On 30 November 2015, the Crown Court approved a deferred prosecution agreement(“DPA”) between the Serious Fraud Office (“SFO”) and ICBC Standard Bank Plc (the “Bank”). The DPA means that the Bank will not be prosecuted under section 7 of the Bribery Act 2010 for failing to prevent its Tanzanian affiliate from allegedly bribing government officials to win business.
This is the first time a DPA has been used in England and Wales to settle criminal charges, and the first time a prosecution has been brought against a commercial organisation for failing to prevent bribery under the Bribery Act. The rapid, decisive and appropriate response of the Bank’s global leadership to the conduct, once it was identified, was critical in enabling it to agree a DPA.
DPAs: the legal context
DPAs were recently introduced to assist prosecutors in holding companies accountable for their crimes. A DPA is an agreement entered into between a prosecutor and a body corporate, association or partnership facing prosecution for criminal offences. The prospective defendant is charged with a criminal offence but proceedings are suspended for a defined period. During this time the corporate must comply with the terms of the DPA. If the defendant does not breach the terms of the DPA, the criminal prosecution will be permanently discontinued. Critically, a DPA must be approved by a court before it comes into effect.
The terms of the DPA
Under the terms of the DPA that was approved by Lord Justice Leveson, the SFO will suspend its prosecution of the Bank under the Bribery Act for three years. The prosecution will be recommenced within three years if the Bank does not:
- pay compensation of just over $7m (including interest) to the Government of Tanzania;
- pay $25.2m in disgorged profits and penalties to HM Treasury;
- pay the SFO’s reasonable costs of £330,000;
- co-operate with the ongoing and future investigations; and
- review and upgrade its anti-bribery and corruption policies according to independent recommendations.
The Bank has also agreed with the US Securities and Exchange Commission to pay a penalty of $4.2m in respect of related conduct.
Lessons for corporates
There are two key lessons that corporates can draw from the DPA:
First, if companies discover potential criminal conduct within their operations, it is critical to launch an investigation and consider self-reporting as soon as possible. The Bank employees in Tanzania raised concerns with the Bank’s Compliance team about suspicious transactions, and the Bank’s global leadership responded decisively and firmly. Just one month after the transactions occurred in Tanzania, the Bank self-reported to the SFO in London. It subsequently conducted an independent investigation, made its employees available for interview, and co-operated with the SFO’s investigation by supplying it with hard copy and electronic files. The SFO described the Bank’s co-operation as “significant” and it was a factor that enabled them to reach a DPA.
Second, the SFO found that some of the Bank’s anti-bribery policies were “unclear and not reinforced effectively…through communication and/or training”. Companies need to ensure that their anti-bribery procedures are truly adequate if they want to defend themselves against a prosecution under section 7 of the Bribery Act 2010 for failing to prevent “associated persons” from engaging in bribery to win business on its behalf. Anti-bribery policies must be practical, appropriate to the business and actively promoted to all staff members. Much depends on senior managers setting the right ‘tone from the top’. We consider that businesses that promote the right corporate culture find it easier to recognise and address corruption problems.
The future of DPAs
This is a defining moment in corporate criminal law. A company that discovers criminality in its operations can potentially reach an early resolution and avoid prosecution if their leadership acts decisively and ethically. The Bank’s rigorous investigation, self-reporting and co-operation were all relevant to the SFO deciding to offer the Bank a DPA. This is a good outcome all around: the Bank avoided prosecution, the SFO avoided an expensive trial, and funds will be returned to the Tanzanian people. We consider this will be the first of many DPAs.