Qanawu Gabby (updated 7pm Sept 29)
Plenty of talk within the circles of the New Patriotic Party about
factionalism within the main opposition party. There are the few who
wish to believe that there are no camps in the NPP and the many who
admit there are camps. More worrying for party analysts is the growing
worry among the rank and file and sympathisers that factionalism could
see once again defeat snapped from the jaws of the National Democratic
Congress by the NPP.
But, if those involved in the competition-driven NPP factionalism mean
well for the party then the NPP has very little to worry about.
Polling station officers’ elections in first week of October;
constituency and regional officers’ contests follow in October and
November, respectively. Once national officers are chosen in December,
the stage is set for the presidential candidate to be chosen,
preferably in the first half of 2010. This leaves NPP until the end of
2010 to sort out all major differences, bond together behind the
nominated leaders and set clear guidelines and mechanisms to ensure a
harmonious parliamentary primaries in 2011/12.
But, the potential for deep-wounding factionalism appears more
apparent in the ruling party than the NPP. I made this point before
September (see maiden edition of The Thunder) and a couple of articles
recently support this view. First of all, power has its obvious way of
making competition for positions seem like a one-off race for limited
accommodation in heaven. Secondly, there are high voltage live fault
lines in the NDC that are likely to experience a power surge in 2012.
Former President Jerry John Rawlings has already given notice that
President John Mills and Vice John Mahama are presiding over borrowed
time, with a grace period shorter than hoped. In the eyes of the NDC
founder and some notable players, President Mills is fast losing his
credit worthiness. President Rawlings can be expected to seriously
consider sponsoring a candidate in 2012 against President Mills. The
former President can be inspired by his own estimation of the support
he enjoys among the grassroots of the party and he has cleverly
crafted his outbursts with the kind of populism that resonates with
the foot-soldiers of the party.
Yet, the NDC founder is likely to face a dilemma similar to what he
faced in 2006. He did not see Prof Mills then as necessarily the best
man to lead the NDC. But President Rawlings was checked by sheer
ground reality: Prof Mills had ridden on the popularity horse of
President Rawlings to have become mightily popular and well-marketed;
to attempt to mount a public challenge against him could seriously
compromise your own hallowed standing in the party you created. So,
Rawlings obediently dropped his two hands in his damerifa.
On the face of it, it seems even more difficult now to mount any
credible challenge against Mills, surely? But, there are strong hints
that Rawlings may be joining up with the man who came second to Mills
in the 2006 flagbearership race to mount an all-out war to get Mills
out. In his hard-hitting article in the September 18 and Wednesday 23
September, 2009 editions of the Daily Graphic, Ekwow Spio Garbrah
spoke boldly as if to say he has pitched camp with Rawlings. Spio
accuses the President being too slow and putting the party's fortunes
in 2012 at risk barely 9 months after taking over. Like Rawlings'
criticisms of Mills, Spio crafted his piece to appeal to the ordinary
members of the party, who are still queuing up for their modest ration
of the better Ghana. They are also crying out for some Mabeys (free
cash), if not jobs.
His warning that leading NDC members would not sit by and watch Mills
return the NDC into opposition cannot be ignored.
“Should leading NDC members stay quietly on the sidelines even if we
can see that if matters continue as they are [NDC] would lose power in
2012? Are we the kind of passengers who sit passively in a bus until
we die in an accident even when we realise that the bus is not being
driven well?” he says. Spio concludes that Mills is driving the NDC
juggernaut into an electoral accident in 2012.
Spio has not been able to come to terms with Mills vindictiveness
against him as much as Mills has never come to terms with what he sees
as Spio's betrayal on the issue of Mills' health. If Spio cannot
convince coach Mills to select him then he's going straight to the
party's shareholders to convince them to change the coach for 2012 and
hopefully make him the coach.
But, should Rawlings and Spio team up to contest Mills, that would be
an all-out war. The NDC should do all that it can to avoid that. Could
the party recover from that kind of intra-political brawl in time to
face the NPP in 2012? I doubt it.
It is not that Rawlings and Spio would win such a fight. Highly
unlikely. Even if Rawlings and Spio are really serious about meeting
Mills head to head together Mills is likely to triumph because the
sensible people in the party would want to stick to driver Mills, even
if he's accident prone. However, Mills would only refuse to run and
use his health as an excuse if his popularity were to dip so low even
beneath the radar of self-deceit. Performing anywhere near fair is
enough to get him to believe he has done mightily well and can do more
and so continue, regardless of any objective advice he's likely to
get.
Again, waiting in the wings is Vice President John Mahama. John is
cleverly building his support base and, one can expect, his war chest,
as well. But, only as a standby strategy. He's not one to rock the
boat so long as the leakage may be deceptively minor.
There is already talk of the Ahwois preparing their brother Kwesi
Ahwoi as a probable candidate. His work as Minister of Agriculture,
with the biggest budget increase this year, allows him to go down on
the ground and do some real work for nation, party and ambition. But,
the Ahwois know too well that their best bet is to keep Mills well and
on for a second term. And, even if it means keeping Mills' popularity
on a life-support machine they would do so to make him run and
therefore maintain their power base. If Spio was in any doubt about
that then Ato Ahwoi's reply should have done some excellent valeting
on Spio's mind.
John Mahama will only run should his boss not. Mills would not have
done enough in 2012 to be contend with his legacy and is likely to be
persuaded by post-2012 oil prospects to want to have another go at a
better Ghana.
The best way the NDC can patch up internal cracks and create a
semblance of party unity is to maintain Mills. President Mills running
effectively stops any serious challenge or acrimonious succession
contest among the three or so power camps within the party. Unlike the
NPP, the NDC would have less than 12 months to patch up before the
2012 general elections.
One of the biggest Hollywood movie hits in 2008 was the ‘Curious Case
of Benjamin Button’. It was about a person who was born already as an
old man in his 80s and grew backward, getting younger until his aged
wife had to carry him as a baby in her arms ‘til death did them part.
For those who think the better Ghana is just a bitter Ghana and have
soon given up hope, they should just take a look at President John
Evans Atta Mills.
He is looking a lot healthier than he did just 9 months ago. He is
getting better. The better Ghana has started with him and we all hope
it may soon trickle down to the rest of Ghanaians.
For those who think President Mills is just a one term head of state,
they should begin to revise their notes. Well, it is said that he
managed to convince John Mahama, who was having daydreams about moving
to South Africa, that the younger and healthier looking man should
join the Mills 2008 ticket and that Mills would pass the baton on to
him after just one term. It is also said that John Mahama then
convinced Hannah Tetteh to retire from her early retirement from
active politics to join him and maybe the two of them could form a
north-south, man-woman dream ticket for 2012.
For those who feared the health of candidate Mills Not only is
President Mills looking every bit a President in good shape, what
candidates promise and what presidents think once they get hit by the
power bug are as compatible as power and hunger. To reiterate, beyond
that President Mills is likely to find out at the end of his four-year
term that he has not delivered anything near what he promised.
The economic indicators and forecasts are not helpful to his wishful
legacy. It is predicted that at least 10 million Ghanaians will get
poorer in the next two years than they were in December 2008, with
inflation depleting their purchasing power. This is expected,
according to World Bank figures, to push half a million more Ghanaians
below the poverty line of $1.25 per day.
President Mills knows he can’t do much to turn the tide of economic
stagnation in four years. He needs more than what the IMF and World
Bank are offering yet he has signed up to the kind of conditionalities
that seriously limits his fiscal manoeuvrability. The IMF may not even
allow him to raise oil bonds next year on the capital market, since
that would be considered non-concessionary. There are even
nonconcessionary issues today about moves by Ecobank and Stanchart to
raise money for the Tema Oil Refinery to pay off some of the debt owed
to Ghana Commercial Bank.
With no serious revenue from oil expected to trickle into state
coffers before 2013, President Mills is bound to feel another four
years should do the trick. The question is, would JJ and Spio share
that position enough not to upset Mills' position?
Tuesday, September 29, 2009
Monday, September 28, 2009
Will JJ and Spio battle Mills and John for 2012?
There is talk and more talk in Kumasi and elsewhere within circles of the New Patriotic Party about factionalism within the opposition party. There are the few who say there are no camps in the NPP and the many who admit there are camps. More worrying for party analysts is the growing worry among the rank and file and sympathisers that factionalism could see once again defeat snapped from the jaws of the National Democratic Congress by the NPP.
But, if those involved in the competition-driven factionalism mean well for the party then the NPP has very little to worry about. Poling station officers’ elections in first week of October; constituency and regional officers’ contests follow in October and November, respectively. Once national officers are chosen in December, the stage is set for the presidential candidate to be chosen in the first half of 2011. This leaves NPP until the end of 2011 to sort out all major differences and set clear guidelines and mechanisms to ensure a harmonious parliamentary primaries in 2011/12.
But, the potential for deep-wounding factionalism appears more apparent in the ruling party than the NPP. First of all, power has its obvious way of making competition for positions seem like a one-off race for limited accommodation in heaven. Secondly, there are high voltage live fault lines in the NDC that are likely to experience a power surge in 2012.
Former President Jerry Rawlings has already given notice that President Mills is presiding over borrowed time. President Rawlings can be expected to seriously consider sponsoring a candidate in 2012 against President Mills. The former President can be inspired by his own estimation of the support he enjoys among the grassroots of the party.
But, the NDC founder is likely to face a dilemma similar to what he faced in 2006. He did not see Prof Mills at that time as the best man to lead the NDC. But President Rawlings was checked by sheer ground reality: Prof Mills was mightily popular and well-marketed; to attempt to mount a public challenge against him could seriously compromise your own hallowed standing in the party you created.
For 2012, surely, Rawlings could only seriously think about sponsoring? But, there are strong hints that Rawlings may be joining up with the man who came second to Mills in the 2006 flagbearership race to mount an all-out war to get Mills out. In a hardhitting article in the Friday, September 18, 2009 edition of the Daily Graphic, Ekkwow Spio Garbrah spoke boldly as if to say he has pitched camp with Rawlings. Spio accuses the President being too slow and putting the party's fortunes in 2012 at risk barely 9 months after taking over. Like Rawlings' criticisms of Mills, Spio crafted his piece to appeal to the ordinary members of the party, who are still queuing up for their modest ration of the better Ghana.
His warning that leading NDC members would not sit by and watch Mills return the NDC cannot be ignored.
“Should leading NDC members stay quietly on the sidelines even if we can see that if matters continue as they are [NDC] would lose power in 2012? Are we the kind of passengers who sit passively in a bus until we die in an accident even when we realise that the bus is not being driven well?” he says, concluding that Mills is driving the NDFC juggernaut into an electoral accident in 2012.
But, should Rawlings and Spio team up to contest Mills, there would be an all-out war. And, could the party recover from that in time to face the NPP? I doubt it. Even if Rawlings and Spio are really serious about meeting Mills head to head together Mills is likely to triumph. But Mills would only refuse to run and use his health as an excuse if his popularity were to dip so low even beneath the radar of self-deceit. Performing anywhere near fair is enough to get him to believe he has done mightily well and can do more and so continue, regardless of any objective advice from any expert.
Again, waiting in the wings is Vice President John Mahama. There is already talk of the Ahwois preparing their brother Kwesi Ahwoi as a probable candidate. His work as Minister of Agriculture, with the biggest budget increase this year, allows him to go down on the ground and do some real work for nation, party and ambition. But, the Ahwois know too well that their best bet is to keep Mills well and on for a second term.
John Mahama will only run should his boss not.
The best way the NDC can patch up internal cracks and create a semblance of party unity is to maintain Mills. President Mills running effectively stops any serious challenge or acrimonious succession contest among the three or so power camps within the party. Unlike the NPP, the NDC would have less than 12 months to patch up before the 2012 general elections.
One of the biggest Hollywood movie hits in 2008 was the ‘Curious Case of Benjamin Button’. It was about a person who was born already as an old man in his 80s and grew backward, getting younger until his aged wife had to carry him as a baby in her arms ‘til death did them part.
For those who think the better Ghana is just a bitter Ghana and have soon given up hope, they should just take a look at President John Evans Atta Mills.
He is looking a lot healthier than he did just 9 months ago. He is getting better. The better Ghana has started with him and we all hope it may soon trickle down to the rest of Ghanaians.
For those who think President Mills is just a one term head of state, they should begin to revise their notes. Well, it is said that he managed to convince John Mahama, who was having daydreams about moving to South Africa, that the younger and healthier looking man should join the Mills 2008 ticket and that Mills would pass the baton on to him after just one term. It is also said that John Mahama then convinced Hannah Tetteh to retire from her early retirement from active politics to join him and maybe the two of them could form a north-south, man-woman dream ticket for 2012.
For those who feared the health of candidate Mills Not only is President Mills looking every bit a President in good shape, what candidates promise and what presidents think once they get hit by the power bug are as compatible as power and hunger. Beyond that President Mills is likely to find out at the end of his four-year term that he has not delivered anything near what he promised.
The economic indicators and forecasts are not helpful to his wishful legacy. It is predicted that at least 10 million Ghanaians will get poorer in the next two years than they were in December 2008, with inflation depleting their purchasing power. This is expected, according to World Bank figures, to push half a million more Ghanaians below the poverty line of $1.25 per day.
President Mills knows he can’t do much to turn the tide of economic stagnation in four years. He needs more than what the IMF and World Bank are offering yet he has signed up to the kind of conditionalities that seriously limits his fiscal manoeuvrability. The IMF may not even allow him to raise oil bonds next year on the capital market, since that would be considered non-concessionary. There are even nonconcessionary issues today about moves by Ecobank and Stanchart to raise money for the Tema Oil Refinery to pay off some of the debt owed to Ghana Commercial Bank.
With no serious revenue from oil expected to trickle into state coffers before 2013, President Mills is bound to feel another four years should do the trick.
But, if those involved in the competition-driven factionalism mean well for the party then the NPP has very little to worry about. Poling station officers’ elections in first week of October; constituency and regional officers’ contests follow in October and November, respectively. Once national officers are chosen in December, the stage is set for the presidential candidate to be chosen in the first half of 2011. This leaves NPP until the end of 2011 to sort out all major differences and set clear guidelines and mechanisms to ensure a harmonious parliamentary primaries in 2011/12.
But, the potential for deep-wounding factionalism appears more apparent in the ruling party than the NPP. First of all, power has its obvious way of making competition for positions seem like a one-off race for limited accommodation in heaven. Secondly, there are high voltage live fault lines in the NDC that are likely to experience a power surge in 2012.
Former President Jerry Rawlings has already given notice that President Mills is presiding over borrowed time. President Rawlings can be expected to seriously consider sponsoring a candidate in 2012 against President Mills. The former President can be inspired by his own estimation of the support he enjoys among the grassroots of the party.
But, the NDC founder is likely to face a dilemma similar to what he faced in 2006. He did not see Prof Mills at that time as the best man to lead the NDC. But President Rawlings was checked by sheer ground reality: Prof Mills was mightily popular and well-marketed; to attempt to mount a public challenge against him could seriously compromise your own hallowed standing in the party you created.
For 2012, surely, Rawlings could only seriously think about sponsoring? But, there are strong hints that Rawlings may be joining up with the man who came second to Mills in the 2006 flagbearership race to mount an all-out war to get Mills out. In a hardhitting article in the Friday, September 18, 2009 edition of the Daily Graphic, Ekkwow Spio Garbrah spoke boldly as if to say he has pitched camp with Rawlings. Spio accuses the President being too slow and putting the party's fortunes in 2012 at risk barely 9 months after taking over. Like Rawlings' criticisms of Mills, Spio crafted his piece to appeal to the ordinary members of the party, who are still queuing up for their modest ration of the better Ghana.
His warning that leading NDC members would not sit by and watch Mills return the NDC cannot be ignored.
“Should leading NDC members stay quietly on the sidelines even if we can see that if matters continue as they are [NDC] would lose power in 2012? Are we the kind of passengers who sit passively in a bus until we die in an accident even when we realise that the bus is not being driven well?” he says, concluding that Mills is driving the NDFC juggernaut into an electoral accident in 2012.
But, should Rawlings and Spio team up to contest Mills, there would be an all-out war. And, could the party recover from that in time to face the NPP? I doubt it. Even if Rawlings and Spio are really serious about meeting Mills head to head together Mills is likely to triumph. But Mills would only refuse to run and use his health as an excuse if his popularity were to dip so low even beneath the radar of self-deceit. Performing anywhere near fair is enough to get him to believe he has done mightily well and can do more and so continue, regardless of any objective advice from any expert.
Again, waiting in the wings is Vice President John Mahama. There is already talk of the Ahwois preparing their brother Kwesi Ahwoi as a probable candidate. His work as Minister of Agriculture, with the biggest budget increase this year, allows him to go down on the ground and do some real work for nation, party and ambition. But, the Ahwois know too well that their best bet is to keep Mills well and on for a second term.
John Mahama will only run should his boss not.
The best way the NDC can patch up internal cracks and create a semblance of party unity is to maintain Mills. President Mills running effectively stops any serious challenge or acrimonious succession contest among the three or so power camps within the party. Unlike the NPP, the NDC would have less than 12 months to patch up before the 2012 general elections.
One of the biggest Hollywood movie hits in 2008 was the ‘Curious Case of Benjamin Button’. It was about a person who was born already as an old man in his 80s and grew backward, getting younger until his aged wife had to carry him as a baby in her arms ‘til death did them part.
For those who think the better Ghana is just a bitter Ghana and have soon given up hope, they should just take a look at President John Evans Atta Mills.
He is looking a lot healthier than he did just 9 months ago. He is getting better. The better Ghana has started with him and we all hope it may soon trickle down to the rest of Ghanaians.
For those who think President Mills is just a one term head of state, they should begin to revise their notes. Well, it is said that he managed to convince John Mahama, who was having daydreams about moving to South Africa, that the younger and healthier looking man should join the Mills 2008 ticket and that Mills would pass the baton on to him after just one term. It is also said that John Mahama then convinced Hannah Tetteh to retire from her early retirement from active politics to join him and maybe the two of them could form a north-south, man-woman dream ticket for 2012.
For those who feared the health of candidate Mills Not only is President Mills looking every bit a President in good shape, what candidates promise and what presidents think once they get hit by the power bug are as compatible as power and hunger. Beyond that President Mills is likely to find out at the end of his four-year term that he has not delivered anything near what he promised.
The economic indicators and forecasts are not helpful to his wishful legacy. It is predicted that at least 10 million Ghanaians will get poorer in the next two years than they were in December 2008, with inflation depleting their purchasing power. This is expected, according to World Bank figures, to push half a million more Ghanaians below the poverty line of $1.25 per day.
President Mills knows he can’t do much to turn the tide of economic stagnation in four years. He needs more than what the IMF and World Bank are offering yet he has signed up to the kind of conditionalities that seriously limits his fiscal manoeuvrability. The IMF may not even allow him to raise oil bonds next year on the capital market, since that would be considered non-concessionary. There are even nonconcessionary issues today about moves by Ecobank and Stanchart to raise money for the Tema Oil Refinery to pay off some of the debt owed to Ghana Commercial Bank.
With no serious revenue from oil expected to trickle into state coffers before 2013, President Mills is bound to feel another four years should do the trick.
What the U.S. wants from Ghana
Not since the inauguration of Nelson Mandela as president of a free South Africa has the election of a national leader generated so much global interest and excitement as that of Barack Obama last November. It was therefore predictable that the announcement of President Obama’s trip to Ghana from 10-11 July would attract extensive media coverage as the first state visit by the first ‘black’ president of the United States to any African state.
While cool heads maintain it is a result of Ghana’s enviable role as a beacon of hope in the continent, proving that multiparty democracy can work in Africa, others have added a partisan spin to the visit, alleging it is because President Mills has shown a greater commitment to fighting the drug barons, which has led to cocaine being in short supply.
The US government itself states the purpose of the visit is: 'Strengthening the US relationship with one of our most trusted partners in sub-Saharan Africa, and to highlight the critical role that sound governance and civil society play in promoting lasting development.'
But who is talking about what is in it for America?
US-GHANA RELATIONS
In the past Ghana has enjoyed a strong relationship with the US ever since the first American Peace Corps volunteers came to Ghana in 1961, the same year that President John F. Kennedy created the US Agency for International Development (USAID) to assist the developing world (aside from a blip in the mid-1980s during the Soussoudis spy affair). Indeed, the setting up of the US Department of State's Bureau of African Affairs in 1958 was largely informed by Ghana becoming the first black African nation to gain independence the previous year. But for the next three decades, Africa was little more than a geo-political lebensraum for proxy campaigns of the Cold War. It was not until March 1978 that sub-Saharan Africa witnessed its first ever state visit by an American president, Jimmy Carter, who first met President Olusegun Obasanjo in Lagos, Nigeria, and then President William Tolbert in Monrovia, Liberia, a country the United States established diplomatic relations with 147 years ago for obvious reasons.
