SFO secures first conviction of an individual for DPA-related conduct but challenges remain

In early March 2023, the Serious Fraud Office (the "SFO") secured its first conviction of an individual in connection with conduct subject to a deferred prosecution agreement ("DPA"). Whilst undoubtedly a success for the SFO, the conviction is the only one of its type to date, despite the SFO having entered into 12 DPAs since the introduction of the DPA regime in 2014, and it arose from a guilty plea rather than the completion of a contested trial. As a result, it is not clear that this will be the beginning of a trend which will see more individuals convicted as a result of conduct which is also the subject of a DPA. Indeed, the week after the conviction, three former executives of G4S (a company which had also entered into a DPA) were acquitted after the SFO offered no evidence against them.

First conviction of an individual linked to a DPA

Although the SFO has brought prosecutions against a number of individuals in respect of conduct related to a DPA, the conviction of Roger Dewhirst was the first time that the SFO had secured a conviction.

Mr Dewhirst was one of five individuals charged in connection with suspected bribery offences by two UK companies. The conduct at issue involved the payment of bribes to secure contracts from Mr Dewhirst's employer. The two companies involved, Bluu Solutions ("BLS") and Tetris Projects ("TPL"), entered into DPAs with the SFO in July 2021 (as we discussed here) and agreed to pay a total of £2.5 million in respect of offences under the Bribery Act 2010 (the "Bribery Act").

According to the agreed statement of facts (available here), BLS sought to influence the award of five refurbishment contracts over a two-year period (March 2014 – July 2016).Two of its directors made unlawful payments totalling over £466,000 to secure four contracts, and promised to make further payments to secure a fifth.

BLS and TPL were initially competitors until BLS was acquired by the group which owns TPL. BLS employees began working for TPL in January 2016 and the two BLS directors alleged to have paid the bribes became directors of TPL. According to the agreed statement of facts, the two directors continued to authorise improper payments once at TPL, which were paid from a shared bank account. The directors have subsequently been acquitted of related charges at trial.

Mr Dewhirst pleaded guilty to two counts of receiving bribes contrary to section 2 of the Bribery Act. The charges related to the receipt of around £291,000 in bribes intended to help BLS secure a refurbishment contract. Mr Dewhirst's three co-defendants (including the two BLS directors referred to above) were acquitted for their alleged role in the scheme in January 2023 following a jury trial. Mr Dewhirst's wife was acquitted in a separate trial in October 2022 in respect of related money laundering charges.

Whilst the conviction is a positive milestone for the SFO, it is worth noting that Mr Dewhirst's guilty plea, and the acquittal of his co-defendants mean that the SFO has yet to secure a post-DPA individual conviction in a contested trial.

The BLS and TPL DPAs (available on the SFO's website here) also highlight some of the potential risks that companies face in mergers and acquisitions, and particularly the risk of successor liability. This is also an issue that we discussed in the context of the Amec Foster Wheeler Energy DPA, entered into in July 2021.

The BLS/TPL agreed statement of facts notes that BLS had minimal procedures in place to prevent bribery by its associated persons (eg the anti-bribery and corruption ("ABC") policy was generic and not effective or enforced, no formal bribery risk assessment had been conducted, no due diligence was carried out in respect of third parties, no anti-bribery training was delivered, etc). Anti-bribery procedures were introduced into the new combined business following the merger, but these new procedures could not be considered adequate, according to the agreed statement of facts, as they lacked the top-level support from the two directors implicated in the bribery who "appear to have been determined to carry on as they had at BSL pre-integration and to conceal their intentions and conduct". Top-level commitment is one of the six principles for implementing adequate procedures to prevent bribery in the Ministry of Justices' Guidance on the Bribery Act (available here). Following an internal investigation, triggered by potential issues identified in a post-acquisition audit, TPL self-referred to the SFO and took steps to remediate its anti-bribery compliance programme. However, TPL itself also entered into a DPA in respect of its failure to prevent the ongoing bribery post-acquisition.

Further acquittals of individuals

On 10 March 2023, three former executives of G4S were acquitted after the SFO offered no evidence against them and stated it was no longer in the public interest to prosecute them. The SFO also reportedly recognised that challenges in disclosure had contributed to its decision to not offer any evidence in the case.

The defendants had been charged with seven counts of fraud in relation to conduct in respect of which G4S had entered into a DPA and agreed to pay a financial penalty of £38.5m and the SFO's full costs of £5.9m in 2020 (the full details of the G4S DPA were discussed in our blog post here).

The collapse of this prosecution underscores the continued challenges in prosecuting individuals for conduct related to DPAs, including challenges with disclosure in complex fraud cases (as discussed in our blog relating to the prosecution of individuals in respect of conduct related to the Serco DPA).