Good Law or Justice Denied?
In recent days, attention was drawn to the comments made by the Attorney General regarding matters of corruption. During a presentation, the Attorney General indicated the government’s intent to provide civil penalties for businesses that are caught engaging in corruption. Such penalties would be facilitated through a Deferred Prosecution Agreement (DPA) in the Prevention of Corruption Act. DPAs are settlement agreements that allow companies to avoid prosecution and conviction and instead, pay a financial penalty. He used the example of Sandals, which agreed, in 2013, to pay a fine of $12M to the Turks & Caicos government as part of a corruption investigation without admitting liability.
Companies too big to fail
The Attorney General argued for such an approach as it may be counter-productive to insist on a criminal prosecution, which might have the effect of permanently crippling an entity, with the consequential loss of jobs and the negative impact on the economy. Furthermore, due to the unwillingness of individuals to give evidence due to fearing prosecution, DPAs may incentivise persons to come forward as they will not be criminalised.
These arguments are merited as DPAs can protect the financial well-being of senior and rank and file employees that were not involved in wrong-doing. This is the case, as the prosecution of a company can have a disproportionate effect on that company’s viability. This was evidenced with the Enron scandal where Enron’s auditing firm Arthur Henderson; worth 9 Billion USD, went bankrupt, costing 28, 000 jobs, over a crime which carried a maximum penalty of 500, 000 USD. Additionally, provisions such as immunity from prosecution can engender disclosures and confessions need to uncover corrupt dealings.
Corruption should be a criminal offence
Nevertheless, corrupt activities are often severe, persistent and deliberate, that come at high socio-economic cost. As such, it is difficult to resist the conclusion that DPAs allow companies and individuals to avoid the warranted penalties of criminal convictions through buying their way out of criminal prosecutions. Furthermore, financial penalties may not be punitive enough to yield sufficient accountability and deterrence. Therefore, replacing prosecutions with fines, may encourage individuals to consider the latter as a cost of doing business that can be compensated by the large financial gains from corruption.
Rigorous DPA provisions needed
Despite these concerns, it appears that government intends to move ahead with DPA legislative provisions. In doing so, through legal design, government must ensure that it retains sufficient monitoring and leverage over offending companies and individuals. These allow the government to ensure that companies fully cooperate and abide by DPA procedures and agreements, that judicial procedures for DPAs are sufficiently transparent, that the fines attached are significant, that companies’ internal governance improvements against repeated acts of wrong-doing are evident, and that corrupt personnel are held accountable. These assurances must be provided to avoid the notion that the penalties for corruption are a mere slap on the wrist.
As time permits, government must provide the public with sufficient information on what its DPA provisions will include. Most importantly, these provisions must be sufficiently robust as equal justice must be served to average citizens, established individuals and large companies alike.