Author: Azizur Rahman
20 October 2015
3 min read
The UK’s first Deferred Prosecution Agreements (DPA’s) are set to be reached. Here, Aziz Rahman explains the need to be careful when considering entering into one.
The SFO has announced that its first DPA's are to be completed with a number of companies that have admitted corporate wrongdoing.
So it is an appropriate time to examine how to determine whether a DPA is the best approach for a company that suspects it is involved in wrongdoing. Under a DPA, a company must admit any criminal behaviour and accept certain conditions imposed by the Serious Fraud Office (SFO) in order for any criminal prosecution against it being deferred. These can include changing its working practices or personnel, paying a fine or introducing anti-corruption measures. If it continues to meet these conditions for an agreed period of time it will avoid prosecution – but if it doesn't, the prosecution will proceed.
The DPA can offer advantages to both those suspected of wrongdoing and the authorities. For a company, a DPA avoids the time-consuming, costly, disruptive and damaging impact of a prosecution and trial. For the SFO, a DPA can be a way of resolving illegal behaviour without the need to devote huge amounts of resources to an in-depth investigation and prosecution; which may not even produce a conviction.
But if a company believes or suspects it is implicated in wrongdoing, it would be unwise to automatically assume that gaining a DPA will be the get out of jail ticket. The SFO has stated that DPA's will not be used as "cosy deals". As the DPA's will be made in open court, they will be subject to scrutiny by judges; with only the most suitable candidates allowed to enter into one.
Prosecutors in England and Wales can use the DPA to encourage businesses to self-report wrongdoing in the belief they will escape the harshest punishments. But it would be wrong for companies who believe they have acted illegally to grab the DPA option without thinking it through.
It is not up to the company to decide whether it is granted a DPA. This is solely a decision made by the SFO. While the DPA can hold advantages for both sides, the SFO wants clear proof that a DPA is a more viable option than prosecution. It will need to be convinced of the company’s determination to put things right and will expect to see detailed plans of how this is going to be done.
SFO investigators will, at all times, weigh up the likelihood of a successful prosecution against the more definite outcome of a DPA. If the SFO is confident of a prosecution it is hard to believe that it will grant a DPA. This would, therefore, make self-reporting by a company hoping for a DPA particularly risky.
In making this decision, the SFO will consider the amount of corporate wrongdoing it believes has been committed and its degree of seriousness. The amount and quality of evidence it believes it can put before a judge and any trial's likely cost to it in terms of time, manpower and finances will all be factors in its decision to choose either prosecution or DPA.
With the SFO likely to take a forensic approach to each company's attempt to secure a DPA, it would be foolish of those under investigation not to take expert legal advice before making contact with the authorities.
Lawyers familiar with all aspects of business crime can assess the likelihood of the SFO pursuing (and obtaining) a prosecution as opposed to going down the DPA route. They can advise a company on how to carry out an internal investigation so that it can determine for itself the extent of any wrongdoing before self-reporting it.
Once such an investigation has been carried out, the legal team can also help the company devise and draft the content of its report to the SFO. The lawyers can offer informed advice on the timing and the extent of the report in order to maximise the opportunity to secure a DPA.
As we write this, three respected non-governmental organisations are calling on the SFO to make sure prosecution remains the main course of option when it comes to corporate wrongdoing. Transparency International, Corruption Watch and Global Witness are concerned that DPA’s may be routinely "rubber-stamped" by the courts and reached with companies who have not made a full and frank admission of wrongdoing or who have not committed themselves fully to righting the wrongs identified. Whether these organisations are listened to by the SFO we will never know. But the SFO will be keen to allay any such concerns about the effectiveness of DPA's and this will mean that it takes a very stringent approach to vetting those companies hoping to obtain one.
Such companies need to make sure they have been similarly rigorous in assessing their suitability for a DPA.
Aziz Rahman is Senior Partner at Rahman Ravelli and its founder. His ability to coordinate national, international and multi-agency defences has led to success in some of the most significant corporate crime cases of this century and top rankings in international legal guides. He is recognised worldwide as one of the most capable legal experts regarding top-level, high-value commercial and financial disputes.