The concept of a “deferred prosecution” was introduced in the United States and, in a (radically) different form, has been adopted here, pursuant to Section 45 and Schedule 17 of the Crime and Courts Act 2013 (the 2013 Act).
A key feature of the deferred prosecution scheme under the 2013 Act is the requirement that the Court examines the details of any proposed agreement, to ensure that the statutory conditions are satisfied. The statutory scheme under the 2013 Act is a two stage process:
Stage 1: following commencement of negotiations to try and obtain a DPA, there must be a preliminary hearing, held in private, for the purposes of ascertaining whether the Court will declare that the proposed DPA is “likely” to be “in the interests of justice” and its terms are “fair, reasonable and proportionate” – the provisional approval stage. The Court must give reasons for its provisional approval and if a declaration is declined, a further application is permitted.
Stage 2: having got through Stage 1 and having received provisional approval, it is for the Prosecutor to apply to the Crown Court for a declaration, made in open Court, that the DPA is in the interests of justice and that its terms are fair, reasonable and proportionate.
Accordingly, and in contradistinction with DPAs obtainable in the United States, DPAs under the 2013 Act are subject to the scrutiny and discretion of the Crown Court; they are not “private” arrangements made between the Prosecuting Authority and the reporting party (usually the company guilty of bribery, corruption and/or other criminal conduct).
The First DPA Approved under the 2013 Act
Standard Bank Plc, now known as ICBC Standard Bank Plc (Standard Bank), has become the first counterparty to an approved DPA under the 2013 Act, having self-reported to the Serious & Organised Crime Agency and the SFO, evidence to show that it had failed to prevent bribery in breach of its obligations under Section 7 of the Bribery Act 2010 – the requirement that corporates must have adequate procedures to prevent bribery.
Facts – as summarised in the Approved Judgment and Indictment
Standard Bank were given a mandate to raise US$600m on behalf of the Government of Tanzania. Pursuant to this mandate, Standard Bank’s subsidiary in Tanzania, Stanbic, entered into an agreement with a Tanzanian company called Enterprise Growth Market Advisors Limited (EGMA). Two of the three directors of EGMA were the Commissioner of the Tanzanian Revenue Authority (therefore a Government Official) and the former CEO of the Tanzanian Capital Markets & Securities Authority. Standard Bank made no enquiries about EGMA; it relied on its subsidiary, Stanbic, to carry out all the due diligence processes (even though the business was being done in a high risk country).
EGMA were paid a fee of 1% of the funds raised; the fee being paid into an account that EGMA opened with Stanbic. Almost all of the money was withdrawn from the account in cash and it is this that caused alarm bells to ring at Standard Bank. They immediately instructed a law firm to investigate and the matter was reported to the Prosecuting Authorities within three weeks. Standard Bank found that EGMA provided no services and/or consideration for the fee of US$6m that it received.
The indictment faced by Standard Bank alleged that the fee paid to EGMA was intended to induce representatives of the Government of Tanzania to perform a “relevant function or activity “improperly”, namely, showing Standard Bank and its Tanzanian subsidiary, Stanbic, favour in the process of appointing or retaining them in order to raise funds for the Government.