The headquarters of the Serious Fraud Office in Westminster.
© Charlie Bibby

The British arm of South African lender Standard Bank is set to enter into the first-ever deferred prosecution agreement with the UK Serious Fraud Office.

The deal will settle an investigation that has already received initial sign-off from a senior judge.

Lord Justice Brian Leveson will hear the facts of the case at a public court hearing on Monday in London at the Royal Courts of Justice. Full details of the case and terms of the agreement will be given at the hearing, the SFO said. If the DPA is approved the agency will publish the terms.

The deal is the first of its kind to strike a new form of plea to avoid prosecution — such a procedure is commonly used in the US. A DPA is a court-approved deal where a company admits wrongdoing, pays a fine and agrees to various other compliance measures. It was introduced to the UK last year.

It follows a significant victory for the agency, which won the conviction of Tom Hayes, the former UBS and Citigroup yen derivatives trader, over Libor manipulation. Mr Hayes was sentenced in August to 14 years in prison. The SFO is at present prosecuting six former interdealer brokers in connection with alleged Libor manipulation, a case being heard at Southwark Crown Court in London, and recently charged former Barclays and Deutsche Bank traders with Euribor manipulation.

Still, the SFO suffered a setback earlier this month when it announced it would drop its prosecution of Olympus, the Japanese camera maker, after its former chief executive Michael Woodford blew the whistle on a $1.7bn accounting scandal. In that case, the agency stressed that it was the law to blame, rather than its procedures.

David Green, the SFO’s director, has said he hopes at least two DPAs will be signed by the end of the year.

Under Mr Green’s predecessor, Richard Alderman, and before DPAs had been introduced in the UK, the SFO made several attempts to settle probes into companies such as Innospec and BAE Systems by offering deals, but were met with severe criticism from the judiciary.

Mr Green has said the primary requirement for a company to be considered for a DPA is complete co-operation with the SFO.

The maximum fine to be decided by the court on Monday will be $40m, according to a statement to the Johannesburg stock exchange published by the bank.

Standard Bank’s UK division is now controlled by Industrial and Commercial Bank of China, although the alleged wrongdoing predates ICBC’s acquisition.

Standard Bank said as part of the terms of the takeover earlier this year it had agreed to indemnify ICBC against the costs of any such probes.

The SFO’s investigation centred on alleged bribery in Africa, according to people familiar with the case. Neither the SFO or the bank would comment.

Standard Bank’s UK arm previously came to the attention of the authorities when last year the Financial Conduct Authority fined the bank £7.5m for lax controls against money laundering.

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