Bribery and corruption
The Bribery Act 2010, which came into force on 1 July 2011, provides a framework to combat bribery in the public and private sectors. As Scotland’s prosecution service, COPFS receives reports from the police and other reporting agencies in relation to alleged offences of bribery and corruption. COPFS is committed to tackling corruption at all levels and in all sectors, to maintain the integrity and security of our institutions and financial markets. All bribery and corruption cases are dealt with by a specialist team of prosecutors, investigators and forensic accountants, who take a robust, effective and fair approach to the investigation and prosecution of these offences, in accordance with the Scottish Prosecution Code and other instructions issued by the Lord Advocate.
Memoranda of understanding
COPFS works in partnership with a range of other law enforcement and prosecution authorities. We are a party to two Memoranda of Understanding (MOU) which set out how we will cooperate with UK law enforcement and prosecution authorities in the area of bribery and corruption:
MOU between COPFS and the Serious Fraud Office (SFO):
The SFO is the authority responsible for dealing with serious cases of fraud, bribery and corruption in England, Wales and Northern Ireland. The MOU sets out how we will cooperate and share information with the SFO in relation to cases in which both organisations have an interest.
MOU between COPFS and the Crown Prosecution Service, Financial Conduct Authority, Her Majesty’s Revenue and Customs, Ministry of Defence Police, National Crime Agency, and Serious Fraud Office:
The purpose of this MOU is to ensure the UK fulfils its international obligations in terms of the various Conventions to which we are a signatory. It sets out how we will communicate and cooperate with other organisations in relation to foreign bribery cases.
- Memorandum of understanding between COPFS and the Crown Prosecution Service, Financial Conduct Authority, Her Majesty's Revenue and Customs, Ministry of Defence Police, National Crime Agency and Serious Fraud Office
Guidance for businesses on the Bribery Act 2010
Section 7 of the Bribery Act 2010 created a new offence of failure of a commercial organisation to prevent bribery. Section 9 of the 2010 Act provides that the Secretary of State must publish guidance about procedures that commercial organisations can put in place to prevent persons associated with them from committing an offence under Section 7. This guidance, which applies to the UK as a whole, is produced by the Ministry of Justice and is published on their website.
Scotland’s self-report initiative – guidance for businesses
On 1 July 2011, to mark the commencement of the 2010 Act and to highlight the Crown’s commitment to encouraging good corporate governance and to creating a corporate culture in which bribery is not hidden, the then Lord Advocate approved an initiative for businesses to ‘self-report’ bribery offences. The initiative must be reviewed and approved each year by the Lord Advocate and has recently been extended until 30 June 2021.
Under this initiative, businesses which discover bribery or corruption within their own organisation may make a report to COPFS, with a view to consideration being given by the Crown to refraining from prosecution and instead making a referral to the Civil Recovery Unit for civil settlement. The Civil Recovery Unit is independent of COPFS and acts on behalf of Scottish Ministers.
COPFS publishes guidance to businesses on the approach that we take to cases that are ‘self-reported’ under this initiative. The guidance sets out the requirements for making a self-report, the factors that COPFS will take into account when deciding if a case is suitable for referral to the Civil Recovery Unit, the conditions attached to such referrals, and other practical information about the process.
It should be noted that the system of Deferred Prosecution Agreements that exists elsewhere in the UK does not operate in Scotland.
Media releases and information – prosecutions
Glasgow-based Weir Group Plc was fined £3 million and made subject of a confiscation order for £13.9 million under Proceeds of Crime legislation at the High Court in Edinburgh on the 15 December 2010.
The engineering company had pled guilty to paying ‘kickbacks’ in return for contracts from Saddam Hussein’s government.The court heard that the company paid more than £3m in kickbacks through a Swiss bank account between September 2001 and April 2004, in contravention of UN sanctions against Iraq.The company had admitted facilitating the payment of kickbacks by paying a fee of more than £1.4 m to their agent, an Iraqi national, to the same Swiss bank account.The agent made the payments to the Iraqi government on behalf of Weir.The kickbacks were paid to the Iraqi Government from funds in the UN’s Oil for Food Programme, which should have been used for humanitarian purposes.
