In the end of November 2015 the Crown Court of England and Wales approved the first “Deferred Prosecution Agreement” or a settlement agreement on criminal offense. It was the first claim brought against a private company for failing to prevent bribery actions. Let’s connect the dots and see how this information might be relevant to the future of Ukrainian anti-bribery compliance.
You may have noticed that authors of Ukrainian latest anti-corruption legislation were, to some extent, inspired by the best foreign legislative experience and the UK Bribery Act (UKBA), in particular. Therefore, to see what future may bring us we should pay closer attention to white-collar crime combating developments overseas, and in the UK specifically.
Before moving to the judgment on the first “Deferred Prosecution Agreement” (DPA or Agreement) here is a brief background and an explanation on how the DPA works. In the beginning of 2014 the British Parliament enacted a new Schedule to the Crime and Courts Act 2013. The Schedule introduced the DPA, a new tool to deal with fraud, bribery and economic crime cases. The Agreement is basically a bargain between a prosecutor and a legal entity. It may be proposed to the alleged wrongdoer by the UK Serious Fraud Office (SFO) and should be approved by the court. If Agreement is concluded, the case proceedings are temporarily suspended. The company would need to meet its commitments indicated in the Agreement. Those commitments are paying fine and compensation prescribed as well as further cooperation in plausible prosecution of individuals. If company complies with all requirements of the Agreement during the suspension period, the criminal charges against the company are dropped.
Now let’s go back to the first deferred prosecution itself. On November 30, 2015 the SFO concluded its first Agreement which was approved by the court and, thus, came into force. Under provisions of the Agreement, ICBC Standard Bank Plc (Standard Bank) shall not be prosecuted for the offence of failing to prevent bribery by its subsidiary in Tanzania. In exchange, Standard Bank shall pay $25 million in disgorged profits to the UK treasury, £330 thousand to the SFO, $7 million to the Government of Tanzania, and shall review its anti-bribery policies as per independent recommendations. Apart from that, Standard Bank should also co-operate on current and future investigations connected to the case.
What are the takeaways from the Crown Court decision and the DPA itself? First of all, if companies discover potential criminal conduct within their operations, it is critical to launch an investigation and consider self-reporting as soon as possible.
Secondly, SFO found that some of Standard Bank’s anti-bribery policies were “unclear and not reinforced effectively… through communication and/or training”. Companies should make sure that their anti-bribery procedures are truly adequate if they want to defend themselves against a prosecution. Anti-bribery policies must be practical, appropriate to the business and actively promoted to all staff members. Much depends on senior managers setting the right "tone from the top".
Last but not least, a company that discovers criminality in its operations can potentially reach an early resolution and avoid prosecution if their leadership acts decisively and ethically. Accordingly, Ukrainian companies that have lately faced requirements to take active measures to prevent corruption and, under certain conditions, implement anti-corruption programs (also, briefly explained in this and this posts) have a great opportunity to learn from mistakes of others with abovementioned takeaways.
Summing up, the level of corruption infiltration into Ukrainian judicial and executive powers is probably still too high to implement the DPA. Moreover, the instrument itself contains certain corruption risks. At the same time, Ukrainian civil society is forcing state institutes to move towards more efficient white-collar crime combating technics based on the best international practices. And, as such, the DPA may become one of those breakthroughs in the sphere of anti-bribery compliance that Ukraine will experience in the upcoming years.