The joint head of bribery and corruption at the SFO, Ben Morgan, gave a speech to the Managing Risk and Mitigating Litigation Conference on 1 December 2015. The speech was timely: the previous day Lord Justice Leveson approved the UK’s first ever deferred prosecution agreement, between the SFO and ICBC Standard Bank plc. The subject matter of the indictment was, for the first time in England and Wales, the section 7 corporate offence under the Bribery Act 2010( BA 2010). There has been a previous case recorded against a company in Scotland (see previous blog).
Mr Morgan was keen to reiterate Lord Justice Leveson’s comment on the first use of the DPA legislation:
” I have no doubt that [the bank] has far better served its shareholders, its customers and its employees (as well as all those with whom it deals) by demonstrating its recognition of its serious failings and its determination in the future to adhere to the highest standards of banking. Such an approach can itself go a long way to repairing and, ultimately, enhancing its reputation and, in consequence, its business.”
Mr Morgan addressed what could be learned about using DPAs from the first case. It is clear the first question for the court will be is the case generally one that it is likely to be in the interests of justice to resolve by way of a DPA?
Lord Justice Leveson identifies four relevant features in this respect;
- The seriousness of the conduct.
- The way in which the organisation behaved once it became aware of it.
- Any history of previous similar conduct.
- The extent to which the current corporate entity has changed from the one at the relevant time.
Mr Morgan paid particular attention to the second of these, the way in which the organisation behaved once it became aware of the conduct. As the judge remarked:
“The second feature to which considerable weight must be attached is the fact that [the Bank] immediately reported itself to the authorities and adopted a genuinely proactive approach to the matter…In this case the disclosure was within days of the suspicions coming to the Bank’s attention, and before its solicitors had commenced (let alone completed) their own investigation.”
In this case there was an investigation by the Bank’s advisers sanctioned by the SFO, and full co-operation with the SFO from the earliest possible date by, among other things:
- Providing a summary of first accounts of interviewees.
- Facilitating the interviews of current employees.
- Providing timely and complete responses to requests for information and material.
- Providing access to its document review platform.
Mr Morgan concluded by stating that firms should not mistake the SFO’s willingness to go down this route on this case for a desire to force a DPA onto every corporate case. Mr Morgan stated “they are not the answer to everything. It is a high bar, for a DPA to be suitable, and where it is not met we have the appetite, stamina and resources to prosecute in the ordinary way.”
There are three clear conclusions to be drawn from the first DPA and the SFO’s subsequent comments:
Firstly, DPAs will not be handed out as readily as civil settlements were under the previous director. The SFO have made it clear there is a high bar to be achieved for a DPA to be suitable, and above all co-operation must be on the SFO’s terms. DPAs also require judicial scrutiny. It seems unlikely any attempt to conduct a full internal investigation, followed by handing the final report to the SFO will result in a DPA.
Secondly, there was no guidance given as to the adequacy, or otherwise, of procedures to prevent Bribery, providing a company with a defence to a section 7 charge under the BA 2010. ICBC Standard Bank and no doubt others will concede their procedures are inadequate, but the true test of section 7 will be judicial guidance as to what constitutes an adequate procedure.
Finally, this case was relatively straightforward for the SFO, involving a single transaction, a rapid self report, full co-operation on the SFO’s terms and changes in the management and structure of the company. There will no doubt be some more questionable cases in the future, for which the SFO may need to take a more pragmatic view. On 2 December, the SFO released a press release to say a second company, Sweett Group plc has admitted an offence under Section 7 of the Bribery Act 2010 regarding conduct in the Middle East. It remains to see whether this case will be deemed suitable for a DPA.
For more information on Deferred Prosecution Agreements, see the Practical Law practice notes, Deferred Prosecution Agreements (DPAs) and What factors will the prosecutor consider before negotiating a DPA?
For more information on offences under section 7 of the Bribery Act 2010, see the Practical Law practice note, Bribery Act 2010: Corporate Criminal Liability