Four men were sentenced to a total of over 13 years and two months imprisonment at Edinburgh Sheriff Court on 18 June 2015 for corruption and bribery at Edinburgh City Council.
The corruption, in contravention of the Public Bodies Corrupt Practices Act 1889, involved the payment of bribes totalling over £42,000 and the provision of hospitality inducements worth over £30,000, between 2007 and 2010.
Two council employees, working within the Property Care Services department were imprisoned for a total 8 years and one month for their role in laundering £45,521 and two directors of Action Building Contracts (ABC) Ltd were imprisoned for a total of five years and one month for defrauding the Council of a total of £68,909.51.
The co-directors of ABC Ltd were also disqualified from being company directors for five years.
The Council officials were bribed with cash payments and hospitality in exchange for allocating building maintenance and repair contracts to ABC Ltd. The fraud element of the case centred on the contractors’ practice of falsely inflating their invoices to the Council in order to cover the costs of the bribes.
Subsequent proceedings under Proceeds of Crime legislation resulted in the directors of ABC Ltd being made subject of confiscation orders totalling over £266,000 on 4 April 2017.
A 62 year-old woman was sentenced to six years imprisonment at the High Court in Edinburgh on 19 April 2018 for an offence under section 2 of the Bribery Act 2010 after being found guilty of agreeing to receive a financial advantage, intending that her function as a juror would be improperly performed.
The woman served on a jury in a drug trafficking and money laundering trial which returned a not proven verdict in April 2016 following three days of deliberation.
A police investigation was instructed after information was passed to Crown Office staff regarding an alleged bribe to a juror.Police then used covert audio surveillance to capture recordings of her talking with a family member at her Glasgow home about the allegations against her.
The court heard that the woman was paid nearly £3,000 in four instalments into her bank account between April and June 2016. Prosecutors linked the bank payments to the charge against her.
Media releases and information – civil settlements
Civil settlements are agreed by the Civil Recovery Unit on behalf of Scottish Ministers. The Joint Minutes of Agreement are a matter of public record and are published by Registers of Scotland in the Books of Council and Session.
The Civil Recovery Unit recovered £5.6 million under Proceeds of Crime legislation on 23 November 2012 after an Aberdeen drilling company accepted that it had benefited from unlawful conduct.
Abbot Group Limited (“Abbot”) was the first company to enter into a civil settlement under the self-reporting initiative since it was introduced in 2011.
Abbot admitted that it had benefited from corrupt payments made in connection with a contract entered into by one of its overseas subsidiaries and an overseas oil and gas company.
The contract was entered into in 2006 and the payments were made in 2007. The sum paid by Abbot represents the profit made by the company under the contract.
The corrupt payments were brought to light in May 2011 following enquiries by an overseas tax authority which resulted in an investigation by a firm of solicitors and a firm of accountants instructed by Abbot itself.
Abbot reported the results of the investigation to the Crown Office and Procurator Fiscal Service in July 2012 under the self-reporting initiative.
The Civil Recovery Unit recovered £172,200 under Proceeds of Crime legislation on 17 December 2014, after a Scottish company accepted that it had benefited from unlawful conduct.
International Tubular Services Limited (ITS), which is based in Aberdeen and supports activities for petroleum and natural gas extraction, admitted that it had benefited from the corrupt payment of $17,000 made by a former Kazakhstan-based employee in 2012, to secure additional contractual work from a customer in Kazakhstan.
The bribery and corruption was discovered when the company was being sold. Parker Drilling Company, which acquired ITS, took steps to implement comprehensive anti-bribery policies and training to ensure no further unlawful conduct.
ITS reported its discovery of the corrupt payment to the Crown Office and Procurator Fiscal Service in November 2013 under the self-reporting initiative.
The recovery represents the total profit made under the corrupt contract in Kazakhstan.
