15 June 2009
M&A Weekly Update: fraud, bribery and money laundering sentencing guidelines; limited liability partners as workers; and more
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A move towards a more American approach in fraud pleas throws up new issues, say Rod Fletcher and Shula de Jersey
The Attorney General’s Guidelines on Plea Discussions in Cases of Serious or Complex Fraud
came into force on 5 May 2009 in an attempt to reduce both the time and cost associated with complex litigation.
The Attorney General has said that the guidelines are “designed to help prosecutors deal with fraud more effectively and efficiently, to the benefit of the public and all parties involved”.
Informal plea discussions between prosecution and defence before trial are not a new feature of our system. In addition, the Court of Appeal in R v Goodyear (2005) enabled a Judge to give an indication as to the maximum sentence on a guilty plea for the case in question.
Such discussions inevitably take place at a late stage in the process. The guidelines are intended to offer a formal, transparent framework to encourage plea discussions in serious and complex fraud cases to take place at much earlier stage.
The guidelines stipulate general principles that in conducting such plea discussions the prosecutor must act openly, fairly and in the interests of justice. It is the prosecutor who will initiate discussions by way of an invitation letter once he is satisfied the suspect’s criminality is known.
This is envisaged to be at any stage after interview under caution. The prosecutor will not initiate discussions with a defendant who is not legally represented.
Effectively, plea discussions will take place on a ‘without prejudice’ basis in that, subject to certain caveats, the prosecutor will give an undertaking not to rely on the fact, or contents, of the discussions should agreement not be reached.
Significantly there is no requirement on a defendant during such discussions to provide information or give evidence about others. The guidelines make clear that should a defendant wish to do so then this should be done in accordance with Sections 71-75 of the Serious and Organised Crime Act (2005).
Deciding how to respond to a plea discussion invitation will be a balancing act for a defendant. Defence solicitors will have to be in a position to fully advise a client on the strength of the evidence, prospects of conviction and likely sentence.
During the investigation stage a lack of adequate disclosure will make it difficult for a client safely to take such a critical decision. The guidelines seek to address this by requiring the prosecutor to provide a written statement of case to the defence containing a summary of the nature of the allegation and supporting evidence.
The prosecutor may also provide material in support of the statement of case, but is not obliged to reveal all of the information or evidence.
Once agreement has been reached as to pleas, discussion as to sentence will follow with a joint submission being presented to the court. Importantly the court has absolute discretion as to whether it sentences in accordance with the agreed joint submission. It remains to be seen how often such judicial discretion will be exercised.
The guidelines make clear that due regard should be had to the court’s asset recovery powers and expresses an expectation that a confiscation order will be sought by the prosecutor reflecting the full benefit to the defendant.
The question of confiscation is often a real obstacle to the early resolution of many fraud cases, as are the provisions relating to exclusion from tendering for public contracts.
This jurisdiction has for some time been moving towards a more American approach. The Attorney General has however been at pains to reiterate that the new guidelines are not about offering discounts, immunity or incentives and have been “specifically designed for our criminal system” to avoid the perception of association with US style plea bargaining arrangements.
Since his appointment as director of the Serious Fraud Office (SFO), Richard Alderman has been seeking to “sharpen the tools” available to the SFO and has made no secret of his desire to explore alternative methods to dispose of criminal investigations in a proportionate manner, particularly those involving corporate defendants.
In the current economic climate with more fraud offences and scandals being uncovered these new guidelines, coupled with the planned legislation to provide crown courts the ability to impose certain regulatory sanctions in fraud cases as part of the sentencing process, may provide the prosecuting authorities with a sharpened tool to obtain higher conviction rates in a swifter, more cost-effective manner.
However, given that the guidelines provide for absolute judicial discretion there will be no easy response to a plea discussion invitation. In some cases the new arrangements may provide a real opportunity for defendants in fraud cases to achieve a satisfactory and timely disposal of their case, but defence practitioners must be prepared and resourced to undertake full preparation of the case before this decision is made.
Rod Fletcher is a partner and Shula de Jersey a solicitor at Russell Jones & Walker