Deferred prosecution agreements – are the benefits really worth it?


Financier Worldwide Magazine

October 2016 Issue

October 2016 Issue

The first conviction under section 7 of the Bribery Act 2010 in December 2015 of the Sweett Group plc marked a milestone for the SFO and has undoubtedly been a sharp wakeup call to UK PLC (and UK Limited). However, with now two Deferred Prosecution Agreements (DPA) under the SFO’s curriculum vitae, companies (and their legal advisers) will undoubtedly be comparing and contrasting very carefully to ascertain whether entering a DPA really does pay.

Judicial approval was given on 8 July 2016 to the SFO’s second DPA which is against a UK SME (with a US parent) known for now as XYZ Ltd. The SME cannot currently be named to protect related proceedings.

Since the SFO’s declaration that the Standard Bank DPA, which was approved last November, set the benchmark for all future agreements, DPAs were in very real danger of becoming unfit for purpose and an overhyped white elephant.

The XYZ DPA has achieved a very welcome step back in the right direction, but it still does not go far enough to truly accomplish the government’s stated aims of incentivising companies to self-report and cooperate with the authorities.

The Standard Bank DPA revealed a highly commendable, but exceptional, response by the bank upon the issues coming to light, including a self-report made to the SFO at near lightning speed. In fact Standard Bank’s reaction was so impressive that the Joint Head of the Anti-Corruption Division of the SFO, Ben Morgan, even praised the bank’s legal advisers for having “the courage to innovate where others will now follow”.

He went on to say that: “Companies and their advisers would do well to reflect on those things that Lord Justice Leveson identifies as having influenced the court’s assessment of the public interests of justice under this head. As the judge says: ‘The second feature to which considerable weight must be attached is the fact that [the Bank] immediately reported itself to the authorities and adopted a genuinely proactive approach to the matter…In this case the disclosure was within days of the suspicions coming to the Bank’s attention, and before its solicitors had commenced (let alone completed) their own investigation.’”

He goes on to highlight certain features of what happened next: “There was an investigation by the bank’s advisers sanctioned by the SFO; the bank fully cooperated with the SFO from the earliest possible date by, among other things, providing a summary of first accounts of interviewees, facilitating the interviews of current employees, providing timely and complete responses to requests for information and material and providing access to its document review platform.

We have been saying for some time that we thought the bar on cooperation would be a high one if it is to satisfy the court that a DPA is in the interests of justice, and, in this case at least, that appears to have been right.”

However despite its laudable reaction, the terms which were imposed on Standard Bank were disappointingly severe, particularly the fine which was calculated using a multiplier of 300 percent from a range of 250 to 400 percent, and a discount of only 33 percent which is on a par with the discount usually applied to a guilty plea entered at the first reasonable opportunity. Further, a number of ongoing fairly onerous obligations were imposed on Standard Bank under the DPA (which lasts for three years) including detailed cooperation provisions going forward and the requirement for a detailed anti-bribery compliance review which will be conducted by PwC.

Unfortunately for the SFO, the Standard Bank DPA was closely followed in February 2016 by the imposition of a comparatively light sentence on Sweett Group plc for a guilty plea to failing to prevent bribery contrary to section 7 of the Bribery Act.

While Sweett ultimately ended up with a criminal conviction, it nonetheless benefitted from the following key advantages: (i) its financial penalty was proportionately lower since it was calculated using a 250 percent multiplier along with the 33 percent discount; and (ii) the proceedings against it were concluded at the sentencing hearing, and it is not subject to any ongoing conditions such as the monitoring of its compliance programme or cooperation with ongoing proceedings.

The net effect of the intimidatingly high bar and dishearteningly low reward set by the Standard Bank DPA, particularly when compared with the Sweett outcome, was to lead companies to wonder whether DPAs were actually more hassle than they were worth.

In the XYZ Ltd DPA, the SFO appears to have sought to redress the balance and offer some advantage beyond the avoidance of criminal conviction, such as: (i) the internal reaction of XYZ to the revelation of corruption issues, while still praiseworthy, was of a more achievable standard than that of Standard Bank; (ii) the fine was calculated using the 250 percent multiplier and a discount of 50 percent was applied rather than 33 percent in recognition of the fact that further discount should be given when a defendant not only pleads guilty, but brought the matter to the attention of the authorities in the first instance; and (iii) the financial status of the company and the impact that the fine would have on its future ability to trade was fully considered, and the fine was accordingly reduced to prevent the company being forced into insolvency.

While the XYZ DPA represents a clear signal from the SFO and the courts that a need for greater financial incentives is understood, we are of the view that a discount of more than just 50 percent should be offered against a backdrop of a genuine self-report and full cooperation in order to persuade more companies that it really is preferable to come forward to the SFO as soon as an issue comes to light rather than to ‘sit it out’ in the hope of avoiding detection.


Anne-Marie Ottaway is a partner, Laura Dunseath a senior associate and Elena Elia an associate barrister with Pinsent Masons. Ms Ottaway can be contacted on +44 (0)20 7490 6345 or by email: Ms Dunseath can be contacted on +44(0)20 7667 0102 or by email: Ms Elia can be contacted on +44 (0)20 7418 7050 or by email:

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Anne-Marie Ottaway, Laura Dunseath and Elena Elia

Pinsent Masons

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