The Civil Recovery Unit recovered £212,800 on 25 September 2015 under an agreed civil settlement with a Glenrothes based company which accepted that it had benefited from unlawful conduct by a third party.
In June 2015, solicitors acting on behalf of Brand-Rex Ltd, a developer of cabling solutions for network infrastructure and industrial applications, contacted the Crown Office to disclose an instance of failing to prevent bribery by a third party associated with the company.
Between 2008 and 2012 Brand- Rex operated an incentive scheme known as “Brand Breaks” for UK distributors and installers. An independent installer of Brand-Rex products offered his company’s tickets for holidays abroad to an employee of one of his customers.
The individual who ultimately received the tickets was in a position to influence decisions as to which company they purchased cabling from. Personnel from this company and individuals connected to them used these tickets for foreign holidays in 2012 and 2013.
Brand-Rex became aware of this issue through an internal review and launched an extensive investigation conducted by external solicitors and forensic accountants. As a consequences of the investigation, Brand Rex made a self-report to Crown Office and accepted that they failed to prevent this when they should have done, accepting responsibility for a contravention of Section 7 of the Bribery Act 2010.
The value of the settlement reflected the benefit that the company derived from the unlawful conduct.
The Civil Recovery Unit recovered £2.2 million on 29 March 2016 under an agreed civil settlement with a Glasgow-based company which accepted that it had obtained business through unlawful conduct.
The company, which has a number of subsidiaries, specialises in freight and logistics. In 2012, the company became aware of potentially dishonest activities in relation to two freight forwarding contracts entered into by a subsidiary. The company initiated an investigation, which revealed there had been breaches of the terms of the Bribery Act 2010.
The first contract related to an agreement between an employee of the company, and the employee of a customer company. An account was used as a means for unauthorised personal expenses amounting to £475,000 to be incurred by the customer’s employee between 2007 and 213. This was funded by the dishonest inflation of invoices provided to the customer.
During the investigation into the above contract, separate bribery offences in relation to a second customer were discovered.
A profit sharing arrangement with a director of the customer company had been operated, where the profit achieved on services provided to the customer was split, in return for orders continuing to be placed with the company. This occurred over a number of years, with the last instance being in September 2013.
As a consequence of the investigation, the company voluntarily made a self-report to the Crown Office and accepted that they failed in their responsibility to prevent this happening, similarly accepting responsibility for a contravention of Sections 1 and 7 of the Bribery Act 2010. The settlement reflected the value of the benefit derived by the company from the unlawful conduct.
WGPSN admitted one of its subsidiaries, PSNA Limited, had benefitted from payments made to Unaoil to secure contracts in Kazakhstan. WGPSN’s ultimate holding company is John Wood Group PLC (Wood).
The payments to Unaoil were made in connection with three contract tenders, two of which were successful, to provide services for the operation and maintenance of onshore and offshore oil and gas, chemical and petrochemical facilities in Kazakhstan.
The successful contracts were entered into in 2008 and 2010 by a joint venture in which PSNA Limited held an interest. Between 2012 and August 2015, a total of 1,358 million Kazakhstan Tenge (then approximately US$8.74m), was paid by the joint venture to Unaoil but there was limited evidence of legitimate services having been provided.
The contracts were entered into before the PSN business was acquired by Wood and the potential misconduct came to light in March 2016, when media reported on widespread corruption by oil and gas consultants Unaoil. The reports said Unaoil had worked with WGPSN in Kazakhstan.
Wood conducted an internal investigation and, in May 2017, the results of the investigation were submitted to the Crown Office and Procurator Fiscal Service (COPFS). WGPSN went on to submit a formal report under the self-reporting initiative in September 2019. After consideration, COPFS referred the case to the Civil Recovery Unit for investigation. Wood and WGPSN fully co-operated with the Civil Recovery Unit's investigation.
WGPSN has now agreed to pay £6,465,564, which represents the dividends and retained profits from the two contracts.
Wood and WGSPN have taken steps to develop and improve its policies and training to try and prevent similar events taking place in the future.