First UK prosecution of a company for overseas corruption

Jul 2009 | Client publication/article

Richard Swallow and Jonathan Cotton consider the implications of the Serious Fraud Office’s prosecution of Mabey & Johnson Limited for offences of overseas corruption and breach of United Nations sanctions.

On 10 July 2009 Mabey & Johnson Limited (Mabey) appeared at Westminster Magistrates’ Court charged with offences of corruption and breaching United Nations sanctions. The corruption charges relate to actions taken by the company in respect of public contracts in Ghana and Jamaica between 1993 and 2001, while the breach of sanctions charges relate to the United Nations 'Oil for Food' programme in Iraq between 1997 and 2003. The company indicated that it would plead guilty to these offences.

This is the first prosecution brought against a company in the UK for overseas corruption. It follows moves by various prosecuting authorities in the UK, including the Serious Fraud Office (SFO) and the City of London Police, to improve the UK’s notoriously poor record on the prosecution of overseas corruption (a record which has long been criticised by organisations such as the OECD).

Points to note

  • The prosecution followed the voluntary disclosure by Mabey’s parent company to the SFO in early 2008 (after an investigation by Mabey’s solicitors) of evidence that Mabey may have engaged in corrupt practices. Mabey subsequently cooperated with the SFO’s investigation in order to resolve the matter relatively quickly
  • The encouragement of companies to undertake such voluntary disclosure and co-operate with the SFO’s investigations is a central feature of the SFO’s current strategy for tackling corporate corruption. The SFO considers that such self‑reporting and co-operation benefits companies by allowing them to have instances of corruption dealt with quickly and efficiently, so that they can move on rather than be mired in lengthy investigations
  • The case will now be transferred to Southwark Crown Court for sentencing. A substantial fine may be imposed on Mabey and the company has agreed to pay reparations
  • It also appears that as part of the resolution of this matter Mabey has agreed to undertake several further steps. Specifically, it has introduced extensive anti-corruption training of its staff, implemented a substantial revision of its internal compliance programme and agreed to the appointment of an independent, SFO-approved compliance monitor. These further steps are familiar from the US anti-corruption enforcement model and provide further evidence of the SFO’s wish to move towards such an approach

Comment

The SFO sees this case as a template for other companies facing overseas corruption issues. However, the key to the SFO’s successful use of this approach is convincing companies that self-reporting and co-operation is in their interests. While this may be possible in cases where there is strong evidence of unlawful conduct, it is likely to be more difficult where the evidence is less clear.

This is particularly the case given that the SFO has yet to achieve a conviction of a company for overseas corruption offences where the company has denied liability. As noted in last year’s report on the SFO by Jessica de Grazia, which compared the SFO to US prosecutors, part of the reason why US prosecutors are able to obtain pleas of guilty in the majority of serious fraud cases prosecuted is because they have a strong track record of achieving convictions at trial where a defendant pleads not guilty; defendants are aware of this and so have a greater incentive to plead guilty at an early stage. Whether the SFO is able to build such a track record remains to be seen.

Contacts

Richard Swallow (partner), Jonathan Cotton (partner)


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