What is a DPA?
A DPA is an agreement reached between a commercial organisation and a prosecutor, whereby a prosecutor agrees to suspend/defer prosecution on condition that a commercial organisation agrees for a specified period of time, to comply with various measures set, and perhaps to pay a fine, or agree to confiscation or restitutionary measures.
Are they in force?
Not yet. It is likely that DPAs will be in existence in early 2014.
Have agreements like this existed before in England?
There are similarities to undertakings being given by individuals, not to act as a Director or Shadow Director for a period of time and to agree to pay costs, rather than for a Court to make a finding and disqualify by Order of Court under the Company Directors’ Disqualification Act 1986. There were mixed feelings, when the Act came into effect, but on the whole, it saved costs, Court time, and individuals avoided the stigma of being formally disqualified. One still needed the approval of Court, but it was very much a rubber stamping exercise, and a compromise to prosecution.
It was a pragmatic use of a hybrid civil consent order, in criminal proceedings; An acceptance that people do wrong from time to time, and applying some emotional intelligence, nay, being philosophical about such matters, was preferable to weighing down the Courts with such matters.
On the other hand, there is good argument and criticism, that such undertakings undermined the seriousness of the offence: In some way, there was a perception that this type of offence was down-graded.
The same arguments apply to DPAs. Will they be regarded as cheapening offences of corruption and fraud? Will such offences whereby a DPA can apply, be made into respectable offences? Time will of course tell.
Comparisons with the United States:
DPAs exist in the USA. They appear to work. They are considered to be an efficient way of disposing of investigations into corporate crime, and preventing any relapses or propensity to commit further offences of a similar nature.
The Policy on appropriateness to offer or consider a DPA:
The Policy and guidelines have yet to be determined.
It is likely that there will be guidelines in much the same way as it was for the Bribery Act: The paper tiger.
The decision to prosecute was, and will likely remain a 2 stage exercise to satisfy the evidential burdens of guilt beyond reasonable doubt, and to consider whether to prosecute is in the public interest.
It is sensible to consider as a parallel, the policy in less serious offences, to give a caution, rather to proceed to prosecute. Usually, if an individual admits his/her guilt, and is truly sorry for their actions, showing sincere remorse, these would be the usual circumstances in which one were to receive a caution.
The current thoughts on DPAs are likely to be adopted as formal guidelines, based on the Ministry of Justice consultation in May last year.
Factors will include, but are not limited to:
- The nature and seriousness of the offence
- Levels of pre-meditation and any attempts to hide such conduct
- The seniority of the person having committed the offence
- Likely impact of prosecution upon the business and its staff
- Loss to 3rd parties
- Steps taken to correct the offence, and policies put in place or changed as a result
- Whether the offence became known due to self-reporting, or whether it was as a result of complaints made, or an investigation conducted or threatened
Who can prosecute?
Currently it is expected that the Serious Fraud Office, and the Crown Prosecution Service will be designated prosecutors. It is envisaged that the newly formed Financial Conduct Authority may also be a designated prosecutor.
What is important however, is that this should not be just another piece of useful and worthy Legislation, without any ‘teeth’ because of financial and other resource limitations.
I see this introduction of DPAs as a way of showing wrongdoers, making good, and showing that the system works, without ever having to prosecute into a full-blown piece of litigation thus saving costs, court timely and acting as a good deterrent.
A clear and transparent policy and guidelines must be in place to give confidence to professionals to be able to suggest admission of guilt, and negotiations. Without it, organisations are likely to shy away from the prospect of alternatives to prosecution.
Professor David Rosen is a Solicitor-Advocate, Partner and head of Litigation at Darlingtons Solicitors. He is a Certified Fraud Examiner and Strategic Director of the Association of Certified Fraud Examiners UK Chapter. He is a working member of the Fraud Advisory Panel, and an associate Professor of Law at Brunel University specialising in Civil Fraud, and Criminal Fraud.
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