Oxford University Press consents to pay over £1,900,000 in corruption settlement Reply

Recent Enforcement Developments

Oxford University Press settles corruption allegations in East Africa.  On 3 July 2012, the UK Serious Fraud Office and the World Bank announced that a settlement had been reached with Oxford Publishing Ltd (“OPL”), a wholly owned subsidiary of Oxford University Press (“OUP”).  Oxford University Press, a department of the University of Oxford, is the largest university press in the world, with sales of £649 million in 2010-2011.

The Civil Recovery Order entered between the SFO and OPL describes improper payments made directly and through intermediaries, by Oxford University Press East Africa (“OUPEA”), based in Kenya, and Oxford University Press Tanzania (“OUPT”), for the purpose of securing government contracts for the supply of textbooks and other educational materials.  The Civil Recovery Order, entered 3 July 2012, requires the payment of £1,895,435 plus the costs of pursuing the order, £12,500, and imposes an independent monitor.  The monitor must be independent of OUP and its subsidiaries, must be appointed within 120 days, and must submit a report within 12 months.

Two of the contracts for which the OUP subsidiaries paid bribes to government officials were supported by World Bank Group grants.  The World Bank announced, also on 3 July 2012, a Negotiated Resolution Agreement involving three components:  (1) debarment of OUPEA and OUPT for a period of three years, cross-debarment of these entities by other development banks, with conditional non-debarment for OUP; (2) payment by OUP of USD 500,000 to the WB, and; (3) a commitment by all three entities to cooperate with the World Bank’s Integrity Vice Presidency and to continue to improve their internal compliance programs.

The complete Compendium summary for this case may be accessed here.

The Serious Fraud Office orders BAE to pay GBP 29.5 million for education in Tanzania 1

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.

Crown Court approves BAE settlement with the UK Serious Fraud Office Reply

On December 21, 2010, Southwark Crown Court approved the plea agreement reached by BAE Systems plc and the UK Serious Fraud Office on February 5, 2010.  The Court sentenced BAE to pay a GBP 500,000 (USD 775,000) fine after the company pleaded guilty to failing to keep proper accounting records in connection with its retention of a marketing adviser that assisted BAE’s sale of a radar system to the Tanzanian Government in 1999.  The Court also ordered BAE to pay GBP 225,000 in costs incurred by the SFO, and BAE will make an ex gratia payment of GBP 29.5 million for the benefit of the people of Tanzania through a mechanism yet to be determined. 

During a two-day hearing, Justice David Bean criticized the SFO’s approach, reportedly calling the plea agreement “loosely and hastily drafted” and commenting that the fine levied reflected that the Court could not “sentence for an offense which the prosecution failed to charge,” such as conspiracy to corrupt.  Justice Bean also reportedly stated that the Court was under “moral pressure” to keep the fine to a minimum because the remainder of the agreed amount would go to Tanzania. 

This brings to an end the SFO’s six-year investigation into foreign bribery allegations connected to BAE’s defense contracts.  BAE settled with the US Department of Justice on February 5, 2010, pleading guilty to conspiring to make false statements to the US Government and agreeing to pay a USD 400 million fine.  While the US settlement covered misconduct in multiple countries, including BAE’s “Al Yamamah” sales to Saudi Arabia, the UK deal only addressed misconduct in Tanzania.  Notably, neither settlement agreement contained any bribery-related charges.   

The Compendium summary regarding this matter may be accessed here:  https://secure.traceinternational.org/compendium/view.asp?id=140

BAE Systems Reaches $447 Million Settlement with SFO and DOJ Reply

On February 5, 2010, it was reported that BAE Systems plc had finally entered into settlement agreements with the UK Serious Fraud Office and the US Department of Justice in connection with long-running bribery investigations into the defense contractor’s business dealings in multiple countries around the world.

Under its settlement with the SFO, BAE will plead guilty in the Crown Court to violating Section 221 of the Companies Act 1985 by failing to keep reasonably accurate accounting records in connection with commission payments made to a former marketing adviser that assisted the company in selling a radar system to the Tanzanian government in 1999.  The company agreed to pay a penalty of £30 million (approx. $47 million), comprising a fine to be determined by the Crown Court and the balance to be made as a charitable donation for the benefit of Tanzania.

Under its settlement with the DOJ, BAE will plead guilty to one charge of conspiring to make false statements to the U.S. Government in connection with certain regulatory filings and undertakings.  The Company agreed to pay a $400 million fine and to make additional commitments concerning its ongoing compliance.  The DOJ settlement covers misconduct related to BAE’s business activities in multiple countries, including the company’s involvement in Sweden’s lease of Gripen fighter jets to the Czech Republic and Hungary in the late 1990′s, as well as the company’s “Al Yamamah” sales of Tornado aircraft and other defense materials to Saudi Arabia between the mid-1980′s and early 2000′s.

First take-away from the information available so far:  BAE will not be pleading guilty to any bribery charges on either side of the Atlantic.

Here are the two main press releases thus far: SFO press releaseBAE press release.