Deferred Prosecution Agreements Coming Next Month for U.K.’s Serious Fraud Office
January 14, 2022 1:03 pm

By Jonathan Russell

LONDON - Nearly three years after the Bribery Act was introduced into law, what should be the workhorse of the U.K. fight against corruption remains stubbornly underemployed. So far the Serious Fraud Office has brought one case, charging a handful of individuals relating to an alleged investment scam in the biofuels market. Two other cases involving private individuals have gone to court. Not one company has felt the force of the new law.

Jonathan Russell

One of the biggest sticks in international anti-corruption legislation has failed to move what is proving to be a very stubborn beast any further down the road.

Hopefully that could be about to change. In February, pursuant to the U.K. Crime and Courts Act of 2013, the SFO will be given the carrot of Deferred Prosecution Agreements to add to the stick of the Bribery Act. The change in the law, based squarely on the U.S. model, will allow prosecutors to strike a deal with companies allowing them avoid prosecution in return for undertaking a package of remediation measures. This would normally include paying a fine, restructuring of the company’s corporate governance systems and agreeing to some kind of monitoring regime going forward.

The benefit for both parties would be in introducing an element of control into the judicial system. The benefit for the courts would be in seeing perpetrators brought to justice, even if it is arguably a “lite” form of justice. Another key consideration for the corporate is that by avoiding prosecution they should not suffer automatic debarment from tendering for public sector contracts.

Set these benefits alongside the huge savings in court time and the ability of the SFO to more effectively manage its growing case list (80 and counting) and the argument for the use of DPAs should be overwhelming.

Unfortunately things are rarely so simple.

Significant questions remain to be answered about how DPAs will be implemented. The most significant of these is the uncomfortable fact that DPAs will only be available for corporates, not for individuals.

The problem here is that any agreement undertaken by a corporate will almost inevitably incriminate one or more individuals. Companies do not decide to pay bribes, people do. So unless the company wants to sacrifice the individuals in questions it will have a large and very uncomfortable conflict to deal with.

The second issue is in managing how the judiciary deal with DPAs. Judges in England and Wales do not take kindly to seeing justice meted out in any other form than through their courts. Consultation with the judiciary prior to any settlement being agreed is intended to satisfy the judges’ concerns. However there is no guarantee of this.

The third problem flows from the structure referred to above. For the system to work well there must be a strong element of predictability, or reliability, of outcome. If a company and the SFO manage to thrash out a settlement, what they do not need is for the courts to tear it up. However under the guidance produced by government for the management of DPAs there is no guarantee that a deal taken to the court will be ratified by the judge. He or she could decide the matter is only suitable to be dealt with by a full jury trial.

Somehow the three parties involved with DPAs, the prosecutor, the accused and the court, need to build a platform of trust that can be used to support future deals. Without that the only thing that will be deferred under DPAs will be the administration of justice.

About Alaco Limited and Jonathan Russell

Alaco Limited is a London-based business intelligence and corporate investigations firm. Jonathan Russell joined Alaco in 2013 after a 14-year career in journalism, the last six of which he worked for The Daily and Sunday Telegraph. As a City of London reporter he covered fraud, white collar crime, the work of the Serious Fraud Office and City regulators. He has also written about property, transport, pharmaceuticals and support services. He has lived in Brazil and France and speaks fluent Portuguese and French. He can be reached at Jrussell@Alaco.com

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About Alaco Limited

U.K. DPAs: Available next month for the Serious Fraud Office. Now comes the hard part of implementing them in practice.

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