ICBC Standard Bank to pay $32 million for failing to prevent bribery

12 December 2015

ICBC Standard Bank is to pay out more than $32 million after it was indicted for failing to prevent bribery in the first Deferred Prosecution Agreement (DPA) granted by the Serious Fraud Office (SFO).

The African bank – the largest on the continent – will pay fines of $25.2 million (£16.6 million) to the UK Treasury along with $7 million (£4.62 million) in compensation to the Tanzanian government.

The settlement relates to a $6 million payment made by two executives employed by a former sister company of Standard Bank, Stanbic Bank Tanzania, in March 2013 to Enterprise Growth Market Advisors, a local partner in Tanzania.

The SFO alleges that the payment was intended to induce members of the Tanzanian government to show favour to Stanbic Tanzania and Standard Bank’s proposal to manage a $600 million (£396 million) transaction on behalf of the Tanzanian government.

Transaction fees of $8.4 million (£5.5 million), shared by Stanbic Tanzania and Standard Bank, were generated by the deal.

Standard Bank reported the incident itself to the SFO and instructed its solicitors Jones Day to conduct an independent investigation, the findings of which were disclosed to the SFO in July 2014.

Following its own investigation and Standard Bank’s full co-operation, the SFO decided that a DPA would be in the public interest. This means the charges against Standard Bank have been suspended for three years, after which the SFO will discontinue the proceedings, if the Bank has complied with the terms of the DPA.

In addition, an independent review will be undertaken of Standard Bank’s existing anti-bribery and corruption controls, policies and procedures regarding compliance with the Bribery Act 2010 and other applicable anti-corruption laws. The bank will be required to carry out any recommendations made by the reviewer, PwC.

“This landmark DPA will serve as a template for future agreements,” said director of the SFO, David Green. “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. I applaud Standard Bank for their frankness with the SFO and their prompt and early engagement with us.”

A statement from Standard Bank said: “The group and its subsidiaries take the risk of corruption very seriously and deeply regret that this issue arose on a transaction with which they were involved.

“The group is confident that the circumstances giving rise to the DPA were an isolated incident relating to one transaction to which the group and its subsidiaries have responded appropriately.”

What is a Deferred Prosecution Agreement?

DPAs are designed to help law enforcement agencies recover monies for corporate crimes more easily and cheaply than by investigating and prosecuting.

A company will only be invited into DPA negotiations if the SFO is persuaded it is genuinely co-operating.

Prosecuting bodies will take into consideration the alleged offence’s seriousness, the way an organisation behaves once it becomes aware of it, history of similar conduct and the extent to which the corporate entity has changed since the alleged offence.

However, the SFO is at pains to point out that a DPA is not a private plea deal or bargain between the prosecutor and the defendant company, but a “way in which a company accounts for its alleged criminality to a criminal court”.

Ben Morgan, joint head of bribery and corruption at the SFO, said the Standard Bank case should “act as a wake-up call”. “If you know about similar conduct, you are on notice that yes, that is what bribery looks like and, yes, if you failed to prevent it that is a criminal offence,” he said.

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