The possibility to enter into a non-prosecution agreement in case of internal investigation and self-reporting
Puccio Penalisti Associati, Italy
From the 1990s, and particularly after 2002 (following the default of the Arthur Andersen consulting firm), in the United States pre-trial diversion mechanisms (initially introduced in trials against minors) – for example, Non Prosecution Agreements (NPA) and Deferred Prosecution Agreements (DPA) – have gradually acquired a leading role in the criminal proceeding against corporations.
As the reader may know, such agreements give the possibility to corporations, should determined conditions occur, to avoid trial and potential reputational risks caused by a conviction, following the ‘too big to fail’ logic.
NPAs are formal agreements concluded between a corporation – held accountable for the crime – and the Public Prosecutor in the preliminary stage of the investigations. Unlike DPAs, which may be concluded in the later stages of the proceeding, an NPA is an out-of-court settlement (private agreements) concluded prior to the filing of the case against the corporation: intervening in a moment in which the trial has yet to be established, this agreement does not need to be approved by the court. To avoid being involved in the criminal trial, the company must, for an agreed period of time (probation), promptly collaborate with the Public Prosecutor and strictly comply with the requirements contained in the NPA. Usually, this means adopting or updating the compliance program, admit the facts (but not its liability; here we may see the difference between NPA and plea bargaining), compensating any damage caused by the alleged crime, paying any fine that may result and making the profit obtained from the crime available for seizure. At the end of such probation, the Public Prosecutor drops the case against the corporation.
Internal investigations and self-reporting play a central role in the significant collaboration required by the company in order to obtain the NPA. Indeed, the most effective way a corporation has to demonstrate its will to collaborate is to promptly report to the Public Prosecutor and hand over to him the outcomes resulting from the internal investigations carried out to identify the employee or the manager responsible for the crime.
In Italy, criminal corporate liability legislation is much more recent than the US one. Indeed, it has been introduced, just 20 years ago, by Legislative Decree no 231/2001.
Despite the aforesaid, the Legislative Decree is widely permeated by a reward-scheme logic, in order to promote the return of the company to legality before the end of the trial against it. It does not foresee the possibility to enter in NPAs with the Public Prosecutor as a consequence of a collaborative behaviour of the company.
Indeed, pursuant to articles 12 and 17 of the aforementioned Legislative Decree, post factum repentance conducts (eg, the adoption of a compliance program suitable for preventing crimes, the compensation of any damage caused by the crime and the making available for seizure of the profit obtained) will only grant the company the chance to obtain, in case of conviction, reduced fines or to avoid disqualifying sanctions.
Given this premise, the question that could be asked is the following: in the Italian criminal proceeding, could the company avoid the trial thanks to an informal negotiation with the Public Prosecutor? And if so, is it strategically convenient?
These are complex questions, that do not have definitive answers.
It all depends on the circumstances of the specific case that need to be carefully evaluated by the corporation’s management with the necessary support of a criminal lawyer. If the company decides to give the Public Prosecutor information about the identification of the employee/manager responsible for the crime, this choice will inevitably undermine the relations with the latter and could negatively affect an eventual defence in court in case of the involvement of the company itself.
The following considerations therefore are to be taken as a starting point for reflection and arises from two key points.
First, pursuant to Article 112 of the Italian Constitution, in Italy the decision whether to prosecute or not is not a Public Prosecutor’s choice, but it is mandatory if there are elements that support the validity of the notitia criminis.
Second, Article 58 of the Legislative Decree no 231/2001 gives directly to the Public Prosecutor the power to dismiss the trial, without providing for the right of the victim to oppose nor a supervision of the judge on the Public Prosecutor’s decision. The decree of dismissal of the Public Prosecutor is only under the control of the General Prosecutor who may perform the necessary deepening understanding and eventually decide for the indictment of the corporation. In practice, however, the General Prosecutor almost never exercises such power.
The first point when the company may evaluate which strategy to adopt is when it discovers the commission of a crime relevant pursuant to Legislative Decree no 231/2001 by one of its employees, but there is no evidence of investigations (which may not even have begun).
In light of the aforementioned Public Prosecutor’s duty to prosecute, it is generally inadvisable for the company to self-report in this case. Indeed, it could find itself under investigation because of its self-disclosure.
A different assessment may be considered in some specific cases, such as those related to bribery.
Indeed, pursuant to Article 323ter of the Italian Criminal Code, a person who commits a crime of bribery is not punishable if, before becoming aware that an investigation is being carried out against him or her, voluntarily reports it to the Public Prosecutor, within a certain period of time, and gather evidence useful for investigations. In this case, the person will not be held liable for the crime if he or she returns the sum obtained thanks to its commission.
