12 January 2015
Bribery and Corruption Convictions are Wake-Up Call for Corporations
Smith and Ouzman Limited, a private limited company based in Eastbourne, has become the first corporation to be convicted after trial for offences relating to the bribing of foreign officials.
This follows an investigation by the Serious Fraud Office which began in 2010 and involved assistance of the authorities in Kenya, Ghana and Switzerland.
The company, which specialises in printing security documents, such as ballot papers and exam certificates, was convicted at Southwark Crown Court of three counts of corruptly agreeing to make payments, contrary to section 1(1) of the Prevention of Corruption Act 1906.
In addition, the company’s chairman, Christopher John Smith was convicted of two counts of the same offence, with Nicholas Charles Smith, the company’s sales and marketing director, being convicted of three counts of the same offence.
The corruption payments totalled £395,074, and had been made to officials in Kenya and Mauritania. Other payments made in relation to Ghana and Somaliland had also been investigated.
These bribery and corruption convictions are noteworthy for several reasons.
Firstly, the fact that the company itself was convicted is a stark reminder of the possibility that companies can be held criminally liable for the actions of its officers. In this case, the SFO was able successfully to argue that Christopher and Nicholas Smith were the controlling minds of the company, and that they were therefore not merely acting for the company, but were in fact acting as the company.
With this established, the company itself was convicted, and shareholders and stakeholders alike will be awaiting the sentencing hearing on 12 February 2015 with anticipation to see how it impacts the value of the business. This is, of course, in addition to the reputational damage that will already have been done.
Secondly, this conviction highlights the fact that the SFO will pursue companies that it considers to be guilty of corruption offences, whatever its size or breadth of operations. It is not only multi-nationals that attract the attention of the authorities.
Finally, the convictions are for offences under the now-repealed Prevention of Corruption Act 1906. Although this statute was repealed in July 2011 by the Bribery Act 2010, the authorities are still able and prepared to utilise this piece of legislation for offences which pre-date the Bribery Act. Therefore, companies cannot be guaranteed to have absolved themselves from liability purely by ensuring they have adhered to the requirements of the Bribery Act. Any transactions that give the SFO cause for concern have the potential to be tried in a court of law, no matter how far back they go.
Stephen Clarkson is a Trainee Solicitor in the Business Crime department at Slater and Gordon Lawyers in London.
Slater and Gordon Lawyers have 1,450 staff and offices in London, Manchester, Liverpool, Birmingham, Sheffield, Edinburgh, Cardiff, Milton Keynes, Merseyside, Bristol, Newcastle, Halifax, Wakefield, Derby, Cambridge & meeting rooms in Bramhall, Cheshire & in Hull, Yorkshire.
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