Bribery Act & Proceeds of Crime - Written by Barry & Richard on Wednesday, August 1, 2012 15:17 - 3 Comments
With the greatest respect. We disagree with Mike.
Mike Koehler recently published an open letter to the UK Ministry of Justice on its DPA consultation. We like Mike. But as Howard Sklar would say: ”Reasonable people can disagree.”
When compared to the current UK system a DPA regime would, we believe, “support an existing culture of self-reporting of serious economic crimes.”
That is not to say that suddenly everyone will be beating a path to the doors of the SFO to shop themselves. But it will certainly be a better system than the one we’ve got.
Mike argues that DPA’s in the UK will lower the bar for enforcement agencies in terms of successful enforcement resolutions. In one sense that is what the MOJ hopes will be the case.
However, it is an over simplistic analysis.
Part of the reason for the SFO’s failures is that the SFO frequently has to fight its corner in court. Sometimes it loses.
In the US, until very recently, it was accepted wisdom that an FCPA investigation would result in a corporate settlement. The DOJ simply did not have to test its legal theories in court.
Statistically in the US corporates and their counsel often fold in the face of a DOJ investigation.
In the UK this is not so.
Is this because US lawyers are less tenacious than their UK counterparts? We’d like to think so…
However, over the last twelve months the DOJ has focussed on prosecution of individuals. The result. The DOJ has had its nose bloodied.
We agree that anecdotal evidence suggests a high percentage of corporate conduct that could implicate criminal laws is not reported to the enforcement agencies.
Mike says that “one factor driving [the lack of self reporting in the US] is that companies and its counsel have come to realize that the enforcement agency will not be diligent and complete in its application of law to facts and its consideration of mitigating facts because the enforcement agency will never have to prove its enforcement theory to anyone other than itself.”
We suspect that the reason is less cerebral.
All this though is a prelude to Mike’s real objection to DPA’s in the UK.
Mike argues that the U.S. principle of respondeat superior a business organization can face criminal liability based on the acts of any employee or agent to the extent the individual’s conduct drives settlement.
Mike states that criminal liability under U.K. law is very difficult to prove and “depends on establishing that the ‘directing mind and will’ of an organization was at fault.” As a result, Mike argues, U.S. adoption of DPAs was largely a function of general circumstances not present under U.K. law.
This ignores the Section 7 offence of failure to prevent bribery where there is no intent requirement or requirement to establish the directing mind and will.
Mike concludes “I pose the following questions the MoJ should consider during its consultation process. Why does a law with an adequate procedures defense require the third option of a deferred prosecution agreement (the first two options being prosecute vs. not prosecute)? If a corporate has adequate procedures, but an isolated act of bribery nevertheless occurs within its organization, the corporate presumably would not face prosecution under the Bribery Act. This seems like a just and reasonable result and there is no need for a third option in such a case. On the other hand, if a corporate does not have adequate procedures (thus demonstrating a lack of commitment to anti-bribery compliance) and an act of bribery occurs within its organization, it presumably would face prosecution under the Bribery Act. This seems like a just and reasonable result. Does a third option really need to be created for corporates who do not implement adequate procedures? I submit the answer is no and urge the MoJ to reject use of DPAs in the Bribery Act context.”
In theory this all sounds very nice. The trouble is that it ignores the joined up world we live in.
In a world where the US accounts for nearly two thirds of overseas anti-corruption enforcement it is inevitable that the UK enforcement efforts and the US enforcement efforts will collide.
Sadly, as it stands, the UK enforcement agencies do not have equality of arms when it comes to their enforcement toolkit. Put another way the DOJ can end run UK enforcement agencies because it does have the potential to enter into DPA’s.
This reason alone is justification enough for putting in place a system which delivers a similar result to the US system.