In the City
Deferred gratification
THE Serious Farce Office (SFO) last week relaunched deferred prosecution agreements as its weapon of choice to fight corporate crime – almost 10 years after they were first deployed. Ironically the move came just as the US Department of Justice (DoJ), which initiated this approach, was at Donald Trump’s directive retreating from prosecuting foreign bribery cases, where the tactic has been most effective.
Deferred prosecution agreements (DPAs) have been a cash cow for the SFO and the Treasury, which pockets much of the proceeds they generate. The 12 DPAs since 2015 have raised almost £1.65bn in fines, disgorged profits and compensation, plus £35m in repaid SFO investigation costs. But there has been consistent criticism of both the SFO and the DoJ that too often DPAs mean shareholders pay but directors walk away, keeping their pay and pensions.
No director has ever been convicted by the SFO after a company admitted in a DPA to criminal conduct. In seven cases – including after the largest fines paid by Airbus and Rolls-Royce for foreign corruption – no main board director was ever charged. In three other cases, senior executives of Tesco, Serco and G4S were charged but acquitted of fraud at trials.
Directors and senior executives of private companies Sarclad and Guralp Systems were acquitted after DPAs admitting corruption. The SFO is now seeking to enforce the agreed but unpaid £2m DPA disgorgement penalty against Guralp for the corruption it admitted in 2019, despite a jury deciding there had been no bribery by its officers!
Individuals do not have the choice of a DPA, although some SFO critics have argued for that option if successful prosecutions are so difficult. For companies, the DPA is and will remain a best, if expensive, option. For the SFO it avoids the risks of losing in court with resulting multimillion bills for the investigation and trial, plus defence costs. But is it justice? Legal experts, campaigners and academics who have studied DPAs here and in the US are unconvinced, pointing to the lack of individual accountability.