The U.K. Serious Frauds Office (the SFO) on July 8, 2016
obtained its second deferred prosecution agreement (DPA).
The Southwark (London) Crown Court approved the SFO's application for a DPA
relating to a defendant company indicted for conspiracy to corrupt
and bribe contrary to section 1 of the Criminal Law Act
1977 and failure to prevent bribery under section 7 of the
Bribery Act 2010.
The defendant, which was accused of offences related to
"contracts to supply its products to customers in a number of
foreign jurisdictions," will pay £6.2 million in
disgorgement of gross profits and a fine of £352,000. The
defendant's U.S. parent company will also pay close to £2
million in disgorgement "as repayment of a significant
proportion of the dividends that it received from the [defendant]
over the indictment period." In addition, the DPA requires the
defendant to "continue to cooperate fully with the SFO and to
provide a report addressing all third party intermediary
transactions, and the completion and effectiveness of its existing
anti-bribery and corruption controls, policies and procedures
within twelve months of the DPA and every twelve months for its
duration." Pursuant to the DPA proceedings, the indictment was
immediately suspended. The identity of the defendant will be released following the conclusion of
ongoing related legal proceedings.
The allegations arose following the defendant's
implementation of a global compliance program, which raised
concerns internally about the way in which a number of contracts
had been secured. The defendant took immediate action and retained
external legal counsel to undertake an independent internal
investigation. Upon conclusion of the internal investigation, the
defendant self-reported the conduct to the SFO. In approving the
application, the court stressed the benefit of such compliance
programs and self-reporting, stating that the DPA reached with the
defendant "provides an example of the value of self-report and
co-operation along with the introduction of appropriate compliance
mechanisms, all of which can only improve corporate attitudes to
bribery and corruption."
The U.K. previously approved its first DPA in November 2015 in
the Standard Bank case (for further details on this DPA
refer to our
Update). DPAs – agreements reached between the
prosecutors and defendant organizations allowing prosecution to be
suspended for a defined period provided the defendants meet
specific conditions – are relatively common in the U.S. but
were only introduced in the U.K. in early 2014. According to the
SFO, the key features of DPAs are that they:
enable an organization to make full
reparation for criminal behaviour without the collateral damage of
a conviction (e.g., severe financial penalties, reputational
are concluded under the supervision
of a judge, who must determine that the DPA is "in the
interests of justice" and that the terms are "fair,
reasonable and proportionate";
avoid lengthy and costly trials;
are transparent, public events.
The resolution represents a further commitment by the U.K. to
increase its use of DPAs, which have the benefit of encouraging
companies to investigate and self-report allegations of potential
compliance violations. Although DPAs are common in the U.S. and are
gaining traction in the U.K., they are not available in Canada.
However, as the use of DPAs increases elsewhere there is pressure
on the Canadian government to consider DPAs as an alternative means
of resolving criminal allegations. For example, SNC-Lavalin (which
is currently facing criminal fraud and corruption charges under
Canada's Criminal Code and the Corruption of
Foreign Public Officials Act) has publicly advocated for the
adoption of this approach in Canada. If Canada increasingly becomes
an outlier in its approach to alternative resolutions that are
accepted in other jurisdictions, it is unclear what if any impact
this approach will have on enforcement efforts in Canada.
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Canadian engineering and construction giant SNC-Lavalin has been charged by the RCMP with paying bribes of nearly $48 million to Libyan government officials and defrauding Libya of nearly $130 million.
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