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Edition 7 July 2015
UK Bribery Digest
Fraud Investigation & Dispute Services
Contents 2 Introduction
3 Deferred Prosecution Agreements
8 Other recent developments
9 Cases in the first half of 2015
12 Abbreviations
12 Contacts
This edition incorporates the case write-ups for the first half of 2015, together with our summary table of cases since 2008.
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Deferred Prosecution AgreementsIntroduction
Welcome to the latest edition of our bi-annual Bribery Digest, in which we comment on cases and developments over the past six months.
There have been three completed cases over the past six months involving individuals and one completed Financial Conduct Authority (“FCA”) action against a regulated business. We comment on these four cases. We also comment in this edition on Deferred Prosecution Agreements (“DPAs”) and corporate hospitality.
In May 2015, a spokesperson for the Serious Fraud Office (“SFO”) announced that the SFO had issued its first invitation letters to organisations offering the opportunity to enter into DPA negotiations. The announcement signifies that DPAs are about to become a reality for UK corporates almost a year after the enabling legislation became effective. We consider the significant implications of DPAs for compliance programmes and corruption investigations.
Concerns over corporate hospitality being potentially construed as bribes received high profile coverage in the UK at the time of the introduction of the Bribery Act. Historically, corporate hospitality had not been central to any of the major enforcement action that we were aware of; rather, any issues around corporate hospitality tended to be ancillary to more serious allegations. Corporate hospitality has, of course, always been a possible channel for bribery. One of the completed UK prosecutions in the last six months does, however, feature inappropriate corporate hospitality as its core wrongdoing. We are aware of at least one other enforcement action in another jurisdiction during this same period that centred on corporate hospitality. These are timely reminders of the need for compliance processes around this activity, especially for large scale corporate sponsorships.
We also consider the announcement of greater international co-operation between agencies which may have implications for the financial services sector and for individuals, and on changes in the regulations on debarment from participating in public contracts for organisations prosecuted for corruption offences.
As usual, we include the updated table of UK bribery and corruption cases since April 2008.
We hope you find this edition of the Bribery Digest useful and informative in your work.
Jonathan Middup Partner, UK Head of Anti-Bribery and Corruption
Deferred Prosecution Agreements (“DPAs”) are finally here: what are the implications for compliance programmes and corruption investigations?
DPAs make it possible for businesses that admit to their involvement in corporate crime, such as fraud, bribery or corruption, to avoid a criminal prosecution if strict conditions agreed by a judge are met.
In May 2015, a spokesperson for the SFO announced that the SFO had issued its first invitation letters to organisations offering the opportunity to enter into DPA negotiations. As this initial stage is confidential, the number and identity of the organisations were not disclosed, nor was the scope of the negotiations (for example whether it covers alleged breaches of Section 7 of the Bribery Act – the failure of a relevant commercial organisation to prevent bribery).
The announcement signifies that DPAs are about to become a reality for UK corporates, almost a year after the enabling legislation became effective. What does this mean for compliance programmes and corruption investigations?
The SFO and the Crown Prosecution Service (“CPS”) published a joint code of practice on the use of DPAs in February 2014 (the “DPA Code”). The DPA Code offers a number of indicators as to what is required with regard to compliance programmes and corruption investigations. An organisation needs to understand the implications of these indicators to put it in the best position to gain access to, and maximise the benefit of, a DPA. The following is not an exhaustive analysis and seeks to highlight only key considerations.
Compliance programmes
With regard to compliance programmes, the DPA Code is quite clear: the existence of a “proactive corporate compliance programme both at the time of the offending and at the time of reporting” is a factor against prosecution (that is in support of a DPA) and “no or an ineffective corporate compliance programme” at the time of the offence is a factor in favour of prosecution. In other words, a compliance programme cannot be put into place after the event and it cannot be a compliance programme that just sits on the shelf.
The DPA Code provides a strong indication of what a “proactive corporate compliance programme” comprises when it addresses what a monitor (who may be appointed under a DPA) should ensure that the organisation has in place. This is summarised in the table on the next page.
The organisation must be able to describe and explain the effectiveness of its compliance programme to the prosecutor. In our experience, an organisation may be able to describe its compliance programme but may find it more difficult to demonstrate or provide evidence that it is effective. The code envisages that the prosecutor may choose to bring in external resource to assist in the assessment of the organisation’s compliance programme. We find that many organisations may not be prepared for this sort of external assessment.
The implication is that if your organisation may contemplate a DPA if an issue arises, you should robustly challenge the effectiveness of your compliance programme.
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Deferred Prosecution Agreements continued…
Factors in favour of prosecution
Factors against prosecution (in favour of a DPA)
Implications
Failure to notify the wrongdoing within reasonable time of the offending conduct coming to light.
Early self-reporting to the prosecutor. The Code states that the prosecutor should be notified and involved “in the early stages of an investigation”.
The organisation should have a response plan in place so that it can quickly mobilise an investigation and quickly appraise itself of the relevant facts while the investigation continues. The investigation must be adequately resourced to allow timely progress.
Reporting the wrongdoing but failing to verify it, or reporting it knowing it to be inaccurate, misleading or incomplete.
The full extent of the alleged offending has been identified (and ultimately, a full and fair account of the alleged offending can be presented in court).
Co-operation: considerable weight may be given to a genuinely proactive approach adopted by the organisation’s management team. It will include providing a report in respect of any internal investigation including source documents. (The prosecutor will critically assess the manner of any internal investigation).
