Key figures discussing Deferred Prosecution Agreements (DPAs) at the recent International Anti-Corruption Conference in London hosted by C5 included the Director of the Serious Fraud Office (SFO), David Green QC, and also Lord Justice Leveson.
The discussions follow the first DPA for the Section 7 "corporate" offence which was entered into with ICBC Standard Bank, and approved by Lord Justice Leveson, in December 2015. In that case, Standard Bank self-reported the matter to the SFO less than four weeks after identifying the criminal activity.
We summarise the position set out by the SFO's David Green QC below.
Deferred Prosecution Agreements
- The SFO has more DPAs in the pipeline for 2016.
- An underlying policy behind the introduction of DPAs is to avoid the "collateral damage" to parties that are innocent in the organisation's criminal activity, namely its employees and shareholders.
- There are questions over whether the current maximum penalty discount of one third constitutes a sufficient incentive for early self-reporting and co-operation in order to obtain a DPA. This is because it is effectively the same which is available for a guilty plea at trial. For example, the USA is currently piloting a 50 per cent discount programme.
Self-reporting
- Self-reporting to the SFO in an effort to obtain a DPA may of course result in law enforcement authorities in other countries investigating the organisation's activities that fall under their jurisdiction. The SFO cannot "smooth the way" for the organisations with those authorities. However, it will "do what it can in a sensible way."
- Co-operation is absolutely key to the chances of obtaining a DPA. The SFO needs to be able to convince the Court that a DPA is in the interests of justice. It can only do so with co-operation. It cannot do so if it has been "led a merry dance" by the organisation.
- The SFO is not particularly interested in the privileged legal advice obtained by the organisation. Instead, the SFO wants access to the facts. It wants access to witnesses and original witness accounts. It does not accept that privilege will automatically apply to such documents.
Corporate criminal liability
- The corporate offence model found in Section 7 of the Bribery Act and also in any potential new offence of failure to prevent economic crime is essential to ensuring that corporates that engage in criminal activity are properly punished.
- At present, the corporate "identification principle" of having to prove that the persons in the organisation engaging in criminal activity were its directing mind and will applies to all corporate criminal activity except for bribery.
- This, perversely, favours larger organisations over smaller ones. On the one hand, the statutory defence of "adequate procedures" requires executives to urge compliance. On the other hand, those same executives are incentivised to distance themselves from operational knowledge to ensure that the identification principle cannot be made out by the prosecution.
The Serious Fraud Office
- The SFO is properly resourced. The "blockbuster" model of funding does not provide the Chancellor of the Exchequer with a veto over any particular large investigation.
Approximately 50 per cent of the work being carried out by the SFO relates to anti-corruption. The anti-corruption issue is also expected to ascend the SFO’s agenda.
- The SFO operates under the "Roskill" model, where all disciplines sit in one place: investigation and prosecution. There is no evidence that a splitting of these disciplines would produce better results.
- The SFO's priorities are fraud and corruption. The NCA has a much wider range of priorities. If the SFO was to be subsumed into the NCA, the focus on fraud and corruption will be diluted.
Conclusions
From the above, it appears to us that the SFO is keen to consider DPAs in appropriate cases. However, early self-reporting and full co-operation by an organisation will be essential if the SFO is to seek approval of any DPA from the Courts.