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Global gambling company Entain plc (Entain) has entered into a deferred prosecution agreement (DPA) with the Crown Prosecution Service (CPS) for £615 million, in relation to an investigation by HM Revenue & Customs (HMRC) into alleged bribery offences in one of Entain’s former Turkish subsidiaries.
This is the second largest corporate criminal settlement agreement to have been reached in the UK and the first to include a charitable donation. While it is the 13th DPA to be agreed in the UK since the DPA regime was introduced in 2014, it is the first to be entered into by the CPS. This suggests that England and Wales’s chief prosecuting agency might be seeking to make more use of the DPA regime to settle corporate criminal liability than it has until now.
HMRC began its investigation in 2019 into Entain’s former Turkish subsidiary, which had been sold two years earlier as part of Entain’s takeover of Ladbrokes. HMRC’s role as the relevant investigating body suggests that the investigation was initially driven by tax concerns.
On 20 July 2020, HMRC informed Entain that it was widening the scope of its investigation to examine “potential corporate offending” by entities within the group. In particular, it started to investigate offences under section 7 of the Bribery Act 2010 relating to Entain’s alleged failure to prevent bribery.
In May 2023, Entain opened negotiations with the CPS and announced publicly that there may have been historical misconduct involving third-party suppliers and employees of the group. Entain announced that it was expecting a “substantial financial penalty” and, in August 2023, put aside £585 million to cover its potential liability for the matter.
On 24 November 2023, Entain announced that it had reached an “in principle” DPA with the CPS in relation to misconduct under section 7 of the Bribery Act 2010, in particular, concerning “the failure of [Entain] to have adequate procedures in place to prevent bribery”. The terms of the DPA subsequently gained full judicial approval by the High Court on 5 December 2023, bringing the agreement into full effect.
A DPA is an agreement to suspend criminal proceedings in exchange for certain conditions being met – typically involving, amongst other things, the payment of a fine, disgorgement of profits and an admission of facts.
Under the terms of the DPA, Entain is required to make a payment of £585 million, a sum which includes a financial penalty and disgorgement of profits. Entain will also make a £10 million payment to the CPS and HMRC to cover their costs, and a £20 million donation to charity. With the exception of the agencies' costs, these sums will be paid in instalments over a four-year period.
This is the first DPA to be entered into by the CPS, with all others to date having been entered into by the Serious Fraud Office (SFO). Whether this is the start of a land-grab by the CPS of overseas corruption cases remains to be seen, but it is certainly asserting itself as a more serious enforcer of the section 7 offence following its rather lacklustre conviction of Skansen Interiors Limited in 2018. (The sentencing judge in that case ordered an absolute discharge on the basis of the company’s dormancy.) Moreover, given HMRC’s role in both initiating and pursuing the investigation, this DPA acts as a reminder to all companies that investigations can be initiated by a range of bodies, acting either independently or in collaboration.
There is comparatively little information in the DPA or the judgment approving it about the underlying conduct that gave rise to the investigation, and the Statement of Facts will not be published until the conclusion of any criminal proceedings against implicated individuals.
However, this is the second largest corporate criminal settlement in the UK to date (just behind Airbus’ £880 million DPA from 2020), and the judgment approving the DPA indicates that the penalty element has been calculated to reflect the revenue from the whole of its Turkish operations at the material time. Given that Turkey was not a jurisdiction in which gambling was legal at the relevant time, it might be reasonable to infer that the underlying conduct was necessary for Entain’s business in Turkey to continue.
It is worth noting that – notwithstanding that Entain did not initially self-report the misconduct – a DPA was considered appropriate, as was a 50% discount to the penalty, because:
(i) Entain had provided significant co-operation to the investigation and made significant admissions for the purpose of section 7 of the Bribery Act 2010, which the CPS considered akin to self-reporting; and
(ii) there had been – at the point of entry into the DPA – a wholesale change of senior management and approach, and an acknowledgment by Entain that it was necessary to overhaul its culture and practices.
Entain’s announcement of the DPA can be found here, and CPS’s publication of the terms of the DPA can be found here. The judgment approving the DPA can be found here.
12 December 2023
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