The investigation must be in-depth and conducted to a high forensic standard from the outset. The credibility of the investigation is likely to depend on a number of factors: the independence of the investigation team; the relevance of the investigation methodology; and the rigour of the evidence handling system (including e-document review). The prosecutor will require its involvement from the early stages of the investigation. The investigation must therefore be of a quality that is suitable for sharing with the prosecutor.
Whether it is appropriate to claim privilege over certain evidence or waive it to make the evidence available to the prosecutor must be carefully considered.
Factors in favour of prosecution
Factors against prosecution (in favour of a DPA)
Implications
The alleged conduct is part of the established business practices of the organisation.
The offending represents isolated actions by individuals.
In order for the organisation to be able to demonstrate that an identified incident of corruption is not part of an established business practice of the organisation, the scope of the investigation will need to be more widely drawn than it might otherwise be, in terms of historical scope and the range of persons and activities covered. For example, an investigation which is limited to the alleged facts known to a whistleblower may not meet the prosecutor’s expectation.
A significant level of harm is caused directly or indirectly to the victims of the wrongdoing or there is a substantial adverse impact to the integrity or confidence of markets or local or national governments. (Indicators of seriousness include not just the value of any gain or loss, but also the risk of harm to the public, to unidentified victims, shareholders, employees and creditors and to the stability and integrity of financial markets and international trade. The impact of the offending in other countries, and not just the consequences in the UK, should be taken into account).
Taking remedial actions including, where appropriate, compensating victims.
A conviction is likely to have disproportionate consequences for the organisation, under domestic law or the law of another jurisdiction including but not limited to that of the European Union.
A conviction is likely to have collateral effects on the public, the organisation’s employees, shareholders and/or institutional pension holders.
Traditionally corruption investigations have tended to focus on the corruption scheme itself rather than its wider implications. To be in an informed position to negotiate a DPA, the investigation would need to be extended to assess the wider consequences of the corruption inside the organisation itself (such as the profit earned on the corrupt contract and potential loss of business arising from debarment) and outside the organisation (such as the harm caused to stakeholders and quantifying compensation for victims, which could include, for example, the impact on share price).
Corruption investigations
We set out in the table below a selection of factors in favour of prosecution and against prosecution, as set out in the DPA Code, together with our comment on the implications for corruption investigations.
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i. A code of conduct
ii. An appropriate training and education programme
iii. Internal procedures for reporting conduct issues which enable officers and employees to report issues in a safe and confidential manner
iv. Processes for identifying key strategic risk areas
v. Reasonable safeguards to approve the appointment of representatives and payment of commissions
vi. A gifts and hospitality policy
vii. Reasonable procedures for undertaking due diligence on potential projects, acquisitions, business partners, agents, representatives, distributors, sub-contractors and suppliers
viii. Procurement procedures which minimise the opportunity of misconduct
ix. Contract terms between the organisation and its business partners, subcontractors, distributors, and suppliers include express contractual obligations and remedies in relation to misconduct
x. Internal management and audit processes which include reasonable controls against misconduct where appropriate
xi. Policies and processes in all of its subsidiaries and operating businesses, and joint ventures in which it has management control, and that the organisation uses reasonable endeavours to ensure that the joint ventures in which it does not have management control, together with key subcontractors and representatives, are familiar with and are required to abide by its code of conduct to the extent possible
xii. Procedures compatible with money laundering regulations
xiii. Policies regarding charitable and political donations
xiv. Terms related to external controls e.g. procedures for selection of appropriate charities
xv. Policies relating to internal investigative resources, employee disciplinary procedures and compliance screening of prospective employees
xvi. Policies relating to the extent to which senior management takes responsibility for implementing relevant practices and procedures
xvii. Mechanisms for review of the effectiveness of relevant policies and procedures across business and jurisdictions in which the organisation operates
xviii. Compensation structures that remove incentives for unethical behaviour
Summary
The key points arising from the DPA Code with regard to compliance programmes and corruption investigations may be summarised as follows:
• A compliance programme does not count in favour of a DPA if it is put in place after the event. Nor can a compliance programme just sit on the shelf. An organisation should robustly assess the effectiveness of its compliance programme against good practice and the requirements and guidance referenced in the DPA Code, which indicate the expectations of the SFO and the CPS.
• The organisation must be prepared to launch a wide- ranging, forensically sound investigation. The scope of this investigation will need to go beyond merely describing the corrupt transactions. In particular, the consequences of the bribery (including the harm caused to stakeholders) will need to be analysed.
Whether or not an organisation, if invited to, should proceed with a DPA is a complex assessment of a number of actual and potential factors, for example, the subsequent use of information obtained by the prosecutors during the DPA negotiation period if a DPA is not agreed. The Code refers to the prosecutors themselves undertaking “a balancing exercise” to determine whether to proceed and the same applies to the organisation itself. Only if the organisation is in a well-informed position as early as possible can it make an appropriate assessment and it should revisit that assessment throughout the process.
Components of a “proactive corporate compliance programme”
The DPA Code provides a strong indication of what comprises a “proactive corporate compliance programme” when it addresses what a DPA monitor will look for in an organisation. This is summarised below.
A monitoring programme should also have regard to contemporary external guidance on compliance programmes. At the time of publishing the DPA Code, this guidance was identified as the Ministry of Justice Bribery Act 2010: Guidance to help commercial organisations prevent bribery, the OECD Good Practice Guide on Internal Controls, Ethics and Compliance, the BS 10500
Anti-Bribery System Standard, the US Sentencing Commission’s Federal Sentencing Guidelines Manual, in particular its guidance on effective compliance and ethics programmes, and the guidance on corporate compliance programmes in the US Department of Justice’s Principles of Federal Prosecution of Business.
