Michael Caplan QC, partner, Kingsley Napley
Adding to the legal armoury
28 May 2012
21 February 2014
8 July 2013
24 February 2014
28 February 2014
7 June 2013
Deferred prosecution agreements, common in the US, could soon be a feature of UK litigation
The latest figures suggest fraud and corruption costs the economy more than £70bn per year. Investigations and trials are expensive at a time when law enforcers have to slash budgets. Deferred prosecution agreements (DPAs) are a pragmatic way of bringing the dishonest to account without costly, time consuming and protracted criminal litigation.
The consultation announced this month by the Government asks for answers to 28 separate questions, recognising that the options for dealing with offending commercial organisations are currently limited.
It will not all be plain sailing for the Government. We live in a world where self-reporting and whistle blowing is encouraged, and where it will be attractive to prosecutors and defendants for a substantial financial penalty and implementation of agreed reforms, rather than a lengthy court case and conviction. However, the public may still believe that those who commit a crime should face a trial and await the outcome. The judiciary will also have to be won over; in the past they have never wished to be involved in negotiated agreements, sanctions or extra-judicial penalties.
DPAs exist in the US where there are very defined sentencing guidelines and a completely different prosecutorial system. Many believe they have been successful.
For the prosecutor a DPA will be seen as a vindication that a crime has been committed. For the boardroom, if there has been dishonesty, it will have the attraction of certainty, no conviction and damage limitation. Boards will venture to justify it as a kind of suspended sentence. Even if dishonesty is in issue, to what extent might a negotiated DPA be a commercial decision? Yet individuals associated with the offence, with no such ‘deal’ available, may well be left to face a trial.
Fraud transcends national boundaries and is usually complex by its nature. It is right that there should be consideration of how best to dispose of these cases and the debate on DPAs is to be welcomed. Nonetheless, the detail in making them workable may well not be straightforward. Who will have the responsibility to monitor? What happens if there is a dispute? How will they be perceived by the public? Particularly, what role will the judiciary have, especially as it is suggested that a judge will have to confirm that a negotiated DPA is ‘in the public interest’? Should there be a reduction in the financial penalty for early admissions and cooperation? It will also be necessary to have a code of practice clearly setting out the factors prosecutors will need to take into account in deciding whether a DPA should be offered.
However, if they work and are credible then it will not be a quantum leap to introduce a multinational framework binding in, for example, courts in the US and here. The Government’s proposal is to introduce DPAs for corporates only, but if successful do not be surprised if they are extended to individuals. Many will see this is as potentially a massive cost saving and an extension to suspended sentences; others a step too far, bringing the criminal justice system into potential disrepute.
With the appropriate safeguards, DPAs are a sensible additional weapon in a prosecutor’s armoury and will clearly be attractive to commercial organisations in suitable cases.
Michael Caplan is chair of the City of London Law Society corporate crime and corruption committee