The High Court has approved a Deferred Prosecution Agreement (DPA) between the Serious Fraud Office (SFO) and Tesco which will see the company pay a fine of just under £130 million (plus the SFO’s costs) in exchange for not being prosecuted in connection with an alleged overstatement by Tesco of its profits in 2014.
This is the fourth DPA that the SFO has secured under the new regime.
This is also the first DPA to be secured without recourse to the controversial “failure to prevent” model of corporate liability. The previous three DPAs were all largely predicated on charges of failing to prevent bribery pursuant to section 7 of the Bribery Act 2010, an offence which many commentators argue exerts unfair pressure on corporates to concede criminal liability in order to avoid the economic costs of a full contested prosecution.
It is also interesting to note that the DPA has been agreed in conjunction with a regulatory penalty to be issued by the Financial Conduct Authority (FCA). The FCA has reported that Tesco will pay compensation in the region of £85 million as a sanction for committing “market abuse”. The money will be paid to purchasers who acquired Tesco shares and bonds after the 29 August 2014 and who still held some or all of them on the last day of trading before the corrective statement was issued on 22 September 2014. This will be a first for investors of a publicly listed company which is accused of a criminal offence.
This is the also first time that we have seen the FCA and the SFO working in tandem to bring a company to account for alleged wrongdoing.
Reporting restrictions prevent the judgment, the DPA or the statement of facts being published. Three individuals have been charged in connection with the overstatement. That case is listed for case management on 30 May 2017.