Deferred Prosecution Agreements continued…
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45. Charles Owenson, James Costello, Kevin Balmer and Brendan Cantwell (June 2015)
Messrs. Balmer and Cantwell were directors of a construction company. Messrs. Owenson and Costello were employees of Edinburgh City Council and helped the construction company win contracts for the maintenance of council properties between 2006 and 2010 in return for cash payments and extensive hospitality, including corporate seats at football matches, meals out, bar crawls and visits to lap dancing clubs. The construction company’s invoices to the council were inflated to cover these costs meaning that the council was effectively being charged for the cost of bribing its own officials.
The offences pre-date the Bribery Act and were brought under The Public Bodies Corrupt Practices Act 1889. The council employees received longer jail sentences for abusing a position of public trust and in Mr Owenson’s case because he did not accept that he had done anything wrong. The sentences were:
• Charles Owenson: four years and four months.
• James Costello: three years and nine months.
• Kevin Balmer: two years and ten months (and disqualified from acting as a company director for five years).
• Brendan Cantwell: two years and three months (and disqualified from acting as a company director for five years).
The sentences reiterate that the courts regard bribery as a serious offence: the amounts involved were not in themselves so significant. The directors of the construction company were found to have made cash payments of £28,387 to Mr Owenson and £14,134 to Mr Costello. In addition, the company spent over £30,000 on providing hospitality inducements to the two council employees. The amount by which the construction company’s invoices to the council were falsely inflated to cover the cost of these bribes was £68,910.
Red flags included the facts that Messrs. Owenson and Costello were often seen at the offices of the company and that Mr Costello bragged about the lavish hospitality he was receiving. (It was reported that at one event Mr Costello would place his empty glass on his head to signify that it was time for someone from the company to buy him another drink).
We comment as follows:
• The case is unusual as the large part of the corrupt transactions were in the form of hospitality. Corporate hospitality is not illegal in itself, but it is a possible channel for corrupt payments. Businesses therefore need to have appropriate compliance processes around it, especially as regards interaction with the public sector and foreign public officials.
• This is one of many cases that highlight the importance of whistle blowers in disclosing corrupt schemes.
44. Graham Marchment (May 2015)
Mr Marchment was sentenced to two and a half years imprisonment for conspiracy to corrupt contrary to section 1(1) of the Criminal Law Act 1977. He was a co-conspirator with four others who had been sentenced in January 2012 (see Case 23) for obtaining payments (disguised as commissions) for supplying confidential information to bidders in relation to oil and gas engineering projects in Egypt, Russia and Singapore. They obtained the information in their procurement roles at procurement services companies. The contracts in which Mr Marchment was personally involved were worth about £40 million.
Mr Marchment had not stood trial with his co-conspirators as he was living in the Philippines and he refused to return to the UK, which at the time did not have an extradition treaty with the Philippines. When his passport expired he was unable to renew it because of the outstanding arrest warrant, and he returned to the UK.
At the same time, while the impact of debarment may be reduced under the new regulations, the same changes would appear to increase the likelihood of a prosecution. Under the joint guidance for prosecutors on the Bribery Act (issued in 2011 by the Director of Public Prosecutions (“DPP”) and the SFO), one of the public interest factors against prosecution is that “a conviction is likely to have adverse consequences for the company under European Law” (i.e. debarment). The significance of this factor is therefore reduced by the new regulations on debarment.
Greater international co-operation between agencies focuses on financial services and individuals
In January 2015, the Financial Times reported (under the headline “Markets watchdogs pledge joint crackdown”) that markets watchdogs on both sides of the Atlantic have pledged to prioritise bribery and other financial crimes, recently the preserve of criminal prosecutors, and predicted that international co-operation will result in more charges against individuals.
The Securities and Exchange Commission (“SEC”) announced at an event in London that it will renew its focus on bribery violations and accounting fraud, while at the same event the head of investigations of the UK’s FCA stated that the regulator also plans to target financial crime including bribery and sanctions, focusing on companies’ controls and referring potentially criminal matters to the SFO, as the FCA tries to improve culture in the City of London.
The Financial Times noted that the FCA is working with both the SFO and the US Department of Justice (“DoJ”) on an increasing number of probes, as public and political scrutiny demands that culpable individuals face jail time rather than just a fine. Assistance from overseas regulators and prosecutors makes it easier to hold individuals, rather than just companies, to account. The SEC and US DoJ decided some years ago that actions against individuals provide a strong deterrent.
The global probe into alleged manipulation of Libor was described by a former US DoJ officer as a “watershed moment in co-operation” between authorities.
Multi-agency probes, which have led to fines on the same banks for similar or related misconduct by a number of different authorities around the world, have begun to attract criticism, both from parties on the receiving end and other regulators. Better consultation between the authorities before initiating investigations and levying (increasingly heavy) fines is being sought.
Other recent developments
Changes in the regulations on debarment from participating in public contracts
Changes which came into effect in February 2015 (via the Public Contracts Regulations 2015) potentially reduce the impact of debarment from participating in public contracts for organisations convicted of corruption offences and certain other economic crimes, including money laundering. Previously, debarment was a very serious consideration for organisations relying on public contracts as a significant part of their business: they could face long term or permanent debarment which was potentially ruinous to their business.
In brief, under the previous regulations organisations convicted in an EU member state of offences such as bribery faced mandatory debarment from bidding for public contracts, subject to limited exceptions. The new regulations put an end to permanent debarment, with the maximum period of exclusion now being no more than five years from the date of conviction. In addition, if an organisation can provide evidence of “self-cleaning” they can restore eligibility to bid for public contracts even sooner. This involves demonstrating that they have:
• Paid or undertaken to pay compensation in respect of any damage caused by the misconduct.
