Page 1

Edition 1 update July 2012

UK Bribery Digest Fraud Investigation & Dispute Services


Contents 1

Introduction

2

Overview of cases in the first half 2012

3

Lessons from our recent work with clients in corruption risk management

4

Other recent matters of note

5

Table of cases

6

Cases in the first half of 2012

8

UK Bribery Digest cases summary table

11

Abbreviations

11

Contacts

14 UK Bribery Digest — Fraud Investigation & Dispute Services


Introduction         Bribery Digest, examining completed UK bribery and corruption cases. This update covers cases in        Digest,1 commented on all completed cases from 2008 to December 2011. We will be issuing a full update of the Digest providing a complete record of UK cases to that point in time in the New Year. As we go to print there hasn’t been the headline corporate prosecution under the Bribery Act that many foretold but there have been some interesting and instructive cases. We pass comment on developments related to anti-bribery and corruption            While each of them has points of interest, none of these cases have

        

   a state of complacency about corruption risk. With bodies such as the OECD keeping a close eye on developments in enforcement in the UK (and any lack thereof) it seems unlikely that any complacency will be allowed to continue for too long. We still await the cases that will shed light on the interpretation       !  "# $  enforcement agency of the Act, will seek to enforce it, however David Green CB QC, the new Director, has been talking tough. At the Ernst & Young sponsored 6th Annual European Forum on Anti-Corruption on 26th June he told the audience that “In any case where there is a realistic prospect of conviction and it is in the public interest to prosecute, then the SFO will prosecute, whether the defendant is an individual or a corporateâ€?. % '  *    useful in your work. Please contact any of the anti-bribery and corruption team listed on the back page if you would like to make comment or enter into the debate. Best regards,

Jonathan Middup Partner, UK Head of Anti-Bribery and Corruption

1

Edition 1 of the Bribery Digest may be accessed at http://www.ey.com/Publication/ vwLUAssets/UK_Bribery_Digest_edition_1_January_2012/$FILE/EY_UK_Bribery_ Digest_edition_1_Jan_2012.pdf

UK Bribery Digest — Fraud Investigation & Dispute Services

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Overview of cases in  All sectors are at risk While the global enforcement history indicates that certain sectors (oil and gas, pharmaceuticals and defence) have found themselves especially prone to bribery prosecutions, all sectors are at risk. If there was any lingering doubt about this assertion, then it is surely dispelled by Case 26 in this Digest: if the potato business gives rise to a bribery prosecution, then any sector must be seen as at risk.

Domestic and private sector bribery is also a threat The focus of commentary during the passage of the Bribery Bill into the Bribery Act and of the subsequent Guidance was on     

    

    It is a timely reminder that all four completed UK prosecutions





  an ancillary action to an older case) concern bribery activities within the UK. Businesses cannot overlook the domestic exposure to corruption. It is also noteworthy that three of these four cases were about private sector bribery — business to business bribery  



   !     needs to be an important consideration in any corruption risk management programme.

!  " #$   and directors The previously highlighted enforcement trend of actions against individuals (including individuals in their roles as directors and " 

# 

 half of 2012 were prosecutions of individuals, with a further 11 individuals being sentenced (prison sentences ranged up to 5 "$ %    Innospec (see Case 7 in the Digest) whose trial or sentencing is in process but not yet completed at the time of writing (two of whom have pleaded guilty). Thus, a discernable feature of the completed prosecutions is that about half of them involve individual defendants and the other half corporations.

Ernst & Young’s Global Fraud Survey: responses relating to bribery Our Global Fraud Survey 20122 has produced encouraging evidence that attitudes towards bribery and corruption are changing in the UK. 4% of UK responses to the survey agreed   

  '      business, this has reduced from 8% of UK responses in 2010. By comparison, global responses in 2012 revealed that 15%  

        '   and 11% of respondents from Western Europe. Insofar as perceptions of the level of bribery are concerned, 14% of UK respondents in 2012 thought that corrupt practices happen widely in business in this country, but only 2% of UK respondents thought that it is common practice in their sector. As was the case in previous years, the UK perception of levels of bribery and corruption in this country are lower than the average of responses from the rest of the world: 39% of global responses thought that bribery happens often in their country and 12% thought that it is common practice in their sector. However, all of these responses are consistent with our long-standing observation that people are inclined to think of bribery and corruption as something that tends to happen elsewhere — be that another sector or another part of the world.

