The SFO's Deferred Prosecution Agreement ("DPA") with Airline Services Limited ("ASL") received judicial approval from Mrs Justice May, sitting at the Royal Courts of Justice, on 30 October 2020. This is the ninth DPA the SFO has entered into since their introduction in 2014 and the third so far in 2020.
ASL was incorporated in 1982 and provided services and products to commercial airlines, for the refurbishment of aircraft interiors. In 2014 concerns arose within ASL in relation to the use of one of its agents and an internal investigation (conducted by independent lawyers) was initiated. Although their original concerns were allayed, this investigation drew ASL's attention to the conduct of another agent, which prompted the company to self-report to the SFO in July 2015. The SFO opened a criminal investigation into ASL in December 2015, so it has taken a lengthy period of almost five years for the SFO to complete their investigation and negotiate the terms of this DPA.
Under the terms of the DPA, ASL admits to three counts of failing to prevent bribery, contrary to section 7 of the Bribery Act 2010. These offences arise from the company's use of an agent (referred to as "Agent 1" in the accompanying Statement of Facts ("SoF")) in order to win three contracts, worth in excess of £7.3m, to refit commercial aircraft for the Lufthansa. In addition to acting as an agent of ASL, Agent 1 was retained by Lufthansa (initially as a contractor and later as an employee) as a Project Manager. Agent 1 was able to "abuse his position with/at Lufthansa in order to provide ASL with an unfair advantage" in contract negotiations (SoF ).
ASL has agreed to pay £2,979,685.76 under the terms of the DPA. This sum consists of a financial penalty of £1,238,714.31, disgorgement of profits of £990,971.45, and £750,000 towards the SFO's costs.
ASL were granted a 50% discount on their financial penalty. Whilst noting that the maximum discount following a guilty plea is ordinarily one third, Mrs Justice May cited the reasons given by Leveson LJ in SFO v Sarclad, and found that, in DPA cases, "50% could be appropriate not least to encourage others how to conduct themselves when confronting criminality…" . Except for G4S Care & Justice Services (UK) Limited (whose "full co-operation with the SFO came relatively late in the day" ), each of the corporates entering into DPAs have received a 50% discount on their financial penalty post-Sarclad.
Handing down her judgment, Mrs Justice May cited the following factors as weighing in favour of a DPA:
- ASL self-reported the offending to the SOF "in a timely manner";
- ASL "actively cooperated" with the SFO's investigation, including facilitating interviews with ASL staff and providing access to material requested;
- The current composition of the board of ASL is substantially different to that which carried out the offending;
- The offending is historic;
- ASL had no previous history of similar offending or regulatory misconduct;
- ASL has taken steps to improve its compliance programme;
- The offending did not involve the corruption of public officials;
- ASL did not make significant profits from the offending; and
- ASL is now effectively a dormant company.
Mrs Justice May emphasised that "ASL mounted its own investigation, since which time it has done all that it could have been expected to do having uncovered the offending behaviour: it made a timely self-report and has since provided full cooperation to the SFO. This is an important consideration given that the core purpose of the creation of DPAs was to “incentivise” the exposure and self-report of corporate wrong-doing" .
As noted above, another significant consideration in this case appears to have been the fact that ASL is now effectively a dormant company. In her judgment, Mrs Justice May stated that "following the sale of its Handling and Interiors business in 2018 ASL stopped trading" and is now "effectively dormant, remaining only as a shell supported by its major investors for the purposes of permitting the SFO to conduct this investigation and conclude the DPA" . It is notable that Serco Geografix Limited ("SGL") was also a dormant company when it entered into its DPA with the SFO in July 2019, suggesting that this factor may weigh heavily in favour of a DPA.
In relation to ASL's cooperation, it is notable that once again this included a limited waiver of legal professional privilege. On this occasion the limited waiver was provided "in respect of ASL’s own investigation into the Lufthansa agreements and the previous one into the activities of Agent X/Airline Y" . It has become apparent that in order to satisfy the SFO's requirement for cooperation, companies will almost certainly be required to waive privilege, particularly in circumstances where an internal investigation has already been conducted by external lawyers.
The agreed term of the DPA is one year and in that time ASL is required to provide ongoing assistance in relation to any other domestic or foreign law enforcement, including the prosecution of individuals. Although the SFO has yet to secure any convictions against individuals following a DPA, the prosecution of two former Directors of SGL is ongoing.
Announcing the DPA, the Director of the Serious Fraud Office, Lisa Osofsky, said that “Airline Services Limited failed in its duties to implement adequate procedures to prevent bribery, allowing one of its agents to pervert what should have been a fair tender process and corruptly win business for the company. I am pleased that our actions hold the company to account and enable us to recover the proceeds of its crimes. It is to the credit of this now-dormant company that it voluntarily disclosed this conduct to the SFO and will remain in existence to fulfil the terms of the DPA.”
A copy of the DPA, Mrs Justice May's judgment and the Statement of Facts can be found here.