• Clarified the facts and circumstances in a comprehensive manner by actively collaborating with the investigating authorities.
• Taken concrete technical, organisational and personnel measures that are appropriate to prevent further misconduct.
These three measures to limit the impact of debarment also feature in the DPA regime described above as factors in favour of a DPA. As a result, the two regimes complement each other.
“While the impact of debarment may be reduced under the new regulations, the same changes would appear to increase the likelihood of a prosecution”
Cases in the first half of 2015
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We comment as follows:
• This enforcement action is a reminder, should it even be needed, that dealings with the Regulator need to be on an honest, complete and straightforward basis and that remediation plans and timetables agreed with the regulator should be complied with.
• The FCA’s Final Notice makes several references to the inappropriate culture within the Bank of Beirut. The regulator concluded that insufficient consideration was being given to the risk that the firm could be used for financial crime. This is a reminder that “hard controls” are only part of a compliance system and that “soft controls” must also be in place. These soft controls present themselves in the attitudes of senior management and key employees toward risk awareness and risk management, including corruption risk specifically. This enforcement action reiterates the FCA’s clear position that its member firms must have adequate corruption risk management systems in place, as part of broader financial crime risk management systems.
• The fines against the former Compliance Officer and the Internal Auditor result from serious breaches of their responsibilities as Approved Persons. They were responsible for addressing a number of the actions required of the firm. The Compliance Officer handled most of the communication between the firm and the Regulator and he sought to dismiss concerns that the firm was not properly implementing the required changes. The Internal Auditor provided false assurance that the improvements to the firm’s processes had been made. The FCA noted that both of them were influenced by senior management. However, the FCA relied on them to gain comfort that the changes to the firm’s processes had been completed. Given their position as Approved Persons, the FCA concluded they should have resisted their senior management in these circumstances. The FCA stated that “we are reliant on compliance officers and internal audit to act as an important line of defence, to support effective regulation at firms and to show backbone even when challenged by their colleagues.” It serves as reminder that persons in these positions must maintain their independence from management and recognise their duties to the FCA as well as their responsibilities to their employers.
Cases in the first half of 2015 continued…
43. Delroy Facey and Moses Swaibu (April 2015)
This case is a further prosecution arising from the National Crime Agency’s (“NCA”) probe into match fixing of non-league football (see also Case 35). Mr Facey was a former professional player (most notably for West Bromwich Albion) and Mr Swaibu a non-league player.
Key pieces of evidence were found in various social media. In one communication Mr Facey approached a player saying: “You guys can’t win for **** so you may as well make some peas”. The amounts offered for fixing scores were in the in order of £2,000.
Mr Facey was jailed for two and a half years and Mr Swaibu for sixteen months.
42. Bank of Beirut, its Compliance Officer and its Internal Auditor (March 2015)
In April and May 2011, the FCA visited Bank of Beirut to assess its anti-corruption and anti-money laundering systems and controls and found deficiencies in customer due diligence and monitoring processes. The FCA found that it did not carry out adequate customer due diligence or enhanced due diligence when establishing relationships with higher risk customers, nor did it conduct the appropriate level of ongoing monitoring on its existing higher risk customers. Specifically, inter alia, it did not investigate allegations of corruption and Safewatch hits (software that screens persons and transactions against watch lists) nor did it establish and verify with adequate evidence the source and wealth of funds of higher risk customers.
The Bank of Beirut was required to address these concerns regarding its systems and controls, but repeatedly provided misleading information to the Regulator indicating that it had completed remedial actions when it had not. For this failure, it was fined £2.1 million (reduced from £3 million for early settlement) and was restricted for a period of 126 days from acquiring new customers in high risk jurisdictions1.
Related to this action, the former Compliance Officer at the Bank of Beirut and the Internal Auditor, were fined £19,600 and £9,900 respectively for failing to deal with the Regulator in an open and cooperative way when responding to queries about the actions taken to mitigate financial crime risk2.
1 The relevant FCA Principle for Businesses is Principle 11: A firm must deal with its regulators in an open and cooperative way, and must disclose to the appropriate regulator appropriately anything relating to the firm of which that regulator would reasonably expect notice.
2 The relevant FCA Principle is the Statement of Principles for Approved Persons 4: An approved person must deal with the FCA, the PRA and other regulators in an open and cooperative way and must disclose appropriately any information of which the FCA or the PRA would reasonably expect notice.
• This is only the second time the FCA has used its suspension or restriction powers to punish a firm for serious misconduct. The FCA stated that this sanction is intended to send a message of deterrence to the rest of the industry, and serve as a reminder that the FCA is able to respond with sanctions that target the business activities of the firm where the misconduct occurred.
• The definition of “high risk jurisdictions” applied by the FCA is countries with a score of 60 or below in Transparency International’s Corruption Perception Index (“the CPI”). This comprises most of the countries in the CPI (138 countries scored 60 or below in the 2014 CPI – including China, India, Italy, Saudi Arabia, South Africa and Spain).
