Campaigners warn Serious Fraud Office against use of 'controversial' deferred prosecution agreements

Transparency International, Corruption Watch and Global Witness said that the UK "must, and can, avoid the more controversial elements" of DPAs, which had become "increasingly controversial" in the US where the practice originated. They should only be made available to companies that have fully admitted to wrongdoing and committed to making amends, the groups said in a letter to Serious Fraud Office (SFO) director David Green (3-page / 178KB PDF).

Prosecutors have had the ability to agree DPAs with corporate offenders since last February, although the SFO is yet to use the new tool. Speaking at an event last month, during which he confirmed that the SFO was currently conducting its first DPA negotiations with companies that had pleaded guilty to corporate wrongdoing, the SFO's Ben Morgan said that the prosecutor would not be using them to enter into "cosy deals" with those that had engaged in criminal behaviour.

Anti-corruption expert Barry Vitou of Pinsent Masons, the law firm behind Out-Law.com, said that there was a "fundamental difference" between the US approach to DPAs and that of the UK, which was set out in guidelines published by the SFO and Director of Public Prosecutions last year. The guidance sets out the circumstances in which a DPA may be granted, with final sign-off required by the courts. Agreements will be made in open court, with details of the wrongdoing and sanctions published. If, at the end of the deferral period, the SFO or other prosecutor is satisfied that the organisation has fulfilled the obligations set out in the DPA then there will be no prosecution. However, if the conditions are not met then the offender could still be prosecuted.

"The criticism in the US is that courts routinely 'rubber-stamp' DPAs," Vitous said. "However, in the UK DPA regime rubber stamping can't happen. Judges will test and probe to ensure that only worthy candidates receive DPAs. As a result, the criticism levelled by the NGOs is misplaced."

Prosecutors in England and Wales have developed an approach to DPAs designed to encourage businesses to self-report wrongdoing in the hope of more lenient treatment. Depending on the circumstances of the case, a DPA may require an offender to pay a substantial fine or to compensate victims, to submit to regular reviews and monitoring, and to undertake reforms to prevent the conduct in question from occurring again.

The Sentencing Council also published its definitive guideline for sentencing corporate offenders convicted of fraud, bribery and money laundering offences last year as part of the package to support DPAs.  It is intended to assist as a point of reference when financial penalty levels within DPAs are being considered and negotiated. In their letter, the NGOs warned against the use of DPAs as a common means of resolving court investigations, and said that individuals should not be able to use them as a means of avoiding prosecution. Individuals "must be prosecuted to achieve the necessary deterrent effect for corporate bribery", while they should only be open to companies that "have taken action against directors or employees involved in wrongdoing and who have provided full assistance to the SFO to help bring prosecutions against individuals", the letter said.

"DPAs should only be used where it is in the interest of justice, the harm caused to victims and the community is minimal, and where there has also been a genuine self-report, full cooperation and remedial action (including dismissal of employees involved in the wrongdoing) by the company," the letter said.

"We remain concerned that DPAs should not be used to help companies avoid debarment provisions under EU regulations, and must not be used for politically sensitive cases. We also urged the SFO to ensure that they avoid a trend of offering DPAs to large companies which are more expensive and difficult to prosecute, while prosecuting smaller companies," it said.

The NGOs said that there had to be "utmost transparency" as part of the DPA process, with full details of the wrongdoing and all the public interest arguments in favour of avoiding prosecution made public. Victims of the company's wrongdoing, including affected states, should be given the opportunity to participate in any negotiations, while sanctions imposed by a DPA "must have significant deterrent value", they said in the letter.