Longer sentences are needed for fraud, and more resources devoted to fighting it, if plea bargaining is to work in the UK, argues Andrew Durant


Plea bargaining is back in the limelight following the recent deal between the 'NatWest Three' and the US authorities. The three former NatWest executives, who were extradited to the US to face charges over a deal exposed by the collapse of Enron, have put their hands up to one charge in return for the dropping of others.



They have also agreed to repay $7.35 million. Despite having claimed their innocence, many believe the thought of a lengthy jail sentence in the US convinced them to accept an offer.



Much has been made of the bullying nature of plea bargaining. Despite this, plea bargaining is set to become a reality in the UK. The Attorney General produced his response to the Fraud Review, entitled 'Fighting Fraud Together', on 15 March 2007. One of the recommendations was to explore the use of plea bargaining. This appears to have the overwhelming support of the legal profession, with more than 70% of respondents agreeing with proposals to introduce plea bargaining in UK fraud trials.



In the US, despite criticism of plea bargaining, more than nine out of ten criminal convictions come from negotiated pleas. However, I am not sure the introduction of such a system in the UK will have the desired effect. The US system depends on a massive stick to go alongside the carrot. Heavy sentences for fraud are now common. Jeff Skilling of Enron and Bernie Ebbers of WorldCom were sentenced to 24 and 25 years respectively for their involvement. John Regas, the founder of Adelphia Communications was sentenced to 15 years in prison, while his son, Timothy, the company's former chief financial officer, received 20 years.



Compare this with the UK. Recent high-profile cases such as Joyti de-Laury (of Goldman Sachs fame), Michael Bright (Independent Insurance) and Carl Cushnie (Versailles Group) led to moderately cushy sentences. Joyti de-Laury received a seven-year sentence from a judge who described her as 'duplicitous, deceitful and thoroughly dishonest'. Michael Bright, founder and former chief executive of Independent Insurance, was also sentenced to seven years for a fraud that resulted in the downfall of the company, the loss of 1,000 jobs and a cost to the Financial Services Authority of £357 million in compensation.



After time spent in open prisons and time off for good behaviour, these sentences look even cushier. No wonder the NatWest Three wanted the Serious Fraud Office to commence an investigation rather than be extradited to the US to face charges.



The stick in the UK is clearly not big enough. For plea bargaining to work in the UK, the authorities here are going to need the ability to hand out much longer sentences. Something between 15 and 20 years will certainly make fraudsters think twice. Meanwhile, fraudsters will also need to believe there is a higher chance of investigation and successful prosecution, which means that more resources need to be dedicated to the fight against fraud. Fraud needs to move up the list of police priorities. At the moment it is much less risk and potentially more profitable to wield the 'pencil rather than the pistol'.



This brings us to the other element of the stick. There needs to be more focus on restitution rather than just retribution. Fraudsters need to be hit hard in their pocket to pay compensation to their victims. Plea bargaining should be considered in terms of a reduced sentence only if there is an admission of guilt and an appropriate offer to pay back the proceeds of crime.



If the fraudster is able to get a light sentence without any payment, crime certainly will pay.



Andrew Durant is managing director of Navigant Consulting's European disputes and investigations practice