All you need to know about self reporting, Bribery Act & Proceeds of Crime - Written by Barry & Richard on Wednesday, February 19, 2014 6:31 - 0 Comments
Cooperation. Cooperation. Cooperation. The name of the game if you want a DPA from next week.
From Monday next week the Americanisation of corporate crime in England continues.
Businesses (but not individuals) will be able to enter into Deferred Prosecution Agreements (DPAs) with the UK taking a leaf out of the US book as it moves to plea bargains for corporates.
Historically plea bargains have been prohibited and frowned upon in the UK.
This judicial perspective was set against a backdrop of: if you can’t do the time then don’t do the crime.
On paper this looks good. But in practice the public interest in prosecuting corporates is often less black and white.
The use of Deferred Prosecution Agreements in the US took off after the Arthur Andersen collapse following its indictment (and subsequent conviction).
Later and less widely known the Andersen conviction was overturned on appeal. But it was too late. The firm was dead.
An indictment and conviction of a corporate has far reaching consequences. Licences can be lost, debarment can kick in and bank loan covenants can be broken.
These are just some of the likely adverse consequences. Businesses can collapse with the consequent loss of jobs for thousands of innocent employees.
On the other hand a DPA offers the possibility of probation – without conviction and the avoidance of a corporate catastrophe.
Cooperation will be king for companies looking to trial the UK’s new “Americanised” route to justice according to the new DPA Code of Practice published late last week.
Co-operation. Co-operation. Co-operation.
The Code contains a list of public interest factors the SFO will take into account when deciding whether a DPA would be appropriate or not.
In a move perhaps illustrative of the SFO’s desire to start playing with its shiny new toy, the “factors against prosecution” are detailed far more extensively than the “factors in favour of prosecution.”
The headline is that co-operation is essential if a company wishes to escape criminal sanctions. According to the Code, assisting the regulator through early self-reporting, taking remedial action, disclosing relevant documents and teeing up witnesses for interview are all steps which will stand a company in good stead for entering into a DPA.
That said what co-operation looks like in individual cases will no doubt differ. One thing is for sure, the process will require careful handling.
Botched internal investigations won’t do
A DPA will almost certainly be off the table where a company has adopted a cowboy approach to investigating criminal allegations.
If, before the regulator’s knock on the door, a company conducted an internal investigation in which relevant material could have been destroyed or there was a delay so that suspect employees were given a chance to fabricate their accounts, the company will face an uphill battle to avoid a full-scale prosecution.
The message for companies – the clock is ticking; tardiness in dealing with allegations will make it harder to do a deal.
As economic crime continues its steady rise up the government agenda and with big US-style fines on the way, DPAs offer an invaluable opportunity for corporates to have a say in their penalty, avoid criminal prosecution and benefit from a guilty-plea discount at the same time.
Sound familiar. The US has been doing this for years.
On the release of the new Code, The SFO director, David Green QC, said the most important attribute of the new DPA regime was “unequivocal cooperation from the corporate” but that prosecution remained the SFO’s tool of choice. David Green reiterated this to us when we met with him.
Given the lessons learnt from across the pond, companies should ensure they keep open the option of plea-bargains through co-operation, cooperation, co-operation.
Much has been said about the utility of Deferred Prosecution Agreements. Commentators and advisers will now be watching and waiting to see how when and how they are in fact used.
The proof of the pudding will be in the eating…
Creme brûlée anyone?