Commercial Bribery: No Government Officials in Sight 1

Anti-corruption enforcement took an interesting turn in January, when four men were convicted in the UK of bribery that had nothing to do with government officials.  Purely private commercial bribery is indeed a growing concern.  It is a field in which relatively few prosecutions have taken place thus far, but it is also a field which holds tremendous potential for prosecution in the future.

In the UK case, the defendants worked as professional agents or contractors on major infrastructure projects in at least five countries around the world.  By virtue of their privileged positions, the men obtained inside information on projects between 2001 and 2009, and then sold the information illegally to companies that were bidding on the contracts.   The men worked together, sharing the proceeds as consultancy fees, commissions or kickbacks for the information they gave.

The investigation that resulted in these convictions focused on projects in Egypt, Iran, Abu Dhabi, Russia, and Singapore.  It was in the Singapore project that precipitated the men’s downfall:  one of the defendants, Andew Rybak, offered confidential information in exchange for a commission, but the company to whom the information was tendered rejected Rybak’s advances and reported him to the procurement company, Foster Wheeler Worley Parsons, which informed the City of London Police and the Serious Fraud Office (SFO).

Charges were brought against the five defendants in September 2010, and on 31 January 2012, sentences were issued:  Andrew Rybak, Ronald Saunders and Philip Hammond received current sentences of between three years and five years on each count; Barry Smith was given a twelve month sentence suspended for eighteen months and 300 hours of unpaid work.    Rybak and Hammond were also disqualified from acting as company directors for a period of ten years, and confiscation actions will be filed against Rybak, Saunders and Hammond.

Commenting upon the outcome of the case against these defendants, Director of the Serious Frauds Office, Richard Alderman, remarked, “Corruption in business life diminishes society.  Today’s outcome makes it clear that it will not be tolerated.”

For most companies, anti-corruption compliance focuses on preventing the payment of bribes to foreign officials.  This may no longer satisfy enforcement authorities in the U.K, the U.S., and elsewhere, and companies may need to make some adjustments in the future.

Details of the four convictions in the UK may be obtained here.

One comment

  1. Pingback: KPMG ‘Insider Trading’ Case Highlights Dangers of Commercial Bribery « TRACE blog

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