Asheesh Goel is a Securities Enforcement partner resident in the
Chicago and Washington offices of Ropes & Gray LLP, managing
partner of the firm's Chicago office and co-chair of Ropes &
Gray's award winning global anti-corruption and international risk
practice. Asheesh focuses on securities enforcement matters,
including internal investigations, government investigations and
enforcement actions. Over his career, he has developed substantial
depth advising clients on the Bank Secrecy Act, the Foreign Corrupt
Practices Act, the U.K. Bribery Act and other related anti-money
laundering and anticorruption laws, financial statement and
disclosure issues, insider trading, auditor issues and industry
Marcus Thompson is assistant general counsel in the Office of
the General Counsel for Ropes & Gray LLP in London. Marcus is
responsible for legal, risk, compliance and regulatory matters
relating to the firm's London and Asian offices. In addition,
Marcus serves as Counsel in the firm's Government Enforcement
Practice Group, assisting clients with matters concerning
anti-money laundering, anti-bribery and corruption, international
sanctions, extradition and corporate investigations.
Katerina Sandford is an associate in Ropes & Gray's
government enforcement practice group. Katerina assists clients
with matters related to anti-bribery and corruption, international
sanctions and anti-money laundering.
On Feb. 24, 2014, deferred prosecution agreements (DPAs) became
available to prosecutors in the U.K. for the first time. Their
introduction marks a significant shift in the U.K.'s approach to
corporate criminal liability and, to a certain extent, aligns it
with the U.S.'s enforcement methods in relation to financial crime.
In particular, DPAs are expected to be valuable tools for
prosecutors looking to enforce the U.K.'s Bribery Act 2010.1
DPAs in the U.K. are very similar to DPAs in the U.S., but there
are some notable differences between the two regimes, both in the
law and the approach prosecutors take.
DPAs in the U.K. and U.S. have some different features, which
are outlined below. Moreover, the legal basis on which companies
face criminal liability in each country differs markedly. It is
much more difficult to establish corporate criminal liability in
the U.K. than in the U.S. In the U.K., prosecutors must present
evidence of guilt by the "controlling mind" of the organization,
typically the board. The difficulty in the U.K. of attributing
liability to individuals on this basis, the so-called
"identification principle," particularly in relation to large
organizations, has made it much harder for prosecutors to pursue
convictions against corporations.
By contrast, respondeat superior liability in the U.S. makes it
much easier to prosecute companies based on the conduct of one or
more employees at any level of seniority. This is significant
because part of the incentive for a company in either country to
enter into a DPA will depend on the realistic threat of criminal
conviction, and it is a much more realistic prospect under U.S. law
than it is, at present, in the U.K. The director of the Serious
Fraud Office (SFO) has publicly acknowledged that the issue of
corporation criminal liability in the U.K. needs to be resolved for
DPAs "to have maximum bite."2
The identification principle does not, however, always burden
the prosecution of companies under the Bribery Act. Section 7 is an
offense aimed at companies that fail to prevent persons associated
with them from bribing others on their behalf. There is a statutory
defense to §7 if a company can prove that it has adequate
procedures in place to prevent persons associated with it from
bribing.3 In other words, if a
prosecutor can show that a person associated with a company has
paid a bribe and the company's procedures to prevent bribery are
not "adequate," the company has a problem.
DPAs have been available to prosecutors in the U.S. for many
years, but they are new to the U.K. The legal basis for DPAs in the
U.K. is set out in Schedule 17 of the Crime and Courts Act 2013.4 A DPA is a
voluntary agreement between a designated prosecutor and a corporate
body that suspends criminal proceedings against the corporation,
subject to compliance with certain conditions, which may
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to an existing programme;
DPAs are available only to corporate entities, partnerships and
unincorporated associations, and they cannot be used in relation to
individuals. The U.K. government has emphasized that DPAs will not
be used as a means for individuals to avoid prosecution. A
corporation has no right to request or initiate the DPA process,
and the designated prosecutors (the Director of the SFO and
Director of Public Prosecutions) have full discretion over inviting
an organization to enter a DPA.
While the DPA is in force, the corporation is protected from
further prosecution in relation to the same offense. A breach of
the conditions imposed under a DPA may lead to the recommencement
Much of this will be familiar to U.S. lawyers and companies who
have dealt with DPAs in the U.S., but there are some notable
differences both in law and approach:
For further analysis of legal issues that can arise in an SEC
prosecution in the U.S., see Colleen P. Mahoney et al., The SEC
Enforcement Process: Practice and Procedure in Handling an SEC
Investigation, Portfolio 77-4th in the Corporate Practice
Series, available at Bloomberg BNA. Go to http://www.bna.com/sec-enforcement-process-p6973/ for
Probably the single most important distinction between these two
approaches is the role of the judiciary in the DPA process.
Prosecutors in the U.S. have been criticized for wielding too much
power over companies in the DPA process, with the prosecutor having
almost sole responsibility for safeguarding the public interest.
The U.K. has chosen to modify this approach by giving the judiciary
much more of a role in the DPA process, though it remains to be
seen how, as a matter of practice, the judiciary will perform this
role. Moreover, although some companies may see the benefit in the
U.K. of having prosecutorial ambition restrained by a judicial
hand, the flip side of this analysis is that companies in the U.K.
will lack the certainty they would have in the U.S. of negotiating
a DPA with a prosecutor--where they have the knowledge that
whatever they agree to will be reflected in the final outcome.
