uk bribery digest - ey · of failing to prevent bribery by associated persons. ... bribery digest...

Edition 11August 2017

Fraud Investigation & Dispute Services

UK Bribery Digest

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ContentsIntroduction 01

Signifi cant developments in legal privilege 02

OECD Working Group on Bribery reports 03 on its Phase 4 review of foreign bribery enforcement in the UK

A retrospective review 06 of Section 7 enforcement

Cases in the fi rst half of 2017 07

Abbreviations 12

Contacts 12

Introduction

Welcome to the latest edition of our UK Bribery Digest. In this edition we outline and comment on six cases that have been completed in the fi rst half of 2017. We also summarise key recommendations from the OECD Working Group on Bribery and provide a review of the past six years of enforcement history of the Section 7 corporate offence of failing to prevent bribery by associated persons.

With the potential effects of Brexit now being an unavoidable topic of discussion, it seemed timely to review the past six years of enforcement history of the Section 7 corporate offence of failing to prevent bribery by associated persons. At the time of the introduction of the Bribery Act, Section 7 was seen by many as the Act’s most controversial aspect: with its extra-territorial reach, critics saw it as a disincentive to foreign investment into the UK — not only would overseas based businesses be concerned about their global affairs coming under the scrutiny of the UK’s anti-corruption bodies, they would also see ‘adequate procedures’ as a bureaucratic cost of doing business in the UK. We offer a brief review of how the section has been enforced and note the uncertainties that still surround it, which is especially relevant as the ‘failure to prevent’ model is poised to be used in the fi ght against the facilitation of tax evasion.

As usual, we have updated our table of UK bribery and corruption cases, which covers the past 9 years.

We hope you enjoy this edition of the UK Bribery Digest and fi nd it useful in your work.

Three of the six cases in this edition highlight the risk of bribery affecting the bank lending sector: the bribery related to lending of US$290mn, £160mn and £245mn in the three cases respectively. A common feature of all three cases is the small number of perpetrators involved in the corrupt schemes in each instance. In two of the cases only two perpetrators were central (one working inside the bank and one not). The third case was more elaborate, resulting in four individuals being jailed (two working inside the bank and two not).

We also briefl y comment on three other completed prosecutions. One of these, a small non-commercial case, is of interest because it demonstrates the broad scope of activities that might be affected by corruption – in this instance the misuse of protected data sold by a public sector offi cial working in child adoption.

March 2017 saw the OECD Working Group on Bribery issue a report on their review of enforcement in the UK. This is a comprehensive review (running to about 100 pages) from an authoritative body. We highlight many of the report’s observations and summarise some of its more than 40 recommendations.

We also comment briefl y on a High Court judgement in May 2017 which has provoked concerned legal comment as to its potentially far-reaching consequences for litigation and legal privilege in the criminal context. Its relevance to the investigation of corruption is its impact on the scope of documents that may be subsequently disclosable or protected from disclosure (i.e. privileged). Clearly, this is a key issue given the serious consequences of a bribery enforcement action.

Jonathan MiddupPartner, UK Head of Anti-Bribery and [email protected]

jonathan_middup

UK Bribery Digest Fraud Investigation & Dispute Services 1

Examples of the types of documents that Eurasian Natural Resources Corporation (ENRC) is required to disclose to the SFO as a result of the judgement are:

• Notes of interviews with potential witnesses, including where lawyers were present (employees and former employees of the company and its subsidiaries, their suppliers and other third parties).

• Communications with the advisors investigating the allegations.

• Books and records of the company and its subsidiaries compiled by the advisors.

• Reports prepared by the advisors.

• Emails between senior offi cers of the company.

ENRC is seeking to appeal the decision and there may therefore be further developments on this issue. Pending the appeal, there are important practical implications for organisations fi nding themselves in a position of investigating suspected corruption of a serious enough scale to be of interest to the SFO. In any such situation, privilege needs to be one of the fi rst issues addressed by the organisation before investigation is commenced (i.e. immediately upon receiving a whistle blower report or tip-off, for example), engaging suitably experienced lawyers. Pending legal consultation, it is wise to conduct all communication with the expectation that they will be disclosed.

Signifi cant developments in legal privilege

A High Court judgement in May 2017 (SFO v Eurasian Natural Resources Corporation) on issues of privilege arising from the SFO’s investigation into allegations of fraud, bribery and corruption in jurisdictions including Kazakhstan has provoked concerned legal comment as to its potentially far-reaching consequences for litigation and legal advice privilege in the criminal context.

As forensic accountants, we do not provide legal analysis in the Bribery Digest but we do stay abreast of developments which may impact the nature of compliance or, as in this instance, investigations.

Privilege is a complex area of law, but in simple terms, its relevance to the investigation of corruption is its impact on the scope of documents that may be subsequently disclosable or protected from disclosure (i.e. privileged). Clearly, this is a key issue given the serious consequences of a bribery enforcement action.

The practical impact of the judgement is that it is now more diffi cult to claim privilege in a criminal context than in a civil context. As a result, depending on the facts in each case, there is a much narrower defi nition of documents that qualify for litigation and legal advice privilege in the context of an SFO investigation.

2 UK Bribery Digest Fraud Investigation & Dispute Services

However, the report includes the following observations and comments:

• While the UK has demonstrated solid progress, the total number of fi nalised and ongoing cases relative to the UK economy remains low and efforts must be sustained to improve detection of foreign bribery and achieve stronger enforcement of its anti-bribery legislation.

• The absence of detection of foreign bribery cases by the UK Financial Intelligence Unit (UKFIU) is a source of great concern, considering the money laundering and bribery risks in the UK and the volume of information generated by the suspicious activity reports (SARs) regime. This is a further demonstration of the lack of effectiveness of the reporting regime under the anti-money laundering framework as it stands. For example, a database of more than two million SARs exists but there is no corresponding record of any SFO foreign bribery investigation being generated by information provided by the UKFIU.

• The absence of any investigation and prosecution of foreign bribery or related offence in the UK’s Overseas Territories is a concern. (The Crown Dependencies of Jersey and Guernsey are able to report investigations and prosecutions of money laundering cases predicated on foreign bribery).

• The level of budget of the SFO is a concern. Blockbuster funding (i.e. funding on an ad hoc basis for large cases) may lead to perceived, if not real, infl uence of the executive over law enforcement decisions.

• A concern that enforcement action has not systematically been taken against legal persons (i.e. corporations) involved despite the fact they may have benefi ted from bribery.

• The OECD Working Group is to follow up on the use of DPAs in foreign bribery cases to evaluate in particular the effective, proportionate and dissuasive character of sanctions imposed in that context, notably the reductions granted in the absence of self-reporting.

• Although the full consequences of Brexit are diffi cult to predict, leaving the EU is likely to impact the ways in which the UK cooperates with EU countries in foreign bribery cases.

• The adoption by UK companies of sophisticated corporate compliance measures to prevent bribery is advanced in the UK, and Section 7 of the Bribery Act appears to have had a signifi cant positive infl uence in this regard. However, there is a concern that SMEs (small and medium-sized enterprises) are not adopting the same measures as larger companies.

