The Serious Fraud Office has been asked to reopen its controversial “plea deal” investigation into London-based ICBC Standard Bank after claims the SFO were misled by the bank.
The bank paid nearly £22m after admitting it failed to prevent bribery by two bankers at a sister firm. The deal, sanctioned by a High Court judge, was the first time the SFO had used its powers to strike a deferred prosecution agreement (DPA).
The court heard two officials at a former sister company of the London bank paid $6m (£3.9m) to a third-party in Tanzania to help secure a deal for the bank to raise £400m for the Tanzanian government. It later emerged the company the $6m was paid to was owned by two senior Tanzanian government officials (one of who was no longer working for the government). Despite a risk of corruption, “inadequate and ineffective” checks were carried out. When the $6m was withdrawn in cash over four days, the bank and its legal advisers reported the matter to the SFO.
The DPA deal meant the bank escaped prosecution in return for a financial penalty and the promise it will improve its anti-crime rules and enforcement and not re-offend for three years. DPA deals have been criticised for letting those responsible off the hook, and failing to deter bribery and corruption, particularly in developing countries. Tanzania is still repaying the expensive Standard Bank deal.
However, David Green, the SFO’s director, has now been asked to reopen the investigation, after claims by a former senior bank official in Tanzania that officials in London were “well aware” what was going on but “suppressed key facts” to help it secure the SFO deal.
The bank paid nearly £22m after admitting it failed to prevent bribery
The petition comes as it was revealed that a former banker involved in the original controversial deal is suing ICBC Bank and Stanbic Bank, its former Tanzanian subsidiary, for $30m for “ruining her banking career and any other finance-related business”. Shose Sinare, the former head of investment banking at Stanbic Bank, claims the bank secured the DPA by “suppressing key facts.” In legal documents seen by The Independent she claims the bank wrecked her career by alleging she participated in the bribery scheme.
She claims the Standard Bank misrepresented the fact it was not aware of a local third party involvement in the deal insisting it was well aware before signing the deal and that a draft collaboration document had been circulated to the entire deal team including senior officials in London.
Biggest business scandals in pictures
Biggest business scandals in pictures
1/17 Rogue trader
A French court cut the damages owed by rogue trader Jerome Kerviel from €4.9bn (£4.2bn) to just €1m (£860,000). The court ruled on that Kerviel was “partly responsible” for massive losses suffered in 2008 by his former employer Societe Generale through his reckless trades. Kerviel has consistently maintained that bosses at the French bank knew what he was doing all along.
2/17 Lloyds chief apologises for damage caused by affair allegations - August 2016
Antonio Horta-Osorio, the chief executive of Lloyds Bank, has broken his silence over allegations about his private life admitting he regrets any "damage done to the group's reputation". In a message sent to the bank's 75,000 employees, the banker said that anyone can make mistakes while insisting that staff had to maintain the highest professional standards.
3/17 Christine Lagarde faces court over £340m Bernard Tapie payment - July 2016
The head of the International Monetary Fund (IMF), Christine Lagarde, must stand trial in France over a payment of €403 million (now £340m, then £290m) to tycoon Bernard Tapie, a France's highest appeals court has ruled. The court rejected Ms Lagarde's appeal against a judge's order in December for her to stand trial over allegations of negligence in her handling of the affair. Ms Lagarde could risk a maximum penalty of one year in prison and a fine of €15,000 euros if convicted.
4/17 HSBC senior manager arrested in FX rigging investigation at JFK airport in New York - July 2016
A senior executive at HSBC has been arrested at New York's JFK airport for his alleged involvement in a conspiracy to rig currency benchmarks, according to reports. Mark Johnson, global head of foreign exchange cash trading in London, was reportedly arrested on Tuesday. He will appear before a federal court in Brooklyn on Wednesday charged with conspiracy to commit wire fraud, Bloomberg said.
5/17 Former PwC employees found guilty in 'Luxleaks' tax scandal - June 2016
Two ex- PricewaterhouseCoopers staffers were found guilty in Luxembourg of stealing confidential tax files that helped unleash a global scandal over generous fiscal deals for hundreds of international companies. Antoine Deltour and Raphael Halet face suspended sentences of 12 months and 9 months and were ordered to pay fines of €1,500 (£1,230) and €1,000 (£822) for their role in the so-called LuxLeaks scandal. Despite the minimal sentences, the ruling was described by Deltour’s lawyer as “shocking” and “a terrible anomaly.” The ruling “puts on guard future whistle-blowers,” Deltour told reporters.The LuxLeaks revelations sped beyond Luxembourg, causing European Union regulators to expand a tax-subsidy probe and propose new laws to fight corporate tax dodging, while EU lawmakers created a special committee to probe fiscal deals across the 28-nation bloc.
6/17 Goldman Sachs dealmakers lavished Libyan officials with prostitutes to win contract - June 2016
A former Goldman Sachs dealmaker trying to persuade Gadaffi-era Libya to invest $1 billion with the investment bank procured prostitutes and invited Libyan officials to lavish parties in the hope of winning the business, the High Court heard on Monday June 13.The Libyan Investment Authority sovereign wealth fund is suing Goldman Sachs for inappropriately coercing its naïve staff into giving its sovereign wealth fund cash to the bank to invest in products they did not understand. The products were designed to generate big profits for Goldman, the LIA claims.Goldman denies wrongdoing and says the LIA was treated as an arms-length customer
7/17 Former boss of BHS said his life was threatened - June 2016
Darren Topp, the former boss of BHS, has said former owner Dominic Chappell threatened to kill him when he challenged him over a £1.5 million transfer out of the business. MPs on the Business, Innovation and Skills Committee asked Mr Topp about a £1.5 million transfer Mr Chappell made from BHS to a company called BHS Sweden.
