Deferred prosecution agreements (DPAs) were introduced by the UK in early 2014 and allowed the Serious Fraud Office (SFO) to reach accommodations with companies where historically there would have been court action over fraud, money laundering, bribery and other forms of corruption.
The guidelines, which were introduced by the Director of Public Prosecutions, represented the biggest change to the Bribery Act since it became legislation in 2010. It is thought that the guidelines on DPAs will ultimately have a profound effect on the way financial crime involving companies and other organisations are investigated and ultimately prosecuted.
DPAs allow companies to reach settlements with prosecutors over allegations of criminal behaviour without having to go to court and crucially, without formally having to admit guilt. Companies cannot choose to ask for a DPA – they have to be formally invited and then to agree to a variety of terms and conditions which are laid down by the prosecutor. Once these terms and conditions have been met, the prosecutor may decide to suspend a court action, however should the company fail to adhere to the conditions, it may resume prosecution.
Not a get out of jail free card
However attractive a DPA might sound, they should not be seen as an easy option. They require dedicated and continuous cooperation if they are to work, otherwise the company will land right back in the middle of prosecution proceedings. As Ben Morgan of the SFO told a conference earlier this year, his organisation expects not simply "the impression of cooperation" but honest and proactive cooperative action.
While a judge must ultimately decide whether a DPA should be finalised, the SFO has to recommend one for it to be considered, and as Mr Morgan added: "I certainly won't be inviting any corporate into the process who I do not honestly believe is being fully frank with us."
What does good co-operation with the SFO involve?
The SFO expects companies to be proactive when seeking to avoid court action. Rather than waiting until investigators come knocking, companies need to contact the SFO as soon as they know that something illegal taken place within the organisation. Waiting for the SFO to find out itself is not enough.
Secondly, the SFO expects the company to provide exhaustive information on what has taken place, including documented first witness accounts from within the organisation. Those witnesses must be willing to cooperate with the SFO themselves by agreeing to appear for interview if necessary.
Company directors and staff are expected to behave respectfully and simply when a DPA is under consideration, which means no evasive statements, no jargon and no delays when asked for responses and statements. The SFO also expects properly documented evidence trails to be maintained by the organisation concerned and that these are handed over at the start of an investigation. Where data is made known to the SFO but not handed over, the organisation must make it clear where that data is held, what steps have been taken to ensure its security and how quickly it can be made available if required.
Practical guidance for managing bribery & corruption risk in financial services
LexisNexis is holding a webinar on November 18th and 26th that will focus on providing practical guidance for managing bribery and corruption risk in the financial sector. The webinar will help companies better understand the continuing expansion of anti-bribery and corruption enforcement, how they can ensure that they remain compliant and will describe regulators' expectations in terms of compliance and cooperation. To find out more and register, click the "Register now" button below.
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