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Mixed reviews over impact of first SFO deferred prosecution agreement

Corporate crime specialists are divided over the likely impact of Lord Justice Leveson’s approval of the UK’s Serious Fraud Office’s deferred prosecution agreement (DPA) with ICBC Standard Bank (formerly Standard Bank).

The application, signed off today (30 November) at Southwark Crown Court, is the first deal to be struck since DPAs came into force and while SFO director David Green QC has hailed it as a template for other agreements, some in the profession say it is unlikely to have a snowball effect.

The bank had been subject to an indictment alleging failure to prevent bribery under the Bribery Act 2010 but under the agreement – made public today – the SFO will end the case.

The bank will pay financial orders of $25.2m and will be required to pay the Tanzanian government a further $7m in compensation. It has also agreed to pay the SFO’s costs of £330,000 for the investigation and subsequent resolution of the DPA.

Green said: ‘This landmark DPA will serve as a template for future agreements. The judgment from Lord Justice Leveson provides very helpful guidance to those advising corporates. It also endorses the SFO’s contention that the DPA in this case was in the interests of justice and its terms fair, reasonable and proportionate.’

In separate but related dealings, the bank has also agreed with the US Securities and Exchange Commission (SEC) to resolve a claim it acted negligently and did not disclose to US investors the involvement of its local partner in the capital-raising mandate, and was fined $4.2m.

Kingsley Napley criminal litigation head Stephen Parkinson said it was a ‘safe case for the SFO to bring to court as the first DPA’, with the offence involving a ‘single transaction rather than widespread criminality’.

He added: ‘The circumstances fall four-square within the guidelines for when a DPA is appropriate and the judge had no difficulty in approving the DPA. This case is bound to encourage other companies to come forward and there is no doubt that this is the first of many DPAs in the future.’

WilmerHale senior associate Alison Geary said the agreement was a ‘major milestone’ but added: ‘despite talk of a second DPA following closely behind, it is unlikely that this is the start of any great avalanche.’

She continued: ‘The government has recently decided not extend this Bribery Act offence and reform the law on corporate criminal liability for other corporate offences. This means the number of companies at threat of prosecution, and therefore keen to secure a DPA, is unlikely to increase at any great pace in coming years.’

Jones Day advised ICBC Standard Bank with a cross-border team led by London partners Sion Richards, Glyn Powell, and Adam Brown, as well as Washington partner Hank Walther and New York-based partner Henry Klehm.

In April Jones Day reported the matter to the Serious and Organised Crime Agency and to the SFO. The firm was instructed to begin an investigation and disclose its findings to the SFO. Herbert Smith Freehills (HSF) is advising its UK entity ICBC Standard Bank on the DPA, with a team led by disputes partner Rod Fletcher alongside Cloth Fair Chambers’ Nicholas Purnell QC.

The SFO instructed 1 Brick Court silk Sir Edward Garnier QC; QEB Hollis Whiteman’s Crispin Aylett QC and Red Lion Chambers’ Allison Clare.

Read the full judgment here.