Top Menu

The U.K. Moves One Step Closer To The “Facade” Of Enforcement

Prior posts here, here, here and here have tracked the desire of United Kingdom law enforcement agencies to import deferred prosecution agreements (DPAs).  In response to the U.K. Ministry of Justice’s (“MoJ”) open consultation process, I submitted this letter suggesting that the  MoJ should say no to DPAs in the Bribery Act context.  Among other things, I noted that in its consultation paper, the MOJ relied upon several unfounded assertions when discussing use of DPAs in the U.S.

I also posed the following questions the MoJ should consider during its consultation process. “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)? 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. This seems like a just and reasonable result and there is no need for a third option in such a case. On the other hand, if a corporate does not have adequate procedures (thus demonstrating a lack of commitment to anti-bribery compliance) and an act of bribery occurs within its organization, it presumably would face prosecution under the Bribery Act. This seems like a just and reasonable result. Does a third option really need to be created for corporates who do not implement adequate procedures?”

Last week, the MOJ issued it consultation response (found here).  Despite stating in the Executive Summary that its response “summarises the responses” received, no where in the response does the MoJ address the questions I posed.

The MoJ’s response makes much of the fact that “respondents overwhelmingly welcomed the proposals to create a new tool for prosecutors to tackle economic crime, with 86% of respondents agreeing that Deferred Prosecution Agreements have the potential to improve the way in which corporate economic crime is dealt with and would enable prosecutors to bring more cases to justice.”

This high percentage is hardly surprising.  As indicated by Annex A of the MoJ consultation response, law firms were by far the largest category of the 75 respondents.  In this regard, the MoJ’s response “poll” is like taking a poll of car dealers and car manufacturers asking them if they are in favor of new and unique ways to sell cars.  Likewise, both the MoJ and law firms benefit from alternative resolution vehicles such as DPAs.  However, the alternate reality that is DPAs harm other stakeholders and undermine the rule of law and justice.  This is becoming increasingly clear in the U.S. and I predict will become clear as well in the U.K. with the passage of time.

The most revealing part of the MoJ’s consultation response concerns the “appropriate level of evidence that prosecutors would need in order to satisfy themselves that entering into a DPA would be appropriate.  The response notes that there was disagreement as to whether the test for entering into a DPA should “be the same test as for bringing a prosecution (a “realistic prospect of conviction”) or whether a lower evidential threshold would suffice.”

The MoJ punts on this issue, yet implicitly endorses a lower evidential threshold.  Its consultation response states as follows.  “With regards to the evidential test, we consider that this should be included in the DPA Code of Practice for Prosecutors [yet more guidance that the MoJ says is forthcoming] and must set a sufficiently high threshold to establish a real threat of future prosecution for the other party.  However, the exact contents of the DPA Code of Practice for Prosecutors will be a matter for those responsible for developing it.”

By endorsing a system whereby lower thresholds of proof will suffice to resolve a corporate “criminal” enforcement action, the U.K. has moved one step closer to a “facade” of enforcement.

In the concluding section of my 2010 article “The Facade of FCPA Enforcement” (here), I stated that among the reasons why the facade of FCPA enforcement matters is “the increasing frequency by which other nations are modeling enforcement of their own bribery laws on U.S. enforcement methods and theories.” I warned that a “global facade of enforcement” will follow unless these methods are corrected here in this country.  These methods have not been corrected here at home.  Indeed, as noted in this recent post, Assistant Attorney General Lanny Breuer recently defended the DOJ’s use of NPAs and DPAs.  I have argued here, here and elsewhere that use of NPAs or DPAs in the FCPA context allow “under-prosecution” of egregious instance of corporate bribery while at the same time facilitate the “over-prosecution” of business conduct.

The global push for alternative resolution agreements I warned about in the “Facade of FCPA Enforcement” is just beginning.  As noted in this recent Irish Times article, there is now discussion of importing these agreements into Irish law.  And who can blame the Irish?

Alternative resolution vehicles allow law enforcement agencies to pad enforcement statistics creating the appearance that such “enforcement” actually accomplishes a worthy objective.   How will Irish law enforcement authorities keep pace with the U.S. and (now the English) if it has fewer options?  If its enforcement statistics are lower, the Irish will be shamed by civil society organizations and others (who appear to place a premium on quantity of enforcement vs. quality of enforcement).