Once company leadership has understood the legal and procedural
differences between the two DPA regimes, there is one final matter
to consider: the mindset of the prosecuting agencies with whom the
company will be negotiating its DPA.
In relation to bribery and anti-corruption matters in the U.K.,
the SFO is the lead agency. In comparison to the DOJ, the SFO is
tiny, with a budget of less than 40 million pounds. In contrast,
the DOJ's FY2014 enforcement budget for financial and mortgage
fraud stands in excess of $500 million.8 The SFO's tone as a
prosecutor is, however, much more aggressive than its relatively
small budget would suggest. As an indication of its desire to adopt
a more proactive investigative stance, the Director of the SFO
announced in a speech to U.K. businesses on April 23 that the SFO
was looking to implement "intrusive surveillance" techniques and
other investigative tools more commonly associated with organised
crime and terrorism investigations in the U.K.
Despite some recent high-profile embarrassment in the courts,
the SFO's director remains bullish about its future prospects and
has recently commented on the SFO's approach to dealing with
companies faced with the prospect of self-reporting compliance
failures that have resulted in matters of bribery and corruption.
"I cannot help you on ethics," he said to companies in a March 6
speech.9 "The SFO is not a
regulator, an educator, an advisor, a confessor or an
His comments suggest that he does not regard his prosecutors as
having any part to play in determining standards of corporate
behavior in a Bribery Act context and, in fairness, the SFO is not
now, and has never been, anything other than a prosecution agency
targeting serious fraud.
The DOJ's Resource Guide10 to the Foreign Corrupt
Practices Act11 "endeavors to provide
helpful information to enterprises of all shapes and sizes--from
small businesses doing their first transactions abroad to
multi-national corporations with subsidiaries around the world,"
which sounds, in contrast to the SFO, rather more educational and
advisory. Companies obviously have access to lawyers and others who
can advise and educate them on everything from compliance programs
to DPA negotiations, but what the company often wants to know is
simply "how will the prosecutor approach this?" At present, a
company and its advisors will probably find it easier to answer
this question in the U.S.
Finally, U.K. DPAs are negotiated after a company has either
self-reported to a prosecutor or the prosecutor has proactively
targeted the company for investigation. For those companies
considering self-reporting in the U.K., there are two additional
factors to bear in mind. First, the Sentencing Council's recent
Guideline on fraud, bribery and money laundering sentences for
corporate offenders expressly provides for a reduction in sentence
for early, voluntary reporting.12 This is also reflected in
the Code of Practice for prosecutors associated with the use of
DPAs, which has been published recently.13
In addition, under U.K. law, if a company suspects that a money
laundering offense has been committed, it needs to consider whether
it is required to self-report to the National Crime Agency under
the Proceeds of Crime Act 2002.14 In many circumstances this
is a mandatory requirement and failure to comply by reporting as
soon as reasonably practicable is a separate criminal offense.
So, back to the question posed at the beginning of this article;
if you are a company facing a DPA negotiation, where would you
rather be? The U.K. has a new DPA regime, which means negotiations
with U.K. prosecutors will be harder to predict, at least in the
short term. Moreover, there is much less prosecutorial guidance
available to companies in the U.K. on Bribery Act/FCPA type
matters. In contrast, DPAs are well established in the U.S. and,
with a raft of guidance and precedent concerning their negotiation
and settlement, allow for greater certainty. However, given the
difficulty in establishing corporate criminal liability in the U.K.
the effectiveness of the DPA regime in incentivizing companies to
enter into DPAs in the first place remains to be seen. In the final
analysis, it is still much easier to prosecute companies in the
For some companies, the question will be irrelevant as it
implies a choice of jurisdiction the company may not have if it is
simultaneously facing DPA negotiations in relation to connected
matters on both sides of the Atlantic. However, 2014 is likely the
first year that companies will face this scenario.
1 SeeBribery Act 2010,
2 David Green, Ethical Business Conduct:
An Enforcement Perspective at PwC (Mar. 6, 2014),
3 Bribery Act 2010, § 7, available
4 Crime and Courts Act 2013, sched. 17,
available at http://www.legislation.gov.uk/ukpga/2013/22/schedule/17.
5 Courts and Crime Act 2013, § 45, sched.
17, pt. 1, para. 7, available at http://www.legislation.gov.uk/ukpga/2013/22/schedule/17.
6 Id.at sched. 17, pt.
7 Id.at sched. 17, pt. 1, para.
8 See U.S. Dep't of
Justice, FY 2014 Budget Request, available athttp://www.justice.gov/jmd/2014factsheets/fin-mgt-fraud.pdf.
9 Supra note 2.
10 See U.S. Dep't of
Justice, FY Budget Fact Sheets, available at http://www.justice.gov/jmd/2014factsheets/.
11 15 U.S.C. §§ 78dd-1.
12 Sentencing Council, Fraud, Bribery and
Money Laundering Offences Guideline: Consultation (June 27, 2013),
13 SFO & CPS, Deferred Prosecution
Agreements Code of Practice: Crime and Courts Act 2013,
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