Crime and Courts Bill [HL]

Debate between Lord Goldsmith and Lord Beecham

Tuesday 18th December 2012 Lords Chamber

[Lord Goldsmith]

My Lords, this amendment can be dealt with briefly, and I would have said that before the Chief Whip made her statement. It concerns the question of the extent of the discretion that prosecutors will have, subject to the double lock of supervision by the courts, in reaching agreements on deferred prosecution agreements. Along with other noble Lords, including the noble Lord, Lord Marks of Henley-on-Thames, I have been concerned that the Bill does not appear to provide a discretion on the maximum reduction of financial penalty. For example, on 10 December at col. 968 the noble Lord, Lord Ahmad of Wimbledon, talked about a maximum discount of one-third, and it was not the first time that that had been said. That led me to consider whether that was the view of the prosecutors, and having made inquiries of them, it turns out that that is not what they thought the Bill was going to do. It was because of that, and only because of that, that I wanted to raise the matter again for clarification.

I wrote to the noble Lord, Lord McNally, and I am grateful to him and to his officials for his detailed response. What I asked in substance was whether it was in fact the case that one-third was not the maximum discount on the financial penalty that could be agreed; it could be greater than that. I understand from the Minister’s response that, shortly put, the one-third discount is not the maximum that can be agreed and that in appropriate cases, there could be an agreement—I underline, subject to the agreement of the court—which could be greater than that. If that clarification can be made, which otherwise would go uncorrected, although I personally would still prefer to see a greater discretion, at least it would deal with the major problem of an apparent one-third maximum reduction. For those reasons, I beg to move.

[Lord Beecham]

My Lords, I support the amendment moved by my noble and learned friend, although I do not anticipate that he will seek to divide the House on it. It is interesting to note that the amendment has come before the House on the same day as a question from the noble Baroness, Lady Williams of Crosby, that referred, of course, to the settlement of cases in America. She referred to a billion-pound settlement reached under a deferred prosecution agreement over there and contrasted that with the very modest levels of financial penalty incurred in this country under processes that usually involve the Serious Fraud Office or, in revenue cases, Her Majesty’s Revenue and Customs.

Throughout our debates on deferred prosecution agreements, my noble and learned friend has pointed to the need to incentivise potential corporate defendants. At the moment they are only corporate defendants, but in due course there may be a case for extending them to individual defendants. He has stressed the need to adopt this procedure rather than rely on prosecution because, as has been pointed out on several occasions, the success rate of the Serious Fraud Office in these cases has been, to put it mildly, not very marked. Unless there is a credible threat of a successful prosecution, there is virtually no incentive for a defendant corporation to plead guilty and every incentive for it to contest the case. The corporation has a very reasonable prospect of being successful. The case would seem to be similar in revenue cases, hitherto at any rate. HMRC has been apt to settle for rather more modest amounts than one might have expected relative to the level of abuse that is alleged to have taken place. The advantage of the agreements, as has been pointed out by my noble and learned friend and several other noble Lords, is not only that there is a financial penalty available as part of the agreement, but that other measures are available as well.

An additional reason for the Government, through their relevant agencies, to press for a deferred prosecution agreement is because, first, there is a greater incentive for companies to settle, knowing that they will not have to meet the full costs which they can take into account in balancing their considerations about whether to defend or not, and secondly, from the public interest perspective, there can be additional conditions that might apply to such an agreement. Those might be monitoring, changes in practice and so on. Furthermore, there can be a period during which matters can be reviewed. All of this suggests that greater flexibility in discounting from what might be expected to be the maximum fine would assist the whole process, although that does raise the question of what the sentencing guidelines from the Sentencing Council will be with regard to these penalties. Perhaps we ought to be moving more in the direction of the level of fines imposed under the American system, which it is hoped would increase the incentives.

My noble and learned friend is clearly minded to accept the position on the basis of the Minister’s letter. From the Opposition’s perspective, we are content with that, and we look forward to seeing in due course how the system moves forward. We would hope also to have an opportunity to review it, as has been discussed in previous debates. I commend my noble and learned friend on his persistence in this matter and the Minister on what has apparently been a sympathetic response.

