Risk - Explaining Deferred Prosecution Agreements

15 September 2016

On 8 July 2016 the Southwark Crown Court approved the UK’s second-ever Deferred Prosecution Agreement (DPA) made between the Serious Fraud Office (SFO) and a company accused of bribery and corruption offences. This follows the UK’s first DPA made between the SFO and Standard Bank, in November of last year following their introduction in 2014.

Their use, which is destined to increase, should prompt directors and officers to review their Directors & Officers (D&O) policies to ensure that, where their interests may diverge from that of their employers during the course of a criminal investigation, directors and officers continue to have the protection of their D&O insurers and are not left without cover.

What are DPAs?

DPAs were made available in the UK in February 2014 pursuant to the Crime and Courts Act 2013. They can be made between a “designated prosecutor” (either the Director of Public Prosecutions or the Director of the SFO), and a defendant organisation (but not an individual) where the prosecutor is considering prosecuting the organisation for alleged fraud, bribery, corruption or certain other economic offences.

Under a DPA, the defendant company agrees to comply with certain requirements (such as the payment of an agreed fine) and in turn, the prosecutor agrees that, upon approval of the DPA by the court, the indictment against the company is suspended.

Of most significance, however, particularly for directors and officers caught up in the same investigation, is that the DPA will contain an agreed statement of facts relating to the alleged offence(s), negotiated between the prosecutor and the defendant company.

It will also likely include significant admissions made by the defendant company in relation to the offences being investigated by the prosecutor. The agreed statement of facts and/or admissions could be made adverse to the interests of directors and officers.

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For further information, please contact James Morris, Legal and Technical Executive on +44 20 7528 4308 or email james_morris@jltgroup.com