SFO says first DPA will be template

Author: Danielle Myles | Published: 1 Dec 2015
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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 controls.

"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 Bank  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 view." 

"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. 

The  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. 

See also

UK DPAs: how useful will they be?
Deferred prosecution agreements possible for Libor charges
Lessons from the SEC's FCPA non-prosecution first
Lord Goldsmith calls for more flexible DPA model