Robert PlotkinKurt E. WolfeIn a recent Bribery Library post, Adam Greaves provides a useful summary of Transparency International UK’s (TI-UK) report, ‘Deterring and Punishing Corporate Bribery’,  which analyses UK enforcement trends in overseas bribery cases.  From a US perspective, we found particularly interesting the Report’s examination of whether US-style Deferred Prosecution Agreements (DPA) might be appropriate in the UK regulatory environment.  TI-UK makes the following recommendation in that regard:

The Government should consider the introduction of DPAs or some similar sentencing procedure after a thorough assessment of the alternatives. DPAs have proved to be a useful procedure to settle [Foreign Corrupt Practices Act (FCPA)] cases in the USA but the process has also been criticised with little judicial oversight.

As discussed more fully below, this recommendation reveals two themes that recur throughout the Report.  First, TI-UK is of the view that US-style DPAs are potentially problematic because they lack adequate transparency and judicial oversight.  Second, in spite of these perceived shortcomings, TI-UK concludes US-style DPAs are nevertheless an efficient and effective means of resolving overseas bribery cases. 

DPAs are plea or settlement agreements negotiated by the US government – typically by the Department of Justice (DOJ) or the Securities and Exchange Commission (SEC) – and a corporate or individual defendant, pursuant to which the defendant avoids formal prosecution by admitting guilt, paying a fine and/or restitution, and in appropriate circumstances agreeing to additional terms or conditions, such as the appointment of a corporate monitor.  Importantly, the agreement is null, and the defendant may be prosecuted, if she is deemed to have violated the DPA. 

TI-UK regards the DOJ’s ‘track record of achieving corporate settlements for overseas bribery’ as ‘second to none’.  This is, in part, because DPAs have emerged as a widely popular and successful means of settling bribery (i.e., FCPA) cases in the US.  DPAs are attractive, TI-UK explains, because they ‘incentivize self-reporting, properly label corruption as criminal, and meet public policy requirements and sentencing outcomes by encouraging future compliance programmes’.  Still, ‘[t]he use of DPAs is not available under current UK law, albeit that this may change after a review was announced recently by the Attorney General’.  The head of the Serious Fraud Office (SFO), too, has expressed support for the use of DPAs. 

Transparency and Judicial Oversight

DPAs may not yet be available in the UK because, as TI-UK notes, ‘[s]ome concerns have been expressed about the approach of the DOJ in settling offences under the [FCPA] in a less than transparent and fair manner’.  The TI-UK report explains that the terms of DPAs are negotiated by the DOJ (or the SEC) and the corporate or individual defendant ‘without any scrutiny’ by the courts.  Because they are not familiar with all the facts, in assessing the appropriateness of a proposed DPA, the courts are ‘necessarily limited to the evidence and charges laid before them, in essence to the confines of the plea agreement’.  In order for the process to be a ‘more predictable and transparent’ one, TI-UK suggests, the agreements themselves must ‘adequately reflect[ ] the underlying criminal conduct’ and ‘be subject to judicial scrutiny independent from the prosecutor’s office’. 

To be sure, TI-UK is not the first to voice this concern.  Indeed, in November 2011, Judge Rakoff of the Southern District of New York famously declined to approve a proposed SEC settlement, ruling that the court must ‘exercise independent judgment’ in evaluating a proposed settlement, and the terms of the proposed agreement did not supply the court with enough evidence to evaluate its appropriateness.  Less than a month later, somewhat less famously, Judge Randa of the Eastern District of Wisconsin too refused to endorse a proposed SEC settlement on grounds that he could not assess the fairness of the proposed settlement without an adequate factual basis for the agreement. 

TI-UK’s concern is, perhaps, more apt with regard to developing countries (or ‘high risk’ jurisdictions) that have adopted anti-bribery legislation in recent years or otherwise purport to deter and punish bribery offenses.  There may be little visibility into criminal or regulatory matters in those jurisdictions; and DPAs or similar agreements may not be subject to stringent judicial or administrative scrutiny.  A lack of transparency in high risk jurisdictions is of grave concern, because the international business community cannot adequately gauge whether a country actively engages in anti-bribery enforcement or has merely enacted policies that are not effectively implemented. 

Adopting the US Model

Despite TI-UK’s concerns – and in light of the recent opinions of Judges Rakoff and Randa – the US’ DPA model presents an efficient and largely transparent procedure for settling bribery cases.  DPAs are filed with and vetted by the court overseeing the criminal or regulatory matter, and the terms of the agreement are publicly available.  Moreover, as TI-UK points out, compared to the SFO, the DOJ publishes ‘far more information’ on its settlements. 

From a US perspective, at least, there are a number of key efficiencies to be gained through the use of DPAs, including incentivizing self-reporting; settling matters at an earlier stage; effectively combating bribery despite ‘a modest number of attorneys working in a dedicated FCPA unit;’ and promoting public policy.  These efficiencies have long outweighed concerns about transparency and judicial oversight.  As we are seeing in the US, however, there may be effective methods to ‘tweak’ the US model by requiring more fulsome factual statements or admissions in proposed settlement agreements.  These simple policy adjustments might allow UK regulators to adopt the US model without undermining their regulatory mandates.


The McGuireWoods Guest Bloggers are Robert Plotkin, a partner based in McGuireWoods LLP’s Washington and New York offices and head of the firm’s SEC Enforcement Defense group, and Kurt E. Wolfe, an associate based in McGuireWoods LLP’s Washington office and a member of the firm’s Government, Regulatory and Criminal Investigations department.