and Reforming Corporate Governance Structures.

It is submitted that the introduction of DPAs into Irish law would play an important

role in addressing the behaviour and issues that contributed to financial crises.

First, the wrongful corporate behaviour that occurred in the lead up to and

during the financial crises occurred despite the fact that such behaviour was heavily

criminalised. In order to reform such behaviour prosecutors need a legal instrument

that deals with imposing appropriate sanction but also one which looks forward to

influencing corporate behaviour and culture on a long-term basis. The ability to

exercise significant influence over the corporate governance structures of offending

corporations via DPAs make them a formidable legal instrument in the effort to

reform the behaviour that contributed to the financial crises. Kaal and Laccine have

conducted an empirical study of DPAs in the US from 1993-2013 that demonstrates

the effectiveness of DPAs in generating substantial change within individual

corporations and across entire industries.66 DPAs allow regulators and the DPP to

play an active role in shaping corporate governance structures in a way that ordinary

legislation cannot.

64 For example: Prior to 2008 legal provision for risk weightings and capital requirements for residential mortgages (Asset Covered Securities Act 2001) and speculative property development loans [European Communities (Licensing and Supervision of Credit Institutions) Regulations 1992 (as amended)] existed and could have been enforced. 65 Blánaid Clarke, and Niamh Hardiman, ‘Crisis in the Irish Banking System’ (2012) UCD Working Papers in Law, Criminology & Socio-Legal Studies, Research Paper No. 02/2012, citing Peter Nyberg, Report of the Commission of Investigation into the Banking Sector – Misjudging Risk: Causes of the Systemic Banking Crisis in Ireland (2011). at 64. 66Wulf A. Kaal, and Timothy A. Lacine ‘The Effect of Deferred and Non-Prosecution Agreements on Corporate Governance: Evidence from 1993-2013’ (2014) The Business Lawyer Vol. 70.

13

Secondly, for the reasons outlined in Part 1 Section (b) it is submitted that

DPAs offer a viable and practical alternative to criminal prosecution in cases of

corporate wrongdoing. DPAs would allow prosecutors and regulators to act early in

response to alleged offending and to avoid the cost and reputational damage that

prevented intervention during the crises. Furthermore, DPAs would remove the

uncertainty currently surrounding corporate criminal liability in Ireland and

incentivise corporations to cooperate with prosecutors. Ultimately it is submitted that

the introduction DPAs in the modified form outlined in Part 2 would be a powerful

legal tool in reforming the corporate behaviour that contributed to the financial crisis

and in aiding prosecutors to hold corporate offenders to account.