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Prosecutors in the UK have in the past cited legal, practical and resourcing obstacles as reasons for their lack of success in bringing successful corporate prosecutions against companies for economic or financial crime.
A Deferred Prosecution Agreement (DPA) allows the Serious Fraud Office (SFO) or Crown Prosecution Service (CPS) to defer a prosecution of a corporate on the condition that the corporate agrees to comply with certain conditions. DPAs were introduced in February 2014 under the provisions of Schedule 17 of the Crime and Courts Act 2013 with the aim of generating a cultural shift towards openness and self-reporting by corporates of criminal wrongdoing. In August 2019, the SFO published Corporate Co-operation Guidance which sets out how the SFO assesses co-operation from business entities and the potential benefits of such co-operation.
The conditions will typically include a financial penalty and a number of requirements imposed on the company either as a form of punishment, compensation or remediation. Under a DPA, a prosecutor will charge a company with a criminal offence but, once deemed by a Judge to be ‘in the interests of justice’ and its terms ‘fair, reasonable and proportionate’, the proceedings will be suspended and only re-commenced if the organisation fails to comply with the terms. The link to the Deferred Prosecution Agreements Code of Practice, published jointly by the SFO and CPS, is available here.
Few companies wish to face a criminal prosecution, given the expense and damage to reputation involved. In many jurisdictions, particularly in Europe, a criminal conviction will prevent a company from entering into tenders for public sector contracts. However DPAs are not a quick fix and to successfully navigate the process is complicated with an array of thorny issues to resolve along the way, including whether the company is vulnerable to a prosecution for failure to prevent bribery, under section 7 of the Bribery Act, or whether the corporate, through the directing mind of its officers, has, as a matter of law, committed a criminal offence itself.
The SFO has now sought approval of three DPAs resulting from overseas bribery and corruption investigations:
- Standard Bank (November 2015);
- XYZ Ltd (July 2016);
- Rolls Royce (January 2017).
In addition, two other DPAs have been secured relating to fraud and false accounting:
- Tesco Stores Plc (April 2017) - We presented Tesco in relation to this DPA; and,
- Serco Geografix Limited (SGL) (July 2019).
We have been involved in a number of the SFO’s investigations into domestic and overseas corruption and are therefore well placed to advise corporates and individuals in this type of investigation. For more information, please see our bribery and corruption page.
If a corporate is at risk of being prosecuted for a criminal offence, a vital decision is whether or not the company wants to put itself in a position to be offered a DPA and, if so, how best to try and achieve this. If a corporate finds itself in this situation, they are likely to also have exposure to a number of other complicating factors including civil litigation, employment proceedings, corporate governance issues and scrutiny from a number of regulators. The teams at Kingsley Napley have the skill and experience to cover all of these different factors where required, and we also regularly work alongside a company’s regular advisers where a corporate prefers for us to do so.
We can advise on how to conduct internal investigations where a company suspects bribes may have been paid on its behalf by its employees, agents or subsidiaries. The tone of an investigation and the interaction with the authorities needs to be set at the outset in order to achieve a favourable outcome. We understand that companies need to try to conclude investigations quickly, so that they can get on with developing their businesses. Assessing the size of the problem and considering whether to report it to the authorities is an important decision that needs to be taken early on.
DPAs are often negotiated alongside more global settlements which engage a range of authorities, including overseas agencies such as the US Department of Justice (DOJ) and Securities and Exchange Commission (SEC). We have a great deal of expertise in dealing with multi-jurisdictional cases and the particular tactical difficulties that arise in those cases. We have a network of overseas lawyers, including in the US, with whom we work closely. Where individuals are caught up in these investigations. and we also have lawyers in our team who specialise in extradition and international law, including advising on Interpol red notices and mutual legal assistance.
If you have any questions about Deferred Prosecution Agreements (DPAs), please contact a member of our team.
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