“The SFO’s current role and purpose is unclear to some and needs restating. I am convinced that the SFO must focus on top level fraud. By that I mean cases which     34   in general and in the City of London in particular; cases which compromise the       entitled; serious bribery and corruption, both national and international and those other cases which may have a particularly strong public interest dimension, or which represent a striking new species of fraudâ€? David Green (Director of the SFO) at the 6th Annual European Forum on Anti-Corruption 26th June 2012

2

The Global Fraud Survey 2012 may be accessed at http://www.ey.com/Publication/vwLUAssets/Global-Fraud-Survey-a-place-for-integrity-12th-Global-Fraud-Survey/$FILE/EY12th-GLOBAL-FRAUD-SURVEY.pdf

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UK Bribery Digest — Fraud Investigation & Dispute Services


Lessons from our recent work with clients in corruption risk management Increased awareness prompting whistleblowing reports Training and other awareness raising measures that businesses are putting in place have resulted in increased evidence of whistleblowing reports. This is important for two reasons. Firstly it shows that the awareness raising is effective and that individuals feel comfortable coming forward as a result and secondly it highlights that businesses need to be prepared for increased reports and have a planned response built into the compliance programme. A side effect of anti-bribery training and awareness has been to bring other misconduct matters to light. A number of our recent           >   interest within procurement, with individuals linked either directly or indirectly to suppliers, which followed close on the heels of anti-bribery and corruption training.

Due diligence challenges One of the areas where we experience a high number of questions from business is on the extent of due diligence which is necessary over third parties and in the supply chain. Reactions have ranged from, at one extreme, the development and roll-out of sophisticated due diligence programmes based on risk scoring across all third party relationships to, at the other extreme, businesses which have been paralysed by the perceived complexity of the challenge, resulting in no action being taken at all.

“As with top level fraud so with bribery and corruption. I want to focus the SFO’s expenditure of blood and treasure on those cases where our impact will be greatest. By doing this the SFO will be making the contribution for which it was designed and which its many supporters rightly expect� “The SFO will concentrate on the most serious cases of international bribery and corruption with roots in or connections back to UK plc. We will not be looking to act in a compliance role, nor will we penalise well-run corporates for relatively minor infractions� David Green (Director of the SFO) at the 6th Annual European Forum on Anti-Corruption 26th June 2012

Some sectors, such as aerospace and defence, have put forward plans to lodge anti-bribery and corruption credentials with a central repository to address the problem of businesses 

?    @   

“We would welcome a debate as to whether    

 rewarded for the information they provide� David Green (Director of the SFO) at the 6th Annual European Forum on Anti-Corruption 26th June 2012

There is no doubt that the requirement for third party due diligence has thrown up some huge challenges but the best programmes we have seen have been pragmatic and heavily risk-based, focusing on the real areas of risk and proportionate measures rather than attempting blanket ‘compliance’. The Mabey Engineering (Holdings) Limited case (see Case 22 in the Digest) highlights the importance of due diligence to investors as a defence in the event of bribery issues subsequently arising.

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Other recent matters of note Deferred Prosecution Agreements The Ministry of Justice is seeking to increase the incentive for businesses to self-report economic crime through the introduction of Deferred Prosecution Agreements (“DPAs�)3. The consultation period on introducing DPAs closes on 9 August 2012. DPAs would potentially have far-reaching impact for business, perhaps making it easier and quicker to resolve bribery cases and opening the door to the scale and nature of settlements we have seen agreed with the US Department of Justice and SEC.

“I will also expand and concentrate our intelligence capability‌(by doing that we) will extend our reach and increase self reporting by corporates‌ a corporate which chooses not to self report can expect little sympathyâ€? David Green (Director of the SFO) at the 6th Annual European Forum on Anti-Corruption 26th June 2012

It also states that “compliance [with the Standard] cannot confer immunity from legal obligations�. This understandable caveat highlights that the Standard, like various guidance previously published, requires interpretation in order to be given practical application. The onus therefore remains with the business to assess whether or not it has “adequate procedures�.

