Crime and Courts Bill [Lords]

Lord Garnier Excerpts

Monday 14th January 2013 Commons Chamber

[Sir Edward Garnier (Harborough) (Con)]

It is always a pleasure to follow the right hon. Member for Wythenshawe and Sale East (Paul Goggins). He made a characteristically thoughtful speech and we have much to learn from it. I agree with a great deal of what he said, particularly in relation to restorative justice. Like him, I have been to a great many prisons in England and Wales. I have been to about 65 of the 142 that we have in this country and in Wales. Where there was restorative justice, there was a great deal of satisfaction for the victims of those crimes, as well as better behaviour from the criminals. It is important that we get the right people involved in restorative justice, but I commend it as a principle.

The right hon. Gentleman mentioned the Home Office’s proclivity for producing Christmas tree Bills. I would rather flippantly say that the Home Office has produced more Christmas trees than Norway over the past 30 years or so, and the Bill is another fine example. I do not want to denigrate this particular Christmas tree, even though we are well beyond 6 January, because one aspect of it is particularly to be commended. That is the bit that I invented. I refer to clause 32. It is the shortest clause in the Bill and it reads:

“Schedule 16 makes provision about deferred prosecution agreements.”

The right hon. Gentleman, when dealing with restorative justice, referred obliquely to the second shortest clause in the Bill, clause 31, but that is 300% longer than the clause that I am talking about.

Neither the Home Secretary nor the shadow Home Secretary thought it appropriate to talk about deferred prosecution agreements, and why should they? They have plenty of other things to talk about in detail—[Interruption.] I am sure the Home Secretary would like me to correct what I said. Yes, she did mention the subject in passing. I shall mention it in the few minutes left to me, but in rather more detail than she had time to do. Before doing so, I declare my interest as a practising member of the Bar.

Corporate economic crime damages the British economy in monetary and reputational terms, and we are not dealing with it effectively. That is not to say that everything in the past has been hopeless or a waste of resources, but it is time for us to do things better.

Since our Government came into office in May 2010, we have made structural changes to improve our strategic capability. We have a new director of the Serious Fraud Office in David Green, a relatively new chief constable of the City of London police, Adrian Leppard, and there is a new focus on economic crime in the Crown Prosecution Service and the Financial Services Authority, which is soon to change its name. During my two or so years in government, it seemed to me that we needed to do something more and that we should think seriously about introducing deferred prosecution agreements, which are an American procedure.

DPAs will be not a substitute for either investigations or prosecutions of companies, but an additional and much-needed weapon in the prosecution’s armoury that provides the flexibility to secure appropriate penalties and better outcomes for victims. They are modelled on a long-established system in the United States, but they will be adapted to suit our criminal justice system with far more judicial oversight. In the United States federal courts, DPAs are concluded and promulgated with little, if any, judicial oversight, but when I spoke to judges in America last spring, it seemed to me that those judges were beginning to chafe at the inadequate role that they play in this aspect of the American criminal justice system. The first thing that I learned when I was in America was that we need to engage our judges in this new means of dealing with economic crime.

We are not talking about non-prosecution agreements or other forms of non-criminal—and therefore civil—action to deal with economic crime; we are simply talking about deferment. The right hon. Member for Wythenshawe and Sale East talked about the deferment of penalties; this is about the deferment of prosecutions of corporate entities, companies, partnerships and unincorporated associations.

Law enforcement agencies say that they do not have the tools that they need to tackle increasingly complex economic crimes. Serious Fraud Office investigations can last up to three and half years, with a cost to the agency of approaching £1.5 million, but they do not guarantee success and they leave victims waiting far too long for reparation. A suspect company is disadvantaged by a lengthy and expensive investigation that takes the focus of its management, which is often new, away from the company’s core functions and frequently leads nowhere, save to collateral damage to innocent third parties. On this point, I often cite the example of Arthur Andersen, which became involved in the Enron scandal in the early part of this century. The company collapsed as a consequence of its prosecution by the United States Department of Justice. Some 100,000 people lost their jobs, and pensioners and suppliers to the business were affected. It did not really help that the Supreme Court quashed the convictions some time later because the company had gone and irreparable collateral damage had already been caused to innocent people.

DPAs will allow prosecutors to tackle economic crime—the crimes that will be susceptible to DPAs are set out in paragraphs 15 to 27 of schedule 16, but essentially they are fraud, bribery, money laundering, market fixing and so forth—more effectively and efficiently, but without losing sight of the aims and needs of justice. In appropriate cases, companies will be prosecuted regardless of whether the facts come to light following a police investigation, through self-reporting or via a whistleblower.

A prosecution against a company will be initiated, but continued to trial only if tough requirements, such as the payment of financial penalties and compensation for victims, the recovery of ill-gotten gains and compliance with measures to prevent future offending, policed by independent monitors, are not adhered to within a given period of deferral or suspension. The agreement, and then its precise terms, will have to be formally approved by a senior judge before being announced in open court, which is different from what happens in the United States. The process in this country will very much form part of the criminal justice system and will not permit private deals made behind closed doors.

Prosecutors will come to know of a company’s conduct through investigation by the authorities, via a whistleblower from within the company, or following self-reporting by the company’s board. Discussions will then follow between the prosecutors and the lawyers for the company. Those will initially be confidential. They might take days or even weeks, but they will continue until the picture is clear. The prosecutors will then consider the facts. On the basis of the information in front of them, they will decide to do nothing; to hand the case over to a foreign jurisdiction, if appropriate; to prosecute, if that is in the interests of justice; or to enter into a deferred prosecution agreement.

