UK: Bribery Act Update: DPAs Come Into Force, Sentencing Guidelines Published – Corporate Prosecutions On The Way?

Last Updated: 25 April 2014
Article by Rania Tadros and Reema Shour

In our last Bribery Act (the "Act") update (Shipping E-Brief July 2013), we outlined how Deferred Prosecution Agreements ("DPAs") are expected to work in the UK, and summarised the draft sentencing guidelines for fraud, bribery and money laundering by corporate offenders (the "Guidelines"), which were first published by the Sentencing Council of England and Wales in June 2013. Following a period of consultation, the Guidelines have now been finalised and will apply to corporate entities convicted of an offence and sentenced on or after 1 October 2014. DPAs will be available in relation to offences committed by corporates from 24 February 2014.

These developments are part of the UK's ongoing anti-corruption initiatives and should be seen in the context of the UK prosecuting authorities' expressed intention of clamping down on economic crime. Fraud is said to cost the UK £73 billion each year. The Director of the Serious Fraud Office ("SFO"), David Green, has already called for an amendment to the Act to widen the scope of corporate liability. It has also been reported that the SFO has received funding from the Treasury to investigate allegations of bribery against Rolls Royce in the Far East, which suggests that a high-level prosecution might be on the way after a lack of corporate prosecutions under the Act since it came into force in July 2011. Below we summarise these various developments in further detail.


DPAs are agreements between prosecutors and corporates (they are not available to individuals) whereby the prosecution of a corporate that is allegedly guilty of an economic crime may be suspended, conditional upon the corporate agreeing to a number of imposed conditions. These may include the confiscation of the profits of wrongdoing; payment of a significant fine and cooperation with future prosecutions of individuals; agreeing to external monitoring; agreeing to establish anti-corruption policies and procedures and the provision of appropriate training. Significantly, and unlike DPAs in the USA, DPAs in the UK will be subject to judicial oversight. Approved DPAs will also be made public in open court, thereby avoiding the use of DPAs to conceal a corporate's alleged wrongdoing.

DPAs are a discretionary tool and will only be used where the prosecuting authorities consider that it is in the public interest to enter into a DPA with a corporate rather than prosecute it. For example, the public interest might be served by avoiding collateral damage suffered by employees and shareholders of a corporate if it is put out of business or wound up as a result of a criminal conviction. However, as stated by David Green: "DPAs are not a panacea, nor are they a mechanism for a corporate offender to buy itself out of trouble".

On 14 February 2014, the Director of the SFO and the Director of Public Prosecutions ("DPP") published a joint Code of Practice on the use of DPAs. Referring to publication of this Code, the DPP, Alison Saunders, has stated that "Whilst the circumstances appropriate for the use of DPAs may be quite rare for the CPS, the guidelines... set out our approach to this new legislative functions in an open and transparent way." Prosecutors must have regard to the Code throughout the DPA process, namely: when negotiating DPAs with a corporate that they are considering prosecuting; when applying to the Court for approval of a DPA; and when overseeing DPAs after their approval by the Court, particularly in relation to their variation, breach, termination and completion.

The Guidelines

Although the Bribery Act has been in force since 1 July 2011, there have so far been no prosecutions of corporates under Article 7 for failing to prevent bribery (although there may be at least one in the pipeline, see below). Furthermore, while the Act introduced a new, strict liability offence for corporates, there were no pre-existing sentencing guidelines for judges to apply in the event that a corporate was prosecuted. These new Guidelines are designed to address this situation and will apply to corporate convictions for fraud and money laundering, in addition to bribery.

The Guidelines are relevant to DPAs as well as actual convictions because Schedule 17, paragraph 5(4) of the Crime and Courts Act 2013 (which contains the provisions governing DPAs) requires that: "The amount of any financial penalty agreed between the prosecutor and P [the defendant] must be broadly comparable to the fine that a court would have imposed on P on conviction for the alleged offence following a guilty plea." As such, when negotiating the terms of a DPA with a corporate, prosecutors will be obliged to take the Guidelines into account.