• HMRC, given its particular role and responsibilities, has been unsuccessful in detecting foreign bribery cases and there is no evidence as to the effective enforcement of the non-deductibility of bribes in the UK, especially when bribery has been proven.

• There is a question regarding how effective UK Export Finance (UKEF) anti-bribery policies are in practice: in spite of its advanced disclosure requirements, UKEF has never itself detected foreign bribery committed by exporters – even though some of the companies receiving support have subsequently admitted that bribery had occurred in relation to UKEF supported contracts — nor has UKEF turned down an application from an exporter following due diligence on its agents.

OECD Working Group on Bribery reports on its Phase 4 review of foreign bribery enforcement in the UK

In March 2017 the OECD Working Group on Bribery issued a 100-page report on the results of its Phase 4 review of foreign bribery enforcement in the UK.

The report recognises the important steps taken by the UK in recent years and that the UK is now ‘one of the major enforcers’.

The report makes more than 40 recommendations, including the following:

Whistleblowing AML reporting• Proceed with the Working Group’s intention (expressed in the 2014

Anti-Corruption Action Plan) to review whistleblowing provisions with a view to their improvement and raise public awareness of the utility of whistleblower reports to bolster the confi dence of potential whistleblowers in the value of their reports.

• Implement the announced reform of the UKFIU through the adoption of the Criminal Finances Bill and adopt further reforms of the UKFIU and the reporting regime, with a view to ensuring that detection of foreign bribery through suspicious activity reports is improved.

• Raise awareness among reporting professions, including non-fi nancial professions, about red fl ags that may indicate foreign bribery.

Detection through other sources Enforcement resources• Consider ways to further mobilise UK agencies with particular

potential for detecting foreign bribery committed by UK companies operating abroad.

• Ensure the SFO’s core budget is suffi cient to allow the SFO to adequately and independently carry out its role.

• Provide the National Crime Agency (NCA) International Corruption Unit with specialised foreign bribery training and adequate resources to enable it to effi ciently carry out foreign bribery investigations and to effectively support foreign bribery prosecutions conducted by the CPS.

Scotland Public procurement sanctions• UK law enforcement authorities, particularly in Scotland, to exercise

considerable caution in deciding whether to resolve foreign bribery cases through civil settlements to ensure cases result in effective, proportionate and dissuasive sanctions.

• Scotland to consider adopting a scheme comparable to the DPA scheme in the UK to overcome the weaknesses apparent in civil settlements and to achieve consistency across the UK with regard to the tools available to law enforcement authorities for the resolution of foreign bribery cases.

• Consider adopting a systematic approach to allow contracting authorities to easily access information on companies or individuals sanctioned for foreign bribery, including companies sanctioned through court orders, DPAs and other settlements.

• Provide suitable training and guidance to contracting authorities on mandatory and discretionary exclusion of economic operators including with regard to companies convicted under Section 7 of the Bribery Act.

Crown Dependencies (CDs) and Overseas Territories (OTs)

• Accelerate and fi nalise the extension of the OECD Convention on Combating Bribery of Foreign Public Offi cials to the OTs that have not yet ratifi ed it. Work in collaboration with the CDs and OTs to enforce the Convention, including by ensuring appropriate resources, training, expertise and capacity to investigate and prosecute foreign bribery and related offences.

• Extend, as a matter of priority, the jurisdiction of the Bribery Act to legal persons incorporated in the CDs and OTs, or ensure in any other way that legal persons incorporated in the CDs and OTs can be held liable for foreign bribery.

• Review, in collaboration with the CDs and OTs, their institutional framework and arrangements to respond to international cooperation requests.

• Ensure HMRC conducts as a matter of priority a comprehensive review of its methods and capacity to detect and report foreign bribery, including examining why HMRC has failed to detect proven cases of foreign bribery.

• HMRC to engage in a more proactive approach in enforcing the non-tax deductibility of bribe payments against the defendants in past and future foreign bribery enforcement actions, including by systematically re-examining defendants’ tax returns for the relevant years to verify whether bribes have been deducted.

• Provide regular training to tax inspectors on the detection of bribe payments disguised as legitimate allowable expenses.

• Ensure that there is an adequate framework in place which enables HMRC to provide information for use in foreign bribery investigations upon request, and report suspicions of foreign bribery to the SFO.

SMEs UK Export Finance (UKEF) • Raise awareness of the 2011 Ministry of Justice Guidance to

Commercial Organisations among SMEs that have overseas operations and facilitate the publishing and dissemination of more targeted information for SMEs on setting up anti-bribery compliance measures to effectively prevent and detect foreign bribery.

• Undertake a comprehensive review of UKEF policies to identify how they could be better applied in practice to enable detection of foreign bribery.

• Where appropriate, take a fi rmer stance against exporters and applicants engaging in corrupt behaviour, by making vigorous use of all its powers, including its audit powers, to carry out due diligence with a view to refusing, suspending or withdrawing support if applicable.

OECD Working Group on Bribery reports on its Phase 4 review of foreign bribery enforcement in the UK (continued)

ConclusionThe implementation of the OECD’s recommendations would represent a signifi cant further strengthening of the detection of overseas bribery and enforcement against its perpetrators, taking the UK beyond its current status as ‘one of the major enforcers’.

Recommendations

WhistleblowingUK Export

Finance (UKEF)

AML reporting

Enforcement resources

ScotlandDetection through

other sources

Crown Dependencies

(CDs) and Overseas Territories (OTs)

Public procurement

sanctions

The corporate offence of failing to prevent bribery by associated persons (Section 7 of the Bribery Act) was seen by many as the Act’s most controversial aspect. One reason for this is the section’s extra-territorial reach. Not only does it apply to a body incorporated or partnership formed under UK law and which carries on a business anywhere in the world, but also to any other body corporate or partnership (wherever incorporated or formed) which carries on a business or part of a business (including a trade or profession) in the UK. Of course, the Section 7 offence has the related defence under the same section of having in place adequate procedures designed to prevent associated persons undertaking corrupt activities.

The critics of Section 7 saw it as a disincentive to foreign investment into the UK: not only would overseas based businesses be concerned about their global affairs coming under the scrutiny of the UK’s anti-corruption bodies, they would also see ‘adequate procedures’ as a bureaucratic cost of doing business in the UK.

Has the past six years of enforcement of Section 7 shed any further light on these issues?

The only prosecution of a Section 7 offence to date in England and Wales was in December 2015 against Sweett Group plc. The offence related to activities in the Gulf, but the prosecution was of the UK company. The prosecution was uncontested.

To date, there has therefore been no testing of the extra-territorrial aspect of Section 7 against an overseas entity.

Scotland has a different enforcement regime to England and Wales. Brand Rex Limited in September 2015 was the fi rst case in Scotland to cite a Section 7 offence, followed by Braid Group Holding in April 2016. Under the Scottish enforcement regime these were civil settlements and not criminal prosecutions.

The case law on Section 7 therefore remains limited. It has not shed any light on what might comprise carrying on of a business or part of a business in the UK: exactly how little or much presence an overseas company or partnership must have in the UK to fall under this defi nition is untested. At the same time, we note that the UK authorities have not brought proceedings against overseas entities.

Similarly, the precise scope of the term ‘associated person’ remains to be defi ned.

