Deferred Prosecution Agreements: an introduction

Section 45 and Schedule 17 of the Crime and Courts Act 2013 introduced for the first time the Deferred Prosecution Agreement (‘DPA’) into the Criminal Justice system. They provide a mechanism under which a defendant organisation (but not an individual) can defer in the hope of ultimately avoiding a prosecution for certain economic or financial offences by entering into an agreement on terms negotiated with the prosecutor.

Sharing certain features with a Conditional Discharge, the DPA is a disposal of a criminal charge which is dependent on the remediation and future good conduct of the (intended) defendant. In contrast to a Conditional Discharge, no conviction results from a DPA and there is no admission of criminality.

An essential feature of the DPA scheme is the requirement that the court examines the proposed agreement in detail and determines whether the statutory criteria are met.

What are the mechanics of a DPA?

Prosecutor’s discretion

Unlike an offer to accept partial pleas of guilty or a guilty plea on a particular basis, which should emanate from the defence, it is the prosecutor in a DPA case who invites the prospective defendant into negotiations. The discretion to issue such an invitation remains with the prosecutor.

Before taking that step, the prosecutor must be satisfied:

• That the evidential test for prosecution has been met or there is a reasonable suspicion based on some admissible evidence that the organisation has committed an offence;
• That the full extent of the alleged offending has been identified;
• That the public interest would be met by a DPA.

The public interest factor usually depends on the seriousness of the offence, the culpability of the organisations and the harm to the victim.

The default position is that a prosecution will take place unless the public interest factors outweigh those tending in favour of a prosecution. Each case will depend on its own facts.

Factors which militate in favour of prosecution include:

1. A history of similar misconduct by the organisation;
2. The conduct is part of established business practice of the organisation;
3. The offence was committed when there was inadequate corporate compliance within the organisation;
4. The organisation has been subject to a previous warning.

Factors which militate against prosecution include:

1. Cooperation by the organisation;
2. A lack of similar previous misconduct on the part of the organisation;
3. The existence of a proactive corporate compliance programme;
4. The misconduct represents the actions of individuals or rogue members of the organisation;
5. The offending is not recent and the organisation has changed radically from the entity responsible for the misconduct;
6. A conviction will have disproportionate consequences for the organisation;
7. A conviction is likely to have disproportionate consequences for the public, the employees and shareholders of the organisation.

Co-operation

It is critical that the defendant organisation demonstrates from the outset that it has cooperated with the prosecution. This is likely to include self-reporting and uncovering criminality which the Serious Fraud Office may not have discovered independently. It will not avail a defendant company to wait for detection of criminality and then to see the strength of the prosecution evidence before deciding whether to accept culpability. Initial refusals to behave in a transparent manner are likely to militate against an invitation to negotiate a DPA.   The Serious Fraud Office has made clear that it expects a very high level of cooperation in order to qualify for a DPA. Such co-operation is likely to include the defendant organisation conducting its own inquiry into what happened.

Should such a course be taken, the recent decision of the SFO v ENRC [2017] EWHC 1017 (QB) should be borne in mind. In that case, the High Court ruled that litigation privilege does not apply to documents generated during investigations undertaken by solicitors and forensic accountants into the activities of a company investigating whether or not criminality had occurred as a result of allegations made by a whistleblower in the context of a possible criminal investigation.

If the prosecutor decides to offer a DPA, a formal letter of invitation will be issued. This represents the start of the negotiation period. Negotiations, although confidential, must be transparent; minutes of all meetings are kept and every offer and concession should be recorded.

Court

Once the negotiation stage is underway, the prosecutor must make an application to the Crown Court supported with a Statement of Facts for a declaration under paragraph 7 of Schedule 12 that:

1. Entering into a DPA is likely to be in the interests of justice; and
2. That the proposed terms of the DPA are fair, reasonable and proportionate.

The Court retains control of the ultimate outcome and should the Court decide not to approve the DPA proposed by the parties, the hearing is held in private so as not to jeopardise any further prosecution.

However, if the court makes the declaration sought by the parties, there follows a public hearing under paragraph 8 at which the declaration and the reasons for it are provided in open court.

At the time of writing, four DPAs have been concluded and sanctioned by Leveson, P sitting at the Crown Court. The President has scrupulously challenged the terms proposed under each of the DPAs and has made it plain that: “There is no question of the parties having reached a private compromise without appropriate independent judicial consideration of the public interest.”