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Insights / News
Michael Bowes QC has been acting for the Serious Fraud Office (SFO) in relation to the Deferred Prosecution Agreement (DPA) agreed with Serco Geografix Limited (SGL), which was approved by Mr Justice William Davis at Southwark Crown Court on 4 July 2019.
The DPA followed SGL self-reporting to the SFO. The undertakings given by Serco Group plc broke new ground in the development of DPAs.
Mr Justice William Davis stated in his judgment, “Without the undertakings given by the parent company it is very unlikely that the goals of a DPA could have been achieved in the circumstances of this case. This is the first occasion on which undertakings of the kind made by Serco Group PLC have been by a parent company in relation to a DPA entered into by one of its subsidiaries. It is an important development in the use of DPAs. The nature of modern corporate structures means that it may be problematic to show that a controlling mind of the parent company was involved in the criminality carried out by a subsidiary company even where the benefit of the criminality tended to accrue to the parent company. Yet it will be the parent company which necessarily must engage in any compliance programme and cooperate with law enforcement agencies. The approach taken by Serco Group PLC in this case strengthens the public interest in the approval of this DPA.”
The DPA is in respect of a five-count indictment against SGL, which is comprised of three counts of fraud contrary to section 1 of the Fraud Act 2006, and two counts of false accounting contrary to section 17 of the Theft Act 1968.
The charges arise out of a fraud SGL and others committed against the Ministry of Justice (“MoJ”) between 2011 and 2013 by means of fraudulent financial reporting to the MoJ and related false accounting (Counts 1 to 4). Further false accounting occurred when SGL falsified its statutory accounts for the year ending 31 December 2011 (Count 5).
The purpose of the fraud was dishonestly to mislead the MoJ as to the true extent of the profits being made by SGL’s parent company, Serco Limited (“SL”) under contracts for the provision of electronic monitoring services entered into by the Secretary of State for the Home Department and SL, so as to ensure a financial gain for SL from those contracts.
SGL will pay a financial penalty of £19.2 million, and the full amount of the SFO’s investigative costs (£3.7m). This is an addition to the £12.8m compensation already paid by Serco to the MoJ as part of a £70m civil settlement in 2013. Serco Group pcl has undertaken responsibility for SGL’s payment of the financial penalty and costs.
Please click here for the SFO press release.
Michael Bowes QC, joint head of Outer Temple Chambers, is a highly regarded expert in civil and criminal “cross-over” work. He is praised as “one of the few specialist criminal practitioners in this area” (Legal 500). Michael specialises in business crime, civil fraud, financial services and international sanctions. He acts for corporate clients and senior managers in global investigations and for the SFO, FCA, CMA and Lloyd’s of London. He is instructed in several current major financial cases, both civil and criminal and in several substantial cross-border corruption investigations.
To instruct Michael or to find out more, please contact firstname.lastname@example.org.
News 3 Jul, 2019