It is not within the remit of this article to provide a detailed analysis of the Guidelines. In essence, however, in determining a sentence, or the terms of a DPA, judges and prosecutors must take the following steps into consideration:

  1. Determine whether compensation should be ordered. This should be given priority over the payment of any other financial penalty, such as a fine.
  2. Consider whether confiscation should be ordered. This can be done under the Proceeds of Crime Act 2002.
  3. Determine the level of the corporate's culpability and amount of harm caused. A corporate's culpability may be categorised as high, medium, or low, depending on the role it played in committing the offence and its motivation in doing so. In the case of bribery, the measure of harm will normally be the gross profit from the contract obtained, retained or sought as a result of the offence, or the cost avoided by failing to put in place appropriate measures to prevent bribery.
  4. Determine the appropriate penalty. The Court may take into account a number of factors set out in the Guidelines to determine the appropriate level for any fine imposed.The fines can be hefty; a corporate is at risk of being fined up to 400% of the value of the actual profit from its criminal conduct.
  5. Make any final adjustment to the fine. The Court should consider whether the fine imposed is proportionate, taking into account the size and financial standing of the corporate and the seriousness of the offence. The overriding objective, according to the Guidelines, is that the fine imposed "must be substantial enough to have a real economic impact which will bring home to both management and shareholders the need to operate within the law. Whether the fine would have the effect of putting the offender out of business will be relevant; in some bad cases this may be an acceptable consequence."

Finally, a corporate's sentence may be reduced where it assists in prosecuting other parties involved or where it pleads guilty.

Proposed amendment to the Act

David Green is reportedly seeking an amendment to the Section 7 "failure to prevent bribery" offence under the Act, with a view to expanding its scope to cover failure to prevent all acts of financial crime. The intention would be to prosecute corporates that have benefited from the criminal conduct of their staff, thereby giving corporates an added incentive to discourage criminal conduct by their employees. In addition to any fine it would have to pay, a corporate could also incur a further financial fallout through being prevented from bidding for any public project within the EU (EU public procurement rules debar a corporate found guilty of bribery from receiving such a contract). As at the time of writing, it remains to be seen whether the Act will in fact be amended.

Forthcoming prosecutions?

The SFO has publicly declared its intention to bring high-level corporate prosecutions sooner rather than later. While a number of prosecutions have been taking place in recent years in respect of bribery and corruption offences committed prior to the Act coming into force, the current major investigation into Rolls-Royce concerning possible bribery and corruption in China and Indonesia is reported to include alleged offences that took place after June 2011. If that is indeed the case, then those offences may be prosecuted under the Act. It has also recently been reported that French train manufacturer, Alstom SA, is to be charged with various bribery and money laundering offences, including for allegedly paying bribes to win contracts overseas. It seems that at least some of the offences they are charged with may come under the Act.

In October 2013, David Green mentioned that the SFO had two cases involving corporate defendants in the court system awaiting trial. Whether those two cases include the allegations against Rolls Royce or Alstom SA or are entirely different cases of bribery and corruption remains unclear. Nor is it clear whether those cases involve offences pre- or post-dating the Act. Be that as it may, it seems likely that at least one major corporate prosecution may be on the way.


Ben Morgan, joint head of bribery and corruption at the SFO, has defended the lack of prosecutions under the Act on the basis that the SFO has so far been dealing with offences committed under the old anti-corruption legislation in the UK and, according to Mr Morgan, "this made it harder to bring companies to book for their misdemeanours". This may all be about to change if, as anticipated, a few high-level prosecutions under the Act finally come to court. It will also be interesting to see if the section 7 offence under the Act is expanded in scope as the SFO would like it to be. If it is, corporates will be at even greater risk of being held liable for their employees' corrupt conduct.

Furthermore, with the introduction of DPAs that give the prosecuting authorities a statutory framework and additional tool for ensuring that financial crime by corporates is appropriately dealt with, together with the new Sentencing Guidelines and joint Code of Practice to regulate the agreement and management of these DPAs, it is to be hoped that there will be an increase in the number of enforcement actions for economic crime.

As ever, however, particularly in an environment of increasing international intolerance of bribery and corruption, corporates should continue to review their adequate procedures and compliance policies regularly to ensure they remain effective and appropriate.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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