As evidence that DPAs are a wanted device in this new “global arms race” (i.e. which country can bring the most bribery and corruption enforcement actions) the MoJ says that obtaining DPAs will be a “prize.”  Specifically, the MoJ consultation response states as follows.  “We will now forward legislative provisions to introduce DPAs in England and Wales in the Crime and Courts Bill, which is currently making its way through Parliament.  The prize will be a more just and effective system for dealing with economic crime, where wrongdoers are identified and brought to justice as commonly as for other offences.”  (emphasis added).  Further to this issue, last week U.K. Solicitor General Oliver Heald stated (here) as follows.  “DPAs will be a swifter, more nimble way to conduct enforcement.”

The global facade of enforcement is beginning to take hold.  Does anyone else care?


Even though this post has been critical of the MoJ for moving forward on DPAs, the following points remain relevant.

As highlighted in this previous post, the U.K. has rejected non-prosecution agreements – a resolution vehicle that has been used to resolve several FCPA enforcement actions.  As also highlighted in the previous post, even though the U.K. is moving forward on DPAs, its proposed model is not the U.S. model.  Rather, the U.K. model envisions judicial involvement in the DPA process from an early stage whereby the proposed DPA is considered by the judiciary at a preliminary hearing before it returns for final judicial approval.

Indeed, the U.K. Solicitor General recently stated (here) as follows.  “We decided to build on the U.S. model by formulating proposals which ensure a greater level of judicial involvement, from an earlier stage, as well as greater levels of transparency in order to command the confidence of the public.”

Proposed Irish Bill Contains A Compliance Defense

Ireland, like the U.S. a member country of the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, has an FCPA-like law.

However, as explained in this Ireland Department of Justice and Equality document “the existing law on corruption – the Prevention of Corruption Acts 1889 to 2010 – comprises several different Acts, and includes statutes dating back to the late nineteenth century.”

Thus, Ireland is in the process of revising its FCPA-like law and the purpose of the proposed Criminal Justice (Corruption) Bill 2012 “is to clarify and strengthen the law criminalising corruption by replacing and updating 7 different statutes dating back to Victorian times, so that the legislation is essentially in one statute.”

One aspect of the proposed legislation, in response to OECD criticism of existing Irish law, is to establish a “clear provision for the liability of corporate bodies for corrupt criminal acts.”  The Department of Justice and Equality explains as follows.  “Up to now, we have not provided specifically in statute in this area, relying instead on the common law in this regard. [The proposed law] include[s] a new provision setting out that a corporate body can be held liable where an officer or employee of the body commits a corruption offence with the intention of obtaining a business advantage for the body. It is considered that this will provide greater clarity for companies as regards their criminal liability in this regard.”

However, and this is the key point for this post, the proposed legislation, “makes provision for a defence by a body corporate to prove that it took all reasonable steps and exercised all due diligence to avoid the commission of the offence.”

Head 13, titled “Offences by Bodies Corporate and Unincorporated Bodies,” of the draft legislation (see here) provides as follows. “It is a defence to an offence … for the defendant body corporate to prove that it took all reasonable steps and exercised all due diligence to avoid the commission of the offence.”

In “Revisiting a Foreign Corrupt Practices Act Compliance Defense” (here) I highlight several other peer countries that already have a compliance-like defense relevant to their “FCPA-like” law such as the U.K., Australia, Chile, Germany, Hungary, Italy, Japan, Korea, Poland, Portugal, Sweden, and Switzerland.

[Note:  That additional OECD Convention countries do not have compliance-like defenses ,does not mean that those countries rejected such a defense.  Rather, in many OECD Convention countries the concept of legal person criminal liability (as opposed to natural person criminal liability) is non-existent.  Further, in many OECD Convention countries that recognize legal person criminal liability, such legal person liability can only result from the actions of high-level personnel or other so-called ‘controlling minds’ of the legal person.  If a foreign country does not provide legal person liability, there is no need for a compliance defense, and the rationale for a compliance defense is less compelling if legal exposure of the legal person can only result from the conduct of high-level executive personnel or other ‘controlling’ minds of the legal person.]

In the article, I argue that, contrary to the claims of FCPA compliance defense opponents such as the DOJ, a compliance-like defense applicable to the offense of bribery of foreign officials is not novel, risky, or dangerous and that amending the FCPA to include a compliance defense would not conflict with U.S. OECD Convention obligations. In this previous post, I argued that a compliance defense is not a race to the bottom, it is a race to the top.

For more on the proposed Irish law, see this recent Irish Times article.

Powered by WordPress. Designed by WooThemes