Lawyer Monthly Magazine - May 2019 Edition

When Are DPAs a Risk to Senior Executives? By Ross Dixon This April marks five years since Deferred Prosecution Agreements (DPAs) were introduced into the UK. Although we have only seen four agreements so far, all made by the Serious Fraud Office, these deals between the state prosecutor and a company under criminal suspicion have changed the game for white collar and corporate criminal investigations. The attractions of a DPA to the SFO and any company it is investigating are powerful. DPAs enable the SFO to bring a company to book for complex financial crimes without the cost, delay and risks of a criminal trial. At the same time, they allow the company to draw a line under a criminal investigation and to move on from any wrongdoing without having to face criminal proceedings. But while the mutual benefits of a DPA to both the SFO and the company concerned are clear, they may be less so for others. I believe DPAs carry considerable risks for senior executives at the company under investigation - even those who may know nothing about any illegal activity. Adopted from the American model, DPAs were introduced into domestic law as part of the Crime and Courts Act 2013. Companies can use a DPA to avoid criminal prosecution on the basis they accept guilt, comply with the terms of the deal, and co-operate with the SFO both during the investigation and in any subsequent prosecution of individuals. All DPAs have to be ratified by a court. The four DPAs that have been agreed so far are with Standard Bank in 2015, an anonymous UK subsidiary of a US company in 2016, and in 2017 both Rolls- Royce and Tesco. More are likely in the near future with the current Director of the SFO - like her predecessor - declaring herself a fan. My experience defending former Tesco UK managing director Chris Bush on charges of fraud and false accounting following a DPA, highlighted to me the way in which DPAs may adversely impact justice for individuals. A DPA can only be agreed with the company itself and not with individuals. In 2017, the SFO and Tesco agreed on a DPA with Tesco on the basis that Tesco Stores Limited (Tesco’s UK subsidiary) was guilty of false accounting relating to a so-called ‘black hole’ in the company accounts. Because a company can only be criminally culpable of fraud or 20 Special Feature www. lawyer-monthly .com MAY 2019