Developments From Across the Pond

This article was reprinted with permission from FCPA Professor

A few developments from the United Kingdom worth highlighting.

SFO Speech

In this recent speech, David Green (Director of the SFO) stated:

“Deferred Prosecution Agreements (DPAs)

I anticipate that at least 2 DPAs will be completed this calendar year.

Concern has been expressed by some in the NGOs and the media that DPAs will be merely a mechanism whereby companies can buy themselves out of trouble, and that prosecutors will be brow-beaten by lawyered-up corporates. These concerns are misplaced and premature.

DPA’s are intended as a mechanism whereby the collateral damage to innocent parties occasioned by the prosecution of a company can be avoided in an appropriate case. On the English and Welsh model, the prosecutor must identify the full extent of the offending. Judicial approval is required at a preliminary hearing which will take place in private and at the final application for approval which will always be in public. Crucially, the judge must be satisfied that the DPA is in the interests of justice, and is fair, reasonable and proportionate. Rubber stamps have no part in the process.

The bar is a high one. This does not mean that corporates lose their right to contest a genuine question of law or that they have to waive privilege. But cooperation is vital, and for this simple reason: how can the prosecutor convince the judge that a DPA rather than a prosecution is in the interests of justice?

I anticipate that once the offer, the bar and the process are demonstrated and understood in action, we will see many more DPA’s.

Corporate criminal liability

There is, I suggest, one more step necessary to make DPAs mainstream. That involves moving away from the identification principle of corporate criminal liability in English law and embracing something closer to vicarious liability, as in the USA.

Until that is done, a corporate might conclude that if the prosecution of a company is so difficult under our law, why should they agree to a DPA?

On a broader front, if the public interest, in terms of public confidence, demands more prosecutions of corporates, then such change is surely necessary.

Despite the advent of DPAs, prosecution is and remains the default preferred option.”

Bribery Act First

Thebriberyact.com reports:

“Drum roll.  We now have the first corporate disposal for a violation of the new offence of failure to prevent bribery.

…in Scotland.

Last Friday the Scottish authorities announced a civil settlement with Brand-Rex Limited. The settlement is of note for two reasons.

Firstly, it is the first concluded settlement for a contravention of the Bribery Act 2010, s.7 – corporate failure to prevent bribery by a third party.

It is a classic case on the thorny question of corporate hospitality and that hospitality being misused.

Secondly, it is the third concluded corporate self-report and civil settlement in Scotland. The Scottish system is akin to that operated by the SFO before deferred prosecutions agreement were introduced. It is clear that Scottish system is encouraging self-reports and that the settlements are being progressed in a reasonable timescale.”

Reform Ditched

Speaking of the above mentioned Section 7 of the Bribery Act, for some time there has been a debate in the U.K. whether to widen such an offense to include economic crimes other than bribery.

Bloomberg reports:

“The U.K. abandoned a much campaigned-for change to legislation that would have made it easier to prosecute corrupt companies in the latest nod to a new era of deregulation for business under the re-elected Conservatives.

In a written answer to a lawmaker’s question posted Monday, junior Justice Minister Andrew Selous said the “ministers have decided not to carry out further work” on an expansion of corporate criminal liability laws as there is “little evidence of corporate economic wrongdoing going unpunished.”

Prosecutors, academics and lawyers have petitioned the government for years to widen the Bribery Act, a 2011 law that allowed companies to be prosecuted for failing to prevent economic crimes such as fraud and money laundering as well as bribery. The decision marks a u-turn by the government, which said in 2012 that the options for dealing with corporate offending were “limited” and the number of convictions each year was “too low” as public displeasure about the Libor and other banking scandals grew.”

Read more articles on the FCPA by Mike Koehler at FCPA Professor.

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