UK Deferred Prosecutions on the Way

Some would say that the Foreign Corrupt Practices Act (FCPA) is a form of American exceptionalism.

And like many forms of American exceptionalism, we export it. Now, many countries around the world have some version of a law that criminalizes foreign bribery. But not everything American is exceptional.

Take corporate deferred and non prosecution agreements. Exceptional they ain’t. And yet, here we go exporting them. 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 said that the deferred prosecution agreements will be used to “to ensure that a higher proportion of economic crime is identified, investigated and dealt with.”

That’s one take.

Another is that deferred prosecution agreements are used as a shield to protect major corporations from criminal convictions in strong cases.

Not that the UK Ministry bought the import of these agreements hook, line and sinker.

As the FCPA Professor Mike Koehler points out today, the Ministry is well aware of the minuscule level of judicial oversight over these agreements.

“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.”

It’s open to debate whether non prosecution agreements have markedly less judicial oversight than non prosecution agreements.

Non prosecution agreements have zero oversight. Deferred prosecution agreements have approaching zero.

“Kudos to the U.K. for rejecting non prosecution agreements – a resolution vehicle that was used to resolve four corporate FCPA enforcement actions in 2011 and four corporate enforcement actions in 2010,” Koehler writes.

But then Koehler questions the need for deferred prosecution agreements in Bribery Act cases.

“Why does a law with an adequate procedures defense require the third option of a deferred prosecution agreement – the first two options being prosecute vs. not prosecute?” Koehler asks. “If a corporate has adequate procedures, but an isolated act of bribery nevertheless occurs within its organization, the corporate presumably would not face prosecution under the Bribery Act. Seems like a reasonable result. In other words, no need for the third option in such a case. On the other hand, if a corporate does not have adequate procedures (i.e. has no commitment to anti-bribery compliance) and an act of bribery occurs within its organization, it presumably would face prosecution under the Bribery Act. Seems like a reasonable result. Does a third option really need to be created for corporates who do not implement adequate procedures?”

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