TI-UK Submission to MoJ Consultation on Deferred Prosecution Agreements

Ministry of Justice Consultation on a new enforcement tool to deal with economic crime committed by commercial organisations: Deferred Prosecution Agreements (Consultation Paper CP9/2012)

Submission by Transparency International UK (TI-UK)

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Summary 

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TI-UK broadly supports the introduction of DPAs but believes that DPAs should be part of a wider set of reforms if they are to work effectively in the interests of justice, including 3 specific reforms that would need to be implemented alongside DPAs. TI-UK is not supportive of the introduction of DPAs as a stand-alone measure without these accompanying reforms.

As an over-riding principle, TI-UK believes that bribery is a serious crime, for which companies and individuals should be prosecuted and punished. It would not serve the interests of justice for the introduction of DPAs to be seen as a soft option for companies or a cheap option for prosecutors.

1. Introduction 1.1 In December 2011, TI-UK published a policy paper entitled “Deterring and punishing corporate 1 bribery” which examined UK corporate plea agreements and civil recovery in overseas bribery cases.

TI-UK made 23 recommendations in the policy paper which are reproduced in Annex II. The policy paper should be considered as part of TI-UK’s submission to this consultation.

1.2 In recent years there have been a number of prosecutions in the UK of overseas bribery cases.

TI-UK welcomed the UK’s improved enforcement record but certain cases raised concerns over the handling of certain cases by the Serious Fraud Office (SFO) coupled with certain procedural, constitutional and other substantive constraints within the criminal justice system. TI-UK’s 23 recommendations included suggestions of some necessary reforms of the criminal justice system in an effort of overcome some of the very difficult practical hurdles in prosecuting bribery cases.

1.3 One such recommendation was that the Government should consider the introduction of Deferred Prosecution Agreements (DPAs) or some similar sentencing procedure after a thorough examination of the alternatives. TI-UK’s view on this has not changed.

1.4 TI-UK broadly supports the introduction of DPAs but believes that DPAs should be part of a wider set of reforms if they are to work effectively in the interests of justice. These are reflected in the 23 recommendations set out in ‘Deterring and Punishing Corporate Bribery’ (see Annex II), including 3 specific reforms that need to be implemented alongside DPAs: 1) Judicial scrutiny: there needs to be sufficient judicial oversight over plea discussions; 2) Sentencing: there should be well-defined sentencing guidelines covering bribery cases reflecting the serious nature of the crime and the damage that it inflicts on society; 3) Transparency: there should be greater transparency on all settlements, whether these be by way of civil recovery orders, DPAs or plea negotiations in criminal proceedings.

1.5 TI-UK is not supportive of the introduction of DPAs as a stand-alone measure without these accompanying reforms. These 3 specific reforms need to be placed within the context of TI-UK’s 23 recommendations (see Annex II), which more fully explain TI-UK’s position on the use of DPAs. 1.6 In any changes to the settlements regime, such as the introduction of DPAs, there needs to be greater clarity over the use of the civil recovery proceedings, and how settlements in such cases are quantified.

1.7 No plea agreement should include a term granting a blanket indemnity from prosecution for undisclosed criminal acts committed in the past.

1.8 In all bribery cases, including those settled through DPAs, prosecutors should properly label bribery offences and not select alternative charges in order to avoid mandatory debarment, which is a 1

http://www.transparency.org.uk/our-work/publications/10-publications/243-policy-paper-series-1-deterring-a-punishingcorporate-bribery. The paper was first issued as a consultation paper in December 2011 and re-issued as a policy paper in May 2012.

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logical and fair outcome in certain cases as it provides a very strong deterrent to corporate offending.

1.9 As an over-riding principle, TI-UK believes that bribery is a serious crime, for which companies and individuals should be prosecuted and punished. It would not serve the interests of justice for the introduction of DPAs to be seen as a soft option for companies or a cheap option for prosecutors.

Criminal prosecutions of both corporates and individuals should be the norm.

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2. Responses to consultation questions 2.1 Potential role of DPAs  Question 1: Do you agree that deferred prosecution agreements have the potential to improve the way in which economic crime committed by commercial organisations is dealt with in England and Wales?

