Deferred prosecution agreement legislation to be introduced, Solicitor General says

Solicitor General Edward Garnier told Parliament that a new framework for 'deferred prosecution agreements' (DPAs) would give courts the power to approve penalty and compensatory payments agreed between firms and prosecutors.

"Later in the current Parliament, I [will] introduce deferred prosecution agreements to the criminal justice armoury," Garnier said on Tuesday. "Such agreements will deal with penalty payments, but also, where appropriate, with the payment of compensation, and the payments will be made as a result of court orders."

Anti-corruption law expert Barry Vitou of Pinsent Masons, the law firm behind Out-Law.com, said businesses would welcome the move.

"We strongly endorse the proposal in principle for UK Deferred Prosecution Agreements," Vitou said. "The US has them and so should we."

"The present UK system creates an uneven playing field where businesses can avoid the equivalent of a corporate death sentence, debarment, in the US but not the UK because we do not have DPAs. A few rotten apples should not place other UK jobs at risk," he said.

In the UK at the moment prosecutors can negotiate a form of plea agreement with organisations, but those companies still face criminal punishments that can harm their reputation and restrict their trade. Businesses that do make plea agreements also have no guarantees that courts will accept those agreements in sentencing and that the admissions will not later be used as evidence against them in a trial.

In other jurisdictions, such as the US, organisations can negotiate settlements with prosecutors with a degree of certainty over the scope of their punishment.

A spokesman for the Serious Fraud Office (SFO) told Out-Law.com in December that DPAs could reduce the need for lengthy fraud investigations in some cases and would encourage businesses to come forward with information about unlawful practices. Any new legislation should define the structures of DPAs and the situations in which they should be used, the SFO said at the time.

DPAs would enable prosecutors to punish businesses for unlawful activity without the need for expensive and time-consuming investigations and enable businesses to avoid more serious criminal sanctions, the spokesman said. The SFO is an independent Government department that investigates and prosecutes serious or complex fraud and corruption.

Garnier, Attorney General Dominic Grieve and outgoing SFO director Richard Alderman have been involved in informal consultations over a potential DPA regime since the autumn last year. Pinsent Masons hosted the first consultation.

A spokesperson for the Attorney General's Office (AGO) subsequently told Out-Law.com that the plans being discussed related to the formation of a regime whereby companies could avoid criminal sanctions for unlawful activity, such as fraud or corruption, by owning up to the conduct and signing judiciary-approved DPAs with prosecutors.

The settlements could involve companies paying fines and agreeing to make changes to policies, practices and structures. Companies would face a form of probation period where criminal prosecutions could still be brought against them for non-compliance with the terms of the settlement or if a second incidence of unlawful activity is discovered, the spokesperson said at the time.

The AGO is keen on an "open and transparent" system around which DPAs can be formed where judges have a bigger say in determining the details of settlements. A new system could see prosecutors and businesses come to a preliminary agreement to settle cases of serious financial crime before judges are asked to approve the outline agreement. If that approval is given, prosecutors and businesses could then agree the final details of their settlement, but this would again require judicial approval.

The AGO spokesperson said that, under a new system, the UK's judiciary could publish guidelines to give business "more certainty" over the kind of cases where DPAs could be approved and the nature of an acceptable settlement.

Another AGO spokesperson told Out-Law.com that it is aiming to consult on the plans in May and introduce legislation in the autumn. The AGO could work with Government departments, such as the Home Office or Ministry of Justice, to introduce its proposals as part of wider legislative reforms those departments are working on.

Garnier has previously said that the current regime for prosecuting serious and complex economic crime results in wasted investigative resources.

"Investigations and prosecutions are long, expensive and resource- intensive," Garnier previously wrote in the Law Society Gazette.

"Too few companies are ever held to account for their crimes.  By the time we are ready to prosecute in this jurisdiction, those businesses who have an international presence, particularly in the United States, have often reached settlements with overseas authorities which shut us out from taking action here. This cannot be right, and it is unfair to those in the UK who may have been adversely affected by these crimes," he said.

"Of course there will be circumstances where the criminal conduct is so serious that only a full investigation and prosecution is the appropriate response. But if a company is prepared to face up to its wrong-doing and accept punishment for it in a way that does not require a full scale investigation and prosecution, there is surely merit in considering how to achieve justice in another way. The introduction of deferred prosecution agreements (DPAs), similar to those in the United States, would provide a more effective approach to dealing with corporate crime in some cases," he said in the report.