Bill Clinton’s visit to sub-Saharan Africa in March 1998 was the first by a US president in 20 years. His successor, President George W. Bush, visited the continent twice in eight years and it was even said that Africa was the place where he felt most comfortable and welcome. He returned this by pushing for the implementation of the African Growth and Opportunity Act (AGOA), which was passed just a year before his predecessor handed over to him. This was followed by initiatives of his own for Africa that earned him respect in the eyes of millions of Africans, including the President's Emergency Plan for AIDS Relief (PEPFAR) in 2003 and the Millennium Challenge Corporation, which has thirty-two African countries on its development assistance radar. Under President Bush’s watch American assistance to Africa quadrupled since 2001.
THE SIGNIFICANCE OF JULY’S VISIT
Against this backdrop, July’s US state visit is significant for various reasons. It will be President Obama’s first to Africa – a continent that has not only personal significance for Obama the man, but growing political significance for Obama the president – and one that has significant expectations of the first black president to sit in the Oval Office.
For Ghana, Obama will be the third successive American president to have visited in the space of 11 years, confirming the significant position Ghana has assumed as a role model for the continent. That Obama’s first visit is to one of Africa’s unquestioned success stories rather than one of its examples of stalled development or conflict zones, will draw attention to the fact that there is proof right here in Africa that freedom can serve as the means to development and multi-party democracy can work. Ghana’s extraordinarily consistent economic growth pattern for the past seven years (registering a GDP of 7.3 per cent in 2008) offers the best evidential advertisement for the new development paradigm, which seeks to show that not only can freedom and development go hand in hand, but that the former provides a helping hand to the latter.
WHY GHANA?
But we must not ignore America’s interest. After all, whatever his connection to the African continent, Obama is president of America – and acts in the interest of its people at home above all else. So what can Americans hope to gain from President Obama’s trip to Ghana?
First, this trip offers a very compelling platform for America to reaffirm to a significant mass of the world the triumph of its values of liberal democracy, rule of law and freedom. With the US’s failure to impose these in the Middle East, and China’s irksome demonstration that economic progress can be achieved without them, Ghana helps bolster the US’s argument about the centrality of these values to the development process.
But the decision to embark on this trip was also made on the basis of some tangible and concrete opportunities for America in the region.
Top on the list is the United States’ military and energy security agenda. Before the 9/11 bombing in 2001, conventional thinking in Washington perceived no vital strategic interests for the US in sub-Saharan Africa. But this has changed. Today we can see a significant shift away from America’s traditional geopolitical calculations regarding oil production and supply. The US’s National Intelligence Council (NIC) estimates that by 2015, 25 per cent of American oil imports will come from West Africa, compared to 16 per cent today – an estimate even considered as too conservative in some quarters. Already West Africa supplies as much oil to the US as Saudi Arabia. Furthermore, our oil is light and sweet, making it easier and cheaper to refine than Persian oil. Plus its offshore location reduces transportation costs and minimises risk of political violence and terrorist attacks.
This shift in global energy patterns to the Gulf of Guinea has led to a significant re-evaluation of foreign policy focus and global alliances, resulting in a multi-layered engagement with countries such as Ghana, that encompasses military and energy security, and development aid. This trip is thus at the heart of Washington’s strategy of working with its regional allies in West Africa to develop relationships that will secure its energy security in the long term.
The United States, in typical Dick Cheney oilthink, sees the Gulf of Guinea as offering the opportunity to break with the old politics which saw the US at the mercy of the geostrategic pressure of unstable or unfriendly oil-producing states in the ‘old’ Gulf (Persian Gulf) and Venezuela.
The way forward is a pro-active policy to build a new Gulf of energy security and prosperity in a part of the world that is relatively receptive to American presence. With significant discoveries being made in the Gulf of Guinea oil basin, off the coast of Ghana, Equatorial Guinea, Congo and Cote d’Ivoire, according to the Energy Information Administration of the US Department of Energy, the United States will be importing in the year 2020 over 770 million barrels of African oil a year. And Ghana with its stability, notable responsiveness to America, deepening multiparty democracy and promising investment climate is seen as the perfect epicentre for the growth and fulfilment of this interest. In the eyes of America, geography, geology and ideology all favour Ghana as the gem in the crown of this new policy.
WHAT ABOUT CHINA?
But the US is not alone in seeing Africa as a better bet to provide a secure source of energy. There is a new scramble for Africa’s raw materials, especially energy resources, brought on by China’s astonishing industrial growth and its deepening influence in the global economy. It is the second largest consumer of oil in the world behind the United States. Consistently high economic growth rates saw Asia’s formerly largest oil exporter switch to become a net importer of oil since 1993. The International Energy Agency projects China's net oil imports will jump from 3.5 million barrels per day in 2006 to 13.1 million barrels per day by 2030.
In 2006, 9 per cent of Africa’s oil exports went to China (with 60 per cent of Sudan’s oil export China-bound). The US received 33 per cent. Already, China has sped past Britain and France to become Africa’s second-highest trading partner behind the United States.
Though Angola, the second largest oil producer in sub-Saharan Africa, supplies the US with approximately twice as much oil as it does China, China has outpaced the United States in partnering Angola’s rapid development with its multi-billion dollar investment support in the country’s infrastructure. For example, in 2006, Sinopec, China’s state-owned energy company, bid US$2.2 billion for two deep-water blocks off the Angolan coast. Two years earlier, Beijing softened the ground with a US$2 billion package of loans and aid to Angola, which has Chinese companies building telecommunications infrastructure, roads, railways, bridges, buildings, schools and hospitals.
However, in 2007, Erica Strecker Downs of the Brookings Institute think tank made some headway in calming American anxiety over China and African oil. She wrote that contrary to public opinion, China's NOCs are not 'locking up' the lion's share of African oil as part of a centralised quest for energy. But while China, with a mere 3 per cent of its FDI in Africa and controlling under 2 per cent of oil reserves on the continent, may not be winning the race for oil exploration and production in Africa, there is no question that China is winning more and more of the oil supply produced in Africa.
If the US wants to out-muscle China in the 21st century scramble for Africa, then it will have to show more aggression in investing in the development of infrastructure on the continent, as China is doing. Even if American money comes with job for American companies, Africans are not likely to complain so long as it ends in the brick and mortar of the continent’s infrastructural development. Africans believe they are increasingly feeling more and more the positive might of Beijing in their quest for advancement. Chinese investment deserves a big part of the credit for Africa’s highest ever economic growth rate, 5.8 per cent in 2007. Furthermore, China has cancelled US$10 billion in bilateral debt owed to it by African countries.
Outside of Ghana’s oil exploration and production zone, the US and China’s involvement in Ghana’s development has been most obvious in two major infrastructural projects in the energy sector. The first, the West African Gas Pipeline (WAGP), is 59 per cent owned by Chevron, the US-based oil multinational company and Royal Dutch Shell. This US$700 million onshore-offshore pipeline will run 681 kilometres from the Western Niger Delta of Nigeria via Benin and Togo to Ghana, and was cooperatively underwritten by the World Bank in 2004. The bank, however, refused to underwrite the Bui Dam project designed to generate 400MW of electricity for Ghanaians. It took a 2006 visit to President Hu Jintao of China by President J A Kufuor to secure Chinese support for the dam’s construction (by Sino-Hydro) and funding (Exim Bank) at an estimated cost of US$600 million.
These two projects highlight the masterful diplomacy that the Mills’ administration will need to deploy in the coming years in order to secure optimal benefit for Ghana from its new oil-rich status.
HOW GHANA MUST UTILISE ITS NEW STRATEGIC IMPORTANCE
With the discovery of significant oil potential offshore, Ghana has not only new international importance – we also have cause for greater confidence and strength in our global interactions. The increased interest of both China and the United States in Ghana can add extraordinary oomph to Ghana’s development – but this can only happen if we become smarter, more strategic and more assertive in our dealings with these two powerful nations.
The Obama trip reinforces the extent of US strategic interest in the country. Ghana has become an object of international desire between the two super powers of the 21st century – America and China – and the Americans are in no mood to lose its ‘trusted partner’ to the Chinese.
The Americans know what they want from Ghana. But does Ghana know what it wants from America? The question is: Has the Ghanaian government taken a considered, sober decision on the price to be paid and the prize to be gained for being considered as the serene oasis at the heart of the ‘New Gulf’? President Obama came into office with the strategic objective of 'investing in a shared humanity' with regards to US policy in Africa, listing his three thematic policy areas of focus as:
i. To accelerate Africa's integration into the global economy
ii. To enhance the peace and security of African states
iii. To strengthen relationships with those governments, institutions and civil society organisations committed to deepening democracy, accountability and reducing poverty in Africa.
He may well be the president who can make a bold resourceful contribution to see the realisation of the dream of an African nation breaking though the stigma of underdevelopment to act as a trailblazer for the others. Ghana has the potential to serve as this model – but it will require a wholesale adoption of a new attitude of assertiveness based on a well-founded confidence in what we bring to the table, and a permanent shift from the outdated and counterproductive assumption amongst Ghanaians that our country is simply a geographical mass of humanitarian concerns or a charity case.
But has the mindset of the Ghanaian leadership gravitated towards this new reality?
GLOBAL ECONOMIC POSITIONING
As Ken Ofori-Atta of Databank stated at Chatham House recently, 'We have not seen such massive destruction of wealth in the history of modern civilisation and I might add also such rapid recreation of capital in the past year. Africa is truly astounded at how quickly the West can mobilise to save their companies when a fraction of those amounts could reinstate the impressive growth trajectory which Africa had achieved.' The rich economies are prepared to spend $2 trillion to rescue their financial infrastructure. For nearly a decade now, Africans have been demanding extra funding to the tune of $60 billion a year to accelerate its development – a mere three per cent of what is being pumped into the western financial systems today to maintain socio-corporate standards there.
The UN under-secretary general and executive secretary of the Economic Commission for Africa, Abdoulie Janneh, said the current economic downturn could cost Africa US$251 billion in 2009 and US$277 billion in 2010 in export earnings, despite earlier predictions that the continent would not be hard hit. So whatever is on offer to countries like Ghana by the IMF and World Bank only follows the old pattern of development assistance never matching what is taken out from Africa.
Unfortunately, once again, (a little over a year after Ghana issued its first sovereign bond on the international capital market) we have been forced by exogenous circumstances to make a u-turn to over-dependence on the Bretton Wood institutions for our development spending. And we are being told to adopt a kind of fiscal discipline which the developed world is also finding to be fundamentally contradictory to their programme for stimulating their economies today.
Much noise has been made both in Ghana and elsewhere about Ghana’s ‘extraordinarily huge’ 2008 budget deficit of 11.5 per cent of GDP. Indeed, the Ghanaian government has allowed it to serve as a roadblock in the way of maintaining, let alone increasing, the momentum of development Ghana has experienced in the last seven years. It is worth noting that in America the Congressional Budget Office estimates that the US budget deficit will reach US$1.85 trillion this year, 13.1 per cent of GDP. Furthermore, they project deficits averaging over US$1 trillion a year for the next 10 years, which will raise the US public debt-to-GDP ratio to over 80 per cent by 2019. Ghana’s total public debt stood at US$7,742.4 million in May 2009, representing a debt-to-GDP ratio of 49.2%. Both huge budget deficits were necessary responses to national crisis and imperatives. In Ghana’s case the energy crisis of 2007 and the urgency with which Ghana needs to invest in its infrastructure and respond to a rising cost of living contributed to our unusually high deficit.
In July 2005, when heads of the world’s leading industrialised countries (the G8) pledged to step up development aid by US$50 billion by 2010, with half of the increase going to Africa, African leaders hailed it as a significant high-gear shift in development aid from the developed world. Barely four years later, what we know today is that a lot more money can be found for productive investment to push millions of Africans out of poverty. US development assistance to Ghana in 2007 – about US$55 million – was nowhere near that befitting a nation carrying the kind of strategic weight that contemporary Pentagon thinking suggests.
In real terms it is little improvement on the 1994 assistance of US$38 million, plus US$16 million in food aid. President Bush contributed an extra US$547 million support from the Millennium Challenge Account. But this was given when America’s strategic flirtation with Ghana was purely based on its interests in Ghana as a geographical location for AFRICOM rather than the additional oil value it has today.
What has all this to do with Obama’s trip?
Negotiations are not held in a vacuum. A nation that sits around the table without prior knowledge and appreciation of its own strengths and weaknesses in its counterpart’s mind has provided gaping holes in its negotiation armoury and is bound to come out with a bad deal. A good deal depends on both an understanding of the cards in your hands and your opponent’s, and the skilful and strategic play of these cards. The first of these cards that the Ghanaian government must not fail to appreciate is the fact that Superpower America now sees West Africa as a zone of strategic importance – it is no longer a question of just us needing them, but they now also need us.
Our trump card is of course oil. But if we are to prevent ourselves being played by the US, we must deploy this to maximum benefit: Ultimately it is up to Africans to selfishly see our oil as means to provide energy security to others in exchange for support for more rapid African economic development.
In the words of US Congressman William Jefferson, 'The strategic question is which countries we depend on for this oil. The suggestion that comes out of all of these discussions is our best partners are in West Africa for many of the reasons I’ve mentioned: the commitment to democracy. Though there may be strivings and failings, nonetheless there is a commitment. West Africa is closer, making it easier to move product from there to here; the resources are, in most cases, not landlocked. Things usually work fairly well if you’re out in deep water.'
Since 2007, Washington has become more convinced that the Gulf of Guinea is an area of 'Vital Interest' and Ghana is in prime position to serve as its hub, a point reinforced by the seemingly smooth transition from one democratically elected government to another of a different party.
AFRICOM
Furthermore, the US is, understandably, bent on establishing a regional command for Africa, similar to US Forces Korea, with a homeport situated on the African continent to protect their interests. West Africa is its natural home, given the need to protect energy interests in the Gulf of Guinea. Liberia has offered but simply cannot match the kind of convenience available in Ghana. It can be a win-win situation.
AFRICOM can protect US investments in our region. But, those investments (regardless of our percentage share of ownership) are also fundamentally our investments – and thus the assistance in their protection will be a welcome boon. US military presence can also help improve the level of military professionalism of our already well-respected troops. It is interesting to note that in the six decades since World War II in which America has maintained a military presence in other sovereign nations, none of the host nations has suffered instability or military takeovers, as the presence of US troops helps entrench the subordination of soldiers to civil leadership. Moreover the presence of U.S. troops boosts social and economic activities in the host countries, too.
The loudest argument against Ghana hosting AFRICOM when the possibility first arose was that it would make us a target for anti-American terrorists. But a global examination of the number and location of American military bases overseas vis-à-vis the geographical targets of terrorist attacks, shows that this argument has far greater emotive value than evidential corroboration.
At the moment the Americans say they are happy to keep the US Africa Command headquarters in Germany, to coordinate all US military and security interests throughout the African continent. But any reasonable assessment must conclude that this can be nothing but a temporary address and arrangement. Ghana should welcome that it is thus the target of America’s desire – and we should make the most of this, using it for our own advantage. After all, the process has already started.
The US and Ghanaian militaries have cooperated in numerous joint training exercises, including the African Crisis Response Initiative, an international activity in which the US facilitates the development of an interoperable peacekeeping capacity among African nations. And the head of AFRICOM has already reaffirmed Washington’s commitment to assisting the Ghana Armed Forces 'to become more robust'.
There is also the African Contingency Operations Training and Assistance program. Beyond that, Ghana and the US have an active bilateral International Military Education and Training program.
In 2007, Kwesi Pratt Jnr, the managing editor of The Insight newspaper and the energy behind the pressure group Socialist Forum, warned Ghanaians against what he saw to be the looming danger of a US military base in Ghana. He cited, inter alia, the erection of the huge American Embassy complex in Cantonments as evidence of this. Meanwhile, in August 2007 Major-General Ward, who was later confirmed as AFRICOM’s first commander, visited Accra. He held discussions with President Kufuor on 'ways of strengthening military cooperation.' His high-powered secret meetings with the president, minister of defence and the chief of defence staff triggered huge speculation. Much was made of Maj Gen J B Danquah’s public statement about the visit when he said Maj Gen Ward had ‘done enough to resolve’ Ghana’s concerns about AFRICOM, adding, 'I have had the chance to hear [Ward] explain what is the reasoning behind the command, and it’s all about partnership.'
General T. Hobbins, head of the US Air Forces Europe, has held discussions with his counterparts here on the possibility of establishing 'lily pads', landing and rapid airlift facilities in otherwise deserted terrain in certain strategic sites in Africa. Tamale Airport has come up as one of the 'forward operating sites' targeted. That airport is said to have a runway capacity of accommodating massive US C-3 cargo planes and troop transports.
Ghana is also already the site of a US-European Command-funded Exercise Reception Facility that was established to facilitate troop deployments for exercises or crisis response within the region. The direct link to our oil is only too apparent: The Facility came out of Ghana's partnership with the United States on what is termed a Fuel Hub Initiative. It may sound like a mere gas station for the troops. But the choice of stable, imminently oil-rich Ghana as a Fuel Hub reflects a greater strategic interest in the country than as merely a filling station.
The Americans have not been shy in establishing a clear economic link alongside their military cooperation. Ghana is one of the few African nations, mainly those with oil, selected for the State Partnership Program to promote greater economic ties with US institutions, including the National Guard. Expanding this to deepen our cooperation with the Drugs Enforcement Agency is one other area that President Mills should focus attention on.
GHANA THE ‘NATURAL’ ALLY
This all points to the fact that the United States sees Ghana as having all the vital statistics and morphological features of a ‘natural’ ally. We have the oil reserves, we are in the stable centre of the ‘New Gulf’ and we have the military discipline and stable atmosphere to make us the perfect hosts for America’s first major military migration to our continent. America is strategically placed to maintain and deepen its stronger footing here, ensuring it rather than China becomes our dominant ally. As one analyst confirmed, Washington has no interest in seeing China’s presence in Africa extended to Ghana. The fact, however, is that China is already here and the recent dealings between the Mills administration and the ruling Chinese Communist Party means the US needs to act sooner rather than later.
Obama’s chief policy adviser assured Africans two months before the 2008 presidential race, 'Barack Obama understands Africa, and understands its importance to the United States. Today, in this new century, he understands that to strengthen our common security, we must invest in our common humanity and, in this way, restore American leadership in the world.' Now is the chance for him to seek and effect the real change that will finally show the world that Africans are capable of more than managing their own affairs – but, crucially, Ghana must take up the opportunity provided by the state visit and the US’s burgeoning strategic interest in us, to be the nation that demonstrates this.
While cool heads maintain it is a result of Ghana’s enviable role as a beacon of hope in the continent, proving that multiparty democracy can work in Africa, others have added a partisan spin to the visit, alleging it is because President Mills has shown a greater commitment to fighting the drug barons, which has led to cocaine being in short supply.
The US government itself states the purpose of the visit is: 'Strengthening the US relationship with one of our most trusted partners in sub-Saharan Africa, and to highlight the critical role that sound governance and civil society play in promoting lasting development.'
But who is talking about what is in it for America?
US-GHANA RELATIONS
In the past Ghana has enjoyed a strong relationship with the US ever since the first American Peace Corps volunteers came to Ghana in 1961, the same year that President John F. Kennedy created the US Agency for International Development (USAID) to assist the developing world (aside from a blip in the mid-1980s during the Soussoudis spy affair). Indeed, the setting up of the US Department of State's Bureau of African Affairs in 1958 was largely informed by Ghana becoming the first black African nation to gain independence the previous year. But for the next three decades, Africa was little more than a geo-political lebensraum for proxy campaigns of the Cold War. It was not until March 1978 that sub-Saharan Africa witnessed its first ever state visit by an American president, Jimmy Carter, who first met President Olusegun Obasanjo in Lagos, Nigeria, and then President William Tolbert in Monrovia, Liberia, a country the United States established diplomatic relations with 147 years ago for obvious reasons.
Bill Clinton’s visit to sub-Saharan Africa in March 1998 was the first by a US president in 20 years. His successor, President George W. Bush, visited the continent twice in eight years and it was even said that Africa was the place where he felt most comfortable and welcome. He returned this by pushing for the implementation of the African Growth and Opportunity Act (AGOA), which was passed just a year before his predecessor handed over to him. This was followed by initiatives of his own for Africa that earned him respect in the eyes of millions of Africans, including the President's Emergency Plan for AIDS Relief (PEPFAR) in 2003 and the Millennium Challenge Corporation, which has thirty-two African countries on its development assistance radar. Under President Bush’s watch American assistance to Africa quadrupled since 2001.
THE SIGNIFICANCE OF JULY’S VISIT
Against this backdrop, July’s US state visit is significant for various reasons. It will be President Obama’s first to Africa – a continent that has not only personal significance for Obama the man, but growing political significance for Obama the president – and one that has significant expectations of the first black president to sit in the Oval Office.
