Author: Nicola Sharp
3 August 2020
2 min read
Nicola Sharp of Rahman Ravelli gives a concise summary of the DPA agreed between G4S and the Serious Fraud Office.
The Serious Fraud Office received final approval to enter into a deferred prosecution agreement (DPA) with G4S Care and Justice Services (UK) Ltd (G4S C&J) in relation to a scheme to defraud the Ministry of Justice (MoJ) over contracts for the electronic monitoring of offenders, contrary to Section 1 of the Fraud Act 2006 (the 2006 Act). Under the terms of the DPA, G4S has accepted responsibility for fraud by false representation (contrary to section 2 of the 2006 Act), in relation to G4S’s submission of three financial models that contained falsified representations as to incurred costs.
In entering the DPA, G4S C&J has accepted responsibility for three offences of fraud against the MoJ. These arose from the scheme to deceive the MoJ about the true extent of G4S C&J’s profits for 2011 and 2012 from its contracts for providing the electronic monitoring of offenders. The scheme intended to prevent the MoJ from attempting to decrease G4S C&J’s revenues under those contracts. By reference to the identification principle, G4S C&J was criminally liable for that conduct, although it has now avoided prosecution for the offences through the DPA with the SFO.
The DPA requires G4S C&J to pay a penalty of £38.5M and the full SFO costs of £5.9M. G4S C&J paid compensation to the MoJ in 2014 as part of a £121.3M civil settlement. The DPA financial penalty was discounted by 40%, representing only the second time in an SFO DPA that a discount lower than 50% has been applied. This discount reflects the delayed cooperation G4S C&J offered the SFO investigation.
The DPA also commits G4S C&J to a range of compliance obligations and improvements. These include periodic review, assessment and reporting of G4S plc’s and G4S C&J’s internal controls, policies and procedures by a third-party reviewer.
Schedule 17 of the Crime and Courts Act 2013 (the 2013 Act) – the provisions of which introduced DPAs - does not provide protection for any individuals involved. The SFO’s investigation into individuals potentially involved in the criminal conduct is ongoing.
Mr Justice William Davis ruled at the Royal Courts of Justice that the terms of the DPA appropriately reflected the gravity of the conduct, and were fair, reasonable, and proportionate, pursuant to paragraph 8(1) of Schedule 17 of the 2013 Act.
This article was also featured on Lexology.com.
Nicola is known for her fraud, civil recovery and business crime expertise, her experience of leading the largest financial disputes and multinational investigations and her skills in devising preventative measures and conducting internal investigations for corporates.