2.1.1 Bribery is a serious criminal offence, recently reinforced by the comments of Lord Justice Thomas in the Innospec case “corruption of foreign government officials is at the top end of serious corporate offending both in terms of culpability and harm. Those who commit such serious crimes as corruption of senior government officials must not be viewed or treated in any different way to other criminals" TI-UK remains of the view that persons, be they corporates or individuals, who commit bribery must expect to face criminal prosecution and must not expect to receive leniency through DPAs as a matter of practice.

2.1.2 DPAs have a role to play where it is considered not to be in the public interest to prosecute a corporate offender but such cases must be clearly defined and only applied to those companies that have demonstrated effective remediation by, for example, self referral of the wrongdoing, disclosed the full extent of such wrongdoing, taken appropriate action against those individuals involved and put in place enhanced compliance and monitoring procedures. DPAs should not be used as a cost saving device to resolve difficult and time consuming criminal actions against major corporates. It is vital that the key prosecution agencies have sufficient resources and skills to bring serious cases before the criminal courts.

2.2 Wider application of DPAs  Question 2: Do you agree that deferred prosecution agreements should be applied only in cases of economic crime? Could or should they be used more widely?

2.2.1 The case for change as outlined in the consultation paper is based on the premise that the present justice system is inadequate for bringing criminal actions against corporates in the field of serious and economic crime. The paper goes on to state that there are insufficient incentives for commercial organisations to “engage and cooperate with UK authorities at earlier stages to achieve better outcomes” 2.2.2 As a matter of principle, if DPAs offer a more suitable outcome than a criminal conviction it would seem incongruous to limit them to serious economic crime by corporates. This highlights our concern that DPAs may be introduced primarily to provide an incentive to powerful companies who are not as resource constrained as prosecution agencies to settle cases at an earlier stage.

2.3 Codes of conduct  Question 3: Do you agree that these are the right factors to which prosecutors should have regard in considering whether to enter into a DPA?  Question 4: Do you think that it would be appropriate to include any further components in a Code of Practice for DPAs for prosecutors?

2.3.1 The key component in deciding whether a DPA is appropriate should be the commitment of the organisation to remediation. By definition any such company should be seen to be fully cooperating with the prosecution agencies, which normally would include self-referral of the wrongdoing.

2.3.2 It is likely that in serious cases an internal investigation would be necessary to establish many of the factors set out in the consultation paper, eg the extent of the wrongdoing, benefit received and losses incurred etc. Such an internal investigation should be under the day to day management of the company but the prosecution agency must have appropriate and effective oversight so as to ensure that any settlement is appropriate and any future criminal action is not undermined. In such circumstances TI-UK would expect the company to waive legal privilege over those documents or material which had any bearing on the prosecutor exercising its judgement on whether to offer a DPA.

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2.3.3 Any code of practice needs to be far more comprehensive than the factors set out in paragraph 94. For example, what is meant by “the nature and seriousness of the offence”? Is it the intention to categorise offences by their seriousness, distinguishing say between private to private bribery offences against bribes to overseas officials? The absence of more detailed guidance will contribute to the uncertainty faced by corporates.

2.4 Guideline for DPAs  Question 5: Do you agree that the Sentencing Council is the right body to develop such a guideline for DPAs?  Question 6: What do you think would be most useful in a guideline for DPAs? 2.4.1 TI-UK expresses no view on Question 5.

2.4.2 With reference to Question 6, any guideline should be as comprehensive as possible. Whilst not wishing to undermine prosecutorial discretion nor the independence of the judiciary the guideline for use of DPAs should set out specific parameters, not only setting out some factors to take account of but unequivocal tests that must be met.

2.5 Early involvement of the judiciary at preliminary hearings  Question 7: Do you agree that the preliminary hearing should take place in private?  Question 8: Do you agree that the first test for a judge to apply at a preliminary hearing is whether a DPA is ‘in the interests of justice’?  Question 9: Do you agree that at a preliminary hearing the judge should also apply a test as to whether the emerging conditions of a DPA are ‘fair, reasonable and proportionate’?