For Ghana, Obama will be the third successive American president to have visited in the space of 11 years, confirming the significant position Ghana has assumed as a role model for the continent. That Obama’s first visit is to one of Africa’s unquestioned success stories rather than one of its examples of stalled development or conflict zones, will draw attention to the fact that there is proof right here in Africa that freedom can serve as the means to development and multi-party democracy can work. Ghana’s extraordinarily consistent economic growth pattern for the past seven years (registering a GDP of 7.3 per cent in 2008) offers the best evidential advertisement for the new development paradigm, which seeks to show that not only can freedom and development go hand in hand, but that the former provides a helping hand to the latter.
WHY GHANA?
But we must not ignore America’s interest. After all, whatever his connection to the African continent, Obama is president of America – and acts in the interest of its people at home above all else. So what can Americans hope to gain from President Obama’s trip to Ghana?
First, this trip offers a very compelling platform for America to reaffirm to a significant mass of the world the triumph of its values of liberal democracy, rule of law and freedom. With the US’s failure to impose these in the Middle East, and China’s irksome demonstration that economic progress can be achieved without them, Ghana helps bolster the US’s argument about the centrality of these values to the development process.
But the decision to embark on this trip was also made on the basis of some tangible and concrete opportunities for America in the region.
Top on the list is the United States’ military and energy security agenda. Before the 9/11 bombing in 2001, conventional thinking in Washington perceived no vital strategic interests for the US in sub-Saharan Africa. But this has changed. Today we can see a significant shift away from America’s traditional geopolitical calculations regarding oil production and supply. The US’s National Intelligence Council (NIC) estimates that by 2015, 25 per cent of American oil imports will come from West Africa, compared to 16 per cent today – an estimate even considered as too conservative in some quarters. Already West Africa supplies as much oil to the US as Saudi Arabia. Furthermore, our oil is light and sweet, making it easier and cheaper to refine than Persian oil. Plus its offshore location reduces transportation costs and minimises risk of political violence and terrorist attacks.
This shift in global energy patterns to the Gulf of Guinea has led to a significant re-evaluation of foreign policy focus and global alliances, resulting in a multi-layered engagement with countries such as Ghana, that encompasses military and energy security, and development aid. This trip is thus at the heart of Washington’s strategy of working with its regional allies in West Africa to develop relationships that will secure its energy security in the long term.
The United States, in typical Dick Cheney oilthink, sees the Gulf of Guinea as offering the opportunity to break with the old politics which saw the US at the mercy of the geostrategic pressure of unstable or unfriendly oil-producing states in the ‘old’ Gulf (Persian Gulf) and Venezuela.
The way forward is a pro-active policy to build a new Gulf of energy security and prosperity in a part of the world that is relatively receptive to American presence. With significant discoveries being made in the Gulf of Guinea oil basin, off the coast of Ghana, Equatorial Guinea, Congo and Cote d’Ivoire, according to the Energy Information Administration of the US Department of Energy, the United States will be importing in the year 2020 over 770 million barrels of African oil a year. And Ghana with its stability, notable responsiveness to America, deepening multiparty democracy and promising investment climate is seen as the perfect epicentre for the growth and fulfilment of this interest. In the eyes of America, geography, geology and ideology all favour Ghana as the gem in the crown of this new policy.
WHAT ABOUT CHINA?
But the US is not alone in seeing Africa as a better bet to provide a secure source of energy. There is a new scramble for Africa’s raw materials, especially energy resources, brought on by China’s astonishing industrial growth and its deepening influence in the global economy. It is the second largest consumer of oil in the world behind the United States. Consistently high economic growth rates saw Asia’s formerly largest oil exporter switch to become a net importer of oil since 1993. The International Energy Agency projects China's net oil imports will jump from 3.5 million barrels per day in 2006 to 13.1 million barrels per day by 2030.
In 2006, 9 per cent of Africa’s oil exports went to China (with 60 per cent of Sudan’s oil export China-bound). The US received 33 per cent. Already, China has sped past Britain and France to become Africa’s second-highest trading partner behind the United States.
Though Angola, the second largest oil producer in sub-Saharan Africa, supplies the US with approximately twice as much oil as it does China, China has outpaced the United States in partnering Angola’s rapid development with its multi-billion dollar investment support in the country’s infrastructure. For example, in 2006, Sinopec, China’s state-owned energy company, bid US$2.2 billion for two deep-water blocks off the Angolan coast. Two years earlier, Beijing softened the ground with a US$2 billion package of loans and aid to Angola, which has Chinese companies building telecommunications infrastructure, roads, railways, bridges, buildings, schools and hospitals.
However, in 2007, Erica Strecker Downs of the Brookings Institute think tank made some headway in calming American anxiety over China and African oil. She wrote that contrary to public opinion, China's NOCs are not 'locking up' the lion's share of African oil as part of a centralised quest for energy. But while China, with a mere 3 per cent of its FDI in Africa and controlling under 2 per cent of oil reserves on the continent, may not be winning the race for oil exploration and production in Africa, there is no question that China is winning more and more of the oil supply produced in Africa.
If the US wants to out-muscle China in the 21st century scramble for Africa, then it will have to show more aggression in investing in the development of infrastructure on the continent, as China is doing. Even if American money comes with job for American companies, Africans are not likely to complain so long as it ends in the brick and mortar of the continent’s infrastructural development. Africans believe they are increasingly feeling more and more the positive might of Beijing in their quest for advancement. Chinese investment deserves a big part of the credit for Africa’s highest ever economic growth rate, 5.8 per cent in 2007. Furthermore, China has cancelled US$10 billion in bilateral debt owed to it by African countries.
Outside of Ghana’s oil exploration and production zone, the US and China’s involvement in Ghana’s development has been most obvious in two major infrastructural projects in the energy sector. The first, the West African Gas Pipeline (WAGP), is 59 per cent owned by Chevron, the US-based oil multinational company and Royal Dutch Shell. This US$700 million onshore-offshore pipeline will run 681 kilometres from the Western Niger Delta of Nigeria via Benin and Togo to Ghana, and was cooperatively underwritten by the World Bank in 2004. The bank, however, refused to underwrite the Bui Dam project designed to generate 400MW of electricity for Ghanaians. It took a 2006 visit to President Hu Jintao of China by President J A Kufuor to secure Chinese support for the dam’s construction (by Sino-Hydro) and funding (Exim Bank) at an estimated cost of US$600 million.
These two projects highlight the masterful diplomacy that the Mills’ administration will need to deploy in the coming years in order to secure optimal benefit for Ghana from its new oil-rich status.
HOW GHANA MUST UTILISE ITS NEW STRATEGIC IMPORTANCE
With the discovery of significant oil potential offshore, Ghana has not only new international importance – we also have cause for greater confidence and strength in our global interactions. The increased interest of both China and the United States in Ghana can add extraordinary oomph to Ghana’s development – but this can only happen if we become smarter, more strategic and more assertive in our dealings with these two powerful nations.
The Obama trip reinforces the extent of US strategic interest in the country. Ghana has become an object of international desire between the two super powers of the 21st century – America and China – and the Americans are in no mood to lose its ‘trusted partner’ to the Chinese.
The Americans know what they want from Ghana. But does Ghana know what it wants from America? The question is: Has the Ghanaian government taken a considered, sober decision on the price to be paid and the prize to be gained for being considered as the serene oasis at the heart of the ‘New Gulf’? President Obama came into office with the strategic objective of 'investing in a shared humanity' with regards to US policy in Africa, listing his three thematic policy areas of focus as:
i. To accelerate Africa's integration into the global economy
ii. To enhance the peace and security of African states
iii. To strengthen relationships with those governments, institutions and civil society organisations committed to deepening democracy, accountability and reducing poverty in Africa.
He may well be the president who can make a bold resourceful contribution to see the realisation of the dream of an African nation breaking though the stigma of underdevelopment to act as a trailblazer for the others. Ghana has the potential to serve as this model – but it will require a wholesale adoption of a new attitude of assertiveness based on a well-founded confidence in what we bring to the table, and a permanent shift from the outdated and counterproductive assumption amongst Ghanaians that our country is simply a geographical mass of humanitarian concerns or a charity case.
But has the mindset of the Ghanaian leadership gravitated towards this new reality?
GLOBAL ECONOMIC POSITIONING
As Ken Ofori-Atta of Databank stated at Chatham House recently, 'We have not seen such massive destruction of wealth in the history of modern civilisation and I might add also such rapid recreation of capital in the past year. Africa is truly astounded at how quickly the West can mobilise to save their companies when a fraction of those amounts could reinstate the impressive growth trajectory which Africa had achieved.' The rich economies are prepared to spend $2 trillion to rescue their financial infrastructure. For nearly a decade now, Africans have been demanding extra funding to the tune of $60 billion a year to accelerate its development – a mere three per cent of what is being pumped into the western financial systems today to maintain socio-corporate standards there.
The UN under-secretary general and executive secretary of the Economic Commission for Africa, Abdoulie Janneh, said the current economic downturn could cost Africa US$251 billion in 2009 and US$277 billion in 2010 in export earnings, despite earlier predictions that the continent would not be hard hit. So whatever is on offer to countries like Ghana by the IMF and World Bank only follows the old pattern of development assistance never matching what is taken out from Africa.
Unfortunately, once again, (a little over a year after Ghana issued its first sovereign bond on the international capital market) we have been forced by exogenous circumstances to make a u-turn to over-dependence on the Bretton Wood institutions for our development spending. And we are being told to adopt a kind of fiscal discipline which the developed world is also finding to be fundamentally contradictory to their programme for stimulating their economies today.
Much noise has been made both in Ghana and elsewhere about Ghana’s ‘extraordinarily huge’ 2008 budget deficit of 11.5 per cent of GDP. Indeed, the Ghanaian government has allowed it to serve as a roadblock in the way of maintaining, let alone increasing, the momentum of development Ghana has experienced in the last seven years. It is worth noting that in America the Congressional Budget Office estimates that the US budget deficit will reach US$1.85 trillion this year, 13.1 per cent of GDP. Furthermore, they project deficits averaging over US$1 trillion a year for the next 10 years, which will raise the US public debt-to-GDP ratio to over 80 per cent by 2019. Ghana’s total public debt stood at US$7,742.4 million in May 2009, representing a debt-to-GDP ratio of 49.2%. Both huge budget deficits were necessary responses to national crisis and imperatives. In Ghana’s case the energy crisis of 2007 and the urgency with which Ghana needs to invest in its infrastructure and respond to a rising cost of living contributed to our unusually high deficit.
In July 2005, when heads of the world’s leading industrialised countries (the G8) pledged to step up development aid by US$50 billion by 2010, with half of the increase going to Africa, African leaders hailed it as a significant high-gear shift in development aid from the developed world. Barely four years later, what we know today is that a lot more money can be found for productive investment to push millions of Africans out of poverty. US development assistance to Ghana in 2007 – about US$55 million – was nowhere near that befitting a nation carrying the kind of strategic weight that contemporary Pentagon thinking suggests.
In real terms it is little improvement on the 1994 assistance of US$38 million, plus US$16 million in food aid. President Bush contributed an extra US$547 million support from the Millennium Challenge Account. But this was given when America’s strategic flirtation with Ghana was purely based on its interests in Ghana as a geographical location for AFRICOM rather than the additional oil value it has today.
What has all this to do with Obama’s trip?
Negotiations are not held in a vacuum. A nation that sits around the table without prior knowledge and appreciation of its own strengths and weaknesses in its counterpart’s mind has provided gaping holes in its negotiation armoury and is bound to come out with a bad deal. A good deal depends on both an understanding of the cards in your hands and your opponent’s, and the skilful and strategic play of these cards. The first of these cards that the Ghanaian government must not fail to appreciate is the fact that Superpower America now sees West Africa as a zone of strategic importance – it is no longer a question of just us needing them, but they now also need us.
Our trump card is of course oil. But if we are to prevent ourselves being played by the US, we must deploy this to maximum benefit: Ultimately it is up to Africans to selfishly see our oil as means to provide energy security to others in exchange for support for more rapid African economic development.
In the words of US Congressman William Jefferson, 'The strategic question is which countries we depend on for this oil. The suggestion that comes out of all of these discussions is our best partners are in West Africa for many of the reasons I’ve mentioned: the commitment to democracy. Though there may be strivings and failings, nonetheless there is a commitment. West Africa is closer, making it easier to move product from there to here; the resources are, in most cases, not landlocked. Things usually work fairly well if you’re out in deep water.'
Since 2007, Washington has become more convinced that the Gulf of Guinea is an area of 'Vital Interest' and Ghana is in prime position to serve as its hub, a point reinforced by the seemingly smooth transition from one democratically elected government to another of a different party.
AFRICOM
Furthermore, the US is, understandably, bent on establishing a regional command for Africa, similar to US Forces Korea, with a homeport situated on the African continent to protect their interests. West Africa is its natural home, given the need to protect energy interests in the Gulf of Guinea. Liberia has offered but simply cannot match the kind of convenience available in Ghana. It can be a win-win situation.
AFRICOM can protect US investments in our region. But, those investments (regardless of our percentage share of ownership) are also fundamentally our investments – and thus the assistance in their protection will be a welcome boon. US military presence can also help improve the level of military professionalism of our already well-respected troops. It is interesting to note that in the six decades since World War II in which America has maintained a military presence in other sovereign nations, none of the host nations has suffered instability or military takeovers, as the presence of US troops helps entrench the subordination of soldiers to civil leadership. Moreover the presence of U.S. troops boosts social and economic activities in the host countries, too.
The loudest argument against Ghana hosting AFRICOM when the possibility first arose was that it would make us a target for anti-American terrorists. But a global examination of the number and location of American military bases overseas vis-à-vis the geographical targets of terrorist attacks, shows that this argument has far greater emotive value than evidential corroboration.
At the moment the Americans say they are happy to keep the US Africa Command headquarters in Germany, to coordinate all US military and security interests throughout the African continent. But any reasonable assessment must conclude that this can be nothing but a temporary address and arrangement. Ghana should welcome that it is thus the target of America’s desire – and we should make the most of this, using it for our own advantage. After all, the process has already started.
The US and Ghanaian militaries have cooperated in numerous joint training exercises, including the African Crisis Response Initiative, an international activity in which the US facilitates the development of an interoperable peacekeeping capacity among African nations. And the head of AFRICOM has already reaffirmed Washington’s commitment to assisting the Ghana Armed Forces 'to become more robust'.
There is also the African Contingency Operations Training and Assistance program. Beyond that, Ghana and the US have an active bilateral International Military Education and Training program.
In 2007, Kwesi Pratt Jnr, the managing editor of The Insight newspaper and the energy behind the pressure group Socialist Forum, warned Ghanaians against what he saw to be the looming danger of a US military base in Ghana. He cited, inter alia, the erection of the huge American Embassy complex in Cantonments as evidence of this. Meanwhile, in August 2007 Major-General Ward, who was later confirmed as AFRICOM’s first commander, visited Accra. He held discussions with President Kufuor on 'ways of strengthening military cooperation.' His high-powered secret meetings with the president, minister of defence and the chief of defence staff triggered huge speculation. Much was made of Maj Gen J B Danquah’s public statement about the visit when he said Maj Gen Ward had ‘done enough to resolve’ Ghana’s concerns about AFRICOM, adding, 'I have had the chance to hear [Ward] explain what is the reasoning behind the command, and it’s all about partnership.'
General T. Hobbins, head of the US Air Forces Europe, has held discussions with his counterparts here on the possibility of establishing 'lily pads', landing and rapid airlift facilities in otherwise deserted terrain in certain strategic sites in Africa. Tamale Airport has come up as one of the 'forward operating sites' targeted. That airport is said to have a runway capacity of accommodating massive US C-3 cargo planes and troop transports.
Ghana is also already the site of a US-European Command-funded Exercise Reception Facility that was established to facilitate troop deployments for exercises or crisis response within the region. The direct link to our oil is only too apparent: The Facility came out of Ghana's partnership with the United States on what is termed a Fuel Hub Initiative. It may sound like a mere gas station for the troops. But the choice of stable, imminently oil-rich Ghana as a Fuel Hub reflects a greater strategic interest in the country than as merely a filling station.
The Americans have not been shy in establishing a clear economic link alongside their military cooperation. Ghana is one of the few African nations, mainly those with oil, selected for the State Partnership Program to promote greater economic ties with US institutions, including the National Guard. Expanding this to deepen our cooperation with the Drugs Enforcement Agency is one other area that President Mills should focus attention on.
GHANA THE ‘NATURAL’ ALLY
This all points to the fact that the United States sees Ghana as having all the vital statistics and morphological features of a ‘natural’ ally. We have the oil reserves, we are in the stable centre of the ‘New Gulf’ and we have the military discipline and stable atmosphere to make us the perfect hosts for America’s first major military migration to our continent. America is strategically placed to maintain and deepen its stronger footing here, ensuring it rather than China becomes our dominant ally. As one analyst confirmed, Washington has no interest in seeing China’s presence in Africa extended to Ghana. The fact, however, is that China is already here and the recent dealings between the Mills administration and the ruling Chinese Communist Party means the US needs to act sooner rather than later.
Obama’s chief policy adviser assured Africans two months before the 2008 presidential race, 'Barack Obama understands Africa, and understands its importance to the United States. Today, in this new century, he understands that to strengthen our common security, we must invest in our common humanity and, in this way, restore American leadership in the world.' Now is the chance for him to seek and effect the real change that will finally show the world that Africans are capable of more than managing their own affairs – but, crucially, Ghana must take up the opportunity provided by the state visit and the US’s burgeoning strategic interest in us, to be the nation that demonstrates this.
Why Nkrumah@100 was a flop
It appears, nobody in Ghana is bold enough to face the truth. But, Qanawu will say it as it was. The centenary celebration of the `African of the Millennium´ was by all standards a big flop!
It was obvious from the start when the government announced members of the Kwame Nkrumah Centenary Celebrations Planning Committee. Its focus was sectarianism rather than competence. Messrs Kwesi Pratt, Bernard Mornah and Agyemang Badu Akosah were on the team not because they have any known record in organising an event. They were there because they claim to be rabid Nkrumaists. To use people who can´t even organise a drink-up in a brewery to plan an important celebration like that is to say´ I´m not interested in the programme´s success´, I´m just interested in making a sectarian case.
The National Democratic Congress, led by a former student of Nkrumah´s ideological institute, saw this centenary event as another opportunity for the NDC to further eat into the CPP support base and claim the left side of the political divide for itself. To the NDC it was just a political strategy. The NDC knew it was on a winner, because so weak is the CPP today that to be its leader is like taking a job as a fitness instructor for a 43-year-old embalmed body.
Haunted by the NDC propaganda on Ghana@50, the government and the planning committee were even afraid to suggest things that were necessary to ensure a good show. Even the printing of t-shirts was problematic. They were afraid to be seen to be spending. So they ended up giving us a no show. Is that rather not causing financial loss?
They promised us several international guests, including many African heads of state. In the end, not a single foreign leader showed up.
The play on Nkrumah was a complete disaster. TV viewers gasped at seeing empty seats with a few occupied ones at the National Theatre, when news of the play was shown. It was like the attendance at a match between Berekum Arsenal and Berekum Chelsea at the 40-seater Ohene Djan Stadium, Accra.
Street vendors complained of lack of patronage for the Nkrumah souvenirs that they tried to sell. Months after Obama's visit, there are still billboards marking the visit to be seen. Few days after Nkrumah's centenary, not even a poster on the wall of the Ako Adjei interchange.
The night vigil at Kwame Nkrumah Circle on Sunday was embarrassingly dull, amateurish and had as many as less than 100 people in the audience. Well, may be 150, tops.Those of us who watched it on TV would have been forgiven to think it was an open audition for anybody on the streets to walk on stage to show what they can do - recite a poem or sing a song. Play a drum or tell a joke.Well, the Nayabingi song from the rastafarians was probably a ras-clat hit.
On Monday, the big event at the Nkrumah Mausoleum was nothing special. It had a lot to be modest about. In fact it bore the thumbprint of a presidency which believes that modesty - even in performance - is a godly virtue. The President looked very pretty in his three-piece abaja, with what looked like shoulder pads. Mahama was comfortable with his casual self. Even the MC, David Dontoh looked bored.
The free concert gala at the Independence Square was sparsely patronised. As one musician noted, "It attracted less crowd than the least attended of the `Believe in Ghana´ concerts done by the Akufo-Addo Campaign ´08.´
Perhaps the youth chose to stay away in protest to President Mills' advice to them during his dawn broadcast: 'What does it profit a man if he gains the whole world and loses his soul,' the President told the youth. I guess if they wanted a preacher for President they would have opted for Prophet TB Joshua.
Then comes Tuesday, the post-mortem was on. The national verdict appears to be strongly against the decision by the President to make 21 September a national day to be called Founder´s Day.
The hypocrisy of President Mills was all too apparent. The man who said the anniversary should galvanise Ghanaians to unite, started on the wrong note by passing that official decree that Nkrumah was the only founder of Ghana and that the day must be called Founder´s Day.
Those who listened to comments on radio Tuesday, especially Peace FM, should gauge for themselves whether indeed there is anything near a national consensus that Nkrumah was the only founder of Ghana. Mr Pratt made the case worse by taking on the man who never wrongs, Opanin Agyekum!
