Post date: Monday, 16th July 2012

Oil and gas industry has the most bribery prosecutions

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David Green, the director of the SFO

David Green, the director of the SFO, said "I am convinced that the SFO must focus on top level fraud."

The oil and gas industry has had the highest number of prosecutions for bribery in the UK compared to any other sector in recent years.

Five (almost 20%) of the 26 cases of bribery and graft prosecuted since 2008 were in the oil and gas sector. Other top offending sectors were construction, medical goods and insurance companies, which each experienced three prosecutions.

In one case, involving Andrew Rybak, Ronald Saunders, Philip Hammond and Barry Smith, confidential information was supplied to bidders and held by companies who were acting as procurement agents for the projects in the oil and gas sector. Some defendants were engaged by the procurement agents and had access to information which they then passed on to targeted bidding companies, who either made, or agreed to make, corrupt payments for the information, disguised as “consultancy services".

These are established UK-based companies, dealing with some of the larger projects in the sector. The procurement companies are not implicated. The SFO says these were “appalled" at the “apparent blatant disregard shown by the defendants" for the confidentiality of the information.

The figures come out of research published in Ernst and Young's UK Bribery Digest July update.

Another case involved operations in Nigeria, where Shell, Total and ENI operate, an area ranked 143 out of 182 in Transparency International's corruption perception index. Another area implicated is BP's patch in Angola, ranked 168.

Other names mentioned are: Aftab Noor al-Hassan, Riad El-Taher, MW Kellogg Limited (MWKL) and the Weir Group plc.

The SFO report shows that many cases rely on whistleblowers in order to come to light. Others, involving the Iraq oil-for-food scandal, relied on a United Nations independent enquiry committee.

Jonathan Middup, UK Head of Ernst & Young’s Anti-Bribery Corruption team, criticises the Serious Fraud Office in the report, for its low “appetite for enforcement".

There have been no prosecutions under the Bribery Act since it came into force just over a year ago, as an attempt to ban what are called “facilitation payments", although there have been five completed cases of bribery and corruption against UK companies under the old laws since the beginning of the year.

A survey published in May by Ernst & Young found that “more than half of UK executives would not rule out unethical activities to survive a downturn despite stricter bribery laws". These astonishing confessions were obtained voluntarily and anonymously.

In this worrying climate, the response of David Green, the director of the SFO, was to tell members of the 6th Annual European Forum on Anti-Corruption in June that “the SFO’s current role and purpose is unclear to some and needs restating". He added: "I am convinced that the SFO must focus on top level fraud."

While the permanent staff of British oil companies have not themselves been implicated in the enquiries and prosecutions, it is third parties in developing countries and temporary staff who have found themselves cast as defendants. Most oil companies have procedures to identify and eradicate corrupt practices, but they are sometimes notoriously hard to spot, as testified to by the case of Andrew Rybak, Ronald Saunders, Philip Hammond and Barry Smith.

Story: David Thorpe, News Editor

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"...there have been no prosecutions under the Bribery Act since it came into force just over a year ago" Check your facts! August 2011 - Munir Patel, a court clerk was sentenced to 3 years in prison under the Bribery Act for accepting a £500 bribe.

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