2.5.1 TI-UK strongly agrees with the principle of early involvement of the judiciary in any plea negotiations, including DPAs. The consultation paper envisages a preliminary hearing(s) at which both the prosecutor and the defendant company are present which would be held in private. Prior to that hearing the prosecutor and the company would have agreed the basic facts and wrongdoing, an outline of which would be presented to the judge.

2.5.2 Past cases have been criticised for failing to address the full criminality of bribe paying. In order for judges to consider the appropriateness of DPAs they must have the power to demand sight of all relevant material in order to fully assess the overall criminal conduct and not just the evidence in support of the agreed facts and charges in any draft indictment as set out in the DPA. 2.5.3 This preliminary hearing is vital to the outcome of the case as it sets the parameters of the DPA. It is understandable that if it is to be held in private that defendant companies and perhaps prosecutors may feel more inclined to go to Court at an earlier stage.

2.5.4 TI-UK does not oppose the contention that the test for a judge to apply in considering whether a DPA is appropriate is if it is “in the interests of justice”. In applying this principle the judge will no doubt have regard to the proposed guidelines issued by the Sentencing Council.

2.5.5 It is suggested that this will give the judge an opportunity to prevent DPAs that do not adequately reflect the wrongdoing. Furthermore, an indication might be given to the parties at the end of the preliminary hearing, which would be confidential at that stage, specifying whether or not the DPA was appropriate in principle. TI-UK recognises the importance of the principle of independence between the functions of prosecutors and the judiciary. But the early involvement of the judiciary must not be a tick-box exercise, justice must be seen to be done. This will provide greater pressure on the prosecutor and defendant company to address the concerns of the judiciary.

2.5.6 It is further suggested that the judge would be able to give an indication to the parties as to whether the emerging terms, including financial considerations, are likely to be appropriate. The proposed test is whether the conditions are “fair, reasonable and proportionate”. It is felt that such wording will ensure that wrongdoing is penalised, victims are compensated and the public interest protected. TI-UK has no specific objection to the wording of the test as long as sentencing guidelines are quite clear as to what penalties, restitution and remediation are appropriate in the public interest.

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What may be “fair, reasonable and proportionate” in the eyes of a defendant company may fall well short of making full and proper restitution in the eyes of victims and fail to adequately penalise companies to deter future offending in the public interest.

2.6 Content and judicial approval of the final agreement  Question 10: Do you agree with the proposed possible contents of a DPA as outlined?

2.6.1 It is suggested that the final approval stage of the DPA would start in private to enable any final issues to be resolved and then the judge would be invited to approve the DPA in open court. If the judge feels that certain aspects need to be heard in chambers or reporting restrictions should apply he has the power to do so.

2.6.2 The consultation sets out a number of issues or matters that could be included in the DPA. Certain of the stated examples are somewhat surprising, since if those issues had not already been addressed, a DPA would almost certainly not be appropriate - for example: 1) It should be a principle underlying all DPAs that companies must cooperate fully in relation to on-going investigations by prosecutors against individual wrongdoers; 2) A DPA would be unlikely if a company had failed to dismiss wrongdoers; and 3) A company that had failed to address inadequate anti-corruption policies and procedures during the course of the investigation does not appear to be worthy of a DPA. 2.6.3 Dealing with some of the specific contents of the DPA as outlined:  Financial penalty – in certain cases the financial resources of the defendant company may be limited and insufficient to pay the appropriate penalty, confiscation and reparation. Sentencing guidelines should address this issue.  Confiscation – the DPA should be clear as to the basis used to calculate the benefit to the company. This appears to be a common area for negotiation – is it limited to the post-tax profits emanating from contracts obtained through bribes? Or can disgorgement be extended to take account of wider economic gains obtained through widespread bribery? Such issues should be covered by sentencing guidelines.  Reparation to victims – TI-UK believes that prosecutors should work with development agencies such as DFID to manage reparations and that convicted companies (including those subject to a DPA) should not play a role in this process.  Assistance with investigations – as stated above this should be non-negotiable. The company should be prepared to waive any privilege to which it is entitled.  Mutual Legal Assistance – It is essential that any DPA should pay proper regard to the interests of law enforcement in other jurisdictions where there may be outstanding investigations into the company and third parties. In those cases the DPA should include an undertaking to cooperate with any MLA requests that may be made to the UK.  Compliance programmes – TI-UK supports the appointment of monitors in appropriate cases. If a company is to self-certify and provide periodic reports TI-UK believes that such material should be open for public inspection.

