By understanding the behaviour that drove these fines and settlements, hopefully, you can avoid the same fate!
Key bribery fines & settlements in 2022
- Glencore - $1bn settlement
- Glencore - £280m fine
- FirstEnergy - $180m settlement
- Tenaris - $78m settlement
- Stericycle - $84m settlement
- K.T. Corporation - $6.3m settlement
- KPMG - £3.4m fine
- Boulting Group - £500k fine
- Tritec and Electron - £70k fine each
Whilst companies face multi-million settlement penalties, the consequences for individuals can include jail time.
Biggest bribery fines in 2022 in detail
1. Glencore - $1bn settlement
The Serious Fraud Office (SFO) has found Glencore Energy (UK) Ltd guilty of all seven counts of bribery brought against it. The business pleaded guilty to several counts of bribery to gain access to oil and make illegal gains.
The SFO's investigation revealed that Glencore paid over $28m (£22.2m) in bribes through its employees and agents in exchange for preferential access to oil, including larger cargoes, more valuable oil grades, and preferred delivery dates.
The firm gave the go-ahead for these activities across its oil operations in South Sudan, Equatorial Guinea, Nigeria, Cameroon, and the Ivory Coast. Glencore's sentencing is scheduled for November 2nd and 3rd of this year. The company expects to pay around $1bn to settle the bribery allegations.
2. Glencore - £280m fine
After an SFO investigation, it was found that Glencore Energy UK Ltd. had paid $29m in bribes to gain preferential access to oil in Africa. This penalty is the largest amount ever in an SFO case following a conviction. The amount issued includes a fine, a confiscation order for the profit it obtained from bribes, and the SFO’s costs.
The SFO's investigation found evidence in the form of text messages, significant cash withdrawals and payments that were deliberately concealed. Glencore's bribery is estimated to have generated around £93.5 million for the company.
3. FirstEnergy - $180m settlement
FirstEngergy's senior management orchestrated a $63m bribery scheme which says the exchange of payment to a top legislative leader and regulator for official action. CEO Charles "Chuck" Jones and Senior Vice President Michael Dowling were fired after initial FBI arrests.
Shareholders in the company filed a derivative lawsuit against the company, which claimed that the bribery action and subsequent legal and political fallout damaged the company and violated its policy.
FirstEnergy agreed to settle. The settlement included the company's agreement to adopt certain corporate governance reforms and the payment of $180m. This amount is to be funded by D&O insurance.
4. Tenaris - $78m settlement
The Securities and Exchange Commission (SEC) announced that Tenaris would pay over $78m to settle violation charges of the Foreign Corrupt Practices Act (FCPA) concerning a bribery scheme. The global manufacturer and supplier of steel pipe products were involved in a bribe scheme concerning its Brazilian subsidiary.
This scheme allegedly aimed to obtain and retain business from Petrobras, a Brazilian state-owned entity. Approximately $10m in bribes were paid to the Brazillian government. Tenaris has consented to the SEC's order without admitting or denying the findings. They agreed to pay more than $78m in combined disgorgement, prejudgment interest, and civil penalties.
5. Stericycle - $84m settlement
The medical waste management company, Stericycle, will pay over $84m to settle parallel civil and criminal charges relating to bribery schemes in Argentina, Brazil and Mexico. The company violated the FCPA when it paid millions to obtain and retain government customers in these countries between 2012 and 2016.
Furthermore, Stericycle failed to have sufficient internal accounting controls to detect and prevent misconduct. The company agreed to the cease-and-desist order that it violated anti-bribery, books and records, and internal accounting controls provisions of the FCPA.
6. K.T. Corporation - $6.3m settlement
South Korea's largest telecommunications company, K.T. Corporation, has agreed to pay over $6.3m to settle FCPA charges. The SEC's order shows that the company engaged in multiple schemes to make improper payments to Korea and Vietnam.
For nearly a decade, K.T. Corp lacked sufficient internal accounting controls that allowed employees, including executives, to generate funds for gifts and illegal political contributions to government officials. The company consented to the SEC's order without accepting or denying the charges.
They agreed to pay approximately $3.5 million in civil penalties and $2.8 million in disgorgement.
7. KPMG - £3.4m fine
The Financial Reporting Council (FRC) found KPMG guilty of serious failures in its audit of Royals-Royce. The auditing regulator paid a reduced fine of £3.4m after cooperating with the FRC. The serious failures identified by the FRC involved two payments made to Indian intermediaries - one payment was £3.3m, and the other payment was £1.9m.
“Allegations of bribery and malpractice through the use of intermediaries and ‘advisers’ in the defence field were prominent at the time of the audit”
8. Boulting Group - £500k fine
Former Coca-Cola enterprise manager provided several companies with confidential and sensitive information, giving them an advantage over rivals in contract bids. One of these companies was Boulting Group, now named WABGS Ltd.
Boulting was fined £500k for failing to prevent bribery while the other two companies received a fine of £70k each. Noel Corry received £950k from Boulting, which benefited by £13m. Boulting admitted to failure to prevent bribery.
9. Tritec and Electron - £70k fine each
Tritec Systems and Electron Systems are the other two companies involved in the bribery scheme orchestrated by Noel Corry. Both of these companies paid over £600k in bribes to Corry. Tritec and Electron were accused of failing to prevent bribery. They admitted to this failure as well as corruption and were each fined £70k.
