On 23 October 2020, in an effort towards transparency, the Serious Fraud Office (“SFO”) published the Chapter on Deferred Prosecution Agreements (“DPAs”) from its Operational Handbook which it describes as “comprehensive guidance on how we approach DPAs, and how we engage with companies where a DPA is a prospective outcome.” The decision as to whether to enter into DPA negotiations is within the prosecutor’s discretion. The guidance sets out the considerations that should inform the decision and the requirements for a formal letter of invitation, written terms of negotiation, confidentiality, disclosure and retention by the company of all relevant material.
As the guidance itself cautions, it does not supersede or replace previous guidance, and should be considered alongside the authoritative legislation under Schedule 17 of the Crime and Courts Act 2013 and the DPA Code. The DPA code remains the lead document for consideration, with its publication and consideration required by law and it having been laid before Parliament.
DPAs under Sir David Green
Former Director of the SFO Sir David Green will be remembered for refocusing the SFO’s objectives towards a more traditional investigation and prosecution of corporate offending. Sir David previously stated that “in the past, there was a feeling that the SFO was nervous about prosecuting cases and was therefore more inclined to civil settlement rather than criminal prosecution.”
Taking inspiration from the US system, DPAs were introduced in the UK in January 2014. Sir David was keen to demonstrate that DPAs were not a ‘soft option’ and that they would only be considered where a company had shown early, genuine and proactive co-operation. He made clear that the SFO would not accept a ‘Damascene conversion’ whereby a company and its legal counsel could fail initially to co-operate with the SFO and later request a DPA.
Almost two years after the introduction of the DPA regime, we saw with Standard Bank the first of this new type of agreement. Commenting at the time, Sir David said:
“This landmark DPA will serve as a template for future agreements. The judgment from Lord Justice Leveson provides very helpful guidance to those advising corporates. It also endorses the SFO’s contention that the DPA in this case was in the interests of justice and its terms fair, reasonable and proportionate. I applaud Standard Bank for their frankness with the SFO and their prompt and early engagement with us.”
The new DPAs regime under Lisa Osofsky
We have witnessed, under the regime of Lisa Osofsky, a shift from the position where both early engagement and proactive co-operation were equally required as pre-conditions for a DPA to a position where there is a greater emphasis on co-operation generally, with self-reporting to be considered as an important factor as part of the same.
Both Rolls-Royce and Airbus were granted DPAs despite not self-reporting. In the Rolls-Royce case, the investigation was triggered by whistleblowers who released information to the media. The Airbus judgment made clear that “there is no necessary bright line between self-reporting and co-operation.” Both companies received 50% discounts.
In disclosing the guidance from the Operational Handbook, Ms Osofsky stated:
“Over the past six years, we at the SFO have been developing our approach to negotiating and entering into DPAs, and in turn, establishing best practice. Publishing this guidance will provide further transparency on what we expect from companies looking to co-operate with us…DPAs are a valuable tool in the fight against serious fraud, bribery and corruption, capable of not only punishing corporates for criminality but also making sure the company rehabilitates and becomes a better corporate citizen. This helps us foster a business environment where everyone plays by the rules, which can only benefit UK Plc.”
The Chapter makes clear that co-operation is “a key factor to consider when deciding whether to enter into a DPA.” Co-operation is to be considered in the context of the SFO’s Corporate Co-operation Guidance (updated on 6 August 2019) which describes co-operation as assistance that goes above and beyond what the law requires, including, among other things, preserving available evidence and providing it promptly in an evidential format.
The guidance makes clear that, “[t]he failure of a Company to self-report is not a bar to DPA negotiations per se,” but self-reporting “within a reasonable time of the offending conduct coming to light” is as “an important aspect of co-operation.”
Since their introduction, the SFO has entered into nine DPAs and recent activity suggests that the model is gaining traction with both the SFO and corporates.
On balance, the newly released guidance doesn’t materially assist companies to understand what the SFO expects in terms of co-operation beyond information which companies wouldn’t otherwise have been aware of based on the DPA judgments and guidance released to date.
While self-reporting has always featured in a list of non-exhaustive public interest factors in the DPA Code of Practice, it might be suggested that the guidance does, however, confirm the shift in emphasis, at least internally within the SFO, in relation to the question of self-reporting.
The release of this guidance in and of itself supports the view that the direction of travel under Ms Osofsky appears to be in favour of making it easier and more attractive for companies to consider the DPA route. How this reflects on the confidence that the SFO has in its own ability to act as an investigator and prosecutor is another matter.