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Self referral and plea bargains... soft landings or bumpy rides?

Source: Redmantle, Red Lion Chambers - Wed, 13 Jul 2011 16:19 GMT
Author: Ian Leist QC
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Any views expressed in this article are those of the author and not of Thomson Reuters Foundation.

By Ian Leist QC, barrister and partner at Redmantle

The Bribery Act and its accompanying Guidance, states that the government is not targeting companies who demonstrate a commitment to zero tolerance to bribery. The Guidance advises that the government does not intend to bring the full force of the criminal law to bear against “well run” commercial organisations that experience an “isolated incident” of bribery but rather against the “mavericks  who undermine the majority of ethical UK business.

An important policy objective of the Act is directed towards preventing bribery of a foreign public official. Furthermore, the government states it is encouraging companies to self report and take positive, robust action from the top down to prevent bribery and corruption.

In its guidance to overseas corruption, the Serious Fraud Office (SFO) recognises the difficulties:

“Without knowing the facts, no prosecutor can ever give an unconditional guarantee that there will not be a prosecution of the corporateNevertheless, we want to settle self referral cases.... civilly wherever possible. An exception to this would be if board members of the corporate had engaged personally in the corrupt activities.”

At a recent event, Roderick Macaulay, also from the Ministry of Justice, said that he anticipated that all prosecutions will be dealt with by way of pleas of guilty.  Are politicians, policy makers and prosecutors being overly-optimistic by promising a ‘soft landing’ for corporates?

The plea bargain has had a difficult history in the criminal justice system in the UK unlike the U.S. In 2006, The UK Government Fraud Review recommended that a plea bargaining framework be devised because it would save an estimated £50m in trial costs.

It remains problematic, however, because on the one hand it is seen as a mechanism by which a guilty person is treated more lightly than he should be, and, on the other, a pressure on innocent people to admit to crimes they have not committed.

Even the word “bargain”, suggests a cheap deal struck in private between lawyers, whereas justice should be public and transparent and involve the judges.

In R v Innospec in March 2010, Lord Justice Thomas noted in paragraph 38 of his sentencing remarks that:

“It will therefore rarely be appropriate for criminal conduct by a company to be dealt with by means of a civil recovery order.... It is of the greatest public interest that the serious criminality of any, including companies, who engage in the corruption of foreign governments, is made patent for all to see by the imposition of criminal and not civil sanctions.”

The case involved sales to Indonesia of a lead-based petrol additive (tetraethyl lead), long banned in Europe and the US, because of the terrible damage it does to children’s brains. Innospec pleaded guilty to paying $12 million to agents who then bribed Indonesian officials. This of course was no ordinary commercial bribery case. The money was paid not merely to secure sales of the chemical but to persuade the Indonesian legislature to delay the introduction of lead-free petrol by six years.

It seems likely therefore, that the future for self referral and negotiated non-criminal settlements remains unpredictable.

Highlighting the result in R v Mabey and Johnson 2009 where a pre trial settlement was unreservedly endorsed by the court, the SFO website states:

“We are working together with companies to manage plea negotiations and achieve settlements which satisfy all parties. But this is just the start; we shall be using all of the tools at our disposal in identifying and prosecuting cases.”

However, in the case of R v Dougall April 2010 the defendant also cooperated and a plea settlement was reached in which both sides submitted his sentence of imprisonment should be suspended.

Mr Justice Bean, sentenced Dougall to 12 months imprisonment- not suspended – and said

“In this jurisdiction a plea agreement between the prosecution and the defence in which they agree what the sentence should be or present what is an agreed package for the courts acquiescence is contrary to principle.”

The defendant later successfully appealed his sentence which was suspended, for different stated reasons. While some will argue the outcome in fact reflected the pre-trial settlement for leniency on sentence, the Court of Appeal in R v Dougall (2010) EWCA Crim 1048   heavily criticised the prosecution’s approach to plea bargains in white collar fraud cases.

“..... although the prosecution should be involved in the process by which the sentencing court is fully informed about any matters arising from the evidence which may reflect on the defendant's criminality and culpability .... this process does not involve an agreement about the level of sentence.”

The Court was unimpressed by the suggestion that the only practicable way of prosecuting white collar crime was by a guarantee of a non custodial sentences to whistle blowers. The Court also dealt with a second important point regarding self referral cases and subsequent pre-trial settlements:

“...in our jurisdiction there is no principle of any legitimate expectation to be enjoyed by the first person to co-operate with an investigating authority, that he (or she) will be the beneficiary of the most favourable sentencing outcome..... The answer to the question, ‘who first co-operated?’ does not answer the separate question of the appropriate level of sentence discount for that defendant.”

On 5 February 2010, the long running and notorious BAE Systems case was finally settled after BAE Systems reached a settlement with the Serious Fraud Office. It was no part of the SFO’s case that the company was involved in the making of payments which were improperly used, nor was it any part of the SFO’s case that the company was party to any agreement to corrupt in Tanzania.

On 21 December 2010, this settlement was endorsed by the court.

In his opening remarks on sentence, Mr Justice Bean stated

“The laying of the information on 5th November 2010 came after a Settlement Agreement between the company and the Serious Fraud Office...  (but) the fine for the offence admitted shall be imposed by the court.”

Justice Bean went on to say that he had

“... no power to vary or set aside the settlement agreement... I also cannot sentence for an offence which the prosecution has chosen not to charge.”

The Joint Prosecution Guidance to the new Bribery Act 2010, issued by the Director of Public Prosecutions and Director of Serious Fraud Office reminds the business community that

"Bribery is a serious offence. There is an inherent public interest in bribery being prosecuted in order to give practical effect to Parliament’s criminalisation of such behaviour."

So far there is no indication that the judiciary intends to rubber stamp the type of pre- trial settlements that regularly feature in other jurisdictions. Responsibility for the sentencing decision in cases of fraud or corruption is vested exclusively in the sentencing court and there are no circumstances in which it may be displaced.

Unless the SFO decides that cases will be dealt with civilly, or by way of agreed satisfactory criminal charges, we are some way off U.S.- style settlements in cases of this kind. Consequently, at the moment, it would be impossible to advise a corporate, looking for certainty and multinational, cross jurisdictional settlements, that self referral and pre-trial settlements provide a method to guarantee this.

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