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Expert challenges Scottish Government to follow rest of UK's lead on 'plea deals' for corporate crime

Out-Law News | 11 Dec 2013 | 2:49 pm | 2 min. read

The introduction of US-style deferred prosecution agreements (DPAs) in England, Wales and Northern Ireland from next year will leave Scotland with "one less tool" in the fight against corporate crime than the rest of the UK, an expert has said.

Tom Stocker of Pinsent Masons, the law firm behind Out-Law.com, said that the new system could encourage companies caught up in suspected bribery or corruption to "bypass" the Scottish legal system to report matters to the London-based Serious Fraud Office (SFO)..

"The UK Government is stepping up its fight against corruption with the adoption of DPAs but in Scotland there is an absence of similar legislation," he said.

"The Crown Office and Procurator Fiscal Service and Police Scotland have made significant progress in the fight against corruption by establishing dedicated corruption units and prioritising their resources, but Scotland's legislative tools are not as advanced as those coming into force in the rest of the UK," he said.

Companies headquartered elsewhere in the UK would be given a "major incentive" to self-report to the SFO, as in appropriate cases DPAs may  give them the opportunity to agree so-called 'global settlements' with both the SFO and US authorities, he said.

Crimes committed by UK companies are usually subject to concurrent jurisdiction, meaning that both the SFO in England and Wales and the Crown Office in Scotland are entitled to prosecute. However, he added that without a formal DPA process applying in Scotland, Scottish companies could become "unsure how to proceed should a bribery problem arise". "That uncertainty could lead companies to conclude that it is best to sweep matters under the carpet and that could lead to a pervasive culture and the commission of other offences such as money laundering," he said.

The Crime and Courts Act will introduce DPAs from early 2014. These will allow organisations in England and Wales to voluntarily admit to wrongdoing and resolve to make things right. DPAs will encourage businesses to self-report instances of economic crime in the hope of more lenient treatment, including the opportunity to avoid a criminal investigation and potential prosecution if strict conditions set by a judge are met.

Depending on the circumstances of a case a DPA may include payment of substantial penalties, the need to compensate victims and submitting to regular reviews and monitoring. Organisations could also be asked to undertake reform to prevent the conduct in question from occurring again. The agreement will be made in open court, and details of the wrongdoing and sanctions published. If the prosecutor is satisfied that the organisation has fulfilled its obligations by the end of the deferral period there will be no prosecution, but if the conditions are not met then the organisation could still be prosecuted.

Stocker said that there were plans to introduce a similar system in Scotland, but that these were not very far advanced. In the meantime, the Crown Office operates a process under which companies can self-report bribery in return for the opportunity to settle cases. However, Stocker said that only a handful of companies had done so, partly due to uncertainty over how the process works because it is not backed by legislation.

Stocker said that "businesses with legacy bribery or corruption issues that need addressed should face the matter head-on, and take positive action to prevent bribery and corruption".

"There is a perception that there is a lack of enforcement, similar to the case with the Corporate Manslaughter and Corporate Homicide Act 2008; but behind the scenes a lot of work is taking place," he said. "Prosecutions take a considerable time to prepare, and a number of criminal cases and civil settlements will enter the public domain next year."