Unlike the position in the United States, it will not be open to the prosecution and the company simply to agree between themselves the penalty, the compensation, the monitoring regime and the length of the deferment. The draft agreement must be put to a senior judge in chambers at a private hearing to which the press and the public are not admitted. The judge will need to be persuaded that it is in the interests of justice for there to be a DPA, and that its terms are fair, reasonable and proportionate.

Although the judge will not be able to order the prosecution to prosecute to trial, he can, in an appropriate case, refuse to sanction a DPA or its terms. The parties would then need to renegotiate the terms in the light of the judge’s criticism, or the prosecution must consider whether it ought to prosecute in the normal way. In reality, it is unlikely that the parties will go before a judge in a case when only a full prosecution is merited, or with terms that suggest either oppressive or feeble conduct by the prosecution, but the judge must approve the DPA before the case goes any further. If the agreement is approved, the judge moves into open court, the company is publicly identified and the terms of the DPA are promulgated to the world at large. Those terms will be reportable by the press. They will appear on the SFO or CPS websites, and they will be known to the world’s stock exchanges.

If a company fails to comply with a DPA after it has been announced, depending on the nature of the breach, the prosecution may either take the matter back to court, and apply to terminate the agreement and bring a prosecution, or it may apply to vary the terms, such as by increasing the extent of monitoring or the length of the deferment period. If the company complies and shows that it can be trusted to conduct its affairs within the law before the end of the deferment period, the parties may apply to vary the terms, such as by bringing the DPA to an early conclusion or removing the monitor.

DPAs will achieve justice through appropriate penalties and the recovery of the proceeds of crime. When sanctioned by a judge, they will provide benefits for victims without the unpredictability, expense, complexity or time associated with a lengthy criminal court process and trial. A DPA will bring certainty and a speedy resolution. It will enable a company, especially if it is being run by a new board, to clear the decks and make a clean start. DPAs will enable commercial organisations to be held to account, but without the collateral damage that I identified earlier.

Most importantly, given that DPAs will be concluded in open court, the public will know about the wrongdoing admitted by the commercial organisation and its consequences. There will be no question of companies burying their wrongdoing in their annual accounts. Experience from the United States shows that even well-known British companies enter into DPAs with a realisation that they are different from plea bargains or civil recovery orders.

The Director of Public Prosecutions and the director of the Serious Fraud Office will issue a code of practice for prosecutors, which will be publicly available, to guide the decision-making process behind DPAs It is also proposed that the Sentencing Council, the statutory body made up of judges, practitioners and academics that publishes sentencing guidelines, will produce guidelines for economic crimes in the near future so that prosecutors, judges and lawyers acting for errant companies will be able to enter into and conclude DPAs with clarity and certainty about the relevant penalties.

DPAs will not be a “get out of jail free” card. The courts cannot send a company to prison but, under a DPA, it would have to admit its wrongdoing and agree to stringent and wide-ranging terms that are tailored to the facts of the case. The agreements are a means of bringing errant companies publicly to justice swiftly, effectively and economically, and it is time that we brought them into our criminal justice system.

In conclusion, I thank all those in the Attorney-General’s Office who worked with me on this proposal, especially my former private secretary, John Peck, as well as all those in the Ministry of Justice who helped me to bring it forward. I also thank the Home Secretary and the Justice Secretary for getting the provisions into the Bill.

--- Later in debate ---

[Mr Straw]

I entirely accept what my hon. Friend says.

Like the Joint Committee on Human Rights, I have looked at the analysis put forward by the Home Office, and I am afraid that I am sceptical about the evidence, which collides with my experience and, I believe, that of my right hon. and hon. Friends and Government Members who have large immigration case loads. It is rare, in my experience, for constituents and their relatives abroad not to have produced the evidence first time round. Much more frequently, they produce the evidence and it is then overlooked. Time and again, my office and I face the situation where the evidence has been submitted and it has been overlooked by the entry clearance officer or has got lost. It may appear to the tribunal to be new evidence, because for sure it is new evidence to the entry clearance officer, but it is not correct to draw the conclusion that that evidence has never gone before immigration officers. Even if that is the case, the fact that a third of appeals are upheld shows that there is important merit in having such a right of appeal. To argue—I hope that the Minister does not do this—that it would be just as satisfactory to re-submit an application is, frankly, disingenuous in the extreme. I have seen constituents re-submit applications in respect of non-family cases, where there is no right of appeal, and all that happens is that the application is turned down again and they have wasted their money.

My final point relates to judicial appointments. I strongly support the proposed changes in respect of diversity. The apparently prosaic change to allow for the number of judges to be counted by full-time equivalents and not by full-time numbers will make a very important contribution to the employment of the part-time judges, typically female, at every level. Also very important are the tipping-point provisions to allow for the Judicial Appointments Commission to take into account somebody’s gender or colour if two candidates are of equal merit.

[Sir Edward Garnier]

Will the right hon. Gentleman give way?

[Mr Straw]

I am afraid that I am running out of time.

I depart from the Government on their proposals for very senior appointments—to the Supreme Court, for the Lord Chief Justice and for the heads of division. Initially the Bill included a proposal by the former Lord Chancellor by which the Lord Chancellor would sit on the appointments panel for those very senior appointments. That has been withdrawn from the Bill in place of consultation. The current arrangements, which include consultation, do not work. It is entirely legitimate for the Lord Chancellor to have a role—not the decisive role, but a role—in these very senior appointments, because what the Supreme Court is doing has very clear political consequences and what the Lord Chief Justice and heads of division are doing has very clear Executive and administrative consequences. The current Lord Chancellor may not wish to sit on the appointments panel—that is his choice—but it is important for the benefit of future holders of that office that the power should be available, and I ask the Minister to look at that again.