A DPA is an agreement between a prosecutor and an organisation (under the supervision of a judge) to allow the prosecution to be suspended for a defined period provided the organisation meets certain specified conditions. These can be used certain offences such as fraud, bribery and other economic crime. They apply to organisations only and not individuals.
DPA’s were introduced on 24 February 2014, under the provisions of Schedule 17 of the Crime and Courts Act 2013. They are available to the Crown Prosecution Service and the Serious Fraud Office. A Code of Practice for Prosecutors was published jointly by the SFO and CPS on 14 February 2014 after a public consultation.
The key features of DPAs are:
- They enable a corporate body to make full reparation for criminal behaviour without the damage that a conviction can have on a company and its people.
- They are concluded under the supervision of a judge, who must be convinced that the DPA is ‘in the interests of justice’ and that the terms are ‘fair, reasonable and proportionate’
- They avoid lengthy and costly trials
- They are public and fully transparent
A company would only be invited to enter DPA negotiations after full and open dialogue and cooperation with the Serious Fraud Office. It is a matter for the SFO to decide the extent of the criminality.
If the negotiations go ahead, the company agrees to a number of terms, such as:-
- paying a financial penalty
- paying compensation
- co-operating with future prosecutions of individuals
If the company does not honour the conditions, the prosecution may resume.
In reality there have only been 3 deferred prosecutions since 2014. Standard Bank in 2015, XYC in 2016 and most recently Rolls Royce in 2017 where after a four year investigation, the parties entered into a Deferred Prosecution Agreement (DPA) which was approved by Sir Brian Leveson, President of the Queen’s Bench Division on 17 January 2017. The DPA enabled Rolls-Royce to account to a UK court for criminal conduct spanning three decades, in seven jurisdictions and involving three business sectors. Payments were made of £497,252,645 (comprising disgorgement of profits of £258,170,000 and a financial penalty of £239,082,645) plus interest. Costs to Rolls-Royce were approximately c£13m. The investigation into the conduct of individuals continues.
Whilst this new legislation may be of concern to companies, given that it seems somewhat easier for the prosecution to attribute blame to a companies actions/behaviour without proper investigation, it does in fact, with the right advice mean an opportunity for ‘damage limitation’ and effectively allow for companies to know precisely what the requirements, obligations or more importantly financial penalties are in advance rather than take the risk of prosecution and the uncertainty of the what the sentence of the court will be.
Our Commercial and Business Crime Department can offer companies and individuals in relation to all manner of financial crime investigations. Should you need advice then please contact a member of the team.
Eric Cowley, Burton Copeland