On 30 November 2015, the Serious Fraud Office reached the first Deferred Prosecution Agreement (DPA) with ICBC Standard Bank Plc. The DPA is covered in detail in an earlier blog. This week, the DPA has come under some criticism and calls were made for the investigation to be reopened, according to reports.
A former senior bank official in Tanzania has suggested, contrary to the agreed statement from the DPA, that officials in London were aware of what was occurring in London and “suppressed key facts” to help secure the deal. The official claims her career was ended after she was alleged to have participated in the bribery.
The SFO stated in response:
The SFO conducted an independent investigation into the matters self-reported to us by Standard Bank Group. We have now concluded the case into those matters that fall within the UK’s jurisdiction. The SFO can and does provide mutual legal assistance (MLA), this includes assisting overseas authorities to investigate and prosecute bribery and corruption. Any request for assistance in this case can be made to the UKCA who will consider it and if appropriate refer it to the SFO. We cannot comment on third party litigation.
It is of course too early to determine the outcome of any third party litigation. However, it highlights two interesting elements to a DPA.
Firstly, the word “deferred” is sometimes overlooked, but is probably the most significant element of the agreement. A DPA can be breached by failing to notify the prosecutor of material relevant to the offences particularised in the draft indictment. If a DPA is breached, and the prosecutor considers the matter appropriately serious, it can be returned to court. The court will have to decide whether, on the balance of probabilities, the corporate body is in breach. If the court finds for the prosecutor, the corporate body can terminate the DPA and the prosecution can be recommenced.
This has occurred in the US, where DPAs are more established. The Swiss bank UBS violated its non-prosecution agreement over Libor-rigging after it was found to have also manipulated forex rates. For more information see Practice note, DPA: breach, variation and discontinuance.
Both the prosecution and the company need to be cautious. Just as a company that fails to make a full disclosure or misleads a prosecution authority can find itself subject to breach proceedings and subsequent prosecution, a breach occurring that could reasonably have been uncovered during an investigation would be a significant embarrassment for a prosecutor.
Secondly, the problem of third party rights was highlighted in a blog dated 17 December 2015. As written at the time:
The legislation providing the framework for DPAs makes no provision for the rights of third parties. While this problem was perhaps unforeseen in the drafting of the Crime and Courts Act 2013, it does present a real problem for individuals, who may lose their professional reputations and employment prospects. While both the court and the prosecution can avoid naming any individuals directly, a problem remains when the individual can clearly be identified simply by the terms of the agreement. Perhaps the first amendment to the DPA legislation will enable relevant third parties to make representations.
When DPAs were in the implementation phase, the difficulties of obtaining a global resolution were well documented. The response from individuals is perhaps an equally significant risk, especially when they have little to lose.