Financial services still under close scrutiny In the last Bribery Digest, we highlighted that regulated businesses need to meet a higher standard and that those regulated by the Financial Services Authority (the FSA) are arguably more exposed for “adequate procedures� type actions, to use Bribery Act terminology. We commented that, in essence, the insurance broker %  N  X    

  $ in the view of the FSA, gave rise to an unacceptable risk that payments could be used for corrupt purposes. In March 2012, the FSA published a thematic review of anti-bribery and corruption systems and controls in investment banks (along the lines of its May 2010 review of the commercial insurance    X4         Z ' \     "!^  rules covering bribery and corruption, either before the implementation of the Bribery Act or after

%'%  *        management system (ABMS)

' `        @ anti-bribery and corruption (ABAC) risk assessment

British Standard 10500 was released in November 2011. The Standard takes into account the requirements of the Bribery Act and internationally recognised good practice, and it is applicable for organisations of all sizes, sectors and    }        !$ in much the same way as companies already do for quality, environmental or health and safety management under other BSI standards. The Standard appears to be gaining some traction, particularly in the construction sector.

' Management information on ABAC was poor, making it       ^     effective oversight

As the Standard itself acknowledges, it â€œâ€Ś does not purport to include all provisions necessary to prevent briberyâ€? and so cannot be used as a simple checklist for compliance.

3

' j '        to monitor the effectiveness of their ABAC controls ' Firms’ understanding of bribery and corruption was often very limited ' j       

  ^      parties used to win or retain business ' j           $ hospitality and expenses policies, few had processes in place to ensure gifts and expenses in relation to particular clients/ projects were reasonable on a cumulative basis

The DPA as envisaged in the consultation document is described as follows: a prosecutor would lay but would not immediately proceed with criminal charges against a    

      @        $      $          to prevent future offending.

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UK Bribery Digest — Fraud Investigation & Dispute Services


Table of cases Covered in this update Case name

Case reference

Date completed

Page

Andrew Behagg, David Baxter and John Maylam

26

Jun–12

7

Bank of Ireland v Jaffery and Gill

25

May–12

7

James McGeown, William Marks, John Symington and Carol Kealey

24

Mar–12

7

X V -QV  @ Q!  Y  Z @ 

23

Jan–12

6

Mabey Engineering (Holdings) Limited

22

Jan–12

6

Case reference

Date completed

Page in Edition 1

Mazhar Majeed, Salman Butt, Mohammed Asif and Mohammed Amir

21

Nov–11

7

*

+- !

20

Oct–11

7

*  !  /  

19

Jul–11

7

Willis Limited

18

Jul–11

8

;! <    /  

17

Aprâ&#x20AC;&#x201C;11

9

Mark Jessop

16

Aprâ&#x20AC;&#x201C;11

10

Aftab Noor Al-Hassan and Riad El-Taher

15

Febâ&#x20AC;&#x201C;11

10

MW Kellogg Limited

14

Febâ&#x20AC;&#x201C;11

11

Richard Forsyth, David Mabey and Richard Gledhill (Mabey & Johnson Limited)

13

Febâ&#x20AC;&#x201C;11

11

BAE Systems plc

12

Decâ&#x20AC;&#x201C;10

12

Weir Group plc

11

Decâ&#x20AC;&#x201C;10

14

>  * !?@<    /   "

10

Octâ&#x20AC;&#x201C;10

14

!P Q@ 

@

@ Q@# Q Rebecca Hoyle and Sarah Kent (Learning Skills Council)

9

Junâ&#x20AC;&#x201C;10

15

V ;;! <    /   "

8

Aprâ&#x20AC;&#x201C;10

15

Innospec Limited

7

Marâ&#x20AC;&#x201C;10

15

Amec plc

6

Octâ&#x20AC;&#x201C;09

17

Mabey & Johnson Limited

5

Sepâ&#x20AC;&#x201C;09

17

Aon Limited

4

Janâ&#x20AC;&#x201C;09

17

Balfour Beatty plc

3

Octâ&#x20AC;&#x201C;08

18

Niels Tobiasen and Ananias Tumukunbe (CBRN)

2

Sepâ&#x20AC;&#x201C;08

19

Dobb White & Co

1

Aprâ&#x20AC;&#x201C;08

19

Covered in Edition 1 of the UK Bribery Digest Case name

UK Bribery Digest â&#x20AC;&#x201D; Fraud Investigation & Dispute Services

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[

 Cases referenced 1 to 21 are set out in Edition 1 of the Bribery Digest. Cases referenced 22 to 26         All of the cases are included in the summary table.

Act. The Guidance (see paragraph 42) states that liability under the Act will not accrue â&#x20AC;&#x153;through simple corporate ownership or investment or through the payment of dividendsâ&#x20AC;? and appears to require a more direct and intentional link between the investor and the bribery.

