We aim to make this site as accessible as possible and therefore have provided the settings below to use if you are finding it difficult to view this website. See the SFO Accessibility Statement for more information.

Where it is appropriate to provide a Welsh translation, you can switch to Cymraeg. See the Welsh Language Commissioner website for more information.

Use the settings button in the bottom right corner of the page to access these settings again.

Change to normal text size A Change to medium text size A Change to large text size A Adjust Text Size

We would like to use Analytics Cookies on our website. 

Turn these on below if you are happy with us collecting information on how our site is used, in order for us to improve the overall experience of our website. 

All other cookies are necessary and therefore by continuing to browse this website, you are agreeing to the usage of these cookies.

 See the SFO Privacy Policy for more information. 

Analytics Cookies

Deferred Prosecution Agreements (DPA): A Practical Guide by Defence and Prosecution

17 October, 2016 | Speeches

Ben Morgan, Joint Head of Bribery and Corruption, at Annual Bar and Young Bar Conference 2016,  London.

Ben Morgan’s address, as part of panel comprising the Rt Hon Sir Edward Garnier QC MP, Alison Levitt QC and Stuart Alford QC.

Good afternoon. I am asked to cover 5 areas in this slot, which are:

  1. The foundations for DPAs;
  2. Key challenges for the SFO’s decision making in applying them;
  3. Opportunities offered by DPAs;
  4. Lessons learned from our first examples; and
  5. How to approach the process.

There’s obviously a lot there that could be covered, so let me jump straight in with some thoughts on each area, and in Q&A we can discuss further any of those that you find interesting.

Foundations – we’ve heard first hand from Sir Edward about how we come to find ourselves in this position. As you know we have the Crime and Courts Act, which creates DPAs, and the DPA Code which helps us all understand how to use them.  We also now have two helpful judgments in the wake of our first two DPAs, which give us the all-important view from the bench about what it takes to achieve the court’s approval, which in this jurisdiction is a necessary, and welcome requirement.

I say welcome – during the first DPA, the ICBC Standard Bank case, I recall LJ Leveson thanking Sir Edward profusely for designing the process so that having given his approval to the resolution, he then had to do a significant drafting exercise to give his reasons for that approval. I’m sure his Lordship was grateful for that opportunity to fill his time.

But nevertheless, the court has engaged with this aspect of our system fully, in such a way as to give all of us who might wish to use this process confidence in its application for future cases, and that has been very important.

So these are the key foundations, and those that we will have regard to – the Act, the Code, and the judgments. I’m not going to take you through them or read to you – you are quite capable of understanding that material, I am sure.  But I will try to focus now on the aspects of them that occupy us at the SFO the most.

As serial users of the DPA tool, it is key to us that we apply the process diligently, and that we maintain the confidence of the court as we seek to do so. It is this that plays on our minds when making decisions about using DPAs for a particular matter.  You can do what we will do – read the Code, apply it to the facts of the case, and ask yourself whether you think, credibly, we can both stand in front of the court and seek its approval to grant a DPA in place of a prosecution.

The key part of this for us really is the steps a company has taken once it is aware of a potential issue. I am yet to see a case where the underlying facts – be it their scale, complexity or gravity – mean that a DPA is out of the question.  On the contrary, while there may yet emerge such an example, I think it’s important that people realise that generally our view at the moment is that a DPA could be fitting for almost any case, just as we are willing and able to prosecute any case, no matter the challenges that might be entailed.

The key difference between the two is the stance the company takes once it becomes aware of the issue. How it behaves then is very significant in determining how we will look to resolve the case.  Cooperate in the way that the Code describes, and that the DPA judgments analyse, and a DPA is very much in play.  Get that part wrong though, and it is going to be very hard for us to justify taking that route, and as I say, we care very much about our credibility as a user of the DPA process, so we will not put that at risk.  So the main thing in our mind will be – are the company, and its advisers, properly cooperating with us?

How that is measured has been covered at some length in speeches and the judgments themselves, so I won’t dwell on it. But the kind of things we are talking about include:

  1. At what point did the company come and talk to us;
  2. What work has it already taken to investigate the matter;
  3. What approach is it intending to take to providing us with access to the factual elements of that work (which unpacks into a number of connected issues);
  4. How has it handled data identification, collection, preservation, continuity, and provision to us; and
  5. To what extent is it willing to respond to our interests in work that remains to be done in the investigation – for example sequencing interviews with us, drawing relevant material to our attention even if we have not asked for it, and allowing us to do our job fairly, without seeking to exert pressure through the media, Whitehall or other means.

The lessons we have learned from the first two DPAs are first, that the court will scrutinise all of these factors very carefully. You can see that from the judgments.  It is really clear that the stance the company has taken with us is one of the most important factors in the assessment the court makes when it answers the first question it has to address – whether it is in the interests of justice to approve a DPA, in place of a prosecution.

