A bribe connected to a $600m (£398m) sovereign loan to Tanzania was at the centre of the UK’s first deferred prosecution agreement (DPA), approved in court by Sir Brian Leveson, head of the Queen's Bench Division today.
In Serious Fraud Office v Standard Bank Plc, Southwark Crown Court, sitting at the Royal Courts of Justice, heard that Standard Bank has accepted a penalty of $16.8m for failure to prevent the bribe. Tanzania will receive $6m. The bank will also pay the Serious Fraud Office’s costs of £330,000.
It was the SFO’s first successful use of section 7 of the Bribery Act – the offence of failure to prevent a bribe. No allegation of knowing participation in an offence of bribery was made against the bank or its employees.
An agreement to defer prosecution was announced last Friday, but details of the case were published only today.
According to the statement of facts, key officials at ST (Standard Bank’s sister bank in Tanzania), chief executive Bashir Awale and head of corporate and investment banking Shose Sinare, were able to increase the cost of the $600m sovereign loan by an additional 1% fee to be paid to a company EGMA Ltd.
To effect this, EGMA had first to be included in loan mandate documents but removed from key later documents.
Almost all of the $6m paid into EGMA’s account was withdrawn in cash days after the transaction concluded. Staff at ST raised concerns to Standard Bank London about the payments and the bank reported its concerns to the Serious Organised Crime Agency and the SFO the following day.
With SOCA and the SFO’s assent, an internal inquiry was carried out by the bank’s counsel, international law firm Jones Day.
At today's hearing, counsel for the SFO was Sir Edward Garnier QC MP (pictured) who, Leveson remarked, had been ‘author’ of the legislation enabling DPAs as solicitor general. It took Garnier more than 90 minutes to read an agreed statement of facts and the terms of the agreement.
James Purnell QC appeared for the bank.
Summing up, Leveson commended the 'very great care' taken by all sides to the agreement, saying this should create the benchmark against which future such applications may fall to be assessed.
Former head of corruption at the SFO, Covington partner Robert Amaee who attended court with the Gazette, said: ‘The SFO will rightly be satisfied that it has successfully navigated the UK’s first ever DPA through the court process, in particular one that deals for the first time with a Bribery Act failure to prevent a case, and will now focus on the next DPAs currently making their way through the system.’
However, Amaee noted: ‘The SFO will be aware that the facts of this case and the company’s actions following discovery of the issues in Tanzania were such that the presiding judge could be, and was, persuaded that it was in the interests of justice for the SFO not to bring criminal charges. Not all future proposed DPAs will have facts that so readily satisfy a presiding judge.’
Alison Geary, senior associate at WilmerHale, added: ‘Despite talk of a second DPA following closely behind it is unlikely that this is the start of any great avalanche.
‘The government’s decision not to reform the law on corporate criminal liability 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.’
Corker Binning partner Jessica Parker said: ‘It is notable that this investigation has remained confidential until the DPA was announced on Friday. This is a significant advantage of this type of negotiated justice. The publicity surrounding conduct is substantially reduced compared to a full-scale investigation and prosecution.’
SFO director David Green QC has said a second DPA will conclude before the end of the year.