What corporates need to know about Deferred Prosecution Agreements

Deferred Prosecution Agreements (DPAs) are a negotiated settlement with the Serious Fraud Office (SFO), which a corporate can enter into after it has been charged with economic crime such as bribery, money laundering, or fraud.

It’s an agreement with the SFO that the corporate will comply with certain conditions, and (usually) pay a fine, in order to avoid a conviction.

The attraction of a DPA is that the corporate reduces the reputational risk associated with a conviction. There may also be a reduced fine attached to a DPA in comparison to the fine handed out at sentencing after a guilty plea in court.

DPAs are usually an attractive option for a corporate charged with economic crime, but they are not handed out freely. Corporates have to show cooperation with the SFO’s investigation. More on this below.

Benefits of a DPA

The prosecution of the criminal charges against the corporate are suspended while the DPA is in place. If the corporate complies with all of the terms of the DPA then it faces no liability for the crimes. This can be a major benefit from a publicity point of view.

The SFO gives clear, and short timeframes for negotiating a DPA. That means that the corporate can conclude the stressful business of the investigations more quickly. These investigations are a serious detraction from the day-to-day running of the business, and can be fraught with issues. Executives and shareholders will want the clarity and certainty of reduced timeframes for the investigations.

There’s a financial benefit of entering a DPA too. There’s a maximum fine reduction of 50%. In addition, the corporate avoids the time and expense of a lengthy trial process.

Is a guilty plea at court better?

Depending on the strategy of your case, some corporates may consider whether it is better to plead guilty at court, rather than negotiate a DPA.

There is some merit to that strategy. The corporate may find it has fewer charges levied against it by the time the matter reaches court. That can happen so that prosecutors can make the case manageable.

But going to court is a long and drawn out process, which inevitably costs a lot of money in legal fees. On top of that, the maximum fine reduction for a guilty plea is 30%. So financially, it may be more expensive to take this route.

Then there’s the possibility that convicted companies can be put on the UK’s debarment register and be disallowed from bidding for Government contracts. Corporates who do a lot of work in the public sector will not want to run this risk

DPAs are not guaranteed

Very few DPAs have been negotiated to date. The DPA system was introduced in 2014 and to date, 13 have been negotiated.

They are seen by the SFO as a reward for openness. In other words, they are only available if the corporate has co-operated with the investigation. Things that indicate co-operation are; preserving documents, gathering evidence, updating the SFO with key findings from any internal investigation.

Self-reporting is also a key consideration. If a business puts its hands up, identifies the wrongdoing, and brings it to the attention of the SFO, it is more likely to be treated with leniency and allowed a DPA.

One more issue to note is that each DPA must be concluded under the supervision of a judge. A judge will only approve a DPA if it is in the interests of justice and the terms are fair, reasonable and proportionate. What passes that threshold will be specific to each case.

Negotiating with the SFO

Given that DPAs are still fairly rare, negotiating one takes skill. The corporate in question will need to explain why it thinks it deserves a DPA and show how it has co-operated fully.

The corporate will need to explain the changes it will put in place to prevent any further wrongdoing. This must be a genuine desire to change working practices, and not just paying lip service to it to tick a box.

The corporate must be transparent with the SFO and have robust measures in mind to keep it on the straight and narrow.

As lawyers, we can help you consider which measures would be appropriate for your business, and how you can best co-operate with an SFO investigation. Navigating this stressful time well is essential to reduce the financial and reputational damage to the business.

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