DEFERRED PROSECUTION AGREEMENTS AS AN ALTERNATIVE TO THE PROSECUTION OF CORPORATE ORGANIZATIONS IN KENYA: FRESH JURISPRUDENCE

There is relief for corporates facing criminal charges. Successful investigation, prosecution and punishment of corporate offenders has, over time, proven rather difficult as traditional criminal process can generally be complicated, slow and costly. In an attempt to provide a more efficient and effective tool, the Office of the Director of Public Prosecution (the “ODPP”) has, pursuant to Article 157 and 159 of the Constitution of Kenya, 2010 (the “Constitution”), the National Prosecution Policy 2015 and the Diversion Policy, 2019, introduced ‘Differed Prosecution’ as an alternative to Prosecution in Kenya.

As a result, corporations can enter into a Deferred Prosecution Agreement (the “DPA”) with the ODPP to defer the prosecution of the corporation for a set period on the condition that the corporation meets and continues to meet specific conditions under the DPA.

A DPA is only applicable to a certain class of offences such as economic crimes. Moreover, for a DPA to be entered into, the ODPP must have satisfied itself that the case meets the evidential and public Interest Test for public prosecution. This is new and fresh jurisprudence.

The Features of the DPA

A DPA requires the impugned organization to agree to certain terms often including, but not limited to, co-operation with investigations, admission of certain facts, imposition of penalties, fines, restitutions and (or) other remedial actions.

It is taken as an acknowledgement that if the suspect entity commits similar offences during the period of the DPA or breaches its terms, the ODPP can prosecute the entity for the crimes committed including the crimes subject to the DPA. A slap on the wrist.

The Procedure

It is intended that a DPA is entered into as a result of voluntary co-operation between the suspect organization and the ODPP. Once the ODPP certifies that the case meets the evidentiary and public interest test for prosecution, either party may issue a notice to enter a DPA. Subsequently, parties negotiate the terms of the DPA and the ODPP monitors the compliance with the terms of the DPA or appoints a regulator or any other necessary third party.

The benefits of a DPA

A DPA would have several benefits to the Public. These include the enhancing of good governance through compliance, saving the taxpayers money that would have been utilised in the trial and post-conviction process as well as quick disposal of cases.

An entity that has negotiated a DPA avoids a potentially tedious and costly spotlight of ongoing litigation and damage to its brand. The company also protects its shareholders against losses associated with any negative publicity.

The implications of negotiating a DPA

The benefits notwithstanding, it is critical that a company assess the likely risks before opting for a DPA. Generally, the terms of a DPA can have material impact on the criminal and civil liabilities of individual directors or officers of the company.

Furthermore, a company will have to make difficult decisions relating to the nature of involvement of its directors or officers in the investigations including whether the company intends to indemnify them of any attendant consequences.

A company would also risk attracting unwanted attention of a regulator or any other third party appointed by the ODPP to monitor compliance with the DPA.

It is therefore imperative that a company seriously considers the risks before signing a DPA so as to properly weigh the associated risks vis a vis the benefits.

A DPA is a serious diversion from the traditional criminal justice system as we know it. The following are some of the issues that will be of great concern upon the operation of DPAs in Kenya:

• Enforcement of the DPA: It is not clear who decides whether there has been a breach of a DPA or not. Seemingly, parties may end up in court for a decision on whether there has been a breach or not hence leading to yet another litigious process.
• Judicial oversight: This is at the heart of the concerns relating to the process of negotiating and the eventual entry into a DPA. In order to provide independent scrutiny of the process and instil certainty and public confidence, the ODPP should be clearer on the level of the courts involvement, if any.
• Subsequent prosecution: The language used by the ODPP is interesting and raises a number of questions on whether the ODPP can commence fresh proceedings on account of the offences which are the subject of the DPA. From the outset, it would seem a DPA simply defers prosecution for a set period. Owing to the extent of disclosure done under the DPA, the ODPP should provide clearer guidance on this concern.
• The effect of admissions under the DPA on subsequent criminal proceedings: Statement of facts under the DPA can easily be treated as formal admissions of those facts under Section 17 of the Evidence Act, Cap 80. This may be used as conclusive evidence of those facts in subsequent proceedings. This appears to be biased to the company that is party to the DPA.
• Encroaching on the judicial sentencing authority: It would seem that through DPAs, the ODPP exercises some core judicial functions such as adjudging guilt and imposing sentence. Implicitly, a DPA amounts to a guilty plea and a conviction. Traditionally, these are judicial functions.
• Issues of Transparency and Confidentiality: Owing to the nature of the crimes that are subject to DPAs, there seems to be a great public interest to publish details of any DPA entered into between the ODPP and any corporate entity. However, it might sometimes be in the interest of the corporate entity that these details remain confidential. Hence, there is a need for a more defined structure on what may or may not be published concerning the DPA.

Conclusion

The advent of DPAs in Kenya will be of momentous impact in the criminal justice process in the country. Financial institutions, corporations and other entities should expect changes in the legal landscape as far as prosecution of corporations is concerned.

The fundamental question now: Is this an insurable interest?