22. Mabey Engineering (Holdings) Limited (January 2012)

Because a number of both criminal (e.g. Bribery Act) and civil (e.g. POCA) laws impinge on incidents of bribery, there is a need for sound analysis and advice for investors in managing corruption risk. The SFOâ&#x20AC;&#x2122;s comment, quoted above, highlights that an investor will be in a more defensible position where adequate due diligence has been performed.

j       \~    Z the company itself was prosecuted in September 2009 and three       "N    Â&#x20AC;Â  respectively in the Digest). Mabey & Johnson self-reported the irregularities in early 2008 and, therefore, the matter took four years to be fully resolved. The January 2012 case concerned a civil order requiring the shareholder of Mabey & Johnson (Mabey Engineering (Holdings) Limited)to pay ÂŁ131,201 in recognition of sums received through share dividends derived from contracts won through unlawful conduct. In the SFO Press Release, Richard Alderman, the Director of the SFO at that time, stated: â&#x20AC;&#x153;First, shareholders who receive the proceeds of crime can expect civil action against them to recover the moneyâ&#x20AC;Ś In this particular case, however, the shareholder was totally unaware of any inappropriate behaviourâ&#x20AC;Ś The second broader point is that shareholders and investors in companies are obliged to satisfy themselves with the business practices of the companies they invest in. This is very important and we cannot emphasise it enough. It is particularly so for institutional investors who have the knowledge and expertise to do it. The SFO intends to use the civil recovery process to pursue investors who have     % 

  $    less sympathetic to institutional investors whose due diligence has clearly been lax in this respect.â&#x20AC;? The Proceeds of Crime Act (POCA) has featured heavily in earlier cases and offers broad powers to the SFO, especially in dealing with privately held businesses. Proceeding against a publicly owned business and more â&#x20AC;&#x153;passiveâ&#x20AC;? investments using this power is likely to be more problematic for the enforcement agency. The position is rendered yet more complex by the yet-to-be      !  Â&#x201A; N"  commercial organisations to prevent bribery by an associated person) â&#x20AC;&#x201D; but, of course, this and the earlier cases pre-date the

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UK Bribery Digest â&#x20AC;&#x201D; Fraud Investigation & Dispute Services

23.X V -QV  @ Q!   Hammond and Barry Smith (January 2012) This case highlights a type of corrupt activity that receives less comment but which is potentially of serious consequence:         j             companies acting as procurement agents for the projects in the oil and gas sector. Certain of the defendants were engaged by these procurement agents and had access to information which they passed on (through the other co-defendants or their front companies) to targeted bidding companies who either made, or agreed to make, corrupt payments for the information, disguised as â&#x20AC;&#x153;consultancy servicesâ&#x20AC;?. These were established UK-based procurement companies, dealing with some of the larger projects in the sector. Several of the bidders who agreed to pay for the information were in mature economies, such as Italy, France and Canada. The SFO reports that the procurement companies helped the investigation enormously and were appalled at the apparent blatant disregard shown by the defendants (several of whom 

?   X     integrity of the project environments. Â&#x2026;         2011(when the Bribery Act came into force), the procurement and bidding companies are likely to have been exposed to prosecution for the section 7 offence of failing to prevent bribery.


24. James McGeown, William Marks, John Symington and Carol Kealey (March 2012) This case involved the familiar bribery model of a supplier making    

     and continuation of contracts, in this instance CCTV provided to the Ministry of Defence in Northern Ireland. It is another example of a domestic bribery prosecution and in this case both the supplier       %   bribery can become a family matter: Carol Kealey is the sister of William Marks and became involved by agreeing to use her bank accounts to receive the corrupt monies.

