Addleshaw Goddard advised Güralp Systems Limited ("GSL") in relation to a criminal investigation conducted by the Serious Fraud Office ("SFO") which was resolved by way of a Deferred Prosecution Agreement ("DPA"). This was a difficult case to resolve given the financial orders which typically accompany a DPA. Whilst this is the sixth time the SFO have concluded a DPA, the circumstances of the case meant that the only available resolution was a targeted solution focused on disgorgement. This is the first time no financial penalty has been levied and allows the SFO and company considerable flexibility to agree how payment will be achieved and over what period.
The investigation process has taken over four years and commenced after the company self-reported suspicious payments made to a government official in South Korea. The DPA provided an alternative resolution to a criminal prosecution for conspiracy to make corrupt payments and failure to prevent bribery by employees.
The DPA was approved on 22 October 2019 by Mr Justice William Davis, sitting at Southwark Crown Court. The existence and content of the DPA was subject to reporting restrictions pending the outcome of the criminal trial of the former employees Dr Cansun Güralp (founder of GSL), Mr Andrew Bell (former Finance Director and Managing Director) and Ms Natalie Pearce (former Head of Sales). These reporting restrictions were lifted immediately following the acquittal of the individuals.
The starting point for any financial orders is that any benefit attributed to the criminal conduct has to be disgorged. GSL has agreed to pay a disgorgement figure of £2,069,861.00, which represents the total gross profit of the contracts obtained through corrupt payments.
The SFO undertook a rigorous and challenging process to understand the company's financial position in order to determine appropriate financial orders. As a result of this process, GSL are not required to pay a financial penalty, compensation or any costs to the SFO. No fixed timetable for the repayments has been set and the DPA provides a careful mechanism to agree an alternative payment plan if it cannot pay the sum by the fifth anniversary (22 October 2024). The in-built flexibility enabled the SFO to achieve a fair, reasonable and proportionate outcome without bringing down the company.
The Addleshaw Goddard team was led by head of Corporate Crime and Regulatory Investigations, Nichola Peters (Partner), and included Amy Russell (Managing Associate), Matthew Stockton (Associate), Lily Dou (Forensic Accountant), Hannah Harrison (Associate), and Richard Wise (Partner assisting on insurance related issues).
Nichola Peters, commenting on the case, said: "This is a seminal decision. The terms of the DPA show that resolution of criminal investigations by a DPA is a route open to SMEs, although the costs and work required to achieve such a resolution should not be underestimated. The terms of this DPA reduced the risk of insolvency for our client. We welcome this result for our client who, since the issues were discovered, has gone to significant lengths to co-operate and work with the DoJ and SFO, and welcome the precedent it therefore sets for small and medium sized enterprises."