The UK Serious Fraud Office said Friday a court approved its second application for a deferred prosecution agreement to settle Bribery Act and related offenses committed in several foreign countries. Deferred prosecution agreements are commonly used in the United States to resolve FCPA and other corporate criminal offenses. But the practice is new in the UK.

WHO WERE THEY?

The SFO DIDN’T NAME THE COMPANY involved because of “ongoing related litigation.” But it said the company is a small or medium sized firm with a “U.S. registered parent company.”

The SFO applied to Lord Justice Leveson for the DPA at Southwark (London) Crown Court.

Justice Leveson said publication of the defendant company’s name

• “is postponed until the criminal proceedings in relation to a number of [the defendant’s] former employees have concluded.”

he went on to say

• Only by delaying naming the company will it be possible to avoid a substantial risk of prejudice to the administration of justice in those proceedings

The company had been indicted for conspiracy to corrupt and bribe contrary

• to Section 1 of the Criminal Law Act 1977 and
• failure to prevent bribery under Section 7 of the Bribery Act 2010.

The SFO said:

• The offenses related to “contracts to supply its products to customers in a number of foreign jurisdictions,”
• This SFO suspended the indictment when the court approved the DPA.
• https://www.sfo.gov.uk/2016/07/08/sfo-secures-second-dpa/ –

The defendant company will:

• pay about £6.55 million ($8.48 million) for the settlement.
• The penalty consists of £6.2 million ($8 million) in disgorgement of gross profits and a £352,000 ($455,000) fine.
• The defendant’s U.S. parent company will pay nearly £2 million ($2.6 million) of the disgorgement “as repayment of a significant proportion of the dividends that it received from the [defendant] over the indictment period,”

The DPA requires the defendant company “to continue to cooperate fully with the SFO and to provide a report addressing all third party intermediary transactions, and the completion and effectiveness of its existing anti-bribery and corruption controls, policies and procedures within twelve months of the DPA and every twelve months for its duration.”

The DPA will extend until December 31, 2020. But it could terminate up to two years earlier if the defendant company meets its financial obligations under the settlement.

Lord Justice Leveson said:

• [This conclusion] provides an example of the value of self-report and co-operation along with the introduction of appropriate compliance mechanisms, all of which can only improve corporate attitudes to bribery and corruption.

The SFO said:

• it investigated the case for two years. It examined 74 contracts and found that 28 were procured with bribes. SFO chief David Green said Friday,
• “The decision as to whether to force a company into insolvency must be balanced with the level and nature of co-operation and this case provides a clear example to corporates.”
• The offenses occurred from 2004 to 2012, the SFO said.
• The defendant company’s U.S. parent implemented a global compliance program in late 2011.
• In August 2012, this compliance program resulted in concerns being raised within the [defendant company] about the way in which a number of contracts had been secured.
• The [defendant company] took immediate action, retaining a law firm that undertook an independent internal investigation.
• The law firm delivered a report to the SFO on 31 January 2013, after which the SFO conducted its own investigation.

1^st SFO DPA

The SFO first used a DPA in November 2015. London-based ICBC Standard Bank agreed to pay about $33 million in penalties for failing to prevent overseas corruption. Lord Justice Leveson also approved the SFO’s application for that DPA.

• https://www.sfo.gov.uk/2015/11/30/sfo-agrees-first-uk-dpa-with-standard-bank/

The SFO accused ICBC Standard Bank of failing to prevent a former affiliated bank from trying to bribe officials in Tanzania in 2012 and 2013.

At the same time as the UK settlement, Standard Bank settled FCPA-related charges with the SEC. The SEC resolved the case through an internal administrative order and didn’t go to court.

The SEC order required ICBC Standard Bank to

• pay a $4.2 million civil penalty. It also required disgorgement of $8.4 million but deemed it satisfied by the disgorgement in the UK enforcement action.
• https://www.sec.gov/litigation/admin/2015/33-9981.pdf

The SFO said Friday that a DPA is not a private plea “deal” or “bargain” between the prosecutor and the company.

• “It is a way in which a company accounts for its alleged offending to a criminal court, and can have no effect until a judge confirms in open court that the DPA is in the interests of justice and that its terms are fair, reasonable and proportionate, pursuant to paragraph 8(1) Schedule 17 Crime and Courts Act 2013.”

A redacted copy of the SFO’s second DPA is here (pdf).

1. The preliminary and final redacted judgements are published below. The names of the company, its parent company, and its legal advisors have been redacted due to ongoing legal proceedings.
2. XYZ (Preliminary redacted) Last Updated: 11 July, 2016
3. XYZ (Final redacted) Last Updated: 11 July, 2016