Deferred Prosecution Agreements – A New Option for Commercial Organisations
04 April 2014
Practice Area: Commercial Law
The Bribery Act 2010 (the “2010 Act”) introduced the section 7 offence of the failure of a commercial organisation to prevent bribery, leaving commercial organisations open to potentially long and expensive court battles as a result of the actions of those associated with them. However, on 24th February 2014, Deferred Prosecution Agreements (“DPAs”) came into force in England and Wales under the Crime and Courts Act 2013 (the “2013 Act”), which should offer some comfort to those organisations who may face prosecution under the 2010 Act. At present, DPAs are available only in England and Wales. However, at the outset of discussions around DPAs, the Ministry of Justice for England and Wales stated its intention to hold talks with the Northern Ireland administration to discuss the implementation of DPAs in Northern Ireland. While it seems that no formal steps have yet been taken to introduce DPAs to Northern Ireland, we are hopeful that these may be available in the future and so provide options for commercial organisations faced with charges under the 2010 Act in Northern Ireland.
A DPA is an agreement between the prosecutor and corporates, partnerships or unincorporated associations (but not individuals), in which the accused agrees to comply with certain conditions rather than being prosecuted for one of the specified offences, one of which is bribery. DPAs are regularly used in the US to combat corruption cases; however the concept is new in the UK.
Under the new legislation, if the prosecutor suspects a corporate entity has committed one of the offences specified in Schedule 17 of the 2013 Act, they have the option of offering the corporate entity the opportunity to enter into a DPA. If the corporate entity accepts and court approval is received, proceedings will be instituted but automatically suspended until the expiry date of the DPA. The court shall only approve the DPA if it finds it to be in the interests of justice, and that the terms of the DPA are fair, reasonable and proportionate.
The DPA itself shall include a statement of facts relating to the alleged offence and an expiry date. It shall also set out the terms of the DPA, which the accused must comply with for the DPA to remain in force. The 2013 Act explains that these may include the following:
- payment of a financial penalty to the prosecutor;
- payment of compensation to the victims;
- donation to a charity or other third party;
- disgorgement of any profits made from the alleged offence;
- implementation of a compliance programme, or change to the current compliance programme;
- co-operation in any investigation of the alleged offence; and
- payment of the prosecutor’s reasonable costs in relation to the DPA or the alleged offence.
However, this is not an exhaustive list.
While proceedings are suspended, the accused may not be prosecuted for the alleged offence. On expiry of the term, the prosecutor shall notify the court that it does not want proceedings to continue, and fresh proceedings cannot be instituted for the same offence.
While this provides an organisation with protection from prosecution, those entering into DPAs should be aware that this protection can be lost. A DPA can be revoked if it is shown that inaccurate, misleading or incomplete information was provided when the DPA was being negotiated, or if the organisation fails to comply with the terms of the DPA. Following expiry of the DPA, fresh proceedings may be instituted for the same offence if inaccurate, misleading or incomplete information was provided during the course of the negotiations of the DPA and the accused was aware or ought to have been aware of this.
DPAs should hopefully offer some comfort by giving an alternative to a lengthy and expensive prosecution. There is no formal conviction with a DPA, and so it may reduce the risk for a corporate of debarment from public contracts. A DPA can also offer more certainty for an organisation. However, commercial organisations should keep in mind that the risk is not entirely gone, and failure to comply with the conditions imposed under a DPA may result in the original criminal proceedings being resumed.