New rules on fines risk making it easier to do dirty business

The Serious Fraud Office is to allow plea bargaining, which will raise cash but leave justice short-changed

deputy business editor

It's not easy growing old in prison. Limited wheelchair access, lack of exercise or healthy food, and poor healthcare make penal life for pensioners pretty miserable. Last week, the grey generation of jailbirds – the fastest growing sector of the prison population – was swelled by a batch of what could be a growing number of white-collar criminals. At least, if fraud prosecutors get their way.

Dennis Kerrison, 69, from Surrey, Paul Jennings, 57, from Cheshire and Miltiades Papachristos, 51, a Greek citizen, were all jailed for their role in the notorious Innospec bribery case. Their crimes were deeply unpleasant: they conspired to bribe state officials in Indonesia and Iraq to buy Innospec's chemicals. In the case of Indonesia, this included the lead additive in petrol banned in the UK and elsewhere for causing severe brain damage, particularly in children. Thanks to these men's complicity in the bribery, the Indonesian people were exposed to leaded petrol long after the government there had wanted to eliminate it.

But despite the seriousness of their actions, the lengths of the sentences – four years in the case of Kerrison – came as a shock to the City. Particularly in the case of Jennings, who was sentenced to two years despite having pleaded guilty in 2012.

For the Serious Fraud Office (SFO), the jail terms are a triumph. The City's police had already obtained successful prosecutions of the company, resulting in multi-million pound corporate fines. They could have stopped there. But, to the surprise of many in the financial world used to decades of relative impunity for individuals, the SFO prosecuted the bosses of the company too – right to the bitter end.

It was to the democratic good that the company's actions, and those of its directors, were dissected by barristers in public. White-collar crime, particularly bribery in emerging or war-torn economies, is far more serious than the publicity it usually receives reflects – and it is instructive how little coverage the Innospec scandal has received. As the judge said last week: "None of these defendants would consider themselves in the same category as common criminals who commit crimes of dishonesty or violence … but the real harm lies in the effect on public life, the effect on community and, in particular with this corruption, its effect on the environment."

But the scrutiny of business people's wrongdoing is, I fear, to be severely lessened under new powers for the SFO allowing companies to effectively plea bargain their crimes away in return for a hefty fine and no trial. These so-called deferred prosecution agreements are based on the US model which has garnered billions of dollars in fines, but potentially seen serious crimes committed by very well-paid executives swept into filing cabinets that will remain locked for ever more in prosecutors' offices.

For, while deferred prosecution deals make it easier to raise fines from companies, they foster a perception that corporate corruption is not as serious as, say, ATM fraud by gangs. Imagine the uproar in the popular press if a gang of east European credit-card cloners paid off the courts with a £50,000 fine and a promise not to do it again.

It's easy to see why the SFO might want to go down the plea-bargain route. This underfunded organisation has blundered repeatedly in attempts to take on the richest people, and organisations, in the land. But to let off the criminal companies with fines – which will inevitably be a fraction of their weekly profits – adds to the temptation of employees and directors to see potential settlements with the SFO as part of the everyday cost of doing dirty business.

In fairness, SFO director David Green is aware of such criticism. That is why he has been telling City law firms – who will be negotiating on behalf of the corporate criminals – that he will be seeking to step up prosecution of individuals as well as striking deferred prosecution deals.

But how easy will it be to encourage companies to cop a plea while also offering up their employees? Some lawyers argue: not very. For starters, the prosecutions of individuals will involve damaging revelations about company behaviour. That evidence could trigger civil claims from shareholders and others. And for seconds, the directors negotiating with the SFO on potential deferred prosecution agreements may themselves be involved in the criminal behaviour that could lead to the dock.

Add to that, the SFO's record on bungling cases – from the Guinness scandal to this year's collapse of the Robert Tchenguiz investigation – and you get some hefty incentives to companies to declare: "See you in court."

