The Minister of State, Ministry of Justice (Lord McNally)
Dear, dear, dear. I noticed that my noble friend Lord Ahmad at one point referred to the noble and learned Lord, Lord Goldsmith, as his noble and learned friend. In some ways, both Front Benches are grateful for the noble and learned Lord’s interventions and draw on his experience in this area. In that spirit, I shall take another look at both of his amendments and take advice on them.
Paragraph 5 of Schedule 17 sets out both mandatory elements that every deferred prosecution agreement must include—namely, an agreed statement of facts and an expiry date—and a number of optional elements set out as a non-exhaustive list of potential terms.
As my noble friend Lord Marks has explained, Amendments 24 to 27 would require a financial penalty to be agreed and imposed in every case; whereas, under the Government’s proposals, that is a matter to be agreed by the parties depending on the particular circumstances. The Government have taken the view that, for the purposes of this approach to dealing with alleged criminal wrongdoing by organisations, there must be flexibility to deal with each case individually. As such, our intention has been, as far as possible, to limit the mandatory elements of a deferred prosecution agreement. I defer to the noble and learned Lord, Lord Goldsmith, on whether it is a wholly new approach. As he says, there are at least some areas of our law that are pathfinders for this. However, I think that it is a new approach to economic crime.
It is important to remember that this is a voluntary process and that the outcome will be an agreement between the prosecutor and an organisation, as distinct from court-imposed sanctions. It is essential, therefore, that the parties are able to negotiate terms in an individual case that are tailored to the particular type and extent of the alleged wrongdoing, as well as to the wider circumstances of the case and the organisation, including its financial circumstances. Ultimately, the package of terms will be the subject of judicial scrutiny and the judge will consider whether, taken as a whole, they are fair, reasonable and proportionate. If the judge is not of that view, he or she will not approve the agreement.
A financial penalty is just one of the potential terms of a deferred prosecution agreement, and is one of five of the suggested terms which are monetary in nature. While the illustrative terms in paragraph 5 are not listed in order of priority, it is the view of the Government that any terms of an agreement relating to compensating or making reparation to victims should take priority over the other monetary terms, including any financial penalty. Not all of the suggested monetary terms would be appropriate or desirable in all cases. In addition to, or instead of, monetary terms, an agreement may include obligations to improve corporate governance and compliance and to provide for implementation of the agreement’s terms to be monitored, the cost of which would fall on the organisation, or indeed anything else which the parties can agree is an appropriate response to the alleged wrongdoing. It will be for the parties to negotiate, and ultimately for the courts to approve, a range of terms that are fair, reasonable and proportionate. While a financial penalty is very likely to be imposed in the majority of cases, we do not consider it necessary or desirable to require a financial penalty to be agreed and imposed in every case.
Amendment 28 concerns the level of financial penalty payable under the terms of a deferred prosecution agreement. Where such terms are to be included in an agreement, the sum payable should be broadly based on the fine that would have been imposed for the alleged offence on a conviction following a guilty plea. Where available, the court would follow relevant offence-specific sentencing guidelines, as well as guidelines on general principles of sentencing, including the reductions in sentence for a guilty plea, as the noble Lord, Lord Beecham, pointed out. When considering a financial penalty term of a DPA, it is expected that both the parties and the court would have regard to the same guidelines, as well as the balance of other monetary terms of the DPA. This is to ensure as far as possible that any financial penalty under a deferred prosecution agreement would be broadly comparable to a fine likely to be imposed by a court following a guilty plea.
The effect of Amendment 28 would be to place a cap on the maximum financial penalty that could be negotiated under a deferred prosecution agreement. Given that it will be impossible in any particular case to estimate accurately the likely fine the court would impose, it would in practice be undesirable to seek to limit the freedom of the parties to negotiate the amount of a penalty in this way. In any event, the amount arrived at will have to be agreed by both parties before seeking the court’s approval and the court would need to be satisfied that any financial penalty is fair, reasonable and proportionate, such that we do not think specific further provision is necessary. But as I said to the noble and learned Lord, Lord Goldsmith, I will look at both of his amendments.
Amendment 29 relates to the provisions we have made enabling the parties to negotiate a term specifying the consequences of non-compliance with a deferred prosecution agreement. We have included this provision as a way of dealing with non-compliance capable of being objectively determined by the parties, for example, where the organisation has made a late penalty payment. The aim is for the parties to remedy the non-compliance without recourse to the court, for example, by way of punitive interest in relation to the late payment. Such a term would be negotiated alongside all of the other terms of an agreement and approved by the judge. We do not envisage that such a term will be appropriate in all cases. Whether or not a deferred prosecution agreement includes such a term, paragraph 9 provides a formal procedure for breach and non-compliance which will be the most appropriate way for most instances of non-compliance to be dealt with.
I hope that the Committee will agree that it is desirable to ensure that agreements are tailored to individual cases, with judicial scrutiny of all of the proposed terms to ensure that they are fair, reasonable and proportionate, and that it would be inappropriate to make any of the terms of deferred prosecution agreements mandatory in all cases. And as regards setting the amount of a financial penalty term and inclusion of a consequences term, I trust that my explanation has reassured noble Lords. But I shall read in Hansard what the noble and learned Lord, Lord Goldsmith, has said, and perhaps he will look at what I have said. We can see how they match up or where we should move.
Lord Goldsmith
Perhaps I may say a sentence because it may help the noble Lord and his officials. I had in mind in Amendment 29 that the DPA should say, “And if you fail to comply with this, then the prosecution can take place and you may be proceeded against”. That is the sort of consequence I am thinking of. I understand that the noble Lord is talking about something else. So with that expansion of my meaning, I am grateful that it will be looked at again.
Lord McNally
That is extremely helpful. With my advisers, I will look at the points that the noble and learned Lord has made. We do not go behind the Chair in this House, but he knows what I mean. I shall see if we can match up. I have found his remarks very helpful.
Lord Marks of Henley-on-Thames
In relation to my amendments, I understand what the Minister has said. The only point I would make is that it is possible to take the middle position, which is really the position that the noble and learned Lord, Lord Goldsmith, has put and which my noble friend has said he will look at. As the noble and learned Lord suggests, the anomaly is where you can have an all-or-nothing financial penalty that still exists, so it must be sensible to have a variable penalty if the noble Lord does not accept my Amendment 24.