01 December 2015

SFO secures first Deferred Prosecution Agreement

The much anticipated first Deferred Prosecution Agreement (DPA) was judicially approved yesterday. In the Rt. Hon Sir Brian Leveson's Judgment, he sets out why DPAs will be so important going forward. In effect, it represents useful guidance for commercial entities as to what they should do if financial crime concerns arise.

DPAs preserve the State's ability to prosecute a commercial entity while at the same time  entering into an agreement with the entity facing criminal liability for certain economic or financial offences, including the payment of bribes by it or a party associated to it (under the UK Bribery Act 2010). Leveson had no doubt that the Bank has "far better served its shareholders, customers and its employees by demonstrating its recognition of its serious failings and its determination in the future to adhere to the highest standards of banking".

Key findings 

Leveson found:

  1. it was "fair, reasonable and proportionate" and in the interests of justice to proceed with a DPA rather than prosecute;
  2. the SFO had insufficient evidence to show that any Standard Bank employee had committed an offence – it was a sister bank (Stanbic) and its employees which had made the offending payments;
  3. the Bank had immediately reported itself and had taken a proactive approach to the matter with the SFO;
  4. there had been significant and prompt escalation of the matter within the Group and cooperation thereafter;
  5. the bank had no previous convictions for bribery and corruption - although there had been a previous regulatory enforcement action by the FCA in respect of its anti-money laundering failings;
  6. the bank had made significant improvements to its compliance policies and procedures since the offence was committed; and
  7. the bank in its current form is effectively a different entity from that which committed the offence.

Financial cost 

The Bank will have to pay in the region of $32 million, comprising a $16.8 million fine to be paid to the SFO, which includes a one-third reduction for self-disclosure and co-operation, a $6 million payment plus interest of more than $1 million to the Tanzanian Government, and $8.4 million in disgorgement of profit – together with costs. It will also incur the expense of an independent review of its existing internal ABC controls, policies and material. The DPA – or period in which prosecution will be deferred - will last for 3 years. The behaviour of the Bank and the information it has provided to date will be scrutinised carefully by the SFO in that period.

It is also interesting to note, where Leveson comments on the amount of the financial penalty that reference is made to the Department of Justice in the US and "noting the co-operation of Standard Bank and Stanbic with them, the Department of Justice has confirmed that the financial penalty is comparable to the penalty that would have been imposed had the matter been dealt with in the US and has intimated that if the matter is resolved in the UK, it will close its inquiry". Separately, the US Securities & Exchange Commission has stated that Standard Bank has agreed to pay $4.2 million to settle similar charges to those brought by the SFO in the UK.

Prosecution of individuals 

The Bank will also cooperate with and not withhold material that could lead to the prosecution of the individuals involved. There is no similar DPA "protection" for individuals.

The underlying offences had involved two senior executives at Stanbic, since departed, who had facilitated the payment of $6 million in bribes to Government officials involved in a $600 million fund raising by the Tanzanian Government in 2012-13.

Practical measures 

It goes without saying that all commercial entities should have a robust and comprehensive compliance regime in place. The Rt. Hon. Leveson’s Judgment highlights what the SFO/Judiciary are looking for in order for a commercial entity to enter into a DPA should it find that it or an associated party has been involved in financial crime. This is a particularly technical area notwithstanding the clarity of the Judgment in relation to which commercial entities should seek immediate and expert legal advice.

Belt and Road Hub

We explore the opportunities the Belt and Road Initiative brings for your business, and provide our comprehensive, professional services to help.

Belt and Road

A Guide to Doing Business in China

We explore the key issues being considered by clients looking to unlock investment opportunities in the People’s Republic of China.

Doing Business in China
Share on LinkedIn Share on Facebook Share on Twitter
    You might also be interested in

    It’s official. On 5 March 2021 the UK Financial Conduct Authority (FCA) announced that all LIBOR settings will either cease to be published by any administrator or no longer be representative, with...

    09 March 2021

    Keepwell deeds, also known as letters of comfort, are a credit protection tool commonly used by Chinese companies issuing debt offshore.

    23 February 2021

    This article was written by Patric McGonigal and Ramon Garcia-Gallardo. At a virtual ceremony on 11 June 2020, Singapore's Minister for Home Affairs and Law, K Shanmugam SC and the President of the...

    22 June 2020

    The UK officially left the European Union (“EU”) at 11pm on 31 January 2020

    20 February 2020

    Legal services for your business

    This site uses cookies to enhance your experience and to help us improve the site. Please see our Privacy Policy for further information. If you continue without changing your settings, we will assume that you are happy to receive these cookies. You can change your cookie settings at any time.

    For more information on which cookies we use then please refer to our Cookie Policy.