Further guidance: the Court of Appeal's view on "plea bargains"
30 June 2010
In the case of R v Dougall  EWCA Crim 1048 (13 May 2010), the first case in which an executive of a company has been prosecuted for overseas corruption and where the Serious Fraud Office (SFO) entered into a plea bargain agreement with the defendant, the court expressed its dissatisfaction with the extent to which the SFO sought to interfere with the sentencing of the defendant.
The appellant, D, who worked for A Limited (AL) which manufactured and supplied orthopaedic devices to various countries including Greece, appealed against a sentence of 12 months' imprisonment following his plea of guilty to the offence of conspiracy to corrupt.
The healthcare market in Greece was highly competitive. From 1997, in order to sustain a market for AL's products in Greece, AL engaged in the practice of making payments of inducements or rewards to surgeons (who influenced hospitals and the like to buy the products) in the Greek orthopaedic market. These (corrupt) payments were common among market participants and were known as 'Professional Education' payments (Prof ED Payments). These products were sold through a distributor mechanism and 35% commission was paid to the intermediaries to enable them to make the Prof ED Payments.
When the SFO began to investigate the matter, D provided assistance to the police and the SFO in the investigation and signed a plea agreement (Plea Agreement) under the Serious Organised Crime and Police Act 2005 (SOCPA). Under the Plea Agreement, D agreed to provide all information to, and fully co-operate with the SFO and any other foreign judicial authority or law enforcement body, including the United States Department of Justice and the Securities and Exchange Commission. In return, the director of the SFO submitted to the court that D's sentence be suspended.
The following mitigating factors were cited:
- D was not responsible for the initiation of the Prof ED Payments, which pre-dated his involvement in AL. Moreover, he was never a statutory director and was only at the middle-management level, there were people more senior than him who were involved in the promotion of Prof ED Payments.
- D had tried to terminate the corrupt practices, however this was reversed by a senior executive.
- On several occasions D advocated the cessation of Prof ED Payments.
- The benefits of the corruption were entirely corporate, and there were no direct cash benefits to D himself.
- D was the only individual worldwide to have accepted personal criminal responsibility for the corrupt conduct of AL. He co-operated fully in the investigation process by entering into a plea agreement under the SOCPA which imposed onerous conditions on him.
- D's character, circumstances and loss of career were also considered.
The Court of Appeal approved the suspension of the sentence but did so based on the facts of the case rather than the Plea Agreement. The court expressed disapproval of the practice of sentence determination in plea agreements, highlighting the serious nature of corruption offences and the need to tackle them strictly. White-collar criminals are similar in the eyes of the law to common criminals and should be similarly punished. Plea agreements should not be a tool to defeat the essential penal nature of criminal justice.
The court encouraged the practice of co-operation in the investigation process, including by way of plea agreements, but expressed strong reservations about sentence determination in such agreements. The court, citing the first instance decision in R v Innospec, stressed that a plea agreement or bargain between the prosecution and the defence agreeing to a sentence is contrary to principle and the rule of law. Sentencing is at the sole discretion of the court, which will decide the fairness and appropriateness of the plea agreement. The agreed basis of the plea is always subject to the approval of the court. At maximum, the prosecutor (in this case the SFO) can put forward the potential mitigating (or aggravating) factors but should not, in effect, advocate the defendant's case by arguing a lower sentence, which should in the ordinary course, be down to the defendant to do.
The court noted that by advocating the suspension of the sentence, the Director of the SFO effectively restricted the sentence to a maximum of up to 12 months because a sentence can only be suspended if it is of 12 months or less. Again, citing R v Innospec, the court observed that a person co-operating with an investigation should not have any legitimate expectation of obtaining the most favourable sentence. The agreement can only provide substantial mitigation in determining the sentence, which must be set considering all the facts of the case.
Whereas R v Innospec dealt with criminal action against a corporation, this case dealt with individual criminal responsibility. The penalty for corporate criminal liability is usually a fine whilst individual liability may extend to imprisonment. However, the court's approach to plea agreements is the same in each case.
The SFO's written policy published in 2009 encouraging self-reporting and co-operation needs to be seen in light of the court's comments about plea agreements. The SFO cannot deliver an agreed sentence and there may therefore be uncertainty as to the likely sanctions imposed if the SFO decides to pursue criminal charges. This contrasts to the position in the US where, although the court retains final discretion on any sentence, there is an established practice of the courts approving plea agreements entered into between prosecutors and defendants.
At present, it seems as if a civil settlement remains open to the parties to agree, however the SFO will not commit to seeking only civil sanctions at the start of any co-operation process and will generally require a full understanding of the case before making a decision in this regard.
For more information please contact Jonathan Hitchin firstname.lastname@example.org, or tel +44 20 3088 4818, Arnondo Chakrabarti email@example.com, or tel +44 20 3088 4424 or Trevor Withane firstname.lastname@example.org, or tel +44 20 3088 2031.