The extensive documentation that is released with the judicial approval of a DPA allows certain inferences to be drawn as to the features of adequate procedures, but the enforcement history has yet to provide a systematic picture.

The concerns raised by the critics of Section 7 have in one sense been answered: the section has not been used against an overseas entity. But at the same time, the lack of case law means uncertainties as to how the section might be used against an overseas entity remains.

A retrospective review of Section 7 enforcement

All three Deferred Prosecution Agreements (DPA) to date have cited Section 7 offences:

Standard Bank(November 2015)

A small to medium sized enterprise XYZ Ltd (July 2016)

Rolls-Royce(January 2017)

The DPA concerned the Section 7 offence only. The underlying bribery was within the bank’s sister company Stanbic in Tanzania. The DPA was with the UK company.

This DPA concerned bribery offences and Section 7 offences. The offences related to activities in a number of jurisdictions (mainly in Asia), and the associated persons were all individuals. The DPA was with the UK company.

This DPA also concerned bribery offences and Section 7 offences. The offences related to activities in a number of jurisdictions, and the associated persons were both individuals and Rolls Royce associated companies. The DPA was with the UK company. As the judgement explains, the Section 7 offences were pursued even though there was no evidence to implicate senior employees or a ‘controlling mind’.

71 Tracey Miller (June 2017)

In 2013, Ms Miller, 42, a former third-party care team manager at one of the UK’s leading insurers, provided confi dential data to a man who paid her £4,500 in exchange for contact information. He wished to use it to make cold calls following road accidents.

Ms Miller was ordered to pay £4,500 compensation for receiving a bribe and supplying confi dential data and also received a two-year prison sentence, suspended for two years.

This is the second recent case of which we are aware where a junior insurance company employee has misused confi dential information (see also case 63).

70 Bernard Gackowski (June 2017)

This is a follow on prosecution to case 59 concerning Ronald Harper, Stephen Thompson and others, who were found guilty of corruption in connection with procurement contracts placed by the Royal Household. Mr Gackowski, 64, was a co-director with Stephen Thompson of one of the suppliers, which paid Mr Harper £55,000 in covert payments as kickbacks. He admitted conspiring to make corrupt payments and the case was adjourned for reports when he broke down in court.

Mr Gackowski was involved in the technical rather than the business side of the supplier. It was found that the bribes were instigated by Mr Thompson but Mr Gackowski later became aware of them and went along with the scheme.

Mr Gackowski received a 10-month prison term, suspended for two years, and was ordered to carry out 200 hours’ unpaid work. The judge added: “I have rarely ever seen someone so genuinely broken by court proceedings.”

69 Andrey Ryjenko (June 2017)

Mr Ryjenko, 44, who has joint UK and Russian citizenship, was found guilty of conspiring to make or accept corrupt payments totalling over US$3.5mn between July 2008 and November 2009 while he worked at the London-based European Bank for Reconstruction and Development (EBRD). EBRD was founded in 1991 to fi nance the transition of former communist Europe to a market economy; it is taxpayer-funded by some 60 states, including the UK. Mr Ryjenko had worked for the bank since 1994.

Mr Ryjenko’s role at the EBRD required him to vet applications for investment from Eastern European oil, gas and mining fi rms. The court found he made an agreement with a U.S. based consultant (Mr Harder acting through Chestnut Consulting Group Inc) who he then introduced to a number of fi rms in former Soviet states to help them make applications for EBRD funding, two of which were successful and involved funding of some US$290mn. Mr Ryjenko then took 50 percent of the consultant’s commission fee when the applications were approved. The monies were paid into UK accounts in the name of Mr Ryjenko’s sister, Tatjana Sanderson, who was declared unfi t to stand trial but under a trial of fact was found to have been involved in the corruption.

The EBRD said its internal systems had fl agged up the wrongdoing and that it has not suffered any loss as a result of his actions.

Mr Ryienko was jailed for six years for accepting bribes. He was also convicted of money laundering by concealing, disguising, converting and transferring criminal property and sentenced to two years in prison to run concurrently.

This case has a complex prosecution history. Mr Ryjenko and his sister were charged in 2012 and extraneous factors delayed the trial. In the meantime, Mr Harder and Chestnut Consulting Group Inc were successfully prosecuted in the US for FCPA violations relating to the same transactions.

The UK prosecution was undertaken by the CPS, which stated that the prosecution was made possible through effective cross-border cooperation between various jurisdictions, including the US.

We comment as follows:

• The corrupt scheme was remarkably simple. Mr Ryienko was able to identify eligible borrowers in the course of his daily work and merely needed to arrange for Mr Harder to be an apparently independent introducer to receive the fee. The payment of Mr Ryienko’s cut to his sister was equally as simple, although they were unable to offer a plausible explanation for her receipt of the monies.

• The case highlights the risks around success and introduction fees, especially where those fees become signifi cant in value because of the high value of the underlying transactions. It is essential that organisations perform adequate due diligence over all consultants involved in introductions.

68 Androulla Farr (June 2017)

This small non-commercial case is of interest as it demonstrates the broad scope of activities that might be affected by corruption, in this instance the sale of a piece of protected data by a public sector offi cial, and the emotional impact this may have.

Ms Farr, 50, was a family support worker who sold details of an adopted child’s whereabouts to her birth mother to fund a luxury Caribbean holiday. She contacted the birth mother and offered to hand over details of her young daughter’s adopted family in exchange for £2,000 cash. The birth mother was desperate to have the information and agreed to pay, with Farr passing it to her on a piece of paper during a meeting at a cafe. The birth mother later wrote a letter to her daughter, telling her that she would be visiting the area where the girl lived with her adoptive parents. The court heard the family were so concerned that they left their jobs and home, and relocated to a different area.

Ms Farr admitted a charge under the Public Bodies Corrupt Practices Act 1889. She was sentenced to 16 months in prison, suspended for 18 months, and ordered to carry out 250 hours of unpaid work.

67 Stephen Dartnell and Simon Mundy (February 2017)

Two individuals involved in Total Asset Limited (trading as Total Asset Finance (TAF)) and one individual involved in a fi bre optic cable laying business, H2O Networks Limited (H2O), were found guilty of conspiracy to commit fraud against two business lenders, (a fi nancing company and a bank) in order to obtain almost £160mn. Two of these individuals were also found guilty of paying bribes (Stephen Dartnell of Total Asset Finance) and receiving bribes (Simon Mundy of the fi nancing company) to facilitate the fraud.

H2O supplied fi bre-optic internet cable connections and their unique selling point was to use sewers as channels for these internet cables. H2O targeted public institutions such as local authorities, universities, colleges and the NHS with long-term payment contracts.

Mr Dartnell and two others had conspired to create, sign and sell falsely infl ated or entirely false contracts from the company H2O to the business lenders. The modus operandi was simple: the business lenders lent money against the assignment of the value of the rental income in H2O’s contracts; the fraudsters infl ated these rental values and later created fi ctitious contracts. Between 2007 and 2010 this fraud amounted to almost £160mn, resulting in a loss of £117mn to the fi nance company. Of this £160mn, about £40mn was paid to H2O, some was used to make repayments to the fi nancing company as they fell due (the Judge notes in his Sentencing Remarks that this was similar to a Ponzi scheme), a small part was used to pay bribes to Mr Mundy and the balance was retained by Mr Dartnell and the co-fraudsters.

