8 reasons why DPAs are a big deal for the SFO
21 Sep 2017 9:02 am by Mark Dunn
What are Deferred Prosecution Agreements (DPAs)?
DPAs were introduced in Schedule 17 of the Crime and Courts Act 2013. Under a DPA a prosecutor charges a company with a criminal offence but proceedings are automatically suspended. The company agrees to a number of conditions, such as paying a financial penalty, paying compensation and co-operating with future prosecutions of individuals. If the company does not honour the conditions, the prosecution may resume.
DPAs can be used for fraud, bribery and other economic crime. They apply to organisations, not individuals. A DPA could be appropriate where the public interest is not best served by mounting a prosecution. Entering into a DPA will be a transparent public event and the process will be supervised by a judge. (www.sfo.gov.uk)
Why are DPAs such a big deal for the SFO, what difference will they make?
DPAs provide the SFO with a viable alternative in certain circumstances to investigating and prosecuting economic crime. DPAs will be welcomed by the SFO given the agency's often limited resources available to pursue cases as seen by the recent HM Treasury request to approve additional funds to help the SFO's criminal investigation into alleged bribery by Rolls-Royce
- We've waited for the guidance on their use for a long time. Now that it's been released, any interesting changes from earlier drafts/what you were expecting? The DPA Code of Practice does not contain any surprises given the fact that the UK model mirrors so closely the DPA process already in place in the US and used so frequently in recent years by the DoJ and SEC for settling US Foreign Corrupt Practices Act cases.
- Where do you think the SFO will to try and use DPAs – what sort of scenarios, offending? I know there's a "when it's in the public interest" line, but what does that mean in practice? Given underlying drivers are to free up SFO resources and enable cases to be processed much faster, DPAs are likely to become a regular feature within the UK legal landscape particularly in relation to the Bribery Act 2010 that was enacted with much fanfare but has yet to see any significant enforcement.
- If you've got a top notch compliance program in place, are you more likely to be considered for a DPA? The DPA Code of Practice makes it clear that: "The existence of a proactive corporate compliance programme both at the time of offending and at the time of reporting" is considered one of a number of factors the prosecutor may take into account when deciding whether to enter into a DPA. However, regardless of these factors, an offer of a DPA remains squarely at the discretion of the prosecutor.
- US execs are used to the idea of deferred prosecutions; how's the new UK offer different/similar to what they might know from home? Given the mirroring of the US DPA system, UK DPAs adopt many characteristics familiar to companies used to the United States process. For example, the use of monitors where appropriate, financial penalties and a number of determining factors such as robust compliance & due diligence processes. However, the UK has not adopted the related US system of offering Non-Prosecution Agreements.
- How is it different to what's in place elsewhere in Europe? If successfully complied with, DPAs enable firms to avoid criminal prosecution and as a consequence help mitigate the impact of related risks such as debarment from EU public contracts
- What is the threat for companies? Alongside the obvious financial risk, a related threat is the potential reputational damage a company may suffer by agreeing a DPA. Initial hearings are in private but the court will give its declaration in an open final hearing. A company will not therefore be immune from reputational consequences arising from its conduct.
- When might we see the first DPA? The SFO has a number of cases pending and it would not be surprising to see the first DPA in 2014.