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Mabey & Johnson guilty of paying overseas bribes

Bridge designer and manufacturer Mabey & Johnson was last week fined £3.5M for bribing officials involved in the United Nations (UN) oil for food programme in Iraq and for bribing foreign officials in Jamaica and Ghana.

London’s Southwark Crown Court heard that the firm secured overseas contracts totalling £60M by offering sweeteners totalling £1M.

The prosecution followed the discovery of incriminating information during an internal investigation by Mabey & Johnson’s solicitor Herbert Smith. This was then passed on to the Serious Fraud Office (SFO) in early 2008.

The company admitted two counts of conspiracy to corrupt in Ghana and Jamaica between January 1993 and January 2001.

It also pleaded guilty to “making funds available” to officials in Iraq working for the UN’s oil-for-food humanitarian aid programme. It paid out more than £365,000 between May 2001 and November 2002.

Individuals of influence

The subsequent investigation showed that it had also paid bribes to “individuals of influence” in Madagascar, Angola, Mozambique and Bangladesh.

As well as paying the fine, Mabey & Johnson will also have to pay a total of £3.1M to cover compensation to countries where it had paid bribes, the prosecution’s costs, and the cost of employing an independent monitor to oversee and report on its future conduct.

Five of Mabey & Johnson’s directors have stepped down since 2008, and the company appointed Peter Lloyd as its new managing director in the same year. “What our company did in the past is a matter of deep regret,” said Lloyd.

“The UK lags significantly behind other countries in the number of cases brought for foreign bribery.”

Chandrashekhar Krishnan, Transparency International

“We have said we will pay appropriate compensation as a further expression of our regret. All of our sales and associated systems have been reviewed and will be regularly updated, while all relevant staff have been extensively trained or retrained. We have made a fresh start as a company.” Anti-corruption groups welcomed the conviction.

“This is the first prosecution of a UK company for foreign bribery since the UK ratified the OECD Anti-Bribery Convention in 1999,” said anti-corruption body Transparency International UK executive director Chandrashekhar Krishnan. “While this is welcome news, the UK lags significantly behind other countries in the number of cases brought for foreign bribery. We hope that this landmark case will encourage other firms to cooperate.”

The prosecution comes as Parliament discusses a draft bribery bill that introduces a new discrete offence of bribery of a foreign public official. It also creates a new corporate liability offence of negligently failing to prevent bribery.

The new offences are in direct response to the difficulty in prosecuting public sector bribery overseas. “British companies may be no more or less corrupt than United States or German companies,” said Krishnan.

“But corrupt companies may be getting away with it in the UK as law and enforcement is not as strong as in other jurisdictions. “In the US there have been 120 cases since the OECD convention came into force, in Germany the number stands at 110, and France has had 17.

“In the UK we are not yet into double figures,” he said.

Catalogue of corruption

Iraq had contributed a major part of Mabey & Johnson turnover before trade sanctions were imposed following the invasion of Kuwait in the 1990s.

The firm got involved in the UN oil for food programme in the mid 1990s and when it was negotiating for a £5.5M contract for 25 bridges, their first Iraqi contract since the mid 1980s, the firm’s senior management approved a kickback payment of 10% and inflated the contract price by the same amount.

In some countries Mabey & Johnson appointed agents to act on its behalf. Court papers show that in Jamaica and Ghana the company knew its agents were involved in corrupt relationships with public officials. Mabey & Johnson agreed with these agents to pay bribes to those public servants.

Prosecutors claimed that the company employed known bribers as agents for commercial gain from the outset, and that corruption was part of the rationale of their employment. The company does not accept this.

Bribes known to have changed hands total more than £1M and were made on contracts valued at between £60M and £70M.

In Jamaica, Joseph Uriah Hibbert, Minister of State in the Ministry of Transport and Works, was one of the public officials bribed. He received £100,134 between November 1993 and October 2001.

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