Standard Bank’s lawyers walked into the Royal Courts of Justice in London on 30 November 2015 and walked out with the first Deferred Prosecution Agreement the UK Serious Fraud Office had ever secured. Criminal proceedings were suspended on the spot.
The price was a fine of USD 25.2 million, plus a further USD 7 million in compensation for the Government of Tanzania. Together that comes to over $32 million. The bank also agreed to cooperate fully with the SFO’s ongoing enquiries and to make material available for the investigation in Tanzania.
A USD 6 million payment
The case traces back to March 2013. A former sister company of Standard Bank, Stanbic Bank Tanzania, paid USD 6 million to a local partner, Enterprise Growth Market Advisors. Investigators suspected the money was meant to induce Tanzanian public officials to favour Stanbic and Standard Bank’s proposal for a USD 600 million private placement on behalf of the government.
The SFO indicted Standard Bank PLC, now ICBC Standard Bank PLC, for failing to prevent bribery under section 7 of the UK’s Bribery Act 2010. It was the first significant use of that section.
Arrests in Tanzania
Tanzania’s Prevention and Combating of Corruption Bureau opened its own investigation. In 2016 it arrested five people: Harry Msamire Kitilya, the former Director General of the Tanzania Revenue Authority; Shose Mori Sinare and Sioi Graham Solomon, Stanbic’s former Head of Investment Banking and former Chief Legal Counsel; and two Ministry of Finance officials, Bedason Anthony Shallanda and Alfred Paul Misana.
Early on, the work centred on material held in Tanzania. It soon became clear that evidence abroad mattered just as much. Partners in the UK, including the International Centre for Asset Recovery at the Basel Institute on Governance, helped the bureau and the National Prosecution Service. Many witnesses were interviewed, and large volumes of material arrived from the UK and South Africa. The sheer volume was one problem; legal differences between countries were another.
Trial, delays and a plea
By 2019 the case was ready for trial. Then hearings were only partway through when the covid-19 pandemic hit, and the trial was adjourned repeatedly in early 2020. In September 2019, meanwhile, Tanzania had amended its law to allow plea bargains.
On 26 August 2020, the defendants pleaded guilty to 1 of 58 charges of occasioning economic loss to the government. They were ordered to jointly pay TZS 1.5 billion, roughly USD 650,000 at the time, and each was fined a further TZS 1 million.
That sum is about a tenth of the TSZ 12 billion fraudulently obtained. Shane Nainappan of the Basel Institute, who wrote the case study, argues the figure looks small only at first glance. Standard Bank had already compensated the government for its loss. The defendants had spent over four years in custody. Financial enquiries had found no realisable assets of any great value. And continuing the trial would have meant calling evidence for roughly another 18 months, with the defence case still to come.
Sources
Sources
- Section: Case Study 2 | From the UK's first Deferred Prosecution…
- UKs Serious Fraud Office Announces First Deferred Prosecution…