The fraud came to light because TAF failed to ensure that the bank – to which three contracts had been assigned – did not notify the customer of the assignment. When the bank contacted Tendring District Council to say that the fi rst annual repayment of around £1mn was due, the Council queried this hugely infl ated fi gure.

As the judge highlights in his Sentencing Remarks: “Perhaps the most important reason the fraud worked was because TAF had an insider in [the fi nancing company’s] UK offi ce [Mr Mundy]. During the fraud [Mr Dartnell] paid £881k [to Mr Mundy] to ensure that all TAF’s applications for funding from [the fi nancing company] were approved.”

Mr Dartnell and Mr Mundy were each sentenced to six years imprisonment for conspiracy to give and receive corrupt payments, to run concurrently with a fi fteen year and seven year sentence respectively for fraud by false representation. In his Sentencing Remarks, the Judge states in respect of Mr Dartnell that “Bribing… over such a long period of time is a most serious offence in its own right and imposing a consecutive sentence could well be justifi ed” but concluded in favour of a concurrent sentence considering the totality principle. Mr Dartnell was also disqualifi ed from acting as a director for twelve years.

This was an SFO prosecution.

66 David Mills, Michael Bancroft, Lynden Scourfi eld, Mark Dobson (February 2017)

Mr Mills , 60, Mr Bancroft, 73, Mr Scourfi eld, 54, and Mr Dobson, 56, were each found guilty on one charge of conspiracy to corrupt between April 2003 and September 2010.

From 2002 to 2007, Mr Scourfi eld worked as a senior director at the high risk assets offi ce of HBoS in Reading, handling business customers who were at risk of defaulting on their loans and Mr Dobson was a director based at Bishopsgate in London working in a similar role. Mr Scourfi eld managed a portfolio of businesses for the bank to whom he agreed loans from the bank on the condition that they would use an outside business consultancy with a view to helping them be restored to solvency.

In his role at the bank, Mr Scourfi eld was required to have all business loans approved by a senior HBoS manager, but he did not. He approved loans to companies that were already deemed ‘impaired’ or in trouble without senior manager sanction. In order to receive these loans each business had to purchase the services of a business consultancy fi rm to help them get back into profi t. There were more than 200 of these ‘turnaround’ fi rms available to Mr Scourfi eld to choose from, but he invariably chose one owned and run by Mr Mills — Quayside Corporate Services which employed amongst others Mr Bancroft. Mr Mills also established other companies that were involved. His wife, Alison Mills, was the co-director of many of these companies. Mr and Mrs Mills reportedly received fees totalling £28mn through these companies.

Some of the schemes used by Mr Mills included:

• Submitting overstated cash fl ow projections for the businesses in turnaround as a basis for additional borrowing from HBoS which funded additional fees to Mr Mills’ companies or loans to companies controlled by him.

• Using his infl uence at HBoS to seize control of the companies in turnaround, then realising company assets for his own benefi t.

Eventually the loans were written off by HBoS as a loss. It is estimated that at least £245mn of bank loans were written off in this way.

Mr Scourfi eld’s bank accounts reportedly showed unexplained receipts of some £350,000 between 2004 and 2007. During the investigation it was established that Mr Scourfi eld had the use of an American Express card paid for by Mr Mills. Mr Scourfi eld spent more than £31,000 on Mr Mills’ American Express card. His purchases included nights at the exclusive Landmark Hotel in central London, fi rst class fl ights, a cruise and luxury goods.

Mr Dobson was given £30,000 by Mr Mills, whose consultancy fi rms were also recommended by Mr Dobson for some of his high risk business customers.

The fraudulent activity came to light in 2006 when Mr Scourfi eld had a new senior manager at the bank who asked to check his previous loan applications.

The Judge’s comments in his Sentencing Remarks are damning:

• “…this case is not simply about a corrupt bank manager lending money he should not have done to businessmen who went on to gamble with it. This case goes very, very much deeper than that. It primarily involves an utterly corrupt senior bank manager letting rapacious, greedy people get their hands on a vast amount of HBoS’s money and their tentacles into the businesses of ordinary decent people … and letting them rip apart those businesses, without a thought for the lives and livelihoods of those whom their actions affected, in order to satisfy their voracious desire for money and the trappings and show of wealth…It involved [Mr Scourfi eld] engaging in as extensive an abuse of position of power and trust as can be imagined and was motivated on both sides of the corruption by the expectation of, and the very considerable realisation of, immense fi nancial gain…”

“That was at the cost of enormous losses to HBoS of some £245 million…but also and, in many respects worse, the destruction along the way of the livelihoods of a number of innocent hard-working people.”Judge’s Sentencing Remarks

“…Some of these connections were capable of rescue but what [he] let happen through Mr Mills and Mr Bancroft predominantly ensured that they would not. The harm for which you were individually and collectively are responsible can of course be quantifi ed in cash terms, but cannot be so in human terms. Lives of investors, employers and employees have been prejudiced and in some instances ruined by your behaviour. People have not only lost money but in some instances their homes, their families, and their friends. Some who would have expected to be comfortable in retirement were left cheated, defeated and penniless”.

• Regarding Mr Scourfi eld: “[Mr Mills] is the devil to whom you sold your soul. For sex, for luxury trips … for bling and for swank. In return for selling that soul, and for as gross and persistent a breach of trust as I have come across in practice or on the bench, what you got back was relatively trivial compared to the millions you enabled [Mr Mills] and others to leach out of HBoS, and to leech more from the companies which you insisted should engage the utterly questionable services of [his] company…As you knew [he] did little or nothing for most of these companies except bleed them, and pick off from time to time, such assets as they thought they could make money out of, using the bank’s money to do so. You could see it and you enabled it to happen time and time again. Through [one of Mr Mills’ companies] you gave [him] the means to borrow money effectively for nothing so he could gamble with it in loans to other IAs (from which he would get an immediate kickback from – in set up fees and dividends) or so he could effectively simply spend it on the things that he could not do without such as a yacht. Yours was a monumental betrayal of your

position – exploiting the obvious weaknesses in the bank’s systems and the lack of proper supervision to which you should have been subject, lying to your seniors, falsifying documents, removing or avoiding protections the bank should have had … all over a long period of time … wholly motivated by greed … mesmerised by the luxury in which as a result of what you did [Mr Mills] let you wallow”.

For the one charge of conspiracy to corrupt, the following custodial sentences were given: Mr Mills 7 years, Mr Bancroft 6 years, Mr Scourfi eld 5 years and 3 months and Mr Dobson 4 and a half years. Together with various related counts of fraudulent trading and money laundering, the four received total sentences of between 4 and a half and 15 years. Mr Mills’ wife was also sentenced to three and a half years imprisonment for money laundering.

The investigation had been run by the Economic Crime Unit of Thames Valley Police (referred from the Financial Services Authority) over the course of six years, leading to charges in 2013.

Following the completion of the prosecution, the FCA announced the resumption of the investigation that was placed on hold in early 2013 at the request of Thames Valley Police pending the outcome of the Thames Valley Police investigation and any resulting prosecutions. The FCA investigation is focussing on the extent and nature of the knowledge of these matters within HBOS and its communications with the FSA (as it was then known) after the initial discovery of the misconduct.