2.6.4 The DPA should set out the agreed facts of the case in sufficient detail for the public to understand the full extent of the wrongdoing and the reasoning as to why the draft charges may have been curtailed and why it is in the interests of justice to proceed with a DPA.

2.7 Penalties  Question 11: Do you agree that there should be a reduction principle, relating only to the financial penalty aspect of a DPA, and that the maximum reduction should be one third of the penalty that would have been imposed following conviction in a contested case?

2.7.1 A reduction in sentence for an early plea already exists under current criminal law and TI-UK sees no reason not to apply this principle to DPAs. Currently, a maximum discount of 30% applies when a defendant enters a plea at the “first reasonable opportunity”. In practice this means after the prosecutor has obtained sufficient evidence to a criminal standard to charge a defendant. Such a discount would be available to a company after the prosecutor had carried out extensive investigations.

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2.7.2 If DPAs are to work in overseas corruption cases financial penalties must be severe and comparable to other countries, especially the USA. In Innospec, Thomas LJ remarked that “there is every reason for states to adopt a uniform approach to financial penalties for corruption of foreign government officials so that penalties in each country do not discriminate either favourably or unfavourably against a company in a particular state. If the penalties in one state are lower than another, businesses in the state with lower penalties will not be deterred so effectively from engaging in corruption” However, in most cases the total costs of a contested trial far outweigh the fines currently imposed by the courts – the incentive of a DPA to a company is to settle the matter as quickly as possible in the knowledge that non-cooperation will extinguish the DPA option.

2.7.3 In the USA the quantum of fines is higher than comparable cases in the UK. Most FCPA cases are subject to DPAs with very few prosecutions. TI-UK does not believe that DPAs are appropriate in all cases. In those cases where there has not been a self-referral and a DPA is only agreed after the prosecution agency has undertaken extensive investigations losing a 30% discount, if indeed that happens, seems an inadequate incentive for early reporting.

2.8 Final stages of the DPA process  Question 12: Do you agree that it would be appropriate for the final stage of the DPA process to take place in open court?

2.8.1 It is suggested that after the judge approves the DPA that there would be an open court hearing at which the agreement could be publicly outlined and explained. After this final hearing details of any rulings given at earlier hearings would be made public, subject to certain safeguards. TI-UK supports transparency of the DPA process by having hearings in open court whenever possible, whilst at the same time avoiding the risk of prejudicing any future criminal proceedings.

2.8.2 It is further suggested that if a draft DPA is not approved by the judge at a final hearing, the prosecutor would need time to reflect on whether to bring a prosecution instead. TI-UK welcomes this stance as it is far from clear, for example, what powers the judiciary have in the USA to dispose of DPAs laid before them.

2.9 Non-compliance with or breach of the DPA  Question 13. Do you believe that it is right that the court should determine whether a variation to a DPA is appropriate, where a change of circumstances has occurred?  Question 14. Do you believe that the prosecutor should be empowered to vary the terms of a DPA, within limits defined within that DPA?  Question 15. Do you believe that it should be possible for the parties to a DPA to be able to make amendments to it, within limits defined by that DPA? 2.9.1 As a matter of principle TI-UK believes that any amendment to the DPA should be sanctioned by the Court. There may be certain terms of the DPA, for example the timing of compliance procedures, monitoring reports etc. that the Court and both parties to the agreement believe do not require a ruling by the Court. Such matters can be stipulated in the original DPA. TI-UK is not in favour of empowering the prosecutor to impose additional financial penalties or other sanctions not approved beforehand by the Court.

2.10 Formal breach proceedings  Question 16: Do you agree that there should be provision for formal breach proceedings and that it should operate as described?

