Deferred Prosecution Agreements (‘DPAs’): A change in culture?

D Rosen I had the honour within the last week or so, of hearing and meeting both the head of the http://www.sfo.gov.uk/ Serious Fraud Office, David Green CB QC, at the Association of Certified Fraud Examiners European Fraud Conference 2014, in Amsterdam, and the Attorney-General, the Right Honourable Dominic Grieve QC MP. https://www.gov.uk/government/organisations/attorney-generals-office at Brunel

Home » David Rosen » Deferred Prosecution Agreements (‘DPAs’): A change in culture?

D Rosen

I had the honour within the last week or so, of hearing and meeting both the head of the http://www.sfo.gov.uk/ Serious Fraud Office, David Green CB QC, at the Association of Certified Fraud Examiners European Fraud Conference 2014, in Amsterdam, and the Attorney-General, the Right Honourable Dominic Grieve QC MP. https://www.gov.uk/government/organisations/attorney-generals-office at Brunel University. http://www.brunel.ac.uk/

In an open forum, at Brunel, I asked of the Attorney-General, the following question:

‘Do you believe that Deferred Prosecution Agreements will reduce criminogenic culture of commercial greed?’.

The response I received was measured, and of course, full of wisdom from a man of such sagacity. I paraphrase, (mainly because I was too busy remembering the question I was going to ask)…The Attorney-General considered it was a useful tool in the fight against corporate fraud, and I entirely agree.

As General Sun Tzu stated, in his definitive work, ‘The Art of War’: ‘The supreme art of war is to subdue the enemy without fighting’. I will elaborate further, below.

As Pope Francis states, as I understand it, that the culture of wealth makes us indifferent to the needs of the vulnerable. The economy of exclusion, contributes to bribery and corruption.

A culture has indeed grown exponentially of corporate greed, where commission, bonusses, and salaries are driven by performance and deals. At its best, competition is not a bad thing. At its worst, without effective regulation, greed has dictated the downfall of many a decent business: Radix Malorum est Cupiditas.

The Financial Services Authority was not as pro-active as it ought to have been. Banks and Insolvency Practitioners have run amok at the expense of the public, with few prosecutions or fines. There is great hope amongst the great and good, that the Financial Conduct Authority will be more robust, and bring swift justice to those who have fallen victim of such practices.

Irresponsible lending, gave rise to a disproportionate frenzy of closure of businesses, but not before they were placed into Administration, squandered, and stripped of all that was good, to satisfy the hunger of Banks to recall loans which were triggered on the basis of breaches of loan covenants, valued at the behest of the Bank, at the expense of course of the customer. Independent Business Reviews (‘IBRs’) were drafted by Accountants and Insolvency Practitioners (obviously at the expense of the customer), painting a doomed future for those Companies, justifying for the Bank, Administration. In many circumstances, the customers never saw the IBRs, but only a summary of them. Those very same authors then became Administrators. Fairness? Conflicts?

In the report of Lawrence Tomlinson, http://www.tomlinsonreport.com/ he highlighted many of the points I have referred to above, and of course more.

Equally, the findings of the Joint Committee Parliamentary Commission on Banking Standards, made comment http://www.parliament.uk/business/committees/committees-a-z/joint-select/professional-standards-in-the-banking-industry/news/changing-banking-for-good-report/ amongst other things, that the authors of IBRs should not then become Administrators.

I have heard a number of Litigants in Person demand the downfall of some of these Corporate giants. What good does that do? Are all people in such Companies rotten? Surely not. Perhaps a number of individuals within these Companies, but is that sufficient to bring misery to those who do their jobs honestly and with integrity?

As a matter of public interest, closure of Banks, Insolvency Practitioners, and Accountancy practices will do nothing other than to bring further misery and insecurity to a painfully slow recovering British economy.

If I ruled the World…What I would like to see as a measured response, would be to create a culture of self-reporting. Threaten intended prosecution of the heads of such ruling Corporates, and offer them a DPA only if the following conditions are fulfilled:

1. Accept shortcomings and failures;
2. Sack those directly responsible;
3. Name and shame the offenders using social media as well as the Press;
4. Put in place meaningful compliance teams with power to monitor standards and practices including reviewing telephone calls and messages, and inspecting emails from time to time;
5. Set up dedicated and independent whistle-blowing departments to field complaints and concerns;
6. Set up meaningful Anti-Bribery Policies, with regular updates, and focus groups to ensure that any concept of bribery or corruption is no longer tolerated;
7. Agree easier access to settlement agreements with those customers who have suffered loss because of such immoral and illegal conduct by Corporates;
8. Report publicly how many complaints have been raised, findings accepted, changes to be made, and what has been settled;
9. Allow a fast-track mediation scheme, with all legal costs to be paid by the Corporates, to resolve matters;
10. Re-enforce in Corporates, lessons learned, and what is, and what is not acceptable in terms of morals and ethics of the Corporate.
11. The FCA should be seen to be pro-active if acting as Ombudsman on complaints unresolved.
12. Disallow Conditional Fee Agreements or Damages Based Agreements in such circumstances. Reasonable and proportionate legal costs ought to be paid by Corporates where their customers have been
wronged. This will prevent those who seek to gain from other’s misfortunes, and prevent businesses arising whose sole purpose is vulturism.

I am aware that the SFO published guidelines as to when a DPA should be offered in the Code of Conduct and Consultation response http://www.sfo.gov.uk/about-us/our-policies-and-publications/deferred-prosecution-agreements-code-of-practice-and-consultation-response.aspx

My wish-list goes considerably further than the SFO guidelines. The aim however, is to curb the culture of corporate greed, and bring into the equation, corporate responsibility, decency, and integrity by a change in culture, re-enforced in the first instance to escape prosecution, and then it is hoped, a sincere desire to be decent to fellow human-beings. Only then, can we hope to subdue this destructive culture, and restore confidence.

David Rosen - Head of litigation and specialist in fraud law
David Rosen – Head of litigation and specialist in fraud law

Professor David Rosen is a Solicitor-Advocate, Partner and head of Litigation at Darlingtons Solicitors LLP. He is a Certified Fraud Examiner, Strategic Director of the ACFE UK Chapter, a member of RUSI, a member of the Society of Legal Scholars, a working member of the Fraud Advisory Panel, and an associate Professor of Law at Brunel University where he specialises in Civil Fraud and Criminal Fraud.

David Rosen • Fraud

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