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Carrot and Shtick: The Efficacy of DPAs in Regulating White Collar Crime - Cheryl Bee

Corporations have ‘no soul to be damned, and no body to be kicked’, so holding actors accountable in white-collar crimes is not a straightforward exercise. Under the common law test for criminal liability, mens rea (a guilty mind) needs to be established before an act can be considered criminal. Attributing the human state of mind to corporations, however, has always been a conceptually difficult task. Does the answer then lie in circumventing the substantial challenge of prosecuting corporations instead?

The increasing prominence of Deferred Prosecution Agreements (DPA) point to a potentially successful alternative enforcement tool against economic crime. To date, there has only been one successful corporate conviction (following a guilty plea) under the Bribery Act 2010 after over 90 convictions, but a total of nine DPAs have been entered into since 2015. By encouraging a culture of self-reporting and compliance, corporations effectively save time and damage to their reputation without the collateral damage of conviction; while the judiciary stands to benefit from effective reallocation of resources from a reduced number of costly, lengthy trials. In practice, this picture appears less rosy. The transformative potential of DPAs hinges entirely on the willingness of companies to cooperate with prosecutors. Ultimately, DPAs are only as attractive as the existing deterrent regime is damaging, and in its current state, it is not an obvious choice. With historically low risks of prosecution and trivial corporate fines in the UK’s enforcement landscape, corporations have good reason to stay undeterred by existing sanctions.

Background of the DPA

Encouragement of self-reporting for fraud, money-laundering, bribery, and other economic crimes has been a moving target since the Serious Fraud Office’s issued guidance in 2009. It presented companies with the reward of a civil penalty in favour of a criminal one if they chose to self-report instances of overseas bribery in appropriate cases. Since then, amendments have been made to provide bigger rewards for cooperation, ultimately leading to the DPA regime’s introduction in 2014. In exchange for avoiding prosecution, the SFO requires corporations at minimum to (1) self-disclose wrongdoing, (2) take remedial action, (3) preserve available evidence, (4) make witnesses available where possible, and (5) waive legal professional privilege over any privileged materials (although corporations cannot be compelled to do so). These ‘rewards for openness’ enable companies to avoid the financial repercussions and reputational damage of criminal prosecution. The former was clearly exemplified by Walmart’s $840 million investigation into compliance failures after rejecting a $600 million settlement for bribery investigations instigated by the Justice Department and SEC for foreign corruption allegations. This, and the threat of debarment from public procurement contracts, also known as the death penalty for businesses, creates significant leverage for prosecutors during negotiations. At first glance, these rewards may point to a greater culture of compliance within corporate Britain while allowing precious judicial resources to be reallocated towards investigating additional economic crimes. A major caveat, however, is the dependence of its success on corporate willingness to engage in such agreements in the first place.

Risky Business

A logical prerequisite for corporations to engage in DPAs is the lack of a better alternative. DPAs are not necessarily the best business decision for corporations for three main reasons. Firstly, the SFO’s historically low prosecution rate dilutes the main attraction of DPAs. The SFO’s termination of investigations into GlaxoSmithKline and Rolls-Royce in 2019 raises pertinent questions about the utility of DPAs. After years of examination, the SFO’s inability to convict any individual suspects in relation to both cases suggests that corporations enjoy a degree of immunity, especially with the scale of allegations in Rolls-Royce’s DPA. The effectiveness of an enforcement tool may be hard to define, but it is not obvious that these cases demonstrate the efficacy of DPAs. The efficacy of enforcement tools and successful convictions are not necessarily correlative, but a prosecutor’s tool that does not convict even with extensive supporting evidence is cause for scepticism.

Secondly, there is no guarantee that self-reporting will lead to non-prosecution. Companies risk exposing themselves to lawsuits from incriminating admissions within the DPA which must be made public for transparency in the UK. Specifically, the negotiation of a DPA involves drafting a statement of facts and full particulars of each alleged offence. In this instance, it is easy to imagine that conflict of interest between the corporation and its senior leadership will likely occur when the roles played by each individual within the alleged offence are detailed. This issue would require careful navigation by the company’s legal advisors. Naturally, the price of “openness” might outweigh the perceived “reward”, and see corporations retain potentially incriminating information by not engaging in a DPA.

Thirdly, the risk of cross-jurisdictional sanctions threatens MNCs with a global presence. Compared to the UK, the US has a relatively limited double-jeopardy doctrine. As a result, companies might end up facing multiple prosecutions for the same offence – especially for bribery allegations. The nature of bribery offences might see a single occurrence trigger concurrent proceedings in multiple jurisdictions, resulting in duplicative punishments for self-disclosure of potential bribery. This creates a disincentive for corporations to engage in DPAs as the risks far outweigh the benefits.

The Future Enforcement Landscape

DPAs embody the flexibility and pragmatism that is potentially a solution to the UK’s enforcement landscape. High thresholds for establishing corporate criminal liability, however, and the historically low risk of prosecution impede the viability of DPAs within the UK. Where corporations do not view it as an attractive alternative route to prosecution, a culture of compliance cannot be established. This culture is crucial especially in the realm of white-collar crime where the role of whistle blowers and cooperation with enforcement agencies is necessary to detect its presence.

Nonetheless, there is much uncertainty in the impact DPAs will have in tackling economic crime. Especially after the investigations into GlaxoSmithKline and Rolls-Royce, scepticism over the agreement’s utility in its current state is justified. DPAs require further fine-tuning, as the ‘carrot-and-stick’ approach in its current state is unbalanced. Where the existing deterrence regime is not sufficiently rigorous, corporations will not see DPAs as the ‘reward for openness’ it proposes to be, ultimately restricting the positive benefit they could bring to the UK’s enforcement landscape.


J. Poynder Literary Extracts (1844) vol. 1

Simmons & Simmons, ‘Corruption Enforcement Tracker’, Simmons & Simmons, 21 April 2021.

Serious Fraud Office, 'The Serious Fraud Office’s Approach To Dealing With Overseas Corruption', SFO, July 2009.

The GEE Blog, ‘UK’s Serious Fraud Office Issues Guidance on Deferred Prosecution Agreements’, Barnes & Thornburg LLP, 16 June 2021.

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Tom Baker, ‘DPAs in spotlight as SFO ends long-running Rolls-Royce and GSK investigations’, Legal Business, 22 February 2019.

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