Deferred Prosecution Agreements: Why Companies Need to be Careful

Aziz Rahman

Aziz Rahman

The recent acquittal of three senior figures at Guralp Systems on charges of conspiracy to make corrupt payments came two months after the company admitted wrongdoing when entering into a Deferred Prosecution Agreement (DPA). Here, Aziz Rahman (whose firm Rahman Ravelli represented one of those cleared) explains why companies need to examine their situation carefully before entering into a DPA.

It almost goes without saying that a corporate will want to minimise the damage if it finds itself under investigation. After all, any unfavourable publicity can mean reputational harm. An investigation can hamper a company’s ability to retain its standing in the marketplace. Any resulting prosecution can mean hefty penalties and debarment from bidding for some types of public contracts both here in the UK and abroad.

Little surprise, therefore, if such a company sees a DPA as an attractive option.

Introduced under the provisions of Schedule 17 of the Crime and Courts Act 2013, a DPA allows a prosecution to be suspended for a set period providing the company involved meets specified conditions. No lengthy trial, no hugely-damaging conviction and the chance to atone for past mistakes. Many companies facing scrutiny would be glad of such an offer. Six have taken the DPA offer so far and we now wait to see if Airbus becomes the seventh.

While those six may have gladly swapped the threat of conviction for a DPA – and the benefits one can bring – it should be emphasised that such an arrangement will not necessarily be in every company’s best interests. This is precisely why companies need to do some careful thinking (and take expert advice) before accepting a DPA when it’s offered as it will not always be the best choice for them.

The Guralp Systems case

As a firm, we successfully represented Natalie Pearce, the former head of sales at Guralp Systems. Natalie was one of three senior figures at the company charged with conspiracy to make corrupt payments to secure contracts. As reported by Risk Xtra, all three were acquitted last month. The acquittal was followed by the Serious Fraud Office (SFO) publishing full details of the DPA it had already concluded with the company two months earlier.

The DPA was concluded on the basis of the same “evidence’’ that failed to see any of the defendants convicted. It involved the company paying £2 million for disgorgement of gross profits. This certainly raises questions about the integrity of the DPA process.

It’s possible that Guralp Systems may now be thinking that if the evidence was not there to convict individuals then maybe it, as a company, should have rejected the idea of taking a DPA and instead have been prepared to go to trial – if it would ever have gone that far.

Similarly, Tesco took the DPA option over its accounting scandal and paid a £129 million fine only for the collapse of the prosecution of all the individuals that were charged. Rolls-Royce held its hands up over bribery and corruption and, under a DPA, paid £258 million for the disgorgement of profits, a £239 million fine and £13 million in costs – only for no individuals to ever be charged, never mind convicted.

Such cases indicate that, in some circumstances, it may be worthwhile for a company to hold its nerve and let the SFO know it’s prepared to have its day in court rather than admit wrongdoing and take a DPA.

No individuals convicted

No individual has ever been convicted after a DPA has been concluded. There’s an argument to be made, therefore, that if prosecutors find it difficult to convict those that can be considered the controlling mind of a company, why should companies automatically assume they will be found guilty of the same alleged wrongdoing?

There is no one-size-fits-all approach that can be taken to every investigation where a DPA is a possibility. The best approach will not always be jumping the gun and taking a DPA. Barclays never obtained a DPA over its Qatar dealings and the SFO’s criminal proceedings against the bank were dismissed in 2018. While the related trial of three former Barclays senior executives is ongoing, the case against its former chief executive John Varley has already failed due to insufficient evidence.

If a company refuses the offer of a DPA there’s no guarantee that the SFO will automatically bring a prosecution. It’s possible that the agency will quietly drop the case with no charges being brought, which is an even more favourable outcome for a company than a DPA.

For some companies, a DPA may well be the best course of action, but from our experience of many such cases, we cannot emphasise strongly enough that the decision to take one requires careful consideration.

Some of those that have taken DPAs may, with hindsight, wish they had not. Those choices cannot be reversed, but they should certainly be considered when any other company is deciding whether a DPA is really in its best interests.

Aziz Rahman is Senior Partner and Head of the Corporate Crime Group at Rahman Ravelli Solicitors

About the Author
Brian Sims BA (Hons) Hon FSyI, Editor, Risk UK (Pro-Activ Publications) Beginning his career in professional journalism at The Builder Group in March 1992, Brian was appointed Editor of Security Management Today in November 2000 having spent eight years in engineering journalism across two titles: Building Services Journal and Light & Lighting. In 2005, Brian received the BSIA Chairman’s Award for Promoting The Security Industry and, a year later, the Skills for Security Special Award for an Outstanding Contribution to the Security Business Sector. In 2008, Brian was The Security Institute’s nomination for the Association of Security Consultants’ highly prestigious Imbert Prize and, in 2013, was a nominated finalist for the Institute's George van Schalkwyk Award. An Honorary Fellow of The Security Institute, Brian serves as a Judge for the BSIA’s Security Personnel of the Year Awards and the Securitas Good Customer Award. Between 2008 and 2014, Brian pioneered the use of digital media across the security sector, including webinars and Audio Shows. Brian’s actively involved in 50-plus security groups on LinkedIn and hosts the popular Risk UK Twitter site. Brian is a frequent speaker on the conference circuit. He has organised and chaired conference programmes for both IFSEC International and ASIS International and has been published in the national media. Brian was appointed Editor of Risk UK at Pro-Activ Publications in July 2014 and as Editor of The Paper (Pro-Activ Publications' dedicated business newspaper for security professionals) in September 2015. Brian was appointed Editor of Risk Xtra at Pro-Activ Publications in May 2018.

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