“We are reliant on compliance officers and internal audit to act as an important line of defence, to support effective regulation at firms and to show backbone even when challenged by their colleagues”
FCA press release on the Bank of Beirut case
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Page title Abbreviations
CoLP City of London Police
COPFS Crown Office & Procurator Fiscal Service
CJA Criminal Justice Act 1967
CLA Criminal Law Act 1977
CPS Crown Prosecution Service
CRO Civil Recovery Order
DoJ US Department of Justice
DPA Deferred Prosecution Agreement
DPP Director of Public Prosecutions
ECU Economic Crime Unit
FCA Financial Conduct Authority
FSA Financial Services Authority
FSMA Financial Services and Markets Act 2000
NCA National Crime Agency
OECD Organisation for Economic Co-operation and Development
PCA Prevention of Corruption Act 1906
POCA Proceeds of Crime Act 2002
SAR Suspicious Activity Report
SEC Securities and Exchange Commission
SFO Serious Fraud Office
SOCA Serious Organised Crime Agency
Fraud Investigation & Dispute Services
John Smart +44 (0) 20 7951 3401
Jonathan Middup +44 (0) 121 535 2104
David Lister +44 (0) 131 777 2308
Steve Caine +44 (0) 20 7951 4433
Contacts
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Case reference Date Name SectorEnforcement agency notified
Enforcement agency Source of enquiry Self-reported? Date of transactions Value of business advantage gained Value of bribe Location of transactions Legal basis of action Financial penalty Basis of financial penalty Other penalties Other financial effects
45 June 2015 Charles OwensonJames CostelloKevin Balmer
Brendan Cantwell
Construction/Public sector
2010 COPFS Whistleblower No 2006 to 2010 Not known £42,521 in cash (£28,387 paid to Owenson and £14,134 paid to Costello) £30,249 in hospitality
UK Criminal: Public Bodies Corrupt Practices Act 1889Criminal: POCA
4 years and 4 months imprisonment 3 years and 9 months imprisonment2 years and 10 months imprisonment and disqualified from acting as a director for 5 years 2 years and 3 months imprisonment and disqualified from acting as a director for 5 years
Proceedings against all four individuals with a view to recovery of stolen funds
44 May 2015 Graham Marchment (re case 23)
Oil and Gas April 2008 SFOCoLP
Whistleblower No 2004 to 2008 Approx £40m (value of contracts) US$250,000 (for QASR Gas Gathering Project, Egypt)£357,000 and US$229,000 (for Sakhalin Island Project, Russia)
Egypt, Russia and Singapore Criminal: S.1 CLA 30 months imprisonment
43 April 2015 Delroy FaceyMoses Swaibu
Football/gambling November 2013 NCA Press investigation No November 2013 £2,000 UK Criminal: S.1 CLA 30 months imprisonment 16 months imprisonment
42 March 2015 Bank of Beirut
Anthony Wills (compliance officer)Michael Allin (internal auditor)
Banking March 2013 FCA No 2011 to 2013 N/A N/A Civil: S.206 FSMA £2.1m fine (bank)
£19,600 fine (compliance officer)£9,900 fine (internal auditor)
Stopped from acquiring new customers from high risk jurisdictions for 126 days
41 December 2014 International Tubular Services Limited
Oil and gas services
November 2013 COPFS Acquisition due diligence Yes N/A Profit of £172,000 N/A Kazakhstan Civil: POCA (Part 5) £172,000 Profit on the contract corruptly obtained
40 December 2014 Christopher Smith
Nicholas Smith Smith and Ouzman Limited
Security printing October 2010 SFO N/A No November 2006 to December 2010
£2,220,520 £395,074 Kenya and Mauritania Criminal: S.1 PCA 18 months imprisonment suspended for 2 years, 250 hours unpaid work, 3 month curfew and disqualified from acting as a director for 6 years3 years imprisonment and disqualified from acting as a director for 6 years(Sentencing of the company is pending)
SFO to pursue compensation and confiscation orders against the company and both individuals
39 December 2014 Gary West (Director of Sustainable AgroEnergy plc)Stuart Stone
Investment fund N/A SFO N/A No April 2011 to February 2012
£23m of investment funds US$2.2m UK Criminal: S.2(1) and (2) Bribery Act
Criminal: S.1(1) and (2) Bribery Act
4 years imprisonment (concurrent with fraud offences)and disqualified from acting as a director for 15 years6 years imprisonment (concurrent with fraud offences) and disqualified as a director for 10 years
SFO to pursue compensation and confiscation orders against both individuals
38 July 2014 FHR European Ventures LLP v Mankarious and others
Hotels N/A N/A N/A N/A December 2004 N/A €10 million Monaco Civil: breach of fiduciary duty Order to deliver up €10m
37 July 2014 Bruce Hall Metals June 2009 SFO COLP
N/A No 1998 to 2006 N/A £2.9m US$0.9m
Bahrain Criminal: S.1 PCA Criminal: S.1 CLACriminal: S.329 and S.327 POCACivil: POCA (Part 5)
16 months imprisonment (reduced from 6 years for cooperation and guilty plea)
£3,070,106 confiscation order£500,010 compensation£100,000 towards prosecution costsUS$900,000 disposal by consent
36 June 2014 Dennis Kerrison
Miltiades Papachristos Paul Jennings David Turner
(Former directors of Innospec Limited)
Chemicals October 2007 SFO UN Independent Inquiry Committee
No 14 February 2002 to 31 December 2006 (indictment period)
US$160m (value of contracts) US$2.9m in kickbacks Indonesia Criminal: S.1 CLA 3 years imprisonment (reduced from 4 years on appeal)18 months imprisonment2 years imprisonment16 months imprisonment suspended with 300 hours unpaid work
Pending confiscation proceedings
