16 July 2009 | Jake Kanter
Anti-fraud experts are predicting a substantial rise in prosecutions of UK firms involved in corruption abroad.
It follows engineering firm Mabey & Johnson (M&J) this month becoming the first UK company to be prosecuted for corruption in respect to overseas contracts.
M&J, which supplies steel bridging, pleaded guilty at Westminster Magistrates' Court on 10 July to charges of trying to influence buyers in Jamaica and Ghana to win public contracts between 1993 and 2001.
The firm also admitted breaking UN sanctions when it bid for contracts in the Iraq oil for food programme between 2001 and 2002.
M&J managing director Peter Lloyd said: "We deeply regret the past conduct of our company, and we have committed to a fresh start."
The firm has taken steps to stamp out corruption through training, he added.
The case was brought by the Serious Fraud Office (SFO) which was alerted by an internal investigation at M&J.
The prosecution is "very significant", according to Robert Barrington of fraud watchdog Transparency International: "There are likely to be similar cases, particularly when the UK's Bribery Bill becomes law early next year."
Last month TI said the UK must "raise its game" to deter companies from using bribes to win contracts overseas (Web news, 26 June).
Brian Stapleton, head of financial investigations at Kroll, said: "It's a signal that the SFO will get an appetite for this. There is more enthusiasm for prosecution."
He added that the UK was following the US, which has had great success prosecuting and "extracting millions of dollars" in penalties from domestic firms under the Foreign Corrupt Practices Act.
The use of bribery to win contracts abroad has "long been part" of British business said Simon Bevan, head of the fraud services team at accountancy BDO Stoy Hayward. He argued that companies need an incentive to admit wrongdoing before prosecutions pick up.
Nick Hildyard, researcher at anti-corruption group the Corner House said the action was a "good step forward", and new bribery laws in the UK will strengthen efforts to stamp out overseas corruption.
Many buyers told SM they support the SFO's action, and some said M&J should be a "blacklisted" supplier.
SM readers comments
Feedback on overseas corruption
Hallelujah! At last progress is being made in identifying culprits and taking them to task. This is but the tip of the iceberg and we should all be aware that corruption is insidious and corrosive and damaging to free trade and the promotion of prosperity. As a Chartered Institute it should be a core objective to root out all corruption at every level. Let's revive the spirit of honesty, probity and help buyers and suppliers achieve fair results for decent efforts.
John Milne, procurement director, Hampco
I commend the SFO for looking into such matters. The untenable and unacceptable conduct of such unscrupulous companies, seek to deepen the corruption canker which invariably these poor and developing countries are making frantic efforts at fighting. Indeed, the actions of such companies depicts hypocrisy at its height given where they are coming from.
Frank Mante, corporate accounts, Zain Ghana
I have spent the last 5 years in West Africa trying to educate locals & other foreign nationals in the FCPA procedures. This revelation just shoots all the hard work we have undertaken in the foot when the locals read this. Companies in the US & Europe have been previously fined heavily but no company in the UK have been involved. Now we have the first company in the UK to plead guilty to corruption charges, I hope they throw the damn book at them.
This is a quite interesting and encouraging development. This will enlighten other supplier in washing their plates and win good business without corruption. It is also a lesson to us buyers that no matter how long the evil conduct might take to be in the dark, it will still come into light. Let us fight and eliminate corruption! Thanks for M&J for accepting their mistake and move forward on a clean plate.
It appears that the only sanction was financial. I am of opinion that debarment of the contractor should have been considered.
Tahalooa Sacheedanand, adviser, procurement policy office, Ministry of Finance
How dim are you people? When will you realise that the crime is not offering a bribe, it is asking for one that is a crime. If you deal with corrupt regimes, you will be asked for bribes. If you think someone else will not pay them, then you will get no business. Your decision and nobody else's.
This is when professionalism comes to the surface. All along it has been happening in the full view of the public and now the respective governments will now see what need to be done as a commitment to conduct an equal transparent exercise.
Mutai Kipchichir Geofrey, stock controller, Kenya Seeds Company
This is great news. More organisations in the developed world should also come out and reveal the corruption and plundering of the resources from especially African countries hence making them poorer day in, day out.
Abdul Dello, Cyber Café
The best way to fight this vice is exactly what you're doing, exposing the culprits. As a procurement professional and practitioner in Africa, I'm encouraged by your effort of sharing such important information. A message to the Diaspora, that no matter which part in the world the vice occurs, if proven, legal action will be taken against the players. This will scare some of the companies already engaged or tempted to join the race. As a member of CIPS, I encourage fellow members and practitioners to blacklist such companies as and when proven guilty whether redeemed or not.
Charles Ngonyo, student
It is very disappointing to learn that such a big company like Mabey & Johnson could involve its self in such evil practices. This must be a big lesson to others too not only to companies in UK but world wide. Many are the fallouts to such activities such as loss of goodwill, employees, markets, trust and support from the government to mention but a few. And once the image of the company has been tarnished it becomes very difficult to rebuild it. As people who are in purchasing let us say NO TO CORRUPTION with the boldness it deserves by up holding our ethics. Nevertheless, I am glad for they have accepted their mistake and are ready to reform.
Muelya Dryden, planning officer, Mulonga Water & Sewerage Co.
Training is the right track, that's good.
Charles Bwanausi, procurement officer, Ministry of Agriculture
Sinners need to be punished. M&J if they are indeed involved must be prosecuted according to the laws. Fraud is not good at all.
Evans Sichali, stores clerk, Daeyang Hospital
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