The Director of the Serious Fraud Office (SFO) has taken action in the High Court, which has resulted in an Order for the company, Macmillan Publishers Limited (MPL), to pay in excess of £11 million in recognition of sums it received which were generated through unlawful conduct related to its Education Division in East and West Africa. The Order was made under Part 5 of the Proceeds of Crime Act 2002.
The initial enquiry commenced following a report from the World Bank. An attempt had been made by an agent to pay a sum of money with the view in mind of persuading the award of a World Bank funded tender to supply educational materials in Southern Sudan. The Company did not win the contract.
As a result of this report search warrants were executed by the City of London Police (CoLP) in December 2009. In March 2010 MPL reported the corporate case to the SFO. The SFO required MPL to follow a procedure based on the guidance contained within its published protocol document - the Serious Fraud Office's approach to dealing with overseas corruption.
The first stage of this process involved MPL, instructing external lawyers to conduct a review of the books and records of the company with a view to identifying areas of corruption risk. The costs of this exercise were met by MPL. That exercise was completed to the satisfaction of the SFO. The product of that work enabled the SFO, working co-operatively with the City of London Police and the World Bank Group, to identify the limited area within the business which potentially presented a bribery and corruption risk. This work also informed the basis on which, the SFO (again in co-operation with CoLP and the World Bank Group) selected the three jurisdictions (Rwanda, Uganda and Zambia) in relation to which it would require MPL's external lawyers to conduct detailed investigations. These jurisdictions fell within the business activities of the MPL's Education Division operating in East and West Africa. There were parallel investigations relating to these three jurisdictions conducted for the World Bank and the SFO. The SFO remit was broader in its scope in that it required investigation of all public tender contracts in the three jurisdictions over the period 2002-2009[1] whether funded by the World Bank or otherwise.
The investigations were thorough and completed to the satisfaction of the SFO. The costs of those investigations were met by MPL. The substantial product of those investigations was presented to the SFO and in a separate presentation to the World Bank Group.
The contracts under investigation related to the supply of educational material. The materials were supplied by publishers, often following the issuing of a public tender by the national government of a country. Such public tender processes were susceptible to improper relationships being formed and corruption taking place. It was impossible to be sure that the awards of tenders to the Company in the three jurisdictions were not accompanied by a corrupt relationship.
Accordingly it was plain that the Company may have received revenue that had been derived from unlawful conduct. Following an accounting examination and taking an aggressive approach to the revenue received in order to capture all potential unlawful conduct the SFO was in a position to determine the appropriate amount to be recovered. The value of the Order[2] made by the High Court is £11,263,852.28. MPL will also pay the SFO costs of pursuing the order which amount to £27,000.
A number of relevant features, which have informed the resolution of this enquiry include the following:
- MPL approached the SFO with a view to co-operation;
- MPL had fully co-operated with the SFO throughout the process and complied with an agreed timetable;
- MPL had fully complied with other authorities including the World Bank Group;
- The Company had, in response to learning of the allegations of bribery and corruption, reacted appropriately in firstly, reviewing its internal anti-bribery and corruption policies and procedures, appointing external consultants to recommend and help implement an internal appropriate anti-bribery and corruption compliance regime;
As a result of the parallel World Bank Process the company has been debarred from participating in World Bank Funded tender business for a minimum period of three years. In addition, the Company has taken the decision to cease all live and prospective public tenders in its Education Division business, in East and West Africa regardless of the source of funds; - The Company, as a result of withdrawing from the sector lost significant revenue including surrendered bid securities;
- The actual products supplied were of a good quality; and
- There was no material identified to support a conclusion that the products supplied were overpriced.
- MPL will be subject to review by a monitor who will report to the Director of the SFO within twelve months and to the World Bank. The monitor must meet strict criteria including clear independence from the company.
Richard Alderman, the Director of the Serious Fraud Office stated: "I am pleased with this outcome. Civil recovery allows us to deal with certain cases of corporate wrong-doing effectively. It delivers value for money to the public by saving the cost of lengthy investigations and protracted legal proceedings and removes any property obtained as a result of the wrong-doing. At the same time it forces the company to reform its practices for the future."
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).
This is the fifth Civil Settlement action by the SFO. The others are Balfour Beatty plc, October 2008, £2.25 m; AMEC plc, October 2009, £4.95m; M W Kellogg Ltd, February 2011, £7m; DePuy International Ltd, April 2011, £4.83m. (Figures may be rounded).
