The case was the first in relation to
- Deferred Prosecution Agreement (DPA) in the UK AND
- Disposal of an offence under section 7 of the UK Bribery Act in respect of failing to prevent bribery by an associated person.
First Deferred Prosecution Agreement in UK
The DPA relates to allegations that the Bank failed, contrary to section 7 of the Bribery Act 2010, to prevent two senior executives of its former sister company, Stanbic Bank Tanzania Limited (Stanbic), engaging a local partner with the intent that the engagement would induce Tanzanian government representatives to award a capital raising mandate to the Bank and Stanbic (contrary to section 1 of the Bribery Act.
A DPA is a voluntary agreement through which a prosecutor agrees to suspend a prosecution and, subject to the defendant’s compliance with the terms of the DPA, discontinue proceedings once the term of the DPA has expired.
Historically DPAs have been used in corporate offences in the U.S. and the power to use DPAs has only been available to UK prosecutors, including the Serious Fraud Office (SFO), since February 2014. It has taken until now – more than 18 months later – for the first DPA to be approved by a UK Court.
The UK DPA regime differs from the practice used in the U.S. in several respects, including the need for the Court to scrutinise whether the DPA is in the interests of justice and be satisfied that its terms are fair, reasonable and proportionate.
Sir Brian Leveson, President of the Queen’s Bench Division, decided that the DPA in this case was in the interests of justice, in particular because the Bank had proactively self-reported its suspicions to the SFO at the earliest possible opportunity and voluntarily co-operated with the SFO throughout its investigation, including by commissioning an independent investigation by external counsel and providing a copy of the resulting findings to the SFO. The Judge’s determination also reflected the fact that the Bank was not accused of committing the predicate bribery office, but only of failing to prevent its associated person from committing bribery.
This case was also one of the first to consider the new Sentencing Council Guidelines for Corporate Offenders, as the DPA Code of Practice jointly issued by the SFO and the Crown Prosecution Service (CPS) provides that a financial penalty under a DPA must be approximate to that which would have been imposed following a guilty plea. The financial terms of the DPA involved:
- an order for compensation to be paid to the Government of Tanzania in respect of the amount that was paid to the local partner (plus interest on that amount);
- disgorgement of the profits from the fees paid to the Bank and to its former sister company as Joint Lead Managers of the private placement;
- a financial penalty; and
- the SFO’s costs, which the Judge acknowledged had been greatly reduced as a result of the Bank’s unrestricted and comprehensive investigation.
First judicial disposal of section 7 Bribery Act offence
- The case was also the first to involve judicial consideration of an offence under section 7 of the Bribery Act 2010, which created the offence of failing to prevent bribery by an associated person. The section 7 offence brought in by the Bribery Act 2010 means that companies can be convicted of a criminal offence even in circumstances where the primary liability for the underlying bribery offence cannot attach to the company (for example, through the identification principle).
Co-ordinated global settlement
- The case also involved simultaneous resolution of enforcement proceedings in the UK and the U.S. The U.S. Department of Justice (DoJ) confirmed that it would close its investigation into the transaction as a result of the Bank’s co-operation and its resolution with the SFO through the DPA. On the same day as the DPA was announced, the U.S. Securities and Exchange Commission (SEC) also agreed a settlement with the Bank in relation to a separate civil enforcement action relating to the same transaction in which it was alleged that the Bank negligently failed to disclose the role of the local partner on the transaction to U.S. investors.
Loading...