Hamish McRae is away

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksA celebration of British elections
Arts and Entertainment
Billie Piper as Brona in Penny Dreadful
tvReview: It’s business as usual in Victorian London. Let’s hope that changes as we get further into the new series spoiler alert
Life and Style
A nurse tends to a recovering patient on a general ward at The Queen Elizabeth Hospital in Birmingham
health
News
Fans take a selfie with Ed Miliband in Kempston, near Bedford, on Tuesday
election 2015
Arts and Entertainment
No Offence
tvReview: No Offence has characters who are larger than life and yet somehow completely true to life at the same time spoiler alert
News
Chuck Norris pictured in 1996
people
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Guru Careers: Project Manager / Business Analyst

£40-50k + Benefits.: Guru Careers: A Project Manager / Business Analyst is nee...

SThree: Trainee Recruitment Consultant - Swiss Banking and Finance

£20000 - £25000 per annum + Uncapped commission: SThree: Can you speak German,...

Ashdown Group: Marketing Executive - 6 month FTC - Central London

£25000 - £30000 per annum + benefits: Ashdown Group: An exciting opportunity f...

Ashdown Group: Junior Project Manager (website, web application) - Agile

£215 per day: Ashdown Group: Junior Project Manager (website, web application ...

Day In a Page

General Election 2015: Ed Miliband's unlikely journey from hapless geek to heart-throb

Miliband's unlikely journey from hapless geek to heart-throb

He was meant to be Labour's biggest handicap - but has become almost an asset
General Election 2015: A guide to the smaller parties, from the the National Health Action Party to the Church of the Militant Elvis Party

On the margins

From Militant Elvis to Women's Equality: a guide to the underdogs standing in the election
Amr Darrag: Ex-Muslim Brotherhood minister in exile still believes Egypt's military regime can be replaced with 'moderate' Islamic rule

'This is the battle of young Egypt for the future of our country'

Ex-Muslim Brotherhood minister Amr Darrag still believes the opposition can rid Egypt of its military regime and replace it with 'moderate' Islamic rule, he tells Robert Fisk
Why patients must rely less on doctors: Improving our own health is the 'blockbuster drug of the century'

Why patients must rely less on doctors

Improving our own health is the 'blockbuster drug of the century'
Sarah Lucas is the perfect artist to represent Britain at the Venice Biennale

Flesh in Venice

Sarah Lucas has filled the British pavilion at the Venice Biennale with slinky cats and casts of her female friends' private parts. It makes you proud to be a woman, says Karen Wright
11 best anti-ageing day creams

11 best anti-ageing day creams

Slow down the ageing process with one of these high-performance, hardworking anti-agers
Juventus 2 Real Madrid 1: Five things we learnt, including Iker Casillas is past it and Carlos Tevez remains effective

Juventus vs Real Madrid

Five things we learnt from the Italian's Champions League first leg win over the Spanish giants
Ashes 2015: Test series looks a lost cause for England... whoever takes over as ECB director of cricket

Ashes series looks a lost cause for England...

Whoever takes over as ECB director of cricket, says Stephen Brenkley
Fishing for votes with Nigel Farage: The Ukip leader shows how he can work an audience as he casts his line to the disaffected of Grimsby

Fishing is on Nigel Farage's mind

Ukip leader casts a line to the disaffected
Who is bombing whom in the Middle East? It's amazing they don't all hit each other

Who is bombing whom in the Middle East?

Robert Fisk untangles the countries and factions
China's influence on fashion: At the top of the game both creatively and commercially

China's influence on fashion

At the top of the game both creatively and commercially
Lord O’Donnell: Former cabinet secretary on the election and life away from the levers of power

The man known as GOD has a reputation for getting the job done

Lord O'Donnell's three principles of rule
Rainbow shades: It's all bright on the night

Rainbow shades

It's all bright on the night
'It was first time I had ever tasted chocolate. I kept a piece, and when Amsterdam was liberated, I gave it to the first Allied soldier I saw'

Bread from heaven

Dutch survivors thank RAF for World War II drop that saved millions
Britain will be 'run for the wealthy and powerful' if Tories retain power - Labour

How 'the Axe' helped Labour

UK will be 'run for the wealthy and powerful' if Tories retain power