Kwame (Saturday born) Nkrumah, named Kofi (Friday born) at birth is said to be born on 21st September, 1909, which was in fact a Tuesday.
Even if we are to accept that fictitious date, should Ghanaians also accept the fiction of Ghana having a singular founder?
The poor patronage of the event should tell President Mills that Ghanaians do not accept his view that Nkrumah was the only founder of Ghana. Not even the obnoxious attempt by GTV to stuff our TV sets with only pro-Nkrumaists telling Ghanaians about a so-called golden age under Nkrumah could tilt sentiments in favour of that distortion.
Perhaps, Ghanaians should call for a probe of Nkrumah@100 if not for anything merely or the fact that resources were spent on a show that was honestly a flop! At least, with the probe we can get some idea how much the planning committee members spent on tea.
Of course, the NPP can be blamed for instigating the flop. The NDC in government is like a culprit, who is told that alcohol is responsible for his present sorry state.
"I'm glad to hear you say that. Everybody else says it's all my fault!"
21st September, in my view, could stay and be marked annually as a national holiday. But, the President should be humble enough to admit that it should rather be a Founders´ Day (putting the apostrophe where it belongs) if it is to receive national endorsement.
It was obvious from the start when the government announced members of the Kwame Nkrumah Centenary Celebrations Planning Committee. Its focus was sectarianism rather than competence. Messrs Kwesi Pratt, Bernard Mornah and Agyemang Badu Akosah were on the team not because they have any known record in organising an event. They were there because they claim to be rabid Nkrumaists. To use people who can´t even organise a drink-up in a brewery to plan an important celebration like that is to say´ I´m not interested in the programme´s success´, I´m just interested in making a sectarian case.
The National Democratic Congress, led by a former student of Nkrumah´s ideological institute, saw this centenary event as another opportunity for the NDC to further eat into the CPP support base and claim the left side of the political divide for itself. To the NDC it was just a political strategy. The NDC knew it was on a winner, because so weak is the CPP today that to be its leader is like taking a job as a fitness instructor for a 43-year-old embalmed body.
Haunted by the NDC propaganda on Ghana@50, the government and the planning committee were even afraid to suggest things that were necessary to ensure a good show. Even the printing of t-shirts was problematic. They were afraid to be seen to be spending. So they ended up giving us a no show. Is that rather not causing financial loss?
They promised us several international guests, including many African heads of state. In the end, not a single foreign leader showed up.
The play on Nkrumah was a complete disaster. TV viewers gasped at seeing empty seats with a few occupied ones at the National Theatre, when news of the play was shown. It was like the attendance at a match between Berekum Arsenal and Berekum Chelsea at the 40-seater Ohene Djan Stadium, Accra.
Street vendors complained of lack of patronage for the Nkrumah souvenirs that they tried to sell. Months after Obama's visit, there are still billboards marking the visit to be seen. Few days after Nkrumah's centenary, not even a poster on the wall of the Ako Adjei interchange.
The night vigil at Kwame Nkrumah Circle on Sunday was embarrassingly dull, amateurish and had as many as less than 100 people in the audience. Well, may be 150, tops.Those of us who watched it on TV would have been forgiven to think it was an open audition for anybody on the streets to walk on stage to show what they can do - recite a poem or sing a song. Play a drum or tell a joke.Well, the Nayabingi song from the rastafarians was probably a ras-clat hit.
On Monday, the big event at the Nkrumah Mausoleum was nothing special. It had a lot to be modest about. In fact it bore the thumbprint of a presidency which believes that modesty - even in performance - is a godly virtue. The President looked very pretty in his three-piece abaja, with what looked like shoulder pads. Mahama was comfortable with his casual self. Even the MC, David Dontoh looked bored.
The free concert gala at the Independence Square was sparsely patronised. As one musician noted, "It attracted less crowd than the least attended of the `Believe in Ghana´ concerts done by the Akufo-Addo Campaign ´08.´
Perhaps the youth chose to stay away in protest to President Mills' advice to them during his dawn broadcast: 'What does it profit a man if he gains the whole world and loses his soul,' the President told the youth. I guess if they wanted a preacher for President they would have opted for Prophet TB Joshua.
Then comes Tuesday, the post-mortem was on. The national verdict appears to be strongly against the decision by the President to make 21 September a national day to be called Founder´s Day.
The hypocrisy of President Mills was all too apparent. The man who said the anniversary should galvanise Ghanaians to unite, started on the wrong note by passing that official decree that Nkrumah was the only founder of Ghana and that the day must be called Founder´s Day.
Those who listened to comments on radio Tuesday, especially Peace FM, should gauge for themselves whether indeed there is anything near a national consensus that Nkrumah was the only founder of Ghana. Mr Pratt made the case worse by taking on the man who never wrongs, Opanin Agyekum!
Kwame (Saturday born) Nkrumah, named Kofi (Friday born) at birth is said to be born on 21st September, 1909, which was in fact a Tuesday.
Even if we are to accept that fictitious date, should Ghanaians also accept the fiction of Ghana having a singular founder?
The poor patronage of the event should tell President Mills that Ghanaians do not accept his view that Nkrumah was the only founder of Ghana. Not even the obnoxious attempt by GTV to stuff our TV sets with only pro-Nkrumaists telling Ghanaians about a so-called golden age under Nkrumah could tilt sentiments in favour of that distortion.
Perhaps, Ghanaians should call for a probe of Nkrumah@100 if not for anything merely or the fact that resources were spent on a show that was honestly a flop! At least, with the probe we can get some idea how much the planning committee members spent on tea.
Of course, the NPP can be blamed for instigating the flop. The NDC in government is like a culprit, who is told that alcohol is responsible for his present sorry state.
"I'm glad to hear you say that. Everybody else says it's all my fault!"
21st September, in my view, could stay and be marked annually as a national holiday. But, the President should be humble enough to admit that it should rather be a Founders´ Day (putting the apostrophe where it belongs) if it is to receive national endorsement.
UK SFO Prosecution case against Mabey & Johnson involving bribery of Ghana govt officials
10/2147845_2 1
IN THE SOUTHWARK CROWN COURT No.T2009 7513
BETWEEN:
REGINA
- v -
MABEY AND JOHNSON LIMITED
______________________________________________________
PROSECUTION OPENING NOTE
______________________________________________________
Note: This statement is provided for the assistance of the Court and the parties. While it
substantially sets out the Crown’s case, it is not, nor does it purport to be, a full and exhaustive
pleading of that case.
I. INTRODUCTION
1.
Mabey and Johnson Limited (“M&J” or "the Company") is a privately-owned,
family-run company, founded in 1923 by the Mabey family and incorporated in
1943. One of the original directors was a Mr Bevil Mabey who remained a director
of the Company until December 2007.
2.
M&J is an engineering company whose principal business over the last 35 years has
consisted of supplying bridging equipment in over one hundred countries, largely in
the developing world. In general, the bridges supplied consist of standardised and
interchangeable components which can be easily transported after manufacture in
the United Kingdom. Similarly, erection on site is a relatively simple engineering
process. On its website M&J proclaims that it manufactures “quick, simple, reliable
bridges” and goes on to assert “our modular steel panel bridge systems provide a
means of helping communities and markets connect reliably and safely”.
10/2147845_2 2
3.
Over the years - according to its website - M&J has become the “world leader” in its
field. Current turnover is around £50 million. During the indictment period
turnover was on average £56 million.
1
In the year to 30 September 2008, pre-tax
loss (before exceptional provisions) was c.£2 million. The Company employs
around 240 people, 210 of whom are based in the UK. Its manufacturing site is at
Lydney in Gloucestershire, where 160 people are employed in creating around
20,000 tonnes of bridging components annually. The Mabey family has reportedly
accumulated over £200 million pounds as a result of their ownership and
management of the Mabey Group, including M&J.
4.
M&J’s overseas clients consist principally of government departments and
highways authorities. Its contracts with foreign governments have often been
underwritten by the United Kingdom's Export Credits Guarantee Department
("ECGD") which is a statutory body whose role is to benefit the UK economy by
helping exporters of UK goods and services win business and UK firms to invest
overseas by providing guarantees, insurance and reinsurance against loss. The
Jamaica and Ghana contracts which are the subject of this indictment were in fact
supported by the Export Credit Guarantee Department (“ECGD”).
II: SUMMARY OF ALLEGATIONS AGAINST M&J
5.
In order to establish and secure its business abroad, M&J appointed agents to act on
its behalf in the various countries where it was seeking to win contracts to build
bridges.
6.
It is accepted by M&J for the purposes of sentencing that the payment of
commissions to agents was a routine aspect of the Company’s business, authorised
at director level. These payments were structured into the Company’s commercial
processes and were factored into contract pricing. Commission fees paid to local
agents or middlemen ranged from contract to contract and by jurisdiction. However,
historically, it was not atypical for agents to be paid between 5-15% by M&J,
although M&J maintain the average was about 8%.
1
Based on statutory accounts for the years 1992/1993 to 2001/2002.
10/2147845_2 3
7.
In Jamaica and Ghana M&J knew that its agents were involved in corrupt
relationships with public officials with influence over M&J’s affairs in those
jurisdictions. M&J accept that they agreed with their agents to pay bribes directly to
public servants in those jurisdictions. Those bribes were deducted from the overall
commission due to the agents.
8.
It is not asserted by the SFO, in this case and generally, that all payments to agents
are illegitimate or that all agents act corruptly. Agents, in some jurisdictions are
both necessary and play a useful marketing and other legitimate function to the
exporter. However it is equally beyond reasonable argument that unless properly
monitored and controlled, the employment of local agents and payment of
commissions is a corruption “red flag” exposing the company to risk. What it may
provide is a convenient smokescreen to deny corporate or individual knowledge of
arrangements conducted overseas. This was the reality of business practices of this
era.
9.
In both Jamaica and Ghana M&J’s agents were involved in corruption in those
jurisdictions. Their corruption was known to M&J and the SFO suggests, though it
is not accepted by M&J, that this would have been part of the rationale of their
appointment. The direct bribes were deducted from the overall commission to be
paid to the agent with respect to Jamaica and the majority were deducted from the
agent's commission for Ghana. In short it is the SFO’s case that the Company
therefore employed known bribers as agents for commercial gain from the outset.
10.
The SFO’s contention, based on inference from all the available facts, is that those
agents were appointed to facilitate corruption. The SFO believes this was known to
the directing minds of M&J. However this is not accepted by the Company.
Nevertheless in the light of the scope of what is admitted by the Company and what
is before the Court, namely bribes of more than £1 million on contracts valued in the
region of £60-70 million, it is the Director’s view that this difference is not so
substantial that it should require resolution by calling evidence. After all where
there are direct payments to public servants, it does not make much difference, for
10/2147845_2 4
the liability of the Company, if there were additional payments through the agents to
facilitate corruption. In some respects it may well be seen as aggravating where
modestly paid public servants are corrupted for relatively small amounts in
proportion to the commercial gain for the company concerned.
11.
In Jamaica M&J’s agent was paid 12.5% of the Jamaica 1 contract price. As will be
explained later, this was a headline figure as the Jamaica 1 contract was a Joint
Venture with Kier International Limited.
12.
For budgeting purposes in relation to the Priority Bridge Programme II in Ghana,
M&J created a notional fund of £750,000 called the "Ghana Development Fund"
("GDF") against which direct payments to public officials were made. In total from
the GDF and associated accounts, between December 1994 and 18 August 1999,
£470,792.60 were paid in bribes.
13.
In a lot of cases monies, represented on M&J's commission cards, would be
deducted from the agents' commission to be paid direct to the public servant. M&J
authorised these requests at director level and payments were processed both to UK
and overseas bank accounts.
14.
Although the appointment of agents to assist an exporter in obtaining overseas
contracts is commonplace and legitimate, payments to agents also carry an accepted
and obvious corruption risk.
15.
The Company does not accept that there was a corrupt intent in the appointment of
and subsequent commission payments to the agents in Jamaica and Ghana.
However it is accepted by M&J that in Jamaica and Ghana and in the countries
referred to below (where corruption has also been identified as a result of internal
investigations conducted on behalf of the Company) that in paying agents large
commissions there was a risk that unknown proportions of those payments might be
passed on to public servants as bribes. It also follows in countries with a similar risk
of corruption where M&J operated, such a system must have given rise to an
identical risk.
10/2147845_2 5
16.
Although, historically, M&J’s corrupt business practices appear to have been
carried on in a number of the countries in which it operated, for reasons which will
become clear the Company is indicted for its dealings in Jamaica, Ghana, and - in a
separate and distinct matter - Iraq. In addition the company has disclosed four
further jurisdictions in which corruption occurred, Madagascar, Angola,
Mozambique and Bangladesh, the relevance of which is described further later in
this Opening Note.
17.
A number of individuals, are the subjects of investigation with regard to the corrupt
business practices of M&J. Those investigations may be protracted. Currently,
however, the position appears to be that if any proceedings are to be commenced
against individuals associated with the Company, they will be contested, despite the
fact that the Company is pleading guilty to allegations which are largely evidenced
by the Company’s own documents.
18.
Given that the case against the Company could not have been brought before the
Court as expeditiously as it has been without the co-operation of and admissions by
the Company. Any long criminal investigation into the business affairs of a
company can have a damaging effect on it. The SFO are of the view that it is
appropriate to prosecute the Company before the completion of the investigations
into the conduct of the individuals.
19.
As will be described below, this is a Company that has replaced its board and is
changing and continues to review its business practices. It is, to a notable extent, no
longer the company that committed these crimes. Therefore mindful of both the
SFO’s domestic and international obligations, the SFO wishes to conduct its duties
in a way that does not unnecessarily damage the Company’s ability to trade. Of
course, that objective can only be fully discharged, as in this case, where the
Company fully and properly co-operates with the prosecuting authority.
20.
In this context it should be noted that the policy of the SFO under the present
Director, further referred to below and Appendix 1, is that boards of companies
should be encouraged to approach the SFO and make a full disclosure of fraud or
corruption they have discovered together with proposals about the changes and
10/2147845_2 6
monitoring needed in the future to re-assure the public that the behaviour of those
companies meet the highest ethical standards. If companies do this then the SFO is
prepared to discuss with them the pleas or other resolution that the SFO considers to
be in the public interest.
III: BACKGROUND TO THE REFERRAL AND INVESTIGATION OF
CORRUPTION ALLEGATIONS RELATING TO M&J
21.
The referral of alleged breach of sanctions legislation is dealt with at section X of
this document. However, additionally during the last decade there has been some
speculation in the media and elsewhere concerning alleged corruption in relation to
M&J’s business practices abroad.
22.
The Metropolitan Police and latterly, the SFO, have sought to progress those
investigations, but, they could not be successfully progressed.
23.
On 11 January 2007 M&J commenced proceedings in the Chancery Division
against certain former employees and its agent in Jamaica. One of the Defendants in
these proceedings was Jonathan Danos. Amongst his other duties, Mr. Danos had
been responsible for negotiating commissions payable to M&J’s agent in Jamaica.
24.
In short, M&J claimed that Mr. Danos had acted in breach of his contract of
employment and his fiduciary duty by agreeing to pay an inflated commission figure
to the Jamaican agent in order that he and the agent could secretly profit at M&J’s
expense, and then direct those secret profits to their own commercial purposes.
What was involved was a “kickback” arrangement, by which Mr. Danos and his
co-Defendants not only unjustly enriched themselves, but then ‘invested’ that
enrichment in commercial schemes of their own.
25.
In his draft amended defence and counterclaim Mr. Danos asserted it was “common
practice” for M&J to pay government officials in order to secure contracts. In terms,
he further asserted that there was a bribery culture within M&J which was
sanctioned by certain directors. Given the nature of the evidence with respect to the
10/2147845_2 7
six jurisdictions referred to below which corroborates these particular assertions on
the part of Mr. Danos, the SFO agrees.
26.
On 9 January 2008, Herbert Smith LLP, solicitors for M&J, received from the Mr.
Danos’s draft amended defence and counterclaim. Although it did not contain a
signed statement of truth by Mr Danos those acting for Mr. Danos made it clear in
correspondence that it had been settled on his instructions. Subsequently, a decision
was taken by certain directors (including Director B, Director A and Director C,
who were directors of M&J at the time) to voluntarily report issues to the SFO. As
a consequence, on 11 February 2008, Herbert Smith LLP approached the SFO to
provide details of the evidence that the Company had been or may have been
engaging in corrupt practices. Documents relating to an internal investigation
undertaken by Herbert Smith LLP were provided to the SFO. Importantly and in the
spirit of exemplary and proper co-operation, the Company provided copies of
privileged notes of internal interviews of certain directors and employees,
conducted during the internal investigation. As an aside, the SFO regards this
approach, namely conducting an internal investigation which is then fully disclosed
to the SFO as meriting specific commendation. In cases where this is not the
practice of the suspect company, the SFO will not regard the co-operation as a
model of corporate transparency.
27.
Thereafter a process of disclosure took place by which M&J through its solicitors
progressively disclosed to the SFO Company documents which evidenced instances
of corruption in Jamaica, Ghana and other jurisdictions.
28.
Accordingly the SFO commenced an investigation into the affairs of M&J, its
directors, executives, agents and other employees.
29.
It is appropriate at this point to acknowledge the considerable level of co-operation
which M&J, through its solicitors, has afforded the SFO, enabling the investigation
into the affairs of M&J to be expedited. Indeed, the level of co-operation, coupled
with the Company’s readiness to admit its guilt, is one of the factors which
persuades the Director of the SFO that it is appropriate for the case against the
10/2147845_2 8
Company to be proceeded with and disposed of before allied investigations against
individuals are concluded.
30.
The SFO also recognises that since the commencement of the investigation M&J
has taken certain remediation steps. The SFO has been informed that five former
directors have stepped down as directors and ceased to be employees. They have
been retained as consultants to assist M&J in its co-operation with the SFO. The
SFO has been told that further training has been provided at both Board level and to
sales managers and commercial staff. It has also introduced new ethical procedures
and agreed to the appointment of an external monitor.
IV: M&J’s OWNERSHIP STRUCTURE
31.
M&J is one of a group of companies owned by the Mabey family. The majority
shareholder of the Mabey Group is Mabey Family Trustees Ltd., which owns the
majority of the shares in Mabey Holdings Ltd., which in turn owns Mabey
Engineering (Holdings) Ltd., a subsidiary of which is M&J.
32.
As of 3 September 2008, David Mabey was the Company Secretary and one of six
Mabey family members who were directors of Mabey Family Trustees Ltd.
Although his five sisters were board members, David Mabey, and his father, Bevil
Mabey, were the only family members who had taken an executive role in the
management and activities of the group of companies, prior to their resignation.
33.
Mabey Holdings Ltd. was incorporated in 1985. The Company's authorised share
capital comprises 550,000 ordinary shares and 2,000,000 preference shares. Both
types of share have a nominal value of £1.
34.
Mabey Engineering (Holdings) Ltd has 30,000,000 issued shares, all of which are
owned by Mabey Holdings Ltd. Mabey Engineering (Holdings) Ltd also owns the
entirety of the share capital of M&J – 4,000,000 shares. David Mabey resigned as
one of the three directors of Mabey Engineering (Holdings Ltd) on 2 July 2008, and
he resigned as a director of M&J and of Mabey Holdings Ltd on the same day.
David Mabey no longer has any executive role in the MHL group of companies.
10/2147845_2 9
35.
The reality of the ownership structure of M&J is that the Mabey family in general,
and David Mabey in particular, have at all material times been in exclusive control
of the affairs of M&J. Whilst directors within the Mabey group could be appointed
or removed at the behest of the shareholders, those same shareholders were David
Mabey and his family.
V: DEVELOPMENTS IN THE CONDUCT OF M&J’s OVERSEAS BUSINESS
36.
In 2002 the Company - evidently aware of the ramifications of sections 108 and 109
of the Anti-Terrorism, Crime, and Security Act 2001 – introduced new
anti-corruption policies and procedures for the conduct of its business.
37.
In May 2002 a “Group Gifts and Hospitality Policy” was distributed. Director A,
sent out two memoranda on 14 and 22 May 2002, defining the Company gifts and
hospitality policy. The Company also created an Export Committee to oversee the
appointment, remuneration, and conduct of its representatives in foreign
jurisdictions, as well as writing and publishing a policy set out in its Business Ethics
and Conduct Policy Manual (“BECPM”), which was circulated amongst its relevant
employees.
VI: THE WIDER CONTEXT OF THE CASE AGAINST M&J
38.
There are indicators, however, for asserting that the policies and measures described
above did not wholly bring about an immediate cessation of potentially corrupt or
unethical practices overseas by individual persons connected with M&J and its
business. Since the voluntary disclosure in February 2008, M&J, through its new
management, have undertaken a review for the purpose of maintaining ethical
standards within the Company.
39.
For the reasons developed at paragraphs 16 and 20 above, and further explained
below, the SFO is content to accept pleas of guilty from the Company to the conduct
alleged in this indictment.
