Four men have been convicted of conspiring to corruptly obtain payments by supplying confidential information about a series of high-value engineering projects in the oil and gas engineering industry.
Amounting to around £70 million, the contracts affected were for engineering and procurement projects based in Iran, Egypt, Sakhalin Island (Russia), Singapore and Abu Dhabi, over the period 2001 to 2009.
The case, named Operation Navigator, was heard at Southwark Crown Court, where the convicted defendants are to be sentenced on 30 January.
Convicted defendants:
- Andrew Rybak (d.o.b. 28/03/56) of Newbury, Berkshire
- Ronald Saunders (d.o.b. 01/02/47) of Hook, Hampshire
- Philip Hammond (d.o.b. 11/06/54) of Brussels, Belgium
- Barry Smith (d.o.b. 19/04/40) of Hindhead, Hampshire
With regard to a fifth defendant, Robert Storey (d.o.b. 04/07/44) of Windlesham, Surrey, the jury could reach no verdict on the charge he faced. He has been bailed pending an SFO decision on how to proceed against him.
In opening, Mukul Chawla QC for the Crown stated that this case was simply about greed and "the abuse of privileged positions with the simple aim of making money illegally."
Commenting on the outcome, SFO Director Richard Alderman said, "Corruption in business life diminishes society. Today's outcome makes it clear that it will not be tolerated. The investigation is an excellent example of collaboration between the City of London Police and the SFO. Each of us used our particular powers and skills, combined in a complex case with significant international links"
Summary
The confidential information supplied to bidders was held by companies acting as procurement agents for the projects. It is an industry where individuals who work for such companies often do so on a short term basis. Crucially, the defendants had access to inside information which they passed on to targeted bidding companies who either made, or agreed to make, corrupt payments for the information. Disguised as "consultancy services", the illicit payments were shared out amongst the co-conspirators.
The Projects
The investigation began in April 2008 as a joint operation between the Serious Fraud Office and the City of London Police. It followed a report of a suspicious approach to a bidding company. Investigators subsequently uncovered suspected corruption in a number of other similar contracts and identified the above-named defendants as being involved. The trial focused on five projects:
Styrene Monomer Project, Iran: Snamprogetti Ltd, a company in Basingstoke, was appointed to provide procurement services to Pars Petrochemical Company for the construction of a styrene monomer plant in Bandar Assaluyeh, Iran. (Styrene monomer is a chemical commonly used in the manufacture of disposable transparent containers). Saunders was engaged by Snamprogetti Ltd as an agency worker between 2001 and 2003. He passed inside information about the splitter column element of this contract (valued at nearly £1 million) to Hammond and Rybak, who were co-directors of Strategic Project Services Ltd (a corporate vehicle for their purported consultancy services). Confidential information was relayed to a bidding company, Walter Tosto Serbatoi S.p.A., which agreed to pay SPS 3% plus a split of any uplift when the contract, which totalled approximately US$100,000, was awarded. The payment was then distributed between the defendants.
QASR Gas Gathering Project, Egypt. In 2004 and 2005, J P Kenny, a company based in Staines, provided procurement services to Khalda Petroleum Company for the development of the QASR gas fields in Egypt. One element of the contract was a generator package valued at nearly £3 million. Saunders, together with another man (see note 1), was engaged by J P Kenny as a contractor from 2005 to 2007. Saunders supplied confidential information to Rybak for the benefit of a bidding company Mantrac Egypt and its subcontractor Impianti e Technolgie do Processo S.r.L. When the contract was awarded, Rybak received over a quarter of a million US dollars, part of which was then passed onto Saunders.
Sakhalin Island Project. This is one of the largest integrated oil and gas projects in the world and involves the exploration and development of several different oil and gas fields in the Sea of Okhotsk off Sakhalin Island (part of the Russian Federation). Fluor Ltd, a company in Farnborough, managed the procurement process for this project. A number of separate packages were investigated in detail, including: air compressors, oil pumps, generator sets, gas turbines, equipment to treat fuel gas, oily water treatment and large bore pipes. These packages were worth over £17 million. Saunders and another man were engaged as contractors by Fluor Limited between 2006 and 2008. Again, Rybak and Hammond received confidential information from the insiders which they sold on to bidding companies. Some payments of around £357,000 and US$229,000, were made from successful bidders, which were then distributed between the defendants.
Singapore Parallel Train Project. In August 2005, Foster Wheeler Worley Parsons, a joint venture in Reading, was awarded the Singapore Parallel Train procurement contract. The other man was again employed as a buyer (from 2007 to 2008). On three parts of the project (waste water treatment, demineralised water and carbon bed filters worth around US$35m), he passed confidential information to Rybak and Hammond which was then offered to bidders Ecodyne Ltd (a Canadian company) and Ondeo Industrial Solutions SarL (based in France), who agreed to pay commission if awarded the contracts. GE Water & Process Technologies Ltd, another bidder corruptly approached by Rybak (using a false name), rejected the approach and reported it to the procurement company, which then led to the City of London Police and the SFO being called in.
Hydrogen Power Project, Abu Dhabi. In 2008 Foster Wheeler was engaged by Masdar (Abu Dhabi Future Energy Company) and Hydrogen Energy International (based in Weybridge) to provide engineering and procurement services for the construction of the Hydrogen Power Abu Dhabi power plant. Both Rybak and Saunders were engaged by Hydrogen Energy as contractors between 2008 and 2009, and 2008 respectively. In relation to the steam turbine generator package, a contract valued at over US$42 million, corrupt approaches were made to bidders by Hammond (also using a false name). In addition, Rybak and Saunders brought Barry Smith into the conspiracy to assist with recruiting an Abu Dhabi agent for Italian bidding company Franco Tosi Mecannica S.p.A., which in turn entered into an agency agreement, the payment of which in turn was to be distributed between the defendants. The SFO alleged that Robert Storey was also involved in this conspiracy.
Proceedings
The companies that provided procurement services for these projects helped the investigation enormously. They were appalled at the apparent blatant disregard shown by these defendants for the confidentiality and integrity of the project environments. Our investigators sifted huge quantities of evidence including mobile phone data, travel records and e-mails, which identified and established the involvement of these defendants. Charges were brought against them in September 2010. The trial opened at Southwark Crown Court on 10 October 2011. The jury was sent out on 10 January 2012. Sentencing has been adjourned until 30 January. Confiscation proceedings will be instigated.
Notes for editors:
- Another suspect is resident in the Philippines and it has not been possible, thus far, to bring him to trial in the UK.
- The Serious Fraud Office is a government department responsible for investigating and prosecuting serious and complex fraud. The SFO is headed by the Director (Richard Alderman) who exercises powers under the superintendence of the Attorney General. These powers are derived from the Criminal Justice Act (1987).
- Charging of defendants. See press release 22 September 2010.
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