Delivered by CMS UK

United Kingdom

30.11.2015

Summary

The English High Court today approved a deferred prosecution agreement (DPA) between the Serious Fraud Office (SFO) and ICBC Standard Bank Plc (the Bank) in relation to allegations that the Bank (prior to its takeover by ICBC) had failed to prevent two executives of Stanbic Bank Tanzania Limited (Stanbic) (a former sister company of the Bank) from bribing Tanzanian government officials (via a Tanzanian consulting firm) into awarding a US$ 600m capital raising mandate to the Bank and Stanbic.  The Bank made a suspicious activity report (SAR) and self-reported to the SFO in April 2013 within three weeks of becoming aware of the issue, following an internal investigation.  It then cooperated fully with the SFO, resulting in today’s approval and publication of the DPA. 

Under the terms of the DPA, which is to last for three years, the Bank must (i) compensate the Government of Tanzania in the amount of US$ 7.05m (including interest) within seven days, (ii) pay a fine of US$ 16.8m (which incorporates a one third reduction for self-reporting and cooperating with the SFO at the earliest stage), (iii) disgorge all profits resulting from the transaction (US$ 8.4m), and (iv) pay the SFO’s costs (around £330,000), which Lord Justice Leveson noted today would have been significantly higher if the SFO had not had the benefit of reports from the Bank’s internal investigation, which was carried out by external counsel.  No tax reduction will be sought in relation to these payments.  Importantly, and stressed by the judge in approving the DPA, the Bank must also commission and submit to an independent review (i.e. a compliance monitor) of its existing internal anti-bribery controls and procedures regarding compliance with relevant anti-corruption laws and implement any advice or recommendations made by the monitor within 12 months of its final report.

This is the first DPA to be concluded in the UK since they became available in February 2014.  It is also the first case brought under section 7 of the Bribery Act 2010 and provides some useful insight into how the SFO and courts will approach that offence.  It represents a significant moment in the UK authorities’ fight against corporate crime, providing (i) proof that the SFO can deliver a non-prosecution outcome for corporates willing to engage with the SFO on its terms and (ii) guidance on how the authorities and courts will approach this new mechanism, including as to financial and other resolution mechanisms.  It highlights that agreeing a DPA is not an easy way out for a corporate involved in wrongdoing, but also shows that cooperation can reap benefits in terms of a relatively swift resolution with limited reputational damage.

The SFO has already indicated that it expects to conclude another DPA before the end of the year; regardless, this DPA may persuade some corporates currently unsure whether to engage with the authorities that cooperation is worth the risk.

To read our full article analysing this case, please click the link below.

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