Richard Alderman, Director of the Serious Fraud Office has welcomed the final act in the Mabey & Johnson case where the shareholder is to pay back dividends gained as a result of Iraq bridge-building contracts. He hailed it as "the final act in an exemplary model of corporate self-reporting and co-operative resolution".
The Director of the Serious Fraud Office (SFO) has taken action in the High Court, which has resulted in an Order for the company, Mabey Engineering (Holdings) Ltd, to pay over £130,000 in recognition of sums it received through share dividends derived from contracts won through unlawful conduct. Mabey Engineering (Holdings) Ltd is the parent company of modular bridge manufacturers Mabey and Johnson Ltd and part of the Mabey Holdings group.
Mabey and Johnson (M&J) has been working with the SFO since the beginning of 2008 when it approached the authorities to highlight irregularities it had identified as a result of an internal investigation. Following the self-referral and subsequent co-operation with the SFO's investigations M&J pleaded guilty to charges of corruption and breaches of United Nations sanctions and was convicted at Southwark Crown Court in September 2009.
Since the self-referral, the group has introduced new management, anti-bribery and corruption procedures and has appointed an independent monitor. The company is viewed by the SFO as having conducted itself in an exemplary way through its self-referral, extensive co-operation with the authorities and the transformation of the company.
The settlement will see the shareholder of M&J pay £131,201 under Part 5 of the Proceeds of Crime Act 2002. The action, which represents the conclusion of all matters related to the self-referral, arises from the successful prosecution in February 2011 of former M&J company officers; David Mabey and Charles Forsyth and the earlier conviction of M&J employee Richard Gledhill for their part in breaching UN Sanctions with Iraq. The sum represents the dividends which the parent company collected from the contracts at the centre of the UN Sanctions prosecutions. The company will also pay costs of £2,440.
Richard Alderman, the Director of the SFO, said:
"There are two key messages I would like to highlight. First, shareholders who receive the proceeds of crime can expect civil action against them to recover the money. The SFO will pursue this approach vigorously. In this particular case, however, the shareholder was totally unaware of any inappropriate behaviour. The company and the various stakeholders across the group have worked very constructively with the SFO to resolve the situation, and we are very happy to acknowledge this.
The second, broader point is that shareholders and investors in companies are obliged to satisfy themselves with the business practices of the companies they invest in. This is very important and we cannot emphasise it enough. It is particularly so for institutional investors who have the knowledge and expertise to do it. The SFO intends to use the civil recovery process to pursue investors who have benefitted from illegal activity. Where issues arise, we will be much less sympathetic to institutional investors whose due diligence has clearly been lax in this respect."
Mr Alderman went on to say: "Finally, we would like to acknowledge the Mabey Group for its cooperation throughout this process. We have been very impressed by its attitude and the clear commitment of the new management to ethical trading. We get regular updates from the independent monitor about the business's ethics and controls and it appears that in many ways the Mabey group is now leading the way in implementing controls and procedures to ensure that it is able to trade ethically in high-risk jurisdictions.
Today's action represents the final piece in an exemplary model of corporate self-reporting and cooperative resolution. This is the approach I would like to foster across the wider business community when it comes to the self-referral processes the SFO has created. The process should provide clarity, confidence and, ultimately for the business concerned, a resolution to the problem. It requires wholehearted support from the business concerned and we got this from the Mabey Group."
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