Crime and Courts Bill [HL]

Debate between Lord Goldsmith and Lord Beecham

Tuesday 13th November 2012 Lords Chamber

[Lord Goldsmith]

I am not concerned about that for this reason. There are two very powerful safeguards in the Bill that should prevent that. First, the DPA has to be agreed by a prosecutor and, as the debate on the previous amendment demonstrated, not just any old prosecutor but either the Director of Public Prosecutions or the director of the Serious Fraud Office—or, possibly, a person designated by the Secretary of State. I leave aside the locum tenens that might come in; the Minister will tell us at some point how likely that will be. First, the prosecutor has to decide whether it is appropriate. Having spent, as the Committee will know, a lot of time with prosecutors when I was in office, I had a high regard for their understanding of what the public interest and public reaction is. They know when people need to go to prison, if they are convicted, and they know when it is appropriate for them not to do so. We can rely a great deal on them to decide which cases are appropriate and which are not.

There is then a second safeguard. Under the Bill as it stands, it has to go to court twice, and the court has to be satisfied that it is appropriate and proportionate for such a step to be taken. Those safeguards mean that one can be much more relaxed about the risks to which the noble Lord, Lord Phillips of Sudbury, refers. Of course, I would entirely agree with him that if we had a situation in which the system operated only to the benefit of the rich it would be wholly unsatisfactory. That is one reason why I think that extending the ability of DPAs so that they cover the sort of offence that I have referred to and individuals would meet part of that concern. If anything, I am worried that by limiting this to economic crimes for companies and partnerships one sends the very message that the noble Lord, Lord Phillips of Sudbury, does not want to be sent. I invite the Government to think very hard about that.

Those are the two safeguards. My personal preference would be not to add any other barriers. I would not add the barrier of the offence being likely to carry a sentence of imprisonment. As the noble Lord, Lord Marks, recognised, if this was extended to cover the sort of case with which I have been concerned it would rule those cases out. I would leave it to the good sense, judgment and sense of public interest of the prosecutor and the court to limit the cases. For the same reason, I would leave the ambit of cases that could be covered open. I would not try to cherry pick through the statute book to find other offences that might be appropriate. I would leave that to the prosecutor and then to the court to say whether it was appropriate to use it for this sort of environmental offence or that sort of health and safety offence. I predict that fairly soon we will have a code giving guidance, and no doubt there will be debates in this House and in other places from time to time as well, and we will see the sort of offences that are appropriate. It is a very useful tool. Other dispositions are not normally limited in this way to particular offences, individuals or specified periods in prison. When I move my amendment, I will invite the Government to consider those points very carefully.

[Lord Beecham]

My Lords, at Second Reading I expressed misgivings about the introduction of this new concept which were shared by other Members of your Lordships’ House. However, it is clear that the proposal will go ahead. It is certainly possible for us to live with that and, indeed, to seek to improve the legislation on the way.

I listened with great care to the reference of my noble and learned friend Lord Goldsmith to the desirability of extending the DPA process to individuals. However, I am still not quite persuaded about that. I certainly would like to see how the original intentions of the Bill are carried out and what effect they have on what I take to be the basic approach of the Government, whose rationale is that in serious cases, which take an inordinate amount of time and cost an inordinate amount of money to pursue, adopting this measure might achieve a swifter resolution of the problem and, as the noble and learned Lord rightly reminded us, help to pursue the desirable objective of changing behaviour. One particularly looks to that approach being applied in the corporate field. Only today we have seen across the pages of the Guardian an apparent example of the kind of corporate misconduct that could well lead to a massive investigation. One might think that that is an ideal case for the application of this new principle. However, the new principle departs from the traditions of our jurisprudence—as do other things that we shall discuss shortly, but not in connection with this Bill—and is not something to be embarked on lightly. In particular, we need to continue to bear in mind the state of public opinion as it might develop.

I quite take the point that it is not necessary or desirable to confine the scope of this new procedure to economic and financial crime, although I suspect that that is what has triggered it. I am particularly attracted by the references of the noble Lord, Lord Marks, to environmental issues. I think of some of the cases that we have debated in other contexts that involved damage to the environment. Those cases can also be formidably expensive and, almost by definition, difficult to pursue. The noble and learned Lord, Lord Goldsmith, is right. We cannot list every conceivable item. There has to be an element of discretion. It would be sensible for this matter, and its extension, to be the subject of orders and therefore subject to parliamentary approval. I agree with the noble and learned Lord that Amendment 35 in the name of the noble Lord, Lord Marks, probably goes too far.