2.10.1 Clearly there must be provision for formal breach proceedings. It is anticipated that any breaches are likely to be relatively uncommon because if there was a substantial breach the prosecutor would elect to resurrect the deferred charges.

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2.11 Revival of the substantive prosecution  Question 17: Do you agree that judges should have discretion, following a breach, to insist that a DPA should be terminated?

2.11.1 Given that the judge approved the DPA in the interests of justice TI-UK agrees that the judge should have discretion to terminate the DPA if the breach is such as to undermine his original decision.

2.12 Admissions  Question 18: Do you agree that the above proposals regarding admissibility are appropriate?

2.12.1 TI-UK agrees.

2.13 Disclosure  Question 19: What are your views on the appropriate approach to disclosure in the context of DPAs? 2.13.1 TI-UK would favour application of a restricted test, so that the obligation on the prosecutor should be confined to disclosing any obviously undermining material.

2.14 Judicial review issues  Question 20: Do you agree with our proposals regarding the susceptibility to judicial review of decisions made in relation to DPAs as outlined above?

2.14.1 TI-UK recognises the limitations placed on challenging a decision not to prosecute through judicial review. This limitation was tested by the failed application to challenge the BAE Systems settlement. It should be recognised that if DPAs are introduced that the decisions of prosecutors and judges will be subjected to public scrutiny. It is essential, therefore, that the entire process is transparent so that final decisions are not seen to be perverse or that prosecution policy was not properly applied, including adherence to proposed guidelines on DPAs.

2.15 Introduction and application of DPAs  Question 21: Do you agree that DPAs should be available in relation to conduct which took place before the commencement of any legislative provisions introducing them?  Question 22: Do you agree with the proposed process for DPAs, as outlined in this chapter, and do you have any suggestions for improvements or amendments to it which would support the overall policy objectives?  Question 23: Do you have any further comments in relation to the subject of this consultation?

2.15.1 TI-UK would not object if DPAs were available in relation to conduct which took place before the commencement of legislative changes.

2.15.2 TI-UK is in favour of any reform of the criminal justice system that brings to book organisations that pay bribes. Some of the current failings of the criminal justice system in the UK are set out in the TI-UK policy paper entitled “Deterring and Punishing Corporate Bribery” in which TI-UK called for a number of actions to be taken, including earlier involvement by the judiciary in plea negotiations, sentencing guidelines for bribery offences, and greater transparency. TI-UK also questioned whether civil recovery under POCA was a suitable model for dealing with corporate bribery.

2.15.3 TI-UK recognises the present difficulties of prosecuting corporates and strongly recommends that the review by the Law Commission is accelerated. TI-UK also recognises that the prosecution agencies in the UK have a very poor record in prosecuting companies. It is important that these and other problems with the criminal law architecture are addressed for not to do so will make criminal prosecutions of corporates for bribery a very rare occurrence and as such, a very ineffective deterrent.

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2.15.4 Some of these issues are recognised in the consultation paper although there is no commitment to address some of the shortcomings of the present criminal justice system. It is stated that “DPAs would be a fair and pragmatic approach to tackling a serious problem and would need to be used judiciously. Where the wrongdoing is most serious, or the public interest would require it, a criminal prosecution would continue to be the most appropriate course of action”. TI-UK agrees with these sentiments but fear that the introduction of DPAs will mean that very few, if any, corporates will be prosecuted, as has been the experience in the USA. 2.15.5 TI-UK is strongly of the opinion that companies should be prosecuted for bribery offences in line with the Code for Crown Prosecutors, fulfilling the UK’s commitment under the OECD Convention.

As the consultation paper points out, a criminal conviction can have severe consequences, including debarment from public contracts. But that is the inevitable consequence of companies committing bribery, which is widely acknowledged as a very serious criminal offence.

2.15.6 Much is made about companies self-referring instances of bribery and having incentives to do so. TI-UK is supportive of having clear processes and penalties in place so that companies can obtain effective legal advice on their position and how problems are best addressed. In those cases where companies have a genuine intention to comply with the law and self-report a DPA may provide a means of quickly and efficiently settling the offences and providing restitution to the victims.

