Out of Court, Out of Mind: Do Deferred Prosecution Agreements and Corporate Settlements Fail to Deter Overseas Corruption?
Corporate settlements are increasingly becoming the preferred tool for dealing with economic crime by large corporations, particularly in the fields of bribery and corruption. In its 2014 Foreign Bribery Report, the OECD found that 69% of foreign bribery cases were dealt with by way of a settlement.
The US, which has long been seen as the most proactive enforcer of the OECD’s Anti-Bribery Convention, has led the way in this regard. Deferred Prosecution Agreements and Non Prosecution Agreements have become the “mainstay of whitecollar criminal law enforcement” in the US. Between 2004 and 2012, the US resolved 70 of its 84 criminal enforcement actions under the Foreign Corrupt Practices Act through either a Deferred Prosecution Agreement or a Non Prosecution Agreement. Only two Foreign Corrupt Practices Act cases involving corporations since 2004 have resulted in a full court trial.
Many countries are now following the US trend, at a time that these settlements are becoming increasingly controversial in the US. The UK introduced Deferred Prosecution Agreements in February 2014 after having used civil recovery orders as a means of corporate settlement for overseas corruption for some years. Brazil introduced a provision for corporate leniency agreements in its 2014 anti-bribery legislation, the Clean Company Act – a provision which allowed a two thirds reduction in penalty for companies that cooperate with authorities, admit wrongdoing, and help identify those involved in the wrongdoing. It is currently in the process of making such agreements more lenient yet.
Settlements have also been used to resolve foreign bribery cases in Germany, Canada, Denmark, Italy, Norway, the Netherlands, Switzerland, Japan and Greece. And several countries are looking at whether to introduce some form of settlement procedure.
The key question this briefing will address is whether corporate settlements do indeed achieve real deterrence and deliver justice. Before settlements are rolled out across the globe in an uncritical manner, the lessons from the US experience and the emerging UK experience need to be heard and learnt. This briefing will also examine the need for global best practice standards on settlements to ensure that settlements are indeed effective and do indeed deter corruption.
Taking first lessons from the US and emerging criticisms of the use of Deferred Prosecution Agreements and Non Prosecution Agreements, the briefing will then look at the UK Deferred Prosecution Agreement regime built on judicial scrutiny. It will go on to look briefly at the trend towards out of court settlements in Europe before drawing some conclusions as to what global standards for corporate settlements are required.