Bribery Act & Proceeds of Crime - Written by on Tuesday, July 3, 2012 14:50 - 1 Comment

Publishing proves riskier than you think: Oxford University Press settles with SFO in bribery case & hands over dividends

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Oxford Publishing Limited (OPL) has been ordered to pay £1,895,435 in respect of monies received generated through unlawful conduct in Africa.

Amid a welter of publicity about the banks the SFO ploughed on today in its successful enforcement of bribery and corruption violations and recovered more dividends attributed to unlawful conduct from a shareholder.

Marking a change with the past the SFO press release is much more detailed than has historically been the case in an effort to avoid criticism of a lack of transparency in such cases.

Self report

The SFO press release records that in 2011, OUP instructed independent lawyers and forensic accountants to undertake a detailed investigation after concerns about unusual tendering practices.  In November 2011 OUP self reported concerns in relation to contracts arising from a number of tenders which its Kenyan and Tanzanian subsidiaries entered into between 2007 and 2010.

Two of the tenders were funded by the World Bank and as a result OUP also voluntarily reported a potential breach of the World Bank’s Procurement Guidelines to the World Bank.

The SFO and the World Bank came to the view, as a result of the investigation, that the Kenyan and Tanzanian subsidiaries had offered and made payments, directly and through agents, intended to induce the recipients to award competitive tenders and/or publishing contracts for schoolbooks to them.

Civil Recovery Order

The High Court ordered that OPL pay £1,895,435 (representing dividends and other fees received by OPL from its subsidiaries) as well as the SFO costs of £12,500.

In a move which will give confidence to those considering self reporting SFO Director David Green CB QC said:

“This settlement demonstrates that there are, in appropriate cases, clear and sensible solutions available to those who self report issues of this kind to the authorities.  The use of Civil Recovery powers has been exercised in accordance with the Attorney General’s guidelines.  The company will be adopting new business practices to prevent a recurrence of these issues and these new procedures will be subject to an extensive and detailed review.”

Debarment

On the same day the World Bank announced that it had debarred the Kenyan and Tanzanian subsidiaries in a statement which said:

“The World Bank Group today announced the debarment of two wholly-owned subsidiaries of Oxford University Press (OUP), namely: Oxford University Press East Africa Limited (OUPEA) and Oxford University Press Tanzania Limited (OUPT) – for a period of three years following OUP’s acknowledgment of misconduct by its two subsidiaries in relation to two Bank-financed education projects in East Africa.”

Leonard McCarthy, World Bank Integrity Vice President said:

This debarment is testimony to the Bank’s continued commitment to protecting the integrity of its projects.  OUP’s acknowledgment of misconduct and the thoroughness of its investigation is evidence of how companies can address issues of fraud and corruption and change their corporate practices to foster integrity in the development business.  In this case, working with the Serious Fraud Office also demonstrates the scope of collective action in deterring corruption impacting the progress of development,”

Compliance procedures

OUP is also subject to a monitor with responsibilities to report on compliance in 12 months to the SFO with additional reporting requirements to the SFO.

Reasons for civil recovery order

The SFO set out in some detail the rationale for the entry into the Civil Recovery Order in this instance as follows:

“a)    The test under the Code for Crown Prosecutors in relation to the case meeting the criteria to prosecute has not been met at this point and there is no likelihood that such a standard would be met in the future.  This view is based on a number of factors including, but not limited to, (i) key material obtained through the investigation is not in an evidentially admissible format for a criminal prosecution and (ii) witnesses in any such prosecution would be in overseas jurisdictions and are considered unlikely to assist or co-operate with a criminal investigation in the UK.

b)    Difficulties in relation to obtaining evidence from the jurisdictions involved and potential risks to the personal welfare of affected persons.

c)     OUP has conducted itself in a manner which fully meets the criteria set out in the SFO guidance on self reporting matters of overseas corruption.

d)    There is no evidence of Board level (or the equivalent) knowledge or connivance within OUP in relation to the business practices which led to the case being referred to the SFO.

e)    The products supplied were of a good standard and provided at ‘open market’ values.  This means that the jurisdictions involved have not been victims as a result of overpaying for the goods or as a result being supplied goods which were unsuitable or not required.

f)     The resources needed to facilitate an investigation into this matter are considerable e.g. 12 terabytes of data collected as part of the investigation, and a civil recovery disposal allows a better strategic deployment of resources to other investigations which have a higher probability of leading to a criminal prosecution.

g)     The settlement terms ensure all gross profit from any tainted contract will be disgorged.

h)      OUPEA and OUPT will be subject to parallel World Bank procedures which will result in them being debarred from participating in future World Bank funded tenders for a number of years.

In addition to the property recovered under the civil recovery order, OUP unilaterally offered to contribute £2,000,000 to not-for-profit organisations for teacher training and other educational purposes in sub-Saharan Africa.”

The income of the SFO has been bolstered to the tune of nearly £1 million as a result of the settlement.  The SFO press release records that funds will be utilised in accordance with the Asset Recovery Incentivisation Scheme which, for cases of civil recovery, resulting in the SFO receiving up to 50% of the value the monies remitted to the Home Office by the Trustee.

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