2.15.7 TI-UK agrees that in such cases that DPAs provide a better solution than the present practice of using civil recovery orders that fail to penalise the conduct, provide restitution or label the improper conduct properly. However, although DPAs should provide prosecution agencies with another tool allowing a “pragmatic approach” there is a very real danger that due process under the criminal law, including offences under the Bribery Act 2010, will be undermined in the interest of cost savings unless there is effective judicial oversight and transparency.

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Annex I Transparency International UK (TI-UK) (www.transparency.org.uk), the UK national chapter of Transparency International (TI), fights corruption by promoting change in values and attitudes at home and abroad, through programmes that draw on the UK’s unique position as a world political and business centre with close links to developing countries.

TI-UK:  Raises awareness about corruption;  Advocates legal and regulatory reform at national and international levels;  Designs practical tools for institutions, individuals and companies wishing to combat corruption;  Acts as a leading centre of anti-corruption expertise in the UK. TI-UK’s vision is for a world in which corruption is greatly reduced and the UK has zero tolerance for corruption both at home and abroad.

C o n t a c t: Chandrashekhar Krishnan, Executive Director Transparency International UK 32-36 Loman Street London SE1 OAU chandu.krishnan@transparency.org.uk www.transparency.org.uk

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Annex II Recommendations from TI-UK Policy Paper on Deterring and Punishing Corporate Bribery Recommendation 1: Guiding Principles A UK settlements regime should follow the following guiding principles: i) Judicial scrutiny: all settlements should be subject to judicial scrutiny independent from the prosecutor’s office; ii)

Sentencing: prosecution of individuals should always remain possible with prison terms for severe wrongdoing. Corporate fines should exceed any profit derived from wrongdoing. Debarment should be considered and linked with acknowledgment of guilt;

iii)

Restitution: there should be restitution to the country that suffered from the offence;

iv)

International cooperation: there should be cooperation between the UK and other States to facilitate prosecutions in those countries where the offences took place;

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Corporate compliance programmes: companies that reach a settlement should commit to compliance programmes with the appointment of an independent expert monitor where remedial action is warranted.

Recommendation 2: Criminal prosecutions Criminal prosecutions of both corporates and individuals should be the norm where the tests under the Code for Crown Prosecutors are met. The use of civil settlements should only be used where there is either insufficient evidence to a criminal standard or there is a strong public interest case not to proceed with a criminal trial, and in those circumstances the prosecutor’s reasoning should be made public.

Recommendation 3: Prosecution of senior managers and directors Where there is sufficient evidence to prosecute the company, the individuals who acted as its guiding mind should also be subject to criminal proceedings. Where a settlement or plea agreement is made with the company, a decision to abandon the prosecution of responsible individuals must be subject to rational and consistent criteria, as set out in the Code for Crown Prosecutors, and should be the exception rather than the rule.

Recommendation 4: Transparency The SFO should publish far more information on all civil settlements as do, for example, the FSA and DOJ. The nature of the underlying criminal conduct should be accurately and fully described in the documents placed before the courts.

Recommendation 5: Independent review An independent body should be considered, such as a parliamentary select committee, with a formal role in reviewing sensitive cases with a view to making recommendations on any necessary changes of law and practice.

Recommendation 6: Protocols in international cases The Attorney General should agree some form of protocol or Memorandum of Understanding with his counterparts, especially with the USA, which deals with the underlying principles of settling concurrent jurisdictional issues. Decisions should be taken on grounds of public interest rather than narrow national self-interest. Defendants should not be encouraged to believe that they can forum shop in the expectation that they can play jurisdictions against each other.

Recommendation 7: Double jeopardy Double jeopardy should not be used to frustrate criminal proceedings in the UK, in those cases where there is a strong public interest to argue for primacy of the UK courts. In those cases where double jeopardy is pleaded as a reason for not proceeding with criminal charges it should be fully reasoned

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and publicly justified. The SFO should contribute to the legal debate over double jeopardy by publicly explaining its view on the application of double jeopardy in US and European cases.

