How to more effectively deal with white collar crime is an issue that Australian legislators and law enforcement are increasingly focused on. A particular area of consideration is whether there is some merit in introducing deferred prosecution agreements (DPAs) to Australia.
DPAs have already been implemented relatively successfully in the United States and the United Kingdom, and given the similarities in our legal systems, may be suitable for introduction to Australia.
The pros and cons of introducing DPAs have been considered in some detail by the Attorney-General’s Department in its public consultation paper Improving Enforcement Options for Serious Corporate Crime: Consideration of a Deferred Prosecution Agreement scheme in Australia.
So how might a DPA scheme be structured and work in practice in Australia?
What is a Deferred Prosecution Agreement / DPA scheme?
The purpose of a DPA scheme is to encourage corporate entities to self-report potential liabilities and white collar crimes, as well as supporting whistleblowers to report misdeeds within their organisations.
A prosecutor may, at their own discretion, negotiate a DPA with a defendant. Although the offered content of each DPA is up to the individual prosecutor, generally the DPA involves the deferral of prosecution for an alleged white collar crime.
In return, the corporate defendant must comply with certain requirements, generally including cooperation with ongoing investigations, agreeing to certain facts (to minimise matters in issue should a trial proceed), the issue of a penalty, and the requirement to have an internal system to ensure compliance going forward.
A failure to comply with any agreed conditions may result in the prosecution case being reopened, or further penalties being imposed.
How would a DPA scheme operate in practice?
In order to determine how a DPA scheme would work, it is important for Australian legislators to decide which key elements from other jurisdictions where DPAs are already in place should be implemented here.
1. What crimes should be subject to DPAs?
As set out in the consultation paper, a DPA scheme would, at least initially, focus on “serious corporate crime” including fraud, bribery and money laundering. The Commonwealth Government would need to introduce legislation setting out which crimes could appropriately be the subject of DPA offers. One potential difficulty could arise in circumstances where the charges include state crimes as well as federal crimes – as individual states would not have the power to draft legislation authorising the offer of DPAs.
2. Who should be offered a DPA?
Another key issue requiring consideration is to whom a DPA might be offered. The paper notes that in the UK, only corporate entities can participate in a DPA. In the United States, individuals or corporations can enter such agreements. The Attorney-General’s Department has stated that although there is some merit in following the UK model, on balance the intended deterrent effect of the DPA scheme is best achieved by permitting individuals to participate. By disallowing individual participation, it could disincentivise people who may have some personal liability or involvement in illicit activities from reporting corporate misconduct.
By the same token, Australian legislators will need to give serious consideration to whether they wish to implement a system whereby big companies could effectively buy their way out of difficulties by meeting large fines and penalties, in return promising to implement weak or vague training or education regimes.
3. The role of the courts
Australia’s Constitution requires that our courts cannot simply sign off on penalties or outcomes which have previously been agreed between the parties. Therefore, Australian DPAs would need to be characterised more in the manner of interim settlement agreements. DPAs would need to be approved by the Commonwealth Director of Public Prosecutions, with indictments and other procedural steps filed in the court suspended, and the terms of the DPA provided for the court file in the event that proceedings need to be re-enlivened.
The judiciary could also be called upon prior to the offer of a DPA, in order to provide prosecutors with a view as to whether a DPA would be a suitable measure or whether the public interest and other factors dictate that a prosecution should proceed. Alternatively, the prosecutor would at a minimum need to make an assessment against a pre-determined checklist of factors determining suitability for the offer of a DPA. Those factors could include:
· The imperative of preventing future criminal activity and the likelihood that the offer of a DPA would achieve this.
· The severity of the alleged offence.
· The conduct of the company (or individual if this is permitted in practice) including the history of any prior similar offending.
· The possibility of disproportionate consequences of prosecution for the offender or effects on employees, third parties or the public.
4. Policy principles
Additional key factors which need to be decided prior to the implementation of any DPA scheme in Australia include whether negotiated DPAs should be made public, or whether the content of any material provided during the course of the DPA could be used for future civil or criminal proceedings. These are factors that can best be assessed once preliminary matters relating to the broader framework of introducing DPAs have been finalised.
While the outcome of the public consultation remains to be seen, there is certainly much work involved before the specifics and nature of any practical implementation of DPAs in the Australian legal landscape can be worked out. An assessment of the implementation of DPA schemes in international landscapes is likely to provide the best path forward for Australian lawmakers to determine whether, and how, DPAs should be used in Australia.