U.K. Bribery Act Review Puts Deferred Prosecution Agreements Under Scrutiny

By Mara Lemos Stein 

Lawmakers in the U.K. are conducting a formal review of the Bribery Act of 2010, with plans to examine the impact of deferred prosecution agreements on corporate conduct.

The absence of prosecution of individuals in bribery cases, and the lack of transparency about prosecutors' decision-making process on whether to offer a DPA, are among the concerns raised so far in the review.

A deferred prosecution agreement is an agreement between a prosecutor and an organization to suspend prosecution for a period of time if certain conditions are met. They usually involve financial penalties, disgorgement and implementation of compliance programs.

The Serious Fraud Office, a special prosecutor with investigative powers covering England, Wales and Northern Ireland, has entered into only four DPAs since the introduction of the agreements in 2014. These were with Standard Bank, with a company that prosecutors haven't identified because of pending criminal proceedings, with Rolls-Royce PLC, and with Tesco Stores Ltd.

Although the sample of DPAs is small, lawyers and nongovernment organizations said that the tool and the Bribery Act have helped raise corporate awareness about the risks of engaging in corrupt practices.

"The Bribery Act has had a significant impact on U.K. companies and on businesses around the world," said Louise Delahunty, a partner at law firm Cooley LLP, in an email. The legislation has driven companies to implement more robust antibribery compliance systems and improve their governance practices, she said.

But questions remain about the absence of prosecution of individuals in bribery cases, especially in those where the companies reached a DPA, say lawyers and others who study policy.

"It is notable that, so far, no individual connected to a published DPA has been prosecuted," wrote the Law Society, the City of London Law Society and the Fraud Lawyers Association in their joint submission on the review.

The absence of prosecution of senior executives in high-profile bribery cases settled under deferred prosecution erodes public confidence in the process, said Susan Hawley, director of policy at Corruption Watch, an advocacy group focused on exposing corruption, during oral evidence to the committee last month.

Despite the guidance available from the prosecutors on the DPA process, lawmakers and policy watchers said the SFO needs to be more transparent about its process on offering an agreement. Transparency is crucial to encourage companies to disclose serious misconduct, they said.

"The process behind the investigation and the discussions on whether to proceed down that [DPA] path are too opaque," said Kathryn Higgs, a director of Transparency International, during an oral evidence session last month. "The community and the business community cannot see what consideration is going into this and whether it is something they would consider."

The review of the Bribery Act is part of a common practice in U.K. policy-making, which calls for a post-legislative analysis if the law constitutes a significant change of policy. The committee is looking to measure the effectiveness of the act since its implementation, and was instructed to include a review of DPAs as a tool to address bribery.

The committee received 41 written submissions to its inquiry, and will hold open sessions to collect views from executives next month. The general counsel of BAE Systems PLC and of Rolls-Royce are scheduled to provide oral evidence about DPAs on Sept. 11.

Write to Mara Lemos Stein at [e-mail]

(END) Dow Jones Newswires

August 27, 2018 05:44 ET (09:44 GMT)

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