Keywords: economic crime, serious fraud office, DPP, code of practice, deferred prosecution agreements
On 27 June 2013, the Director of the Serious Fraud Office (SFO) and the Director of Public Prosecution (DPP) in the UK announced a consultation concerning a new draft Code of Practice setting out a proposed approach to the use of Deferred Prosecution Agreements (DPA). On the same day, another consultation was published by the UK Sentencing Council on a proposed Fraud, Bribery and Money Laundering Offences Guideline. Together, these consultations provide a valuable opportunity for interested parties, particularly multinational companies with UK connections and operations in Asia, to raise their comments and concerns in relation to the two guidelines that may affect the future landscape of the enforcement regime for bribery, money laundering and fraud offences in the UK.
A DPA is a voluntary alternative to prosecution in which the prosecutor agrees to suspend criminal proceedings against a corporate defendant that is charged with a criminal offence on the condition that the corporation agrees to fulfill certain conditions, which may include the payment of a financial penalty, co-operation in future investigations, confiscation of profits, compensation to victims and undertaking compliance programmes and self-reporting obligations. Similar devices have long been a feature in US criminal investigations, notably those under the Foreign Corrupt Practices Act.
DPAs were introduced in the UK (with distinctive UK features) in the Crime and Courts Act 2013, which received Royal Assent in April this year. Some of the key features of the UK DPA are as follows:
- Initially covers crimes relating to bribery (in particular, the offences under the Bribery Act 2010), money laundering and fraud committed by companies, partnerships and unincorporated associations (not individuals);
- Discretionary alternative - the prosecutor may invite a company to enter into negotiations to agree a DPA but the company does not have a right to request one;
- Subject to court approvals at two stages - once "in principle" at a preliminary hearing and once "in terms" at a final hearing;
- Transparency - all DPAs will have to attach a statement of facts, although an admission of guilt will not be required;
- Broad range of requirements under the DPA that the prosecutors will be able to impose; and
- Breach of any terms of the DPA by the company may cause the prosecution to be resumed.
The draft DPA Code intends to provide guidance to prosecutors in relation to the factors to be considered in determining whether a DPA will be appropriate; the negotiation of DPAs; the application for the court's approval; and the oversight of approved DPAs (in particular, variation, breach, termination and completion).
In response to public concerns of the introduction of DPAs offering cut-price justice, Kevin Davis (chief investigating officer at the SFO) has said that DPAs would not be a "cosy deal behind closed doors" or an "easy option". On the one hand, a prospect of settlement may be attractive for some corporations hoping to avoid a long and uncertain court battle. On the other hand, a corporation will find itself facing a dilemma if it has been advised that a criminal conviction is unlikely to be successful based on the factual evidence (or the lack thereof).
The consultation closes on 20 September 2013.
Sentencing Council's Guideline on Fraud, Bribery and Money Laundering Offences
The second consultation is the UK Sentencing Council's consultation on a proposed Fraud, Bribery and Money Laundering Offences Guideline.
The Sentencing Council can only issue guidelines and has no legislative power. However, it is suggested that the proposed new guidelines are likely to lead to tougher sentences as they focus more on impact on victims (rather than on just the amount involved, as under the current guidelines).
The Sentencing Council's guidelines are to be of general applicability and are therefore of significant importance. They would also be relevant for corporations in considering whether to enter into DPAs with the prosecutor authorities.
The consultation closes slightly later, on 4 October 2013.
Originally published on 20 August 2013
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