On 20 December 2019 it was announced that Güralp Systems Ltd (Güralp) had entered into a £2m Deferred Prosecution Agreement (DPA) with the Serious Fraud Office (SFO) in October 2019 in relation to bribery offences.
Reporting restrictions on the DPA have been lifted following the acquittal between 18 and 20 December 2019 of three Güralp employees: Cansun Güralp (the company’s founder), Andrew Bell (Financial Director and later acting Managing Director) and Natalie Pearce (Head of Sales) in relation to charges of conspiracy to make corrupt payments to a South Korean public official (Dr Chi) between 2002 and 2015.
In the DPA, Güralp accepted charges of conspiracy to make corrupt payments (together with the three employees) and failure to prevent bribery by two of the employees, contrary to section 7 of the Bribery Act 2010. The company accepted in the agreed statement of facts that its employees had bribed Dr Chi in the amount of c.USD1m (by a mixture of cash payments and bank transfers to a US account) to induce or reward “Dr Chi for exploiting his position…to influence the award of contracts” to Güralp and to provide confidential information.
This is a further example of a company entering into a DPA with the SFO in circumstances where no employees have subsequently been convicted.
The DPA is conditional on Güralp’s: (i) ongoing cooperation; (ii) disgorgement of gross profits of c.£2m; and (iii) review and maintenance of its existing compliance programme.
Unusually, the DPA does not provide for Güralp to pay a fine, nor the SFO’s costs, and gives the company a full five years to pay the disgorgement amount – and even accepts that the DPA may need to be varied in the event that it cannot pay the disgorgement within five years. This is due to Güralp’s financial position. The judgment emphasises that this is not intended to set a precedent but is a result of the impact on the disgorgement on a company with only around 100 employees.
Factors supporting approval
Factors supporting the approval of the DPA included:
- prompt self-reporting in both the UK and US (where Dr Chi was convicted of money laundering): Güralp’s new Executive Chairman raised questions about the payments upon becoming aware of them on 7 September 2015 and instructed a law firm to conduct an investigation. The matter was reported on 23 October 2015 to UK and US authorities;
- the complete change in senior management;
- the fact that there had been no similar conduct with other third parties;
- the company’s cooperation, including deferring its own interviews (the SFO conducted 33 interviews), providing information on a voluntary basis and responding to some 51 Section 2 Notices (notices requiring the disclosure of information or documentation). Notably there is no reference to the company having waived privilege; and
- evidence that the company would likely be put out of business if convicted and fined.
This case again highlights the difficult decision companies face when deciding whether or not to self-report to the SFO and seek a DPA (see our previous article) particularly given the onerous expectations set out in the SFO’s cooperation guidance (see our previous blogpost) and the difficulties the SFO has faced in bringing cases against individuals, let alone corporates.