In addition to the loans of at least £245mn that the bank has written off, it is reported that it has set aside £100mn for payments under a compensation scheme that the bank decided to offer the victims.

We comment as follows:

• The case again illustrates the central role played by a corrupt arrangement (Mr Scourfi eld’s referring consultancy appointments to Mr Mills in return for favours) in facilitating much broader frauds (Mr Mills’ improper dealing with the companies in turnaround).

• A key red fl ag in this case was the nature of Mr Scourfi eld’s relationship with Mr Mills. Whilst large companies have plentiful experience in monitoring transactions, the monitoring of relationships is a more challenging area but one that is core to effective corruption risk management.

• The case demonstrates the considerable amount of time that may be required to prosecute complex frauds such as this. Indeed, in his Sentencing Remarks the Judge refers to the case being “in one sense a true example of the long arm of the law”. The corrupt and fraudulent activities mainly took place between April 2003 and September 2007, with ongoing corruption and money laundering offences through to September 2010. Charges were brought in 2013. In his sentencing remarks, the Judge highlights several factors affecting the timeline: the enormity of the case; the defendants’ insistence on a trial (the trial took six months); and two years taken up in disclosure matters.

• The case highlights that corruption risk in the banking sector is not limited to the City of London and that signifi cant exposures can arise elsewhere. The centre of the activities in this case was the HBoS Impaired Assets Team in Reading.

AbbreviationsABC Anti-bribery and corruption

AML Anti-Money Laundering

CoLP City of London Police

CDs Crown Dependencies

COPFS Crown Offi ce & Procurator Fiscal Service

CPS Crown Prosecution Service

CJA Criminal Justice Act 1967

CLA Criminal Law Act 1977

CPS Crown Prosecution Service

CRO Civil Recovery Order

CRU Civil Recovery Unit

DoJ US Department of Justice

DPA Deferred Prosecution Agreement

DPP Director of Public Prosecutions

ECU Economic Crime Unit

FCA Financial Conduct Authority

FCPA Foreign Corrupt Practices Act

FSA Financial Services Authority (former name of the FCA)

FSMA Financial Services and Markets Act 2000

MPS Metropolitan Police Service

MoJ Ministry of Justice

NCA National Crime Agency

OECD Organisation for Economic Co-operation and Development

OTs Overseas Territories

PCA Prevention of Corruption Act 1906

POCA Proceeds of Crime Act 2002

SAR Suspicious Activity Report

SEC Securities and Exchange Commission

SFO Serious Fraud Offi ce

SOCA Serious Organised Crime Agency

SOCD Serious Organised Crime Division

UKFIU UK Financial Intelligence Unit

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Jonathan Middup+44 (0) 121 535 2104 [email protected]

David Lister+44 (0) 131 777 2308 [email protected]

Steve Caine+44 (0) 20 7951 4433 [email protected]

Contacts

Case reference Date Name Sector

Enforcement agency notifi ed

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 fi nancial penalty Other penalties Other fi nancial effects

71 June 2017 Tracey Miller Insurance/Claims Management

CoLP Insurance Fraud Enforcement Department

No 2013 £4,500 UK Criminal: S.2. Bribery ActCriminal S.55. Data Protection Act

£4,500 compensation 2 years suspended sentence

70 June 2017 Bernard Gackowski Royal Household CPS / Leicestershire Police

Police investigation Yes 2006 to 2011 Estimated to £55,000 UK Criminal: S.1. CLA 10 months imprisonment suspended for 2 years and 200 hours of unpaid work

69 June 2017 Andrey Ryjenko Financial Services CPS No July 2008 to November 2009

Over $3.5 million UK and USA Criminal: S.1. CLA 6 years imprisonment

68 June 2017 Androulla Farr Social Services Avon and Somerset Police

No £2,000 UK Criminal: Public Bodies Corrupt Practices Act 1889

16 months imprisonment, 18 months suspended and 250 hours of unpaid work

67 Feb 2017 Stephen Dartnell

Simon Mundy

Financial Services SFO No 2007 to 2010 £160 million UK Criminal: S.1. CLACriminal: S.1 Fraud Act 2006

Criminal: S.1. CLACriminal: S.1 Fraud Act 2006

Count 1: 10 years imprisonment, Count 2: 5 years to run concurrently with count 1, Count 3: 6 years to run concurrently with count 1Count 1: 7 years imprisonment, Count 2: 6 years concurrently with count 1, 12 years disqualifi cation as a director

66 Feb 2017 David Mills Michael BancroftLynden Scourfi eldMark Dobson

Banking/Insurance Services

Thames Valley Police (referred from the Financial Services Authority)

No April 2003 to September 2010

UK Criminal: S.1. CLACriminal: S.1. CLACriminal: S.1. CLACriminal: S.1. CLA

7 years imprisonment 6 years imprisonment5 years and 3 months imprisonment4 years and 6 months imprisonment

65 January 2017 Rolls-Royce PLCRolls-Royce Energy Systems Inc

Defence aerospaceCivil areospaceEnergy

2012 SFO Internal whistleblower No 1989 to 2013 Gross profi t totalling £258 million Unknown UK, Indonesia, Thailand, India, Russia, Nigeria, China and Malaysia

Criminal: S.1 CLACriminal: S.17 Theft Act 1968Criminal: S.7. Bribery Act

£258 million£239 million

Disgorgement of profi tsFinancial penalty

Compliance with the terms of the DPA £13 million of SFO costs

64 December 2016 Richard Kingston Construction SFO 2015 UK Criminal: S.2(16) CLA 12 months imprisonment on 2 counts to run concurrently

63 December 2016 Aisha ElliottStephen Oates

Insurance / Claims Management

2015 CoLP Internal investigation Yes January 2013 to December 2014

Estimated £39,000 through commission from the referrals

Estimated at £16,000 (£150 for each successful claim)

UK Criminal: S.1 Bribery ActCriminal: S.2 Bribery Act

12 months imprisonment12 months imprisonment

62 November 2016 Peter Lewis

Richard Moxon

NHS Foundation Trust

December 2011 Surrey Police Police investigation Yes 2011 £950,000 Estimated at £81,000 UK Criminal: S.1 PCA 3 years imprisonment and 10 years disqualifi cation as a director14 months imprisonment and 10 years disqualifi cation as a director

61 September 2016 Feezan Hameed Nouman Chaudhary

Various others

Organised crime April 2015 Metropolitan Police Fraud and Linked Crime Online Taskforce (FALCON) with support from 16 police forces across the UK

Reports of frauds perpetrated against bank business customers

No January 2013 to October 2015

£113 million UK Criminal: S.4 Fraud Act 2006 Criminal: S.327: POCA

11 years imprisonment3.5 years imprisonment

Between 20 weeks and 5 years imprisonment

60 September 2016 John ReynoldsWesley Mezzone

Fire and Rescue Services

Sussex Police Internal investigation Yes June 2010 to July 2013 £30,000 UK Criminal: S.4 Fraud Act 2006S.2 Bribery ActS.1 Bribery Act