Pending confiscation proceedings £5,000 towards prosecution costs£10,000 towards prosecution costs
35 June 2014 Chann Sankaran Krishna Ganeshan Michael Boateng
Football/gambling November 2013 NCA Press investigation No November 2013 N/A €450/€60,000 fund UK Criminal: S.1 CLA 5 years imprisonment5 years imprisonment16 months imprisonment
34 March 2014 Besso Limited General insurance broking
FCA No January 2005 to October 2009
N/A N/A Various Civil: S.206 FSMA £315,000 £450,000 under the Old Penalty Regime less 30% discount for early settlement
Besso was required to requisition a S.166 Skilled Person report
33 February 2014 Constantin Medien AG v Ecclestone and others
Sport N/A N/A N/A N/A May 2005 N/A US$44m Factual finding of bribery within a wider civil claim
N/A N/A N/A
32 February 2014 Otkritie International Investment Management and others v Urumov
Securities trading N/A N/A N/A N/A November and December 2010
N/A Approximately US$12m in total London and Moscow Civil: Deceipt, tort of bribery and/or dishonest assistance; conspiracy and breach of fiduciary duty
N/A N/A Damages of US$23m and concurrent delivery of US$12,044,114
31 December 2013 JLT Specialty Limited Insurance broking N/A FCA FCA review No February 2009 to May 2012
£20.7m (gross commissions from business from overseas introducers) £11.7m (commissions paid to overseas introducers)
N/A Global: various countries are cited — Argentina, Bahamas, Cameroon, China, Ecuador, Egypt, Gabon, Nigeria, Sudan
Civil: S.206 FSMA £1,876,000 £1m under the Old Penalty Regime less 30% early settlement discount. Under New Penalty Regime: Relevant revenues £14,000,115 x 10% plus 20% for aggravating factors less 30% early settlement discount
30 April 2013 Yang Li Education Avon and Somerset Constabulary
Individual who was offered bribe
No November 2012 £5,000 UK Criminal: S.1 Bribery Act Prosecution costs 12 month bribery charge, 6 months firearms charge £4,880 towards prosecution costs
29 December 2012 Mawia Mushtaq Public service October 2011 Greater Manchester Police CPS
Individual who was offered bribe
No October 2011 £200 or £300 UK Criminal: S.1 Bribery Act 2 months imprisonment suspended for 12 months and a 2 month curfew from 6pm to 6am
28 November 2012 Abbot Group Limited Oil and gas July 2012 COPFS Tax audit Yes 2007 Contracts with profit totaling US$8.9m (£5.6m)
Contracts with profit of US$8.9m (£5.6m)
Not known Civil: POCA (Part 5) £5.6m Profit on contract corruptly obtained
27 July 2012 Oxford Publishing Limited (part of Oxford University Press)
Publishing November 2011 SFO World Bank investigation Yes 2007 to 2010 Contracts with profit totaling US$2.9m (£1.9m)
East Africa Civil: POCA (Part 5) £1,895,435 Revenue generated from unlawful conduct World Bank debarment for 3 yearsIndependent monitor for 12 months
£12,500 of costs to the SFOUS$500,000 paid to World BankVoluntary contribution of £2m to not‑for‑profit organisation
26 June 2012 Andrew Behagg David Baxter John Maylam
Food retailing 2008 CoLP Audit No January 2006 to January 2008
Total of £8.7m overcharge of contracts totaling £40m
£4.9m UK Criminal: S.1 PCACriminal: S.329 POCA
3 years and 6 months imprisonment2 years and 6 months imprisonment4 years imprisonment
25 May 2012 Syed Jaffery Pritpal Gill
Banking No May 2007 to May 2010
Approx £16m (value of loans) UK Civil: Breach of fiduciary duty and bribery Not reported Not reported
24 March 2012 James McGeown
William Marks John Symington Carol Kealey
Government procurement (CCTV contracts)
2002 Ministry of Defence Police (MDP)SFO
Whistleblower No January 1998 to February 2004
£16.2m (value of contracts) £84.5m UK Criminal: S.1 PCACriminal: article 47 (2) Proceeds of Crime (Northern Ireland) Order 1996
3 years imprisonment suspended for 2 years and 7 years disqualification as a director2 years imprisonment suspended for 2 years9 months imprisonment suspended for 2 yearsConditional discharge
Confiscation orders of £1m
Confiscation order of £24,600
UK Bribery Digest cases Edition 7, July 2015
Case reference Date Name SectorEnforcement agency notified
Enforcement agency Source of enquiry Self-reported? Date of transactions Value of business advantage gained Value of bribe Location of transactions Legal basis of action Financial penalty Basis of financial penalty Other penalties Other financial effects
23 January 2012 Andrew Rybak
Ronald Saunders Philip Hammond
Barry Smith
Oil and gas April 2008 SFO CoLP
Whistleblower No 2001 to 2009 Approx £70m (value of contracts) US$100,000 (10% of Styrene Monomer Project, Iran)US$250,000 (for info re QASR Gas gathering Project, Egypt)£357,000 and US$229,000 (for info re Sakhalin Island Project)
Iran, Egypt, Russia, Singapore and Abu Dhabi
Criminal: S.1 PCA 5 years imprisonment and 10 years disqualification as a director3 years and 6 months imprisonment3 years imprisonment and 10 years disqualification as a director12 months imprisonment suspended for 18 months
22 January 2012 Mabey Engineering (Holdings) Limited (parent company of Mabey & Johnson Limited)
Engineering(temporary bridges)
January 2007 SFO No 2001 and 2002 Contracts totaling £8m+ (in Jamaica), £26m (in Ghana), €4.2m (in Iraq)
£131,000 (value of dividends) Iraq Civil: POCA (Part 5) £131,000 Dividends received by parent company derived from contracts won by subsidiary through unlawful conduct
£2k in costs
21 November 2011 Mazhar Majeed Salman Butt Mohammad Asif Mohammad Amir
