DPAs in a nutshell: focusing on the non-recognition of liability

Originating from America, DPAs essentially allow companies to put an end to criminal judicial procedures, without formal recognition of guilt, based on payments of fines and in exchange of commitments for better governance.[1] This absence of a formal recognition of guilt is, of course, the main difference between the DPA and the plea agreement. More precisely, DPAs are administrative arrangements between, on the one hand, a justice department and, on the other hand, a business accused of a crime. The terms of these agreements may provide that corporate controllers will ensure the satisfactory implementation of good governance reforms, such as a code of ethics and anti-corruption compliance measures. DPAs sometimes contain factual admissions on the part of the business surrounding the events of the criminal accusation. In principle, if the business commits another related offence during the term of a DPA, the prosecutors may revive the criminal file and take advantage of the factual admissions that will have been agreed upon during the negotiation of the DPA. In reality, however, at least in the United States and the UK, the lawsuits are abandoned, even in cases where repeated breaches are found.

Although some DPAs include factual admissions of ‘wrongdoing,’ their main effect is therefore to avoid a finding of guilt and the consequences that ensue for businesses. In some cases, the loss of public contracts that this recognition of guilt would entail would be so important that it would lead the business entity to bankruptcy. The DPA is therefore different from the guilty plea on this crucial point. The other characteristics of the DPAs mentioned above are not exclusive to these instruments: one could very well monitor the rehabilitation of the particular business culture, charge penalties, or compensate victims without introducing DPAs in the criminal system. The main debate surrounding DPAs is therefore to determine whether it is appropriate to allow a business entity to escape recognition of criminal culpability through the payment of sums of money

and good governance commitments. That is why they are controversial among legal experts as to their efficiency and fairness.

For instance, law Professor Peter Reilly writes that DPAs turn the criminal justice system into a ‘mockery’ because they allow for abuse of discretion while involving inequities between litigants.[2] Among other critical analyses, law Professors Brandon Garrett and Rena Steinzor respectively demonstrate that DPAs are controversial across the partisan lines, since they run counter to ideals of law, order, and social cohesion. Nevertheless, despite criticism from many law professors, DPAs have spread to the United Kingdom, Brazil, Canada, France, Singapore, Japan, and other jurisdictions in various forms.

DPAs therefore evolved in various jurisdictions. We are a long way from the first corporate DPA in the United States, which occurred in 1992. It was only in 2002, after the Enron scandal and the bankruptcy of their accounting firm Arthur Andersen, that the instrument really gained momentum. The Bush administration and Deputy Attorney General Larry Thompson then revised the administrative guidelines for corporate indictments. The ‘Thompson Memo’ allowed for DPAs to avoid or suspend the charge of large companies. As the subsequent ‘Filip Memo’ explicitly points out, DPAs and NPAs should now be considered in some criminal corporate cases if they can protect innocent third parties. Between the Thompson and Filip Memos, and around 2006-2007, the use of DPAs in the US was consolidated, as we describe below. We also focus our review on

corruption of foreign public officials and provide more details about the definition, origins, and prevalence of DPAs below.

  • [1] Note that American DPAs have some technical variations. When an agreement is reached before a company is indicted, it is referred to as a non-pursuit agreement (NPA). NPAs are not allowed in the UK or in Canada. There are many nuances between the DPAs of different countries. The notion of negotiation to avoid a recognition of guilt, however, remains intact and that is what we focus on in this chapter. 2 We refer to businesses, business entities, and ‘corporate’ as generic terms—to include corporations, holdings, and other forms of entities—and to simplify the text, although corporations almost exclusively sign DPAs given their legal personality. 3 Brandon L Garrett, Too Big to Jail: How Prosecutors Compromise with Corporations (Harvard University Press 2014); Greg Farrell, ‘Senate Democrats Seek Answers from DOJ on Latest HSBC Agreement’ Bloomberg (2 July 2018) accessed 1 June 2020. 4 Brandon L Garrett, ‘Structural Reform Prosecution’ (2007) 93 Virginia Law Review 853; Garrett (n 3).
  • [2] Peter Reilly, ‘Justice Deterred Is Justice Denied: We Must End Our Failed Experiment in Deferring Corporate Criminal Prosecutions’ (2015) Brigham Young University Law Review 307; Peter Reilly, ‘Corporate Deferred Prosecution as Discretionary Injustice’ (2017) Utah Law Review 46; Peter Reilly, ‘Sweetheart Deals, Deferred Prosecution, and Making a Mockery of the Criminal Justice System: US Corporate DPAs Rejected on Many Fronts’ (2018) 50 Arizona State Law Journal 1113. 2 Garrett (n 3); Rena Steinzor, Why Not Jail?: Industrial Catastrophes, Corporate Malfeasance, and Government Inaction (CUP 2015). 3 Michel A Perez and Alizée Dill, ‘The Rise of the American Deferred Prosecution Agreement (‘DPA’) and Its European Avatars’ (2016) 2 Revue Trimestrielle de Droit Financier 43; Michaël Fernandez-Berticr, Mona Giacometti, and Nathalie Van der Eecken, ‘La Transaction Pénale et La Reconnaissance Préalable de Culpabilité Comme Modes Alternatifs de Règlement Des Conflits Pénaux: L’heure Des Comptes a Sonné’ in Marie-Aude Beernaert, Henri-D Bosly, and Christian De Valkeneer (eds), La loi pot-pourri IL un an après (Larcier 2017)171. 4 Court E Golumbic and Albert D Lichy, ‘The “Too Big to Jail” Effect and the Impact on the Justice Department’s Corporate Charging Policy’ (2014) 65 Hastings Law Journal 1293. 5 Mark J Stein and Joshua A Levine, ‘The Filip Memorandum: Does It Go Far Enough?’ Law. Com (11 September 2008) accessed 1 June 2020. 6 Larry D Thompson, ‘Principles of Federal Prosecution of Business Organizations’ (20 January 2003). 7 Mark Filip, ‘Principles of Federal Prosecution of Business Organizations’ (28 August 2008) 18.
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