Speech

Keynote speech to the World Bribery and Corruption Compliance Forum

Speech by Solicitor General Oliver Heald QC MP

“Thank you Mr Chairman. It gives me great pleasure to open this conference on this hugely important topic. It is also a great honour to speak alongside so many distinguished speakers to so many eminent delegates.

“The importance of tackling bribery and corruption, at all levels, cannot be overstated. Corruption is corrosive. Like rust, rot and other decay, corruption, once set in, begins to spread, and which, like rust, rot and other decay, must be stopped before lasting and irreversible damage is done.

“Many have written with great power and eloquence of the degenerative effects of corruption at all levels, from the impact of corruption on the person engaging in the corruption, to the wider effects on society as a whole. Some considerable time ago, the writer of Ecclesiastes spoke perceptively of the impact of corruption on the corrupter. The author wrote, ‘Extortion turns a wise person into a fool, and a bribe corrupts the heart’.

“More recently, Kofi Annan spoke of the impact of corruption on society as a whole. In his now well-known foreword to the 2004 United Nations Convention against Corruption, the then Secretary General described corruption as, ‘an insidious plague that has a wide range of corrosive effects on society’.

“In the 20 years I spent at the Bar, then later during my time as the minister responsible for benefit fraud prosecutions in the Department for Work and Pensions, more recently working with the Council of Europe’s Group of States against Corruption, as a member of the House of Commons Committee which debated what is now the Bribery Act, and finally, from the unique perspective I now have as Solicitor General, I have seen, and attest to the impact of bribery and corruption - and the importance of ensuring that we share the collective responsibility to ensure that the rot of corruption does not set in, or if it does, it is adequately dealt with and those responsible punished appropriately.

“I am sure that many here this morning will share those observations. Of course, when I recite these truths, I am saying nothing new. Indeed, the very fact that you are attending this conference underlines the commitment you and your respective organisations clearly have to tackling bribery and corruption.

“The reason, however, I chose to open my remarks this morning by underlining these truths is because it is important to remind ourselves of this context. Bribery and corruption are borderless crimes, neither respecting boundaries nor constrained by geography. For that reason, those seeking to eradicate it or avoid it - and I take that all of us here fall into at least one of those categories - should not be constrained by boundaries or geography either.

“Put another way, international crimes require international enforcement strategies.

“The international community has taken its stand; I have already mentioned the UN Convention; of course, the OECD Convention on Combating Bribery of Foreign Public Officials 1997 requires State parties to the Convention to apply penalties which are “effective, proportionate and dissuasive”.

“So it is absolutely right that a conference such as this - the World Bribery and Corruption Compliance Forum - has senior representation from across the globe. I am delighted that Lanny Breuer, Assistant US Attorney General, will be joining us to speak this afternoon, and I hope to be able to return for his address later today.

“Of course, it is easy to extol the virtues of tackling bribery and corruption; it is altogether less easy to do so effectively. Many of us will approach the issue of enforcement with different perspectives. For some, the issue will be carrying out the enforcement. For others, the issue will be avoiding the need for enforcement by advising clients on steps to be taken to prevent bribery and corruption from setting in in the first place.For others still, the task will be to defend those accused of engaging in it.

“Whatever perspective we bring to the issue of enforcement, it is clear that all involved could benefit from a tool to reduce the complexity and uncertainty of current enforcement powers, and to deal with cases more quickly and in a way which better meets the interests of justice and commands public confidence.

“That is why I am delighted to confirm that that the government is introducing Deferred Prosecution Agreements, a new tool to tackle economic crime, through amendments to the Crime and Courts Bill, to be tabled today.

“Earlier this year, the government consulted on the possibility of introducing DPAs. The response we received to that consultation, which closed in August, was overwhelmingly positive, with 86% of those who responded supporting the proposals. No doubt many organisations represented today are among those who responded. Today the government’s response to the consultation will be published.

“In broad terms, under a Deferred Prosecution Agreement, organisations will publicly face-up to their wrongdoing and resolve to make things right by agreeing to comply with stringent conditions. Conditions may include the payment of substantial penalties, making reparation to victims, undertaking reform to prevent such conduct occurring again, and submitting to regular reviews and monitoring.

“The process will be scrutinised by an independent judge and the threat of prosecution will remain hanging over an organisation should it fail to comply fully with the agreement.

“Initially, DPAs will be available to the Serious Fraud Office and the Crown Prosecution Service, although there will be provision for the Secretary of State to designate additional prosecutors to use the powers. In the case of the DPP and the Director of the SFO, the power to enter a DPA may only be exercised by the relevant director acting personally, as an additional safeguard.

