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Plea bargain-style laws to be consulted on in summer, Government says

Out-Law News | 23 Apr 2012 | 3:28 pm | 2 min. read

Legislation to set out a framework that would allow businesses and prosecutors to negotiate punishments for criminal activity is being drafted and will be consulted on in June, according to a Sunday newspaper.

The Telegraph reported that the Ministry of Justice (MoJ) said laws seeking to introduce a system where deferred prosecution agreements (DPAs) could be formed were being worked on and that it is the intention of the department to open its proposals up to scrutiny "this summer".

Last month Solicitor General Edward Garnier told Parliament that a new framework for DPAs would give courts the power to approve penalty and compensatory payments agreed between firms and prosecutors.

Anti-corruption law expert Barry Vitou of Pinsent Masons, the law firm behind Out-Law.com, told thebriberyact.com that the current UK system does not allow companies that have reformed their business practices to be certain of avoiding criminal sanctions for previous unlawful behaviour.

"The lack of a DPA regime in the UK places UK PLC at a significant disadvantage with no ability to stave off the possibility of debarment by way of a ‘Deferred Prosecution’ if a corporation changes its ways," Vitou said. "This results in forum shopping or enforcement arbitrage with some corporations seeking to end run UK enforcement by entering into Deferred Prosecution Agreements in the US. This makes no sense."

In the UK at the moment prosecutors can negotiate a form of plea agreement with organisations, but those companies still face criminal punishments that can harm their reputation and restrict their trade. Businesses that do make plea agreements also have no guarantees that courts will accept those agreements.

In other jurisdictions, such as the US, organisations can negotiate settlements with prosecutors with a degree of certainty over the scope of their punishment.

A spokesman for the Serious Fraud Office (SFO) told Out-Law.com in December that DPAs could reduce the need for lengthy fraud investigations in some cases and would encourage businesses to come forward with information about unlawful practices. Any new legislation should define the structures of DPAs and the situations in which they should be used, the SFO said at the time.

DPAs would enable prosecutors to punish businesses for unlawful activity without the need for expensive and time-consuming investigations and enable businesses to avoid more serious criminal sanctions, the spokesman said. The SFO is an independent Government department that investigates and prosecutes serious or complex fraud and corruption.

Garnier, Attorney General Dominic Grieve and former SFO director Richard Alderman have been involved in informal consultations over a potential DPA regime since the autumn last year. Pinsent Masons hosted the first consultation.

A spokesperson for the Attorney General's Office (AGO) subsequently told Out-Law.com that the plans being discussed related to the formation of a regime whereby companies could avoid criminal sanctions for unlawful activity, such as fraud or corruption, by owning up to the conduct and signing judiciary-approved DPAs with prosecutors.

The settlements could involve companies paying fines and agreeing to make changes to policies, practices and structures. Companies would face a form of probation period where criminal prosecutions could still be brought against them for non-compliance with the terms of the settlement or if a second incidence of unlawful activity is discovered, the spokesperson said at the time.

The AGO is keen on an "open and transparent" system around which DPAs can be formed where judges have a bigger say in determining the details of settlements. A new system could see prosecutors and businesses come to a preliminary agreement to settle cases of serious financial crime before judges are asked to approve the outline agreement. If that approval is given, prosecutors and businesses could then agree the final details of their settlement, but this would again require judicial approval.

The AGO spokesperson said that, under a new system, the UK's judiciary could publish guidelines to give business "more certainty" over the kind of cases where DPAs could be approved and the nature of an acceptable settlement.