U.K. Serious Fraud Office Concludes its First Deferred Prosecution Agreement in Standard Bank Case

By Mengqi Sun 

Standard Bank PLC won't face further prosecution after meeting the terms of a deferred prosecution agreement, the U.K.'s Serious Fraud Office said on Friday.

The satisfactory conclusion of the agreement, the first since the white-collar crime prosecuting agency launched the use of DPAs in 2014, signals a milestone for the practice and demonstrates the effectiveness of this type of agreement as a way of altering a company's culture, the SFO said.

"What we've got is an accomplished outcome," said Lawrence Cunningham, a professor at George Washington University's law school with an expertise in corporate governance issues. "I think it's fair for them to claim this as a victory."

A deferred prosecution agreement allows a prosecutor to suspend a prosecution for a defined period as long as the organization completes actions specified in the agreement under the supervision of a judge. The U.S. Justice Department has a similar practice.

Standard Bank -- now known as ICBC Standard Bank PLC after the Industrial and Commercial Bank of China Ltd. acquired a majority stake in the company in February 2015 -- faced an indictment in November 2015 for its alleged failure to prevent bribery.

The bank's former sister company, Stanbic Bank Tanzania Ltd., made a $6 million payment to a local partner in Tanzania in March 2013, the SFO said. The agency said the payment was intended to influence members of the Tanzanian government to help the banks secure a contract to raise $600 million in sovereign debt for the country. The two banks shared $8.4 million in transaction fees generated from the government-bond deal, the SFO said.

Standard Bank agreed to pay $16.8 million in fines to the U.K. government and another $7 million in compensation to the Tanzanian government, and to forgo the $8.4 million in fees from the contract as part of its agreement with the agency. The bank also agreed to review and change its internal compliance program and pay for the agency's costs while cooperating with the investigation, the SFO said.

The bank worked with an independent reviewer from PricewaterhouseCoopers LLP to inspect its internal antibribery and corruption controls. The bank also was required to implement recommendations from the review, which it completed in August 2017.

"The bank cooperated with the SFO from the outset and has fully complied with all of the terms of the DPA," Standard Bank said in a statement on Friday.

Deferred prosecution has become one of the preferred methods in enforcing laws against corporations, as they give prosecutors more control over the operations and procedures inside a company to aid in improving oversight and governance, said George Washington University's Mr. Cunningham.

"DPAs are a way of holding companies to account without punishing innocent employees and are an important tool in changing corporate culture for the better," Lisa Osofsky, director of the SFO, said Friday in a statement related to the Standard Bank agreement.

Write to Mengqi Sun at [e-mail]<mailto:[e-mail]>.

(END) Dow Jones Newswires

November 30, 2018 17:55 ET (22:55 GMT)

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