The Serious Fraud Office (SFO) is poised to seal its first deferred prosecution agreement, with the South African-based ICBC Standard Bank. Details of the case will be heard publicly at the High Court in London on Monday, the SFO said.
Deferred prosecution agreements (DPAs) are deals fraud prosecutors can offer to companies that report themselves for financial crimes in the hope of more lenient treatment. The deals have to be approved by senior judges. Critics are concerned they offer “cosy” deals to corporate offenders who can buy themselves out of jail sentences.
The ICBC Standard Bank agreement is the first time the powers have been used since they came into force in February last year. Similar powers are used regularly in the US.
The deal has already been approved “in principle” by a senior judge, according to the SFO. Lord Justice Brian Leveson is expected to hear the full case details on Monday.
Standard Bank confirmed the DPA in an announcement to the South African stock exchange. The bank said the court’s full approval would be sought for the terms. The alleged offence dates from the period 2012-13, the bank said. It added that under the terms of the agreement it expected to be fined no more than $40m (£26m).
The bank said the offence occurred before the Industrial and Commercial Bank of China acquired a 60 per cent majority shareholding in February. Under the terms of the deal the bank had agreed to indemnify its Chinese partners for the full costs, it said.
The bank added that under the terms of the DPA it was not permitted to comment further until the case had been formally adjudicated.
David Green, head of the SFO, said this month that the agency was receiving a “surprisingly high” number of self-reports from UK companies. He said they were likely to be more comfortable with the DPA process once they had seen it in action.
He warned that DPAs were not a way for companies to “buy themselves out of trouble” and would only be used “in the interests of justice”.
Mr Green also said DPAs would help prevent “collateral damage” to other parties, such as investors and employees, who could also become “victims” if a company was prosecuted.
He reported that the SFO was seeing “strong whistleblowing activity” and warned that companies that choose not to admit wrongdoing, and are subsequently exposed by whistleblowers, will face potentially greater punishment.
According to the SFO a second DPA agreement is close to being finalised.