59 August 2016 Ronald HarperSteven ThompsonChristopher MurphyAlan Rollinson

Aseai Zlaoui

Glynn Orridge

Royal Household CPS / Leicestershire Police

Police investigation Yes 2006 to 2011 Estimated at £70,000 UK Criminal: Bribery ActCriminal: S.2 Bribery ActCriminal: S.1 Bribery ActCriminal: S.4 Fraud Act 2006

Criminal: S.327: POCA

5 years imprisonment18 months imprisonment18 months imprisonment12 months imprisonment suspended for two years12 months suspended sentence and 200 hours of unpaid work100 hours of unpaid community work

58 July 2016 Saeed ShakirMuzaffar Hussain

Local authority December 2013 Surrey Police Individual who was offered a bribe

Yes December 2013 Estimated at £1 million £500 UK Criminal: S.1 Bribery Act 20 months imprisonment27 months imprisonment (reduced from 3 years on appeal)

57 July 2016 Small to medium sized enterprise November 2012 SFO Internal investigation Yes 2004 to 2012 £6.5m (gross profi t on contracts) Criminal: S.1 CLACriminal: S.7 Bribery Act

£6,201,085£352,000

Disgorgement of gross profi tFine

Compliance with terms of DPA including annual reporting to the SFO on anti-bribery compliance programme

56 June 2016 Simon DaviesRobert Gillam

Defence CoLP FBI referral No 2009 £5m (contract value) £120,000 UK and US Sentencing pending

55 May 2016 Peter Chapman Manufacturer May 2009 SFO Australian Federal Police

Australian Reserve Bank referral

No 2009 €30m (sales value) US$205,000 Nigeria Criminal: PCA 2.5 years imprisonment

54 April 2016 Elena Kotova Banking NCACoLP

Internal investigation No 2005 to 2011 UK Civil: CRO £1.5m (property)£230,000 (cash)

Surrender of assets acquired using corrupt funds

53 April 2016 Braid Group Holdings Limited Freight and logistics COPFS Internal investigation Yes 2012 £2.2m (gross profi t on contracts) UK Civil: POCA (Part 5) £2.2m Profi t on contracts corruptly obtained

52 December 2015 Sweett Group plc Construction July 2014 SFO Press allegations No 2012 to 2015 US$100m (value of contract) US$3.5m Middle East Criminal: S.7 Bribery Act £1.4m£851,152

FineConfi scation

£95,032 SFO costs

51 November 2015 Standard Bank plc Banking April 2013 SFO Internal investigation Yes March 2013 US$8.4m (profi t on contract) US$6m Tanzania Criminal: S.7 Bribery Act US$8.4mUS$16.8mUS$7m

Disgorgement of profi tFineCompensation to Government of Tanzania

Compliance with terms of the DPA, including independent review of its existing anti-bribery and corruption controls

£330,000 SFO costs

50 November 2015 Barclays Bank plc Banking November 2014 FCA FCA No 2011 to 2012 £52.3m (revenue from transaction) Civil: S.206 FSMA £52.3m£19,769,400

Disgorgement of revenueFine

49 October 2015 22 individuals (re case 20) Public Service August 2011 MPS Press investigation No 2010 to 2011 UK Imprisonment (sentences of between 4 and 18 months)

48 September 2015 Anthony BodginKevin WingraveGary RawlingsHarold McGirlLynda McMayon

Public sector 2011 CPS Police investigation No 2005 to 2011£2.3m (value of contracts)£88,830 (value of contract)£81,000 (value of contract)

£400,000 (Bodgin)£262,746 (Wingrave)£33,000 (Rawlings)£5,000 (McGirl)

UK Criminal: S.1 CLACriminal: S.4 Fraud ActCriminal: S.327 POCA

3 years and 6 months imprisonment3 years and 6 months imprisonmentSuspended sentenceSuspended sentenceSuspended sentence

47 September 2015 Brand-Rex Limited Manufacturing June 2015 COPFS Internal investigation Yes 2008 to 2012 £212,800 UK Civil: POCA (Part 5) £212,800 Gross profi t obtained

46 September 2015 Guido BakkerSijbrandus Scheffer

Pharmaceutical / International development

2007 CoLP UN investigation No 2004 to 2007 $43m (value of contract) $1m Denmark and UK 12 months imprisonment15 months imprisonment

45 June 2015 Charles Owenson

Kevin Balmer

Brendan Cantwell

Construction/Public sector

2010 COPFS Whistleblower No 2006 to 2010 Confi scation order for £20,000Confi scation order for £95,000Confi scation order for £171,223.92

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 offi cer)Michael Allin (internal auditor)

Banking March 2013 FCA No 2011 to 2013 Civil: S.206 FSMA £2.1m

£19,600

£9,900

Fine (bank)

Fine (compliance offi cer)

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 £172,200 (profi t on contract) Kazakhstan Civil: POCA (Part 5) £172,200 Profi t on the contract corruptly obtained

40 December 2014 Christopher Smith

Nicholas Smith

Smith and Ouzman Limited

Security printing October 2010 SFO No November 2006 to December 2010

£2,220,520 £395,074 Kenya and Mauritania Criminal: S.1 PCA £4,500£75,000

£18,693£75,000£1,316,799£881,158£25,000

Confi scation order (C. Smith)Costs (C. Smith)

Confi scation order (N. Smith)Costs (N. Smith)Fine (Company)Confi scation order (Company)Costs (Company)

18 months imprisonment suspended for 2 years,250 hours unpaid work, 3 month curfew anddisqualifi ed from acting as a director for 6 years3 years imprisonment and disqualifi ed fromacting as a director for 6 years

39 December 2014 Gary West (Director of Sustainable AgroEnergy plc)Stuart Stone

Investment fund SFO 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

£52,805

£1,141,680

Confi scation order

4 years imprisonment (concurrent with fraud offences) and disqualifi ed from acting as a director for 15 years6 years imprisonment (concurrent with fraud offences) and disqualifi ed as a director for 10 years

38 July 2014 FHR European Ventures LLP v Mankarious and others

Hotels December 2004 €10m Monaco Civil: breach of fi duciary duty Order to deliver up €10m

37 July 2014 Bruce Hall Metals June 2009 SFOCoLP

No 1998 to 2006 £2.9mUS$0.9m

Bahrain Criminal: S.1 PCA Criminal: S.1 CLACriminal: S.329 and S.327 POCACivil: POCA (Part 5)

£3,070,106 £500,010

Confi scation orderCompensation

16 months imprisonment(reduced from 6 years for cooperation and guilty plea)

£100,000 towards prosecution costsUS$900,000 disposal by consent

36 June 2014 Dennis Kerrison

Miltiades PapachristosPaul JenningsDavid 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 confi scation proceedings

Pending confi scation proceedings£5,000 towards prosecution costs£10,000 towards prosecution costs

35 June 2014 Chann SankaranKrishna GaneshanMichael Boateng

Football/gambling November 2013 NCA Press investigation No November 2013 €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

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 May 2005 US$44m Factual fi nding of bribery within a wider civil claim

32 February 2014 Otkritie International Investment Management and others v Urumov

Securities trading November and December 2010

Approximately US$12m in total London and Moscow Civil: Deceipt, tort of bribery and/or dishonest assistance; conspiracy and breach of fi duciary duty

