By Margot Patrick

LONDON--The British arm of African lender Standard Bank failed to prevent alleged bribery in its Tanzania unit, a London court heard Monday.

The U.K. Serious Fraud Office said the former chief executive and the former head of corporate and investment banking at Standard Bank in Tanzania arranged for $6 million in fees from a $600 million government bond sale in 2013 to be paid to a local company owned by government officials. The case was presented Monday to a senior judge who has already given his preliminary approval to what would be the first deferred prosecution agreement in Britain.

Standard Bank last week said it expected to settle the matter for no more than $40 million. The SFO on Monday said fines and compensation in its agreement came to $16.8 million.

The court heard that the U.S. Securities and Exchange Commission will also be announcing a resolution of its own investigation into the bond sale.

If the judge approves the SFO application, it will mark the first successful use of a tool introduced last year for corporate prosecutions in Britain. Commonly used in the U.S., deferred prosecution agreements give alleged wrongdoers a chance to cooperate fully with prosecutors in exchange for a less punitive outcome, typically involving a fine, admission of breaking rules and measures to improve compliance. Under such agreements, the company is charged but criminal proceedings are suspended as long as conditions of the DPA are met.

The SFO said a Standard Bank employee flagged the alleged breach and that the bank reported it to the SFO in July 2014. The proposed deferred prosecution agreement would involve a fine, compensation to the Tanzania government, improvements in compliance systems and data sharing with other authorities investigating the matter, the SFO said. The agreement would run for three years.

The alleged breach of Britain's anti bribery act occurred before a majority investment in Standard Bank's London arm by Industrial and Commercial Bank of China. ICBC announced the deal to buy 60% of the unit in early 2014 and completed the purchase in February.

The U.K. Financial Conduct Authority previously fined Standard Bank in London GBP7.6 million over failures between 2007 and 2011 in its anti-money laundering systems.

Write to Margot Patrick at margot.patrick@wsj.com

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(END) Dow Jones Newswires

November 30, 2015 08:22 ET (13:22 GMT)