DPAs The Gateway To White Collar Crime's Legal Future - To Infinity And Beyond?

€991m Airbus paid to the SFO as part of its DPA arrangement, but what are DPAs, why did Airbus pay the SFO nearly €1 bn, and what role do DPAs play in the future of white collar crime enforcement, find out during this week's weather report

DPAs offer limitless potential to the future of effective white collar crime enforcement and beyond, this weeks weather report forecasts as to why.

What is a DPA?

A DPA (Deferred Prosecution Agreement) is an agreement between a prosecutor and a company which allows for criminal proceedings against a company to be delayed if the company agrees to meet specific conditions.

DPAs can only apply to certain criminal offences which includes: money laundering, fraud, bribery, and failure to prevent tax offence. Crucially for a DPA to arise a judge in either the crown court, or the Royal Courts of Justice must hold:

1. The DPA was in the interest of justice.

2. The terms of the DPA are fair, reasonable, and proportionate.

Airbus's €991m DPA

In 2020 Airbus agreed to pay the SFO €991m euros, to delay its 'failure to prevent' bribery sentence until January 2023. The judge in Airbus felt criminal prosecution would have disproportionate impact on the company in light of Airbus's cooperation during the investigation stage, so it agreed to postpone the company sentence until January 2023. The SFO in reaching its decision considered:

1. Airbus's imposition of positive changes to mitigate against the risk of bribery. Since June 2015 Airbus, had reshuffled its senior leadership, and imposed a new strategy to tackle corruption, and bribery.
   

2. The company's self reporting of its own wrong-doing during the investigation stage.

The Role of DPAs in the future of WCC enforcement and Beyond

The SFO suggests there are several advantages of DPAs including:

• Avoid lengthy, and costly trials.

• Arise where it is in "the interest of justice"

• Terms must be fair, reasonable and proportionate

• Allow a company to make reparations for the criminal behaviour, without having to face reputational damage that comes alongside criminal prosecution.
  

DPAs A Gateway To The Future of WCC enforcement - To Infinity And Beyond

DPAs could be an incentive for company's continued cooperation with the regulators, meaning regulators are able to investigate while avoiding the cost and length of trials. In effect this could free up the regulators capacity to deal with more cases, and to use their limited resources more effectively.

Organisation like the FCA, and the SFO have come under scrutiny in the last few years because of their reputation of taking on large cases without having the resource, nor the infrastructure to do so (see the Upper Tribunals comments in the Julius Baer case).

DPAs offer a solution to this problem, through cooperation, the regulators, and companies can work together to achieve clean markets, DPAs enable companies to make reparations for the criminal behaviour, whilst avoiding the stigma of criminality.

DPAs can enable the regulators to monitor the markets by discouraging criminal misconduct by imposing multi-million pound DPAs to companies, whilst companies can continue to operate in the UK without the immediate threat of criminal prosecution.

Without the threat of immediate criminal prosecution companies are given greater incentive to cooperate during investigation stage, meaning decisions at the regulator level can be made a faster pace.

By being able to make decisions at faster rate, the regulator can potentially deal with more cases, improving the security of London's financial market, sustaining the UK's reputation as a financial centre.

DPAs One Piece of a Bigger Picture

UK reputation as a financial centre has come under threat, as the UK economy is recovering at a slower rate than the UK's American and European Counterparts. Already we have seen big UK technology companies like Arm move over to the states.

We are at a watershed moment for the UK economy. The imposition of more DPAs, could be one piece of the puzzle which aims to restore the UK's reputation as a financial centre, by incentivising Big Tech, and other large companies to stay in the UK to ensure the UK economy flourishes in the coming years.

DPAs are a gateway to a potentially, more secure, more integral financial market, alongside a more efficient and effective regulator. The combination of more effective regulator with a stronger financial market may provide the perfect formula to re-establish and maintain London's reputation as a financial centre.

DPAs are only one piece of a bigger puzzle. Cooperation is the way forward. DPAs are one facet to a much brighter future. The next weather report will look at CPS first DPA agreement in the Entain case, and what this might mean for the future use of DPAs in the UK.