The management of long and complex fraud cases has for some years been a concern in our legal system. The Lord Chief Justice’s Protocol already requires the prosecution and defence to resolve issues and agree evidence where possible prior to the trial. Formal Criminal Procedure Rules encourage this and build opportunities for discussions into the court timetable. However, there is at present no formal procedure for plea negotiation. Traditionally the criminal justice system in England and Wales has shied away from sanctioning any sort of formal plea “bargaining”. We have been rightly concerned to ensure that judges retain their independence from either party, and that no undue pressure is brought upon a defendant to plead guilty.

However, recent changes have encouraged a movement towards more open discussion and negotiation between the parties to a criminal fraud investigation and prosecution.

Thus, firstly, the Crown Prosecution Service, Revenue and Customs Prosecutions Office and other prosecuting authorities now have responsibility for charging offences. They apply two tests, the evidential and the public interest tests. If a case satisfies both tests, a prosecution will follow. The Code for Crown Prosecutors specifically prohibits prosecutors from charging more offences than are necessary just to encourage a defendant to plead guilty to a few. In the same way, they are prohibited from laying a more serious charge just to encourage a defendant to plead guilty to a less serious one. This has placed greater responsibility on the prosecuting authorities with regard to which offences to charge and which cases to divert away from the court system.

A second evolutionary change has been the introduction of conditional cautions under sections 22-27 of the Criminal Justice Act 2003. This permits the prosecutor to advise on conditions that would be suitable to satisfy the public interest in the fair and efficient administration of justice. Once again, this enables the prosecutor to divert the suspect away from the court system, and to put in place conditions that are designed to ensure that the suspect does not re-offend. The Criminal Justice Act 2003, as amended by the Police and Justice Act 2006, the Code of Practice for Conditional Cautions and the Code for Crown Prosecutors provide for appropriate principles.

A further change occurred when the Serious Organised Crime and Police Act 2005 came into force. By sections 71-73, the Prosecution is empowered to enter written agreements with suspects and defendants for the provision of evidence and other forms of assistance to the prosecution and law enforcement agencies. Courts are entitled to give additional credit for such assistance, based on the formal agreement, when sentencing.

A prosecutor still has no role in suggesting or recommending any particular sentence, but nevertheless has increasing duties to perform at the sentencing stage. These include drawing the judge's attention to: any victim personal statement, any statutory provisions relevant to the offender or the offences and any aggravating or mitigating factors. (R. v Cain (Alan John) [2006] EWCA Crimp 3233, [2007] 2 Cr. App. R. (S.) 25, The Times, December 26, 2006), The prosecutor may also offer assistance to the court by making submissions, in the light of all these factors, as to the appropriate sentencing range. (Addendum to the Attorney General’s Guidelines on the Acceptance of Pleas and the Prosecutor’s Role in the Sentencing Exercise 2005, New Paragraph C6.)

Until the recent case of R v Goodyear (Karl) [2005] EWCA Crim 888, there was no formal process by which a defendant could seek a formal indication of sentence in open court. Formerly, indications as to sentence had been strictly limited by the principles laid down in R v Turner (FR) [1970] 2 QB 321. The Court of Appeal (Criminal Division)’s ‘Goodyear’ principles represent the introduction of a formalised procedure of advance sentence indication. The defence may seek an indication of sentence once a basis of plea has been agreed. The Attorney General’s revised Guidelines on the topic confirm that prosecutors should not agree a basis of plea unless and until the necessary consultation has first taken place with the victim and/or with the victim’s family. The Deputy Chief Justice was emphatic in Goodyear that a judge should not be invited to give an indication in what would be, or what would appear to be a “plea bargain”. “He should not be asked or become involved in discussions linking the acceptability to the prosecution of a plea or basis of plea, and the sentence which may be imposed. He is not conducting or involving himself in any plea bargaining”. Nevertheless, it is suggested that Goodyear indications are a significant step towards what is proposed in the new draft Framework for Plea Negotiation.

Prosecutors have always had the power to accept pleas to a lesser offence or offences charged if they consider that it is in the public interest to do so. However, they have no power to come to even a provisional arrangement with the defendant regarding confiscation, compensation, disqualification or any other aspect of sentence save under the specific provisions of the Serious Organised Crime and Police Act 2005 regarding offenders who agree to assist investigations and prosecutions.

On 15th March 2007 the Government approved the recommendations of the Fraud Review, including its recommendation that there should be a formal plea bargaining system for cases dealt with by the SFO, the Fraud Prosecution Service in the CPS, and serious and complex fraud cases brought by other prosecuting authorities. The Fraud Review had concluded that there were clear advantages in offering the parties in serious fraud cases the opportunity to consider reaching a court-sanctioned agreement at the earliest possible stage. The advantages were identified as relating to the large financial savings to the public purse that can be made by early disposal of even a few such cases, and the easing of the strain caused by delay on defendants, victims and witnesses. It was also suggested that, in some cases, investigators and prosecutors would, as a result, be able to pursue others involved in the criminality on a more focused and efficient basis. To this may be added, in the light of current concerns, the potential advantages to be achieved by way of consistency and predictability in sentencing, which will facilitate the allocation of appropriate resources for custodial sentences.