Cricket/gambling N/A N/A Press investigation No August 2010 £150,000 UK Criminal: S.1 CLA 32 months imprisonment30 months imprisonment12 months imprisonment6 months imprisonment
£105k between them in prosecution costs
20 October 2011 Munir Yakub Patel Public service Not known CPS Press investigation No August 2011 £500 UK Criminal: S.2 Bribery Act 3 years imprisonment19 July 2011 Macmillan Publishers
Limited (MPL)Educational materials
December 2009 SFOCoLP
World Bank report Yes 2002 to 2009 £11.26m (value of contracts) Rwanda, Uganda and Zambia Civil: POCA (Part 5) £11.26m Revenue received from potentially unlawful conduct MPL debarred from World Bank contracts for minimum 3 years SFO approved monitor put in place
MPL pay all investigation costs. MPL pay £27,000 SFO costs. MPL withdrew from all public tenders in education business in East and West Africa. Loss of bid securities
18 July 2011 Willis Limited Wholesale insurance and reinsurance broking
Not known FSA FSA and SARs filed with SOCA
No 2005 to 2009 £32.7m (net insurance commissions earned)£27m (insurance commissions paid)
£140,600 “High risk jurisdictions” Egypt, Russia and Argentina cited
Civil: S.206 FSMA £6.895m FSA fine considering “all relevant circumstances”High standards of regulatory conduct
Willis to carry out a review of past payments to overseas third parties “Significant” financial and management time costs per the FSA
17 April 2011 DePuy International Limited Medical goods October 2007 SFO Internal whistleblowerReferred to SFO by DoJ
No 1998 to 2006 £14.8m (profit on contracts)£4.5m (payments to Greek officials)
US$7.37m (£4.5m) Greece Civil: POCA (Part 5) £4.829m Had regard to penalties, settlements and seizures in US and Greece
DePuy pays prosecution costs
16 April 2011 Mark Jessop Medical goods December 2005 SFO UN Independent Inquiry Committee
No 2000 to 2003 US$12.3m (value of contracts) €339,900 Iraq Criminal: The Iraq (United Nations Sanctions) Order 2000
£150,000 Fine — payable to the Development Fund for Iraq 24 weeks custodial sentence Jessop pays prosecution costs of £25,000
15 February 2011 Aftab Noor al-Hassan
Riad El-Taher
Oil and gas October 2005 SFO UN Independent Inquiry Committee
No 2001 to 2002 US$220m oil value (with profits of US$4.4m)US$50m oil value (with profits of US$600k)
US$1.6m
US$0.5m
Iraq Criminal: The Iraq (United Nations Sanctions) Order 2000
16 months imprisonment suspended for 2 years
10 months imprisonment
14 February 2011 MW Kellogg Limited (MWKL) Oil and gas October 2009 SFO French prosecutors Yes 1995 to 2004 US$6bn (total value of contracts) US$182m (paid to government officials) Nigeria Civil: POCA (Part 5) £7.028m Amount of share dividends payable from profits of parent company derived from contracts obtained by bribery and corruption
MWKL to overhaul its internal audit and control measures
MWKL pay costs of investigation
13 February 2011 Richard Forsyth
David Mabey
Richard Gledhill (Mabey & Johnson Limited)
Engineering (temporary bridges)
January 2007 SFO No 2001 and 2002 €4.2m (contract revenues) £420,000 payments to Iraq government
Iraq Criminal: The Iraq (United Nations Sanctions) Order 2000
21 months imprisonment and 5 years disqualification as a director8 months imprisonment and 2 years disqualification as a director8 months imprisonment suspended for 2 years
£75,000 of prosecution costs
£125,000 of prosecution costs
12 December 2010 BAE Systems plc Defence 2004 SFO Investigative journalism No 1999 to 2005 US$39.97m (contract value) US$12.4m (payments to intermediaries) Tanzania Criminal: S.221 Companies Act 1985 £500,000£29.5m
FineEx‑gratia payment for the benefit of the people of Tanzania
Remediation as set out in the Report of Lord Woolf£225,000 in SFO costs
11 December 2010 Weir Group plc Oil and gas services
2004 COPFS UN Independent Inquiry Committee
No 2000 to 2002 £13.9m (profit on contracts) £3m kickbacks Iraq Civil: POCA (Part 5) (referencing S.221 Companies Act 1985)Criminal: The Iraq (United Nations Sanctions) Order 2000
£13,945,962£3m
Profit on contractsFine
10 October 2010 Julian Messent (PWS International Limited)
Insurance broking October 2005 SFOCoLP
Foreign and Commonwealth Office
No February 1999 to June 2002
US$1,982,230 as inducements or rewards
Costa Rica Criminal: S.1 PCA £100,000 Compensation to the Republic of Costa Rica 21 months imprisonment and 5 years disqualification as a director
9 June 2010 Paul Kent Silinder Singh Sidhu Stuart Ford Rebecca HoyleSarah Kent
(Learning Skills Council (LSC))
Government funded training programmes
July 2006 SFO West Mercia Police
LSC Whistleblower No June 2003 to August 2005
£1.3m (contract value) £270,000 kickbacks UK Criminal: S.1 PCACriminal: S.329(1)(b) POCA (money laundering)Criminal: S.328(1) POCA (acquisition, retention, use or control of criminal property)Criminal: S.16 Theft Act 1968 (pecuniary advantage by deception)
4.5 years imprisonment3 years imprisonment2 years imprisonment1 year imprisonment suspended for 2 years12 months imprisonment suspended for 2 years and 200 hours unpaid work and 12 month supervision order
8 April 2010 Robert Dougall (DePuy International Limited)
Medical goods Not known SFOWest Yorkshire Police
Internal whistleblowerReferred to SFO by DoJ
1998 to 2006 £14.8m (profit on contracts) £4.5m (payments to Greek officials) Greece Criminal: S.1 PCA 12 months prison term suspended for 2 years on appeal
7 March 2010 Innospec Limited Chemicals October 2007 SFO UN Independent Inquiry Committee
No 14 February 2002 to 31 December 2006 (indictment period)
