Crime and Courts Bill [HL]

Debate between Baroness D'Souza and Lord Goldsmith

Monday 10th December 2012 Lords Chamber

[Lord Goldsmith]

My Lords, I will speak to all four amendments in this group, which are in my name. Amendments 116A and 116B cover the same grounds. They are really alternatives, and I will explain why. However, the fundamental point is that they deal with the provision in the Bill that the,

“amount of any financial penalty agreed between the prosecutor and”—

the company—let us call it that—

“must be broadly comparable to the fine that a court would have imposed on”—

the company—

“on conviction for the alleged offence following a guilty plea”.

I firmly believe that that is a wrong provision. It removes, first, the incentive for an agreement to be made. It is odd, because the Government put forward the limitations on the deferred prosecution agreement on the pragmatic grounds that it is often difficult to prosecute these offences. Therefore they want to have an alternative system which people suspected guilty of financial or economic crime will be prepared to accept. Well, they will be prepared to accept it if the offer is acceptable. There is another point to which I will come, but this provision says that if you do the deal you can only do it on the basis of the same financial penalty. Bear in mind that we are dealing with companies and commercial organisations which cannot be sent to prison, so it is the financial penalty which matters. It seems, with respect, to make no sense to remove the possibility from an agreement which provides some sort of incentive to make that agreement. To impose a requirement that the penalty must be,

“broadly comparable to the fine that a court would have imposed on … a guilty plea”,

seems, as I have suggested, to be wrong in principle.

However, there is another reason. It was pointed out clearly by the noble Lord, Lord Marks of Henley-on-Thames, in Committee, when he noted that this provision only applies if there is a financial penalty. There are a number of options in the agreement: a financial penalty; compensation; donation of money to charity; disgorgement of profits; implementing a compliance programme; and so on. There is a whole menu, but this provision says that if you have a financial penalty is has got to be the same fine that would have been imposed, broadly speaking.

That seems to lead to an absurd situation. In the discussions that are taking place, the company will say, “We don’t want to pay the full fine that we would have paid. We are prepared to accept our guilt even though we think that we could fight this in court and get off, but we do not want to pay the full penalty”. Then the prosecutor is faced with saying, “Well, either that means no penalty at all, because then I can escape the straitjacket of subsection (4), or you have to pay the full penalty, so there is no deal. So we will be forced to go into court; we may lose the case; it will cost the public a great deal”. It seems to make no sense at all, and the noble Lord, Lord Marks, was quite right to draw attention to that.

It is critical that deferred prosecution agreements work. Of all the amendments necessary to make this work, I suggest that this is one. One needs to remove the straitjacket whereby the penalty has to be the same as the fine that would have been imposed. In promoting that—I shall come to the way to do it—I want to underline that the scheme that the Government have put forward contains safeguards against a wrong agreement. Those safeguards are, first, that the deal has to be approved by the Director of Public Prosecutions, the director of the Serious Fraud Office or another senior prosecutor specifically designated for that role. There is no doubt that a senior prosecutor will have to make the decision. Secondly, the deal has to go through not one but two approvals of the court, the preliminary approval and the final approval. That is the structure of the proposal. I cannot see why this opportunity to make an agreement with some greater incentive should be removed.

There are two ways of achieving this, and that is what my two alternative amendments are designed to do. One is simply to remove sub-paragraph (4) altogether. I would be content with that. It achieves the objective and it leaves it to the discretion of the prosecutor and the court to fix the right elements. If there is some sentencing guideline as to what is appropriate, that is perfectly proper and perhaps it does not need to be contained in the Bill. That way of dealing with the matter meets an objection raised when I spoke to the other amendment in Committee when it was said that by saying “not more than broadly comparable”, one had to work out what the fine would have been, that that was difficult and it was therefore unreasonable to say that it should be “not more than broadly comparable”. I did not say then what I say now: that seems to be an objection to the provision as it stands, in any event. If the Government prefer, I accept that the alternative way of doing this would be not to say that the amount of any financial penalty should be “broadly comparable” to the fine that would have been imposed on a guilty plea, but “not more than” such a fine. It sets a finite level.

I want to make one further point before I briefly deal with the two other amendments in my name, Amendments 116C and 116D. I have gone back to the consultation paper to consider what respondents actually said on this issue because a question arose in our meeting as to whether I had recollected correctly that a majority of respondents had thought that the reduction should not be limited to the one-third reduction that one receives on a guilty plea. On page 28 of the Government’s response to the consultation paper at paragraph 102, it is stated:

“57% of respondents disagreed with the proposed maximum reduction of one third”.

