UK: Fraud Trials: Plea Negotiation- Plea Bargaining

Last Updated: 5 August 2008

Reproduced with kind permission of The Barrister ,Trinity Term Issue

Article by Monty Raphael, joint head of Fraud and Regulatory Department

Any reform, particularly one as drastic as introducing negotiated justice must, I believe, be accompanied by an assurance that it would not diminish the public's trust in the fair and evenhanded dispensation of criminal justice

The decision to put the Old Bailey's cases online reveals that until the mid-19th century judges and juries at that Court could sometimes get through three whole trials in a day. True, few, if any, accused were represented, but still, such efficiency must inspire those in Whitehall anxious to see a return to such judicial efficiency.

While the inconvenient intervention of representation by counsel, and the necessary complexities of modern fraud cases make this rate of progress a little ambitious, there can still be discerned in the Attorney General's recent consultation paper, a wish perhaps that this was not the case.

The plain fact is that full-blown fraud trials, with all their guarantees of due process, are no longer seen as affordable. No-one would argue against early dialogue between prosecution and defence, but only if both parties to such dialogue are equally matched in experience and expertise, and both know the strength of the Crown's case and, indeed, such weaknesses as are known only to the Crown. The preservation of the burden of proof, and the presumption of innocence both impose fundamental constraints on consensual or collaborative justice. That we are in danger of forgetting this truism is due to the failure of successive Governments to implement coherent policies for policing white collar crime. Indeed, this omission is true across the whole criminal calendar. Instead, we have had decades of Royal Commissions, Law Commissions, Working Groups, and One-Man Enquiries, all recommending piecemeal remedies, of which some have been adopted and others ignored, often for reasons of financial economy.

We have been left with a plethora of prosecution agencies, interpreting policies in their own individual ways while dealing with a problem, the increasing threat from large scale fraud, inefficiently and with horrendous losses to the Revenue and the legitimate economy. We have grafted on ideas from the inquisitorial systems of our European neighbours and borrowed others from civil jurisprudence, while all the while diminishing investigative resources and failing to send a clear signal to those contemplating the commission of these serious crimes. Whether one is caught, and if caught prosecuted at all, has become even more of a lottery than is any way inevitable in a free society governed by the rule of law.

Any reform, particularly one as drastic as introducing negotiated justice must, I believe, be accompanied by an assurance that it would not diminish the public's trust in the fair and even-handed dispensation of criminal justice. It must be part of a coherent policy which makes transparent why some white collar crime, even when discovered, is met with civil or administrative penalties, while others are not. None are victimless crimes, so why are some visited with naming and shaming, others by financial penalties, and the remainder by criminal sanctions. Why, even after the latest Government Fraud Review, would the reporting of fraud only be encouraged rather than be made mandatory. Why will only some of our 43 police forces be adequately resourced to investigate fraud.

Is it enough to concentrate on the comparatively small number of fraud cases that are brought before the Courts and then either put the blame for the acquittals of some on the ignorance or credulity of juries, or on the absence of a formal plea bargaining regime.

If the answer is that some reform is better than no reform, should we not be astute in assuring that any measures introduced can be seen to be fair rather than just efficient in terms of saving time and money. The Consultation Paper records the extraordinary statistic that in the USA 98% of all criminal cases are resolved by some form of negotiating plea. At the same time, the Chairman of the Fraud Review Working Group is quoted as saying that the proposed UK reform is but a "distant cousin" of the US system. If this is meant to reassure, it does not. It may be enough to echo the words of the Lord Justice of Appeal in a recent extradition case, when he commented unfavourably on negotiations with a prospective extraditee as follows: "We make no secret of the fact that we view with a degree of distaste the way in which the American authorities are alleged to have approached the plea bargain negotiations. Viewed from the perspective of an English Court, the notion that a prosecutor may seek to induce a plea of guilty on the basis that substantial benefits will be withdrawn if one is not forthcoming is an anathema".

Indeed Stephen Hockman QC is reported as conceding: "In America, defendants sometimes are coerced into pleading guilty because of the huge sentences that are available to Judges on a guilty verdict, which makes it too dangerous to contemplate a full trial". Any threat of the deprivation of liberty is huge, but particularly so when an innocent accused is terrified or coerced into pleading guilty with a promise, perhaps, of no custodial sentence. Only the most complacent would believe that our criminal justice system has been, or will become, so perfect that there will be no significant number of innocent persons who plead guilty for a variety of reasons, coercion being not the least of them.

