The UK's first deferred prosecution agreement (DPA) was
approved yesterday, 19 months after the plea-bargaining method
was added to the Serious Fraud Office's (SFO) toolkit and
three-and-a-half years after it was
first proposed by the Ministry of Justice.
It concerns Standard Bank's alleged breach of the Bribery
Act, by failing to prevent corrupt payments to officials of the
Tanzanian Government two years ago.
Pioneered in the US, DPAs waive the right to prosecute in
exchange for financial sanctions and adjustments to the
defendant's behaviour. Under the agreement between Standard
Bank and the SFO, the lender is fined $25.2 million, must pay
$7 million in compensation to the Tanzanian government and
£330,000 ($496,000) in costs. The bank is also subject to
an independent review of its anti-bribery and corruption
"This landmark DPA will serve as a template for future
agreements," said SFO chief David Green. "The
judgment from Lord Justice Leveson provides very helpful
guidance to those advising corporates." He praised Standard
Bank for its frankness and early engagement with the UK bribery
and corruption watchdog.
According to the SFO's statement, the suspended charge
relates to a $6 million payment by a former sister company of
Standard Bank, Stanbic Bank Tanzania, in March 2013 to a local
partner known as Enterprise Growth Market Advisors. That
payment was allegedly intended to induce Tanzania's government
to select the banks to carry out a $600 million private
placement is was planning.
In addition to being the UK's first, the Standard
DPA is also notable in that the suspended charge marks
the first use of section 7 of the Bribery Act 2010,
which introduced the concept of corporate criminality into
the country. Under this provision, a commercial entity that
fails to prevent bribery by an associated person –
usually an employee – commits a crime.
However the biggest lesson for white-collar lawyers could be
to build rapport with the SFO.
"The court has confirmed the key lesson for companies is
that early cooperation and engagement with the SFO is critical
followed by close cooperation," said
Norton Rose Fulbright partner Neil O'May in London.
"The SFO has been delivering this lecture for the last 18
months and must be satisfied that the court has endorsed their
"Cooperation clearly includes a company providing the SFO
with the first accounts of witnesses. Importantly, the SFO will
consult with a wide range of regulatory bodies in the UK and
internationally, notably the US Department of Justice, when
reaching agreement on fines," he added.
SFO announced in September that it had initiated its
first DPA, but the defendant's identify was not known until
late last week. According to Jessica Parker, partner at City
firm Corker Binning, it's notable that the investigation
remained confidential until then.
"This is a significant advantage of this type of negotiated
justice. The publicity surrounding conduct is substantially
reduced compared to a full scale investigation and
prosecution," said said.
The first DPA comes as the SFO finds itself at a critical
juncture. There is
speculation that certain politicians want to merge the body
into the National Crime Agency; yesterday's ruling should boost
the SFO's claim to remain separate.
On the flipside,
Green last year pushed to extend the corporate liability for
inadequate processes and controls beyond section 7 of
the Bribery Act, but this was
rejected by the government this October.
WilmerHale's Alison Geary said that despite talk
of a second DPA following closely behind Standard Bank's,
corporate crime being contained to section 7 means it's
unlikely that this is the start of any great avalanche. "The
number of companies at threat of prosecution, and therefore
keen to secure a DPA, is unlikely to increase at any great pace
in coming years," she said.
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