News & what's on - Written by on Wednesday, April 25, 2012 0:56 - 0 Comments

Opinion – enforcement principles will be key as criminalisation of corporate law continues

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“We are developing proposals for deferred prosecution agreements to tackle corporate crime more effectively. The Government intends to publicly consult on these proposals this summer.” [Ministry of Justice official]

“…later in the current Parliament, I [will] introduce deferred prosecution agreements to the criminal justice armoury. Such agreements will deal with penalty payments, but also, where appropriate, with the payment of compensation, and the payments will be made as a result of court orders.” [Edward Garnier MP QC]

The Bribery Act was a game changer in the context of corporate liability for economic crime. The UK government is now adding to the armory of investigators and prosecutors with the addition of Deferred Prosecution Agreements.

We are in favour of the introduction of DPA’s for various reasons which have been well aired on this website and elsewhere before.

In summary a DPA regime could provide a better outcome for corporations and their stakeholders, rather than the corporate death sentence which can result from a bribery conviction.

In putting in place a DPA regime there is an opportunity to create a system which is not just as good, but better, than the US system.

Enforcement principles are key

Corporates crave certainty.

The Ministry of Justice guidance on Adequate Procedures is to be applauded, likewise, the SFO’s recent strategy of spelling out its enforcement approach either in guidance or public pronouncements.

Both approaches have received plaudits from US commentators and UK arguably has done a better job than the US on these fronts.

In the US Deferred Prosecution Agreements are public documents and incorporate details of the penalty and the basis for calculation as well as the relevant conduct and the compliance program mandated going forward, the so-called ‘probation’.

This is important and should be mirrored in the UK DPA arrangements.

Broadly, the US does not publish details of circumstances where it is decided not to take enforcement action. The principle reason cited for this is a desire not to adversely impact a corporation which is not prosecuted.  In the UK this could be dealt with through anonymity and the describing facts in a way which do not ‘out’ the corporate.

While corporates crave certainty they also understand they cannot achieve 100% certainty of outcome in the real world.  There are too many moving parts.

However, the UK should augment the guidance and various statements already in existence. Publishing a clear set of principles from which penalties for violations can be worked out followed by demonstrable (ie published) consistency in their application (whether by DPA or otherwise) will provide sufficient certainty.

Much has been said about the Bribery Act, the likely outcome following violations and the benefits of self reporting.

All of this must be translated into reality for any of it to have any force.

Actions speak louder than words.

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