Mr. Hockman goes on to say: "The proposals for England and Wales have the advantage that they do not require parliamentary legislation and can be introduced relatively easily under existing law". Far from applauding this shortcut, should we not be alarmed by yet another example of parliamentary debate being denied to a fundamental change in our criminal justice policy, particularly when the safeguards which the committee and the Attorney General accept are necessary may not, in reality, be put in place.

There is an acknowledgment in both the Committee's recommendations and the Consultation Paper that anyone entering upon a plea negotiation must receive legal advice. The question is whether this advice will be adequate. I would suggest that the basic requirements of such advice can be summarised as follows:-

Access to lawyers who can advise:

a. On the procedure to which the suspect/accused is already subject.

b. The nature and possible outcomes of plea negotiation.

c. The consequence of such outcomes:

  1. penal, including loss of liberty, loss of reputation, financial penalty, disqualification, compensation orders, confiscation orders, community penalties and costs

  2. civil liability – exposure to third party claims – the effect of a conviction by negotiated plea in any subsequent class action

  3. the loss of employment or employment prospects

  4. possible deportation or difficulties in obtaining a visa to enter certain countries

  5. the effect of the plea on investigations in another jurisdiction and the possible heightened exposure to an application for extradition to a third country

  6. debarrment from office or ability to bid for certain contracts (also a concern for corporations).

Ideally the corporate or individual would receive all the necessary advice from a one stop firm with the addition of counsel. Corporations may be able to do just that, because they have the means to instruct law firms with these skills if they so choose. Individuals, on the other hand, must rely on access funded by (a) themselves – if their assets are adequate and not the subject of restraint orders which cannot ordinarily be varied to provide for such expenditure, or (b) by insurance through Director and Officer policies which may or may not afford sufficient cover but will often be refused because the insured admits delinquency which is an excluded risk, (c) through the generosity and goodwill of a corporate employer, whose sentiment is very likely blunted by either itself being the victim of the fraud or where the corporation and officer/ employee are alleged accomplices will nonetheless be hesitant to assist lest such largesse be criticised by shareholders and/or the agency with which the corporation is co-operating. A salutary reminder of this problem is provided by an ongoing case in the United States involving the former partners of KPMG. In the U.S. –v- Jeffrey Stein the trial Judge dismissed tax fraud charges against a number of former partners of the accountancy practice because he found that they had been deprived of their constitutional rights as a result of the prosecution, so it was alleged, pressuring the firm to stop funding the accused ex partners if they, themselves, wanted to arrange a satisfactory outcome for the firm as a whole. This case is currently under appeal.

There is surely something of a paradox where corporations which are almost always well funded, and which are anyway both immortal and immune to imprisonment, should be best able financially to take care of themselves; whereas, loyal and long serving officers or employees can find themselves exposed to the vagaries and uncertainties of a criminal justice system made more oppressive by the prospect of enforced entry into plea negotiations without adequate professional assistance.

d. Funding may be provided by third party well-wishers. In practice these usually turn out to be few in number, and the suspect's previously dependable close friends who, if their emotions and wallets are still engaged, would prefer to provide for the suspect's dependents than enrich a bunch of lawyers.

e. The Public Purse. Little comfort may perhaps be derived from the Attorney General's assurance that legal aid will be available because, firstly, it may not be available to cover all the advice required, secondly, if it is, it is certainly not going to provide adequate remuneration sufficient to attract the sort of expertise and experience that is necessary to provide adequate support to a party to plea negotiations. Here again, one must recall the recent confiscation proceedings which collapsed because the legally aided accused could find no senior member of the bar who was willing to undertake the work at the rate offered by the public purse.

Readers of the Barrister will only be too aware that the number of law firms and members of the Bar continuing to offer publicly funded advice and representation in serious and complex fraud matters has significantly diminished, and is likely to diminish further as the full impact of the Carter Review becomes ever more apparent.

It is hypocritical to imply that the American system of plea bargaining is not an example to be followed, while introducing many of its features and exposing a suspect to many of the imperfections of their system. 98% pleas of guilty in a legal system, where the less well off (the majority) have to use a publicly funded service which, while not universally bad, is acknowledged to significantly fail to provide basic safeguards, and where the system is coercive in the extreme is not a relative to claim even as a distant cousin.

Being able to engage with the prosecution in white collar cases is a laudable reform, but only if it is not implemented as a cheap and inadequate bureaucratic convenience which provides few, if any, safeguards for all, save the unrestrained rich and well funded corporate client.

(The views expressed in this article are those of the author alone, and do not necessarily represent those of Peters & Peters, or the Fraud Advisory Panel).

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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