From the 24 February 2014, a new tool was made available to prosecuting authorities to tackle corporate economic crime such as fraud and bribery.

Deferred Prosecution Agreements have been brought in to deal with the problem caused by the failure of a number of high-profile complex fraud investigations which have collapsed either prior to or during trial and have cost the Government hundreds of thousands of pounds in wasted legal costs.

Such failures have also created doubt in the minds of the public as to the ability of the State to deal with major corporate organisations who many perceive as being above the law. Similar enforcement powers have been available in the United States for a number of years and notably the UK company, HSBC, was made subject to one.

Often described as a form of plea bargaining, they will, when utilised, involve an agreement between a prosecutor such as the Serious Fraud Office or the DPP and a company which allows a prosecution for criminal offences to be suspended for a defined period if the company adheres/complies with certain conditions.

The agreement and the conditions will have to be agreed by a judge. The conditions can include draconian fines, paying of compensation and providing assistance in the prosecution of individuals.

As well as the advantages for the prosecuting authority, there are also potential benefits for the subject company which include the avoidance of conviction, the certainty of outcome and a potential reduction in legal costs which any trial would involve.

The accusation that will be levelled by some that such deals allow companies to buy their way out of trouble is one that the Government are likely to counter by demonstrating that, in due course, many more companies will have to accept that they have been involved in criminal conduct but that, through the use of compliance schemes which the DPA’s provide for, it will lead to a widespread improvement of corporate cultures.

The Government will hope that once a few precedents are in place with the publicity that is likely to follow, corporate UK will rush to ensure that they are not committing similar offences. It is unlikely that responsible companies will become complacent about the possibility of having DPA’s administered, as being subject to one is likely to have adverse implications in terms of competing for tenders with public authorities.

To try and ensure public confidence in the agreement, any agreements made will be transparent and available for scrutiny. In addition, the offer of such agreement is at the discretion of the prosecutor and the Code of Conduct agreed between the DPP and the Director of the Serious Fraud Office makes it clear that a public interest test will have to be met. Consideration of whether the public interest test does apply may include factors of history of previous conduct of the company in question, the existence of an effective compliance programme and whether wrongdoing was self reported.

Fraud costs the Government billions of pounds per year and the Government believe the DPAs will allow companies to be brought to book in a way which involves no expenditure by the Government but leaves open the possibility of prosecution in the future if the conditions imposed are not complied with.