A nervous disposition
Speculation is mounting that Sarclad, a private technology company based in Rotherham, could be the first company to enter into a deferred prosecution agreement (DPA) with the Serious Fraud Office (SFO). This follows confirmation by the SFO in May that it had issued its first letters inviting a number of companies to enter into DPA negotiations. The Sarclad case is also thought to be one of the first involving allegations of bribery under the Bribery Act 2010, which came into force in 2011.
DPAs, quite commonplace in the US and enabled in the UK through legislation introduced in February 2014, allow a company to reach an agreement with a prosecutor to avoid a criminal conviction. This may be important as a conviction can impact not only on a company's reputation but also on its ability to win future work, particularly public contracts. A DPA is likely to include a substantial financial penalty as well as other conditions, which may include the requirement for enhanced compliance procedures and even the company’s co-operation in the prosecution of individuals suspected of wrongdoing.
Should this turn out to be the first DPA, it will inevitably be the subject of intense scrutiny. It has been suggested that the SFO has intentionally sought to conclude its first DPA with a relatively unknown organisation to allow any unforeseen hurdles to be overcome out of the media’s glare. However, this may prove a false hope given the publicity that the case has already generated. This is somewhat at odds with the intended procedure for DPAs, which envisages negotiations should remain confidential until they are announced in final form in open court.
There will be a number of parties interested in the details of the first concluded DPAs, including company boards and their lawyers (especially those who may have already received an invitation letter or those considering whether a DPA might be a viable option for them). They will wish to understand the source and extent of the corporate’s culpability, whether there is a history of offending within the company, whether there are related investigations into any individuals involved and how co-operative the company has been. A key question is whether any company entering into a DPA has done so to avoid a real risk of a criminal conviction or for other, more pragmatic reasons, such as to end the uncertainty and negative attention that attaches to any criminal investigation.
It should not be forgotten that, even if negotiations are as advanced as suggested, DPAs require court approval at both a preliminary and final stage. In light of heavy judicial criticism in some recent high profile SFO cases, the approval of the court should not be taken as given.
Whether or not reports regarding the Sarclad case are accurate, it is clear that a DPA will be concluded within the next few months. Only when this happens, and the full facts can be examined, will it become clearer what form this new type of resolution will take and whether or not it represents a positive development in the area of corporate criminal liability.
This article first appeared in The Times Law Section online on 30 July 2015. For further information on the issues raised in this blog post, please contact Jonathan Grimes or a member of the criminal litigation team.
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