US$160m (value of contracts) US$2.9m in kickbacks Indonesia Criminal: S.1 Criminal Law Act 1977 (conspiracy to corrupt)Criminal: S.1 PCA
US$6.7m
US$6m
Confiscation penalty in respect of Indonesian corruption Civil recovery of which US$5m to UN Development Fund for Iraq (penalties taking into account the ability to pay)
SFO appointed monitor No further funds available to fund confiscation or compensation Innospec to pay costs of a monitor for up to three years
6 October 2009 AMEC plc Engineering and project management
March 2008 SFO Yes 2005 to 2007 US$9m South Korea Civil: POCA (Part 5) (referencing S.221 Companies Act 1985)
£4.95m Contribution to costs of the Civil Recovery Order External consultant appointed
5 September 2009 Mabey & Johnson Limited Engineering (temporary bridges)
January 2007 SFO Yes 1993 to 2002 Iraq: €4.2m (contract revenues)Jamaica: £8m+ (contract revenues)Ghana: £26m (contract revenues)
Iraq: £420,000 payments to governmentJamaica: £200,000 payments to officialsGhana: £470,000 payments to officials
Iraq, Jamaica and Ghana Criminal: S.1 CLA Iraq £2mJamaica £750,000Ghana £750,000
FineFineFine
Iraq reparations £618,000Jamaica reparations £139,000Ghana reparations £658,000Confiscation order £1.1m
First year monitoring costs up to £250,000 SFO costs £350,000
4 January 2009 Aon Limited Insurance broking April 2007 FSA SAR filed with SOCA and FSA
No January 2005 to September 2007
US$7.1m and €1m (revenues arising) US$2.5m and €3.4m to intermediaries Bahrain,Bulgaria, Myanmar, Bangladesh, Indonesia, Vietnam
Civil: S.206 FSMA £5.25m
3 October 2008 Balfour Beatty plc Engineering and construction services
April 2005 SFO Yes 1998 to 2001 Not known Egypt Civil: POCA (Part 5) (referencing S.221 Companies Act 1985)
£2.25m Not known Contribution to costs of the Civil Recovery Order External monitor appointed
2 September 2008 Niels Tobiasen (CBRN)Ananias Tumukumbe
Security consulting services
Not known CoLPCPS
SAR No May 2007 £500,000+ (value of contracts) £83,000 payments to officials Uganda Criminal: S.1 PCA 5 months jail sentence suspended for a year1 year jail sentence; subsequently deported
1 April 2008 Shinder Singh Gangar
Alan White
Nigel Heath (Dobb White & Co)
High yield investments
September 2002 SFOLeicestershire Police ECU
A separate SFO investigation
No Not known US$500,000 bribe United States Criminal: S.1 CLA 18 months jail sentence for corruption and 6 years for fraud18 months jail sentence for corruption and 6 years for fraud6 months jail sentence
About EYEY is a global leader in assurance, tax, transaction and advisory services. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In so doing, we play a critical role in building a better working world for our people, for our clients and for our communities.
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About EY’s Fraud Investigation & Dispute ServicesDealing with complex issues of fraud, regulatory compliance and business disputes can detract from efforts to succeed. Better management of fraud risk and compliance exposure is a critical business priority — no matter the industry sector. With our more than 3,400 fraud investigation and dispute professionals around the world, we assemble the right multidisciplinary and culturally aligned team to work with you and your legal advisors. And we work to give you the benefit of our broad sector experience, our deep subject matter knowledge and the latest insights from our work worldwide.
EY | Assurance | Tax | Transactions | Advisory
About EYEY is a global leader in assurance, tax, transaction and advisory services. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In so doing, we play a critical role in building a better working world for our people, for our clients and for our communities.
EY refers to the global organization and/or one or more of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. For more information about our organization, please visit ey.com.
About EY’s Fraud Investigation & Dispute ServicesDealing with complex issues of fraud, regulatory compliance and business disputes can detract from efforts to succeed. Better management of fraud risk and compliance exposure is a critical business priority — no matter what the industry sector. With over 3,500 fraud investigation and dispute professionals around the world, we can assemble the right multidisciplinary and culturally aligned team to work with you and your legal advisors. We work to give you the benefit of our broad sector experience, our deep subject matter knowledge and the latest insights from our work worldwide.
Ernst & Young LLPThe UK firm Ernst & Young LLP is a limited liability partnership registered in England and Wales with registered number OC300001 and is a member firm of Ernst & Young Global Limited.
Ernst & Young LLP, 1 More London Place, London, SE1 2AF.
© 2015 Ernst & Young LLP. Published in the UK. All Rights Reserved.
ED None
In line with Ernst & Young’s commitment to minimise its impact on the environment, this document has been printed on paper with a high recycled content.
Information in this publication is intended to provide only a general outline of the subjects covered. It should neither be regarded as comprehensive nor sufficient for making decisions, nor should it be used in place of professional advice. Ernst & Young LLP accepts no responsibility for any loss arising from any action taken or not taken by anyone using this material.
ey.com/uk/FIDS
