Expert hails 'double first' in landmark deferred prosecution agreement between SFO and ICBC Standard Bank

Out-Law News | 30 Nov 2015 | 3:44 pm | 2 min. read

The first deferred prosecution agreement (DPA) in the UK has been approved in a case that also saw an offence of failure to prevent bribery under the Bribery Act confirmed by a court in England for the first time.

Anti-corruption law expert Barry Vitou of Pinsent Masons, the law firm behind Out-Law.com, called it a "double first" for the Serious Fraud Office (SFO).

The SFO and ICBC Standard Bank agreed a DPA (8-page / 61KB PDF) after it was found that the company had failed to prevent bribery during a period in 2012-2013. Failure by a business to prevent bribery is an offence under section 7 of the UK's Bribery Act.

DPAs are designed to encourage businesses to self-report wrongdoing in the hope of more lenient treatment. Prosecutors in the UK have had the power to put DPAs in place with corporate offenders since February 2014.

Courts have final sign-off powers over DPAs put in place between companies and prosecutors. Judge Sir Brian Leveson gave his approval for the DPA reached by the SFO and ICBC Standard Bank at Southwark Crown Court on Monday. Sir Brian said that the DPA "fully reflects the interests of the public in the prevention and deterrence of this type of crime", according to his judgment (8-page / 43KB PDF).

ICBC Standard Bank is headquartered in London. The company was bought over by Industrial and Commercial Bank of China Limited earlier this year. Prior to that Standard Bank, as it was then known, was a UK subsidiary of South Africa-based Standard Bank Group.

At the time of the corrupt activity Standard Bank Group had a subsidiary business in Tanzania. The SFO found that Standard Bank Group's Tanzanian subsidiary, Stanbic Bank Tanzania, paid a $6 million bribe to win business for a "sovereign note private placement" the Tanzania government wished to engage in. Standard Bank in the UK became involved with the sovereign note private placement project as Stanbic Bank Tanzania was "not licensed to deal with non-local foreign investors in the debt capital market", according to the judgment.

Under section 7 of the Bribery Act, companies can escape liability for failure to prevent bribery if they can prove they "had in place adequate procedures designed to prevent" such behaviour.

Sir Brian said: "It is important to underline that no allegation of knowing participation in an offence of bribery is alleged either against Standard Bank or any of its employees; the offence is limited to an allegation of inadequate systems to prevent associated persons from committing an offence of bribery."

ICBC Standard Bank faces financial penalties totalling more than $30 million under the terms of the DPA, which has effect for three years. The company is also under an obligation to cooperate with the SFO going forward and to "commission and submit to, at its own expense, an independent review of its existing internal anti-bribery and corruption controls, policies, and procedures regarding compliance with the Bribery Act 2010 and other applicable anti-corruption laws".

ICBC Standard Bank's financial penalty includes a $16.8m fine, $8.4m in disgorgement of profits and a duty to pay the Tanzanian government $6 million plus more than $1m in interest as compensation.

Companies that fulfil their obligations in the agreements within the specified timescale will avoid prosecution for their wrongdoing, according to guidelines published by the SFO and Director of Public Prosecutions last year. 

David Green, director of the SFO, earlier this month told delegates at a regulatory conference hosted by Pinsent Masons, the law firm behind Out-Law.com, that the first deferred prosecution agreement (DPA) to be reached in the UK was "imminent" and that a further DPA with another company is also likely "to be signed by the end of this year".

In a statement issued after Monday's ruling, Green said: "This landmark DPA will serve as a template for future agreements. The judgment … provides very helpful guidance to those advising corporates. It also endorses the SFO's contention that the DPA in this case was in the interests of justice and its terms fair, reasonable and proportionate. I applaud Standard Bank for their frankness with the SFO and their prompt and early engagement with us."