25. Bank of Ireland v Jaffery and Gill (May 2012) This case is a reminder that bribery allegations may be pursued, in certain circumstances, by way of civil disputes between private parties and that English law takes a broad view of what constitutes a bribe for civil claims where the briber is inducing what he knows to be an agent of another party and there is a failure to disclose it to the other party. This case was brought by the bank against one of its former senior executives (Syed Jaffery) and one of his associates (Pritpal Gill). Mr Gill was the agent for several of the bankâ&#x20AC;&#x2122;s customers and the case concerned a series of loans made by the bank to those customers. All of the customers were introduced to the bank by Mr Gill and both defendants admitted that the relevant customers were all ultimately owned by one or other of Mr Gillâ&#x20AC;&#x2122;s sisters. The key allegations were that Mr Jaffery acted in breach of his           

    >       Mr Gill dishonestly assisted Mr Jafferyâ&#x20AC;&#x2122;s breach. Of the various bribery allegations made by the bank, the successful claim concerned a promise made by Mr Gill to Mr Jaffery that he would receive a 10% interest in a project for which a customer connected with Mr Gill was seeking funding from the bank. The judge held that the 10% had been promised as a quid pro quo for Mr Jaffery assisting Mr Gill to obtain banking facilities and that after being promised the interest Mr Jaffery had encouraged the bank to loan money to Mr Gill and his family. The encouragement took the form of promoting the loans and giving references to the bank for Mr Gill and his family.

The judge held that Mr Gill had acted dishonestly in procuring Mr Jafferyâ&#x20AC;&#x2122;s services to assist him in obtaining the loan and that the bank would not have proceeded with the loan had it known that Mr Jaffery had been promised a 10% interest in the project.

26. Andrew Behagg, David Baxter and John Maylam (June 2012) This UK-based bribery case involved a major supplier of potatoes to Sainsburyâ&#x20AC;&#x2122;s. It appears to involve many of the classic features and >     Andrew Behagg and David Baxter were the Operations Director and Finance Director respectively of the company, which supplied half of Sainsburyâ&#x20AC;&#x2122;s potatoes in the UK. John Maylam was a buyer for Sainsburyâ&#x20AC;&#x2122;s. The scheme appears to have been straightforward: Sainsburyâ&#x20AC;&#x2122;s were overcharged for potatoes supplied since 2006 with the excess (some ÂŁ8.7 million) being accumulated into what was called The Fund. John Maylam and his associates received ÂŁ4.9 million of The Fund and the remainder was retained by the other defendants. ! >        Â&#x2021;

  include the following: ' Lavish hospitality and holidays for John Maylam (including a ÂŁ200,000 bill at Claridgeâ&#x20AC;&#x2122;s Hotel and a ÂŁ350,000 holiday to the Monaco Grand Prix) paid from The Fund ' Some ÂŁ1.5 million transferred by John Maylam to Luxembourg ' A â&#x20AC;&#x153;consultancy reportâ&#x20AC;? for which he was paid ÂŁ85,000 ' Large and frequent cash payments to him â&#x20AC;&#x201D; the scam was uncovered by an employee of the potato supplier who became suspicious of being asked to withdraw ÂŁ5,000 in bundles of ÂŁ50 notes If there was any lingering doubt that bribery is a risk faced by all sectors, then that doubt is surely dispelled by this case: if the potato business generates a bribery prosecution then any sector must be seen as at risk.

UK Bribery Digest â&#x20AC;&#x201D; Fraud Investigation & Dispute Services

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UK Bribery Digest cases â&#x20AC;&#x201D; Summary table Case reference

Date

Name

Sector

Enforcement $  

Enforcement agency

Source of enquiry

26

June 2012

Food retailing

2008

CoLP

Audit

25

May 2012

24

March 2012

Andrew Behagg David Baxter John Maylam Syed Jaffery Pritpal Gill James McGeown William Marks John Symington Carol Kealey

Government procurement (CCTV contracts)

2002

Ministry of Defence Police (MDP) SFO

Whistleblower

23

January 2012

Andrew Rybak Ronald Saunders Philip Hammond Barry Smith

Oil and gas

April 2008

SFO CoLP

Whistleblower

22

January 2012

Engineering (temporary bridges)

January 2007

SFO

21

November 2011

Cricket/gambling

N/A

N/A

Press investigation

20 19

October 2011 July 2011

Mabey Engineering (Holdings) Limited (parent company of Mabey & Johnson Limited) Mazhar Majeed Salman Butt Mohammed Asif Mohammed Amir Munir Yakub Patel Macmillan Publishers Limited (MPL)

Public service Educational materials

N/A December 2009

N/A SFO CoLP

Press investigation World Bank report

18

July 2011

Willis Limited

Wholesale insurance and reinsurance broking

Not known

FSA

FSA and SARS

17

April 2011

DePuy International Limited

Medical goods

October 2007

SFO

16

April 2011

Mark Jessop

Medical goods

2007

SFO

Internal whistleblower Referred to SFO by DoJ UN Independent Inquiry Committee

15

February 2011

Aftab Noor al-Hassan

Oil and gas

September 2008

SFO

15

February 2011

Riad El-Taher

Oil and gas

August 2008

SFO

14

February 2011

MW Kellogg Limited (MWKL)