The other question the court has to answer is whether the terms of a DPA are fair, reasonable and proportionate. What we have learned here is how hard it is to get that right, because what we have to do is strike a very delicate balance, it seems to me.

A DPA must be a punishment. It cannot be a cosy deal.  Corruption is a serious criminal offence and its effects can be brutal.  So the sanction should really include the necessary components to respond to that, in particular compensation where appropriate, disgorgement of illegal gain, and an additional fine, to deter others.  It has to be a just financial sanction therefore, that stands up to scrutiny, and is constructed on a transparent and principled basis.

But it also needs to incentivise others to do the same thing. It must be lenient enough to reward the company for having the courage and integrity to self-report a crime and to cooperate with the SFO’s investigation into it.  It was often said that the one third discount on fine – equivalent to an early guilty plea – was not enough of an incentive in this regard.  And we’ve learned from our second DPA, XYZ, that the court will consider a deeper discount, up to 50%, in the right circumstances.  Note “up to” (not “at least”), and note “in the right circumstances (not “in every case”).

The other aspect to be balanced is the effect of the sanction on innocent people – employees, pensioners, and others dependent on the fortunes of the company. And so in XYZ, we also saw that beyond the 50% discount on fine, the court was prepared to take into account the relevant financial circumstances of the company.

As I say, getting this balance right is extremely difficult. It is inevitable that wherever we land, there will be those who say it is too lenient, that the company has got off lightly, that we should be prosecuting corporates into the ground.  They may be right.  But there will also be those who say the punishment is far too severe, it is grotesque, that the company bent over backwards to do the right thing and should not be so severely punished having chosen to do so, or else they may as well have just kept quiet about the matter, or fought us at trial.  They may be right too.  To be honest, it is a thankless task trying to judge this balance, and one that quite literally keeps me awake at night as we look at the composition of other cases we have that might be suitable for a DPA.

And I will finish on this point – the other cases. I think a session like this is important, because you should know that work on DPAs is now a part of business as usual at the SFO.  Not every case will be suitable (and believe me there are still a few who seem to prefer to fight us tooth and nail), but there are lots that might be, and so all over the building just over the river on Cockspur Street you will find our people working through the Code, the judgments, and sharing our emerging experience with each other.  It is serious business, and we now have major companies that come in at the point where they are conceptually ready to accept they have matters they wish to resolve with us, and they want to get a DPA.  That business creates opportunities for you, as you will readily spot. 

All I really want to say on that is this – you need to approach DPAs with a new mind set, whether you’re instructed for us, or against us. It is a process that I have found does not come naturally to the UK litigation community, be it counsel or solicitors.  I include myself in that.  We are born to fight and scrap for every advantage for those we represent, and to win by defeating our opponent.  But trust me if you bring that mentality into a DPA process it will backfire.  It takes a fresh mind to grasp the dynamic needed to get a DPA over the line.  Winning in these circumstances is not defeating the opponent, for either the prosecutor or the defendant.  It is securing approval for the DPA – finding that difficult balance that ultimately the court agrees is appropriate.  So of course, you have to protect your client’s interests as best you can, and we have to ensure we administer justice without favour and without cutting any corners whatsoever.  But somehow, uniquely, we actually need to achieve the same end – we need to stand shoulder to shoulder, together seeking the court’s approval of the resolution we negotiate, and this is new territory in the UK, different even from work some of you might have done negotiating civil settlements in the past. 

It means not trying to get us to accept the lowest sanction you can force out of us, but instead volunteering the sanction that viewed objectively, the court is likely to deem appropriate. It means not invoking every possible avenue you have to hide information or dodge liability, but being forthcoming with it so that we can all have confidence that the full ambit of any offending is identified to the court, as the Code requires. And on our side it means us not scoring points in the drafting of the DPA documents, for example, but finding a way to describe what has happened and is being accepted by the company that is factual, without hyperbole and rhetoric, without trying to “win the case”.  As I say, it is new territory. 

For my part, I find it really interesting, and I think there is an exciting period ahead as our market gets used to DPAs, and begins to mature. But I think it is going to take lots more sessions like this for us to keep talking, keep sharing concerns and hopefully finding more and more solutions to the challenges and opportunities that DPAs present.

So I will stop there, and try to make sure we have time to have some of that discussion today. The last thing I would say, though, is that if you also find this kind of thing interesting, then it would be good to work more closely with you.  There are lots of opportunities to work with us at the SFO – we are shortly to begin hiring permanent in-house lawyers, and we are turning our minds to refreshing our counsel panel list too.  So if you want to be part of this world, I hope you will keep your eyes open for those opportunities.