The Crime and Courts Act, which received Royal Assent last week, will allow prosecutors to enter into deferred prosecution agreements (DPAs) with companies that admit to unacceptable corporate behaviour or economic crime.
The Director of Public Prosecutions (DPP) and Serious Fraud Office (SFO) will publish a draft Code of Practice for Prosecutors for consultation shortly. White collar crime expert Barry Vitou of Pinsent Masons, the law firm behind Out-Law.com, said that this document would contain more practical detail about the new DPAs, including details of when a DPA will be considered appropriate.
"DPAs are on track for 2014 in an Americanisation of the UK criminal law enforcement setup for corporations," he said. "Businesses would be well advised to take note and make sure their houses are in order: criminal law enforcement for corporate crime is a rising tide."
The new DPAs will allow organisations to voluntarily admit to wrongdoing and resolve to make things right. Where a prosecutor, such as the SFO or Crown Prosecution Service (CPS), agrees that a DPA is an appropriate course of action, it will be able to defer prosecution in exchange for a range of stringent conditions.
The agreement will be made in open court and details of the wrongdoing and sanctions published. Depending on the circumstances of the case, these may include substantial financial penalties, the need to compensate victims and submitting to regular reviews and monitoring. If the prosecutor is satisfied that the organisation has fulfilled its obligations by the end of the deferral period there will be no prosecution, but if the conditions are not met then the organisation could still be prosecuted.
The plans were announced in October by the Ministry of Justice, following a consultation period. At the time Tom Stocker, a Scottish-based anti-corruption expert with Pinsent Masons, warned that the new agreements would be "unworkable" unless the regime was extended to Scotland. Crimes committed by UK companies are usually subject to concurrent jurisdiction, meaning that both the SFO and the Scottish Crown Office are entitled to prosecute.
"We made the point during the consultation period that global settlements need to be achievable," Stocker said at the time. "It remains insufficiently clear to businesses operating on both sides of the border whether plea bargains entered into with the SFO in London will be respected by the Scottish authorities."
"Scottish companies could also be at a disadvantage to companies in England and Wales if DPAs do not extend to Scotland," he said.