UK white collar prosecutors look set to receive a new
enforcement tool following the
Ministry of Justices consultation (the Consultation)
on deferred prosecution agreements (DPA), which closes on
If the plea negotiation-method has retrospective effect, as
proposed by the Consultation, use of DPAs in any charges
stemming from UK investigations into manipulation of the London
Interbank Offered Rate (Libor) cannot be ruled out.
Following Serious Fraud Office (SFO) director David
Greens announcement last week that
Libor offences can be prosecuted under existing UK law,
white collar lawyers have told IFLR that DPAs could be
an option if the SFO brings Libor charges.
Depending on when DPAs take effect, and how long the
Libor investigations last, then yes it could be an
option, one former SFO lawyer said.
Intended as a swifter way of pursuing serious economic
crime, DPAs allow corporates to bypass criminal prosecution if
they self-report or own up to offences, pay the relevant fine,
and abide by conditions over the term of the DPA.
Paragraph 83 of the Consultation proposes, and asks for
feedback on, whether the enforcement mechanism should be
available in relation to conduct taking place before DPA
legislation takes effect.
Lawyers told IFLR there is no apparent reason why
DPA legislation should not have retrospective effect.
The possibility of DPAs used for Libor-offences
hasnt escaped the attention of legal market
commentators further afield, either.
UK white collar lawyers have welcomed DPAs
introduction as a way to most effectively use SFO resources,
and improve the predictability for companies considering
self-reporting unlawful conduct.
But for DPAs to work, the governments response must
give corporates greater reassurance than the Consultation.
It seems to me that its all very much worded for
the prosecutor. I cant see the benefit for corporate
bodies right now, said the former SFO lawyer.
A criticism of SFO agreements in the past has been
their lack of transparency, and thats not really been
rectified in the consultation document, they added.
Transparency improvements are needed in three overriding
First, it must be clearer what information is needed from
corporates to secure a DPA. It is critical that a proper
framework is put in place for DPAs, which identifies the
factors which should be considered when determining if a DPA is
appropriate, the former SFO lawyer said.
Second, a sentencing matrix must be devised (as in the US)
so corporates can adequately assess DPA fines against
prosecution penalties before self-reporting.
Finally, to the greatest extent possible, court proceedings
in approving the DPA must be private. The degree of judicial
oversight proposed by the Consultation is a major distinction
between it and the US regime, where court involvement is
limited to final approval and widely viewed as a rubber
Given DPAs have been used in the US for more than a decade,
its not surprising the Consultation falls short in
One area where the UK framework improves on the USs
even before corporate responses are incorporated
is the process following suspected breach of the DPA.
A positive sign for transparency and fairness is the
way they have sought to protect the competing interests of all
involved the court, the prosecutor and the company
in connection with alleged breaches of the DPA, rather
than simply leaving the determination of breach to the
discretion of the prosecutor, as is the practice in the
US, said Patrick Doris, a London-based Gibson Dunn &
The government will publish a response in the autumn of 2012
summarising the comments that have been received and how they
will be incorporated into
the proposals, a MoJ spokesperson said.