Back in 2010, TRACE president Alexandra Wrage wondered what mechanism the UK Serious Fraud Office would employ to provide restitution of bribe money to the Tanzanian people in settlement of BAE’s corruption debts. As Sarah Geiger, Manager of Global Research, describes below, The SFO has provided an answer – at least in part.
On 15 March 2012, the SFO, BAE, and the Department for International Development signed a Memorandum of Understanding, requiring BAE to pay GBP 29.5 million plus accrued interest for educational projects in Tanzania. The sum will be used to purchase textbooks for 16,000 primary schools in the country, guides and lesson plans for 175,000 primary school teachers, and GBP 5 million worth of school desks. The Director of the Serious Fraud Office, Richard Alderman, expressed satisfaction at the arrangement, saying, “This agreement is a first for the SFO which piloted it through the UK legal system. It provides a satisfactory outcome for all concerned but most of all for the Tanzanian people and I am personally delighted that SFO staff were able to achieve this.” In an interview with TRACE earlier this week, Mr. Alderman expressed his views on the challenges of providing restitution to victims of crime.
This is not the first time the SFO has ordered restitution to a national government. In October 2010, the director of a UK insurance company, PWS International, was sentenced to 21 months in prison after pleading guilty to paying nearly USD 2 million in bribes to Costa Rican officials. His sentence would be increased by an additional 12 months in prison unless he could pay GBP 100,000 to the Republic of Costa Rica within 28 days. In the SFO’s first criminal conviction for foreign bribery, Mabey & Johnson was required to pay GBP 658,000 to the Ghanaian government, GBP 139,000 to the Jamaican government and GBP 618,000 to Iraq.
Indeed, repatriation of stolen assets has become an increasingly common theme in the international community. Since December 2005, when the United Nations Convention Against Corruption came into being, enforcement agencies have been trying to develop vehicles for restitution of ill-gotten gains – through the Stolen Asset Recovery Initiative (StAR) and other means. Thus, since 2007 the World Bank has made restitution part of its strategy in negotiated settlements. The Bank’s Integrity Vice Presidency required an Italian engineering firm, Lotti, to pay USD 350,000 to the Government of Indonesia for bribing officials in the Public Works Department. And in a negotiated agreement with Siemens, The World Bank required Siemens to establish the “Integrity Initiative,” involving an undertaking by the company to pay $100 million over a period of 15 years to non-profit organizations in various locations to promote business integrity and fight corruption. Recipients include the Instituto Ethos in Brazil, and the European International Anti-Corruption Academy in Austria, among others.
The U.S. has also not been a stranger to repatriation programs. In 2007, in settlement of a civil forfeiture action, a tripartite agreement was signed between the governments of the U.S., Kazakhstan and Switzerland to return USD 84 million to Kazakhstan, after a banker was indicted under the FCPA for bribing Kazakh officials in the late 1990s in order to obtain oil and gas exploitation licenses for U.S. petroleum companies. The Bota Foundation was established in Kazakhstan to distribute the repatriated funds for the health, education and welfare of Kazakh poor.
The trouble with requiring companies to give money back to governments is the risk of paying the corrupt officials who stole the money in the first place. In the BAE case, the SFO emphasized the fact that the procurement process and distribution of the funds will be independently monitored to ensure their most effective use. We are sanguine that this will indeed bring direct relief to some of corruption’s poorest victims.
A complete summary of the BAE case is available here.