Prosecution agreements appear to be the tool of choice for federal prosecutors going after corporations, and are likely to remain the favorite tool for years to come, according to a new report from Gibson, Dunn & Crutcher.
The "2017 Mid-Year Update on Corporate Non-Prosecution Agreements (NPAs) and Deferred Prosecution Agreements (DPAs)," released last week, analyzed the use of these agreements, which is becoming increasingly global. As previously reported, Canada, France and Australia are considering such agreements; Scotland is considering enhancements; and the United States and United Kingdom already use them.
The midyear update said the U.S. Department of Justice has reached 10 corporate prosecution agreements so far in 2017. Of those, six were deferred prosecutions and four were nonprosecutions. The U.S. Securities and Exchange Commission, which occasionally employs them, has issued none in 2017.
Although Gibson Dunn didn't include them in its totals, so far this year the DOJ also entered into two letters of declination under the Foreign Corrupt Practices Act Pilot Program. Declination letters are a type of nonprosecution agreement and are sometimes called "NPA-lite."
The report said the DOJ has now issued four declination letters, each of which contains disgorgement terms, is counter-signed by the receiving company, and leaves open the possibility of prosecution if terms of the deal are not met.
Six agreements this year three DPAs and three NPAs involve some form of continued monitoring, according to the report. "At 60 percent, this monitoring rate exceeds the average since we first began tracking monitoring requirements in NPAs and DPAs. Since 2000, only approximately 41 percent of agreements have involved some form of monitoring, including self-monitoring and reporting," the report said.
But the report warned the sample size is too small to tell if this increase signaled a shift in policy toward more use of corporate monitors.
The resounding theme this year in all prosecution agreements is "cooperation," according to the report. It cites numerous examples in the United States and U.K. where cooperation is a deciding factor in accomplishing an NPA or DPA, "even in cases where wrongdoing is alleged to have been long-standing and broad in scope."
Because DPAs and NPAs often occur in spurts, especially near the end of the year, the report said it is too early to tell if the number of agreements is on pace with prior years and prior administrations.
The report said one of the most unusual deals this year was an NPA between John Huber, the U.S. attorney for Utah, and the Utah Transit Authority (UTA), a state government entity.