In these situations, especially in cases of major corruptions, the employee may not have the financial means to return the sum and, in turn, the company would have a real interest in providing restitution.
In such cases, the company and the employee may consider making a joint self-reporting to the Public Prosecutor: the employee would not be punishable under Article 323ter of the Italian Criminal Code and the company may seek to take advantage in terms of avoiding investigations from having promptly reported the matter, returned the benefit received, and persuaded its employee to cooperate with the Public Prosecutor.
Of course, this is an extremely delicate assessment that requires the involvement of a criminal lawyer.
Subsequently, it could be that the company becomes aware of preliminary investigations against one of its employees. This may happen, for example, if the individual receives the notice of investigation.
Also in this case, the option of approaching the Public Prosecutor to better understand his beliefs concerning the role of the company and to offer him its collaboration should be attentively evaluated to balance costs and benefits. Despite the duty to prosecute, in general, it is not uncommon for Public Prosecutors to file the proceeding only against the individual, even if from the crime, the criminal corporate liability could arise.
In the light of this, if the corporation takes action in this phase, it could result in the negative side effect of reminding the Public Prosecutor to also investigate the company and to cause him to suspect that the company fears an eventual investigation against it. In such cases, it may be appropriate, for the corporation to wait for the Public Prosecutor to make the first move. Meanwhile, the company could pre-emptively carry out internal investigations to protect itself (always with the advice of a criminal lawyer, so that the investigations are covered by the attorney-client privilege and cannot be misinterpreted by the Public Prosecutor as tentative of evidence suppression) and comply with the requirements as provided by Legislative Decree no 231/2001.
The case in which the corporation is sure to be investigated in a criminal proceeding is very different. Here, the strategy of approaching the Public Prosecutor to ascertain if there is opportunity for an informal negotiation may have positive effect. Indeed, as anticipated, the dismissing mechanism is up to Public Prosecutor’s discretion.
Clearly the outcomes of the negotiations depend also on the stage at which this effort is carried out. For example, if the company's awareness of being under investigation comes at an early stage of the investigation, a proposal to cooperate and disclose the results of the internal investigation in exchange for dismissing the case against the company may be welcomed by the Public Prosecutor.
Obviously, if no evidence was found to establish the company's liability, the corporation would have a better chance of avoiding the indictment. In such cases, the Public Prosecutor will be more inclined to dismiss the case if the company proves that it has adequate internal control systems in place and has eliminated the harmful consequences of the offence.
However, it may also happen that the company only learns about the proceedings at the end of the preliminary investigation. At this stage, the Public Prosecutor has likely collected enough elements against both the corporation and the employee and he may be not so interested in cooperating with the company.
At this late stage, it is unlikely that the Public Prosecutor will consider dismissing the case against the company.
To this end, the only way to change the Public Prosecutor's mind might be to prove that the company had an effective compliance program in place at the time of the offence and that the employee committed the crime by completely circumventing it.
In addition, it is necessary for the company to have compensated damages to the victims of the crime, to have made the profit of the crime available for seizure, and to have taken measures to mitigate the risk of future commission of the crime.
Given that the possibility for the company to enter into NPAs with the Public Prosecutor is not regulated in Italy, it is important to point out that, in the last few years the Public Prosecutor’s Office of Milan – which is likely more engaged in the prosecution of criminal corporate liability in Italy – officially took a stand in favour of the introduction, de iure condendo, of pre-trial diversion mechanisms for corporations.
In the document ‘Social responsibility report of the Prosecutor’s Office of Milan for years 2019-2020’, it can be read that:
‘20 years from the entry into force of the Legislative Decree no. 231/2001 the time has come to accept the suggestion given by doctrine and operators in the field, who insist for the introduction of a real and effective exemption of the criminal liability for all those firms that, in addition to the compliance to all requirements under art. 17 Legislative Decree no. 231/2001, pre-emptively act and concretely collaborate with the judicial authority, promptly providing information and reports useful to ascertain the facts.’
As a conclusion, waiting for the introduction of pre-trial diversion mechanisms in the criminal proceedings against corporations, it can be assumed that, in the practice of the Public Prosecutor’s Offices, there is today an opening towards informal negotiation.
It is clear that, given the impossibility of concluding formal agreements with the Public Prosecutor, the decision on whether to resort to the path of diversion or not must be carefully evaluated by the company, with the necessary advice of a criminal lawyer.
 Available at www.procura.milano.giustizia.it/files/BRS_Procura_19-20.pdf.