Damages of US$23m and concurrent delivery of US$12,044,114

31 December 2013 JLT Specialty Limited Insurance broking 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)

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 12 month bribery charge, 6 months fi rearms charge

£4,880 towards prosecution costs

29 December 2012 Mawia Mushtaq Public service October 2011 Greater Manchester Police CPS

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 profi t totalling US$8.9m (£5.6m)

Civil: POCA (Part 5) £5.6m Profi t 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 profi t totalling 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-profi t organisation

26 June 2012 Andrew BehaggDavid BaxterJohn Maylam

Food retailing 2008 CoLP Audit No January 2006 to January 2008

Total of £8.7m overcharge of contracts totalling £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 JafferyPritpal Gill

Banking No May 2007 to May 2010

Approx £16m (value of loans) UK Civil: Breach of fi duciary duty and bribery

24 March 2012 James McGeown

William MarksJohn SymingtonCarol Kealey

Government procurement (CCTV contracts)

2002 Ministry of DefencePoliceSFO

Whistleblower No January 1998 to February 2004

£16.2m (value of contracts) £84.5k UK Criminal: S.1 PCACriminal: article 47 (2) Proceeds of Crime (Northern Ireland) Order 1996

£24,600

Confi scation order

3 years imprisonment suspended for 2 years and 7 years disqualifi cation as a director2 years imprisonment suspended for 2 years9 months imprisonment suspended for 2 yearsConditional discharge

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 disqualifi cation as a director3 years and 6 months imprisonment3 years imprisonment and 10 years disqualifi cation 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 totalling £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 MajeedSalman ButtMohammad AsifMohammad Amir

Cricket/gambling 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 CPS Press investigation No August 2011 £500 UK Criminal: S.2 Bribery Act 3 years imprisonment

19 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

FSA FSA and SARs fi led 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 fi ne considering “all relevant circumstances”High standards of regulatory conduct

Willis to carry out a review of past payments to overseas third parties “Signifi cant” fi nancial 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 (profi t on contracts)£4.5m (payments to Greek offi cials)

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 profi ts of US$4.4m)US$50m oil value (with profi ts 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 offi cials) Nigeria Civil: POCA (Part 5) £7.028m Amount of share dividends payable from profi ts 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 disqualifi cation as a director8 months imprisonment and 2 years disqualifi cation as a director8 months imprisonment suspended for 2 years

£75,000 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 benefi t 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 (profi t 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

Profi t on contractsFine

10 October 2010 Julian Messent (PWS International Limited)

Insurance broking October 2005 SFOCoLP

Foreign and Commonwealth Offi ce

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 disqualifi cation as a director

9 June 2010 Paul Kent Silinder Singh SidhuStuart FordRebecca 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 SFOWest Yorkshire Police

Internal whistleblowerReferred to SFO by DoJ

1998 to 2006 £14.8m (profi t on contracts) £4.5m (payments to Greek offi cials) 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

US$160m (value of contracts) US$2.9m in kickbacks Indonesia Criminal: S.1 CLA 1977 (conspiracy to corrupt)Criminal: S.1 PCA

US$6.7mUS$6m

Confi scation penalty in respect of Indonesian corruptionCivil 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 confi scation 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 offi cialsGhana: £470,000 payments to offi cials

Iraq, Jamaica and Ghana Criminal: S.1 CLA Iraq £2mJamaica £750,000Ghana £750,000

FineFineFine

Iraq reparations £618,000Jamaica reparations £139,000Ghana reparations £658,000Confi scation 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 fi led 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 Egypt Civil: POCA (Part 5)(referencing S.221 Companies Act 1985)

£2.25m Contribution to costs of the Civil Recovery Order External monitor appointed

2 September 2008 Niels Tobiasen (CBRN)Ananias Tumukumbe

Security consulting services

CoLPCPS

SAR No May 2007 £500,000+ (value of contracts) £83,000 payments to offi cials 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 US$500,000 bribe US 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

Simon Mundy

Richard Moxon

Various others

Aseai Zlaoui

Glynn Orridge

£6,201,085£352,000

FineConfi scation

£95,032 SFO costs

£330,000 SFO costs

Kevin Balmer

Brendan Cantwell

£19,600

£9,900

Fine (bank)

Nicholas Smith

£18,693£75,000£1,316,799£881,158£25,000

£52,805

£1,141,680

Confi scation order

No 1998 to 2006 £2.9mUS$0.9m

£3,070,106 £500,010

£24,600

Confi scation order

Barry Smith

£2k in costs

Riad El-Taher

US$1.6m

US$0.5m

David Mabey

£13,945,962£3m

US$6.7mUS$6m

FineFineFine

CoLPCPS

Alan White

Simon Mundy

Richard Moxon

Various others

Aseai Zlaoui

Glynn Orridge

£6,201,085£352,000

FineConfi scation

£95,032 SFO costs

£330,000 SFO costs

Kevin Balmer

Brendan Cantwell

£19,600

£9,900

Fine (bank)

Nicholas Smith

£18,693£75,000£1,316,799£881,158£25,000

£52,805

£1,141,680

Confi scation order

No 1998 to 2006 £2.9mUS$0.9m

£3,070,106 £500,010

£24,600

Confi scation order

Barry Smith

£2k in costs

Riad El-Taher

US$1.6m

US$0.5m

David Mabey

£13,945,962£3m

US$6.7mUS$6m

FineFineFine

CoLPCPS

Alan White

Simon Mundy

Richard Moxon

Various others

Aseai Zlaoui

Glynn Orridge

£6,201,085£352,000

FineConfi scation

£95,032 SFO costs

£330,000 SFO costs

Kevin Balmer

Brendan Cantwell

£19,600

£9,900

Fine (bank)

Nicholas Smith

£18,693£75,000£1,316,799£881,158£25,000

£52,805

£1,141,680

Confi scation order

No 1998 to 2006 £2.9mUS$0.9m

£3,070,106 £500,010

£24,600

Confi scation order

Barry Smith

£2k in costs

Riad El-Taher

US$1.6m

US$0.5m

David Mabey

£13,945,962£3m

US$6.7mUS$6m

FineFineFine

CoLPCPS

Alan White

Simon Mundy

Richard Moxon

Various others

Aseai Zlaoui

Glynn Orridge

£6,201,085£352,000

FineConfi scation

£95,032 SFO costs

£330,000 SFO costs

Kevin Balmer

Brendan Cantwell

£19,600

£9,900

Fine (bank)

Nicholas Smith

£18,693£75,000£1,316,799£881,158£25,000

£52,805

£1,141,680

Confi scation order

No 1998 to 2006 £2.9mUS$0.9m

£3,070,106 £500,010

£24,600

Confi scation order

Barry Smith

£2k in costs

Riad El-Taher

US$1.6m

US$0.5m

David Mabey

£13,945,962£3m

US$6.7mUS$6m

FineFineFine

CoLPCPS

Alan White

Simon Mundy

Richard Moxon

Various others

Aseai Zlaoui

Glynn Orridge

£6,201,085£352,000

FineConfi scation

£95,032 SFO costs

£330,000 SFO costs

Kevin Balmer

Brendan Cantwell

£19,600

£9,900

Fine (bank)