I want to touch briefly on Amendment 48 in my name which seeks to establish a sunset clause. This is one of three amendments which are partly designed to reassure the public that this measure is not undertaken lightly by the Government and Parliament and that, novel as it is and potentially almost offensive as it could be to some people’s sense of justice, it will be subject to very careful review which is more extensive than the post-legislative scrutiny now available. My amendment would compel a proper parliamentary review of the whole issue if, in the light of experience, it is thought appropriate to renew the provisions. I suggest a five-year period because by definition many of these cases take a long time and it will take time to see how the new system beds down.

The Minister was not oversympathetic to that suggestion on the previous occasion we discussed this matter. However, I hope that it will be given consideration because we cannot lightly embark on this massive change, with the implication that people—corporations rather than individuals—can buy their way out of difficulty. I will return to that thought in relation to other amendments. I hope that the Government will look sympathetically at some of the points that have been made, notably about the extension beyond simply economic and financial crime, and in particular at the possibility of a sunset clause as proposed in my amendment.

[Lord Goldsmith]

The noble Lord referred to someone buying themselves out of trouble, or whatever it may be. It is the same sort of idea that the noble Lord, Lord Phillips of Sudbury, raised. Would the noble Lord agree that as well as a financial penalty, a DPA could well provide an obligation to comply in particular ways in future? That is not the same thing as buying your way out of trouble. It is accepting a form of conduct in future that hopefully would be beneficial to the public and everyone else and is not just a matter of pounds in your back pocket.

[Lord Beecham]

I am talking about public perception, which might well be less grounded in those more fundamental objectives than we might give it credit for when debating it in this environment, dominated as it is—looking around the Chamber—by lawyers. We have to carry the public with us. The noble Earl, Lord Attlee, is aghast: unfortunately for the legal profession, perhaps, the lawyer gene apparently did not pass from his grandfather. We have to take public perception on board and it is in that sense that I use the term.

--- Later in debate ---

[Lord Goldsmith]

I have a short but important point to make on Amendment 31 which stands in my name. As it stands, paragraph 5(2) requires that there should be an expiry date in any DPA but gives no guidance as to what its length should be. There needs to be some end point. This should not hang on for ever—in any event, it is unlikely that it would do so—but it is difficult to specify what that length should be. It could be different depending on the circumstances. The point of my amendment is simply to say that some consideration should be given to how one determines the length of the DPA. The best way of trying to get some guidance about that seemed to be to suggest that it should be included in the proposed code. There may be other ways to do it. I am completely open to what the mechanism is. My concern is that it is undesirable to leave it as it stands with apparently infinite or perpetual DPAs in existence.

[Lord Beecham]

My Lords, I certainly endorse my noble and learned friend’s remarks and support his amendment. I also support Amendment 32 standing in the name of the noble Baroness, Lady Hamwee. I shall speak to Amendments 31A and 31B, which again would provide effectively parliamentary oversight and approval of the code of practice to be drawn up by the Director of Public Prosecutions and the director of the Serious Fraud Office.

In his letter to me that other noble Lords may have seen, the noble Lord, Lord McNally, indicated that of course the Government believe in,

“the fundamental principle of prosecutorial independence”.

We certainly affirm that. The Minister went on to say that it is therefore appropriate for the code to be issued by the DPP and the director of the Serious Fraud Office,

“rather than it being put on a statutory footing in regulations laid by a Government minister”.

In my judgment, prosecutorial independence merely applies to the way in which a case can proceed, whether it should proceed and the like, but not necessarily the framework.

This is a novel framework being established for this purpose and, I reiterate, it will need to command public support. I do not refer to the individuals currently holding those offices or necessarily to those previously holding them, but neither of those departments has, shall we say, an unblemished reputation among the public over a series of quite different matters over the years. I have every respect for the current holders of those offices. As it happens, they both seem to be doing a very good job but the history is somewhat difficult in both cases. After a consultation process, the holders of those offices would have effectively the final word without any real intervention or guidance by Parliament. That is inappropriate in the particular circumstances of this case. What I propose would not interfere with their prosecutorial discretion, but it would allow the public to have confidence that the framework being established, within which prosecutorial independence would be exercised and maintained, is one that has Parliament’s support. It would not simply be left to Parliament to debate, without being able to influence it, following consultation carried out under the provisions of the Bill. For what it is worth, I have the support of the noble and absent Lord, Lord Phillips. The noble Lord, Lord McNally, looks to the heavens in gratitude. I shall direct the noble Lord, Lord Phillips, to Hansard tomorrow. There is a serious point here and I ask the Government to reflect upon it.