40.
The indictment contains allegations pre-dating the coming into force of sections 108
and 109 of the Anti-Terrorism, Crime, and Security Act 2001. The issue of
10/2147845_2 10
jurisdiction has been considered by the SFO and M&J's legal advisers and it is their
respectful view that there is no jurisdictional bar to the prosecution of the indictment
before the Court.
41.
The Director of the SFO wishes to emphasise that by accepting the proposed pleas,
the SFO does not fetter itself in any way from investigating (and, if appropriate,
prosecuting) undeclared allegations of corruption against the Company if these are
discovered at a later stage. The SFO is also continuing with investigations
concerning a number of the individuals allegedly involved in corruption.
Prosecutions will be considered in due course if the tests in the Code for Crown
Prosecutors are satisfied. However given the admission of the Company of the
widespread historical corrupt practices within the indictment in relation to its
business affairs in a number of jurisdictions (see below), the SFO accepts that
having taken this feature into account in the sentencing of the Company, further
undisclosed criminality within the indictment period will not be the subject of
prosecution against the Company. For the avoidance of doubt, this is not the
position taken by the Director of the Serious Fraud Office in relation to ongoing
investigations against individuals.
42.
The policy of the SFO with regard to companies which 'self-refer' themselves to the
SFO for offences which can be described as - at least, relatively - historic, as in this
case, is to apply a proportionate approach to investigation and prosecution, both so
as to acknowledge endeavours at remediation, and to encourage other companies
which have a history of improper conduct to come forward and "clear the slate".
43.
Hence, in the light of the agreement of M&J to institute a system of independent
monitoring (see Appendix 1) of its overseas business activities and transactions on
the same model as that envisaged in the United States of America under the Foreign
Corrupt Practices Act 1977, as well as certain steps it has already taken to remove
certain directors it views as "involved" in the corrupt practices, and further
improvements to procedures as outlined at paragraphs 19 and 20 above, the SFO is
respectfully of the view that the public interest is not best served - as against the
Company only - by what might well be long-drawn out litigation over remaining
unproven allegations of corrupt practices.
10/2147845_2 11
44.
Accordingly, the Director of the SFO is minded to accept the pleas proffered on the
part of M&J, without prejudice to its ongoing and unfettered investigations of
corrupt practices - on the part of individuals associated in various capacities with
M&J.
VII: THE JAMAICA CONTRACTS
(i) Relevant personnel
45.
The relevant Ministry responsible for bridge contracts has undergone changes of
name over time. In 1989 the department was known as the Ministry of Construction
(Works). In 1996 the department became known as the Ministry of Local
Government and Works and in 1998, it became the Ministry of Transport and Works
(“the Ministry”) and retains that name today.
46.
In 2001, the National Works Agency was established. This is an executive agency
working under the control of the Ministry.
47.
Joseph Uriah Hibbert was born on 20 July 1948 He served as a Jamaican
government official until October 2000.
48.
Mr. Hibbert joined the Ministry on 10 July 1972 as an engineer. By 1989 he had
risen to the position of Chief Engineer and in November 1993 he was promoted to
Chief Technical Director of the Ministry. He left the Jamaican Civil Service on 28
October 2000.
49.
During his tenure he held delegated powers to act on behalf of the Permanent
Secretary of the Ministry, including entering into binding financial commitments,
and where there was a vacancy in that position, he could lawfully act as the
Permanent Secretary. In short he held a very important and influential position in
regard to his principals affairs and respectively, M&J’s affairs.
10/2147845_2 12
50.
At all relevant times when Mr. Hibbert was in receipt of money from M&J he was
bound by the relevant Public Service Staff Orders. He was not entitled to receive
the money M&J paid him in respect of the exercise of his duties.
51.
Subsequently Mr. Hibbert entered national politics. In 2002 he became a Member
of the Jamaican Parliament as a Jamaican Labour Party member. When the
Jamaican Labour Party were returned to government in the general election of 2007,
Mr. Hibbert was appointed as Minister of State in the Ministry of Transport and
Works. He remains in that position today.
52.
As an official he occupied a position of influence in regard to the award of contracts
relating to Jamaica’s transport infrastructure. Indeed it might be said that his
appointment as Minister of State is testament to the influence he wielded in his
capacity as an official.
53.
What is plain beyond peradventure is that M&J paid Mr. Hibbert so that he would
exercise his influence corruptly on behalf of M&J. M&J paid him directly from
agreed commission payments earmarked for their Jamaican agent £100,134.62
between 20 November 1993 and 30 October 2001.
54.
In fact the direct bribes evidenced in M&J’s schedules year on year from 1993
onwards would have approximated something in the order of his annual salary each
year.
55.
Deryck A. Gibson is a director and chairman of Deryck A. Gibson Ltd. (“DAG
Ltd.”) which was incorporated in 1965, having originally traded as Deryck A.
Gibson Commission Agent. He is a former vice-president of the Jamaican Chamber
of Commerce and holds himself out to have been in business for over 50 years and
to be “a well-known and well respected figure by the private and public sector
leaders in Jamaica.” Mr Gibson acted as M&J's agent in Jamaica.
56.
M&J paid commission of 12.5% of the contract price for a contract which was
called Jamaica 1 (see below). M&J subtracted the direct payments to Hibbert from
Gibson’s 12.5% commission. It is accepted by M&J that Mr Gibson was involved
10/2147845_2 13
in corrupt activity with M&J within the indictment period and that Mr Gibson was
in a corrupt relationship with Mr Hibbert. When appointing and permitting Mr
Gibson to continue as an agent acting for M&J prior to 2002, M&J knew that there
was a risk that Mr Gibson might pass further commission money to Hibbert.
57.
Initially, Mr Gibson's commission was paid into accounts in his name. Later,
however, Director E, agreed that payments could be made to an offshore vehicle,
Montego Bay Enterprises Inc. for the payment of commissions to Mr Gibson. These
payments were made to a Bahamas account with Barclays PLC in the name of
Leadenhall Bank and Trust Company Ltd. These payments carry the reference
“Montego Bay” on an M&J commission card.
58.
Manager C was said to “have had the ear” of both Bevil Mabey and Director B, and
was capable of overriding decisions made by other board members. In terms of
global geography, Manager C’s duties were primarily concentrated in the Caribbean
and Latin America, although he also had some dealings with countries in Africa and
elsewhere.
(ii) M&J Jamaica Contracts
59.
M&J have obtained contracts for the supply of flyovers and modular pre-fabricated
bridges and associated technical services to the Jamaican Government.
60.
M&J have conducted business with the Jamaican Government from approximately
1993 and work is ongoing in respect of a current contract.
61.
Though M&J’s records are, because of the passage of time, sketchy in relation to the
earliest of its contracts in Jamaica, there appear to have been a number of precursor
contracts to a larger Priority Flyover Programme in Kingston, (the "Jamaica 1"
contract).
62.
Following Jamaica 1, there has been a subsequent, distinct, Jamaican project for
rural bridges (the "Jamaica 2" project). Only “Jamaica 1” and its precursors are
relevant to these, instant, proceedings.
10/2147845_2 14
63.
M&J entered into a contract referenced “OX93/081” with the Ministry of
Construction in 1993-1994 valued at £291,000. There were then two further
contracts in 1997 referenced as “0282R” and “0298R” with values of £547,000 and
£60,000 respectively.
64.
These early contracts were for the supply of various spans of modular pre-fabricated
bridging and spare parts for such bridging. The bridging equipment supplied under
these “supply only” contracts would have been sited and used by the Jamaican
Ministry of Construction at their discretion. M&J's business developed during the
1990's, so that in addition to this type of "supply only" contract of bridging
equipment, M&J was able to complete larger projects for the supply and installation
of more complex, flyover type, bridges, such as those provided on Jamaica 1.
65.
On 17 February 1999 M&J and Kier International Ltd (“Kier”), a British based
construction firm, entered into a Joint Venture, in order to facilitate both the
construction and civil engineering aspects of what became known as Jamaica 1.
66.
The Joint Venture ("JV") was conducted through an unincorporated vehicle called
the Kier/Mabey (Kingston) Joint Venture. M&J and Kier agreed that overall
revenue and profits from the JV in respect of Jamaica I would be divided 57% and
43% respectively. Under the terms of the JV a sponsor would have primary
responsibility for representing the JV. Kier was nominated to act as the sponsor.
There was a supervisory board of the JV comprising both Kier and M&J executives.
67.
The project effectively began as an unsolicited approach to the Ministry by M&J.
In December 1998 M&J made presentations to the Jamaican Ministry of Transport
and Works for bridge projects in the Kingston area including: Three Mile
Roundabout; Sandy Gully Bridge; Hagley Park Road/Maxfield Avenue and Half
Way Tree Rd.
68.
In January 1999 Mr Hibbert wrote back to the JV care of Deryck Gibson and asked
M&J/Kier to make a bid. There was no competitive tendering exercise.
10/2147845_2 15
69.
As the project developed the locations changed from the original plans and in the
end the proposal related to flyover bridges at Three Mile Roundabout; Sandy Gully
Bridge on Constant Spring Rd, Kingston and Montego River/NorthGully Bridge on
Howard Cooke Boulevard in Montego Bay
70.
Kier were responsible for the erection of the bridges and work of a general civil
engineering nature. M&J provided the steelwork.
71.
This was the only JV between Kier and M&J in Jamaica although there were other
proposals over time for work, for example, in Hunts Bay and certain rural bridges.
72.
The contract for Jamaica 1 was signed during December 1999. The contract was
entered into by the Ministry of Transport and Works on behalf of the Government of
Jamaica and Kier/Mabey (Kingston) Joint Venture. The contract was signed on
behalf of both M&J and Kier International Limited. Its value was £13.9 million.
73.
The Jamaica I contract was covered by a guarantee from ECGD.
74.
A change order varying the scope of the contract was sent under cover of letter dated
19 May 2000 by the Estimating Director of Kier International Limited.
75.
In the final contract the total value increased to £14,900,000. This price was broken
down into the cost of the specific bridging projects and an employer contingency
fund of nearly £1 million. The purpose of the employer contingency fund was to
meet costs relating to third party works, land purchase compensation and other
incidental costs arising during the building project.
76.
Within the JV costs commissions were 12.5%. M&J were responsible for
commission arrangements. In fact although the commission costs were 12.5% of
the total contract price/revenue, M&J bore all of the costs from their proportion of
revenue received, approximately £8 million, which represented 57% of the total
revenue under Jamaica 1. Therefore in reality M&J paid more than 20% of received
revenue in commission costs.
10/2147845_2 16
77.
The SFO has investigated the relationship between Kier and M&J in respect of this
contract. For the reasons given above, and all the evidence currently available to
the SFO, there is no evidence that Kier were privy to these corrupt practices. Kier
have co-operated with the SFO’s investigations.
78.
Moreover, it appears that Manager C was able to secure from the Jamaican
government an agreement to pay the ECGD premium on top of the contract price,
when in fact M&J had already factored some of this cost into the overall contract
price. In his memorandum to Director B of 30 June 2000, Manager C comments:
“I am pleased to confirm that we have now received from the Jamaican Government
£1,212,420 for the ECGD premium that has been paid in full. Please note that this
was included in our offer but nonetheless we have managed to get them to pay this,
which increases our profit on the contract by that amount.”
79.
As the overall contract price was approximately £15 million, this represented an
additional uplift on this contract for M&J and Kier. Prior to this memorandum, it
appears that, of the £1,212,420, the Jamaican Government had already agreed to pay
a contribution of £726,000 towards the premium amount, with M&J and Kier
paying the remaining amount of £486,420. It is not clear why the Jamaican
Government paid the full amount of the premium. M&J were evidently content to
treat it as a windfall.
80.
This windfall was again split between M&J and Kier according to the proportions of
the JV agreement. As you will hear, M&J agree that their share of this sum should
be properly paid back to the Jamaican Government.
81.
The Jamaica 1 contract was won by M&J and Kier. M&J had behaved corruptly.
They had already corrupted an important person of influence over these matters, Mr.
Hibbert.
82.
Mr Hibbert received relatively modest advance payments in his own name both in
cash and through bank accounts here in the UK. In addition, M&J made a payment
to Mr Hibbert's niece, a Faith Jadusingh, of £3,000. There was a payment to cover
10/2147845_2 17
the UK based funeral expenses for Mr Hibbert’s mother. Additionally, Mr. Hibbert
received monies via his National Commercial Bank account in Jamaica.
83.
M&J had corrupted Mr Hibbert from the time they first conducted business in
Jamaica back in 1993. Payments began at around the same time as he was promoted
to his position as Chief Technical Director in November 1993. M&J continued to
cultivate this relationship by bribing him in relation to the subsequent contracts in
1997. M&J made payments to Mr. Hibbert intending to influence him to act
corruptly in relation to those subsequent contracts and Jamaica 1. In short they had
bought Mr. Hibbert and in making payments to secure Jamaica 1 were doing so,
believing that they would have a corrupt effect.
84.
Monies were paid on a number of occasions from 1993 by way of “Advance
Commission”, and other such devices. Mr Gibson was connected with some of
these payments, as was Manager C. The payments illustrate the malign and corrupt
approach of both Mr. Hibbert and M&J: the request for payment and the willingness
to pay speak of an assurance on both sides that their “relationship” would eventually
bear significant fruit.
85.
In particular payments were made to Mr Hibbert in 1998 when M&J and Kier were
planning the project that Mr Hibbert later approved in January 1999.
86.
By 1 July 1998 M&J, Kier and another British construction company4 had begun
meetings discussing the prospect of work in Jamaica which ultimately became the
Jamaica 1 project. The Minutes of the Consortium Progress Meeting was attended
by Director E, Manager C and another representative for M&J and the Estimating
Director of Kier.
87.
The minutes note that some preparatory work had been done in drafting some
outline plans for the various flyovers and that it was proposed that,
4
WS Atkins
10/2147845_2 18
“This material could then be presented to Joe Hibbert (MoW – Chief Technical
Director) during his visit to UK in July – Manager C to arrange meeting”
88.
An action point was left for Manager C,
“ Manager C to arrange meeting with Joe Hibbert before he returns to Jamaica (but
after next consortium meeting).”
89.
The next consortium meeting was arranged for 15 July 1998 at 2.00pm at M&J’s
offices in Twyford.
90.
There is an Export Agents Commission Card in the name of Joe Hibbert which
shows a cash payment of £10,000 being made on 7
th
July 1998.
91.
This payment is supported by a memo of the same date from Manager C to Director
B,
“re: Joe Hibbert – Jamaica
As you are aware Mr Hibbert is presently visiting the UK with two other colleagues.
He has requested £10,000 cash to be deducted from commission due to him. Recent
commission statement is enclosed.
Please could you initial this memo as authorisation for the payment to be made.”
92.
The payment is authorised by Director B as requested by Manager C. Director B
then in turn requests Director E to amend Joe Hibbert’s commission card
accordingly. In a separate short letter, Manager C confirmed he received the
£10,000 cash sum on Joe Hibbert’s behalf.
93.
A further cash payment of £10,000 for Joe Hibbert during his visit to the UK was
requested for Director B’s authorisation by the Office Manager.
10/2147845_2 19
94.
Evidently Joe Hibbert was still in the UK by the 23 July 1998. In a memo dated 22
July 1998 the Office Manager stated,
“Please find attached the commission statement for J Hibbert for Jamaica which
indicates a total of £15,449.62. As you are aware Mr J Hibbert is visiting the UK at
the moment and he has requested via Manager C that he would like payment of
commissions due as follows:
The sum of £10,000 to be made available in cash (tomorrow 23/7/98)
The remainder to be transferred to his account in Birmingham.”
95.
These payments were made by M&J. In fact Director B and Director C authorised
the cash payment and countersign an instruction to their bankers that,
“In confirmation of instructions from the Office Manager we will require the sum of
£10,000 in cash (£20 notes) to be provided Thursday 23 July 1998 at 1100 hours.”
96.
This cash payment was made in person on the date of Joe Hibbert’s attendance at
M&J’s factory at Twyford on 23 July 1998. A further payment of £5449.62 was
paid on the same date to Joe Hibbert’s Birmingham account.
97.
All the payments prior to, up to and including the signing of the Jamaica 1 contract,
and following the contract’s delivery are recorded on an “Export Agents
Commission Card” kept at M&J’s Head Office. By the time of the last payment, the
Card had been re-named “Montego Bay” as opposed to “Joe Hibbert”. Montego
Bay was a company which M&J understood was owned or controlled by Mr
Gibson.
(iii) The role of M&J’s directors and management in securing Jamaica 1
98.
As with many of M&J's contracts, including Jamaica Phase 1, commission was paid
to a sales agent, and was integral to contract pricing. While commissions were
capable of being paid at agreed stages of a contract, a typical contract for the supply
10/2147845_2 20
of bridging equipment provided for payment of commission to be made pro rata to
revenues received.
99.
The majority of the payments made to Mr. Hibbert in his various accounts in various
jurisdictions were authorised by Director B. On a memorandum dated 2 June 1999,
Director B adds in relation to a payment to Mr. Hibbert of US$3,000 “This will be
the last one in advance.” Whether by way of advance or otherwise, one particular
payment followed the receipt of a memorandum from Manager C dated 30 June
2000 announcing that “Joe Hibbert, Technical Director of Ministry of Works,
Jamaica is due to arrive in the UK in July”. The sums sought were £5000 to be paid
into Mr. Hibbert’s Birmingham (UK) account, and £2500 to be paid to DAG Ltd to
cover Mr. Hibbert's travel expenses. One earlier payment, of £10,000, was made on
23 July 1998 to Mr. Hibbert while he was visiting the United Kingdom, and,
apparently at Mr. Hibbert’s request, consisted entirely of £20 notes. The M&J letter
of instruction to its bankers, Barclays Bank Plc regarding this payment was signed
by Director B.
100.
Director C signed the approvals of the majority of payments to Mr. Hibbert
relating to the two 1997 contracts, but apparently did not authorise any payments
relating to Jamaica 1.
101.
Director A signed approvals for payments in respect of both the 1997 contracts
and Jamaica 1.
102.
Director E authorised the entity Montego Bay Enterprises as the entity to which
Mr Gibson's commissions could be paid, as referred to at paragraph 57 above. His
status in the Company can be measured by the fact that on one document authorising
a payment of $20,000 to Montego Bay Enterprises, Director B writes “subject to
Director E approval”. Director E then went on to sign the document approving the
payment. His signature also appears on a number of approvals of payments to Mr.
Hibbert and he met Mr Hibbert at least once in the UK when he visited M&J’s
offices.
10/2147845_2 21
103.
Manager C wrote memoranda to Director B (and to the Office Manager - see
below) from 1996 onwards requesting payments be made to Mr. Hibbert, or DAG
Ltd. on Mr. Hibbert’s behalf. In some cases reasons are given, such as funeral
expenses for Mr. Hibbert’s mother (document dated 1 November 1998), or travel
expenses.
104.
The Office Manager, who has provided a witness statement to the SFO, has been
employed by M&J for a considerable period of time in various capacities. The
Office Manager was responsible for making sure that M&J were paid for the
products and services the Company provided to its customers. Within that role he
was responsible for transmitting “commission” payments when instructed to do so
by those in authority above him. He provides important evidence for the prosecution
in this case. That evidence shows that in relation to Jamaica, typically - though not
exclusively - Manager C transmitted requests to M&J for payments to be made
either to Mr. Hibbert or others, those requests were authorised by Director B and
another signatory, and the Office Manager then implemented the instructions for
payment. The Office Manager maintained and updated the “commission cards” for
all of M&J’s overseas agents.
105.
Other incidental payments were sought and paid - for example on 18 December
2000 Manager C wrote to Director B to the effect that M&J had been “approached”
and invited to pay Deryk A. Gibson a contribution of US$10,000 for “local party
funds”.
106.
It is plain and apparent that the payments to a public official in the position of
Mr Hibbert, often for expressed reasons which could have no conceivable legitimate
commercial purpose, are nothing other than bribes, which bribes were paid to
persuade Mr. Hibbert to use his influence in Jamaican government circles to secure
the Jamaica 1 contract for M&J. M&J accept that these payments were made with a
corrupt intent to so persuade Mr. Hibbert to act in a manner inconsistent with his
duties as a public servant of the Jamaican Government.
VIII: THE GHANA CONTRACTS
10/2147845_2 22
107.
M&J has conducted business with government departments in Ghana over a
number of decades. From the mid 1980’s until approximately 1996, M&J’s interests
in Ghana were represented by Kwame Ofori. During the early 1990's Kwame Ofori
acted as M&J's agent in Ghana. He controlled a Ghanaian bridge building company,
and apparently had influence within the ruling circles of the then ruling party in the
Ghanaian government - the National Democratic Congress (“NDC”).
108.
