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UK's Serious Fraud Office - Green says "keep DPAs"

Nigel Morris-Co...

A report in yesterday's Law Society's Gazette quotes a passage from a speech given by David Green, the outgoing head of the Serious Fraud Office under whose watch the SFO's performance has seen a significant improvement. But there is one area where this publication forcefully disagrees with him: the development of US-style Deferred Prosecution Agreements. In his speech, he speaks strongly in favour of them, it is reported.

"If you discover criminality and report it to the SFO it is likely to be favourably considered. It would be unfortunate if that offer is shortened or if the bar is lowered," according to the Gazette.

Well, that's not necessarily so, as demonstrated in the Skansen case, which was brought by the Crown Prosecution Service not the SFO.

This publication, and its sisters, are strongly opposed to deferred prosecution agreements for the simple reason that they are tantamount to bribing prosecutors to not prosecute and that they are in breach of the principle that justice must be seen to be done.

It is almost by definition that the work of the Serious Fraud Office is in the public interest: large and complex cases often have, to some degree, national interest issues, too. It is simply not acceptable that a company that is involved in criminal conduct so large and so complex that the SFO is involved should not be subject to the full weight of the law. And so should its officers.

A deferred prosecution agreement is entered into by a company which does not enter a plea to the charges against it - that's the "does not admit or deny the charges" element in the Orders. It promises not to do it again, so there is a form of probation and, if that fails, the prosecutors are entitled to reactivate the charges. There is the payment of a generally large sum of money, often comparable with that which would be awarded as fines if the company were convicted, but it's not a fine because no finding is made by the Court. The fact of the agreement is not to be taken as an admission in any subsequent trial. Often the defendant will agree to take a number of steps, often in relation to compliance systems. But most important of all is this: the defendant does not have a conviction recorded against it.

In this publication's view, the payment of moneys to avoid prosecution and a conviction is a bribe, regardless of whether such conduct is approved in legislation.

In the USA, DPAs are a form of blackmail: prosecutors with weak cases push deals because a settlement is cheaper than a protracted trial and has less impact on a company's reputation.

So there's a clear benefit to both sides of a system which, even if legal, is immoral and deprives the public of their right to see wrongdoers punished.

It is also noticeable that it is only in rare cases that the directors of a company are prosecuted after the company enters into a DPA, raising the question as to whether shareholders' money is used to buy off prosecutions of directors and, because that is not on the face of the agreement, that's an under-the-table deal.

It is said that, in the case of the SFO, the four cases in which it has entered into DPAs has resulted in a discount of penalty of around 50%. While discounts for early settlement are common, they are made by the court after a defendant pleads guilty in recognition of the savings to the public purse by avoiding a trial. That's an entirely different concept to the idea that a prosecutor can do a back-door deal that is presented to a Judge as a fait accompli. Moreover, if one were to look at DPAs in the USA's financial sector, there is a template with remarkably few changes.

No, Mr Green: on every basis possible, Deferred Prosecution Agreements are abhorrent to the principles of justice and far from being continued should be specifically legislated against.

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