Just Say Pleas
Even with the Bribery Act in place, U.K. prosecutors still need a way
to convince defendants to cooperate.
By Michael D. Goldhaber
After months of delay, the much-ballyhooed U.K. Brib- ery Act arrived last summer. But it won’t move moun- tains without a subtle but seismic change in Britain’s
legal superstructure. What the United Kingdom needs is a
mechanism to allow leniency for cooperating corporate defen-
dants. Some top enforcement officials apparently agree. The
U.K. solicitor general has quietly floated the idea of adopting
U.S.–style deferred prosecution agreements. And the Serious
Fraud Office (SFO) is lobbying the Home Office and Justice
“There’s a real need for a middle ground between full-on
criminal prosecution and civil recovery,” says the former U.K.
corruption prosecutor Matthew Cowie, who joined Skadden,
Arps, Slate, Meager & Flom last year.
Ministry to push a deferred prosecution
bill through Parliament, the Financial
Times reported.
“There is a need for a mechanism
that allows a strongly ethical company
that uncovers an isolated problem, and
reports it, to have a reasonable prospect
of reaching a just settlement without
necessarily being exposed to a criminal
sanction,” says Covington & Burling’s
Robert Amaee, former head of the U.K.
anticorruption unit of the SFO.
In the United States, the Foreign
Corrupt Practices Act is supported by
traditions of self-reporting and crimi-
nal pleas, and bolstered by the nuclear
threat of debarment from government
contracts and licenses. In its new Brib-
ery Act, the U.K. at last has the robust
anticorruption act that’s required under
the Organisation for Economic Co-op-
eration and Development (OECD) an-
tibribery convention of 1997. A severe
debarment regime is imposed by the
The only current alternative to civil action is a costly crimi-
nal trial, which can exhaust prosecutors’ resources. “The [SFO]
has this enormous stick,” says a London lawyer. “But in times of
economic strain, it lacks the budget to use that stick too often.”
A corporate plea bargain would finally give prosecutors a
carrot. And it’s a carrot that can raise immense sums for the
government, while outsourcing most
work. Last year the U.S. Department
of Justice entered into 34 nonprosecution or deferred prosecution agreements, with recoveries exceeding $2.3
billion, according to a Gibson, Dunn &
Crutcher study. Corporate plea agreements have grown dramatically in
number, size, and diversity since the
first was struck with Salomon Brothers Inc in 1992. In its 2010 list, Gibson,
Dunn identified 15 statutes covered by
these agreements, regulating everything from Internet gambling to meth-amphetamine epidemics.
Deferred prosecution would
give the British government
a carrot for defendants.
2004 European Union directive on the
procurement of government contracts,
and the SFO issued guidance on self-reporting in 2009. All
that’s missing is a framework for corporate pleas.
But internal investigations have yet to take root, and the
SFO expressed disappointment that only ten corporations had
self-reported as of August, according to the Financial Times. In
the absence of criminal pleas, corporations have everything to
lose and nothing to gain. “It’s impossible to bring over the self-reporting culture of the U.S. without the institutions that support it,” says Louise Delahunty of Sullivan & Cromwell.
The lack of a plea mechanism has distorted prosecutors’
charges. With companies facing automatic debarment from
contracts in the European Union after a bribery conviction,
prosecutors are unwilling to pull the trigger, lest they kill a
company that employs thousands. Instead they settle for civil
recoveries, under a forfeiture regime that was developed for
criminal terrorists and is ill-suited to the corporate context.
U.K. settlements are also likely to
grow and spread—for instance, to the
arena of cartel enforcement. Yet Britain is unlikely to become the world’s
second corruption policeman. SFO director Richard Alderman assures lawyers that he is principally interested in
The ultimate complaint is that too often the government
settles cases that don’t deserve to be settled. F. Joseph Warin of
Gibson, Dunn praises plea agreements as a tool that increases
certainty for business, but advises the U.K.: “Don’t forget about
the polar extremes of declination and prosecution.” In other
words, if charges should be dropped, they should be dropped—
and if charges should be brought, they should be brought. ■
