Deferred prosecution agreements for Australia?

Regulatory Update


Australia's Minister for Justice recently released a public discussion paper calling for comment on the implementation of a deferred prosecution agreement (DPA) scheme in Australia. If such a scheme is implemented in Australia, it will have important ramifications for how companies address potential breaches of the corporate criminal law.

The public discussion paper, available here, and the call for public submissions on an Australian DPA scheme, is one of a number of recent steps taken by the Australian Government following ongoing criticism of Australia's track record in enforcing bribery and corruption laws. Others have included the recent Senate Inquiry into Australia's foreign bribery regime (due to report in July 2016 - see our previous article), and the recent introduction of false accounting laws (discussed here).

What is a DPA scheme? 

A DPA scheme is a flexible scheme that applies to instances of serious corporate crime. Under such a scheme, a company that has engaged in serious corporate crime may be able to negotiate with a prosecutor to defer, and ultimately discontinue, prosecution without criminal conviction, typically in return for the company's cooperation with the prosecutor, payment of financial penalties and implementation of improved compliance programs. 

DPA schemes are already in place in the United States and, more recently, the United Kingdom, although the models utilised in those two jurisdictions differ. In the United States, prosecutors have significant discretion in agreeing the terms of a DPA, with relatively little judicial oversight. In the United Kingdom, DPAs face a much greater level of judicial scrutiny, requiring Court approval (which is granted only if the Court is satisfied that the terms of a DPA are fair, reasonable and proportionate, and in the interests of justice). 

Potential benefits of, and issues raised by, a DPA scheme

Perhaps the most significant, and obvious, potential benefit of a DPA scheme is its capacity to allow companies the opportunity to avoid the time, cost and uncertainty associated with drawn out investigations and prosecutions; and for prosecutors to also marshall their resources and achieve enforcement outcomes more effectively.

The recent submissions to Australia's Senate Inquiry into foreign bribery (discussed in detail in our previous article) show there is considerable interest from the private sector and the legal community in introducing DPAs as a way of supporting self-reporting of potential offences by corporations, and offering a more clearly structured and transparent process for doing so than currently exists. A prevailing theme of many of those submissions was criticism of the difficulties created by the current uncertainties around the precise consequences and benefits that might flow to a corporation from self-reporting contravening conduct. The discussion paper released by the Government recognises these concerns, while pointing to the scope for DPAs to also help improve Australia's track record for investigating and prosecuting corporate misconduct.

While these represent significant benefits, a DPA scheme also raises some complex issues, as the discussion paper recognises. Some of those issues include:

  • the extent to which information disclosed during negotiations for a DPA can be used in future proceedings against the defendant. While there are sound policy reasons why prosecutors should not be prevented from doing so, that approach would give the prosecution significant bargaining power over the defendant in the process; and 
  • the extent to which the details of internal corporate investigations are provided to the prosecutor in negotiations. While commonplace in jurisdictions such as the United States, that would represent a significant change to current Australian practice.

What issues are open for consideration?

In addition to the issues noted above, the Minister for Justice has sought comment on the following topics (some of which are also being considered by the Senate Inquiry into Australia's foreign bribery laws):

  1. the utility of an Australian DPA scheme;
  2. the range of corporate misconduct for which a DPA may be sought (noting that this range would be limited by the scope of Commonwealth legislative power);
  3. possible parties to a DPA – whether they should be allowed for individuals as well as companies;
  4. the extent of judicial involvement in approving and supervising DPAs;
  5. the kinds of guidance that would enhance predictability and certainty for companies invited to enter into a DPA;
  6. whether DPAs should be made public;
  7. the terms to be required in a DPA; and
  8. the consequences for breach of a DPA.

Several of these issues are likely to be of critical importance to companies who may have need to seek DPAs in future, in particular on guidance about when DPAs will be offered and how they will operate; how negotiations for a DPA should be conducted; and whether the terms of a DPA should be made public. Companies should therefore carefully consider whether to make submissions on the contemplated DPA scheme.

How can I make submissions? 

The opportunity for public submissions closes on Monday, 2 May 2016. If a company wishes to make submissions, a template is available here. Submissions will be published on the Attorney-General's website, unless otherwise requested. 

If you would like assistance in preparing a submission, or more information, please contact Rani John at DLA Piper in Australia.