Key takeaways for companies
- Never give or offer any inducement, nor request or accept one from others - remember that bribery is a criminal offence and a predicate offence to money laundering.
- Ensure that any gift or hospitality you give or accept is proportionate and in line with industry-standard policies and thresholds.
- Conduct due diligence on all third parties and make your company's stance on bribery clear - lookout for any bribery red flags.
- Never attempt to disguise a bribe as something legitimate, for instance, as a 'scholarship' or 'loan repayment'.
- Report any knowledge or suspicion of active bribery via your company's whistleblowing channels.
Biggest individual bribery prosecutions in 2022
- Timothy Schools - 14-year imprisonment
- David Ames - 12-year imprisonment
- Skeene & Bowers - 11-year imprisonment
- Michael Strubel - 6-year imprisonment / £2.1m repayment
- Noel Corry - 20-month imprisonment / £1.7m repayment
- Peter Kinsella - 12-month imprisonment
- Gary Haines - 20-month imprisonment
- Anthony Skyes - £112.5 fine
The consequences for individuals guilty of bribery and corruption are severe, with penalties that could include time in prison.
1. Timothy Schools - 14-year imprisonment
Investment manager, Timothy Schools, of the Cayman Island-based Axiom Legal Financing Fund was sentenced to 14 years in prison, following an investigation that found he used investor money to fund his luxury lifestyle.
The Axiom Fund was set up in the Cayman Islands by Schools to provide loans to law firms and promised approximately 500 investors a secure return on £100m. The SFO's investigation found that Schools dishonestly acquired £19.6 million in loan money which includes over £5.7 million from audit and management fees.
This money was subsequently hidden in offshore accounts and then used to finance Schools' luxury lifestyle which included luxury cars, shares in a French ski hotel and a motor boat.
2. David Ames - 12-year imprisonment
David Ames, former Chairman of the Harlequin business, was found to fraudulently abuse his position and expose 8000 investors to huge financial losses between 2010 and 2015. Victims lost their pensions and life savings thinking that the money would be invested in holiday properties.
However, the scheme had no external funding and couldn't deliver what it promised. Ames sold to a number of people who had Self-Invested Personal Pensions (“SIPPs”). Victims continue to struggle in the wake of this fraud. The investigation found that Ames had personally gained £6.4m through the Harlequin Group.
3. Skeene & Bowers - 11-year imprisonment
Andrew Nathaniel Skeene and Junie Conrad Omari Bowers were sentenced to 11 years in prison after they were convicted for three counts of conspiracy to defraud as well as misconduct when winding up a company. Skeene and Bowers were behind the fraudulent green investment scheme, Global Forestry Investments.
This scheme scammed around 2000 investors out of their savings and pensions. Throughout the duration of the scheme, the two collectively gained £750k in cash and spent a further £2 million on retail, luxury and entertainment. In fact, Skeene used investor money to fund his lavish wedding, and Bowers bought a Bentley Continental GT.
4. Michael Strubel - 6-year imprisonment / £2.1m repayment
Following his conviction in 2016, Michael Strubel failed to pay back the money from his crimes. Strubel conned investors out of a collective amount of £72.5 million by providing false claims of supplying services to the London Olympic Village during the 2012 Olympics.
Stubel and his co-conspirators used the Ponzi-style scheme to purchase expensive property and luxury cars. The investigation found that Stubel had hidden the fraudulent assets in loans and investments. The course ordered him to repay £2.1m of which £1.4m is still outstanding.
5. Noel Corry - 20-month imprisonment
Noel Corry is the former Coco-Cola Enterprises manager responsible for providing Boulting Group, Tritec Systems, and Electron Systems with confidential information that gave them an advantage over rivals in contract bids.
Corry was ordered to pay Coco-Cola Enterprises Ltd. £1.7m when his nine-year scam was discovered. To do this, he needed to sell his family home and empty his pension pot. Corry admitted to five counts of corruption and was sentenced to 20 months in prison, a 21-month suspension and 200 hours of unpaid work.
6. Peter Kinsella - 12-month imprisonment
Peter Kinsella is a former contract manager at Boulting Group who was involved in Corry's bribery scheme. He admitted to three counts of corruption and three counts of conspiracy to bribe. Kinsella was sentenced to a 12-month suspended prison term and 200 hours of unpaid work.
7. Gary Haines - 20-month imprisonment
Gary Haines is the former director of Tritec Systems and Electron Systems and another participant in Corry's bribery scheme. He pleaded guilty to two counts of corruption. Haines was sentenced to a 20-month suspended prison term and 200 hours of unpaid work.
8. Anthony Skyes - £112.5k fine
Anthony Skyes led the KPMG audit of Rolls-Royce where the FRC found serious failures by the companies. He was fined an amount of £112.5k ahead of his retirement. This fine was reduced from the original amount of £150k due to cooperation with the regulator.
Key takeaways for individuals
- Ensure that you conduct adequate due diligence on all third parties and make our stance on bribery clear to them.
- Have a suitable Gifts and Entertainment Policy in place so that everyone is clear on what is and is not acceptable.
- Never make facilitation payments - they're just bribery by another name.
- Remember that bribery is a crime resulting in hefty fines or a stretch in jail!
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