SFO secure largest Deferred Prosecution Agreement in the UK
Aerospace manufacturer Airbus has agreed to pay regulators almost 3.6 billion Euros, to settle a global investigation into allegations of bribery and corruption. As part of this deal, a staggering 991 million Euros is payable in the UK, after a Deferred Prosecution Agreement (DPA) was entered into with the Serious Fraud Office (SFO).
The SFO began their investigation 4 years ago, after suspicions were raised that Airbus and its associates, who were external intermediaries, had paid bribes to secure sales of its aircraft.
The commercial and defence & space divisions of Airbus were charged with 5 counts of failing to prevent bribery, which concerned conduct that took place between 2011 and 2015 across Ghana, Indonesia, Malaysia, Sri Lanka, and Taiwan.
Although Airbus had reportedly got off to a slow start, the regulators were eventually satisfied that the company had cooperated to the fullest extent and that it had adopted a programme of corporate reform which had been implemented by new leadership at the very top of the organisation.
Is this a good deal for Airbus and the SFO?
Ultimately, this deal gives the SFO cause to bang the drum and point to a DPA that, in monetary terms, has eclipsed the collective value of all of the other DPA’s since the UK first introduced this American style system six years ago.
However, critics have scrutinised the timing and suggested that it simply papers over the cracks, at a time when the SFO has come under fire for a falling case load and a growing perception that it is failing to secure convictions.
The recent and well-publicised collapse of the trial involving 3 Tesco executives who, allegedly, were involved in a £250 million accounting scandal only serves to support this view. Even the SFO’s own statistics show that 10 cases were closed without charges being brought against those under investigation in the last 12 months. This is in stark contrast to the period between 2015 and 2018 when only 7 cases were closed in total.
In those cases where DPA’s have been entered into, the SFO have failed to secure convictions against any individuals suspected of wrongdoing. This has led to calls that bigger companies, such as Airbus, now see DPA’s as nothing more than just the cost of doing business, safe in the knowledge that individuals within those companies are unlikely to face justice.
What key points can companies take from this?
The Airbus case is a clear indicator of the extent to which regulators across the globe are prepared to cooperate in the pursuit of those who they believe are guilty of bribery and corruption.
Furthermore, providing that companies cooperate to a high level, it is also proof that any failure to self-report from the outset is not necessarily a bar to securing a DPA. In demonstrating high level cooperation, companies should have regard to the SFO’s co-operation guidance which we have reported on previously.
Is the DPA regime here to stay?
Whilst there is nothing to suggest that DPA’s are under threat at all, many feel that there are several key areas which the SFO should look at going forward.
Firstly, following reports by the charitable organisation Spotlight on Corruption, that companies are likely to face lesser financial penalties and constraints if they are convicted rather than if they enter into a DPA, this raises the obvious question of whether the current regime encourages companies to contest allegations of bribery and corruption rather than coming clean to the regulator
Secondly, following recent suggestions that fewer companies are willing to self-report, many believe that the SFO should introduce a regime, whereby a distinction is drawn between the penalties that are imposed on companies, who voluntarily come forward and approach the regulator and those companies who sit on their hands until their misconduct is discovered.
Finally, if convictions against senior managers are seemingly so difficult to achieve, many believe that the SFO need to consider alternative ways to penalise those who are in charge of companies which commit wrongdoing. However, given that complex organisational structures are often in place, the prospect of holding senior personnel to account is likely to remain difficult.
Contact our Compliance & Regulatory team today, if you would like to hear more about how your organisation can adequately protect itself where bribery is suspected.
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