The U.K.'s New (and Improved) Deferred-Prosecution Agreements

After watching from the sidelines as U.S. prosecutors settled criminal charges in case after case with U.K.-based companies, Parliament passed the Crime and Courts Act of 2013, which armed British prosecutors with a criminal-justice tool commonly wielded by their American counterparts: deferred-prosecution agreements — DPAs for short. As of Feb. 24, U.K. prosecutors for the first time will have the authority to negotiate DPAs with companies accused of criminal wrongdoing as an alternative to a formal prosecution and public trial. The new U.K. DPA differs from the American prototype in significant ways, and we think serves as a useful template for U.S. lawmakers to consider.

In recent years, DPAs have formed perhaps the central strategy for U.S. prosecutors tackling white-collar crime. The federal government has entered into 278 such agreements with companies since 2004, extracting billions of dollars in “penalties” annually. The feds have hardly limited their use of the DPA mechanism to American companies. Rather, in many respects, the U.S. government has emerged as a global enforcer of alleged wrongdoing by corporations, including large U.K. companies like GlaxoSmith­Kline PLC, HSBC Holdings PLC and, most recently, The Royal Bank of Scotland Group PLC, which is 82 percent owned by the British government.