What is meant by serious or complex fraud?

The Guidelines classify fraud as any financial, fiscal or commercial misconduct or corruption which is contrary to the criminal law. Fraud may be serious or complex if at least two of the following factors are present:

• the amount obtained or intended to be obtained is alleged to exceed £500,000;
• there is a significant international dimension;
• the case requires specialised knowledge of financial, commercial, fiscal or regulatory matters such as the operation of markets, banking systems, trusts or tax regimes;
• the case involves allegations of fraudulent activity against numerous victims;
• the case involves an allegation of substantial and significant fraud on a public body;
• the case is likely to be of widespread public concern;
• the alleged misconduct endangered the economic well-being of the United Kingdom, for example by undermining confidence in financial markets.

How do the Guidelines change the plea negotiation process?

Informal plea negotiations already take place under the current system and it is not intended to introduce any new legislation to radically change this.  Rather, the Guidelines will formalise the process and also address issues of sentencing which has not happened previously.   The Guidelines encourage plea discussion at a much earlier stage (even before charge), and in a more formal, open and transparent manner, which should benefit both the prosecution and the defence. 

The initiative to start negotiations rests with the prosecutor, who will be able to initiate plea discussions with any person who is being prosecuted or investigated with a view to prosecution in connection with a serious or complex fraud, and who is legally represented. 

The prosecutor must ensure that:

• a full and accurate record of the plea discussions is prepared and retained;
• the defendant has sufficient information to enable him or her to play an informed part in the plea discussions;
• the victim is consulted before accepting a reduced basis of plea, wherever it is practicable to do so, so that the position can be explained;
• the final written plea agreement placed before the court fully and fairly reflects the matters agreed.

The plea agreement must also reflect the seriousness and extent of the offending, give the court adequate sentencing powers, and enable the court, the public and the victims to have confidence in the outcome.  Although the plea agreement may make an agreed recommendation as to sentence, the final sentencing decision will remain entirely a matter for the court.

What does this mean for those facing investigation and prosecution?

The Attorney General has made it clear that this is not about introducing a US-style plea bargaining system to the UK:

"This plea negotiation framework is specifically designed for our criminal system and is not about offering discounts, immunity or incentives to fraudsters. It doesn't require a defendant to assist the prosecution, and is careful to avoid a perception of plea 'bargaining' associated with the US. It highlights the importance of judicial discretion to agree, reject or alter the agreed plea, and to impose an appropriate sentence."

There will be no carrot and stick approach to guilty pleas with the Guidelines expressly forbidding prosecutors from exerting pressure on defendants by threatening to bring more serious charges.  And, in any event, UK sentences for fraud are not as severe as those in the US - therefore, the discounts for guilty pleas are not as substantial and do not act as a significant incentive for defendants to plead guilty.

However, although there are no substantial changes to the current plea negotiation system and no added sweeteners to entice defendants to plead guilty, there will be a defined, open and transparent process for those who wish to wipe the slate clean and admit their guilt at the earliest opportunity.  For corporates this could mean a significant saving in the cost of defending a full investigation and prosecution.

The prosecution will only enter into negotiations with those who are legally represented, so it is essential that anyone facing investigation or prosecution consult specialist lawyers at an early stage to consider their position in relation to possible plea negotiations. 

How can we help?

DLA Piper's Corporate Crime & Investigations team aims to help our clients avoid regulatory intervention wherever possible.  We can provide valuable advice and assistance on serious fraud and corruption matters - whether that be training your staff, running risk and compliance audits, managing negotiations and self-reporting, providing advice and assistance during raids, or defending you in court.

We have experienced criminal law practitioners who are used to liaising and negotiating with the prosecution authorities.  We can give our clients a unique insight into the way they investigate and prosecute their cases because we employ a number of lawyers who have worked in senior positions for the prosecuting authorities, including the former director of the SFO, Robert Wardle.  This experience will be invaluable for those clients who find themselves under investigation or facing prosecution and need to consider plea negotiation issues. 

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For further information, please contact:

DLA Piper Regulatory & Government Affairs Group

Find out more about DLA Piper's global Regulatory & Government Affairs group.