International Law

UK approves its first deferred prosecution agreement in bank's bribery case

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A judge on the High Court of Justice of England and Wales today approved the United Kingdom’s first deferred prosecution agreement, under which the ICBC Standard Bank will avoid criminal charges and instead receive other sanctions, Reuters and Bloomberg Business report.

The DPA statute enacted in February 2014 is stricter than those of the United States, requiring stricter and continued judicial involvement in the agreement’s implementation. In his opinion (PDF) issued today, Lord Justice Brian Leveson wrote, “In contra-distinction to the United States, a critical feature of the statutory scheme in the U.K. is the requirement that the court examine the proposed agreement in detail, decide whether statutory conditions are satisfied and, if appropriate, approve the DPA.”

A hearing will be held in private for the court to determine whether the settlement is “fair, reasonable and proportionate.” The justice added that “the court retains control of the ultimate outcome and, if the agreement is not approved, the possibility of prosecution is not jeopardised as a consequence of any publicity that would follow if these proceedings had not been held in private.”

Under the agreement, the bank will pay a $25.2 million fine; $7 million in compensation to the government of Tanzania; and nearly half a million dollars for the U.K.’s Serious Fraud Office’s costs in the investigation and resolution, the SFO reports in a news release, which includes links to the agreement and a statement of facts.

The investigation concerned a $6 million bribe that Stanbic Bank Tanzania, which was then part of ICBC Standard Bank, paid to gain favor with Tanzanian officials who might send some of the nation’s work to the bank. A month after the bribes, the Jones Day law firm, which represents ICBC Standard Bank Plc, notified the Serious and Organised Crime Agency and then the SFO, the SFO says in its news release.

The SFO worked with the U.S. Justice Department and the Securities and Exchange Commission to develop the DPA. ICBC Standard Bank agreed to pay the SEC $4.2 million for matters related to the bribes in Tanzania.

“This is a very welcome development,” Stephen Parkinson, a lawyer in London with Kingsley Napley, told Bloomberg Business late last week when the settlement was imminent.

“DPAs, if used properly, can avoid unnecessary fallout for shareholders and other third parties affected by a company prosecution. DPAs don’t allow companies to get off scot-free, any interaction with prosecutors is going to impact reputation, but it can allow for a sensible conclusion in smaller cases.”

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