Deferred prosecution agreements explained

What a DPA is and is not

A DPA is not a conviction. It is an agreement under which a prosecution is held back on conditions. The US Justice Manual says non-prosecution and deferred prosecution agreements occupy a middle ground between declining prosecution and obtaining the conviction of a corporation ⁴. In Canada, once the court declares a remediation agreement complied with, proceedings for the covered offences are stayed and treated as never having started ⁷. In France, the order validating a CJIP does not amount to a declaration of guilt ⁸.

A DPA is different from a regulator's civil settlement. It resolves a criminal matter, it is overseen by a court in the UK, Canada and France, and a breach can lead back to prosecution ^1,68.

England and Wales: Schedule 17

Schedule 17 of the Crime and Courts Act 2013 defines a DPA as an agreement between a designated prosecutor and a person the prosecutor is considering charging. That person may not be an individual ¹. Terms can include paying the prosecutor a financial penalty and compensating victims of the alleged offence ¹.

The court is involved twice. Before terms are agreed, the prosecutor asks for a declaration that a DPA is likely to be in the interests of justice. After terms are agreed, the court must find the DPA is in the interests of justice and that its terms are fair, reasonable and proportionate. The DPA takes effect only on Crown Court approval ¹.

If the prosecutor believes the terms have been broken, it can apply to the Crown Court. The court decides on the balance of probabilities and can invite the parties to agree a remedy or terminate the DPA ¹. If the DPA runs to expiry, the prosecutor gives notice discontinuing the proceedings. As a rule, fresh proceedings for the same offence cannot then be brought, with an exception for inaccurate or misleading information given in negotiations ¹.

The DPA Code of Practice sets two stages. At the evidential stage either the Full Code Test evidential stage is met, or there is at least a reasonable suspicion based on some admissible evidence plus grounds to expect more evidence. At the public interest stage the public interest must be properly served by a DPA instead of prosecution ². The Code says considerable weight may be given to a genuinely proactive approach by management. After approval the prosecutor publishes the DPA and the court's declarations with reasons on its website ².

The first UK DPA

The first DPA in England and Wales was approved on 30 November 2015 by the President of the Queen's Bench Division at the Crown Court at Southwark, in Serious Fraud Office v Standard Bank plc. The judgment calls it the first example of a DPA in this country ³.

The terms included compensation of US$6 million plus interest of US$1,046,196.58, disgorgement of profit of US$8.4 million, a financial penalty of US$16.8 million and SFO costs of £330,000. The indictment was suspended for three years and then to be discontinued, subject to compliance ³.

United States: DPAs and NPAs

US federal prosecutors use both deferred prosecution agreements and non-prosecution agreements with companies. The Justice Manual calls them a third option, besides a criminal indictment and a declination ⁴. It says such agreements keep the government's ability to prosecute a corporation that materially breaches the agreement, and that successive agreements are disfavored in most cases ⁴.

The factors prosecutors weigh for companies include the pervasiveness of wrongdoing, the company's history, its cooperation, its compliance program, voluntary self-disclosure, remediation, collateral consequences and the interests of victims ⁴. Whether to require an independent compliance monitor is decided case by case ⁴.

Canada and France

Canada's Criminal Code Part XXII.1 sets up a remediation agreement regime applicable to organizations. Its stated purposes include denouncing an organization's wrongdoing and the harm it caused ⁵. The prosecutor must apply to the court for approval. The court approves the agreement if it is in the public interest and the terms are fair, reasonable and proportionate to the gravity of the offence ⁶. When the organization complies, the court declares the terms met, the proceedings are stayed, and no other proceedings may be initiated for the same offence ⁷.

France introduced the convention judiciaire d'intérêt public in law no. 2016-1691 of 9 December 2016, in article 41-1-2 of the Code of Criminal Procedure ⁸. The fine is capped at 30% of average annual turnover over the last three years. The president of the court decides whether to validate it at a public hearing. The validation is not a declaration of guilt and does not appear on the criminal record. The company has ten days after validation to withdraw. The order, the fine and the agreement are published on the website of the Agence française anticorruption ⁸.