“I am confident that DPAs will be an invaluable tool for the SFO and CPS. In cases where a company accepts wrongdoing, and is committed to put things right, a DPA will mean that it must comply with stringent conditions to compensate and ensure there are no repeat incidents, whilst avoiding a lengthy and expensive prosecution with the prolonged uncertainty it brings for the victims, blameless employees and others dependent on the fortunes of the company.

“When formulating our proposals, we looked to other jurisdictions that deploy similar tools. The United States, for example, has been using Deferred Prosecution Agreements and Non Prosecution Agreements for some 20 years, and a considerable body of jurisprudence and commentary has built up surrounding their use.

“But as anyone advising on cross-jurisdictional issues will tell you, it is not possible simply to transplant one element of a very different legal regime into our domestic legal and constitutional framework, even if we do have a shared common law heritage.

“There is much to learn from the US model however; it offers a good example of the effective use of the voluntary agreement approach. We decided to build on the US model by formulating proposals which ensure a greater level of judicial involvement, from an earlier stage, as well as greater levels of transparency in order to command the confidence of the public.

“So a key feature of the new regime will be early, pre-charge judicial oversight. This oversight, from a Crown Court Judge, will ensure that DPAs provide both certainty, as required by the prosecutor and the party to the DPA; and transparency, as required by the public.

“In recognition of the unique nature of economic crime, DPAs will only be available for certain economic crimes committed by organisations. They will not be available in relation to offending by individuals, and they will not be available in relation to the criminal law generally.

“I must stress that this is not because economic crime is in any sense not as serious as other crime - on the contrary. As the Lord Chief Justice said in the 2010 case of Dougall, which involved a plea agreement by the Serious Fraud Office,

For all the respectable and reputable fronts that many fraudsters and corrupt businessmen may present, they are criminals. What is sometimes described as white collar crime or commercial crime taking the form of fraud and corruption in particular is crime. And it is not victimless: sometimes identified individuals are victims, and at others, unnamed, unknown individuals in the entire community are victims, and sometimes the community itself is the victim.

“There will always be cases where the public interest requires a full criminal prosecution - DPAs will allow prosecutors to focus more of their resources on those cases, and in effect will allow them to prioritise prosecutions. It is highly unlikely, for example, that DPAs will ever be appropriate for use with companies which have been used primarily as a vehicle for criminal activity: such companies, and the individuals responsible for the criminal activity, can expect to face criminal investigation and prosecution in the normal way.

“Returning to the new regime, much of the procedure leading to a DPA will be similar to the way in which investigations are carried out at present. A criminal investigation will take place, prompted either through self-reporting by the company, or through some other means. The prosecutor will be involved from an early stage, as is the case with most serious and complex investigations.

“If the prosecutor considers in principle that the offending revealed by the investigation is suitable for a DPA, the views of the organisation in question will be sought. In reality, there is likely to be a dialogue between the prosecutor and organisation from an early stage; we expect there to be an increase self-reporting and DPAs will rely to an extent on cooperation from organisations.

“We hope that the certainty provided by the DPA process, combined with the possibility to draw a line under past criminal conduct, without the organisation having to face full criminal proceedings will be a strong incentive to engage with the regime.

“The early judicial oversight of which I spoke a moment ago will take place in the following way. The prosecutor, having agreed with the organisation an outline of agreed basic facts, will present those agreed facts to a Crown Court judge, in private, along with details of the alleged wrong doing, a draft indictment, the agreed or contemplated conditions to be attached to the DPA, and an outline of any areas which remain under discussion.

“It would be at this stage that the prosecutor could inform the judge of any international dimensions to the case, which we hope will be particularly useful in cases where the organisation faces enforcement proceedings in a number of jurisdictions, where both the prosecutor and the organisation need to ensure that whatever is happening domestically correlates with whatever is happening internationally. As such, DPAs will be a swifter, more nimble way to conduct enforcement.

“As well as speed, we hope that DPAs will provide the parties with a degree of certainty that simply cannot be offered by regular criminal proceedings. The judge will, at the early preliminary hearing, be able to give an initial indication as to whether what is proposed by the prosecutor and the organisation is likely to be endorsed by the Court when presented for final approval. Or in the words of the clauses being tabled today, whether, ‘entering into a DPA… is in the interests of justice and the proposed terms of the DPA are fair, reasonable and proportionate…’

“Of course, the judge may decide not to make such a declaration; the court may consider that in the particular circumstances of the case, a DPA is not appropriate, or that certain steps must be taken, or further lines of enquiry pursued, before the matter could be considered further.

“While this early hearing of necessity cannot be open to the public, details of what took place will be published by the prosecutor in the event that a DPA agreed and approved by the court. 92% of those who responded to the consultation considered that it was appropriate for this early hearing - or hearings, for there may be more than one if the parties so require - to take place in private.

