Cut company fines ‘pour encourager les autres’, says UK ex-solicitor-general
Discounts of 50% or more should be given to companies that admit their wrongdoing at the earliest stages to avoid expensive proceedings and encourage other companies to own up, a former solicitor-general has said.
In the week that International Investment reported that the Financial Conduct Authority (FCA) had reduced its £5.75m fine to insurance broker Bluefin by 30% for early cooperation, Sir Edward Garnier, who lost his seat in the May snap election, said the principle should be extended to all companies suspected of wrongdoing.
The former Tory MP, who is a senior barrister known in the UK as Queen’ Counsel, proposed a carrot-and-stick method whereby discounts of up to 50% could be offered to those companies that were prepared to admit wrongdoing, tackle fraud and pay compensation to their victims, the Times reported.
The mechanism by which this could be done, he argued, was through the use of deferreed prosecution agreements (DPAs), which were introduced in 201.
According to the Serious Fraud Office (SFO), a DPA is an agreement reached between a prosecutor and an organisation, which can be prosecuted under the supervision of a judge.
The agreement allows a prosecution, says the SFO, to be suspended for a defined period provided the organisation meets certain specified conditions.
A cost-effective tool in the fight against fraud
DPAs can be used for fraud, bribery and other economic crime, the SFO explains. They apply to organisations, never individuals.
On the SFO website, the key features of DPAs are listed as:
- They enable a corporate body to make full reparation for criminal behaviour without the collateral damage of a conviction (for example sanctions or reputational damage that could put the company out of business and destroy the jobs and investments of innocent people).
- They are concluded under the supervision of a judge, who must be convinced that the DPA is ‘in the interests of justice’ and that the terms are ‘fair, reasonable and proportionate’
- They avoid lengthy and costly trials
- They are transparent, public events
It was, in fact, Sir Edward who introduced DPAs into English and Welsh law during his tenure as solicitor-general.
To date, DPAs have been used by the SFO to complete successfully four cases, namely Standard Bank in 2015, XYZ in 2016, Rolls-Royce in January and Tesco in April.
All four were cases of financial impropriety, namely bribery, and all four took place under the supervision of Sir Brian Leveson, a president of the high court in London.
Sir Edward felt that, in part due to Brexit and as we seek to build trade outside of the European Union, “the need for us to maintain a reputation for the highest standards of business integrity is paramount”.