“We have not been great advocates of DPAs, but we are watching these cases go through the courts and then these people getting off. So then you come to this situation: is it better for companies to get a DPA … or pull everyone through a long process at public expense. If they win, they get all costs paid and get away with it.”
Sue Hawley is an anti-bribery expert and policy director at Corruption Watch in the U.K. So a good person to talk to as we await developments on the SNC-Lavalin case: the who-said-what-to-whom (for political watchers), and the if-not-now-then-when (for the business community seeking to understand when deferred prosecution agreements (DPAs) will be deployed in Canada and under what conditions).
Hawley laughs heartily at the notion that the U.K. has been an exemplar when it comes to bribery prosecutions (“You can count the number of bribery prosecutions on two hands,” she says), and notes that the House of Lords has been reviewing the Bribery Act. (She gave evidence before the parliamentary committee tasked with the review. The committee’s report is expected mid-March.)
Issues under consideration include whether there should be carve-outs for small- and medium-sized enterprises, whether facilitation payments are ever defensible, and whether the DPA regime is favouring big companies.
A big company example is Rolls-Royce, which I cited two weeks ago as an appropriate point of comparison to SNC-Lavalin.
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There are a number of reasons why this is so. The bribery allegations against Rolls-Royce spread across continents and across decades. And — this is important — the company, as is the case with SNC, did not self-report its wrong-doing as DPA legislation encourages. Rolls-Royce co-operated with the U.K.’s Serious Fraud Office (SFO) after the misdemeanours were first brought to the office’s attention by a whistle blower. As with SNC, Rolls faced debarment from government contracts should it have been successfully prosecuted.
To followers of the SNC case who have found themselves caught up in the OECD convention on the corruption of foreign individuals — that the national economic interest cannot be considered a factor in a DPA determination where the bribery of foreign persons is alleged — I commend to you the judgment of Sir Brian Leveson in approving the Rolls-Royce DPA in January 2017.
The company’s conduct included “bribery of foreign public officials, commercial bribery and the false accounting of payments to intermediaries.” The impact of a conviction would have “significant, and potentially business critical” effects on the company.
Nevertheless, Leveson approved a DPA for Rolls, quite brazenly concluding that such factors were not determinative of his decision. “Indeed,” he wrote, “the national economic interest is irrelevant.”
True, there’s a question as to whether the OECD convention, or Article 5, is binding in the U.K. Nevertheless, the Rolls-Royce decision does raise the question as to whether SNC’s advisers might have seen a way around the corruption of foreign public officials provision in the Canadian legislation.
There have been developments. As I wrote previously, many organizations, including Transparency International, argued that the financial penalties in the Rolls-Royce case, at more than £650 million, were insufficient. Since then, observers had been awaiting news of individual prosecutions, without which, they argued, the DPA would be confirmed as what Transparency International calls a “soft option” for big companies.
Last Friday, the SFO announced that the case against Rolls was closed. “Following further investigation, a detailed review of the available evidence and an assessment of the public interest, there will be no prosecution of individuals associated with the company,” the fraud office stated in a press release.
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Robert Barrington, Transparency International’s executive director, called the result “absurd … It is hard to believe that the interests of justice have been served or that there has been proper acknowledgement of the victims of the crime.”
The case has fired up the DPA debate in the U.K. “A fundamental issue at the heart of DPAs is, are they about punishment or are they about leniency?” asks Sue Hawley. DPAs “really only work as a carrot if your stick is big enough, if your system can actually convict people in court.”
She’s been watching the SNC case with interest. “If it went through the courts, how confident are you that it would be convicted? If not, would it be better that it paid a very large fine and had a major corporate monitorship imposed on it, with some individuals either disqualified or prosecuted?”
It appears that a decision has been made in that regard. At least in the SNC case.
Which leaves our new remediation agreement legislation untested and, one would hope, a justice committee with a great many questions to ask.
Jennifer Wells is a business columnist based in Toronto. Reach her on email: firstname.lastname@example.org