To promote its business transactions with government departments of Ghana,
M&J paid commissions to its agent or agents in relation to the business it won in
Ghana. It is accepted by M&J that through the creation of the GDF (the notional
fund created by M&J known as the “Ghana Development Fund”), its executives
facilitated corruption on behalf of M&J and that its executives were in (or sought to
create) a corrupt relationship with a variety of decision making Ghanaian public
officials with responsibilities affecting M&J’s affairs. These funds were
purportedly for the development of M&J business in Ghana but, in truth and reality,
were capable of and were understood to be capable of, being used for corrupt
purposes.
109.
When appointing and permitting its agents in Ghana to act on its behalf or for it,
M&J knew that there was a risk that unknown proportions of the agents' commission
totalling £750,000 might be used for corrupt purposes.
110.
The budget representing the GDF was managed by Director D, an executive
who later became a director of M&J. Whilst Director D had responsibility for
different territories during his career, in particular he had responsibility for Ghana.
Consequently during the material period, the affairs of M&J in Ghana were heavily
influenced by his direction and control.
111.
On 3 April 1996 Mr. Ofori and a relative attended a meeting at Twyford with the
Office Manager. It appears that Director B and other Directors made their excuses
for not attending. The Office Manager' note of the meeting records that Mr Ofori
did not have control over the "total 15% commission". Mr Ofori complained that he
had problems as he did not believe Director D had distributed 5% to the "relevant
10/2147845_2 23
personnel" or “local personalities”. The note records Mr Ofori saying that had he
been involved in the payment of the total amount of the 15% commission the
present difficulties would not have existed and said that this aspect had been dealt
with ably by him in the past.
112.
On 14 March 1996 Mr. Ofori had sent a fax on “Danielli Mabey Ltd” headed
notepaper (a Ghanaian company which was wholly unrelated to M&J and which is
understood to have been owned by Kwame Ofori). The fax was marked for the
attention of Mrs Margaret Ofori in Accra and appears to have been then passed to
M&J. The fax detailed how it was that “the situation in Ghana has been
deteriorating gradually ever since Director D came in to Ghana.” There can be little
doubt that the contents of the fax had become known at Twyford before Mr. Ofori
visited M&J’s Head Office. This is because Director D had himself sent a
“confidential memo” dated 25 March 1996 direct to Director B rebutting Mr.
Ofori’s assertions, and detailing how it was that he had had a meeting recently with
the only person who “can guarantee M&J’s position in this market”: Kwame Peprah.
Mr. Peprah was at that time the acting Minister of Finance and the Chairman of the
NDC Finance Committee.
113.
In fact Director D had been introduced to Mr. Peprah through Baba Kamara (aka
I. B. Ibraimah), who was the NDC Treasurer, and ‘political overseer’ for the
Ministry for Roads and Highways.
114.
The role of Baba Kamara and his value as an agent to M&J is made clear in a
document authored by a M&J executive, probably prior to July 1996, and sent to
Director A; Director B; Director C and Director E. The document is entitled
“Ghana” “Review of existing Agent and introduction of alternative Agent”.
Concerning the value of the proposed new agent,
“Kamara Ltd is a small Ghanaian contractor owned by Baba Kamara. He is the
NCE (sic) Treasurer and also the political overseer for the Ministry of Roads and
Highways. He is a member of the all powerful NDC Finance Committee which
includes Kwame Peprah (Minister of Finance and Minister of Mines and
Energy), Obed Asamoah (Justice Minister and Foreign Minister) and Mrs
10/2147845_2 24
Rawlings amongst others….[he] has considerable influence over Ato Quarshie,
the Minister for Roads, the Deputy Minister and other top ranking civil servants
and has been working with us since June 1994. This has been demonstrated over
the allocation of the extra Stg 1.3 mil for the Tano bridge and the Stg 4.5 mil
allocation for the Priority Bridge Programme.”
5
115.
Additionally, Mr. Kamara’s wife was secretary to the then President of Ghana -
the former Flight Lieutenant ‘Jerry’ Rawlings, who had originally achieved power
by means of a military coup in 1981. Unsurprisingly, a person in the position of
influence of Mr. Kamara was an attractive prospect to M&J as agent for their
business in Ghana, and the SFO contend, that M&J knew and intended that
commission paid to Mr. Kamara would be deployed as and when required to
corruptly promote M&J’s commercial interests. The SFO believe that because he
had demonstrated his effectiveness to attract business corruptly, he was appointed
by M&J. This is not accepted by M&J.
116.
Allied to the decision to use Mr. Kamara as their agent from some time early in
1996, M&J had plainly also decided to “sideline” Mr. Ofori, and to impose more
direct control over the payments made to “local personalities” by Director D
supervising and control from 1994 and the creation of the notional GDF.
117.
As will become apparent, whereas in Jamaica corrupt payments were directed
towards a specific individual, payments allocated against the GDF were more
general and numerous government ministers and officials were potentially in line
for a bribe. Each such payment required the authorisation of two M&J directors.
118.
Payments allocated against the GDF did not relate specifically to stages of
contracts in progress. The SFO says that they were obviously made with the
intention of securing and maintaining those contracts when it was deemed prudent
to do so. It is accepted by M&J that in creating and making payments from this fund
corrupt payments would be made to public officials in order to affect the decision
making process in favour of M&J. Thus payments were made for a variety of
5
MJN01 000131000056-7
10/2147845_2 25
purported purposes to a variety of ministers and officials. Some of those purposes
were self-evidently unrelated to M&J’s legitimate business such that the payments
can best - and, indeed, only - be described as bribes. Not only were the bribes overt,
so too was the means of collection on the part of the Ghanaian ministers and
officials, most of whom had UK bank accounts. Some, indeed, visited the UK in
order to collect their payments in sterling.
119.
During the 1990’s M&J entered into three principal contracts with the Ghanaian
Ministry of Roads and Highways (“MRH”) for the provision of bridges: Priority
Bridge Programme Number 1, worth £14.5 million, was agreed in 1994; Priority
Bridge Programme Number 2, worth around £8 million, was agreed in 1996; and the
Feeder Roads Project, worth £3.5 million, was agreed in 1998.
120.
Throughout the relevant period, and until the general election in 2000, the NDC
formed the Government of Ghana and many of the GDF payments were directed to
its members. Thus the then Minister at the MRH, Dr. Ato Quarshie, received a
cheque when he visited London in July 1995 in the sum of £55,000 for “contract
consultancy”. The cheque was drawn on M&J’s Clydesdale Bank account at the
Victoria branch in Buckingham Palace Road, and signed by Director A, and another
M&J director at that time. Director A also faxed the bank instructions to enable Dr.
Quarshie to cash the cheque.
121.
The payment to Dr. Quarshie and the following payments are but examples of a
wider-ranging series of bribes to various ministers and officials, which will be set
out in a schedule. Even relatively junior officials were the willing recipients of
bribes. In 1996 Saddique Bonniface was the ECGD desk officer in the Ministry of
Finance (he was recently until the change of government a highly placed politician
within the Ghanaian administration). He had a bank account at the National
Westminster Bank in Rickmansworth. On 29 February 1996 Saddique Boniface
received a transfer of £10,000 from M&J to an account at Barclays Bank Plc in
Watford. On 29 October 1996 the same account received a transfer of £13,970 from
M&J. On or about 29 October 1996 Amadu Seidu, the Deputy Minister at the MRH,
received £5000 in his Woolwich account held in St. Peter Port, Guernsey and Dr.
George Yankey the Director of Legal and International Affairs at the Ministry of
10/2147845_2 26
Finance, received £10,000 in his Midland Bank account in Hill Street, London W1;
and Edward Lord Attivor, the ex minister at the MRH, also received £10,000 in his
London bank account. This was the same branch of the Clydesdale Bank which was
used by M&J. Authorisation from M&J directors for each of these transfers was
requested by Director D. Amadu Seidu received a further £5,000 on 7 March 1997,
the same date on which Saddique Bonniface received a further £2,500. The latter
two transfers were authorised by Director B.
122.
Mr. Bonniface’s son was a student at Exeter University, where, on or about 26
March 1998, he received a cheque from M&J in the sum of £500. Although this is a
relatively small sum it is indicative of the nature of the corruption M&J was then
practising: it is a payment which could have no conceivable legitimate commercial
purpose.
123.
M&J's payments to Dr. Yankey were not confined to the payment on or about 24
October 1996, since his Hill Street account received £5,000 on 26 August 1998 from
M&J. Dr. Yankey was subsequently convicted in Ghana of conspiring to wilfully
cause losses to the state and served a prison sentence, along with Kwame Peprah.
Their convictions cannot be directly related to payments from M&J, but reflect the
culture of government corruption at the time, a culture with which M&J was only
too willing to engage.
124.
From December 1994 to 18 August 1999, M&J used the GDF and associated
accounts to pay bribes directly to named Ghanaian public officials totalling
£470,792.60.
125.
None of the payments set out above, obviously, could be said to have anything
remotely resembling a legitimate commercial purpose. Thus M&J was able to
engage in wholly corrupt business practices without any effective level of external
scrutiny being applied. Plainly, those who governed and directed the affairs of M&J
were responsible for arranging and authorising payments which, no matter they
were eagerly sought and accepted, were considered vital in securing M&J’s
business in a developing nation – at the expense of those least able to avoid the
10/2147845_2 27
expenditure that is inevitably involved in the making of corrupt payments: the
people of Ghana.
IX: M&J’s INTERNAL INVESTIGATIONS
126.
The counts on the indictment are in one sense specimen counts. They fully
reflect the defendant Company’s criminality in the two jurisdictions concerned.
However, during the course of the investigation thus far, indicators have emerged to
the effect that corruption has been practised in other jurisdictions.
127.
The Company’s solicitors Herbert Smith LLP, have been instructed by M&J’s
present board to instigate an internal investigation into suspected corruption
practiced by M&J under its previous directorial and managerial regime.
128.
Their investigations are ongoing. Before they have been completed, what was
initially revealed by the Company’s investigations has caused the Company to come
forward and make disclosures to the SFO.
129.
Of necessity the investigations have been limited to a review of Company
documentation and interviews of current Company employees. It follows that the
internal investigations are incapable of inquiring into foreign bank accounts, the
activities of foreign agents and the like – which are matters which would ordinarily
be the subject of MLA requests.
130.
These investigations have revealed other corruption indicators. Some of these
might not necessarily be provable cases of corruption in this jurisdiction or at all.
The SFO is not in a position as of this date to determine with certainty whether
charges could be brought in all or the majority of cases.
131.
M&J accepts that in order to establish and secure its business abroad, it
appointed agents to act on its behalf in the various countries where it was seeking to
win contracts to supply bridges. Commission fees paid to local agents ranged from
contract to contract and by jurisdiction. In a number of jurisdictions; Jamaica,
Ghana, Mozambique, Bangladesh, Madagascar and Angola M&J did not pay all
10/2147845_2 28
those commission fees to its agents but in some cases it also used some of the funds
set aside for commission to make direct payments to public officials. Those
officials were either responsible for or involved in the allocation of contracts to
build bridges.
Angola
132.
During the 1990's M&J entered into a number of contracts with the Angolan
Government for the provision of bridging and associated services through which it
derived sales revenue worth in total approximately £6m.
133.
In a summary document prepared by a M&J employee it records that there have been
contracts and revenue in every year from 1991 to 1998 totalling £6,145,000. The
document records that the product sold was the C200 EW with “a few Hydromasters”
and that in 1997-8 the contracts were supported with Swedrelief (funding provided by a
Swedish Government aid body that is involved with U.N. projects).
134.
A Mr Antonio Gois was an official at the Angolan State owned entity, Empresa
Nacional des Pontes (National Bridges Company), and appears, at the relevant time, to
have been the direct contact for M&J along with another public official, Joao Fucungo,
also from the same department. Both Mr Gois and Mr Fucungo appear to have held the
position of Director of the Empresa Nacional Des Pontes. Details as to the exact dates of
their Directorships and their specific roles in the department are not available.
135.
In relation to Angola, in the 1990's M&J had an Export Agent's Commission Card in the
name of a company called Servicios Bella. Details in relation to the incorporation
(including country of incorporation), directors, and ownership of this company are not
available. At that time it was believed generally by M&J that Servicios Bella was owned
by or was for the benefit of Mr Gois. Payments made to Servicios Bella were made to a
French bank account.
136.
Manager C was the M&J employee with the primary responsibility for sales in Angola.
His position in M&J has already been set out at para 58 above (in relation to Jamaica).
10/2147845_2 29
Manager C requested M&J to remit commissions due under Angolan contracts to
Servicios Bella's account at the Banque Transatlantique in Paris.
137.
Details of the payments made to the French bank account of Servicios Bella are set out
in the table below:
Date Amount in US $ GBP equivalent (where
known)
23.11.1993 298,373.22
15.12.1993 348,816.81
28.04.1994 30,000.00
09.12.1994 44,664.62 29,003.00
09.02.1995 50,000.00 32,239.94
11.03.1995 67,246.51 42,029.07
10.04.1996 119,225.25 77,925.00
30.08.1996 171,795.22 112,400.69
08.05.1997 49,663.60 31,039.75
05.08.1997 27,593.41 17,257.12
10.11.1998 50,073.58 31,295.99
Total 1,257,452.22
138.
In relation to Angola, requests for authorisation of payments originated from Manager C
specifying that the amounts should be deducted from the commission account. In some
cases, requests were made by Manager C based on demands that he claimed were made
by Mr Gois.
139.
During 1993 calendars, diaries and other promotional gifts worth £3,124.80 and US
$2,208.51 were paid for in the UK by M&J and appear to have been provided for the
10/2147845_2 30
benefit of Mr Gois. In a faxed handwritten letter dated 24 November 1993 from
Manager C to the Office Manager; a Director of M&J and others he states:
“Please go ahead + purchase the two Land Rover for Gois from 2
nd
C payment invoice
from Hull, Blyth with this fax. Try + establish if Land Rover are imed avail +
advise me E.T.A.”
140.
Two Land Rover Defenders costing in total £28,646 were then purchased in the UK
during 1993 and shipped to Angola for Mr Gois' benefit. In 1994, further promotional
gifts worth £974 were paid for by M&J in the UK.
141.
In one fax to Director E dated 1 February 1995 Manager C writes:
“Further to our telecon I have been chased by G on several occasions for a
transfer of 50k U.S. as an advance for C for U.N. order. As this is a firm
U.N. order I recommend we comply with his request immediately. He
will not accept downgrading his C from 15 to 12.5 as 15 was the amount
1
st
agreed. As we are talking about a further 5 m U.S. package I’m not
inclined to argue. Pls advise what info you have on a fund the Angolan’s
are negotiating with European Development Fund”
142.
On 3 February 1995 further clarifying information was provided in a memo to Director
A concerning outstanding Angola orders which included a completed order for
Hydromaster units for which payment had been received in full from the Angolan
government and a pending order for various C200 bridges for the U.N’s agency, the
World Food Programme. The memo attached a copy of the abovementioned fax from
Manager C.
143.
The US $ 50,000 payment was made to Servicios Bella and authorised by Director A
and Director B.
10/2147845_2 31
144.
On 22 February 1995, Director A authorised a M&J employee visiting Angola to take
US$ 3000 cash for “local expenses”. These monies were paid to Mr Gois on 27
February 1995.
145.
In addition, $13,000 was paid to an account at Citibank in Berkeley Square to a
company called Unimedia Ltd in June 1997. This appears to have been a bribe for Mr
Gois' benefit.
146.
Cash bribes totalling US $13,000 were made to the public official Mr Fucungo in 1993
and 1994. It is not clear where these bribes were made. A payment of US$ 10,000 was
requested for medical treatment for Mr Fucungo’s wife in South Africa.
147.
The SFO has been informed by M&J that not all of the documentation relating to
payment approvals is available. However, Director A appears to have been involved in
the approval of a number of the payments in 1993 and 1994. Subsequently, Director B
was also involved in approving a number of the subsequent payments to Servicios Bella.
Madagascar
148.
M&J have supplied bridges to Madagascar since 1972. In early 2001 M&J won a
contract with the Madagascan Government worth approximately £1.1m to supply 11
bridges. This was a World Bank financed project.
149.
Manager A had responsibility for sales in Madagascar during 2000-2001 when the
contract with the Madagascan Government was being negotiated. M&J’s local Sales
representative had responsibility for a number of French speaking African countries and
he reported to Manager A who in turn reported to Director A and Director B. In a M&J
memorandum dated 17 July 2000, anticipating the business eventually won by M&J, the
local Sales representative states,
“As explained to Director A during his visit to France, we have alternatives to HFF and
we think it might be time to consider these seriously. A tender from the World
10/2147845_2 32
Bank has just been issued. It is supposed that the specifications have been
written as much as possible in our favour (though we have not seen them yet).
We think it is the proper thing for a visit to clarify the relationships with our final
client, Ministry of Public Works and to start the change in our local
representation.”
150.
Henri Fraise Fils & Cie Ocean Indien Ltd ("HFF") was the company that acted as M&J's
agent (the local representation refered to above) in Madagascar during the relevant
period. Initially HFF sought a commission of 17% of the contract value. The principal
of HFF was Ralph Fraise. However, M&J considered the level of commission to be too
high for the nature of the contract. During discussions regarding the commission HFF
disclosed that the commission being proposed was set at this level since it would need to
pay from the commission it received 6% of the contract value to Mr Jean Emile
Tsaranasy as a bribe.
151.
Mr. Tsaranasy was the Madagascan Minister for Public Works (or Ministere des
Travaux Publics) at the relevant time and was the direct contact for M&J in relation to
the £1.1m bridging contract. In the light of these discussions M&J decided that it would
seek to negotiate directly with Mr Tsaranasy to try to reduce the amount of the bribe that
would be paid to him. In the final event, HFF was paid approximately 11% of the
contract price.
152.
After entering into direct negotiations with Mr Tsaranasy it was agreed that he would
receive a payment of approximately 2.83% of the contract value. M&J's Export Agent's
Commission Card for Madagascar records the following payments that appear to have
been made to Mr Tsaranasy in the total sum of £33,250.00. These payments were
bribes.
153.
Details of payments to Mr Tsaranasay are set out in the table below:
Date Amount in
10/2147845_2 33
GBP
11.07.2001 £ 3,650
22.08.2001 £ 7,200
30.08.2001 £ 3,650
30.08.2001 £ 7,200
06.02.2002 £ 6,160
06.02.2002 £ 5,390
Total £ 33,250
154.
The bribes were made either by cash being given to Mr Tsaranasy or his representatives
in Paris or by M&J making bank transfers to Mr Tsaranasy's Swiss bank account, the
Banco del Gottardo in Geneva over a period from August 2001 until early February
2002. On 12 July 2001 Mr Tsaranasy picked up 39,098.07 FF (£3650) in a bank in Paris
and signed for the money.
155.
M&J also paid a bribe to Mr Zina Andrianarivelo-Razafy when he served as the
Madagascan Ambassador to the United States, the World Bank and the International
Monetary Fund in 2001. Mr Andrianarivelo is currently the Permanent Representative
of Madagascar to the United Nations.
156.
A M&J note, dated 24 November 1998, from the Manager B to Director A, Director B
and Manager A states:
“For your information Zina Andrianarivelo from Fraise has been appointed the
Madagascan Ambassador to the USA and will take up his position in
Washington from the 1 January 1999.”
157.
In a memorandum from Manager A to Director B dated 7 February 2001, he states,
10/2147845_2 34
“We have now been notified of the order … E00424. The full FOB value will be
£1,131,123…For his assistance we wish to pay Zina Andrianarivelo $10,000
(allowed in figures) of which $5000 to be paid now and the balance in due
course.”
158.
In a further memorandum from M&J’s local Sales representative to Manager A dated 7
February 2001 the same payment is referred to and is explained:
"Zina in Washington played an important role in the allocation of funds from the World
Bank to Madagascar for bridges. He also helped at some difficult stages in the
negociations [sic]; finally he will be helpfull [sic] in the future as well to
introduce us in Washington. I propose to reserve for him an enveloppe [sic] of
$5000 on the first job (7 bridges) and an additional $5000 if we actually get the
additional 4 bridges."
159.
Subsequently, after receiving a request directly from Mr Andrianarivelo-Razafy on 23
February 2001 a sum of $5000 was paid into his account at Credit Lyonnais in France on
23 February 2001.
160.
The SFO has been informed by M&J that not all of the payment authorisation forms can
be located. However, requests for payments to Mr Tsaranasy were generally made by
Manager A and Director B was involved in the approval of the payments made to Mr
Tsaranasy.
Mozambique
161.
During the 1990s M&J entered in to a number of contracts with Government
departments in Mozambique . M&J received sales revenues from contracts in
Mozambique worth approximately £6 million during the relevant period (1995-1999).
162.
A written report to the Directors of M&J of a visit to Mozambique in November 1995
refers to a number of projects, in particular in Zambesia, at various stages of completion.
10/2147845_2 35
163.
Mr Amerigo Fortuna was the Deputy Director of the Mozambique Ministry of Foreign
Affairs and Co-operation and was involved in the selection of eligible recipients of
project grants. Carlos Fragoso was the national director of the National Directorate of
Roads and Bridges (DNEP) in Mozambique. Subsequently Carlos Fragoso appears to
have been chairman of the National Roads Administration (ANE) in Mozambique.