Nicholas Smith

£18,693£75,000£1,316,799£881,158£25,000

£52,805

£1,141,680

Confi scation order

No 1998 to 2006 £2.9mUS$0.9m

£3,070,106 £500,010

£24,600

Confi scation order

Barry Smith

£2k in costs

Riad El-Taher

US$1.6m

US$0.5m

David Mabey

£13,945,962£3m

US$6.7mUS$6m

FineFineFine

CoLPCPS

Alan White

Simon Mundy

Richard Moxon

Various others

Aseai Zlaoui

Glynn Orridge

£6,201,085£352,000

FineConfi scation

£95,032 SFO costs

£330,000 SFO costs

Kevin Balmer

Brendan Cantwell

£19,600

£9,900

Fine (bank)

Nicholas Smith

£18,693£75,000£1,316,799£881,158£25,000

£52,805

£1,141,680

Confi scation order

No 1998 to 2006 £2.9mUS$0.9m

£3,070,106 £500,010

£24,600

Confi scation order

Barry Smith

£2k in costs

Riad El-Taher

US$1.6m

US$0.5m

David Mabey

£13,945,962£3m

US$6.7mUS$6m

FineFineFine

CoLPCPS

Alan White

Simon Mundy

Richard Moxon

Various others

Aseai Zlaoui

Glynn Orridge

£6,201,085£352,000

FineConfi scation

£95,032 SFO costs

£330,000 SFO costs

Kevin Balmer

Brendan Cantwell

£19,600

£9,900

Fine (bank)

Nicholas Smith

£18,693£75,000£1,316,799£881,158£25,000

£52,805

£1,141,680

Confi scation order

No 1998 to 2006 £2.9mUS$0.9m

£3,070,106 £500,010

£24,600

Confi scation order

Barry Smith

£2k in costs

Riad El-Taher

US$1.6m

US$0.5m

David Mabey

£13,945,962£3m

US$6.7mUS$6m

FineFineFine

CoLPCPS

Alan White

Simon Mundy

Richard Moxon

Various others

Aseai Zlaoui

Glynn Orridge

£6,201,085£352,000

FineConfi scation

£95,032 SFO costs

£330,000 SFO costs

Kevin Balmer

Brendan Cantwell

£19,600

£9,900

Fine (bank)

Nicholas Smith

£18,693£75,000£1,316,799£881,158£25,000

£52,805

£1,141,680

Confi scation order

No 1998 to 2006 £2.9mUS$0.9m

£3,070,106 £500,010

£24,600

Confi scation order

Barry Smith

£2k in costs

Riad El-Taher

US$1.6m

US$0.5m

David Mabey

£13,945,962£3m

US$6.7mUS$6m

FineFineFine

CoLPCPS

Alan White

Simon Mundy

Richard Moxon

Various others

Aseai Zlaoui

Glynn Orridge

£6,201,085£352,000

FineConfi scation

£95,032 SFO costs

£330,000 SFO costs

Kevin Balmer

Brendan Cantwell

£19,600

£9,900

Fine (bank)

Nicholas Smith

£18,693£75,000£1,316,799£881,158£25,000

£52,805

£1,141,680

Confi scation order

No 1998 to 2006 £2.9mUS$0.9m

£3,070,106 £500,010

£24,600

Confi scation order

Barry Smith

£2k in costs

Riad El-Taher

US$1.6m

US$0.5m

David Mabey

£13,945,962£3m

US$6.7mUS$6m

FineFineFine

CoLPCPS

Alan White

Simon Mundy

Richard Moxon

Various others

Aseai Zlaoui

Glynn Orridge

£6,201,085£352,000

FineConfi scation

£95,032 SFO costs

£330,000 SFO costs

Kevin Balmer

Brendan Cantwell

£19,600

£9,900

Fine (bank)

Nicholas Smith

£18,693£75,000£1,316,799£881,158£25,000

£52,805

£1,141,680

Confi scation order

No 1998 to 2006 £2.9mUS$0.9m

£3,070,106 £500,010

£24,600

Confi scation order

Barry Smith

£2k in costs

Riad El-Taher

US$1.6m

US$0.5m

David Mabey

£13,945,962£3m

US$6.7mUS$6m

FineFineFine

CoLPCPS

Alan White

Simon Mundy

Richard Moxon

Various others

Aseai Zlaoui

Glynn Orridge

£6,201,085£352,000

FineConfi scation

£95,032 SFO costs

£330,000 SFO costs

Kevin Balmer

Brendan Cantwell

£19,600

£9,900

Fine (bank)

Nicholas Smith

£18,693£75,000£1,316,799£881,158£25,000

£52,805

£1,141,680

Confi scation order

No 1998 to 2006 £2.9mUS$0.9m

£3,070,106 £500,010

£24,600

Confi scation order

Barry Smith

£2k in costs

Riad El-Taher

US$1.6m

US$0.5m

David Mabey

£13,945,962£3m

US$6.7mUS$6m

FineFineFine

CoLPCPS

Alan White

Simon Mundy

Richard Moxon

Various others

Aseai Zlaoui

Glynn Orridge

£6,201,085£352,000

FineConfi scation

£95,032 SFO costs

£330,000 SFO costs

Kevin Balmer

Brendan Cantwell

£19,600

£9,900

Fine (bank)

Nicholas Smith

£18,693£75,000£1,316,799£881,158£25,000

£52,805

£1,141,680

Confi scation order

No 1998 to 2006 £2.9mUS$0.9m

£3,070,106 £500,010

£24,600

Confi scation order

Barry Smith

£2k in costs

Riad El-Taher

US$1.6m

US$0.5m

David Mabey

£13,945,962£3m

US$6.7mUS$6m

FineFineFine

CoLPCPS

Alan White

Simon Mundy

Richard Moxon

Various others

Aseai Zlaoui

Glynn Orridge

£6,201,085£352,000

FineConfi scation

£95,032 SFO costs

£330,000 SFO costs

Kevin Balmer

Brendan Cantwell

£19,600

£9,900

Fine (bank)

Nicholas Smith

£18,693£75,000£1,316,799£881,158£25,000

£52,805

£1,141,680

Confi scation order

No 1998 to 2006 £2.9mUS$0.9m

£3,070,106 £500,010

£24,600

Confi scation order

Barry Smith

£2k in costs

Riad El-Taher

US$1.6m

US$0.5m

David Mabey

£13,945,962£3m

US$6.7mUS$6m

FineFineFine

CoLPCPS

Alan White

Simon Mundy

Richard Moxon

Various others

Aseai Zlaoui

Glynn Orridge

£6,201,085£352,000

FineConfi scation

£95,032 SFO costs

£330,000 SFO costs

Kevin Balmer

Brendan Cantwell

£19,600

£9,900

Fine (bank)

Nicholas Smith

£18,693£75,000£1,316,799£881,158£25,000

£52,805

£1,141,680

Confi scation order

No 1998 to 2006 £2.9mUS$0.9m

£3,070,106 £500,010

£24,600

Confi scation order

Barry Smith

£2k in costs

Riad El-Taher

US$1.6m

US$0.5m

David Mabey

£13,945,962£3m

US$6.7mUS$6m

FineFineFine

CoLPCPS

Alan White

Edition 11August 2017

UK Bribery Digest

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