UK: Deferred Prosecution Agreements Come Of Age

Last Updated: 10 December 2015
Article by Tony Lewis and Natalie Quinlivan

Deferred Prosecution Agreements come of age

The Serious Fraud Office will be justifiably satisfied with court approval of the first UK DPA but Tony Lewis and Natalie Quinlivan of Fieldfisher find the case raises questions about scope for application of the new tool.

After many months of speculation, it was announced on 30 November that Standard Bank Plc ("Standard Bank") now called ICBC Standard Bank plc, has become the first entity in the UK to enter into a Deferred Prosecution Agreement (DPA) with the Serious Fraud Office (SFO). Standard Bank was the subject of an indictment alleging failure to prevent bribery by two executives at Stanbic Bank Tanzania Ltd., a former sister company of Standard Bank, contrary to section 7 of the Bribery Act 2010.

Speed is of the essence

Lord Justice Leveson at Southwark Crown Court approved the DPA in his judgment noting the fact that Standard Bank self-reported within days of identifying the wrongdoing and cooperated fully with the SEG as one of his principle reasons for doing so. The terms of the ORA suspend the charges for a period of 3 years and require that Standard Bank pay compensation of US$7m to the Government of Tanzania, financial orders payable to HM Treasury totalling US$25.3m, consisting of a financial penalty of US$16.8m and disgorgement of profits of US$8.4m, in addition to the SFO's costs of £330,000 in relation to the investigation and subsequent resolution of the DPA.

Standard Bank also agreed to continue to cooperate fully with the SFO and to be subject to an independent review of its existing anti-bribery and corruption controls, policies and procedures, regarding compliance with the Bribery Act 2010 and other applicable anti-corruption laws. To this end, it is required to implement recommendations of the independent reviewer, Price Waterhouse Coopers LLP.

This decision marks the end of a long wait for the SFO to strike a plea deal with a company, and follows many months of rumours about potential candidates. Interestingly, Standard Bank self-reported on 24 April 2013 to the SFO, one day before DPAs were introduced in the Crime and Courts Act 2013, and some ten months before DPAs became available for use.

Only Section 7?

For the SFO the introduction of DPAs in February 2014 heralded a new dawn. The DPA process is designed to provide commercial organisations with an alternative avenue to investigation and prosecution. Essentially, if a company self-reports and satisfies the SFO that it will provide sufficient information to enable it to establish a realistic prospect of conviction, the SFO proffers a carrot in return which is a chance for the company to hold its hands up to the wrong, comply with specified steps imposed by the SFO and approved by the court, pay a fine and, potentially, walk away without a conviction.

Lord Justice Leveson's judgment provides the first guidance on how a DPA works in practice. It is unsurprising that the first DPA involves a section 7 offence (of failing to prevent bribery) as it is a corporate offence not requiring satisfaction of the identification principle. The identification principle dispenses with this requirement and therefore, provides a more attractive avenue by which to achieve a realistic prospect of conviction in accordance with the full code test for prosecutions as set out in the DPA Code of Practice. We can expect that future DPAs will, therefore, be Briber Act related.

Long reach demonstrated

It is also notable that the London-based Standard Bank, at that time of the offence, was 100 percent-owned by South Africa's Standard Bank Group. The DPA effectively demonstrates the Bribery Act's reach when pursuing non-UK companies that maintain a presence in the UK. Standard Bank's failure to prevent its sister company at that time, Stanbic Bank Tanzania Ltd., and the two named executives in that company from committing bribery in circumstances in which they intended to obtain or retain business or an advantage in the conduct of business for Standard Bank, formed the basis of the offence and opened Standard Bank up to being prosecuted by the SFO. The corrupt behaviour took place overseas, and the defence under section 7(2) of the Bribery Act, the existence of "adequate procedures" to prevent bribery, was not available in this instance due to the failure of Standard Bank to conduct its own KYC and due diligence into a local Tanzanian partner.

Corporate v. individual interests

In saving its skin a DPA may encourage a company to highlight the roles of individuals, who thereby become exposed to potential prosecution themselves (and are not able to enter into a DPA). The Statement of Facts accompanying the DPA provides detail of the corrupt behaviour by individuals in this case. However, while the SFO could prosecute Standard Bank, as it is "carrying on business" in the UK, its reach does not go as far as prosecuting the two executives, Bashi Awale or Shoes Sinare, as neither are UK citizens nor are they based in the UK. Instead it has been reported that the Prevention and Combating of Corruption Bureau (PCCB) in Tanzania will commence its own investigation.

Cooperation expectation

When approving the DPA, Lord Justice Leveson emphasised the fact that Standard Bank self-reported within days of identifying the wrongdoing and cooperated fully with the SFO. This reiterates what is stated in the DPA Code of Practice, that cooperation is a key factor that the prosecutor may take into account when deciding whether to enter into a DPA. The level of cooperation by Standard Bank was also stated as a factor when considering the reduction in the financial penalty imposed by Lord Justice Leveson. The fact that Standard Bank promptly reported its own conduct and cooperated with the SFO's subsequent investigation meant that a full reduction of one third was justified and appropriate in the circumstances (US$25.2m to US$16.8m).

In light of the above it can be expected that future DPAs may only be approved by the court where there has been full cooperation. This point has been driven home by the joint head of bribery and corruption at the SFO, Ben Morgan. Referring to this first DPA, he noted that the bar has been set high and that "where it is not met the SFO have the appetite, stamina and resources to prosecute in the ordinary way". Given that the one third reduction on sentence secured via a DPA could also be anticipated for a guilty plea, but without the burden of full disclosure and cooperation, companies invited to consider a DPA in future might be tempted to gravitate towards a guilty plea route. Particularly if they have a sense that full disclosure and cooperation could unearth irregularities that they, and the SFO, are not aware of.

The DPA has come of age, but it remains to be seen whether it will flourish into adulthood.

First published by Fraud Intelligence on 7 December 2015

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.