The agreement is between the Serious Fraud Office (the “SFO”) and Standard Bank Plc (now known as ICBC Standard Bank Plc) (Standard Bank). Standard Bank was facing an indictment for failure to prevent bribery contrary to section 7 of the Bribery Act 2010.
As part of the agreement Standard Bank has agreed to pay a financial order of $25.2m. They will also be required to repay the government of Tanzania $7m in compensation. Not only is this a landmark case for the first use of a DPA by UK authorities, this is also the first use by the SFO of Section 7 of the Bribery Act 2010, which makes it a criminal offence for a company’s failure to prevent bribery.
In determining the level of fine to impose, LJ Leveson referred to the guidelines issued by the Sentencing Council concerning corporate criminality for fraud and fraud-related offences. As well as agreeing to make the payments, Standard Bank has agreed to continue to cooperate fully with the SFO and to assist with its investigation into the bribery. They will also be subject to an independent review of its existing anti-bribery and corruption controls, policies and procedures regarding compliance with anti-corruption.
Deferred prosecution agreements (DPAs) were introduced in February 2014 and throughout this year the SFO have made references to two DPAs that were in the pipeline. DPAs allow prosecutors to suspend a prosecution for an agreed period of time. In exchange, companies are likely to be required to pay a hefty fine, repay related profits, abide by specific conditions and assist in the prosecution of any individuals.
There have been concerns raised about the use of DPAs and whether they will be used as a tool for wealthy companies to simply pay their way out of trouble to avoid prosecution. As part of his judgement LJ Leveson was keen to dispel such fears, stating:
“It is important to emphasise that the Court has assumed a pivotal role in the assessment of its (the DPA’s) terms. That has required a detailed analysis of the circumstances of the investigated offence, and an assessment of the financial penalties that would have been imposed had the Bank been convicted of an offence. In that way, there is no question of the parties having reached a private compromise without appropriate independent judicial consideration of the public interest.
Furthermore publication of the relevant material now serves to permit public scrutiny of the circumstances and the agreement. Suffice to say I am satisfied that the DPA fully reflects the interests of the public in the prevention and deterrence of this type of crime.”
There has been a great deal of interest and anticipation surrounding this first ever use of the DPA in the UK.
The case itself relates to a single transaction, namely a payment of $6m by a former sister company of Standard Bank, Stanbic Bank Tanzania, in March 2013 to a local partner in Tanzania. This payment is alleged to have been made to adduce the government of Tanzania to show favour to Standard Bank in relation to a $600m private placement of sovereign debt to finance electricity, water and other infrastructure work in Tanzania.
It would therefore seem that the case was relatively straight forward and it would seem to be quite a safe case for the SFO to enter into a DPA. There seems to be little doubt that the court’s finding that it was in the interests of justice for there to be a DPA, was justified.
The SFO will no doubt be relieved to have its first DPA under its belt. It is anticipated that the second DPA will be agreed by the end of the year and they will be hoping that this will encourage companies to self-report in the future.
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