The future of Deferred Prosecution Agreements after Rolls-Royce

Written on 9 Mar 2017

Ben Morgan, Joint Head of Bribery and Corruption at the Serious Fraud Office gave an illuminating address on 7 March 2017, in which he set out the SFO’s view on the future direction of travel for DPAs following the decision in Rolls-Royce (January 2017).

The speech analysed the three previous DPAs to date, which we have examined in earlier OC briefings (see here and here). It then went on to give 6 key takeaways that we believe will provide an important reference point for any business that encounters a problem and has to embark on the difficult and complex process of addressing that position.

Key Points

The points highlighted by Mr Morgan in the light of the Rolls–Royce decision were as follows:

  1. For companies that behave responsibly, DPA’s will be the new normal, and will become increasingly common.
  2. The benchmark for discounts on penalties is becoming established, but by reference to the benchmark of co-operation given to the SFO that will be required to achieve that discount.
  3. There will be a tangible downside, in the form of increased sanctions, for companies that do not engage with the SFO and are later caught:

 “If the benefits of cooperating and receiving up to 50% discounts on penalty are to be understood, then it is only right that those who do not cooperate receive the most punitive sanction available under the Sentencing Council’s Guidelines if they are convicted after trial.”

4. Self-reporting is not dead, and will remain a key feature of the profile of cases suitable for a DPA.

5. Closer and better cooperation between international enforcement agencies will continue. This will mean better intelligence sharing and evidence sharing, meaning guilty parties are more easily held to account. Equally, it may lead to global settlements being easier to achieve.

6. The SFO will remain self-aware and self-critical, constantly asking itself whether DPAs are working as effectively as they could. The SFO asserts that it will not become complacent and so risk criticism that it is not being hard enough on economic crime. The granting of a DPA will not, it says, become a casual, commoditised practice  and the SFO will remain committed to ensuring that that DPA legislation is deployed responsibly and only if it is in the interests of justice to do so.

Osborne Clarke comment

As we have noted previously, the SFO will have been emboldened by the Rolls-Royce decision, and is therefore understandably trying to capitalise on what was a landmark case. As such Mr Morgan was keen to emphasise what the SFO  views as the benefit to be gained by early, and full, cooperation and, conversely, stressing the severe penalty that will result if a company does not take that course of action.

Whether that message is followed will of course remain to be seen. There has, as Mr Morgan noted, been some critical comment asking why Rolls-Royce was not subject to a full prosecution. Our view remains that a DPA was, for all the reasons articulated in the judgment handed down by Lord Justice Leveson, the correct way of dealing with the particular facts of that case.

We though also remain of the view that, if DPAs are utilised most effectively, greater incentives, by way of increased discount in sanction, should be made available to those who fully self-report. This will not in any way compromise the SFO’s objective of ensuring that companies that do not self-report are subject to the harshest of sanctions, but it will more clearly delineate the carrot from the stick.