Bribery Act & Proceeds of Crime - Written by Barry & Richard on Thursday, January 26, 2012 15:55 - 1 Comment
What happens in practice? Confidential information offered to contract bidders
If you are in-house counsel or in the compliance department then the SFO press release on the conviction of the four people convicted of conspiracy to corrupt earlier this week makes interesting reading. The case highlights potential risks for companies managing procurement processes.
Examples of real cases are always interesting and are a useful way of understanding what to look out for.
In summary, very broadly speaking it appears that insiders within various projects (detailed below) shared confidential information about various projects with co-conspirators who then sold on the information to bidders – the conspirators then shared the proceeds. The scheme emerged when a bidder suspicious of an approach made by the men reported it.
The rest, as they say, is history…
[FROM THE SFO PRESS RELEASE]
“The investigation began in April 2008 as a joint operation between the Serious Fraud Office and the City of London Police. It followed a report of a suspicious approach to a bidding company. Investigators subsequently uncovered suspected corruption in a number of other similar contracts and identified the above-named defendants as being involved. The trial focused on five projects:
Styrene Monomer Project, Iran: Snamprogetti Ltd, a company in Basingstoke, was appointed to provide procurement services to Pars Petrochemical Company for the construction of a styrene monomer plant in Bandar Assaluyeh, Iran. (Styrene monomer is a chemical commonly used in the manufacture of disposable transparent containers). Saunders was engaged by Snamprogetti Ltd as an agency worker between 2001 and 2003. He passed inside information about the splitter column element of this contract (valued at nearly £1 million) to Hammond and Rybak, who were co-directors of Strategic Project Services Ltd (a corporate vehicle for their purported consultancy services). Confidential information was relayed to a bidding company, Walter Tosto Serbatoi S.p.A., which agreed to pay SPS 3% plus a split of any uplift when the contract, which totalled approximately US$100,000, was awarded. The payment was then distributed between the defendants.
QASR Gas Gathering Project, Egypt. In 2004 and 2005, J P Kenny, a company based in Staines, provided procurement services to Khalda Petroleum Company for the development of the QASR gas fields in Egypt. One element of the contract was a generator package valued at nearly £3 million. Saunders, together with another man (see note 1), was engaged by J P Kenny as a contractor from 2005 to 2007. Saunders supplied confidential information to Rybak for the benefit of a bidding company Mantrac Egypt and its subcontractor Impianti e Technolgie do Processo S.r.L. When the contract was awarded, Rybak received over a quarter of a million US dollars, part of which was then passed onto Saunders.
Sakhalin Island Project. This is one of the largest integrated oil and gas projects in the world and involves the exploration and development of several different oil and gas fields in the Sea of Okhotsk off Sakhalin Island (part of the Russian Federation). Fluor Ltd, a company in Farnborough, managed the procurement process for this project. A number of separate packages were investigated in detail, including: air compressors, oil pumps, generator sets, gas turbines, equipment to treat fuel gas, oily water treatment and large bore pipes. These packages were worth over £17 million. Saunders and another man were engaged as contractors by Fluor Limited between 2006 and 2008. Again, Rybak and Hammond received confidential information from the insiders which they sold on to bidding companies. Some payments of around £357,000 and US$229,000, were made from successful bidders, which were then distributed between the defendants.
Singapore Parallel Train Project. In August 2005, Foster Wheeler Worley Parsons, a joint venture in Reading, was awarded the Singapore Parallel Train procurement contract. The other man was again employed as a buyer (from 2007 to 2008). On three parts of the project (waste water treatment, demineralised water and carbon bed filters worth around US$35m), he passed confidential information to Rybak and Hammond which was then offered to bidders Ecodyne Ltd (a Canadian company) and Ondeo Industrial Solutions SarL (based in France), who agreed to pay commission if awarded the contracts. GE Water & Process Technologies Ltd, another bidder corruptly approached by Rybak (using a false name), rejected the approach and reported it to the procurement company, which then led to the City of London Police and the SFO being called in.
Hydrogen Power Project, Abu Dhabi. In 2008 Foster Wheeler was engaged by Masdar (Abu Dhabi Future Energy Company) and Hydrogen Energy International (based in Weybridge) to provide engineering and procurement services for the construction of the Hydrogen Power Abu Dhabi power plant. Both Rybak and Saunders were engaged by Hydrogen Energy as contractors between 2008 and 2009, and 2008 respectively. In relation to the steam turbine generator package, a contract valued at over US$42 million, corrupt approaches were made to bidders by Hammond (also using a false name). In addition, Rybak and Saunders brought Barry Smith into the conspiracy to assist with recruiting an Abu Dhabi agent for Italian bidding company Franco Tosi Mecannica S.p.A., which in turn entered into an agency agreement, the payment of which in turn was to be distributed between the defendants. The SFO alleged that Robert Storey was also involved in this conspiracy.”