Nonetheless, the committee made a number of recommendations to help speed up investigations and improve reporting mechanisms. The inquiry also looked at Deferred Prosecution Agreements (DPAs) which can be used to allow bribery cases and a range of other financial crime cases to be settled without the companies involved being convicted of offences. DPAs only apply to bribery cases in England and Wales, whereas Scotland has a civil settlement regime which operates at the discretion of the Crown Office and Procurator Fiscal Service (COPFS).
The inquiry highlighted that in Scotland the scheme is non-statutory and liable to be applied differently in different cases; it is available only when a business self-reports, there is no financial penalty in addition to the recovery of profits obtained by the incidence of bribery; and that there is no judicial supervision of the scheme.
The lack of a financial penalty might make it appear that a company has little to lose by self-reporting, said the inquiry, however, the Lord Advocate Rt Hon James Wolffe QC, said in evidence: “I certainly would not accept any suggestion that the civil settlement option is any sort of soft option for the companies that engage in self-reporting. If the Crown is prepared to enter into a settlement rather than to prosecute, that decision itself is made following a rigorous consideration of where the public interest factors lie. The outcome for the company is the sanction of the publicity and the requirement in effect to make a full and candid disclosure, to put in place measures to prevent repetition and to make whatever payment is identified through the civil recovery process.”
I also gave evidence to the select committee and my view was that for a company to be considered for a civil settlement it must submit a “self-report” which entails the company’s solicitors writing a fulsome report of the investigations undertaken, the facts of the case, and, importantly, that those facts may amount to bribery.
In that regard the civil settlement regime is more onerous than the DPA regime, which does not require a self-report as a prerequisite to a non-prosecutorial resolution. When the self-report is made there is no guarantee that the case will be dealt with by way of civil settlement. The self-reporting firm is therefore taking a risk and any company that reports to the COPFS has, in my view, acted both ethically and bravely.
The inquiry invited the Scottish Government to “consider adopting a system analogous to the DPA regime. This would ideally have a full statutory basis, and would include the requirement of judicial approval, the ability to impose a financial penalty in addition to the disgorgement of profits, and a high degree of transparency.”
A DPA system would represent a significant change in Scottish criminal practice because it would entail judicial supervision of prosecutorial discretion. Currently, this rests entirely with Lord Advocate and, under his authority, the COPFS. The impact of such a change will need careful consideration and therefore DPAs are unlikely to be introduced without a consultation process.
Despite its recommendation for the introduction of English-style DPAs into Scotland, the House of Lords also recognised that there are important differences in criminal law and practice between England and Wales and Scotland, and it has recommended that the Ministry of Justice publishes guidance on the different enforcement regimes that apply within the UK. This should give prominence to the steps taken by the Scottish authorities to tackle the scourge of bribery and corruption, and Scotland’s distinct self-reporting and civil settlement regime.
- Tom Stocker, partner and head of corporate crime at Pinsent Masons