On 4 July 2019 at Southwark Crown Court, Mr Justice William Davis formally approved the fifth Deferred Prosecution Agreement (DPA) entered into by the UK’s Serious Fraud Office (SFO). The SFO’s latest DPA is with Serco Geografix Limited (SGL), a now-dormant subsidiary of Serco Limited (SL), and marks the end of a six-year investigation which started in November 2013 when the Ministry of Justice (MoJ) reported concerns about its contract with SL for the supply of electronic monitoring equipment, i.e., ankle tags, used to monitor individuals accused or convicted of criminal offences.
According to the judgment, while the investigation ‘revealed no evidence of any dishonest or fraudulent activity’ in respect of the original concerns, Serco Group PLC, the ultimate parent, in reviewing material thought to be relevant to those concerns, discovered emails which appeared to show there had been manipulation of accounting between SGL and SL designed to artificially reduce the profit margins reported to the MoJ, giving rise to a potential fraud on the public purse. It was this discovered conduct which ultimately led to the DPA.
The judgment raises some interesting points of law and practice. In this GT Alert, we consider the facts and analyse the features of this latest UK DPA, the first under new SFO Director Lisa Osofsky. We also discuss how a dormant company is able to pay significant financial penalties and costs and satisfy positive obligations to improve internal procedures (the answer is that, effectively, it doesn’t).
Click here to read the full GT Alert.