Deferred prosecution agreements are such a hit in the United States, they’re being exported around the world. First stop, the United Kingdom. The UK Ministry of Justice recently kicked off a drive to import corporate deferred prosecution agreements from the United States. The UK Ministry says that the deferred prosecution agreements will be used to “to ensure that a higher proportion of economic crime is identified, investigated and dealt with.” But the Ministry didn’t buy the import of these agreements hook, line and sinker.
“Despite the effectiveness of the U.S. model, the lack of judicial oversight is likely to make it unsuitable for the constitutional arrangements and legal traditions in England and Wales,” the Ministry writes. “We have concluded that [non prosecution agreements] are not suitable for this jurisdiction due to their markedly lesser degree of transparency, including the absence of judicial oversight.”
David Lorello is a partner at Covington & Burling’s London office. We asked Lorello – where is the push for deferred prosecution’s coming from? “A number of parties, including the Ministry of Justice and the Serious Fraud Office (SFO). Richard Alderman, the former Director of the SFO, had in particular emphasized that deferred prosecutions would be useful,” Lorello told Corporate Crime Reporter in an interview last week.
“It arises from a concern that there just aren’t the right set of incentives in the UK to encourage companies to come forward and voluntarily disclose and cooperate with the SFO. That has been the principal driver. I’m sure there are people in the corporate world who have favored the DPA type of approach because of its flexibility. But it’s more on the government side where the push for deferred prosecutions is coming from.”
Why couldn’t they do it in the UK the way we did it – by a memo from the Attorney General or through the U.S. Attorney’s manual?
“Deferred prosecutions have been a significant feature of US corporate enforcement for fifteen years,” Lorello said. “But the agreements themselves go back more than 100 years as applied to individuals, and are a long established practice. In the UK, there isn’t a tradition of deferred prosecutions and there really isn’t any hook in existing legislation that governs the conduct of prosecutors or the courts that would allow for deferred prosecution agreements. The view is that you would need legislation that creates it.”
Is there a cultural block?
“Perhaps, although I wouldn’t overstate it. If you look at the consultation paper, there is reference made to the legal traditions in England and Wales as one of the motivations behind certain aspects of the proposed DPA approach as compared to the US approach. And I would say that the principal cultural dynamic is a sense in this country that it is important to have the judiciary involved in sentencing matters. And not just be involved in the sense of approving something determined by the prosecutor and the defense, but a more active involvement than in the United States. If there is a cultural distinction, that’s probably the one.”
[For the complete transcript of the Interview with David Lorello, see 26 Corporate Crime Reporter 26(12), print edition only.]