Susan Hawley on Deferred Prosecutions in the UK

Deferred and non prosecution agreements for corporate criminals are controversial in the United States. But they might be even more so in the United Kingdom, where they were introduced in 2014. 

Susan Hawley
Spotlight on Corruption

Susan Hawley, executive director of the UK group Spotlight on Corruption, says there are particular concerns relating to the lack of prosecutions brought against individuals, the necessity of self-reporting (and discounted penalties even absent a self-report), as well as the dearth of prosecutions against corporations who have not engaged with the deferred prosecution agreement regime. 

Hawley is co-author of Justice for Whom? The Need for a Principled Approach to Deferred Prosecution Agreements in England and Wales. 

It’s a chapter in the book – Negotiated Settlements in Bribery Cases (Edward Elgar, 2020).

“Prosecutions are the way forward,” Hawley told Corporate Crime Reporter in an interview last month. “I am inherently a bit uncomfortable with deferred prosecution agreements.”

“When we first started looking at deferred prosecution agreements, I felt very skeptical about them. And I’ve heard a lot of that from people in the UK system. They look at them, and it kind of offends their sense of justice that a company could engage in these kinds of behind the scenes discussions and get off with the fine without it properly being heard in court.”

“We monitor court cases carefully in the UK. What we see is that there is not such a good track record of dealing with corporate crime. And some of that is because of really outdated corporate liability laws in every area except for bribery. And some of it is a kind of sense of white collar criminals being treated differently.” 

“The question that I think the editors of the book posed to some of us who are more opposed to deferred prosecution agreements was – surely having a punishment is better than nothing? And what was happening for a large part is that there was actually nothing happening.”

“You pay 3 billion, or you pay nothing. And I think I have certainly come around to the view that it’s far better that a company pays a price for engaging in corporate crime than none at all.” 

“But on the other hand I think the UK system is set up all wrong and that you can’t have an effective deferred prosecution regime unless you also deal with what’s going on in your courts, to make sure that companies that head into the courts because they haven’t cooperated will actually face a realistic prospect of being convicted if they’ve done something wrong.” 

“The problem we are seeing in the UK is that the DPA regime hasn’t been set up in a way that actually incentivizes companies to come forward and self report with the knowledge that if they don’t and they actually face prosecution, they are going to be hammered in the courts far more heavily.” 

“You will get a few occasional big DPAs in the UK like you’ve seen with Rolls Royce and Airbus. But actually, things have gone very quiet now. What we’re hearing is that companies are not coming forward to the UK prosecuting bodies, because all the defense bar in the UK is saying – actually, if you sit this out, you might make out better off.”

What is the evidence of that?

“There have been quite a few journal articles about declining numbers of prosecutions and investigations coming out of the SFO. The evidence is not super clear. It’s a lot of anecdotal discussion by defense lawyers saying they don’t have any work because it doesn’t appear that the SFO are doing any investigations.” 

“We have also heard from people who do know about what’s going on at the SFO – that they just aren’t having companies coming forward anymore.”

And the SFO does not have the resources to follow up on whistleblower complaints and do their own investigations?

“They do. They’re fairly well resourced actually. Obviously we are in a strange situation with COVID. We’ve seen recently the SFO have dropped a couple of bribery cases into De La Rue and ABB. We’re pretty worried actually about the fact that they’re opening very few new investigations and seem to be dropping ones that they were doing.” 

“The truth is that the SFO have had a really hard time in the courts recently and have been unable to land prosecutions. And that also seems to be having an impact on companies. They are thinking – well we might as well tough it out in the courts than enter DPA with the SFO because actually we might get off and have our names cleared.” 

“Certainly you have seen the Barclays case, which was the only financial crisis related case. Under the previous director, Barclays was not cooperating in that investigation. So the previous director said – okay, we’re going to prosecute you. And unfortunately the corporate liability laws are such in the UK, that basically you can’t prosecute a large bank. And the new director has said this on various public occasions.” 

“We have a deferred prosecution regime which is slightly orphaned by the fact that the laws that would make it have teeth are so weak that companies know they might get off.”

“That’s kind of the situation in the UK at the moment and it’s very concerning.”

You mentioned a new prosecutor and a predecessor. Do they have different outlooks on prosecuting corporate crime cases?

“David Green was the previous director. This is really important in terms of the background on deferred prosecution agreements. He came in and he took over from Richard Alderman, who was widely regarded as a complete disaster. Alderman was doing much worse than deferred prosecutions. He was doing lots of civil recoveries. They were completely secret. There were very minor fines.” 

“He was going over the heads of his staff to enter into these deals. But it was interesting because the government were like – well it looks good because actually we’ve got five civil recovery orders – something’s going on we’re doing something.” 

“But the OECD Working Group on Bribery came in and said – no way. You have these civil recovery orders. They don’t command judicial or public confidence. They are not an appropriate punitive remedy for bribery.”

“And unfortunately Alderman also was a disaster as a manager and a lot of good people left the SFO. So David Green came in and he had to turn the agency around. And he really gave the SFO a lot of clout, and they started to be like a force to be reckoned with. And it looked like this was an agency that was going somewhere and it was really going to go off on corporate crime. But he left before quite a lot of the cases actually started to come to court.”

Where did he go?

“He went off to private practice. He went to Slaughter and May. At the SFO, he had brought on board a lot of really good people who have been slowly leaving after he left.”

“And then we have this new director, Lisa Osofsky, who’s come in with a lot of fighting talk. She’s a former FBI general counsel. She’s also been in the private sector. She was the monitor for HSBC when it was under a DPA in the US.” 

“But she does not have a huge grasp of the UK legal system. She has had to take on board an agency which is then bringing these cases to court. And the courts have been really letting a lot of people off and acquitting them or rejecting the cases.”

“They’ve really had a lot of bad luck in the courts. I do think this merits a really serious review by the UK Government, because it seems to a lot of people that it’s very hard to prosecute white collar criminals in the UK, and the courts and the juries are basically very sympathetic to white collar criminals.” 

There are similar problems here in the United States, but even under President Trump, it seems that the companies are still more willing to enter into deferred prosecution agreements than the risk of going to court.

“That’s what is not happening in the UK now. A key case was the Alstom case. That case set the tone. Alstom pled guilty in the US. It paid $700 million. They then decided to fight it out in the UK, instead of trying to cooperate or plead guilty here. And they got off on all but one of the charges. Many of the individuals were let off. They were going after the individuals and the company. They got away very, very lightly. And that sent a strong message to people. And that was alongside this trend where you had deferred prosecutions with individuals getting off. And a lot of people are looking at this and saying – so if we can get off in the courts, why would we enter into a deferred prosecution agreement?”

Why would they plead in the United States and fight it in the UK?.

“Some of it is about our very weak corporate liability laws. Maybe they think the courts have a lighter touch in the UK. I’m not sure. I think it’s a really good question. It would be worth asking Alstom itself. I don’t know whether they thought the UK conviction would have more damage to their public procurement.”

“Theoretically in the EU, if you are convicted, you are not going to be able to do any public procurement for a period of time. As far as we can tell that never happens. Companies just carry on tendering and contracting as if nothing had happened. And we’ve seen that since the Alstom judgment. Several really big contracts with Alstom in the UK.” 

“That’s a really important part of the picture – our debarment regime in the UK, does not support the enforcement division. I know that it’s a bit contentious in the US as well. But I think it’s working a lot better than it’s working here.”

[For the complete q/a format Interview with Susan Hawley, 34 Corporate Crime Reporter 26 (11), Monday June 29 2020, print edition only.]

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