JOHANNESBURG – Standard Bank Group Limited will pay UK and US regulators $37 million (R532 million) in fines after its global markets business, ICBC Standard Bank Plc failed to prevent bribery by two Stanbic Bank Tanzania executives.
The Industrial and Commercial Bank of China (ICBC) acquired 60% of Standard Bank Plc’s ordinary shares in February 2015. In terms of the sale, Standard Bank Group indemnified ICBC against the cost of such resolutions and as such is liable to pay the fines – amounting to some R532 million – in full.
The fines are a function of a Deferred Prosecution Agreement (DPA) entered into with the United Kingdom Serious Fraud Office (SFO), which in effect suspends a prosecution and withdraws it after three years in exchange for penalties.
“This DPA relates to allegations that SBPlc failed… to prevent two executives of Stanbic Bank Tanzania Limited from engaging a local partner with the intent that the engagement would induce Tanzanian government representatives into acting partially in awarding a capital raising mandate to SBPlc and Stanbic,” Standard Bank said in a statement on Monday.
Edward Garnier, the lawyer acting for the SFO, told Bloomberg that the case is connected to a $6 million bribe related to a private placing of sovereign notes to raise funds for the government of Tanzania.
Standard Bank said that the Group and Standard Bank Plc self-disclosed the issue to the SFO in April 2013 “within days of it coming to their attention” and assisted in full in the investigations.
“The Group and SBPlc commissioned the international law firm, Jones Day, to conduct an unrestricted, comprehensive investigation and reported the resulting findings in full to the SFO,” Standard Bank said. “Stanbic in turn ensured that the events were fully disclosed to the relevant authorities in Tanzania and has cooperated fully with all investigations.”
The SFO has not made any allegations that anyone within SBPlc knew of the intentions of the two Stanbic employees, according to Standard Bank.
This is the first time a Standard Bank entity has been investigated for bribery or corruption.
SBPlc has agreed to pay a penalty of $16.8 million (R241.8 million), which includes a one third reduction for the self-disclosure and co-operation. SBPlc will also pay $7.05 million (R101.5 million) in compensation to the Government of Tanzania and $8.9 million (R128.1 million) to refund profits related to the transaction and expenses related to the investigation.
For not disclosing the bribery to US investors, SBPlc has agreed to pay the United States Securities and Exchange Commission (SEC) $4.2 million (R60.5 million) to resolve a claim that it acted negligently.
Standard Bank’s share price was down 1.72% to R130.86 in late trade on Monday.