CPS SECURES ITS FIRST DEFERRED PROSECUTION AGREEMENT

On 5 December 2023, the High Court approved a deferred prosecution agreement ("DPA") between the Crown Prosecution Service ("CPS") and Entain plc ("Entain") for Entain's alleged failure to prevent bribery occurring in its legacy Turkish-facing business, contrary to section 7 of the UK Bribery Act 2010 (the "UKBA"). This is the first DPA entered into by the CPS, with the mechanism having previously only been deployed by the UK's Serious Fraud Office ("SFO"). It is also the second largest DPA secured in the UK to date (find our latest briefings on previous DPAs here and here).

The DPA followed an investigation into the company's Turkish-facing business launched in 2019 by HM Revenue and Customs ("HMRC"), a government agency which is not usually associated with bribery investigations, which are ordinarily handled by the SFO.

An Approved Summary of the Judgment and the DPA have been published following final approval of the DPA on 5 December 2023, with publication of the full judgment and the Statement of Facts having been postponed pending the end of the criminal proceedings.

Background

Entain, a FTSE 100 listed sports betting and gaming company, accepted responsibility for four counts of failing to prevent bribery under the UKBA. The alleged offences concerned the activities of former third-party suppliers and employees in Turkey, a country in which gambling is not legal under domestic law, from July 2011 to December 2017, the date at which Entain (which was known as GVC Holdings plc at the time) disposed of its Turkish business.

Under the terms of the DPA, the company has agreed to pay a total sum of £615 million over a four-year term, apportioned as follows:

• a financial penalty of £465 million to reflect Entain's revenue from the whole of its Turkish operations at the material time;
• a disgorgement of profits of £120 million;
• costs of £10 million (to be paid to HMRC and the CPS, the investigating bodies); and
• a charitable donation of £20 million to various charities in accordance with a memorandum that will be agreed between the CPS and Entain. This is a more unusual feature of the DPA and is not a term which has previously been seen in prior DPAs.

In addition to the standard DPA term requiring Entain to co-operate fully and in good faith with the relevant authorities (ie the CPS and others directed by the CPS) in all matters relating to the relevant conduct, the non-financial terms of the DPA also require Entain to:

• conduct its gambling operations only in regulated markets (and subject to the scrutiny of authorities such as the KSA – the Dutch gambling authority which recently fined an Entain group entity, BetCity, €3 million for anti-money laundering and terrorist financing failures);
• continue to review and, where necessary, enhance its compliance procedures; and
• engage PwC to conduct an external compliance review, the terms for which will be agreed with the CPS.

Interests of Justice

Dame Victoria Sharp P, President of the King's Bench Division, oversaw the case and explained, in her summary of the judgment, that a court will only approve a DPA if it is in the public interest to do so. In determining whether this threshold was met in these circumstances, the Court considered and balanced the following factors with the seriousness of the offences in question:

• The "sweeping changes to the compliance procedures" within the company – in addition to having sold its Turkish-facing business, since November 2020, Entain has exited around 140 markets in which there is no clear domestic gambling regulation. Entain's proactive overhaul of its culture and practices, which included engagement with external bodies to assist with ensuring its compliance programme is effective, has culminated in an Ethics & Compliance Programme which the CPS has determined to be "robust and fit for purpose" and the Court considered that the risk of repetition of relevant conduct was remote.
• Although Entain did not initially self-report, the summary of judgment indicates that the company co-operated extensively with the investigation, with the CPS considering that the extent of material voluntarily produced by the company was "akin to self-reporting". The Court accepted that Entain had taken significant steps to assist HMRC with their investigations and have committed to continuing to do so during the term of the DPA.
• The disproportionate consequences the company would have faced should it have been convicted, including the loss of relevant licences which may have endangered thousands of jobs in various jurisdictions in which the company holds licences, such as the United States, as well as the revenue losses which would risk damaging the interests of shareholders, pension fund holders, counterparties and those in the company's supply chain.
• The operation of the DPA will extend Entain's current co-operation obligations during its term and encourages self-reporting.
• The DPA avoids significant costs in time and money of a prosecution.

Taking the above factors into account, the Court concluded that it was satisfied that the interests of justice will be served by the approval of the DPA.

Commentary

Entain's DPA is a significant corporate criminal settlement, second in value only to the DPA in 2020 which required Airbus S.E. to make a payment of €991 million (£880 million) following an SFO investigation. Dame Sharp P (who also approved the Airbus S.E. DPA) applied the full 50% financial penalty discount to Entain as a result of its "exemplary co-operation and remediation". This follows the approach taken in previous DPAs, where nine out of the eleven DPAs conferring financial penalties have involved a 50% discount being applied as a result of the respective companies being fully cooperative with the investigators.

This DPA marks the first time that corporate bribery offences under the UKBA have been investigated and prosecuted by bodies other than the SFO, and it remains to be seen whether this was an anomaly arising out of the nature of HMRC's investigation or whether other investigative bodies and the CPS will become more active in a domain in which previously only the SFO has operated. The Chief Crown Prosecutor of the CPS, Andrew Penhale, said that "the CPS will continue to work closely with law enforcement partners in this area" indicating that the use of DPAs as a method of resolution may be an option the CPS is increasingly willing to explore.