IS PROSECUTION always the right response to corporate crime? Sometimes it can be a blunt instrument, causing unintentional collateral damage. Companies are not people and cannot be sent to prison: the effect of a prosecution can be felt by innocent employees, pensioners and shareholders as much as by the directors. Arthur Andersen’s collapse in 2002 demonstrated that all too vividly.
Already, prosecuted companies sometimes agree to plead guilty to fraud in accordance with the attorney general’s guidelines, or a civil outcome may be appropriate. In March 2010 the chemicals company Innospec pleaded guilty to bribing employees at a refinery and other government officials in Indonesia in order to secure sales of a fuel additive and paid a financial penalty of $12.7m (£8.3m). In July 2011 Macmillan Publishers was ordered to pay over £11m under the Proceeds of Crime Act to claim back money generated through unlawful conduct in east and west Africa.
These are examples of offending so serious that only a prosecution will meet the justice of a case. But if a company is prepared to face up to its wrong-doing and accept punishment through a criminal justice process that stops short of prosecution, there must be merit in thinking about how that might be achieved.
Together with the Serious Fraud Office, Crown Prosecution Service, Ministry of Justice and Home Office, I am discussing with lawyers here and overseas the introduction of deferred prosecution agreements (DPA), similar to those in the United States, which could provide a more effective approach to dealing with corporate crime in some cases.
DPAs are an established part of the United States response to corporate crime, encouraging companies to self-report criminal conduct to the Department of Justice (DoJ). The DoJ typically agrees with a company to defer its prosecution in return for payment of a substantial fine, compensation to victims and the imposition of a regime of corporate monitoring (at the company’s expense) for a period of two or three years. There may be other terms in the agreement to maintain flexibility. If the company complies, the prosecution is eventually dropped at the end of the period.
An important aim of any DPA system would be to allow investigators and prosecutors to focus resources on cases where a prosecution is in the public interest. If we can encourage companies to confess their wrong-doing, pay penalties and reform their operations, the time and energy of investigations and prosecutions will better spent elsewhere, bringing more individuals and companies to justice.
I am examining the pros and cons of DPAs and I will be consulting judges, lawyers, business people and interested campaigners on how they might work. It is an open-minded process designed to get the best of the American system translated across to ours in the most effective, open and just way.
The solicitor general Edward Garnier QC MP and the attorney general Dominic Grieve QC MP are, in addition to their other duties, accountable to Parliament and superintend the Serious Fraud Office (SFO) and the Crown Prosecution Service (CPS).