First, I thank the House for its understanding. I am sure that your Lordships will not find when you wake up tomorrow morning that you have cleared the Bill at all its stages and that it will not be coming back. It was a slightly unusual procedure and I am very grateful to the House for its co-operation on it. I hope that once people have had a chance to look at Hansard and see the new shape of the Bill we can, in two weeks’ time, have a proper Committee stage with amendments and the rest. We now turn to the second part of what we were trying to do, which is to bring in the deferred prosecution agreement.
These amendments introduce a new tool for tackling corporate economic crime: deferred prosecution agreements. DPAs will enable more organisations involved in wrongdoing to be brought to justice and secure better outcomes for victims. Last year alone, fraud cost its victims and the taxpayer an estimated £73 billion. This is unacceptable. More needs to be done to hold organisations involved in such wrongdoing to account. As noble Lords will be aware, this Government are committed to making sure that there is the same tough response to economic crime as for any other kind of offending. This harmful activity, which undermines the economy, must be tackled.
We have already brought into force the Bribery Act 2010 and published a national strategic plan, Fighting Fraud Together. Furthermore, the Bill will establish the National Crime Agency, which will have a strong focus on combating economic crime. DPAs are the next step in the battle against economic crime. Currently, prosecuting an organisation for economic crime can pose significant challenges. Such prosecutions often take many years and cost millions of pounds. In many cases, a prosecution and conviction can do more harm than good. Organisations may go out of business, shareholders may lose their investments and employees may be out of work.
The key elements of this scheme are set out in the proposed new schedule in this group of amendments. A DPA will be a voluntary agreement between a prosecutor and an organisation under investigation for economic crime. In return for complying with
tough terms and conditions, a prosecution will be commenced but deferred for the duration of the agreement. If the organisation successfully complies with the terms of the agreement, the prosecution will be dropped. In this way, organisations would be held to account for their wrongdoing without the uncertainty, expense or length of a criminal trial. However, if the organisation does not comply with the agreement they can be prosecuted in the usual way. The agreement will be subject to oversight and scrutiny by the judiciary to ensure that it is in the interests of justice and that its terms are fair, reasonable and proportionate. Once agreed and approved by the court the agreement will be fully transparent, with the terms being published for all to see.
Initially, the Director of Public Prosecutions and the director of the Serious Fraud Office will be the only prosecutors able to enter into a DPA. This is because they are, by and large, the prosecutors responsible for bringing proceedings for the relevant offences. However, this may not always be the case. The list of relevant economic offences set out in Part 2 of the proposed new schedule may change, as might the role and remit of different prosecutors. That is why we have provided a power for the Secretary of State to designate further prosecutors as being capable of entering into a DPA. Any decision by a prosecutor to enter into a DPA must be made by the director of the relevant prosecuting agency personally, to ensure that there is prosecutorial oversight of each agreement at the highest level.
These agreements may be used only to address alleged economic offending by organisations. Let me be clear: a DPA cannot be entered into with an individual, nor may they be entered into for just any crime. They have been developed to provide an additional tool to assist in the battle against economic wrongdoing by organisations. Individuals who commit economic crime will be best dealt with through criminal prosecution, where a range of punishments and sanctions are available—including the ultimate punishment of imprisonment.
Paragraph 5 of the proposed new schedule sets out the terms that a DPA must and may contain. If DPAs are to be meaningful, they must make clear what wrongdoing they seek to address and what sanctions are being imposed for dealing with this. For that reason, every DPA will contain a statement agreed between the parties setting out the facts of the case.
Each agreement will set out stringent measures with which an organisation must comply. These measures will need to be proportionate to the alleged wrongdoing and capable of being tailored to the facts of the case. The proposed new schedule does not set out every possible term and condition; that is for the parties to decide. However, it does provide examples of terms that might be appropriate. The terms may include compensating victims of the organisation’s wrongdoing and payment of a financial penalty. Other conditions may require the organisation to put in place a robust compliance and monitoring programme or to pay the prosecutor’s costs.
In determining the level of any financial penalty, the amount must broadly reflect the fine that a court would have imposed on a conviction following an
early guilty plea by the organisation. Both parties will need to take account of the various factors that would be considered by a sentencing court, including relevant sentencing guidelines relating to offences, application of the early guilty plea reduction and the means of the organisation. Organisations will not be getting off lightly.