8/17 Sports Direct founder Mike Ashley admits paying workers below the minimum wage - June 2016
Mike Ashley admitted paying Sports Direct employees below the minimum wage at a hearing in front of MPs. The company founder said that workers were paid less than the statutory minimum because of bottlenecks at security in an admission that could result in sanctions from HMRC.
9/17 Mitsubishi admits ‘improper’ fuel tests - April 2016
Mitsubishi has admitted to using false fuel methods dating back to 1991. The scale of the scandal is only just coming to light after it was revealed in April that data was falsified in the testing of four types of cars, including two Nissan cars.
10/17 Panama Papers: Millions of leaked documents expose how world’s rich and powerful hid money - April 2016
Millions of confidential documents have been leaked from one of the world’s most secretive law firms, exposing how the rich and powerful have hidden their money. Dictators and other heads of state have been accused of laundering money, avoiding sanctions and evading tax, according to the unprecedented cache of papers that show the inner workings of the law firm Mossack Fonseca, which is based in Panama.
11/17 Google's tax avoidance
Google reached a deal with the HM Revenue and Customs to pay back £130 million in so-called “back-taxes” that have been due since 2005. George Osborne championed the deal as a “major success”. But European MEPs have since called for the Chancellor to appear in front of the committee on tax rulings to explain the tax deal.
12/17 Turing Pharmaceuticals and Martin Shkreli
Martin Shkreli became known as the “most hated man in the world” after his drug company, Turing, increased the price of a 62-year-old drug that treated HIV patients by 5,000% to $750 a pill. He was charged with illegally taking stock from Retrophin, a biotechnology firm he started in 2011, and using it pay off debts from unrelated business dealings. Shkreli, who maintains he is innocent, and says there is little evidence of fraud because his investors didn't lose money.
13/17 Volkswagen emissions scandal
VW admitted to rigging its US emission tests so that diesel-powered cars would looks like they were emitting less nitrous oxide, which can damage the ozone layer and contribute to respiratory diseases. Around 11 million cars worldwide were affected.
14/17 Quindell, the scandal-ridden insurance firm
Quindell was once a darling of AIM but its share price fell in April 2014 when its accounting practices were attacked in a stinging research note by US short seller Gotham City. In August the group was forced to disclose that the £107 million pre-tax profit it had reported for 2013 was incorrect, and it had in fact suffered a £64million loss.
15/17 Toshiba Accounting Scandal
The boss of Toshiba, the Japanese technology giant, resigned in disgrace in the wake of one of the country’s biggest ever accounting scandals. His exit came two months after the company revealed that it was investigating accounting irregularities. An independent investigatory panel said that Toshiba’s management had inflated its reported profits by up to 152 billion yen (£780m) between 2008 and 2014.
16/17 FIFA Corruption Scandal
Fifa, football's world governing body, has been engulfed by claims of widespread corruption since the summer of 2015, when the US Department of Justice indicted several top executives. It has now claimed the careers of two of the most powerful men in football, Fifa President Sepp Blatter and Uefa President Michel Platini, after they were banned for eight years from all football-related activities by Fifa's ethics committee. A Swiss criminal investigation into the pair is ongoing.
17/17 Libor fraudster
City trader Tom Hayes, 35, has become the first person to be convicted of rigging Libor rates following a trial at London's Southwark Crown Court. Hayes worked as a trader in yen derivatives at UBS before joining the American bank Citigroup in Tokyo. He was fired from Citigroup following an investigation into his trading methods. He returned to the UK in December 2012 and was arrested following a two-and-a-half year criminal investigation by the SFO.
According to the writ Standard Bank told the SFO she resigned from her position to avoid co-operation in an internal investigation by them. It claims she co-operated fully both before and after she resigned. She insists she only quit her job in protest at the way “she was victimised and/or treated for a decision made by Standard Bank”.
She continued to help even after quitting and was even flown to Standard Bank’s offices in South Africa to assist them. She claims that during one meeting a very senior bank official told her “it was essential that the bank is not in any way implicated in the allegations of, or impression of bribery because if it was it would lose its banking licence in the UK; or forced to refund investors the entire $600m and/or lose a very important transaction with the ICBC of China, which was negotiating to sell its business in London.”
The bank’s internal investigation report implicated her in the bribery report but did not give her an opportunity to see the allegations or respond to them she claims. Ms Sinare is reported to be facing investigation in Tanzania.
More than a 1,000 people including senior Tanzanian church and political figures have signed a petition calling for the SFO to reopen the investigation.
Kapinga Kangoma, a London-based activist with Tanzania’s ruling political party, said Tanzanians needed to learn the full truth about the allegations. “Corruption has caused huge problems for our citizens and we need to know the perpetrators are going to be brought to justice.”
The SFO said in a statement: "The SFO conducted an independent investigation into the matters self-reported to us by Standard Bank Group. We have now concluded the case into those matters that fall within the UK’s jurisdiction
"The SFO can and does provide mutual legal assistance (MLA), this includes assisting overseas authorities to investigate and prosecute bribery and corruption. Any request for assistance in this case can be made to the UKCA who will consider it and if appropriate refer it to the SFO.
"We cannot comment on third party litigation."