Oil and gas

October 2009

SFO

13

February 2011

Richard Forsyth David Mabey Richard Gledhill (Re Mabey & Johnson Limited)

Engineering (temporary bridges)

January 2007

SFO

12

December 2010

BAE Systems plc

Defence

2004

SFO

11

December 2010

Weir Group plc

Oil and gas services

2004

} # Â&#x2021;  UN Independent Fiscal (Scotland) Inquiry Committee

10

October 2010

Insurance broking

October 2005

9

June 2010

Government funded training programmes

Not known

SFO CoLP SFO West Mercia Police

Foreign and }  #  LSC Whistleblower

8

April 2010

Medical goods

Not known

7

March 2010

Julian Messent (PWS International Limited) Paul Kent Silinder Singh Sidhu Stuart Ford Rebecca Hoyle Sarah Kent (Learning Skills Council (LSC)) Robert Dougall (DuPuy International Limited) Innospec Limited

Chemicals

October 2007

SFO West Yorkshire Police SFO

Internal whistleblower Referred to SFO by DoJ UN Independent Inquiry Committee

6

October 2009

AMEC plc

Engineering and project management

March 2008

SFO

5

September 2009

Mabey & Johnson Limited

Engineering (temporary bridges)

January 2007

SFO

4

January 2009

Aon Limited

Insurance broking

April 2007

FSA

3

October 2008

Balfour Beatty plc

Engineering and construction services

April 2005

SFO

2

September 2008

Security consulting services

Not known

1

April 2008

Niels Tobiasen (CBRN) Ananias Tumukumbe Shinder Singh Gangar Alan White Nigel Heath (Dobb White & Co)

High yield investments

April 2006

CoLP CPS SFO Leicestershire Police ECU

8

UK Bribery Digest â&#x20AC;&#x201D; Fraud Investigation & Dispute Services

Banking

UN Independent Inquiry Committee UN Independent Inquiry Committee French prosecutors

Investigative journalism

!Â&#x161;  !#} and FSA

A separate SFO investigation


Selfreported?

Date of transactions

Value of transactions

Location of transactions

Legal basis of action

January 2006 to January 2008

ÂŁ8.7m

UK

Criminal: S.1 PCA Criminal: S.329 POCA

May 2007 to May 2010 January 1998 to February 2004

Approx ÂŁ16m (value of loans)

UK

}  Z   

ÂŁ16.2m (value of contracts)

UK

Criminal: S.1 PCA Criminal: article 47 (2) Proceeds of Crime (Northern Ireland) Order 1996 Criminal: S.89 Police Act 1996

2001 to 2009

Approx ÂŁ70m (value of contracts)

Iran, Egypt, Russia, Singapore and Abu Dhabi (projects) UK, Italy, Canada, France (procurement & bidding)

Criminal: CJA

2001 and 2002

ÂŁ131k (value of dividends)

Iraq

Civil: POCA (Part 5)

August 2010

ÂŁ150k

UK

Criminal: Conspiracy to corrupt

August 2011 2002 to 2009

ÂŁ500 ÂŁ11.26m (value of contracts)

UK Rwanda, Uganda and Zambia

S.2 Bribery Act Civil: POCA (Part 5)

2005 to 2009

ÂŁ32.7m (net insurance commissions earned) ÂŁ27m (insurance commissions paid)

â&#x20AC;&#x153;High risk jurisdictionsâ&#x20AC;?Egypt, Russia and Argentina cited

Civil: FSMA (Section 206)

1998 to 2006

Â&#x2C6;Â&#x2030;Â&#x2019;N   X Â&#x2C6;Â&#x2030;Â&#x20AC;N Â&#x201C;  X US$12.3m (value of contracts) â&#x201A;Ź339,886 in improper payments paid or due ÂŁ40,000 paid in cash in Iraq 3!Â&#x201D;Â&#x2030;Â&#x2030;  

US$1.6m in illegal payments 3!Â&#x201D;Â&#x160;  

US$500k in illegal payments US$6bn (total value of contracts) 3!Â&#x201D;Â&#x2019;N   X

