UPDATE: The Bribery Act 2010 is now in force. Read more in our dedicated section about how this will impact your business.
The UK Serious Fraud Office (SFO) has taken action in the High Court today which resulted in an Order that M.W. Kellogg Limited (MWKL) pay just over £7 million in recognition of sums it is due to receive which were generated through the criminal activity of third parties.
The US parent company of MWKL was one of four corporate entities which formed a joint venture to bid for contracts on a liquefied natural gas project in Nigeria. Three of the four contracts won by the joint venture were obtained through promises to pay or payments of bribes. The US parent company acknowledged in a plea agreement with the DOJ, that through MWKL it owned the special purpose vehicle created for the Nigerian project and that the structure of the arrangements was intended to distance the parent company from the corruption and avoid the consequences of the Foreign Corrupt Practices Act 1977. The US parent company had resolved all matters with the US authorities, including a civil settlement with the Securities and Exchange Commission, by February 2009.
MWKL reported concerns to the SFO under the “self referral” scheme and fully co-operated with the subsequent investigation. The SFO, working in partnership with the DOJ, reviewed the conduct of MWKL and decided that the most appropriate approach was to remove the funds which will become due to the company through the unlawful conduct. The SFO recognised that MWKL took no part in the criminal activity which generated the funds. The funds due to MWKL are share dividends payable from profits and revenues generated by contracts obtained by bribery and corruption undertaken by MWKL’s parent company and others. The agreement will lead to the payment of £7,028,077 within fourteen days in full and final settlement of the case. The agreement also ensured that MWKL overhauled its internal audit and control measures to enable it to satisfy the SFO that its compliance systems are in accordance with UK law. MWKL has also agreed to pay the costs of the investigation.
Today's Court Order demonstrates that the SFO continues to have discretion as to the charges that businesses will face in relation to alleged bribery and corruption. It also reinforces the SFO's flexibility to deal more leniently with organisations which 'self-report' a transgression. That leniency can include the SFO agreeing not to pursue criminal investigations.
It's also notable that MWKL took no part in the criminal activities but that the funds were generated through its interest in the joint venture company. Under the Bribery Act 2010 which is expected to come into force later this year it will be easier for the SFO to pursue companies that fail to put in place procedures to prevent joint venture vehicles or other intermediaries paying bribes.
Sign up to our email digest