There appears to be US judicial and cross-political-party ‘pushback’ against Deferred Prosecution Agreements made between the various US justice agencies and large-scale corporate offenders.
The Americans essentially invented both Non- and Deferred Prosecution Agreements in the late 90s as a convenient way in which to deal with the perceived difficulties of prosecuting large-scale corporate crime.
The view held on both sides of the Atlantic is that the large corporates are too big to prosecute, and the collateral fallout of any successful prosecutions would be enormous on a variety of levels, e.g. loss of banking licences. The track record of the US authorities, and indeed the UK authorities, as far as the prosecution of large-scale white collar and corporate crime goes, has been very poor, however that is simply because they have been underfunded by their respective governments for many years. There has not been the consistent will on behalf of government or the prosecution authorities to deal with these issues.
The last few years have shown the extent of corporate criminal offending: industrial money laundering, sanction busting, bribery and corruption, and FATCA offences, to name but a few, in unimaginable sums of money, all committed by multinational corporates, who are household names, across a variety of industries. It was, however, the banks’ criminal offending which has captured the attention of a furious public both in the US and the UK.
There has been increasingly vocal cross-party criticism from US Congress and the Senate Banking Committee to the effect that the corporates are perceived as ‘getting away with corporate crime’, whereas individual fraudsters convicted of large-scale white collar fraud, face massive sentences, far longer than handed down in this country.
Perhaps stung by criticism both in the US and abroad, two US judges, in particular Judge Rakoff, when dealing with the Deferred Prosecution Agreement between Citigroup and the US Securities and Exchange Commission, remarked that there had been much publicised criticism of judges rubber-stamping these DPAs. More recently, as reported in The Guardian (23 May 2013), Judge John Gleeson has invoked the ire of the US justice department by apparently rejecting the deal made between the DOJ and HSBC (rumoured to be in the sum of $1.96 billion) in connection with allegations of industrial-scale money laundering.
Recent thinly veiled remarks by the US Attorney General have hinted at a much tougher policy to be adopted by the relevant prosecuting authorities. Certainly Sir John Peace, Chairman of Stanchart, found this out to his cost when he made certain remarks about the DPA signed by Standard Chartered Bank in 2012. Top executives at the bank were quickly summonsed by the DOJ and the remarks were retracted under the threat of prosecution.
DPAs are to be a feature of the criminal justice system here, courtesy of the Crime and Courts Act 2013, which received Royal Assent on 25 April 2013. Both the CPS and the SFO will have the power to enter into such agreements with corporate offenders when dealing with money laundering, fraud, bribery and corruption. Both organisations are currently working on a code for prosecutors in relation to DPAs.
Many City law firms and US ‘white shoe’ firms that have set up offices here, are busy recruiting lawyers from the FCA and the SFO in anticipation of a tsunami of corporate self-reporting and DPAs. They had better be warned: our system for dealing with these DPAs is not going to be as soft a touch as in the US, which has been criticised for its inconsistency, lack of transparency, and a rather partisan approach by the US authorities.
Our Judiciary universally loathe these agreements; six or so of the toughest, specialist fraud Judges throughout the country have been chosen to deal with them and they promise a rigorous, robust scrutiny of DPAs. They also are determined to bring much needed transparency and consistency to the punishments (i.e. the size of the fines and related requirements).
Currently, the Sentencing Council for England and Wales, under the Chairmanship of LJ Leveson, is preparing to consult upon the approach to DPAs. The Council will have to ensure that the approach taken does not lead to ‘jurisdiction shopping’, whereby these large multinational corporate offenders ‘shop around’ for the legal jurisdiction which proves to be the softest touch.
The author was, until March 2013, a member of the Sentencing Council for England and Wales, and has advised on the Council’s forthcoming consultation on DPAs, bribery and corruption, money laundering, and fraud.