Greece

Civil Recovery Order: POCA

Iraq

Criminal: The Iraq (United Nations Sanctions) Order 2000

Iraq

Criminal: The Iraq (United Nations Sanctions) Order 2000

Iraq

Criminal: The Iraq (United Nations Sanctions) Order 2000

Nigeria

Civil: POCA (Part 5)

2001 and 2002

â&#x201A;Ź4.2m (contract revenues) ÂŁ420k payments to government

Iraq

Criminal: The Iraq (United Nations Sanctions) Order 2000

1999 to 2005

US$39.97m (contract value) US$12.4m (payments to intermediaries)

Tanzania

Criminal: S.221 Companies Act 1985

2000 to 2002

Â&#x2C6;Â Â&#x2014;N   X ÂŁ3m kickbacks

Iraq

February 1999 to June 2002 June 2003 to August 2005

US$1,982,230 as inducements or rewards

Costa Rica

Civil Recovery Order: POCA (referencing S.221 Companies Act 1985) Criminal: The Iraq (United Nations Sanctions) Order 2000 Criminal: S.1 PCA

ÂŁ1.3m (contract value) ÂŁ270k kickbacks

UK

Greece

1999 to 2006

Â&#x2C6;Â&#x2030;Â&#x2019;N   X Â&#x2C6;Â&#x2030;Â&#x20AC;N Â&#x201C;  X US$160m (value of contracts) US$11.7m in commissions to agents Up to US$8m in bribes

Indonesia

Criminal: S.1 Criminal Law Act 1977 (conspiracy to corrupt) Criminal: S.1 PCA

Yes

2005 to 2007

US$9m

South Korea

Civil Recovery Order: POCA (referencing S.221 Companies Act 1985)

Yes

1993 to 2002

Iraq: â&#x201A;Ź4.2m (contract revenues) and ÂŁ420k payments to government Jamaica: ÂŁ8m+ (contract revenues) and ÂŁ200k   

Ghana: ÂŁ26m (contract revenues) and ÂŁ470k   

US$7.1m and â&#x201A;Ź1m (revenues arising) 66 improper payments totalling US$2.5m and â&#x201A;Ź3.4m to 9 intermediaries Not known

Iraq, Jamaica and Ghana

Criminal: Conspiracy to corrupt

Bahrain,Bulgaria, Myanmar, Bangladesh, Indonesia, Vietnam

Civil: S.206 FSMA

Egypt

Civil Recovery Order: POCA (referencing S.221 Companies Act 1985)

Uganda

Criminal: S.1 PCA

United States

Criminal: Conspiracy to corrupt and conspiracy to defraud

Yes

2000 to 2003

2001 to 2002 2001 Yes

1995 to 2004

1998 to 2006

January 2005 to September 2007 Yes

1998 to 2001

May 2007 Not known

ÂŁ500k+ (value of contracts) Â&#x2C6;Â&#x2019;Â   

US$500k bribe

Criminal: S.1 PCA Criminal: 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) Criminal: S.1 PCA


Financial penalty

    

Other penalties

+   

Not reported

3 years and 6 months imprisonment 2 years and 6 months imprisonment 4 years imprisonment Not reported }   Â&#x2C6;

ÂŁ131k

3 years imprisonment suspended for 2 years and 7 years  @       2 years imprisonment suspended for 2 years 9 months imprisonment suspended for 2 years Conditional discharge Â&#x20AC;     @    as a director 3 years and 6 months imprisonment       @    as a director 12 months imprisonment suspended for 18 months ÂŁ2k in costs

32 months imprisonment 30 months imprisonment 12 months imprisonment 6 months imprisonment 3 years imprisonment MPL debarred from World Bank contracts for minimum 3 years SFO approved monitor put in place

ÂŁ105k between them in prosecution costs

Dividends received by parent company derived from contracts won by subsidiary through unlawful conduct

ÂŁ11.26m

Revenue received from potentially unlawful conduct

ÂŁ6.895m

"!   Â&#x152;     Â&#x2018; High standards of regulatory conduct

ÂŁ4.829m

Had regard to penalties, settlements and seizures in US and Greece Fine â&#x20AC;&#x201D; payable to the Development Fund for Iraq

ÂŁ150k

24 weeks custodial sentence

}  Â&#x2C6;Â&#x2030;Â&#x160;

