The future of deferred prosecution agreements (DPAs) as a weapon against corporate crime has come under scrutiny following the collapse of prosecutions of former executives at supermarket giant Tesco over allegations of overstating profits. A Crown court last week dismissed the Serious Fraud Office’s case against former director Carl Rogberg, ruling that there was no evidence on which the case could proceed. In December, the court dropped charges against two other directors.
The trials’ collapse allowed the lifting of reporting restrictions on a DPA that Tesco agreed with the SFO in 2017. The agreement includes a statement of facts naming the three former directors. It reveals that, in addition to a £129m fine, Tesco agreed to pay £3m towards the cost of the investigation.
Lawyers said the Tesco case might embolden businesses to take their chances in court rather than accept a DPA.
Barry Vitou, shareholder at US firm Greenberg Traurig, said: ‘Before considering a DPA a company must satisfy itself that there is actual corporate criminal liability in the first place. DPAs are designed to resolve criminal liability without a conviction. If there is no corporate criminal liability then there is no basis for a DPA.
‘The SFO needs to explain on what basis they can justify imposing a DPA on a corporation in circumstances where no one is prosecuted or, if someone is charged, a judge later finds that there is insufficient evidence and throws out the case. This must not happen again.’
Tesco said that since 2014 it has ‘fundamentally transformed’ the business: introducing a new model for buying and selling products; changing the leadership; improving accountability; and developing stronger supplier partnerships.