DPAs must be transparent, Chancery Lane warns

Deferred prosecution agreements (DPAs) could improve the way economic crime committed by commercial organisations is dealt with, but the process must be transparent to retain public confidence, the Law Society has said.

Chancery Lane’s response to the Ministry of Justice consultation on the proposed new enforcement tool, argued that DPAs are an appropriate way to tackle complex economic crime given the complexity and cost of investigating and prosecuting cases.

Under a DPA, a prosecutor would lay criminal charges against a commercial organisation, but would not immediately proceed with those charges. Companies would agree to publicly admit wrongdoing, and meet conditions. Those conditions could include payment of financial penalties, undertaking internal reform, and submitting to regular review and monitoring. The process would be overseen by a judge and the threat of full prosecution would remain should the company fail to comply with the agreement.

The response argued that such agreements would provide commercial organisations with an incentive to self-report with a reasonable level of certainty as to the likely outcome.

DPAs would also lower the costs of investigation and prosecution, reduce the use of court resources and increase public confidence in the accountability of commercial organisations.

However, the Law Society warned that public confidence in the DPA process could be harmed if it is insufficiently transparent and seen as a way of letting individuals within commercial organisations ‘get away’ with criminal activity, or if DPAs are granted only to larger organisations, with smaller, ‘softer targets’ prosecuted.

The Law Society response, prepared with input from the Society’s criminal and company law committees and its money laundering taskforce, suggested that given the resources involved in monitoring compliance with a DPA, it may be appropriate to limit their use to cases of serious economic crime.

The City of London Law Society (CLLS) was more circumspect about the proposal in its response. It agreed that improvements are needed in the way economic crime is dealt with and said DPAs have a role to play in increasing the number of successful investigations. But it said they alone ‘will not provide the complete answer’, stating that more funding is needed to enable the Serious Fraud Office to ‘function appropriately’.

CLLS warned: ‘It is easy to foresee a danger that introducing DPAs for white collar and economic crime would certainly lead to perceptions that such crime is not treated as seriously as other crime, which may undermine public confidence in the justice system.’ It suggested a ‘careful balance’ had to be maintained.

In the coalition agreement the government made a commitment to tackle economic crime more effectively. Its proposals, set out in the consultation in May, seek to develop new tools for prosecutors to use alongside existing methods. The consultation ends on 9 August.