ICBC Standard Bank to Pay $33 Million to End Bribery Case

  • First deferred prosecution agreement in U.K. under new powers
  • Deal includes $16.8 million fine, disgorgement of profits

ICBC Standard Bank Plc will pay about $33 million to resolve an investigation into bribery at its former Tanzanian unit, after a London court approved the first-ever deferred prosecution agreement in the U.K.

The deal with the U.K. Serious Fraud Office, which lasts for three years, was signed-off by Judge Brian Leveson in London on Monday. The settlement includes a $16.8 million fine, the disgorgement of $8.4 million in profits, $7.04 million in compensation and interest to the Tanzanian government and 330,000 pounds ($500,000) in SFO legal fees.

The DPA means ICBC Standard Bank won’t face prosecution for bribery committed by two executives at the bank’s former Tanzanian unit between June 2012 and March 2013. The executives committed bribery "to retain business" and to "induce public officials to act improperly", the SFO’s lawyer Edward Garnier said at the hearing today.

Under a DPA, prosecution is suspended if the company agrees to conditions that can include paying a fine, repaying profits, and helping bring cases against individuals. SFO Director David Green said in recent speeches the agency is planning two such deals to be agreed by the end of the year. DPAs are a common enforcement tool in the U.S. but were only introduced into U.K. law in February 2014.

“This landmark DPA will serve as a template for future agreements,” Green said in a statement. “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.”

The DPA relates to a $6 million payment by former sister company of Standard
Bank, Stanbic Bank Tanzania, in March 2013. The funds were sent to Enterprise Growth Market Advisors, a consulting firm linked to the Tanzanian government. The payment was intended to encourage Tanzania’s government to favor the bank in its $600 million private placement, which generated fees of $8.4 million for the bank.

The bank said in a statement last week that the facts to which the DPA relate took place before ICBC acquired a 60 percent majority shareholding in South Africa’s Standard Bank in February.

The bank said in a statement Monday that it disclosed the issue to SFO in April 2013 and cooperated with the investigation.

"The bank takes the risk of corruption very seriously and deeply regrets that this issue arose on a transaction with which it was involved," said Andrew Walton, a spokesman for Standard Bank. "The SFO has not made any allegations that anyone within the bank knew of the intention of the two" employees.

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