UK’s first ever Deferred Prosecution Agreement for corporate bribery offence for foreign subsidiary’s actions
Author: Kevin Cooper (pictured)
The Rt. Hon. Sir Brian Leveson approves the first Deferred Prosecution Agreement in English legal history.
On 30 November 2015, Lord Justice Leveson made history by giving the court seal of approval to the first Deferred Prosecution Agreement (“DPA”) since the concept was introduced by the Crime and Courts Act 2013 (“the Act”).
Similar to the US style plea bargain, the purpose of a DPA, in the words of Lord Justice Leveson “is to provide a mechanism whereby an organisation… can avoid prosecution for certain economic or financial offences by entering into an agreement on negotiated terms”. A key distinction between a DPA and the US plea bargain, however, is the requirement that a DPA be approved by the court to determine that the settlement is: i) in the interests of justice; and ii) fair, reasonable and proportionate in its terms. A DPA only comes into force once court approval has been obtained, ensuring that the court retains an element of control over the resolution of cases arising from alleged criminal conduct. The DPA along with the court’s reasons for approving the DPA must then be published.
The first DPA arose out of instances of bribery discovered by Standard Bank Plc (now ICBC Standard Bank) in connection with the private placement by one of its subsidiaries of $600m of sovereign debt to finance the Tanzania government’s development plan for electricity, water and other infrastructure. Within weeks of discovery of the potential bribery, Standard Bank instructed external counsel to investigate the suspicious activity. Following the investigation, a self-report was made to both the Serious Fraud Office (“SFO”) and the Serious and Organised Crime Agency for a potential breach of Section 7 of the Bribery Act 2010, being the failure by an organisation to prevent instances of bribery.
No allegation that Standard Bank knowingly participated in an offence of bribery was maintained by the SFO. The offence was limited to the allegation that the bank had insufficient systems in place to prevent associated persons from engaging in corrupt activities. The material disclosed by the internal investigation was insufficient to support a defence to that allegation as: i) the applicable policy was unclear and was not reinforced effectively to employees; and ii) the bank’s training did not provide sufficient guidance about relevant obligations and procedures.
Standard Bank and the SFO subsequently concluded a DPA which required, amongst other things:
1. payment of compensation of US$6 million plus interest;
2. disgorgement of profit from the transaction of US$8.4 million;
3. payment of a financial penalty of US$16.8 million. This figure was determined as being broadly comparable to a fine that would have been imposed by a court following conviction after a guilty plea, with a one third reduction to represent the early admission of responsibility;
4. past and future co-operation with the relevant authorities in all matters relating to conduct arising out of the current circumstances; and
5. submitting to an independent review of the bank’s existing internal anti-bribery and corruptions controls, policies and procedures.
On 30 November, the DPA was determined by Lord Justice Leveson to be in the interests of justice. Factors of particular significance cited in that decision were the promptness of the self-report, full disclosure of the internal investigation, the extent of Standard Bank’s co-operation with the SFO and the bank’s agreement to submit to an independent review of its anti-corruption policies.
In making his declaration as to the adequacy of the DPA, Lord Justice Leveson took care to emphasise the pivotal role played by the court in the assessment of the terms of the DPA in order to negate any question that the parties had negotiated a private compromise of criminal conduct in a manner not consistent with the public interest. The fact that the DPA would be made public was also highlighted by him as a means by which the agreement may be subject to public scrutiny and therefore serve as deterrent against bribery offences. The judge’s concluding remark was to quote from an earlier judgment in the same matter in which he reasoned that Standard Bank’s decision to self-report and its recognition of its serious failings had no doubt gone a long way to repair and enhance the bank’s reputation.
The judgment from Lord Justice Leveson leaves no doubt of the judiciary’s willingness to engage with the new process of DPAs and the pains taken to assure the public that such agreements are there to serve the interests of justice. There is also a clear message from the judiciary that the self-reporting of crimes, whilst no guarantee of a DPA, will be viewed favourably by the authorities and the court.