Green light for deferred prosecution agreements
The government today announced plans to legislate to create US-style deferred prosecution agreements (DPAs) for corporate crime. Publishing a government response to a Ministry of Justice consultation held last summer the justice minister, Damian Green (pictured), said DPAs 'will give prosecutors an effective new tool to tackle what has become an increasingly complex issue.
'It will ensure that more unacceptable corporate behaviour is dealt with including through substantial penalties, proper reparation to victims, and measures to prevent future wrongdoing.'
DPAs act as a form of plea bargain, allowing a company to escape prosecution if it admits wrongdoing, takes corrective action and pays a penalty. The idea is to encourage self-reporting of white-collar crime, and to ensure fines are paid in the UK rather than overseas. The MoJ said the process will be scrutinised by an independent judge and the threat of prosecution will remain hanging over an organisation should it fail to comply fully with the agreement.
In the US, deferred prosecutions raise about $2.5bn a year in penalties.
Barry Vitou, partner at international firm Pinsent Masons welcomed the announcement, saying that DPAs offer a better way to tackle corporate crime than the present choice of prosecution or no prosecution. The proposal to involve judges at an early stage would be 'an improvement on the US process,' Vitou said.
Critics of DPAs have raised concerns about transparency and their tendency to undercut the role of the judiciary. Today's announcement, which is subject to a further public consultation, said that the law would require final agreement to be made in open court and published so that the wrongdoing and sanctions for it are 'entirely transparent'.
Another worry, raised by the City of London Law Society in its response to the consultation is creating a public perception that white collar crime is not treated as seriously as other crime, 'which may undermine public confidence in the justice system'.
However Oliver Heald, the solicitor general, said: ‘I am confident that DPAs will be an invaluable tool for the Serious Fraud Office and the Crown Prosecution Service as they work to combat economic crime. In cases where a company accepts wrongdoing, and is committed to put things right, a DPA will mean that it must comply with stringent conditions to compensate and ensure there are no repeat incidents, whilst avoiding a lengthy and expensive prosecution with the prolonged uncertainty it brings for the victims, blameless employees and others dependent on the fortunes of the company.
‘There will always be cases where the public interest requires a full criminal prosecution and DPAs will allow prosecutors to focus more of their resources on these cases.’
Comments
This is a terrible idea
This is a terrible idea that in the US has led to a belief among banks and corporates that executives will not be prosecuted, and certainly never see any jail time.
The fines paid come out of the company's accounts, i.e. from shareholders' and investors' money, not the manager's own money.
This is a huge moral hazard that replaces cash fines with the need to be personally responsible.
Also, if one considers the very weak approach the FSA and other bodies have taken in terms of fining corporate wrong-doing, then this perhaps shows what will happen with DPAs.
And finally, as mentioned above, this removes the necessary process of court trials and replaces them with closed door haggling sessions between commercial lawyers and the prosecutors about what the fine should be. This is a terrible erosion of justice. Please stop this now before it gets any further.
This is a good idea
I entirely sympathise with Magnum's comments, but this proposal will achieve more justice than the existing system where the cash-poor (and arguably talent-poor) prosecuting authorities hesitate to bring proceedings against wealthy corporate defendants for fear that the financial costs of bringing the prosecution will outweigh the public interest involved in securing a conviction. When proceedings are launched too often they fail catastrophically at enormous public cost.
This proposal conveniently coincides with the removal of the right of a successfully acquitted corporate defendant from receiving its own defence costs from the public purse (removed courtesy of the Legal Aid Sentencing & Punishment of Offenders Act 2012) which has historically drained millions from the legal aid budget intended for the poorest members of society.Now a corporate defendant will face huge legal costs even if found not guilty.
We therefore face the prospect of both prosecutors and defendants being too scared of the costs of litigation to want to take a matter to trial. This is a perfect scenario for DPAs to intervene to provide a cost-effective mechanism for obtaining a form of justice (financial punishment, reparation and rehabilitation) without the crippling cost to the tax-payer of litigation in the senior criminal courts.