Business Irish

Sunday 19 November 2017

There's no point in new anti-corruption laws if there's no criminal sanction

The new Criminal Justice (Corruption) Bill promises to update offences, increase penalties, and specifically provide for the criminal liability of companies for the corrupt acts of their officers and employees. Stock photo
The new Criminal Justice (Corruption) Bill promises to update offences, increase penalties, and specifically provide for the criminal liability of companies for the corrupt acts of their officers and employees. Stock photo

Joe McGrath

The Government has announced new plans to introduce more punitive anti-corruption legislation. Separately, however, the Law Reform Commission is also considering calling for the introduction of Deferred Prosecution Agreements (DPAs), which would obviate the need for criminal trials altogether.

This is a potentially paradoxical approach by the State to be "tough on corporate crimes", but one in which criminal punishment is the sanction of last resort.

The new Criminal Justice (Corruption) Bill promises to update offences, increase penalties, and specifically provide for the criminal liability of companies for the corrupt acts of their officers and employees. It is the latest addition to the relative flurry of legislative action in this field.

Prior to the 1990s, the old anti-corruption framework consisted of archaic legislation in the form of the Prevention of the Corruption Acts 1889-1916. In the last two decades, however, the State has introduced new laws targeting bribery, misconduct in public office, and money laundering. It has enhanced public access to government records via freedom of information requests, enhanced the ability to seize the proceeds of corruption, and boosted investigative powers to facilitate its detection of corruption. Gathered together, the new initiatives reflect an instrumental approach to tool up executive power to be tough on corporate crimes.

If introduced, Deferred Prosecution Agreements (DPAs) will also address corporate crimes. DPAs are settlement agreements that allow companies to avoid prosecution and conviction. In return, companies are usually required to pay financial penalties and improve their internal governance systems to prevent against repeated wrongdoing. The company is only prosecuted as a last resort if it breaches the agreement.

Though DPAs can be used to resolve many forms of corporate criminality, they have proven particularly useful in dealing with egregious cases of corruption and bribery in the US and UK. Earlier this year, for example, Rolls-Royce agreed to pay half-a-billion pounds in a DPA which chronicled "criminality over decades, involving countries around the world, making truly vast corrupt payments". However, Ireland should cautiously consider whether it should introduce DPAs.

DPAs can be valuable tools when they are used to reward companies who self-report wrongdoing and co-operate with investigations. They also allow enforcers to avoid lengthy and costly trials that they run the risk of losing.

Nevertheless, American judges have expressed significant reservations in circumstances where the fines have been too small, when individuals have not been held accountable, and when companies have refused to admit wrongdoing.

In the UK, DPAs are subject to greater oversight. Nevertheless, in the Rolls-Royce case, though approving the settlement, the court also questioned whether companies should really be able to avoid criminal convictions in circumstances where the wrongdoing was particularly serious, deliberate and persistent.

Moreover, it is difficult to resist the conclusion that DPAs allow companies to buy their way out of criminal prosecutions. Managers are no longer placed in the dock and asked, in public, to defend their decisions and the actions taken by their companies.

Instead, society loses the cathartic forum of the trial, to freely and visibly identify corporate crimes as shared harms against society, and to reinforce the common sense of right and wrong. This loss is not healed by a DPA's mutually-agreed 'statement of facts' filed in court.

Increased legislative activity tackling corporate crimes is welcome - but what is the point if new offences are not prosecuted, if corporate crimes are being 'managed' instead of being criminally punished?

Dr Joe McGrath is a law lecturer at UCD

Sunday Indo Business

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