UK's Serious Fraud Office Secures First Deferred Prosecution Agreement

On 30 November 2015, Lord Justice Leveson formally approved the UK's first deferred prosecution agreement ("DPA") since the legislative scheme for such arrangements came into force on 24 February 2014. The introduction of DPAs was seen as a landmark moment in the SFO's capacity to pursue corporate wrongdoing effectively.

This first DPA is between the Serious Fraud Office ("SFO") and ICBC Standard Bank ("ICBC") and relates to an offence of failing to prevent bribery, contrary to section 7 of the Bribery Act 2010. Under the agreement, ICBC is required to pay a financial penalty of $16.8 million, as well as disgorgement, compensation and costs.

The Conduct

The SFO alleged that Standard Bank (purchased by ICBC in February 2015), between 1 June 2012 and 31 March 2013, failed to prevent persons associated with it from committing bribery, contrary to section 7 of the Bribery Act 2010. The misconduct arose from the Government of Tanzania's attempt to raise public funds through a sovereign note. Essentially, Standard Bank and Stanbic Bank Tanzania, which shared the same parent company, together sought to secure from the Tanzanian Government the instructions to raise the funds.

Those efforts only progressed after Stanbic entered into a contract with a Tanzanian company for 'consultancy' services, under which a payment of $6 million was made. That payment was a bribe: the directors of the company were politically connected individuals and the payment was immediately withdrawn in cash. Standard Bank had relied on Stanbic to conduct due diligence into the recipient company. In so doing, and having failed to identify that parties associated with the recipient company were politically exposed persons ("PEPs"), it was found to have had inadequate measures to protect against bribery. As stressed in the judgment, neither Standard Bank, nor its employees, were implicated in knowingly participating in an actual bribery offence.

The Court's Role

A guiding element of the DPA scheme, in contrast to the US, is the requirement for a high level of judicial oversight and sanction. In authorising the agreement, the presiding judge must determine whether the DPA is in the interests of justice. Three key factors, which led Lord Justice Leveson to conclude that a DPA was in the interests of justice, were as follows:

1. the seriousness of the offence itself:

   The misconduct, a section 7 Bribery Act offence, is not considered the most egregious offence on the spectrum of...