164.
It appears that M&J met with Mr Fortuna and Mr Fragoso and, inter alia, discussed the
extension of a contract for spare parts in Mozambique. This was a contract which
involved Crown Agent backing and the involvement of Japanese financing
arrangements. It is reported that,
“Met Dr. Fortuna who is involved to some extent in the selection of eligible recipients
of NPG, who confirmed that there probably will be $ 8 m of NPG available in
1996, and DNEP will be eligible for a further $ 2 m (max $ 5 m per
customer)…Mr Fragoso confirmed he will apply for further $ 2 m for Bridge
Spares in Feb/Mar 1996.”
165.
M&J retained an Export Agent's Commission Card for Mozambique which covers the
period 23 August 1997 to 10 April 2000 in the name of "C Fragoso". M&J's
commission card records that it made a number of payments to Mr Fragoso between 14
October 1997 and 10 April 2000 in the total sum of £286,978.54..
166.
M&J also retained an Export Agent's Commission Card for Mozambique which covers
the period 23 February 1996 to 23 January 1998 in the name of "Fortuna". This
Commission Card records a number of payments made to CKY Partnership, V&M
Tooling (Pty) Ltd and V&M Import and Export Agents (Pty) Ltd between the above
dates in the total sum of £42,475.88.
167.
It is possible that these were companies with which Mr Fortuna is connected. However,
it is not possible to confirm this connection; the SFO has been told by M&J that it does
not have any further information available about these companies; nor is it now known,
because records are no longer available, where these companies received payment.
10/2147845_2 36
168.
Another name appearing on M&J’s Export Agent’s Commission Cards for
Mozambique was a Mr Notece. Mr. Notece was an engineer employed by the DNEP
who it appears had some involvement with M&J's work in Mozambique. Mr Notece's
name appears on an unnamed Commission Card in relation to a payment of US$5,000
made in Mozambique in October 1999.
169.
Manager A was responsible for M&J sales in Mozambique. In a memo to Director B
dated 1 October 1999 he states,
“There are three recipients of commission and I believe it important that I can take USD
5,000 on my imminent trip to Mozambique…”
170.
M&J no longer has all the documentary records relating to its work in Mozambique
however it appears that this payment was made to Mr Notece and that in total Mr Notece
was paid $25,000 in Mozambique.
171.
Insofar as the payments to Mr Fragoso are concerned, these appear to have been made
by bank transfer to his Swiss bank account. M&J's records show that Director B would
have met both Mr Fragoso and Mr Notece during a visit to Mozambique in March 1996.
Insofar as the payments made to Mr Notece are concerned, it appears that these were
cash payments whereby Mr Notece received the cash in Mozambique.
Bangladesh
172.
M&J conducted business in Bangladesh between 1982 and 2001. Between 1997 and
2001 M&J received sales revenue from contracts in Bangladesh worth approximately
£20 million. Dates that these contracts were executed and their value are not available.
In part the requirement for these bridge contracts was in response to devastating
flooding in Bangladesh in 1998.
10/2147845_2 37
173.
Bangladesh is a country which has a reputation for widespread corruption and did so
during the period concerned. M&J made corrupt payments in connection with one of
the contracts obtained in this jurisdiction.
174.
In a M&J document concerning sales planning and development, believed to have been
authored by Director D, he states,
“High Marketing costs.
Our success has been based upon: Development of close personal relationships with key
personnel in the Roads and Highways Department, the Ministry of
Communications, the Planning Ministry and the Ministry of Finance. The use of
the “white man’s handshake” is extensive in building trust and confidence
before any contract is concluded in Bangladesh.
The drive and contacts of our agent. Our new agent has very strong contacts within the
Ministry of Communications. He has also worked hard at developing relations
within the other relevant Ministries where he was not known.”
175.
M&J entered into a contract on 29 June 1999 with the Ministry of Communications
(acting through the Roads and Highways Department) for emergency bridging under the
Emergency Flood Rehabilitation Programme (the "MOC Contract"). M&J's records
indicate that it received sales revenue of approximately £15 million in relation to the
MOC Contract.
176.
This was a contract for the supply of 25,000 rft of Bailey Bridges; “launching kits”; tool
kits and emergency floating bridges. This was a contract that was underwritten by the
ECGD.
177.
C. M. Nizamuddin (also known as Bulbul), was M&J’s local agent in Bangladesh from
at least 1998 until some time in 2002. M&J's Export Agent's Commission Card in the
name of "C. M. Nizamuddin" records that approximately £2.4 million in commission
payments in connection with the MOC Contract was paid during 1999 and 2000 through
accounts in various names.
10/2147845_2 38
178.
Transfers were also made in relation to Bangladesh which are recorded in a separate
M&J Commission Card entitled Asia Development Fund. Director D appears to have
made cash payments in Bangladesh and claimed these as expenses to be deducted from
the Asia Development Fund. On trips in April and May 1999, Director D made a
payment of £320, referenced as "TSC approval" and a payment of £640 referenced
"Purchase committee member". On a trip in June 1999, Director D made two further
payments of £1300 each to engineers.
179.
From 1997 to 2004 Khandaker Rahman was a Chief Engineer employed by the Roads
and Highways Department (RHD) in Bangladesh. He was employed in a number of
different capacities during this period. He had a role in procuring or approving contracts
for bridges in Bangladesh. In his CV, held on file by M&J, he states that between
1982-1986 he was a member /secretary and in 1997-1999 he was a permanent member
of the Roads and Highways Committee on Procurement (RHD COP). He stated that, in
respect of his involvement in the RHD COP his responsibilities included:
“To scrutinize, evaluate and recommend the procurement of all civil & mechanical
works/consultancy and supply works of Roads & Highways Department. The
construction of all Roads & Bridges have been dealt with and the
recommendations of the awards were made.”
180.
Khandoker Azad is Khandaker Rahman's son. There is evidence to suggest that
payments were made to accounts in Khandoker Azad's name for Khandaker Rahman's
benefit. M&J retained an Export Agent's Commission Card in Khandoker Azad's name.
Certain payments were also recorded on the commission card of C M Nizamuddin in the
name of Khandoker Azad. The available Commission Cards record payments totalling
£240,000; however these Commission Cards record multiple payments on the same day
and not all bank transfer documents are available, therefore there may be some
duplication of payments.
181.
Director D requested that a number of payments be made by M&J to Khandaker
Rahman and/or Khandoker Azad.
10/2147845_2 39
182.
On 4 October 2000 Director D requested that Director B authorise cash in the sum of
£25,000 to be made available for Khandaker Rahman. The arrangement was that
Khandaker Rahman would go with the Office Manager to M&J’s local branch of
Barclays in Reading to collect the cash. A letter signed by Director B was sent to
Barclays' Reading branch on 9 October 2000 requesting £25,000 in £50 notes to be
made available for collection on 12 October 2000. The cash collection is entered on
Bulbul's Commission Card for 12 October 2000.
183.
In addition to the cash payment referred to above, Director D also requested payments to
Khandaker Rahman to be paid to bank accounts in the name of Khandoker Abdullah Al
Azad. Payments were made to bank accounts at Barclays Bank, Jersey; Barclays Bank,
Richmond; National Westminster Bank, Richmond; and Standard Chartered Bank,
Jersey. Khandoker Azad's Commission Card also records two cash payments of
US$5000 made at Twyford on 8 May and 6 October 2000. Additionally Director D
claimed £500 (to be deducted from Khandoker Azad’s commission card) as part of his
expenses for a business trip that took in Bangladesh in late November – early December
2000.
184.
Not all documentation relating to payment approvals is available. However, Director B
and Director D appear to have been involved in the approval of a number of the
payments.
185.
The total value of the direct payments in these four jurisdictions are in the region of
£700,000 and the value of the contracts which were obtained by M&J in those
jurisdictions at the time of those payments was in the region of £22.5 million.
CONCLUSION
186.
The Court should note that in the relevant period of the indictment M&J’s annual
turnover would have averaged about £56 million and these investigations do not
purport to cover all the contracts M&J entered into during the relevant period.
10/2147845_2 40
Realistically in terms of time and cost, it is accepted it cannot and need not investigate
all contracts.
187.
The SFO is of the view that it is appropriate to prosecute the Company based on its
admissions before completion of the Company’s investigations and the SFO's
investigations into the conduct of the individuals. Pending that outcome, it is not the
SFO's case that the instances of corruption disclosed to date by the Company are the
totality of the corrupt activity.
188.
For the purposes of illustrating the pervasive historical picture, the Company accepts
and admits that in four other jurisdictions - Angola, Bangladesh, Madagascar, and
Mozambique - corrupt payments were made direct to elected or appointed public
officials.
189.
Deep consideration has been given by the Director of the SFO into continuing further
and lengthy investigations into M&J’s affairs. Those investigations may or may not
reveal further sustainable criminal charges. But in the light of the admissions today and
the other features of remediation that will be explained to this Court the Director of the
SFO has taken the view, in the public interest, that the Company should be sentenced
now and on this basis.
190.
What is clear from the evidence disclosed, and accepted by the Company in relation to
the six jurisdictions put before the Court today, is that there was a practice of corrupt
activity within the Company before 2002.
191.
The counts on the indictment are illustrative of practices that also occurred in the other
named jurisdictions. They cannot be seen as isolated offences. The consequences of the
Company’s recognition of this fact is that in considering the proper sentence, that the
Court can take into account that the Company engaged in more widespread corrupt
activity in the four other jurisdictions details of which are set out above.
192.
Furthermore, as is explained elsewhere, the SFO have sought where appropriate to have
regard to the model for corporate regulation adopted by the Department of Justice in the
United States of America under the Foreign Corrupt Practices Act 1977. That model
10/2147845_2 41
contemplates corporate remediation as an important factor in considering the propriety
and proportionality of lengthy investigations into companies that are willing to come
forward, engage co-operatively with the Prosecuting authorities and admit their guilt.
193.
Accordingly, given that the Company has engaged and is continuing to engage in efforts
at remediation, and can face only a financial penalty, it is felt that further investigation
of offending corporate behaviour would not be an appropriate use of resources nor be in
the public interest given how this case is being presented for sentencing.
194.
The SFO has decided not to name certain directors, executives and employees of M&J
at this stage because they may face trial in English Courts. The fact of the naming of
certain directors, executives, employees of M&J and any others should not be taken by
this court, the public and press as determinative of guilt of any of the persons named in
this Opening Note. In the interests of fairness to those who are under investigation, no
settled view concerning the culpability of individuals whether named here or not has
been made.
195.
The corrupt payments made benefited the recipients directly, and in all likelihood will
have benefitted the shareholders of M&J indirectly, in that they profited from business
they might not otherwise have obtained.
196.
The corruption, came at the cost of those least able to afford it: the peoples of the
countries in which M&J operated.
X: IRAQ: ‘OIL FOR FOOD’
197.
A separate Opening Note is being prepared in respect of the Iraq “Oil For Food matter.
10/21623009_2
42
APPENDIX 1
The following matters are intended to assist the Court. They are a non-exhaustive list of the
factors which the Director of the SFO takes into account when considering whether to
investigate and prosecute allegations of overseas corruption by United Kingdom based
companies and individuals.
1. The case of M&J is the first prosecution undertaken by the SFO’s dedicated Anti
Corruption Domain.
2. The present Director of the SFO has made clear his position in the public domain and to
the UK business community that companies can and should refer themselves to the SFO
where it appears they have previously engaged in corrupt practices overseas.
3. The SFO is committed to the interests of the victims of overseas corporate corruption.
Overseas corruption is not a “victimless crime”. As the present case demonstrates only
too well, the victims are all or any of the proper interests of the governments of the
countries where such practices are carried out, the integrity of their civil services and
public officials, and - more generally - the peoples of those countries, particularly the
poorer and poorest sectors of those populations.
4. The United Kingdom has ratified the OECD Convention of 1999 prohibiting overseas
corrupt practices. As a result, it enacted sections 108 and 109 of the Anti-Terrorism,
Crime and Security Act 2001. Furthermore, at the G8 summit at Gleneagles in July
2005, the United Kingdom re-affirmed its commitment to the eradication of overseas
corruption, as did the world’s other leading industrialised nations. By virtue of the
multilateral approach to the problem, it can be seen that United Kingdom companies are
not disadvantaged in their endeavours to compete for overseas business. Equally, it is
the view both of the United Kingdom government and the Director of the SFO (amongst
others) that corrupt practices overseas distort proper competition and are wasteful and
damaging to the economies of, in particular, developing nations.
5. Where companies which have been engaged in corrupt practices refer themselves to the
SFO, the Director will consider the option of imposing a monitoring system to ensure
10/21623009_2
43
absolute compliance with UK law in particular and ethical standards in general.
Although UK law does not, at present, provide for monitoring as a means of
remediation, the Director will, where appropriate, seek to follow the model provided by
the United States of America’s Foreign Corrupt Practices Act 1977. In particular, the
Director of the SFO will have regard to whether the instances of corrupt practices by a
self-referring company are relatively historic, and what the company itself has done to
remedy its past conduct, including whether the company remains in the same ownership
and/or whether the board of directors and the management remain the same as those
responsible for instigating and supervising corrupt practices.
6. The Director of the SFO does not necessarily regard monitoring as an alternative to
prosecution; nevertheless he acknowledges that a company’s agreement to being
monitored may constitute significant mitigation in cases which are prosecuted.
7. The Director of the SFO will consider where the public interest lies in deciding what
approach to take in dealing with a company in these circumstances. There will be cases
where the public interest is very firmly in favour of prosecution. There will be others
where alternatives to prosecution (which still impose significant penalties on the
company) will be appropriate. The Director has also made it clear that any resolution
will ultimately be subject to public scrutiny.
8. The Director of the SFO has also explained publicly that any resolution relating to any
company is entirely without prejudice to any investigation and prosecution of those
individuals who took part in unlawful activity. There are circumstances in which the
public interest will be in favour of investigation and prosecution of those individuals,
notwithstanding that the company is dealt with by way of an alternative or alternatives
to prosecution.
IN THE SOUTHWARK CROWN COURT No.T2009 7513
BETWEEN:
REGINA
- v -
MABEY AND JOHNSON LIMITED
______________________________________________________
PROSECUTION OPENING NOTE
______________________________________________________
Note: This statement is provided for the assistance of the Court and the parties. While it
substantially sets out the Crown’s case, it is not, nor does it purport to be, a full and exhaustive
pleading of that case.
I. INTRODUCTION
1.
Mabey and Johnson Limited (“M&J” or "the Company") is a privately-owned,
family-run company, founded in 1923 by the Mabey family and incorporated in
1943. One of the original directors was a Mr Bevil Mabey who remained a director
of the Company until December 2007.
2.
M&J is an engineering company whose principal business over the last 35 years has
consisted of supplying bridging equipment in over one hundred countries, largely in
the developing world. In general, the bridges supplied consist of standardised and
interchangeable components which can be easily transported after manufacture in
the United Kingdom. Similarly, erection on site is a relatively simple engineering
process. On its website M&J proclaims that it manufactures “quick, simple, reliable
bridges” and goes on to assert “our modular steel panel bridge systems provide a
means of helping communities and markets connect reliably and safely”.
10/2147845_2 2
3.
Over the years - according to its website - M&J has become the “world leader” in its
field. Current turnover is around £50 million. During the indictment period
turnover was on average £56 million.
1
In the year to 30 September 2008, pre-tax
loss (before exceptional provisions) was c.£2 million. The Company employs
around 240 people, 210 of whom are based in the UK. Its manufacturing site is at
Lydney in Gloucestershire, where 160 people are employed in creating around
20,000 tonnes of bridging components annually. The Mabey family has reportedly
accumulated over £200 million pounds as a result of their ownership and
management of the Mabey Group, including M&J.
4.
M&J’s overseas clients consist principally of government departments and
highways authorities. Its contracts with foreign governments have often been
underwritten by the United Kingdom's Export Credits Guarantee Department
("ECGD") which is a statutory body whose role is to benefit the UK economy by
helping exporters of UK goods and services win business and UK firms to invest
overseas by providing guarantees, insurance and reinsurance against loss. The
Jamaica and Ghana contracts which are the subject of this indictment were in fact
supported by the Export Credit Guarantee Department (“ECGD”).
II: SUMMARY OF ALLEGATIONS AGAINST M&J
5.
In order to establish and secure its business abroad, M&J appointed agents to act on
its behalf in the various countries where it was seeking to win contracts to build
bridges.
6.
It is accepted by M&J for the purposes of sentencing that the payment of
commissions to agents was a routine aspect of the Company’s business, authorised
at director level. These payments were structured into the Company’s commercial
processes and were factored into contract pricing. Commission fees paid to local
agents or middlemen ranged from contract to contract and by jurisdiction. However,
historically, it was not atypical for agents to be paid between 5-15% by M&J,
although M&J maintain the average was about 8%.
1
Based on statutory accounts for the years 1992/1993 to 2001/2002.
10/2147845_2 3
7.
In Jamaica and Ghana M&J knew that its agents were involved in corrupt
relationships with public officials with influence over M&J’s affairs in those
jurisdictions. M&J accept that they agreed with their agents to pay bribes directly to
public servants in those jurisdictions. Those bribes were deducted from the overall
commission due to the agents.
8.
It is not asserted by the SFO, in this case and generally, that all payments to agents
are illegitimate or that all agents act corruptly. Agents, in some jurisdictions are
both necessary and play a useful marketing and other legitimate function to the
exporter. However it is equally beyond reasonable argument that unless properly
monitored and controlled, the employment of local agents and payment of
commissions is a corruption “red flag” exposing the company to risk. What it may
provide is a convenient smokescreen to deny corporate or individual knowledge of
arrangements conducted overseas. This was the reality of business practices of this
era.
9.
In both Jamaica and Ghana M&J’s agents were involved in corruption in those
jurisdictions. Their corruption was known to M&J and the SFO suggests, though it
is not accepted by M&J, that this would have been part of the rationale of their
appointment. The direct bribes were deducted from the overall commission to be
paid to the agent with respect to Jamaica and the majority were deducted from the
agent's commission for Ghana. In short it is the SFO’s case that the Company
therefore employed known bribers as agents for commercial gain from the outset.
10.
The SFO’s contention, based on inference from all the available facts, is that those
agents were appointed to facilitate corruption. The SFO believes this was known to
the directing minds of M&J. However this is not accepted by the Company.
Nevertheless in the light of the scope of what is admitted by the Company and what
is before the Court, namely bribes of more than £1 million on contracts valued in the
region of £60-70 million, it is the Director’s view that this difference is not so
substantial that it should require resolution by calling evidence. After all where
there are direct payments to public servants, it does not make much difference, for
10/2147845_2 4
the liability of the Company, if there were additional payments through the agents to
facilitate corruption. In some respects it may well be seen as aggravating where
modestly paid public servants are corrupted for relatively small amounts in
proportion to the commercial gain for the company concerned.
11.
In Jamaica M&J’s agent was paid 12.5% of the Jamaica 1 contract price. As will be
explained later, this was a headline figure as the Jamaica 1 contract was a Joint
Venture with Kier International Limited.
12.
For budgeting purposes in relation to the Priority Bridge Programme II in Ghana,
M&J created a notional fund of £750,000 called the "Ghana Development Fund"
("GDF") against which direct payments to public officials were made. In total from
the GDF and associated accounts, between December 1994 and 18 August 1999,
£470,792.60 were paid in bribes.
13.
In a lot of cases monies, represented on M&J's commission cards, would be
deducted from the agents' commission to be paid direct to the public servant. M&J
authorised these requests at director level and payments were processed both to UK
and overseas bank accounts.
14.
Although the appointment of agents to assist an exporter in obtaining overseas
contracts is commonplace and legitimate, payments to agents also carry an accepted
and obvious corruption risk.
15.
The Company does not accept that there was a corrupt intent in the appointment of
and subsequent commission payments to the agents in Jamaica and Ghana.
However it is accepted by M&J that in Jamaica and Ghana and in the countries
referred to below (where corruption has also been identified as a result of internal
investigations conducted on behalf of the Company) that in paying agents large
commissions there was a risk that unknown proportions of those payments might be
passed on to public servants as bribes. It also follows in countries with a similar risk
of corruption where M&J operated, such a system must have given rise to an
identical risk.
10/2147845_2 5
16.
Although, historically, M&J’s corrupt business practices appear to have been
carried on in a number of the countries in which it operated, for reasons which will
become clear the Company is indicted for its dealings in Jamaica, Ghana, and - in a
separate and distinct matter - Iraq. In addition the company has disclosed four
further jurisdictions in which corruption occurred, Madagascar, Angola,
Mozambique and Bangladesh, the relevance of which is described further later in
this Opening Note.
17.
A number of individuals, are the subjects of investigation with regard to the corrupt
business practices of M&J. Those investigations may be protracted. Currently,
however, the position appears to be that if any proceedings are to be commenced
against individuals associated with the Company, they will be contested, despite the
fact that the Company is pleading guilty to allegations which are largely evidenced
by the Company’s own documents.
