Anti-corruption enforcers close in on shipping and energy sectors
September 2017 proved to be a busy month for enforcement authorities, including the UK Serious Fraud Office (SFO) in its ongoing war against international bribery and corruption, serving as a reminder that those operating in the shipping and energy sectors must remain alive to the risks of being convicted of such crimes.
First, the SFO brought criminal charges against the former Chief Executive Officer and Chief Operating Officer of the UK oil and gas exploration company Afren plc in connection with a US$400 million fraud, involving Nigerian business deals that eventually led to Afren’s collapse. The charges involve accusations of money laundering and fraud by abuse of position. Although the senior executives in question were fired by Afren in 2014 for gross misconduct, that did not stop the company from going under and suffering the consequences of these serious corporate governance abuses.
Second, September 2017 also marked the end of a successful long-term investigation into logistics and freight forwarding company, F.H. Bertling (an English subsidiary of the German Bertling Group), and six current and former employees, for conspiracy to make corrupt payments to the agent of Angolan state oil company Sonangol. Both the company and the relevant employees have been found guilty of conspiring together and with others to give or accept corrupt payments for assisting F.H. Bertling Ltd in being awarded or retaining contracts for the supply of freight forwarding services relating to a North Sea oil exploration project, a contract worth approximately US$20 million.
The F.H. Bertling prosecution was brought under anti-bribery and anti-corruption legislation that pre-dates the entry into force of the UK Bribery Act 2010, so that it was necessary to show conspiracy. A similar claim under the Bribery Act might arguably be easier to prosecute, since it is irrelevant under that Act that the bribe is paid abroad; and a commercial organisation may be liable where a person associated with it commits a bribe that benefits the commercial organisation, regardless of whether it was aware of the bribe. It remains to be seen what sentence will be imposed on both F.H. Bertling Ltd and the convicted individuals in accordance with the old law. Under the Bribery Act, in similar circumstances, one could expect a significant monetary fine for F.H. Bertling Ltd and the individuals would risk up to 10 years in prison, as well as a fine.
This is yet another reminder that doing business in a region or in an industry where bribery is commonplace will not be seen as a good excuse for engaging in prohibited activities. Infringements by organisations that “turn a blind eye” will not be tolerated. The indication is that the SFO is actively investigating, and prosecuting, allegations of illegal payments and it will not be deterred by the potential complexity of the investigations.
The UK is not the only jurisdiction that is clamping down on corrupt activities in the shipping and energy sectors. It has been reported that a former procurement officer of Singaporean shipyard, Keppel, has recently been charged with 395 offences involving corruption and money laundering. The charges include allegations of corruptly accepting money from company directors and others as a reward for advancing their companies’ business interests with the shipyard.
Corporations should heed the warnings provided by these and similar prosecutions and ensure that they are adequately protected, including by having in place a clear and comprehensive anti-bribery and anti-corruption policy for their employees, agents and other entities associated with them, and effective procedures to implement the policy. Because of their very nature, the shipping and energy industries face particular challenges in complying with anti-corruption legislation. When in doubt, corporations should seek assistance in drafting appropriate compliance policies and procedures.