News & what's on - Written by on Sunday, October 16, 2011 15:36 - 0 Comments

Opinion: DPA’s – UK should take the best US ingredients add greater judicial scrutiny & deliver justice

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The UK government has not committed to any formal consultation but it is considering the potential for Deferred Prosecution Agreements to tackle economic crime.

In September at the 29th Cambridge International Symposium on Economic Crime Dominic Grieve QC MP, the UK Attorney General, spoke about the British Government’s commitment to tackling economic crime and in particular the potential for new tools in the fight.  He said:

“Tackling economic crime also requires consideration of how the tools available to prosecutors might be further enhanced…The Government has reached no decided view on the merits of introducing deferred prosecution agreements, but the Solicitor General and I are currently engaging with the Ministry of Justice and others to explore the issues….

….In the UK context, detailed consideration would naturally need to be given as to the benefits and drawbacks of introducing DPAs as an additional enforcement tool in the prosecutorial armoury of the future. However, this is certainly an issue that merits closer consideration. And since in many cases UK prosecutors will be working with their counterparts in the United States…we need to ensure that we have arrangements in place that can cater for trans-jurisdictional matters, the effective gathering of evidence from abroad, and the issues of forum-shopping and double jeopardy. However, if the UK can learn from the US experience and avoid some of the pitfalls the Americans have encountered then deferred prosecution agreements may offer a new way for the UK to deal with corporate crime in appropriate cases. This is all very much work in progress. A crucial question for any comparable UK process would be the degree of judicial oversight and the mechanism for achieving that.

The Solicitor General, Edward Garnier QC MP, speaking more recently to the UK’s Law Society Gazette said:

“By the time we are ready to prosecute in this jurisdiction, those businesses which have an international presence, particularly in the US, have often reached settlements with overseas authorities which shut us out from taking action here.

This cannot be right, and it is unfair to those in the UK who may have been adversely affected by these crimes…

…Prosecution can have a destabilising effect on a company. It is sometimes a blunt response. It often also causes collateral damage: companies are not people, but the effect of a prosecution can be felt by employees, pensioners and shareholders who have played no part in the crime as much as by the directors. Arthur Andersen’s collapse in 2002 demonstrated that all too vividly.

Of course there will be circumstances where the criminal conduct is so serious that only a full investigation and prosecution is the appropriate response. But if a company is prepared to face up to its wrong-doing and accept punishment for it in a way that does not require a full-scale investigation and prosecution, there is surely merit in considering how to achieve justice in another way.

The introduction of deferred prosecution agreements (DPAs), similar to those in the US, would provide a more effective approach to dealing with corporate crime in some cases…

…We are clear that as we open up a dialogue about DPAs here, we will do so fully informed of the advantages and disadvantages of the American system. We will ask the judiciary to ensure that any new arrangements will work in the interests of justice. DPAs here will be part of the criminal justice system and will be policed and controlled by the judiciary.

We will also need to consider carefully the balance between the need of companies to be able to discuss their options confidentially with prosecutors, and the need for justice to be seen to be done.

Parties must have space and time to negotiate but, at the same time, there can be no cosy deals behind closed doors.”

In a remark which suggests that the present system will be changing the Solicitor General said:

We are still at an early stage; there is much to discuss and there will be many differing views. And if there is a consensus in favour, a regime for DPAs will still require legislation to be passed in a crowded parliamentary schedule against competing priorities and pressures on parliamentary time. This will not happen by Christmas, but if we get it right it will be worth the work. Change is coming; let us ensure we achieve the right sort of change.

Opinion

We strongly support the right sort of change.

Under the present UK system it really is a case of one strike and you’re out.  A conviction for bribing carries with it mandatory debarment.  There is no debarment time limit in the legislation.

A death sentence for some businesses.

This is disproportionate and unfair.  It makes no sense to penalise innocent employees and drive companies out of business.

The present system discourages self reporting, encourages forum shopping and is a blunt instrument.

But, and there is a but – we should take care not to embrace every element of the US system.

The DOJ has taken an expansive view over the application of the FCPA in a vacuum of judicial interpretation.  The fact that over 30 years the FCPA has only produced two contested corporate cases speaks for itself.

We should take the best of the US DPA ingredients and add our own.

There should be greater transparency on penalties and sanctions with greater judicial oversight early to ensure certainty and, importantly, fairness.


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