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English: The logo of the Organisation for Econ...

English: The logo of the Organisation for Economic Co-operation and Development (OECD). (Photo credit: Wikipedia)

Deferred Prosecution Agreements (“DPAs”) are to become a reality in the UK following Royal Assent being given to the Crime & Courts Act (“the ACT”) in April 2013.  The provisions for DPAs can be found in Schedule 17 of the Act and can be used to address corporate offending for a number of offences including: fraud, bribery and corruption, tax evasion and money laundering. 

The exact details of when and how these will be used is not yet known. Before DPAs are rolled out the Director of Public Prosecutions and the Director of the Serious Fraud Office are required to issue a joint Code for prosecutors (the “Code”) on the general principles to be applied in determining whether a DPA is likely to be appropriate.  A draft of the Code is expected to be issued in the next few weeks as part of a public consultation exercise. 

The principles that may appear in this guidance are likely to be similar to the public interest factors referred to in the Ministry of Justice’s (“MoJ”) consultation on the introduction of DPAs which share some common themes with existing public interest guidance contained in the Code for Crown Prosecutors and the Guidance on Corporate Prosecutions.  The MoJ cited the following factors for prosecutors to consider:

  • Whether the wrongdoing was self reported
  • The degree to which the organisation cooperated with prosecutors
  • The extent of the dishonesty throughout the organisation
  • The impact of the wrong doing on third parties
  • Behaviour of the organisation since the offending and whether any action has already been taken by the organisation to put right the wrongdoing
  • The ability of organisations to pay a financial penalty and meet other financial obligations

Whilst the judiciary is to be involved in this process, I wonder why the wrong doers can not face the full scrutiny of the court system?  I note that involvement of the judiciary might just be masking  concerns about transparency expressed by organisations such as the Organisation for Economic Development in their phase 3 report on the UK.

Under a DPA companies may be required to do one or more of the following:

  1. Pay a financial penalty;
  2. compensate victims;
  3. donate money to charity;
  4. disgorge any profits resulting from the alleged offence;
  5. implement a compliance programme or enhance an existing programme;
  6. cooperate with any related investigation; and
  7. pay the reasonable cost of the prosecutor. 

The level of financial penalty that can be imposed will be comparable to a fine that a court would have imposed following a guilty plea.  Normally, for a guilty plea at the first reasonable opportunity, that would be a one third reduction on the sentence.  The Sentencing Council has indicated that it is intending to publish guidelines on the penalties for companies convicted of economic crimes covered by DPAs which will provide some certainty of outcome for companies.    

Another toolkit for prosecutors or another erosion of the British judicial system?

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