A supplier and two former IKEA staff were jailed today at Birmingham Crown Court in a £1.3m bribes case to evade the retailer's purchasing limits and to obtain orders for the supply of goods. Adam Hauxwell-Smith was sentenced to three years' imprisonment. John Brown two years and Paul Hoult to thirteen months imprisonment.
The sentencing followed their guilty pleas to charges of corruption which were entered on 6 September 2007 ahead of trial. The case was adjourned to today for sentencing.
There were three other defendants for whom not guilty verdicts on all charges they faced have been recorded after the prosecution decided to offer no evidence against them.
Outline
Adam Hauxwell-Smith (with his wife Leisa) set up a number of companies to supply goods, such as Christmas crackers, pot-pouri, candles and kettles to the UK operation of IKEA, the home furnishings retailer. IKEA operated a policy whereby it would not take more than 40% of a supplier's turnover. This "turnover rule" was designed to prevent suppliers being over reliant on IKEA's business. In this case virtually the entire turnover of these companies was with IKEA. In addition, by supplying goods through their various companies the true extent of the scale of turnover of the Hauxwell-Smiths' business with IKEA was masked.
To help keep this fact from being discovered and to ensure that his companies' supplies and invoices would be approved, Adam Hauxwell-Smith made corrupt payments to two IKEA executives in influential positions: John Brown (purchasing) and Paul Hoult (retail sales). Later, the corrupt payments were linked to the quantity of goods ordered. Ultimately the position was reached where Adam Hauxwell-Smith was dictating what would be ordered by IKEA according to what goods he had available. The events relating to the offences took place during 1998 to 2000.
Proceedings
IKEA became suspicious about discrepancies between amounts invoiced to IKEA Wholesale and goods received by IKEA Retail and discovered the link between the Hauxwell-Smith companies. Following an internal inquiry, the case was subsequently referred to the Serious Fraud Office. A joint investigation by the SFO and Nottinghamshire Police commenced in February 2001. Six persons were charged in July 2004 as follows:
- Adam David Hauxwell-Smith (dob 4 March 1961) with offences (1), (2) and (3) - see below for key.
- John Brown (dob 6 May 1958 ) with offences (1) and (2)
- Paul Hoult (dob 28 December 1965) with offences (1) and (2)
- Leisa Hauxwell-Smith (dob 30 July 1959 ), with offences (1), (2) and (3)
- Maria Brenda Brown ( dob 20 October 1957), former IKEA employee, with offence (2) only
- Paul Appleby Walker (dob 11 November 1948), an accountant engaged by the Hauxwell-Smiths, with offences (1) and (2)
The offences charged:
- Conspiracy to defraud contrary to Common Law
- Corruption contrary to the Prevention of Corruption Act 1906
- Witness intimidation contrary to the Criminal Justice and Public Order Act 1994
Adam Hauxwell-Smith admitted to providing inducements to John Brown (£1,012,730) and Paul Hoult (£286,168) which they admitted receiving. All three denied conspiring to defraud IKEA and Hauxwell-Smith denied witness intimidation. Those charges are to remain on the file.
Sentencing
- Adam David Hauxwell-Smith was sentenced to three years imprisonment and was disqualified from being a company director for eight years. The issue of prosecution costs were adjourned for six months.
- John Brown was sentenced to two years imprisonment and ordered to make a contribution towards prosecution costs of £15,000.
- Paul Hoult was sentenced to thirteen months imprisonment.
In passing sentence, HHJ Eccles QC stated that custodial sentences were necessary to deter others and that John Brown and Paul Hoult's 'moral compass was broken by greed.' He also commended SFO accountants Julia Ambler and Kevin McDonald.
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