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Following U.K. DPA, Company Executives Acquitted Of The Same Alleged Underlying Conduct

A guest post today from Dan Stowers [1] (Shoosmith LLP in London).

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Michael Sorby was the first managing director to be prosecuted, and then found not guilty, following the conclusion of a Deferred Prosecution Agreement (DPA)[1] [2] between the Serious Fraud Office (SFO) and Sarclad (formally publicised as XYZ). (See here [3] and here [4]). Represented by Dan Stowers (Shoosmiths LLP), John Harrison QC (St Pauls Chambers) and Henry Grunwald QC (Charter Chambers) the verdicts from the jury, and directed by the trial judge, further confirms that the SFO has struggled to prosecute individuals on charges stemming from the DPAs, which became available in 2014. The verdicts throw into doubt any prosecution of individuals following a DPA and the suitability of the DPA process as a whole.

The SFO reached a DPA with Sarclad Ltd in July 2016, following a self-report in January 2013. Sarclad accepted the charges of corruption and failure to prevent bribery in relation to the systematic use of bribes to secure contracts in a number of overseas territories, including China.  As a result of the DPA, Sarclad agreed to pay financial orders of over £6.5 million. On 16 July 2019, following a ten-week trial in Southwark Crown Court (London), the three executives, including Michael Sorby, were acquitted.

Mr Sorby had been acquitted of the conspiracy to bribe at an earlier stage in the proceedings, on the direction of the trial judge, who ruled that there was no evidence of Mr Sorby’s involvement. The acquittals of the defendants, and particularly that of Mr Sorby following the judge’s ruling, are expected to raise questions about Sarclad’s DPA with the SFO.  How could it have been agreed between Sarclad and the SFO that Mr Sorby was the controlling mind of the company at the relevant time, when the trial judge ruled there was no evidence of his involvement in a conspiracy to bribe?

It is apparent that both the investigation that led to the self-report, and the subsequent SFO investigation, were fundamentally flawed. Without descending into the detail of the investigation or the evidence, we suggest the following issues must be addressed in any future internal investigation and/or DPA:

[1] [5] Taken  from the Serious Fraud Office website:

“A UK Deferred Prosecution Agreement (DPA) is an agreement reached between a prosecutor and an organisation which could be prosecuted, under the supervision of a judge.The agreement allows a prosecution to be suspended for a defined period provided the organisation meets certain specified conditions.DPAs can be used for fraud, bribery and other economic crime. They apply to organisations, never individuals.The key features of DPAs are:

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