A working group chaired by me, and including representatives from a range of stakeholders, produced a model for consideration and consultation. The working group was set up under the aegis of the Attorney General’s office and had the support of Gaon Hart of the CPS as its project manager.

The working group believes that this model could be introduced without primary legislation and on the basis either of a practice direction or on the basis of amendments to the Criminal Procedure Rules with accompanying Attorney General’s guidelines. The changes which it involves are modest and evolutionary and are designed principally to encourage the prosecution and the defence to talk to each other at the earliest possible stage, and to facilitate the attainment of a transparent plea agreement for presentation to and consideration by the court, whose powers of disposal remain entirely unaffected.

Among the key provisions of the framework are: the proposal that the ground rules for discussion between prosecution and defence should be reduced to writing in advance, that the agreement should be one which will enable the public and any victims to have confidence in the outcome, that the plea agreement may include reference to sentence and that, as already emphasised, the courts’ independence is expressly preserved. The sentence recommendations could cover all relevant issues including custodial or community penalties, fines, compensation, costs, confiscation and disqualification.

In his article in the last issue of “The Barrister”, Mr Monty Raphael, joint head of the Fraud and Regulatory department at the solicitors’ firm Peters and Peters, comments:

“Being able to engage with the prosecution in white collar cases is a laudable reform, but only if it is not implemented as a cheap and inadequate bureaucratic convenience which provides few, if any, safeguards for all, save the unrestrained rich and well funded corporate client.”

Among the safeguards inherent in the model, however, are that the whole of our existing framework of procedural and sentencing law and guidance (including the law as to disclosure) will continue to apply. In those cases in which plea negotiation takes place before charge, legal aid will be available under powers taken in the Criminal Justice and Immigration Act 2008. The conduct of the prosecution in such cases will be strictly regulated in Attorney General’s guidelines.

In the case of McKinnon v. Government of the United States 2008 UKHL 59, the House of Lords was faced with an argument that it was an abuse of process, and an unjustified interference with human rights, to allow an accused to be extradited in circumstances where he would be placed under what was alleged to be unconscionable pressure in the form of a suggested “plea bargain”. In the leading speech on behalf of the Judicial Committee, Lord Brown of Eaton-under-Heywood made the following observations, with which his colleagues agreed:-

“It is as well to recognise that the difference between the American system and our own is not perhaps so stark as the appellant’s argument suggests. In this country too there is a clearly recognised discount for a plea of guilty: a basic discount of one-third for saving the cost of the trial, more if a guilty plea introduces other mitigating factors, and more still (usually one-half to two-thirds but exceptionally three-quarters or even beyond that) in the particular circumstances provided for by sections 71 – 75 of the Serious Organised Crime and Police Act 2005 – see R v P; R v Blackburn [2007] EWCA Crim 2290. No less importantly, it is accepted practice in this country for the parties to hold off-the-record discussions whereby the prosecutor will accept pleas of guilty to lesser charges (or on a lesser factual basis) in return for a defendant’s timely guilty plea. Indeed the entire premise of the principle established in Goodyear [2005] 1 WLR 2532 is that the parties will have reached an agreed basis of plea in private before the judge is approached. What, it must be appreciated, Goodyear forbids are judicial, not prosecutorial, indications of sentence. Indeed, Goodyear goes further than would be permitted in the United States by allowing the judge in certain circumstances to indicate what sentence he would pass.

Your Lordships will also appreciate that in April 2008 the Attorney General issued a consultation paper regarding the possible introduction here of a formal court-sanctioned plea negotiation framework for fraud cases: “The Introduction of a Plea Negotiation Framework for Fraud Cases in England and Wales: a consultation”. The framework would enable the prosecutor to agree (without binding the court) that a specific sentence or sentencing range is appropriate. The paper summarises the current system, recognising the legitimacy of the informal plea negotiations that currently take place, unregulated though these are. In the Federal Courts of the United States, by contrast, the practice of plea bargaining is regulated and the courts have a duty to discuss the consequences of a guilty plea with the accused in open court and to ensure that it has been entered voluntarily and with a full understanding of those consequences. The contents of any plea agreement must be disclosed in open court and the trial judge has the power to accept or reject it.”

The appeal was therefore dismissed.

We hope that our proposals, if implemented, will offer a useful option for the just and convenient disposal of some of the longer fraud cases, thereby enabling more resources to be concentrated on those in which a plea of not guilty is properly maintained.