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Deferred Prosecution Agreements - Definitive Guidelines and code of conduct

    • Fraud and financial crime
    • Financial institutions - Briefings and articles

    20-02-2014

    Deferred Prosecution Agreements

    Deferred Prosecution Agreements (“DPAs”), the Government’s newest weapon in the fight against corporate crime, become available to prosecutors from 24 February 2014.  They will widen the scope for enforcement against companies and corporate entities involved in fraud, money laundering, bribery and corruption. On 14 February 2014, the Director of the Serious Fraud Office and the Director of Public Prosecutions published a joint code of practice on their use of Deferred Prosecution Agreements (“the Code”) which supplements the recently published Sentencing Council’s Definitive Guideline on fraud, bribery and money laundering for corporate offenders (“the Guidelines”). The Government announced plans to introduce DPAs in October 2012 and they were given their statutory footing in the Crime and Courts Act 2013 which received royal assent in April 2013. In the summer of 2013 there followed an extensive consultation exercise which has resulted in the publication of the Code. 

    What is a DPA? 

    A DPA is a public, voluntary and transparent agreement between a prosecutor and an organisation whereby prosecution for alleged economic crimes can be deferred if certain conditions are met. If an organisation admits wrongdoing, a DPA would still mean criminal charges being laid but the proceedings would be automatically suspended pending compliance with stringent conditions which will be agreed between the parties and subject to approval by the judiciary. Conditions may include disgorgement of profits, payment of fines, compensation for victims, cooperation in any prosecution of individuals and implementation of a compliance programme, if necessary with a monitor appointed. Unequivocal cooperation by the corporate is essential. If the conditions are not met, the prosecution will be resumed. Neither the Code nor the Guidelines seek to dissuade prosecutors prosecuting where the public interest would not be served by entering into a DPA. However, it is hoped that their use in appropriate circumstances can help to mitigate some of the collateral damage caused to shareholders and employees when a company is convicted of a criminal offence by the Courts, for example if the business is wound up.

    The discretion to negotiate a DPA remains with the prosecutor and will not automatically be the default position. Factors that may be taken into account include whether the organisation has a history of similar conduct, whether the conduct is part of an established business practice, whether the organisation had in place an effective compliance programme and the failure to notify, or verify, the wrongdoing within a reasonable time period.

    What this means for you 

    Whilst the first prosecution of a corporate under section 7 of the Bribery Act is still awaited, the announcement of “blockbuster funding” to investigate alleged large scale bribery offences committed by UK corporates makes the Government’s message clear - corporate economic crime will not be tolerated in the UK. Now, with the availability of DPAs imminent, businesses operating in the UK need to look seriously at their anti-fraud and anti-corruption regimes. Companies facing prosecution subject to the UK’s new criminal sanctions for corporate fraud and bribery need to ensure that they have done everything possible to reduce risk to the lowest practicable level. 

    Encouragement to self-report creates an additional consideration for businesses that find themselves inadvertently caught up in the midst of a corruption investigation, and is contrary to the position that there is currently no legal obligation to self-report in bribery or corruption cases in the UK. UK corporates should work closely with their trusted advisors in the event of an investigation to determine the best course of action.

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    For more information contact

    Hannah Nichols, Principal Associate Professional Support Lawyer

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