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UK court approves first-of-its kind ‘group’ DPA

On July 4, 2019, the UK’s fifth Deferred Prosecution Agreement was approved. The DPA is between the Serious Fraud Office and Serco Geografix Limited (SGL), a subsidiary of Serco Group PLC, and relates to fraud and false accounting offenses.

The offenses relate to a scheme to dishonestly mislead the Ministry of Justice (MoJ) as to profits being made between 2010 and 2013 by SGL’s parent company, Serco Limited (SL), from its contract for the provision of electronic monitoring services. The scheme prevented the MoJ from obtaining information which it could have used to reduce SL’s contract revenues, including limiting SL’s future profits, recovering SL’s previous profits, or seeking more favourable terms during renegotiation of contracts.

This is the first DPA containing substantial undertakings by a parent company in relation to one of its subsidiaries. Undertakings include reinforcing the compliance programs of Serco Group PLC’s subsidiaries in relation to fraud and bribery as well as reporting of future material issues. These undertakings therefore extend beyond the offenses to which the DPA relates and the party to the DPA (i.e. SGL).

The judgment (pdf) explains that no “directing mind” of SL or Serco Group PLC was deemed to be involved in the devising of the scheme, despite SL being the main beneficiary of the fraud, although there was sufficient evidence of individuals within SGL acting as “directing minds.”

The terms of the three-year DPA include a financial penalty of £19.2 million ($24 million) and a payment of £3.7 million ($4.6 million) in respect of the SFO’s costs. This is in addition to the £12.8 million ($16 million) compensation already paid by Serco Group PLC to the MoJ as part of a £70 million ($87.7 million) civil settlement in 2013.

The Statement of Facts has not yet been published (because a charging decision in relation to the individuals concerned has not yet been made) but we have set out below five key points arising from the judgment:

1. Self-reporting: The company was given credit for self-reporting despite the conduct having been identified in the course of Serco Group PLC reviewing material following a referral of the company to the SFO regarding well-publicised allegations of fraud in relation to electronic tagging.

2. Cooperation: The judgment emphasised that Serco Group PLC had complied with a request not to interview witnesses and limited its investigation to a document review (leaving the SFO to take first witness accounts). This was also the case in the Tesco DPA. The judgment refers to waiver of privilege in relation to some accounting material. We can expect these issues to be drawn out in more detail in the SFO’s upcoming self-reporting and cooperation guidance.

3. Delay: Despite the conduct having been reported in 2013 or 2014 (the precise date is unclear), it took over five years to reach a DPA and the SFO is not expected to make a charging decision in relation to individuals until at least December 2019. This is despite the fact that, according to the judgment, the fraud “was relatively simple in its formation and execution.”

4. Group DPA: This was the first ever “group” DPA, in that it included a separate but related undertaking by Serco Group PLC to the SFO to: (i) assume responsibility for the payment of the financial penalties (SGL has been dormant since 2018); and (ii) commit to a group-wide reinforcement of its compliance programmes across all of its subsidiaries. The judge referred the group DPA as “an important development in the use of DPAs” and this is something we can expect to see repeated in the future.

5. DPAs are no bar to debarment: The judgment makes clear that the decision as to whether or not a company will be debarred (whether it is convicted or a DPA is entered into) is a separate decision for the UK government under the Public Contracts Regulations 2015. The judge was careful to note that his decision would not be the determining factor in what he referred to as a “political decision.”


Andrew Reeves, pictured above, is a Senior Associate based in Norton Rose Fulbright’s London office. He represents corporates, financial institutions and ‎senior executives in relation to a range of major regulatory and criminal investigations, including those brought by the UK Serious Fraud Office, Financial Conduct Authority, and Information Commissioner’s Office, as well as U.S. and various local regulators and prosecutors. He can be contacted here

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