Also, paragraph 105 states:

“We have noted the concerns raised by respondents that the maximum penalty level of one third may not prove to be sufficiently attractive in practice”.

Those are exactly the points that I have raised, and it appears that a majority of respondents took that view. I take some heart from that.

The other two amendments go together. Amendments 116C and 116D are simply intended to provide that in a deferred prosecution agreement there should be an obligation to spell out to the person who accepts it what the consequences may be, so that people know where they stand. There may be other ways of achieving that, but it seems right that the deferred prosecution agreement should, one way or another, make it clear to someone who is signing up to it what the consequences may be. Of course, if the person signing up to the agreement is a great corporation advised by substantial firms of lawyers, they do not need such a provision, but these cases may not be limited to such corporations and people deserve to be told just what they are getting into. I beg to move.

[The Lord Speaker (Baroness D'Souza)]

My Lords, I should warn your Lordships that if this amendment is agreed to, I cannot call Amendment 116B by reason of pre-emption.

Crime and Courts Bill [HL]

Debate between Baroness D'Souza and Lord Goldsmith

Tuesday 13th November 2012 Lords Chamber

[Lord Goldsmith]

The quality, as my noble friend says, is however very high. The way the Bill is structured is that there are two court approvals. Under paragraph 7, there has to be a court approval before a DPA is entered into and then a court approval, described as a final hearing under paragraph 8, afterwards. My question is: why is it necessary to have both? I am really not clear what the advantages are because it is plain, under paragraph 8, that a DPA does not come into effect and cannot be entered into unless there is the court’s approval. Why does one need the prior approval under paragraph 7? I do not see the advantages; that is why it is a probing amendment.

I also see disadvantages. There are costs and court time, both of which are precious commodities—particularly for the ministry that the Ministers represent. I am concerned that it is also unnecessarily cumbersome. May it also distort the negotiating process? Might a defendant who is a potential agreer to a DPA say, “I know you want more, Mr Prosecutor, but let us go and ask the judge whether what I have offered so far is enough”. I am not very happy with that proposal. Above all, why is it necessary to have a double process? That is the question. Amendments 37 and 39 are consequential to that amendment.

The next point, which I imagine can be dealt with very quickly, is in Amendments 34 and 36. These amendments are designed to ensure that whatever process there is, whether it is preliminary or final, it is clear that the defendant is to be present when that takes place. I have little doubt that that is what is intended but I would like reassurance on it, and that there is not to be any form of ex parte application by the prosecutor to the court—something to which the defendant is not a party.

Amendment 40 raises a more substantial point. As it stands under the scheme of the Bill, when a DPA comes to an end certain things are to happen. Paragraph 11(8), to which this amendment applies, requires that at that stage there should be details of the compliance. It says that:

“Where proceedings are discontinued under sub-paragraph (1)”,

which I apprehend is when the DPA has come to an end,

“the prosecutor must publish … the fact that the proceedings have been discontinued, and … details of P’s compliance with the DPA”.

I am rather concerned about why that is necessary. It cannot be for the purpose of checking whether there has been compliance because that must be for the prosecutor to do. Indeed, if the public say, “We don’t like this compliance”, there is no procedure for the DPA somehow to come back into existence, so I do not see why it is necessary. If, to take a different case, a prison sentence is reduced for good behaviour, the behaviour that has led to the reduction is not published.

I am concerned for one reason in particular. If there is a lengthy DPA, and the company, which it seems it is simply going to be, has complied and done what was necessary, the publication of the details of its compliance—and I do not know how detailed that will be—would result in the whole thing being revived. That is a little against the spirit of the idea that you make an agreement, it is sanctioned by the court, you comply with its terms, and then your record does not get sullied again. I am concerned that the consequence of this may be to raise the matter again to the disadvantage of the defendant who has done all that was required of him or her. If it is necessary because there is a real point in publicising the details of compliance, that may be one thing, but because I cannot, at the moment, see the benefit of it in the scheme of the provision, I question its desirability. I look forward to hearing what whichever noble Lord responds will say about it. I beg to move.

[The Lord Speaker (Baroness D'Souza)]

I must advise your Lordships that if this amendment is agreed to, I cannot call Amendments 34 and 35 by reason of pre-emption.