SME’s and those working for them should take note.

Yesterday, in a Christmas themed prosecution, the SFO successfully obtained convictions of Smith and Ouzman Ltd, its former Chairman and Sales and Marketing Director who were convicted following an SFO investigation into corrupt payments made for the award of business contracts to the company.

Merry Christmas

Smith and Ouzman is a security printer, and the supplier of many of the Christmas vouchers for some of the UK’s top high street retailers.  The Company’s other security printing services ranging from financial services to event ticketing and election and government.

The SFO press release reports that the corrupt payments were made to public officials for business contracts in Kenya and Mauritania, often under the guise of ‘chicken’.

Smith and Ouzman Ltd was convicted of three counts of corruptly agreeing to make payments, contrary to section 1(1) of the Prevention of Corruption Act 1906.

Christopher John Smith, former chairman of Smith and Ouzman, age 71, from East Sussex, was convicted of two counts of corruptly agreeing to make payments.

Nicholas Charles Smith, former sales and marketing director of Smith and Ouzman, age 43, from East Sussex was convicted of three counts of corruptly agreeing to make payments.

Timothy Hamilton Forrester, former international sales manager of Smith and Ouzman, age 57, from East Sussex was acquitted of all three counts of corruptly agreeing to make payments.

Mr Abdirahman Mohamed Omar, a sales agent for Smith and Ouzman, age 38, from London, was acquitted of one count of corruptly agreeing to make payments in relation to a contract in Somaliland.

Director of the SFO, David Green CB QC said:

“This is the SFO’s first conviction of a corporate for offences involving bribery of foreign public officials. Such criminality, whether involving companies large or small severely damages the UK’s commercial reputation and feeds corrupt governance in the developing world. We are very grateful to the Kenyan authorities for their assistance in this case.”

All those convicted denied bribery.

The SFO alleged corrupt payments totaling £433,062.98.

No turkey for the SFO

Some dubbed the case “chickengate” due to the repeated references to “chicken” in the email evidence between one of the protagonists and defendants Christopher and Nicholas Smith.

The SFO said that “the [c….hicken] word [was] used…for bribe”.

Both Christopher and Nicholas Smith argued that the term “chicken” was a loose term that could mean “money, cash, payment, facilitation payments” or “subsistence payment” (such as for travel expenses) and that “S&O do not pay bribes”.

[Ed: the defence seems to have missed a trick.  The word chicken could also be used for a…Ahem… Chicken]

It is reported that in an email sent to Chris Smith in December 2008 in relation to business he was trying to develop in Kenya chicken was referenced repeatedly [verbatim as provided by the SFO] said: “Hes anice guy smith he is in my pockets now, lets use em to get the contract and as i promised em we get the order he gets chicken…….Smith these peoples problem is chiken after award and I told them as lond as we get the tender and after looking at our margins then will definately give them the chicken…”

So.  A new keyword search term for us all and another nice result for the SFO.

Sentencing is due to take place on 12 February 2015.  The big question? Are the former directors looking at doing a bit of ‘bird’.

Opinion

SME’s should take note.  It is often remarked that the SFO will not be interested in SME’s or small bribery cases.  In fact they could not be more wrong.

While at one point in time the SFO publicly stated that its threshold for ‘serious’ was £1 million this is no longer the case.  In this instance the total alleged bribery was less than half that, a poultry £c.400k.

The SFO applies a variety of tests to establish whether a case is one which warrants being accepted by the SFO and the amount of the bribe is unlikely to be a determinative factor.

Likewise, SME’s and their directors who kid themselves that the SFO is only interested in household names ignore history – the SFO has a track record of successfully prosecuting SME’s and Smith and Ouzman is a case in point.

There is a good reason for this.  Under the old law, proving the Board knew of the wrongdoing was a necessity.

However, this was and is easier in a small company where the reporting lines to the Board are much shorter.  Put another way, the evidence trail has less opportunity to peter out before it reaches the Board and in some cases the evidence trail begins and ends at Board level.

Today of course under the Bribery Act’s failing to prevent bribery offence, there is no need for knowledge at Board level.

Enjoy your Christmas chicken turkey.