Recommendation 8: Sentencing guidelines The Sentencing Guidelines Council should issue guidance on sentencing in overseas bribery cases, reflecting the seriousness of the offences, the damage that bribery inflicts on society and to provide an effective deterrent to future corporate offending. There should be greater clarity and certainty over the level of fines and the method of calculation, and the aggravating or mitigating factors that should be taken into account in the sentencing.

Recommendation 9: Guidance on recoverable amount There should be published guidance on what factors to take into account when determining the “recoverable amount� for the purposes of civil settlements under POCA in foreign bribery cases. TIUK does not consider that it is appropriate to set the recoverable amount at the net profit obtained by the company in all cases. To do so would limit restitution to the disgorgement of profits and fail to provide an effective deterrent to future offending.

Recommendation 10: Compensation of victim countries Victim countries should receive restitution and prosecutors should work with development agencies, such as DFID, to manage this process.

Recommendation 11: Control over compensation payments Convicted companies should not be allowed to play any role in devising and implementing compensation arrangements. The convicted company should have no element of control over the disbursement of the payments that were subject to the court order or terms of the settlement agreement.

Recommendation 12: Corporate liability The work of the Law Commission on corporate criminal liability should be finalised as soon as possible to enable the SFO to seek to clarify its application in respect of offences under the Bribery Act and if necessary test its interpretation before the courts.

Recommendation 13: Review use of civil recovery procedures Given the present level of uncertainty concerning the rationale for civil settlements there should be a full review of whether the current procedures governing civil settlements are sufficiently robust and transparent in dealing with serious offending in bribery cases.

Recommendation 14: Clarity over when to use civil powers There must be good and published criteria to depart from a criminal prosecution, with clarity and transparency on the principles adopted by prosecutors in deciding when to use civil recovery in overseas bribery cases.

Recommendation 15: Protocol in using civil powers There should be a published protocol for conducting civil recovery negotiations, as there is for criminal plea discussions; currently there is no obligation to explain prosecutorial decision-making in the civil court proceedings.

Recommendation 16: Rationale for using civil powers The SFO should as a matter of standard practice publish its reasoning for using civil powers and be prepared to disclose details of the compromise agreement in much the same way as the DOJ does with DPAs. Recommendation 17: No blanket immunities No plea agreement should include a term granting a blanket indemnity from prosecution for undisclosed criminal acts committed in the past. The SFO should consider including this fundamental principle in its self-reporting Guidelines.

Recommendation 18: Proper labelling of bribery offences

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Prosecutors should properly label bribery offences and not select alternative charges in order to avoid mandatory debarment, which is a logical and fair outcome in certain cases as it provides a very strong deterrent to corporate offending.

Recommendation 19: Debarment There should be more clarity on the process for entering and exiting the debarment process, including taking into account any remedial action taken by the company. TI-UK recognises that the current uncertainty over the risk and nature of debarment can play a disproportionate role in plea negotiations, which may result in an inappropriate charge being laid before the court.

Recommendation 20: Appointment of Monitors The process by which Monitors are appointed, their terms of reference, their powers and reporting need to be subject to clear published guidelines.

Recommendation 21: Sanctions available to Monitors The Government should consider whether the present law and/or practice needs to be changed in order to support the work of Monitors by the imposition of appropriate sanctions in cases in which a company is not abiding by the terms of a settlement. There is a need to ensure that effective sanctions are available to prosecutors should there be breaches of the agreed terms of compliance programmes that were an integral part of the criminal plea agreement or compromise agreement under a civil settlement.

Recommendation 22: Earlier judicial oversight Prosecutors should have access to the Court at an earlier stage in plea negotiations to obtain tacit judicial approval of plea agreements and to obtain an indicative range of the fine and confiscation. It is important that whatever extended role is played by the judiciary, the independence and separation of powers between the judiciary and prosecutors is not undermined.

Recommendation 23: Use of Deferred Prosecution Agreements The Government should consider the introduction of DPAs or some similar sentencing procedure after a thorough assessment of the alternatives. DPAs have proved to be a useful procedure to settle FCPA cases in the USA but the process has also been criticised with little judicial oversight.

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