Eastbourne based printing company Smith and Ouzman Limited was ordered to pay a fine totalling £2.2million in a sentencing hearing at Southwark Crown Court on 8 January 2016. The penalty consisted of a £1,316,799 fine, £881,158 confiscation order and £25,000 in costs.
Background
The Serious Fraud Office (SFO) began their investigation into Smith and Ouzman in October 2010. It was discovered that the company had made £395,074 in corrupt payments to public officials for business contracts in Kenya and Mauritania.
Christopher and Nicholas Smith, father and son, and employees of the company were convicted on 22 December 2014 under the Prevention of Corruption Act 1906 (the offences pre dated the Bribery Act 2010). Both men were sentenced to imprisonment for their role in the corruption.
Scale and impact of the fine
£2.2million is by no means the largest fine handed down for bribery offences. The significance lies in the fatal affects the fine has on the one-time well respected SME Smith and Ouzman. The majority of the fine may be paid in instalments over a period of five years however the confiscation order must be paid within 28 days. This kind of time restraint would place cash flow pressure on even the most financially prudent SME.
The damage this scandal has caused to Smith and Ouzman's reputation cuts straight to the heart of the business. The family run company has been in the printing trade for over a century and was well respected in the local and wider community specialising in security documents such as ballot papers and education certificates. A portion of the corrupt payments were made to members of Kenya's Interim Independent Electoral Commission (IIEC) which is an independent body ironically billed as a critical pillar in the overall infrastructure of Kenya's democratic elections.
The case was well documented by the Kenyan press which was perhaps in part due to the peculiar fact that Smith and Ouzman called the bribes "chicken". The Kenyan press made sure that "chickengate" entered into Kenya's hall of shame alongside Goldenberg and Anglo Leasing.
Why is this case important?
This case serves as an important reminder that SMEs are not untouchable by the SFO (England) and the Crown Office (COPFS Scotland) who have clear intentions to cut out corruption at all levels of business and not just in domestic affairs but also in overseas relationships. Considering the time and resources the UK government has invested in the fight against corruption in Kenya it is understandable that the SFO initiated this cross-border investigation. Smith and Ouzman's actions undermined the UK government and the Kenyan democratic process was dealt a significant blow.
How can I protect my business?
Some will argue it is simply impossible to do business without paying bribes; however bribery is not a victimless crime, and SMEs need to be acutely aware of the risks and adopt strategies to stay safe. Having a comprehensive compliance programme in place is key to this, along with providing staff training on the Bribery Act 2010 and fully briefing and monitoring staff members involved in international relations particularly with 'high risk' countries.
MacRoberts advises on all aspects of compliance and provides pro-active and re-active advice and assistance in relation to the Bribery Act 2010. For further information, please contact Valerie Surgenor or David Flint.
Disclaimer
The material contained in this article is of the nature of general comment only and does not give advice on any particular matter. Recipients should not act on the basis of the information in this e-update without taking appropriate professional advice upon their own particular circumstances.
