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Panalpina DPA Provides Blanket Immunity Even For Undisclosed Conduct

Deferred prosecution agreements (DPA) tend to be interesting reads. These documents clearly are based on templates, but you never know what clause will be buried deep within the large document.

The DPA template contains a “Conditional Release From Criminal Liability” section that generally states as follows.

“In return for the full and truthful cooperation of [Company] and its compliance with the other terms and conditions of this Agreement, the Department agrees [subject to breach of the Agreement] not to use any information related to the conduct described in the attached Statement of Facts against [Company] or its wholly-owned or controlled subsidiaries in any criminal case [except for perjury, making false statements, and certain other exceptions]. In addition, the Department agrees, except as provided herein, that it will not bring any criminal case against [Company] or any of its wholly owned or controlled subsidiaries related to the conduct of present and former directors, employees, agents, consultants, contractors, and subcontractors, as described in the attached Statement of Facts, or relating to information [Company] disclosed to the Department prior to the date on which this Agreement was signed.”

The Panalpina DPA (here [1]) follows this template, but also states that the DOJ will not bring any criminal or civil charges against Panalpina or its related entities “relating to undisclosed conduct of a similar scale and nature that took place prior to the signing of the Agreement and was not discovered by [Panalpina’s] internal investigation, notwithstanding reasonable efforts by [Panalpina].”

In other words, if there was something Panalpina and its counsel missed in its investigation, it does not matter because the DOJ contractually agreed not to prosecute any undisclosed conduct that took place prior to the signing of the Agreement.

This clause further demonstrates that DPAs are less a prosecuting document, but more a negotiated contract between the DOJ and the alleged offender.

In the United Kingdom, judges take a much more active role in analyzing the terms and conditions of bribery and corruption settlements compared to U.S. judges. For instance, in his recent BAE sentencing remarks, Justice David Michael Bean sharply criticized a similar blanket immunity clause in the Serious Fraud Office’s plea agreement with BAE.

At page 4 of his sentencing remarks (see here [2]), Justice Bean states as follows. “The Settlement Agreement is, with respect, loosely and perhaps hastily drafted. In paragraph 6 “any person” is not defined, and paragraph 10 is not, at least expressly, confined to conduct preceding the agreement. But the heart of the matter is paragraph 8, whereby the SFO agreed that there would be “no further investigation or prosecutions of any member of the BAE Systems Group for any conduct preceding 5 February 2010.” It is relatively common for a prosecuting authority to agree not to prosecute a defendant in respect of specified crimes which are admitted and listed in the agreement: this is done, for example, where the defendant is an informer who will give important evidence against co-defendants. But I am surprised to find a prosecutor granting a blanket indemnity for all offences committed in the past, whether disclosed or otherwise. The US Department of Justice did not do so in this case: it agreed not to prosecute further for past offences which had been disclosed to it.”