On 31 January 2012, four individuals were sentenced for conspiring to commit corruption offences in securing payments in exchange for disclosing confidential procurement information between 2001 and 2009 in relation to lucrative energy engineering projects in Abu Dhabi, Egypt, Iran, Russia and Singapore.  The offences were prosecuted as conspiracy to corrupt in relation to the pre-Bribery Act 2010 corruption laws, as the offences occurred before that Act came into force.

The convictions were brought on the basis of information uncovered during "Operation Navigator", which was triggered by a bidding company's report to the authorities who was approached by the defendants. The Operation was a joint SFO and City of London Police investigation which began in April 2008, looking into allegations linked to a procurement process in Singapore.  During the investigation the team discovered further corrupt activities and payments made during the procurement processes for similar energy engineering projects elsewhere in the world.

The defendants, who, except for one (Mr Hammond), are all based in the UK, were at various times short-term agents for the procurement companies and so possessed inside information on the projects in question.  Depending on which individual was an agent to which procurement company, they passed the confidential information to others in their group who provided the information to bidding companies in return for corrupt payments described as "consultancy services". The contracts for the projects involved amounted to approximately US$110 million (£70 million) in value and the defendants shared payments totalling at least US$936,000.

The procurement services companies that employed the defendants cooperated extensively with the investigation by enabling access to mobile phone data, travel records and emails, which established the defendants' involvement.

The sentences of the individuals ranged from 12 months' suspended sentence with 300 hours' community service to five years' imprisonment and disqualification from acting as a director for 10 years.  The range of sentences reflected the level of offending of each individual.

In addition, confiscation orders are being sought against three of the defendants under Part 2 of the Proceeds of Crime Act 2002. Confiscation orders enable the courts to confiscate assets from a defendant who has been found guilty of a relevant crime, which reflect the benefit they obtained as a result of their offence.

Comment

This case is not novel for any legal precedent that it creates, although some of the sentences handed down were relatively severe, reflecting both the length of time over which the offences occurred and the court's increasingly hard-line approach to corruption.

However, the case is a useful reminder of the increased corruption risk associated with high value procurement, particularly in high-risk sectors such as energy. The value of the contracts in question, as is often the case with oil and gas contracts, can mean that the risk of, and opportunity for, intermediaries seeking additional illicit personal benefits in connection with the projects (and the willingness of others to offer or pay them in order to secure an advantage in winning the contract) is that much greater, which puts companies who have to engage such intermediaries at greater risk.  Although the individuals in this case were successfully prosecuted by reference to the pre-Bribery Act corruption laws, the bidding companies who paid the bribes do not appear to have faced censure.  Had the offending occurred under the Bribery Act, the risk of corporate penalties may have been greater.

This article was written for Law-Now, CMS Cameron McKenna's free online information service. To register for Law-Now, please go to www.law-now.com/law-now/mondaq

Law-Now information is for general purposes and guidance only. The information and opinions expressed in all Law-Now articles are not necessarily comprehensive and do not purport to give professional or legal advice. All Law-Now information relates to circumstances prevailing at the date of its original publication and may not have been updated to reflect subsequent developments.

The original publication date for this article was 06/02/2012