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Do UK DPAs throw individuals under the bus?

It is five years since Deferred Prosecution Agreements (DPAs) came into force in the UK. In that time they have become such an established part of the corporate crime landscape that any UK-based company which is under investigation for fraud or bribery by the SFO will now give serious thought to pursuing a DPA.

However, over here DPAs are not available to individuals. So while they may have been a game changer for corporations the outcome for individual suspects has proved somewhat different and surprising.

Of the five DPAs agreed so far, four have completed their journey through the criminal courts, with companies agreeing financial penalties in excess of $800 million. Yet, not a single individual has been convicted following any of these four deals. This should be food for thought for those advising both corporations and individual suspects — especially as for many UK criminal offences, including fraud, the guilt of the company depends upon the guilt of senior individuals, the so called ‘identification principle’.

The SFO’s first DPA, with Standard Bank in 2015, was a textbook example of new owners self-reporting wrongdoing by the previous regime. The reported criminality took place overseas and understandably there were no individual prosecutions in the UK. In contrast, the three DPAs that followed (with technology firm Sarclad, grocery giant Tesco and engineering heavyweight Rolls-Royce) were agreed on the basis that there was substantial evidence of wrongdoing by individuals living or working in the UK. However, no convictions have followed.

In Rolls-Royce, the SFO somewhat surprisingly decided it was not in the public interest to prosecute anyone even though the DPA was based on “the most serious breaches of the criminal law in the areas of bribery and corruption … some of which implicated senior management.” In Tesco, the judge, having heard the prosecution case, acquitted the defendants at half time due to a lack of evidence rather than leaving the case to the jury. In Sarclad, the individuals blamed stood trial but were acquitted by the jury.

It follows that just because the SFO agrees a DPA based on the criminality of particular individuals it does not mean they will be successfully prosecuted. For corporate advisors such contradictory outcomes may take some explaining to the Board and shareholders, as well as creating the perception that individuals have been “thrown under the bus.” Whatever the SFO’s tough talk, any company considering a DPA has got to accept that no individual may be found responsible.

In the cases that have been prosecuted, the narrative agreed by the SFO and the company as part of the DPA has not stood up to the rigors of a criminal trial. What does this say about the scrutiny being applied when the SFO agree a DPA? For individuals who have been named and blamed in a DPA, a conviction is clearly far from certain and a healthy scepticism as to the basis of the DPA is called for.

In 2012, the UK’s Solicitor-General said DPAs would “contribute to the welcome trend of an increase in self-reporting by organizations” which would “enable the Serious Fraud Office and the Crown Prosecution Service to obtain better evidence so that prosecutors will be able to bring more cases.” While they may be having a significant impact on the behavior of corporations under investigation they have not led to any individual convictions. Whether this pattern continues remains to be seen, but for those of us with a regular diet of SFO cases these are interesting times.

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Ross Dixon, pictured above, is the Chair of Partners at Hickman & Rose. He is an officer of the International Bar Association Crime Committee, a member of The Fraud Lawyers Association committee, and is a regular commentator and speaker on crime and white collar crime issues. He can be contacted here

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3 Comments

  1. Sorry, I'm confused – it sounds as though the public at large was thrown under the bus. A number of individuals committed crimes such as bribery and corruption, some small monetary penalties etc were applied to a corporate entity which regards such matters as business as usual, and the individuals who perpetrated the crimes walked away with no penalties, and probably took with them some large bonuses. What a great system. For white-collar criminals.

  2. While I agree that the lack of individual prosecutions is an important consideration when corporates come to decide how to approach self-reporting and cooperation with the SFO (and, indeed, other agencies) with a view to a DPA, I don't think that there is necessarily any criticism of corporates entering into DPAs, even if it subsequently turns out that the individuals' trials collapse.

    The standard of proof is far lower in the case of DPAs, and corporates have stakeholders to consider, the commercial impact, the reputational impact, and indeed (for certain companies) the ability to compete for public tenders.

    One needs to consider the evidence on a case-by-case basis, but corporates and individuals have different – oftentimes competing – imperatives.

  3. Seems like a system which is made to protect white collar criminals as said by JG. I completely agree on comments of JG.


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