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SFO Guidance on Deferred Prosecution Agreements – key public interest and co-operation factors

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United Kingdom

The latest guidance provides some clarity regarding the SFO's approach to DPAs but raises questions about its views on cooperation.

 
On 23 October 2020, the SFO published what it describes as "comprehensive guidance" on how it approaches Deferred Prosecution Agreements (DPAs). 

The guidance, which forms part of the SFO's Operational Handbook, is for internal guidance only but provides a clear indication of how the SFO engages with companies where a DPA is a prospective outcome.

The guidance was published within 24 hours of the SFO announcing a DPA in principle with Airline Services Limited, which if granted court approval, will be the ninth DPA concluded by the SFO since the introduction of DPAs in February 2014 under the Crime and Courts Act 2013.

DPAs – a refresher  

A DPA is a court-approved agreement between a company and a prosecutor (either the CPS or SFO), and is an alternative to prosecuting the company.  

A DPA requires a company to admit criminal conduct and the prosecution is suspended for a set period, during which time the company will be required to meet certain specified terms and conditions.  

The terms of a DPA may include payment of a financial penalty, implementing a compliance programme, being subject to ongoing monitoring and cooperating in any ongoing investigation related to the alleged offence. 

A DPA must be in the interests of justice, and the terms must be fair, reasonable and proportionate.
 If a company breaches the terms of the DPA, it could still be prosecuted for its criminal conduct.

Public interest

In addition to factors set out in the Code for Crown Prosecutors, the guidance provides a non-exhaustive list of additional public interest factors considered to be in favour of a prosecution, as opposed to a DPA.

These factors include:
 
  • A history of similar conduct;
  • The company had no or an ineffective corporate compliance programme and has not been able to demonstrate a significant improvement in such programme since then;
  • Failure to notify the wrongdoing within a reasonable time;
  • Reporting the wrongdoing but failing to verify it, or reporting it knowing or believing it to be inaccurate, misleading or incomplete; and
  • Significant level of harm caused directly or indirectly to the victims.
In addition to the above, the guidance provides additional public interest factors in favour of a DPA, including:
 
  • Co-operation;
  • A lack of history of similar conduct;
  • The existence of a proactive corporate compliance programme both at the time of offending and at the time of reporting but which failed to be effective in this instance;
  • The offending is not recent and the company in its current form is effectively a different entity from that which committed the offences;
  • A conviction is likely to have disproportionate consequences for the company; and
  • A conviction is likely to have collateral effects on the public, the company's employees and shareholders or the company and/or institutional pension holders.
Co-operation

The guidance provides clear examples of what it considers evidence of co-operation, and states that considerable weight will be given to a genuinely proactive approach adopted by the company when the relevant misconduct is brought to their attention. 

This includes, but is not limited to:
 
  • Within a reasonable time of wrongdoing coming to light reporting the company's offending otherwise unknown to the prosecutor;
  • Taking remedial actions including, where appropriate, compensating victims;
  • Preserving available evidence and providing it promptly in an evidentially sound format;
  • Identifying relevant witnesses and disclosing their accounts and the documents shown to them;
  • Where practical, making witnesses available for interview when requested;
  • Providing a report in respect of any internal investigation including source documents; and
  • Waiving privilege over any LPP material, though the company can neither be compelled to waive privilege, nor penalised for not waiving privilege.
The guidance specifically highlights that voluntary self-reporting within a reasonable time is an important aspect of co-operation. 

Analysis

While guidance in relation to public interest and cooperation considerations essentially follows previous guidance (see Corporate Prosecutions Guidance and Corporate Cooperation Guidance), it provides much needed transparency on the SFO's approach to DPAs, including sections on parallel investigations, invitations to DPA negotiations, disclosure and what a DPA may contain. This will be welcomed by companies and their advisers.

It is seems that the SFO will not give significant weight on one or two factors when considering co-operation, but will look at the overall conduct of the company concerned. 

The guidance indicates that if a company self-reports, they should do so within a reasonable time. It therefore seems reasonable to assume that companies will not be penalised for investigating matters for themselves to understand the factual matrix before self-reporting.

The SFO's position in relation to waiving privilege over LPP material remains a curious one. On the one hand, waiving privilege has been specifically referred to as a factor that will be taken into consideration when assessing a company's level of co-operation. 

Consistent with the SFOs Corporate Cooperation Guidance (see our previous article), the guidance also states that companies will not be penalised for not waiving privilege. 

However, it is difficult to see how a company that does not waive privilege risks receiving a black mark against it from the SFO when determining its level of co-operation, which could ultimately sway the SFO into refusing to enter into a DPA.   

Companies that seek to rely on this fundamental common law/human right may, in reality, risk being penalised in some way. 

This article was authored by Kyle Phillips, director in the dispute resolution team at Fieldfisher.
 

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