Bark & Co Solicitors London: Deferred Prosecution Agreements

395 views
347 views

Published on

The director of the Serious Fraud Office (SFO) and the Solicitor General, Edward Garnier QC

The director of the Serious Fraud Office (SFO) and the Solicitor General, Edward Garnier QC, have recently made no secret of the fact that they consider the criminal justice system to be incapable of dealing with corporate prosecutions in a way that refects commercial realities. The blunt impact of a prosecution of a company has the impact of damaging innocent parties including employees, shareholders and creditors. Garnier cited the cautionary example of the ill-effects of prosecution caused to Arthur Andersen, eventually acquitted on charges of obstruction of justice by the US Supreme Court, many years after the allegations had destroyed the company. US prosecutors have a tool at their disposal, the deferred prosecution agreement (DPA), which is being touted as a viable alternative to the present options of either prosecution or civil recovery. Much of the impetus
for the reform has been caused by the difficulties faced by the SFO when they sought to prosecute Innospec. The SFO effectively had already agreed with the company, pre-sentencing, the nature of the sentence in return for a guilty plea. This was criticized by Thomas LJ who reminded the SFO that it is for the Judge to determine sentence at his discretion and especially that any plea must be “rigorously scrutinized in open court”.

The US Approach

In the US, DPAs are considered a hugely important weapon in the armoury of a highly successful prosecutor – the Department of Justice, which entered into nine DPAs in 2009. The DPA does pretty much what it says on the tin, deferring criminal prosecution pending certain terms and conditions being agreed (and adhered to) and fled in a formal indictment at court. Typical conditions are that prosecution is deferred for two - three years with the payment of a fine commensurate with the Federal
Sentencing Guidelines, disgorgement of profits, a clear out of implicated directors, a possible pull-out from the market in which the wrongdoing is admitted, and the possible instruction of a court appointed monitor where the corporate does not have proper anti-corruption procedures presently in place.
The appointment of monitors has been particularly contentious in the US where there have been allegations of a lack of transparency in their appointment, cronyism and high cost. The costs charged by monitors is particularly eye-watering to UK onlookers. Innospec were charged $50m for the corporate monitor (described by the sentencing Judge as “an outrage”), agreed as part of their
DPA in the US.

Are DPAs Right for the UK?

As it stands in the UK, the SFO has found it difficult, time consuming and costly to prosecute corporates in the UK for bribery and related offences as well as occasionally stymied by political interference. It is unlikely to find it any easier under the Bribery Act.

Published in: Business
5 Comments
5 Likes
Statistics
Notes
  • Whatever it is you post, it is a good rule of thumb to listen twice as much as you speak.
       Reply 
    Are you sure you want to  Yes  No
    Your message goes here
  • It’s my pleasure to find this amazing website who provides mostly unseen information about every single topic which is i really like it.
       Reply 
    Are you sure you want to  Yes  No
    Your message goes here
  • Wow, this was a really quality post. In theory I’d like to write like this too – taking time and actual effort to make a good post…
       Reply 
    Are you sure you want to  Yes  No
    Your message goes here
  • Thanks much for your downright post
       Reply 
    Are you sure you want to  Yes  No
    Your message goes here
  • Thanks for this informative piece! cheers
       Reply 
    Are you sure you want to  Yes  No
    Your message goes here
No Downloads
Views
Total views
395
On SlideShare
0
From Embeds
0
Number of Embeds
2
Actions
Shares
0
Downloads
1
Comments
5
Likes
5
Embeds 0
No embeds

No notes for slide

Bark & Co Solicitors London: Deferred Prosecution Agreements

  1. 1. Bark & Co SolicitorsLondon: DeferredProsecutionAgreements- Bark & Co Solicitors
  2. 2. The director of the Serious FraudOffice (SFO) and the SolicitorGeneral, Edward Garnier QC, haverecently made no secret of the factthat they consider the criminaljustice system to be incapable ofdealing with corporate prosecutionsin a way that refects commercialrealities.
  3. 3. The blunt impact of a prosecution of acompany has the impact of damaginginnocent parties includingemployees, shareholders and creditors.Garnier cited the cautionary example of theill-effects of prosecution caused to ArthurAndersen, eventually acquitted on chargesof obstruction of justice by the US SupremeCourt, many years after the allegations haddestroyed the company.
  4. 4. US prosecutors have a tool at their disposal, the deferredprosecution agreement (DPA), which is being touted as aviable alternative to the present options of eitherprosecution or civil recovery. Much of the impetus for thereform has been caused by the difficulties faced by theSFO when they sought to prosecute Innospec. The SFOeffectively had already agreed with the company, pre-sentencing, the nature of the sentence in return for aguilty plea. This was criticized by Thomas LJ whoreminded the SFO that it is for the Judge to determinesentence at his discretion and especially that any pleamust be “rigorouslyscrutinized in open court”.
  5. 5. The US ApproachIn the US, DPAs are considered a hugelyimportant weapon in the armoury of a highlysuccessful prosecutor – the Department ofJustice, which entered into nine DPAs in 2009.The DPA does pretty much what it says on the tin,deferring criminal prosecution pending certainterms and conditions being agreed (and adheredto) and fled in a formal indictment at court.
  6. 6. Typical conditions are that prosecution isdeferred for two - three years with thepayment of a fine commensurate with theFederal Sentencing Guidelines,disgorgement of profits, a clear out ofimplicated directors, a possible pull-outfrom the market in which the wrongdoingis admitted, and the possible instruction ofa court appointed monitor where thecorporate does not have proper anti-corruption procedures presently in place.
  7. 7. The appointment of monitors has beenparticularly contentious in the US wherethere have been allegations of a lack oftransparency in their appointment,cronyism and high cost. The costs chargedby monitors is particularly eye-watering toUK onlookers. Innospec were charged $50mfor the corporate monitor (described by thesentencing Judge as “an outrage”), agreedas part of theirDPA in the US.

×