Deferred Prosecution Agreements (“DPA’s”) were introduced in England and Wales by Section 45 of and Schedule 17 to the Crime and Courts Act 2013 (“CCA”). A DPA, where available, can, in some circumstances, enable a company that has cooperated with investigators to avoid a prosecution, provided that it complies with specified conditions. DPAs are available for certain types of economic crimes. They can be a painful but pragmatic outcome for any company being investigated and facing prosecution because, although the conditions can be very expensive and strenuous, a DPA can present an opportunity for the company to begin to move on from a damaging experience and help to manage longer term reputational and financial risk.
The SFO recently published a chapter from its handbook, which offers updated comprehensive guidance on how the SFO approaches DPAs, and how the SFO engages with companies where a DPA is a prospective outcome. On the publication of the chapter, Lisa Osofsky, Director of the SFO, said the following:
“DPAs are a valuable tool in the fight against serious fraud, bribery and corruption, capable of not only punishing corporates for criminality but also making sure the company rehabilitates and becomes a better corporate citizen. This helps us foster a business environment where everyone plays by the rules, which can only benefit UK Plc.”
In the light of this recent publication, this article will provide a brief guide to DPAs and how they operate.
Deferred Prosecution Agreements
A DPA is an agreement between the accused and the prosecution made with the approval of the court. Under such an agreement, provided the accused abides by specific conditions, a potential prosecution will be suspended and ultimately avoided.
Who can enter into a DPA?
A company, partnership or unincorporated associated can enter into a DPA, but an individual person cannot. The prosecutor must be “designated” to be able to offer a DPA (i.e. the Director of Public Prosecutions (“DPP”) or the Director of the Serious Fraud Office (“SFO”)).
To which offences can a DPA apply?
A DPA can only be entered into by an accused whom the prosecutor is considering prosecuting for a “specified offence”. The specific offences are listed in Part 2 of Schedule 17 to the CCA. Perhaps the most recognisable offences that may be eligible for a DPA include fraud under section 1 of the Fraud Act 2006, and the Bribery offences contained in sections 1, 2, 6 and 7 of the Bribery Act 2010.
Some of the more common offences are listed below:
- Conspiracy to defraud;
- Cheating the public revenue;
- Theft (under section 1 of the Theft Act 1968 (“TA”));
- False accounting under section 17 TA;
- Destroying, mutilating, etc. company documents under section 450 of the Companies Act 1985;
- Fraudulent evasion of VAT under section 72 of the Value Added Tax Act 1994;
- Several offences under the Financial Services and Markets Act 2000, including:
- Contravention of prohibition of carrying on regulated activity unless authorised or exempt; and
- Misleading statements and practices.
- Several offences under the Proceeds of Crime Act 2002 (“POCA”), including:
- Concealing etc. criminal property;
- Acquisition, use and possession of criminal property;
- Failing to disclose knowledge or suspicion of money laundering; and
- Tipping off.
- Several offences under the Companies Act 2006, including:
- Contravention of the general rule against a limited company acquiring its own shares;
- Prohibited financial assistance; and
- Fraudulent trading.
How does a DPA work?
Under the DPA, the accused company agrees to comply with the requirements imposed by the prosecutor, and the prosecutor, in turn, agrees to suspend the prosecution. Proceedings are instituted by the preferment of a bill of indictment, but as soon as this occurs, the proceedings are automatically suspended. The suspension can only be lifted on an application by the prosecution to the Crown Court, but no such application may be made during the currency of the DPA.
Before a DPA can be agreed, the approval of the Crown Court must be sought. Initially, approval will be sought at a preliminary hearing which is conducted in private. At this hearing, the court will be asked to agree that the DPA is “likely to be in the interests of justice” and that the terms contained within it are “fair, reasonable and proportionate” (as per paragraph 7, Schedule 17 CCA). If the court agrees, then the terms of the DPA will be finally agreed between the accused and prosecutor. Thereafter, the court will be asked for a final declaration that the DPA remains in the interests of justice, with fair, reasonable and proportionate terms. At this point, provided the prosecutor publishes the DPA and the court’s declaration, the DPA will take effect.
The DPA must specify an expiry date, which is the date on which the DPA ceases to have effect (provided that it has not already been terminated as a result of a breach). It must also contain a statement of the facts relating to the alleged offence, and this may include any admissions made by the accused.
What requirements may a DPA impose?
A DPA may impose the following requirements on an accused. Note that the below list is not exhaustive:
- To pay the prosecutor a financial penalty;
- The amount of any financial penalty must be broadly comparable to the fine that a court would have imposed on the accused following a guilty plea.
- To compensate victims for the alleged offence;
- To donate money to a charity or other third party;
- To disgorge any profits made by the accused as a result of the alleged offence;
- To implement a compliance programme, or make changes to an existing compliance programme relating to the accused company’s policies or to the training of its employees, or both;
- To co-operate in any investigation related to the alleged offence; and
- To pay any reasonable costs of the prosecutor in relation to the alleged offence, or to the DPA.
The DPA may impose time limits within which any requirements must be complied with.
What if the DPA is breached?
If the prosecutor believes that the accused company has failed to comply with DPA’s terms, then they may make an application to the Crown Court for a decision on whether the company has failed to comply. The court must then decide whether, on the balance of probabilities, the accused company has, in fact, failed to comply. If the court decides that it has, it may either invite the prosecutor and the accused company to agree proposals to remedy the failure to comply, or terminate the DPA.
What happens at the end of the DPA’s expiry period?
If the DPA is not terminated as a result of breach, and remains in force until its expiry period, the proceedings which were stayed at the outset of the process are discontinued on the expiration date of the DPA. Following the discontinuation, fresh criminal proceedings may not be started against the accused company for the alleged offence (unless, after the expiry of the DPA, the prosecutor finds that the company provided inaccurate or misleading information to the prosecutor in the course of negotiations for the DPA and knew, or ought to have known, that the information was inaccurate, misleading or incomplete).
Why instruct Bindmans
Our Fraud, Business Crime and Regulatory Law Team has experience in cases in which companies have entered into DPAs. We are adept at evaluating evidence and assisting our clients to develop strategies to meet and defend investigations. We can provide comprehensive advice about the strength of the evidence and potential eligibility for a DPA. We also advise individuals whose conduct is the focus of investigation and who may be at personal risk of prosecution or regulatory action.
If you have any questions about this, you can complete the form below or call the direct line number to speak to our specialist team +44 (0) 20 7014 2020 or, in the case of emergency, call +44 (0)20 7305 5638 for our out of hours police station assistance.