Asset Recovery Watch

ARW-244
Standard Bank/ Enterprise Growth Market Advisors / Tanzania Sovereign Note Private Placement
Tanzania
Harry Kitilya, Commissioner of the Tanzanian Revenue Authority (resigned December 2013); Fratern Mboya, CEO of Tanzania Capital Markets and Securities Authority (1995-2011)
United Kingdom
Undertaking Recovery Effort; Location of Recovery Effort
2013
2016
Art.16, Art.18, Art.19
Deferrred Prosecution Agreement/Settlement
The case was triggered by a self disclosure by Standard Bank. The UK SFO also acknowledged working with the US Department of Justice and Securities and Exchange Commission, the UK Foreign and Commonwealth Office and the Financial Conduct Authority. (Source: UK SFO Press Release, " SFO agrees first UK DPA with Standard Bank," November 30, 2015)
Ongoing
Assets Returned to Victim or Requesting Jurisdiction
$7,000,000
Unknown
According to the UK Serious Fraud Office, "The money due to the Government of Tanzania will be returned in line with advice being received from the Department for International Development." (Source: SFO Press Release, "SFO agrees first UK DPA with Standard Bank," November 30, 2015)

According to a news article by the British High Commission Dar es Salaam, "The UK has recently transferred to the Tanzanian Government the $7m fine that Standard Bank paid as a result of its failure to prevent bribery." (Source: British High Commission Dar es Salaam, "UK, Tanzania close partners in fighting corruption scourge," May 17, 2016.)

 

According to the UK Serious Fraud Office and the Statement of Facts in the case, in 2012-2013, Standard Bank and its Tanzanian subsidiary Stanbic Bank were involved in a US$600 million soveeign note private placement for the Government of Tanzania, which was seeking to raise funds in support of its "Five Year Development Plan" to finance various infrastructure projects.  As part of the deal, the fees to be paid to the bank was increased to 2.4%, with the "local partner" Enterprise Growth Market Advisors receiving a consulting fee of 1% although according to the Statement of Facts, there was "no evidence of payment represented reasonable consideration for services rendered on this transaction."  (Source: Statement of Facts, para 28; See also Final Judgment, paras 6 and 7).  The chairman of Enterprise Growth Market Advisors (EGMA) was Mr. Harry Kitilya, who was also one of its three directors and shareholders, and at the same time serving as the Commission of the Tanzanian Revenue Authority.  EGMA's Managing Director was Dr. Fratern Mboya, who had been the Chief Executive Officer of the Tanzanian Capital Markets and Securities Authority (a government agency), 1995-2011.  The Statement of Facts in the case also lists (in paras 56-57) the involvement of other Tanzanian government officials in the deal, including two successive Ministers of Finance.   

 

The case was triggered by a disclosure to the SFO by Standard Bank's legal counsel.  The SFO noted that despite "obvious red flags for bribery" Standard Bank and Stanbic Bank "team not appears to have recognized possibility of the arrangement being corrupt."  (Source: Statement of Facts, paras 153-154). The Statement of Facts notes that within days and weeks of being paid $6 million into an account opened specifically to receive the fees, Dr. Mboya of EGMA made four withdrawals in cash of nearly all of the amounts paid, with the assistance of bank personnel.  The Statement of Facts noted that "The cash withdrawals prevents any further tracing of the US$6 million." (Statement of Facts, paras 178-185, 30).  

 

As part of the Deferred Prosecution Agreement, Standard Bank will pay $25.2 million in total financial penalty, consisting of $16.8 million financial penalty, $8.4 million disgorgement of profits. 

 

 

According to the UK Serious Fraud Office, in November 2015, the Southwark Crown Court approved the SFO's first Deferred Prosecution Agreement with the Standard Bank, which was the subject of an indictment alleging failure to prevent bribery contrary to section 7 of the Bribery Act 2010.  As a result of the Deferred Prosecution Agreement, the charge against Standard Bank has been suspended for three years.  (Sources:  UK SFO Press Release, "SFO agrees first UK DPA with Standard Bank," November 30, 2015; Deferred Prosecution Agreement, November 2015; Between Serious Fraud Office and Standard Bank, Case U20150854, Approved Judgment, November 30, 2015)

Serious Fraud Office
Serious Fraud Office
Southwark Crown Court