Serco DPA puts individuals, and corporate parental responsibility, in the spotlight

The possibility of individual prosecutions of senior executives for corporate white-collar crime has arisen once more as a result of a Deferred Prosecution Agreement reached between a subsidiary of multinational outsourcing specialist Serco Group plc (Serco Group) and the Serious Fraud Office (SFO).

The DPA, the fifth to be agreed in the UK, also heralds the likelihood that in future parent companies may be expected not just to take responsibility for wayward subsidiaries, but may need to extend remediation group-wide if a DPA is to be in the public interest.

SGL agreed to pay a fine of £19.2 million, and the SFO’s costs of £3.7 million. Serco agreed to implement wide-ranging compliance changes across not just SGL but the entire group, and to report to the SFO annually on its performance for the three-year life of the DPA.

The DPA arises from the SFO’s investigation of Serco Geografix Ltd (SGL), a UK subsidiary of Serco Group which for several years provided electronic tagging services to the Ministry of Justice (MoJ). SGL took responsibility for three offences of fraud and two of false accounting. The offences arose because SGL misled the MoJ for three years to 2013 about how much profit it was making from its provision of electronic tagging, so as to stop the MoJ from using that information to cut the cost of the project to the taxpayer. Serco Group discovered the behaviour at SGL in the course of investigations connected to another SFO enquiry, which has now closed without charge, and self-reported its findings.

In approving the DPA on Thursday 4 July 2019, Mr Justice Davis described this as a “quite deliberate fraud” in which SGL had “cooked the books to allow [the group] to retain the profit… which would otherwise have been clawed back by the MoJ”.

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For the reader’s ease of reference: the SFO’s News Release is accompanied by a zip file containing the DPA itself and Serco Group’s accompanying undertaking. The judgment can be downloaded separately.

The Authors

Oliver is a contributor to Millington & Sutherland Williams on the Proceeds of Crime (Fifth Edition), OUP, writing the chapters on Investigations and Bribery & Corruption. His practice encompasses: asset recovery (civil and criminal), bribery & corruption, commercial fraud, sanctions, and matters involving financial wrongdoing. He acts almost exclusively for companies and company officers in relation to investigations by the SFO, FCA and Lloyd’s of London. He is routinely invited to talk at events in the ‘White Collar Space‘, recent engagements of note include: chairing a conference panel at AMLP 7th Annual Anti-Bribery and Corruption Forum; and speaking on behalf of SanctionsAlert.com.

Jeremy Scott-Joynt practices across a number of areas both civil and criminal. Prior to becoming a barrister, he ran financial crime compliance programmes in two international banks, having previously worked in intelligence and investigations at the Financial Services Authority.

Post Script

Michael Bowes QC was leading counsel instructed on behalf of the Serious Fraud Office in SFO v Serco Geografix Limited.

Michael Bowes QC is Head of the Business Crime Group at OTC. He 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. He advises companies in respect of US and EU sanctions. He is a co-author of the Practitioner’s Guide to Global Investigations (GIR, 2nd ed.2018).

Should you require further information about Michael, Oliver and/or Jeremy, or if you would like to instruct any of them, please contact David Smith, Business Development Director.

News 4 Jul, 2019