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It is essential that there is transparency and consistency in how DPAs operate. The code of practice for prosecutors, issued by the Director of Public Prosecutions and the director of the Serious Fraud Office, will play an important part in meeting these requirements. The code will be publicly available and will be laid before Parliament. It is not only prosecutors who will benefit from the code of practice. The respondents to our consultation clearly saw this code as an important tool for organisations and the public to understand how this process will operate. To this end, the code may also give clear guidance on other relevant matters such as how information obtained by the prosecutor during negotiations will be treated. The Government expect that prosecutors will consult on its full contents.
Paragraphs 7 and 8 of the proposed new schedule explain the process by which a DPA will be developed by the parties and approved by the Crown Court. Once the parties have negotiated an initial draft of the agreement, the prosecutor must apply to the court for a declaration that a DPA in the form the parties are seeking is likely to be appropriate. At a preliminary hearing, the judge would be given notice of the intention to enter into a DPA and would be presented with an outline of the basic facts of the case and the intended terms of the agreement. The judge would give an early view on whether a DPA is likely to be in the interests of justice, and indicate whether the proposed terms are likely to be fair, reasonable and proportionate. This hearing will be in private to ensure that parties are able to discuss the proposed terms of the agreement openly. Once an agreement is entered into, the preliminary determination by the judge will be published by the prosecutor to ensure transparency.
Following the preliminary hearing, the parties will be able to revisit the agreement in light of the views given by the judge. Once they have reached a final agreement, the prosecutor will need to seek a declaration from the court confirming that the proposed agreement is in the interests of justice and that its terms are fair, reasonable and proportionate. This final hearing will start in private and would move into open court if the agreement meets the tests. The terms of the DPA would then be publicly outlined and explained, and the court would give reasons for the declaration. Once approved, the final agreement and the court’s declarations from both the preliminary and final hearings would be published.
This approach will ensure that there is scrutiny and transparency throughout the process. However, when an agreement is not made, the confidentiality of any discussions between the parties would be protected to avoid potential prejudice to any future prosecution of the organisation or other criminal proceedings. Once the agreement is approved, the prosecutor will lay the
relevant charges before the court and proceedings would then be immediately suspended. This suspension will be the sword of Damocles, providing the threat of prosecution should the organisation fail to fulfil its agreement.
A DPA will not remain in force indefinitely. It is only right that if the terms and conditions have been met the matter should come to an end. Each agreement will therefore specify an expiry date. Once the conditions of the agreement have been complied with, the suspended proceedings against the organisation would be discontinued. The organisation would not then be able to be prosecuted for the same offences. However, this will not prevent a prosecutor bringing fresh proceedings if they discover that the organisation provided false information during negotiations. Organisations should not be able to evade prosecution by entering into a DPA where they have misled prosecutors.
As a DPA will be offered only to organisations that are genuinely co-operative, we expect the terms of the agreement to be complied with in every case. However, there may be occasions where for some unforeseen reason, this does not happen. We have therefore made provision to deal with instances of breach and have provided a mechanism to vary the agreement if that proves absolutely necessary. A variation would be allowed only when it was necessary to prevent a breach and in circumstances that could not have been foreseen at the time the agreement was made. Any proposed variation will be subject to scrutiny by a judge to ensure that it is in the interests of justice, and that the variation proposed is fair, reasonable and proportionate.
If a prosecutor believes that an organisation has breached an agreement, they may apply to the Crown Court to determine whether, on the balance of probabilities, a term has in fact been breached. Alternatively, the agreement itself may specify how a breach for certain of its terms should be addressed. If the court determines that a breach has occurred, it may either invite the parties to remedy the breach or order the agreement to be terminated. As with all hearings throughout this process, the court is required to give reasons for its decision, which will be published by the prosecutor.
Paragraph 13 of the proposed new schedule sets out how information contained in the statement of facts or material collated during negotiations may be used. I believe that any limit on the use to which information can be put should be kept to a minimum. Where an organisation does not comply with the terms of an agreement and is prosecuted, the statement of facts should be admissible against the organisation in future criminal proceedings for those offences. Finally, we have provided that a DPA may be entered into for conduct that has taken place before the commencement of this legislation, provided that criminal proceedings have not been commenced. This transitional provision will enable the benefits of DPAs to be realised as soon as possible.
I am conscious that I have spent a little time setting out the key elements of the deferred prosecution agreements, but it is important that there is a common understanding of how this new procedure will operate. Once implemented, the Government will keep this area of the law under review and formal post-legislative
scrutiny will also take place in April 2018. I firmly believe that deferred prosecution agreements can make an important contribution in the fight against economic crime, bring more wrongdoers to justice and provide redress to the victims of such crimes. I commend these amendments to the Committee and beg to move.