“There are a host of reasons why such hearings should be in private, not least the Article 6 rights of the company to a fair trail in the event that a DPA is not concluded and a full prosecution takes place. The same could be said in relation to prosecutions against individuals.

“And there are, of course, market considerations too - while a commercial organisation may be willing to sustain whatever the impact of an announcement that a DPA has been agreed, quite understandably such organisations will be less willing to engage with the process if the early stages of their otherwise confidential discussions with the prosecutor are simply used to fuel speculation and adverse coverage in the media, with all that that will entail.

“Following the preliminary hearing or hearings, the prosecutor and the party to the DPA will return to the Crown Court for the final disposal hearing, in which the prosecutor must apply to the Court for a declaration in similar terms to the initial indication given during the preliminary hearing, but with the crucial distinction that once the declaration is made, the DPA comes into force. We propose that the test to be applied by the Crown Court at that stage will be the same as that applied at the preliminary hearing, that is to say,

entering into a DPA… is likely to be appropriate in all the circumstances of the case and in the interests of justice, and the proposed terms of the DPA are fair, reasonable and proportionate…

“Allow me to say a few words about the terms of the DPA.

“The regime is intended to be flexible, so neither the legislation nor the statutory DPA Code for Prosecutors that the SFO and CPS will be required to produce, will be prescriptive as to what the terms should be. Rather there will be a non-exhaustive list of indicative criteria in the legislation that will include:

  • a financial penalty
  • disgorgement of profits or benefit
  • reparation to victims
  • an obligation to use all reasonable efforts to make available to the prosecutor all relevant non-privileged information or material, such as the factual findings of an internal investigation and to interviews given as part of an internal investigation
  • an obligation to put in place anti-corruption or anti-fraud policies, procedures or training
  • in the more serious cases, an independent monitor could be appointed

“Taking into account the relevant facts, previous discussions and the views of the prosecutor, the financial penalty and other terms would be a matter for the judge to approve. Once the DPA and its terms are approved, a voluntary bill of indictment will be preferred and immediately and automatically suspended - suspended, that is, pending compliance by the organisation with the terms of the DPA.

“Variation of a DPA or termination of a DPA will not be in the gift of the prosecutor; an application will have to be made to the court for the DPA to be varied or terminated as the case may be and the court will apply the same test as when the DPA was made, whether “entering into a DPA… is likely to be appropriate in all the circumstances of the case and in the interests of justice, and the proposed terms of the DPA are fair, reasonable and proportionate…”.

“If a DPA remains in force until its expiry date, the prosecutor will give notice to the court that the proceedings are not to continue, and it will not be possible to bring fresh criminal proceedings against the organisation for the same offence in the future. That restriction is subject to the proviso that if the organisation provided inaccurate, misleading or incomplete information, and knew or ought to have known that that is the case, the bar on fresh proceedings being brought for the same offence no longer applies.

“Of course, I am aware that a regime such is this will not be without criticism. It has been said that DPAs are themselves a fraud; companies that commit criminal acts do so by their human actors; should not the priority be prosecuting such people? Well let me say this: I agree with the conclusion of that statement. The priority should be prosecuting people: where there is evidence, and it is in the public interest (which, given my comments at the outset, it undoubtedly will be), there will be criminal prosecutions of such individuals.

“We hope the regime will encourage companies, perhaps as part of a cleansing process, to resolve past misconduct. In doing so, evidence to support full criminal investigations against individuals is likely to be revealed to prosecutors to support prosecutions of those individuals.

“It has been said that the rationale of DPAs is logically inconsistent; if a DPA is available for economic crime, why not for other crimes? Why not offer DPAs to gang criminals or drug dealers, for example?

“Well, that criticism fails to address the fact that the DPA regime does not detract one bit from the primacy that should be afforded to prosecuting individuals of serious economic crime. Indeed, by freeing up resources currently consumed by prosecutors engaged in lengthy criminal litigation against companies, more prosecutions of more individuals will be a realistic goal. DPAs are only available in relation to organisations for the simple reason that you can’t send an organisation to prison, only a financial penalty is available. The same simply cannot be said of the other crimes cited in this criticism.

“I am aware of cases which are and have been before the courts involving both the company and the directors; in cases where the directors are convicted of criminal charges, there is a very strong argument for using the tailored, bespoke solution offered by a DPA to deal with enforcement matters against the company in such situations.

“So as I conclude, although I noted at the outset that when I underlined the pernicious effects of bribery and corruption I was saying nothing new, I hope certainly that in the second half of my speech I not only said something new, but that I have kindled your interest in what will be a very effective, and in time vital, enforcement tool.

“The programme for the rest of the conference looks fascinating, and I trust that it will be interesting and productive.”

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