MPL pay all investigation costs. MPL pay ÂŁ27k SFO costs. MPL withdrew from all public tenders in education business in East and West Africa. Loss of bid securities Willis to carry out a review of past payments to overseas third parties Â&#x152;!   Â&#x2018;   costs per the FSA Depuy pays prosecution costs Jessop pays prosecution costs of ÂŁ25k

16 months imprisonment suspended for 2 years 10 months imprisonment ÂŁ7.028m

ÂŁ500k ÂŁ29.5m



     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



  Â&#x20AC;  @    as a director Â&#x2019;

    @    as a director 8 months imprisonment suspended for 2 years

ÂŁ75k of prosecution costs ÂŁ125k of prosecution costs

ÂŁ13,945,962 ÂŁ3m

Fine Â&#x2022;Â&#x2013;?    of Tanzania Â&#x2021;  

Fine

ÂŁ100k

Compensation to the Republic of Costa Rica

US$6.7m US$6m

}     Â&#x2DC;    SFO appointed monitor Civil recovery of which US$5m to UN Development Fund for Iraq (penalties taking into account the ability to pay)

`       or compensation Innospec to pay costs of a monitor for up to three years Contribution to costs of the Civil Recovery Order External consultant appointed

Fine Fine Fine

First year monitoring costs up to ÂŁ250k SFO costs ÂŁ350k

Remediation as set out in the Report of Lord Woolf

ÂŁ225k in SFO costs



  Â&#x20AC;  @    as a director 4.5 years imprisonment 3 years imprisonment 2 years imprisonment 1 year imprisonment suspended for 2 years 12 months imprisonment suspended for 2 years and 200 hours unpaid work and 12 month supervision order 12 months prison term suspended for 2 years on appeal

ÂŁ4.95m

Iraq ÂŁ2m Jamaica ÂŁ750k Ghana ÂŁ750k

Iraq reparations ÂŁ618k Jamaica reparations ÂŁ139k Ghana reparations ÂŁ658k }  Â&#x2C6;

ÂŁ5.25m

ÂŁ2.25m

Not known

Contribution to costs of the Civil Recovery Order External monitor appointed 5 months jail sentence suspended for a year 1 year jail sentence; subsequently deported 18 months jail sentence for corruption and 6 years for fraud 18 months jail sentence for corruption and 6 years for fraud 6 months jail sentence

UK Bribery Digest â&#x20AC;&#x201D; Fraud Investigation & Dispute Services 10


Abbreviations

Contacts

Bribery Act

Bribery Act 2010

Fraud Investigation & Dispute Services

CoLP

City of London Police

CJA

Criminal Justice Act 1987

John Smart +44 (0) 20 7951 3401

jsmart@uk.ey.com

CPS

Crown Prosecution Service

Jonathan Middup +44 (0) 121 535 2104

jmiddup@uk.ey.com

CRO

Civil Recovery Order

DoJ

US Department of Justice

Steve Caine +44 (0) 20 7951 4433

scaine@uk.ey.com

David Lister +44 (0) 131 777 2308

dlister@uk.ey.com

ECU

Economic Crime Unit

FBI

Federal Bureau of Investigation

"Â&#x2021;#

" Â&#x2021; # 

FSA

Financial Services Authority

FSMA

Financial Services and Markets Act

Guidance

The Bribery Act 2010 Guidance about procedures which relevant commercial organisations can put into place to prevent persons associated with them from bribing (Ministry of Justice)

PCA

Prevention of Corruption Act 1906

POCA

Proceeds of Crime Act 2002

SAR

Suspicious Activity Report

SEC

Securities and Exchange Commission

!"#

!  "# 

SOCA

Serious Organised Crime Agency

11 UK Bribery Digest â&#x20AC;&#x201D; Fraud Investigation & Dispute Services

â&#x20AC;&#x153;Corporates should be genuinely working towards a zero tolerance (in relation to) facilitation payments. Supported by OECD policy, we will actively consider prosecution where there is plainly no intention of ceasing such paymentsâ&#x20AC;? David Green (Director of the SFO) at the 6th Annual European Forum on Anti-Corruption 26th June 2012

11


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Disclaimer The factual content of this Digest is based on published sources. We provide comment based on our understanding as forensic accountants of the relevant laws and related guidance. This does not comprise legal analysis or advice. 12

Ernst&Young UK Bribery Digest Edition 1 Update  

Ernst&Young UK Bribery Digest Edition 1 Update

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