Bribery Act & Proceeds of Crime - Written by on Thursday, December 8, 2011 5:38 - 0 Comments

Why individuals must not be left out on a limb in Deferred Prosecution Agreement proposals

Print Friendly

Much has been said about Deferred Prosecution Agreements and their importance to provide certainty to corporates.

In this piece, friends of, Ross Dixon and Alan Ward highlight the importance of dealing fairly with individuals as part of the Deferred Prosecution Agreement process.

By Ross Dixon and Alan Ward of Hickman & Rose niche city crime practice in Central London

Deferred prosecution agreements may mean that a company avoids prosecution but will prosecutors still try to secure high-profile “scalps”?

It is clear that the Serious Fraud Office is eager to see American-style ageements to defer prosecution of suspects in the UK. The law officers are informally consulting on the issue and they appear to have the preliminary backing of the the Solicitor-General, Edward Garnier, QC.

These agreements are a voluntary alternative to immediate prosecution in which the prosecutor grants an amnesty in exchange for the potential defendant taking steps to put things right.

And the initial response from lawyers is generally positive. But what do such deals – known as deferred prosecution agreements (DPA) – mean for the individual?

They may be viewed as a potential win-win for both the prosecutor and the corporate entity but they could leave directors, senior managers and other employees of a company, who have co-operated with prosecutors to facilitate them, facing individual criminal liability.

In other words, what is good for the company and the prosecuting agency may be to the detriment of the individual employee. In the US, one of the fundamental conditions for a company wishing to negotiate a DPA is full co-operation with the prosecutor. In practice this means far-reaching assistance with any ancillary or subsequent enforcement action that the prosecutor seeks to bring, including prosecutions of individual employees of the company.

It is at this point that the interests of the company and those of senior employees who may be implicated can significantly diverge.

As a corporate entity co-operates in an effort to secure a DPA, there will be an expectation of employees to participate and provide full and frank evidence to investigators. They will be expected to own up to mistakes and admit bad practice in which they have been involved to assist the company in securing the agreement.

And while that agreement will mean that the company avoids prosecution, prosecutors may still be under pressure to secure some high-profile “scalps” by way of convictions.

Notwithstanding the DPA, it will presumably still be possible to prosecute those same employees who have made a clean breast of past behaviour at the investigation stage.

Individual employees are thus placed in an invidious position as the company tries to negotiate a DPA: an employee’s admissions of wrongdoing may assist the company in reaching agreement with the prosecutor but also provide all the evidence the prosecutor needs to prosecute them individually.

Does this matter if someone has acted outside the law? Very often, individuals will have acted in breach of the criminal law only on the instructions of a superior or in a manner that was simply in keeping with a pervasive corporate culture.
So the company is spared a criminal trial, conviction and all that comes with it, but directors, managers and frontline staff may be all the more liable to prosecution as a consequence.

Some loyal employees may accept that such sacrifice is necessary for the company good. But many more will question the fairness of a prosecutorial system that affords individuals a different standard and measure of justice to large corporations.
In many cases it will be wholly appropriate for a prosecutor to pursue convictions against high-ranking individuals within an entity when they appear to be the directing minds that led that company into criminality.

But prosecutors, and overseeing judges, must be alert to the danger of injustice to individuals not receiving the benefit of the DPA that has been entered into with a view to achieving the most agreeable and convenient settlement for the company.
So DPAs would offer clear advantages for both prosecutors and self-reporting companies. But, with the focus of the debate so far on the potential benefit for corporates and prosecuting agencies there is a risk that the cost of such agreements is unfairly borne by individual employees.

If one of the aims is ensure that bad practice and misconduct are not repeated, then the individual should be encouraged to be open. To achieve this end, and to avoid perceived injustice, deferred prosecution or a similar measure in return for full and frank co-operation, should also be available to individual employees within any DPA framework.

Share Button

Comments are closed.

Brought to you by...

Barry Vitou &
Richard Kovalevsky Q.C.

The views expressed on this website are those of Barry Vitou & Richard Kovalevsky QC and/or our guest authors from time to time. Please see our terms of use