First Conviction under the UK Bribery Act

Munir Patel

(Reuters) - The first person to be convicted under new bribery laws was jailed on Friday November 18th, 2011, and lawyers said his sentence sent out a warning message to business.

Munir Patel, 22, a court clerk who worked at Redbridge Magistrates' Court in east London, had pleaded guilty to accepting 500 pounds to "get rid" of speeding charges by keeping the details off a court database.

He was given three years in prison for bribery offences and six years for misconduct in a public office, with the sentences to run concurrently, the Press Association reported.

"The sentencing ... demonstrates the significant sentences that the courts are willing to impose on individuals who commit an offence under the (Bribery) Act," said Angela Pearson, a partner with international law firm Ashurst.

"It is only a matter of time before the SFO (Serious Fraud Office) bares its teeth and prosecutes the first corporate or its directors under the Act. In the meantime, the business community collectively hold their breath."

The Bribery Act, which came into force in July, makes failure to prevent bribery - whether committed by staff, subsidiaries or "associated persons" anywhere in the world - a criminal offence.

It also clamps down on so-called "facilitation payments," often used to oil the wheels of business by speeding up services such as visa applications, and "disproportionate" hospitality.

Southwark Crown Court heard Patel had helped at least 53 individuals evade prosecution for driving offences, and that he had advised people on how to avoid being summoned to court.

His salary was 17,978 pounds, but the court heard that 53,814 pounds in cash was deposited in his bank account while another 42,383 pounds was transferred into the same account, both without explanation.

"It hardly needs saying that these were very serious offences," Judge Alistair McCreath said.

"A justice system in which officials are prepared to take bribes in order to allow offenders to escape the proper consequences of their offending is inherently corrupt and is one which deserves no public respect and which will attract none."
(Reporting by Michael Holden; editing by Andrew Roche)

MW Kellogg Ltd to pay £7 million in SFO High Court action

The Serious Fraud Office (SFO) has taken action in the High Court today which has resulted in an Order for the company, M.W. Kellogg Limited (MWKL), to 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 High Court made the Order under Part 5 of the Proceeds of Crime Act 2002. 

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.  This sum represents the share dividends due and the interest which has accrued on these sums.

The contracts were awarded to a company partly owned by MWKL on behalf of its US parent company.  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 US Department of Justice, 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. This reflects the finding that MWKL was used by the parent company and was not a willing participant in the corruption.

The US parent company was one of four corporate entities which formed a joint venture to bid for contracts on a liquefied natural gas project in Nigeria. The joint venture created three special purpose vehicles to bid for, and subsequently run, the contracts. Three of the four contracts won by the joint venture were obtained through promises to pay or payments of bribes.  The US parent company, Kellogg Brown and Root LLC and its predecessors (KBR) has been subject to a criminal and civil investigation in the US.  The criminal investigation, which was conducted by the Department of Justice (DOJ), into the Bonny Island Project related to KBR and a number of other corporate and individual parties being involved in bribery and corruption.  KBR has acknowledged, in its plea agreement with the DoJ, that it owned the special purpose vehicle created for the Nigerian project, through MWKL in order to distance itself from the corruption and avoid the consequences of the Foreign Corrupt Practices Act 1977.  KBR had resolved all matters with the US authorities, including a civil settlement with the Securities and Exchange Commission, by February 2009.   

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.

The Director of the Serious Fraud Office, Richard Alderman said: "The SFO will continue to encourage companies to engage with us over issues of bribery and corruption in the expectation of being treated fairly. In cases such as this a prosecution is not appropriate. Our goal is to prevent bribery and corruption or remove any of the benefits generated by such activities.  This case demonstrates the range of tools we are prepared to use."

Notes for editors:

1. The Serious Fraud Office is a government department responsible for investigating and prosecuting serious and complex fraud.  The SFO is headed by the Director (Richard Alderman) who exercises powers under the superintendence of the Attorney General. These powers are derived from the Criminal Justice Act (1987).

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