Deferred prosecution agreements must not contribute to trend of powerful elites escaping liability

The Center to Combat Corruption and Cronyism (C4 Center) is outraged at recent comments from Malaysian Anti-Corruption Commission chief commissioner Azam Baki on the proposed ‘deferred prosecution agreement’ (DPA) mechanism intended to resolve high-value corruption cases without trials in court.

According to Azam, the mechanism shall allow corporate entities and individuals connected to corruption cases involving amounts of RM100m and above to settle their cases out of court.

We hold that this is a ridiculous move that will only serve to reduce public trust in the criminal justice system and ensure that those who cause the most detriment to the nation get to escape accountability.

This represents an extremely dangerous misunderstanding of a deferred prosecution agreement, which should be limited to legal persons and not natural persons. The deferred prosecution agreement mechanism is implemented in many nations as a form of non-trial resolution, where criminal prosecutions are concluded without a full trial in court.

The exact procedure differs across jurisdictions, but generally it involves a process of negotiation between the prosecution and the investigated party which leads to a mutually acceptable agreement affirmed by a court. Common contractual terms include monetary penalties, admissions of guilt, and internal governance reforms for corporate entities.

If the Malaysian government intends to introduce a deferred prosecution agreement scheme, the fundamental consideration should be its purpose: why should an entity involved in criminal activity be afforded the opportunity for non-trial resolution?

For corporate entities, the measure is intended to mitigate potential consequences associated with a criminal conviction for blameless employees, customers, suppliers and investors, for example, the potential for job losses and wider negative economic implications.

Deferred prosecution agreements can also circumvent the slow, complex and resource-intensive nature of prosecuting corporate criminal offences.

However, this must be balanced against the obvious fact that such agreements can enable parties to escape accountability for their actions, thereby weakening the deterrent effect of criminal penalties and undermining public confidence in the criminal justice system.

For instance, the deferred prosecution agreement scheme in the UK explicitly states that individuals are excluded – with the solicitor general noting that “individuals should not feel that they have any way out of their liabilities, but this relates purely to organisations… That does not let individuals off the hook, but it means that the business and jobs can continue and that these business entities have certainty, while ensuring that they are on tough conditions.”

It is for this reason that we strongly oppose any decision to extend the applicability of deferred prosecution agreements to individuals involved in corruption offences.

According to Azam, the rationale for this decision is to prevent major cases from dragging on for years, causing prolonged losses to the government.

It is important to emphasise that cases of this magnitude will primarily involve misappropriation of public funds by political leaders and bureaucrats who are in positions of power and authority. We ask, is that sufficient justification to enable such powerful individuals to simply pay restitution (when they have already benefited unjustly from pilfering public coffers) and escape criminal sanctions?

This mechanism would effectively encourage leaders to commit massive amounts of corruption to qualify for a deferred prosecution agreement: why misappropriate RM50m million and face criminal charges when one could take double that amount and settle the case out of court? In a worst-case scenario, they would simply be required to return the money that was already stolen.

How is it logical to remove true accountability for the most serious offenders? What is the deterrent for grand corruption once this proposed scheme is in place?

This is in furtherance of a growing trend of utilising civil forfeiture through the Anti-Money Laundering, Anti-Terrorism Financing, and Proceeds of Unlawful Activities Act 2001 to recover funds from corrupt practices without taking criminal action for the predicate offence.

One such example was a recent case settled with RM600m in tax penalties and a RM300m million compound, without the company being named and any admission of guilt.

This indirectly creates an environment where the rich can effectively ‘settle’ corruption cases by paying a financial sum through seizure, and their identities are further protected.

This trend of settling corruption cases through asset seizure, coupled with the plans to introduce a perverse deferred prosecution agreement regime that allows individuals to settle corruption cases based on thresholds, is collectively alarming and raises serious questions about the competence of the graft busters and the lawmakers under the ‘Madani’ (trustworthy) government.

Such selective logic and regressive policies will directly lead to a guaranteed drop in the Corruption Perceptions Index and affect investor and voter confidence.

We hold that expanding the scope of a deferred prosecution agreement mechanism to include individuals involved in corruption offences would be a massive step backwards in upholding the rule of law and reinforcing public trust in the justice system.

As it stands, there is already a general perception of a two-tiered legal system which protects the rich and powerful, and this move would only make this worse.

It is clear that deferred prosecution agreements can be useful in tackling corporate crimes, but the government must not use this opportunity to also dilute accountability for the ruling class.

Therefore, C4 Center urges for the following:

• The government must publicly commit to restricting the scope of deferred prosecution agreements to only include corporate entities.
• The Madani government must ensure meaningful engagement with civil society organisations and relevant stakeholders prior to any drafting of laws related to deferred prosecution agreements.
• The Madani government must ensure that non-conviction-based asset forfeiture is not used solely to settle cases and recoup financial losses, while avoiding efforts to bring those involved in corrupt activity to justice.

– C4 Center

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