Scheme for dealing with complex corporate crime suggested

Mechanism allows authorities deal with suspected crimes by firms ‘too big to jail’

In 2012, banking group HSBC agreed a €1.6 billion fine as part of a deferred prosecution agreement in which it admitted massive laundering of the proceeds of Mexican drugs gangs through its US bank network.

In 2012, banking group HSBC agreed a €1.6 billion fine as part of a deferred prosecution agreement in which it admitted massive laundering of the proceeds of Mexican drugs gangs through its US bank network.

 

A scheme for dealing with complex corporate crime that has seen fines of hundreds of millions of euro in other jurisdictions should be introduced here, the Law Reform Commission has said.

Deferred prosecution agreements (DPAs) are a mechanism for dealing with suspected crimes by corporations that are considered “too big to jail”.

They involve companies or partnerships agreeing to a stated period of good behaviour after which a prosecution would be dropped. They also involve a fine and a public statement outlining the full extent of the wrongdoing admitted by the corporation or partnership.

Crimes such as conspiracy to defraud; bribery; corruption; tax evasion; market abuse and abuse of the competition laws should be covered by the new law, the commission recommends.

The Irish scheme should be overseen by the High Court and should not be available to senior executives.

In the United States such schemes have been criticised because senior executives have agreed that huge fines would be paid by their companies as long as they were granted personal immunity.

Huge fines

A DPA scheme introduced in the UK in 2013 has seen huge fines being agreed by Rolls Royce (€565 million) and Tesco (€145 million).

DPAs began as a way of dealing with young offenders in Chicago about a century ago, but have been used more recently in the US against a string of corporate offenders.

One of the reasons for agreeing DPAs is that the public interest would not be served by convicting the corporation.

Arthur Andersen, which was one of the world’s largest multinational companies and had more than 85,000 employees, collapsed in 2001 after being found guilty of a criminal offence.

In 2012, banking group HSBC agreed a €1.6 billion fine as part of a DPA in which it admitted massive laundering of the proceeds of Mexican drugs gangs through its US bank network. As part of the deal senior executives were given immunity.

The commission has recommended that Ireland introduce a scheme that is like the one in the UK rather than the one in the US.

In the UK there is oversight of the process by the courts, whereas in the US the scheme is run by prosecutors and the department of justice.

Corporate crime can be difficult to detect due to its covert nature and this can pose challenges to Irish law-enforcement and regulatory bodies using traditional models of investigation, the commission said in its report.

A DPA scheme provides a “third option” where a decision on whether to prosecute or not is “in the balance”.

An “all or nothing” regime can see serious suspected offences not being prosecuted.

Also, because they allow corporates to avoid conviction, DPAs may “encourage self-disclosure of misconduct and therefore enhance detection”.