SFO: In first DPA, ICBC Standard Bank fined $33 million for failing to prevent Tanzania bribes
Monday, November 30, 2015 at 3:28PM
Richard L. Cassin in Bribery Act 2010, David Green QC, ICBC Standard Bank, Jones Day, Serious Fraud Office, Stanbic Bank Tanzania, Tanzania, ddeferred prosecution agreements

ICBC Standard Bank agreed to pay about $33 million in penalties and enter into a deferred prosecution agreement for failing to prevent overseas corruption, the UK Serious Fraud Office said Monday.

Lord Justice Leveson at Southwark Crown Court, sitting at the Royal Courts of Justice, approved the SFO's first application to use a deferred prosecution agreement to end an investigation.

In the U.S. Monday, the bank agreed to resolve SEC charges related to the same allegations.

The SFO accused ICBC Standard Bank of failing to prevent a former affiliated bank from trying to bribe officials in Tanzania from 2012 to 2013.

Under the UK deferred prosecution agreement, ICBC Standard Bank agreed to pay a fine of $25.2 million and a further $7 million in compensation to the government of Tanzania.

The $25.2 million penalty consisted of a $16.8 million fine and $8.4 million in disgorgement of profits, the SFO said.

The bank also agreed to pay the SFO's "reasonable costs" of £330,000 ($500,000) for the investigation and resolution of the DPA.

In the related U.S. enforcement action Monday, the Securities and Exchange Commission charged ICBC Standard Bank with failing to disclose payments by the affiliate in Tanzania in 2013 that were intended to influence a government decision. The SEC settled the matter through an internal administrative order and didn't go to court.

The SEC order required ICBC Standard Bank to pay a $4.2 million civil penalty. It also required disgorgement of $8.4 million but deemed it satisfied by the disgorgement in the U.K. action.

A copy of the SEC's administrative order is here (pdf).

In the UK, the SFO alleged that Stanbic Bank Tanzania paid $6 million in March 2013 to a local partner. The partner was supposed to use the money to influence members of the Tanzanian government to favor Stanbic Tanzania in a $600 million private placement to be carried out on behalf of the government, the SFO said.

The placement generated transaction fees of $8.4 million for Stanbic Tanzania and ICBC Standard Bank.

ICBC Standard Bank was the subject of an indictment alleging failure to prevent bribery contrary to Section 7 of the Bribery Act 2010, the SFO said. Under the DPA, the indictment was "immediately suspended."

The SFO said it was also the first use by any prosecutor of Section 7 of the Bribery Act 2010 (Failure of commercial organizations to prevent bribery).

Monday's DPA also required ICBC Standard Bank to cooperate with the SFO and have an independent review of its existing compliance program regarding the Bribery Act 2010 and other applicable anti-corruption laws.

The bank agreed to make changes recommended by the independent reviewer, Price Waterhouse Coopers LLP.

ICBC Standard Bank Plc is headquartered in London. It has operations in Dubai, Hong Kong, Shanghai, Singapore, New York, and Tokyo, according to its website.

SFO director David Green said Monday: "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. I applaud [ICBC Standard Bank] for their frankness with the SFO and their prompt and early engagement with us."

ICBC Standard Bank's lawyers, Jones Day, reported the Tanzania compliance problems to British authorities in April 2013. The bank then commissioned Jones Day to start an investigation. The resulting report was sent to the SFO in July 2014.

The UK authorized the SFO to begin using deferred prosecution agreements in February last year. 

A DPA is not a private plea "deal" or "bargain" between the prosecutor and the defendant company, the SFO said Monday.

"It is a way in which a company accounts for its alleged criminality to a criminal court, and can have no effect until a judge confirms in open court that the DPA is in the interests of justice and that its terms are fair, reasonable and proportionate."

The deferred prosecution agreement between the SFO and ICBC Standard Bank PLC is here (pdf).

_______

Richard L. Cassin is the publisher and editor of the FCPA Blog. He can be contacted here.

Article originally appeared on The FCPA Blog (http://www.fcpablog.com/).
See website for complete article licensing information.