This case is a departure from the recent practice of the SFO’s strategy of negotiating deferred prosecution agreements (“DPAs”) with companies avoiding any criminal convictions. Since the scheme was introduced in 2014, DPAs have been considered a welcome development for corporations in that they have enabled both sides to mitigate the risks and expense of lengthy trials whilst ensuring that companies make reparation for criminal behaviour.
Of course, in this case, the SFO had already secured a conviction against a former senior employee and the offences admitted to are of strict liability without the need to prove that the Company had acted dishonestly.
The approach taken in this case may represent a reassessment of the suitability of DPAs, particularly in cases where a ‘failure to prevent’ offence provides a clear route to conviction avoiding the problems associated with connecting criminal liability to a company’s ‘directing mind’. Government consultations are ongoing to consider increasing the number of these offences in relation to the failure to prevent economic crime.
Equally, guidance is clear that DPAs are only ever appropriate in instances where there is significant cooperation from the offending company. In several instances, (including agreements concluded with Airline Services Limited (2020) and Guralp Systems Ltd (2019) and Serco Geografix Ltd (2019)) the companies self-reported to the SFO. The circumstances of the investigation into Petrofac were likely not in the interests of justice for a DPA to be pursued.
In SFO v Standard Bank, it was stated that financial penalties featured as a term of DPAs must demonstrate broad comparability with a fine following conviction, and indeed in many respects it is unlikely that Petrofac will face more punitive consequences as a result of its conviction as opposed to reaching a DPA. The early guilty plea entered by the Company means it is likely any sentence will be subject to a discount of a third. After Petrofac’s announcement their shares jumped more than 22% and this plea agreement represents the end of a long period of uncertainty for the company. Whilst the investigation was ongoing Petrofac would likely have been barred from obtaining government contracts and the resolution of the SFO’s investigation may now facilitate its ability to secure new contracts.
