The Serious Fraud Office (SFO) has set out its vision of the future for Deferred Prosecution Agreements (DPAs) in the UK. Ben Morgan, Joint Head of Bribery and Corruption at the SFO, told a meeting of corporations and financial institutions that DPAs have become the 'new normal' for companies that self-report evidence of bribery and corruption and cooperate with the subsequent investigation.
In his speech, Mr Morgan said that DPAs will become "increasingly common" and that "for whose that behave responsibly, this is the new normal". He also revealed that the SFO has a "steady flow of engagement from companies" wishing to self-report evidence of corruption that they have uncovered. He cited the UK's latest DPA with Rolls-Royce in January, which was the UK's third DPA. Rolls-Royce agreed to pay more than £497 million to settle accusations of bribery and corruption in China, Russia, India, Nigeria, Indonesia and Malaysia. The settlement includes £239 million as financial penalty and £258 million as disgorgement of profits, in addition to paying the SFO's costs of £13 million. This penalty dwarfs the UK's largest previous DPA settlement of $33 million paid by Standard Bank in November 2015.
There is a 'high bar' for the level of cooperation a company must give the SFO before it can enter into a DPA. Mr Morgan said Rolls-Royce qualified for a DPA because they cooperated fully with the SFO's investigation. "There is little more they could have done to put right what had happened," he said. As well as providing the regulator with unfiltered access to their records, they also agreed to improve their compliance procedures.
Mr Morgan reiterated that companies who choose not to cooperate on investigations into bribery and corruption risk being exposed to significant financial and legal penalties. He said: 'If the benefits of cooperating and receiving up to 50% discounts on penalty are to be understood, then it is only right that those who do not cooperate receive the most punitive sanction available under the Sentencing Council's Guidelines if they are convicted after trial.'
Mr Morgan said that another advantage of DPAs is that they allow cases to be resolved more quickly. This advantages the SFO because it frees up investigators who can focus their attention on other cases. It also benefits companies, who will experience less interruption to their business and he said of Rolls-Royce: 'This case is over far sooner than it otherwise would have been.' As a contrast to this, he mentions that Alstom Group has chosen to challenge the SFO's allegations of corruption against them, and that they will begin the first of a series of trials, after a six-year investigation, later this year. Being under investigation can cost a company time and money in legal expenses and interruption to business continuity, as well as the reputational damage of ongoing media coverage of the allegations.
Mr Morgan said there is "closer and better" international cooperation between enforcement agencies in different countries. This means regulators are likely to have access to better information and evidence, which makes it easier to prosecute offenders. He said this means that "choreographed resolutions are possible", so that a company which is being investigated by regulators in different countries can reach a simultaneous agreement with all of them. For example, Rolls-Royce had a coordinated agreement with agencies in the UK, the US, and Brazil.
There are signs that DPAs are spreading to other markets. In November 2016, France adopted new anti-corruption legislation which allows companies to enter into negotiated settlements. It is hoped that this will improve France's record on prosecuting bribery cases. Last year, Australia launched a public consultation paper on whether to introduce DPAs, and 14 of 16 responses from stakeholders came back in favour. Pressure on Australia to introduce DPAs is increasing: after the country's disappointing showing in the latest Global Corruption Index, Professor A.J. Brown of Transparency International suggested that introducing DPAs could reduce foreign bribery and corruption.