U.K. Deferred Prosecution Agreement Proposal–A Dialogue Worth Having

UK-deferred-prosecution-agreement-proposalThis article was republished with permission from the site FCPAProfessor.com.

A previous article discussed U.K. plans to introduce U.S.-style corporate plea bargains, including deferred prosecution agreements. Among other things, the article mentioned an October 17th meeting with U.K. prosecutors at Pinset Mason’s London office.

TheBriberyAct.com summarizes the meeting and nicely frames the issues here and then discusses key questions posed by the solicitor general & SFO in the deferred prosecution agreement proposal & consultation. The post states as follows. “We think that the need for DPA legislation is obvious. Its absence has often been remarked upon by the Director of the SFO and for very good reason. It is a serious hole in the UK law. Its absence has a chilling effect on the attempts to ensure that ethical attitudes become a permanent feature of corporate life in all companies, be they International, SME or small.”

Others have shared their views on whether the U.K. should adopt U.S. style alternative resolution vehicles and, if so, how.

Thomas Fox at the FCPA Compliance and Ethics Blog believes “that the ability to enter into a DPA is a powerful tool that advances the interests of prosecutors, the judiciary and the public.”  Fox states that “the primary reason for both the prosecution and a company which violates the Bribery Act entering into a DPA is certainty.”

Ross Parlane of McGuire Woods writing at The Bribery Library states, “There are a number of benefits to be gained from giving UK prosecutors the power to negotiate DPAs. Certainly the cost and time involved in investigating offences would be significantly reduced, which is good news for the public purse.  Further, a well negotiated DPA that gives proper attention to remediation (e.g. through monitoring) as well as to punishment, has the potential to effect a permanent positive change in the culture of an organisation.” Yet Parlane says (and identifies) that “there are a number of tricky issues that need to be resolved before the use of deferred prosecution agreements can be adopted in the the U.K.”

Michael Volkov, writing at TheBriberyAct.com, notes that ”for UK policymakers, the balance between judicial review and prosecutorial discretion is one which has to be resolved before any new policy can be enacted.”

Let me contribute to the dialogue by posing this question. Why does a law with an adequate procedures defense require the third option of a deferred prosecution agreement – the first two options being prosecute vs. not prosecute?

If a corporate has adequate procedures, but an isolated act of bribery nevertheless occurs within its organization, the corporate presumably would not face prosecution under the Bribery Act.  Seems like a reasonable result.  In other words, no need for the third option in such a case.

On the other hand, if a corporate does not have adequate procedures (i.e. has no commitment to anti-bribery compliance) and an act of bribery occurs within its organization, it presumably would face prosecution under the Bribery Act.  Seems like a reasonable result.  Does a third option really need to be created for corporates who do not implement adequate procedures?

Because the FCPA does not have an adequate procedures/compliance defense (at least not yet), the same analysis does not apply.

Other U.K. News

Last week the SFO announced that two former Innospec executives were charged. Dennis Kerrison, former CEO of Innospec Ltd., was charged with “an allegation of conspiracy to corrupt, in that he gave or agreed to give corrupt payments to public officials and other agents of the Government of Indonesia as inducements to secure, or as rewards for having secured, contracts from the Government of Indonesia.”

Paul Jennings, the former CEO of Innospec, is accused of “two allegations of conspiracy to corrupt, in that he gave or agreed to give corrupt payments to public officials and other agents of the Governments of Indonesia and Iraq as inducements to secure, or as rewards for having secured, contracts from those Governments.”

Earlier in the week, the SFO also announced that David Turner, a former business unit director of Innospec Ltd., was charged with “alleged offenses of conspiring to make corrupt payments to public officials in Indonesia and Iraq to secure contracts for Innospec Ltd. for the supply of its products.”

Both Jennings (here for the prior article) and Turner (here for the prior article) previously settled SEC FCPA enforcement actions based on the same core set of conduct.

As with the SFO’s  recent case against Victor Dahdaleh, the recent Innospec related enforcement actions are not Bribery Act enforcement actions.

Belated Halloween FCPA Humor

Sure, it was Halloween Monday and all, but the FCPA reform debate is getting a little silly don’t you think? Click here for a chuckle.