Deferred Prosecution Agreements: The UK Proposal

Previously published in Westlaw Journal White-Collar Crime, July 2012

Deferred prosecution agreements have been a feature of the U.S. legal system for many years. They have generally been viewed as a success and an invaluable tool in the arsenal of prosecutors in a modern commercial environment, particularly in the field of corruption. Accordingly, their absence from the U.K. legal system has been increasingly questioned. The U.K. solicitor general and the director of the Serious Fraud Office have sought to address this apparent deficiency and have been strongly advocating for the introduction of DPAs into the U.K. This has culminated in the U.K. Ministry of Justice's recently released consultation paper on the subject.1 The U.K. DPA aims to increase self-reporting by corporations by providing a degree of certainty and efficiency. Its broad intention is to take the best of the U.S. system and complement it with the U.K. legal system.

U.K. POSITION

The current position in the U.K. is thought-provoking. Its legal system already contains a myriad of criminal and regulatory sanctions for corporate wrongdoing, especially in relation to fraud and corruption matters.2 But the problem lies not in the lack of applicable law upon which to prosecute; the issue is the relative ineffectiveness and inefficiencies of enforcement of those laws and their lack of flexibility. Whereas the current system has proven relatively reliable, in a modern commercial world, that system gives rise to the following primary conflicts:

Self-reporting: Incentives vs. discouragement

If corporations are to come forward and self-report wrongdoing to the authorities, there must be an incentive in doing so. In the U.S., a company may benefit from a DPA whereby criminal prosecution may be deferred or eventually dismissed provided that the company, for example, pays a fine, pays compensation, accounts for its profits, agrees to work with a monitor and/or accounts to the U.S. Department of Justice for its future actions. To this end, the U.S. system of self-reporting provides corporations with some comfort as to the range of sanctions available to the regulator.

The position under the U.K. system is more stark: Admission or not, one strike and you're out! Save for only a few exceptions, criminal prosecution and conviction as punitive sanctions are the primary options for authorities when presented with an admission. This blunt enforcement instrument positively discourages self-reporting and, conversely, encourages forum-shopping. The Serious Fraud Office's arsenal, for example, is limited in that it must either prosecute with the aim of securing a criminal conviction or proceed under the civil law. Bearing in mind that a conviction for bribing carries with it mandatory debarment from EU contracts,3 it can be viewed as a death sentence for some businesses.

Sentencing: Judicial independence vs. certainty

The independence of the judiciary is the foundation of any modern justice system. In the U.K., it is a well established principle that the sentencing of offenders is solely for the judge.4 That said, prosecutors are expected to assist the judge as to tariffs and guidelines, but no more. There is no mechanism currently to allow for U.S.-style "plea bargains."

Offering offending corporations a degree of certainty as to the potential outcome through plea negotiations is perceived as undermining and/or usurping the sentencing discretion of the judge. Notions of "rubber-stamping" plea agreements come to mind, and any suggestion of endorsing that practice is understandably deplored. That the U.S. courts will not adopt such an approach is evident in...