18.
Given that the case against the Company could not have been brought before the
Court as expeditiously as it has been without the co-operation of and admissions by
the Company. Any long criminal investigation into the business affairs of a
company can have a damaging effect on it. The SFO are of the view that it is
appropriate to prosecute the Company before the completion of the investigations
into the conduct of the individuals.
19.
As will be described below, this is a Company that has replaced its board and is
changing and continues to review its business practices. It is, to a notable extent, no
longer the company that committed these crimes. Therefore mindful of both the
SFO’s domestic and international obligations, the SFO wishes to conduct its duties
in a way that does not unnecessarily damage the Company’s ability to trade. Of
course, that objective can only be fully discharged, as in this case, where the
Company fully and properly co-operates with the prosecuting authority.
20.
In this context it should be noted that the policy of the SFO under the present
Director, further referred to below and Appendix 1, is that boards of companies
should be encouraged to approach the SFO and make a full disclosure of fraud or
corruption they have discovered together with proposals about the changes and
10/2147845_2 6
monitoring needed in the future to re-assure the public that the behaviour of those
companies meet the highest ethical standards. If companies do this then the SFO is
prepared to discuss with them the pleas or other resolution that the SFO considers to
be in the public interest.
III: BACKGROUND TO THE REFERRAL AND INVESTIGATION OF
CORRUPTION ALLEGATIONS RELATING TO M&J
21.
The referral of alleged breach of sanctions legislation is dealt with at section X of
this document. However, additionally during the last decade there has been some
speculation in the media and elsewhere concerning alleged corruption in relation to
M&J’s business practices abroad.
22.
The Metropolitan Police and latterly, the SFO, have sought to progress those
investigations, but, they could not be successfully progressed.
23.
On 11 January 2007 M&J commenced proceedings in the Chancery Division
against certain former employees and its agent in Jamaica. One of the Defendants in
these proceedings was Jonathan Danos. Amongst his other duties, Mr. Danos had
been responsible for negotiating commissions payable to M&J’s agent in Jamaica.
24.
In short, M&J claimed that Mr. Danos had acted in breach of his contract of
employment and his fiduciary duty by agreeing to pay an inflated commission figure
to the Jamaican agent in order that he and the agent could secretly profit at M&J’s
expense, and then direct those secret profits to their own commercial purposes.
What was involved was a “kickback” arrangement, by which Mr. Danos and his
co-Defendants not only unjustly enriched themselves, but then ‘invested’ that
enrichment in commercial schemes of their own.
25.
In his draft amended defence and counterclaim Mr. Danos asserted it was “common
practice” for M&J to pay government officials in order to secure contracts. In terms,
he further asserted that there was a bribery culture within M&J which was
sanctioned by certain directors. Given the nature of the evidence with respect to the
10/2147845_2 7
six jurisdictions referred to below which corroborates these particular assertions on
the part of Mr. Danos, the SFO agrees.
26.
On 9 January 2008, Herbert Smith LLP, solicitors for M&J, received from the Mr.
Danos’s draft amended defence and counterclaim. Although it did not contain a
signed statement of truth by Mr Danos those acting for Mr. Danos made it clear in
correspondence that it had been settled on his instructions. Subsequently, a decision
was taken by certain directors (including Director B, Director A and Director C,
who were directors of M&J at the time) to voluntarily report issues to the SFO. As
a consequence, on 11 February 2008, Herbert Smith LLP approached the SFO to
provide details of the evidence that the Company had been or may have been
engaging in corrupt practices. Documents relating to an internal investigation
undertaken by Herbert Smith LLP were provided to the SFO. Importantly and in the
spirit of exemplary and proper co-operation, the Company provided copies of
privileged notes of internal interviews of certain directors and employees,
conducted during the internal investigation. As an aside, the SFO regards this
approach, namely conducting an internal investigation which is then fully disclosed
to the SFO as meriting specific commendation. In cases where this is not the
practice of the suspect company, the SFO will not regard the co-operation as a
model of corporate transparency.
27.
Thereafter a process of disclosure took place by which M&J through its solicitors
progressively disclosed to the SFO Company documents which evidenced instances
of corruption in Jamaica, Ghana and other jurisdictions.
28.
Accordingly the SFO commenced an investigation into the affairs of M&J, its
directors, executives, agents and other employees.
29.
It is appropriate at this point to acknowledge the considerable level of co-operation
which M&J, through its solicitors, has afforded the SFO, enabling the investigation
into the affairs of M&J to be expedited. Indeed, the level of co-operation, coupled
with the Company’s readiness to admit its guilt, is one of the factors which
persuades the Director of the SFO that it is appropriate for the case against the
10/2147845_2 8
Company to be proceeded with and disposed of before allied investigations against
individuals are concluded.
30.
The SFO also recognises that since the commencement of the investigation M&J
has taken certain remediation steps. The SFO has been informed that five former
directors have stepped down as directors and ceased to be employees. They have
been retained as consultants to assist M&J in its co-operation with the SFO. The
SFO has been told that further training has been provided at both Board level and to
sales managers and commercial staff. It has also introduced new ethical procedures
and agreed to the appointment of an external monitor.
IV: M&J’s OWNERSHIP STRUCTURE
31.
M&J is one of a group of companies owned by the Mabey family. The majority
shareholder of the Mabey Group is Mabey Family Trustees Ltd., which owns the
majority of the shares in Mabey Holdings Ltd., which in turn owns Mabey
Engineering (Holdings) Ltd., a subsidiary of which is M&J.
32.
As of 3 September 2008, David Mabey was the Company Secretary and one of six
Mabey family members who were directors of Mabey Family Trustees Ltd.
Although his five sisters were board members, David Mabey, and his father, Bevil
Mabey, were the only family members who had taken an executive role in the
management and activities of the group of companies, prior to their resignation.
33.
Mabey Holdings Ltd. was incorporated in 1985. The Company's authorised share
capital comprises 550,000 ordinary shares and 2,000,000 preference shares. Both
types of share have a nominal value of £1.
34.
Mabey Engineering (Holdings) Ltd has 30,000,000 issued shares, all of which are
owned by Mabey Holdings Ltd. Mabey Engineering (Holdings) Ltd also owns the
entirety of the share capital of M&J – 4,000,000 shares. David Mabey resigned as
one of the three directors of Mabey Engineering (Holdings Ltd) on 2 July 2008, and
he resigned as a director of M&J and of Mabey Holdings Ltd on the same day.
David Mabey no longer has any executive role in the MHL group of companies.
10/2147845_2 9
35.
The reality of the ownership structure of M&J is that the Mabey family in general,
and David Mabey in particular, have at all material times been in exclusive control
of the affairs of M&J. Whilst directors within the Mabey group could be appointed
or removed at the behest of the shareholders, those same shareholders were David
Mabey and his family.
V: DEVELOPMENTS IN THE CONDUCT OF M&J’s OVERSEAS BUSINESS
36.
In 2002 the Company - evidently aware of the ramifications of sections 108 and 109
of the Anti-Terrorism, Crime, and Security Act 2001 – introduced new
anti-corruption policies and procedures for the conduct of its business.
37.
In May 2002 a “Group Gifts and Hospitality Policy” was distributed. Director A,
sent out two memoranda on 14 and 22 May 2002, defining the Company gifts and
hospitality policy. The Company also created an Export Committee to oversee the
appointment, remuneration, and conduct of its representatives in foreign
jurisdictions, as well as writing and publishing a policy set out in its Business Ethics
and Conduct Policy Manual (“BECPM”), which was circulated amongst its relevant
employees.
VI: THE WIDER CONTEXT OF THE CASE AGAINST M&J
38.
There are indicators, however, for asserting that the policies and measures described
above did not wholly bring about an immediate cessation of potentially corrupt or
unethical practices overseas by individual persons connected with M&J and its
business. Since the voluntary disclosure in February 2008, M&J, through its new
management, have undertaken a review for the purpose of maintaining ethical
standards within the Company.
39.
For the reasons developed at paragraphs 16 and 20 above, and further explained
below, the SFO is content to accept pleas of guilty from the Company to the conduct
alleged in this indictment.
40.
The indictment contains allegations pre-dating the coming into force of sections 108
and 109 of the Anti-Terrorism, Crime, and Security Act 2001. The issue of
10/2147845_2 10
jurisdiction has been considered by the SFO and M&J's legal advisers and it is their
respectful view that there is no jurisdictional bar to the prosecution of the indictment
before the Court.
41.
The Director of the SFO wishes to emphasise that by accepting the proposed pleas,
the SFO does not fetter itself in any way from investigating (and, if appropriate,
prosecuting) undeclared allegations of corruption against the Company if these are
discovered at a later stage. The SFO is also continuing with investigations
concerning a number of the individuals allegedly involved in corruption.
Prosecutions will be considered in due course if the tests in the Code for Crown
Prosecutors are satisfied. However given the admission of the Company of the
widespread historical corrupt practices within the indictment in relation to its
business affairs in a number of jurisdictions (see below), the SFO accepts that
having taken this feature into account in the sentencing of the Company, further
undisclosed criminality within the indictment period will not be the subject of
prosecution against the Company. For the avoidance of doubt, this is not the
position taken by the Director of the Serious Fraud Office in relation to ongoing
investigations against individuals.
42.
The policy of the SFO with regard to companies which 'self-refer' themselves to the
SFO for offences which can be described as - at least, relatively - historic, as in this
case, is to apply a proportionate approach to investigation and prosecution, both so
as to acknowledge endeavours at remediation, and to encourage other companies
which have a history of improper conduct to come forward and "clear the slate".
43.
Hence, in the light of the agreement of M&J to institute a system of independent
monitoring (see Appendix 1) of its overseas business activities and transactions on
the same model as that envisaged in the United States of America under the Foreign
Corrupt Practices Act 1977, as well as certain steps it has already taken to remove
certain directors it views as "involved" in the corrupt practices, and further
improvements to procedures as outlined at paragraphs 19 and 20 above, the SFO is
respectfully of the view that the public interest is not best served - as against the
Company only - by what might well be long-drawn out litigation over remaining
unproven allegations of corrupt practices.
10/2147845_2 11
44.
Accordingly, the Director of the SFO is minded to accept the pleas proffered on the
part of M&J, without prejudice to its ongoing and unfettered investigations of
corrupt practices - on the part of individuals associated in various capacities with
M&J.
VII: THE JAMAICA CONTRACTS
(i) Relevant personnel
45.
The relevant Ministry responsible for bridge contracts has undergone changes of
name over time. In 1989 the department was known as the Ministry of Construction
(Works). In 1996 the department became known as the Ministry of Local
Government and Works and in 1998, it became the Ministry of Transport and Works
(“the Ministry”) and retains that name today.
46.
In 2001, the National Works Agency was established. This is an executive agency
working under the control of the Ministry.
47.
Joseph Uriah Hibbert was born on 20 July 1948 He served as a Jamaican
government official until October 2000.
48.
Mr. Hibbert joined the Ministry on 10 July 1972 as an engineer. By 1989 he had
risen to the position of Chief Engineer and in November 1993 he was promoted to
Chief Technical Director of the Ministry. He left the Jamaican Civil Service on 28
October 2000.
49.
During his tenure he held delegated powers to act on behalf of the Permanent
Secretary of the Ministry, including entering into binding financial commitments,
and where there was a vacancy in that position, he could lawfully act as the
Permanent Secretary. In short he held a very important and influential position in
regard to his principals affairs and respectively, M&J’s affairs.
10/2147845_2 12
50.
At all relevant times when Mr. Hibbert was in receipt of money from M&J he was
bound by the relevant Public Service Staff Orders. He was not entitled to receive
the money M&J paid him in respect of the exercise of his duties.
51.
Subsequently Mr. Hibbert entered national politics. In 2002 he became a Member
of the Jamaican Parliament as a Jamaican Labour Party member. When the
Jamaican Labour Party were returned to government in the general election of 2007,
Mr. Hibbert was appointed as Minister of State in the Ministry of Transport and
Works. He remains in that position today.
52.
As an official he occupied a position of influence in regard to the award of contracts
relating to Jamaica’s transport infrastructure. Indeed it might be said that his
appointment as Minister of State is testament to the influence he wielded in his
capacity as an official.
53.
What is plain beyond peradventure is that M&J paid Mr. Hibbert so that he would
exercise his influence corruptly on behalf of M&J. M&J paid him directly from
agreed commission payments earmarked for their Jamaican agent £100,134.62
between 20 November 1993 and 30 October 2001.
54.
In fact the direct bribes evidenced in M&J’s schedules year on year from 1993
onwards would have approximated something in the order of his annual salary each
year.
55.
Deryck A. Gibson is a director and chairman of Deryck A. Gibson Ltd. (“DAG
Ltd.”) which was incorporated in 1965, having originally traded as Deryck A.
Gibson Commission Agent. He is a former vice-president of the Jamaican Chamber
of Commerce and holds himself out to have been in business for over 50 years and
to be “a well-known and well respected figure by the private and public sector
leaders in Jamaica.” Mr Gibson acted as M&J's agent in Jamaica.
56.
M&J paid commission of 12.5% of the contract price for a contract which was
called Jamaica 1 (see below). M&J subtracted the direct payments to Hibbert from
Gibson’s 12.5% commission. It is accepted by M&J that Mr Gibson was involved
10/2147845_2 13
in corrupt activity with M&J within the indictment period and that Mr Gibson was
in a corrupt relationship with Mr Hibbert. When appointing and permitting Mr
Gibson to continue as an agent acting for M&J prior to 2002, M&J knew that there
was a risk that Mr Gibson might pass further commission money to Hibbert.
57.
Initially, Mr Gibson's commission was paid into accounts in his name. Later,
however, Director E, agreed that payments could be made to an offshore vehicle,
Montego Bay Enterprises Inc. for the payment of commissions to Mr Gibson. These
payments were made to a Bahamas account with Barclays PLC in the name of
Leadenhall Bank and Trust Company Ltd. These payments carry the reference
“Montego Bay” on an M&J commission card.
58.
Manager C was said to “have had the ear” of both Bevil Mabey and Director B, and
was capable of overriding decisions made by other board members. In terms of
global geography, Manager C’s duties were primarily concentrated in the Caribbean
and Latin America, although he also had some dealings with countries in Africa and
elsewhere.
(ii) M&J Jamaica Contracts
59.
M&J have obtained contracts for the supply of flyovers and modular pre-fabricated
bridges and associated technical services to the Jamaican Government.
60.
M&J have conducted business with the Jamaican Government from approximately
1993 and work is ongoing in respect of a current contract.
61.
Though M&J’s records are, because of the passage of time, sketchy in relation to the
earliest of its contracts in Jamaica, there appear to have been a number of precursor
contracts to a larger Priority Flyover Programme in Kingston, (the "Jamaica 1"
contract).
62.
Following Jamaica 1, there has been a subsequent, distinct, Jamaican project for
rural bridges (the "Jamaica 2" project). Only “Jamaica 1” and its precursors are
relevant to these, instant, proceedings.
10/2147845_2 14
63.
M&J entered into a contract referenced “OX93/081” with the Ministry of
Construction in 1993-1994 valued at £291,000. There were then two further
contracts in 1997 referenced as “0282R” and “0298R” with values of £547,000 and
£60,000 respectively.
64.
These early contracts were for the supply of various spans of modular pre-fabricated
bridging and spare parts for such bridging. The bridging equipment supplied under
these “supply only” contracts would have been sited and used by the Jamaican
Ministry of Construction at their discretion. M&J's business developed during the
1990's, so that in addition to this type of "supply only" contract of bridging
equipment, M&J was able to complete larger projects for the supply and installation
of more complex, flyover type, bridges, such as those provided on Jamaica 1.
65.
On 17 February 1999 M&J and Kier International Ltd (“Kier”), a British based
construction firm, entered into a Joint Venture, in order to facilitate both the
construction and civil engineering aspects of what became known as Jamaica 1.
66.
The Joint Venture ("JV") was conducted through an unincorporated vehicle called
the Kier/Mabey (Kingston) Joint Venture. M&J and Kier agreed that overall
revenue and profits from the JV in respect of Jamaica I would be divided 57% and
43% respectively. Under the terms of the JV a sponsor would have primary
responsibility for representing the JV. Kier was nominated to act as the sponsor.
There was a supervisory board of the JV comprising both Kier and M&J executives.
67.
The project effectively began as an unsolicited approach to the Ministry by M&J.
In December 1998 M&J made presentations to the Jamaican Ministry of Transport
and Works for bridge projects in the Kingston area including: Three Mile
Roundabout; Sandy Gully Bridge; Hagley Park Road/Maxfield Avenue and Half
Way Tree Rd.
68.
In January 1999 Mr Hibbert wrote back to the JV care of Deryck Gibson and asked
M&J/Kier to make a bid. There was no competitive tendering exercise.
10/2147845_2 15
69.
As the project developed the locations changed from the original plans and in the
end the proposal related to flyover bridges at Three Mile Roundabout; Sandy Gully
Bridge on Constant Spring Rd, Kingston and Montego River/NorthGully Bridge on
Howard Cooke Boulevard in Montego Bay
70.
Kier were responsible for the erection of the bridges and work of a general civil
engineering nature. M&J provided the steelwork.
71.
This was the only JV between Kier and M&J in Jamaica although there were other
proposals over time for work, for example, in Hunts Bay and certain rural bridges.
72.
The contract for Jamaica 1 was signed during December 1999. The contract was
entered into by the Ministry of Transport and Works on behalf of the Government of
Jamaica and Kier/Mabey (Kingston) Joint Venture. The contract was signed on
behalf of both M&J and Kier International Limited. Its value was £13.9 million.
73.
The Jamaica I contract was covered by a guarantee from ECGD.
74.
A change order varying the scope of the contract was sent under cover of letter dated
19 May 2000 by the Estimating Director of Kier International Limited.
75.
In the final contract the total value increased to £14,900,000. This price was broken
down into the cost of the specific bridging projects and an employer contingency
fund of nearly £1 million. The purpose of the employer contingency fund was to
meet costs relating to third party works, land purchase compensation and other
incidental costs arising during the building project.
76.
Within the JV costs commissions were 12.5%. M&J were responsible for
commission arrangements. In fact although the commission costs were 12.5% of
the total contract price/revenue, M&J bore all of the costs from their proportion of
revenue received, approximately £8 million, which represented 57% of the total
revenue under Jamaica 1. Therefore in reality M&J paid more than 20% of received
revenue in commission costs.
10/2147845_2 16
77.
The SFO has investigated the relationship between Kier and M&J in respect of this
contract. For the reasons given above, and all the evidence currently available to
the SFO, there is no evidence that Kier were privy to these corrupt practices. Kier
have co-operated with the SFO’s investigations.
78.
Moreover, it appears that Manager C was able to secure from the Jamaican
government an agreement to pay the ECGD premium on top of the contract price,
when in fact M&J had already factored some of this cost into the overall contract
price. In his memorandum to Director B of 30 June 2000, Manager C comments:
“I am pleased to confirm that we have now received from the Jamaican Government
£1,212,420 for the ECGD premium that has been paid in full. Please note that this
was included in our offer but nonetheless we have managed to get them to pay this,
which increases our profit on the contract by that amount.”
79.
As the overall contract price was approximately £15 million, this represented an
additional uplift on this contract for M&J and Kier. Prior to this memorandum, it
appears that, of the £1,212,420, the Jamaican Government had already agreed to pay
a contribution of £726,000 towards the premium amount, with M&J and Kier
paying the remaining amount of £486,420. It is not clear why the Jamaican
Government paid the full amount of the premium. M&J were evidently content to
treat it as a windfall.
80.
This windfall was again split between M&J and Kier according to the proportions of
the JV agreement. As you will hear, M&J agree that their share of this sum should
be properly paid back to the Jamaican Government.
81.
The Jamaica 1 contract was won by M&J and Kier. M&J had behaved corruptly.
They had already corrupted an important person of influence over these matters, Mr.
Hibbert.
82.
Mr Hibbert received relatively modest advance payments in his own name both in
cash and through bank accounts here in the UK. In addition, M&J made a payment
to Mr Hibbert's niece, a Faith Jadusingh, of £3,000. There was a payment to cover
10/2147845_2 17
the UK based funeral expenses for Mr Hibbert’s mother. Additionally, Mr. Hibbert
received monies via his National Commercial Bank account in Jamaica.
83.
M&J had corrupted Mr Hibbert from the time they first conducted business in
Jamaica back in 1993. Payments began at around the same time as he was promoted
to his position as Chief Technical Director in November 1993. M&J continued to
cultivate this relationship by bribing him in relation to the subsequent contracts in
1997. M&J made payments to Mr. Hibbert intending to influence him to act
corruptly in relation to those subsequent contracts and Jamaica 1. In short they had
bought Mr. Hibbert and in making payments to secure Jamaica 1 were doing so,
believing that they would have a corrupt effect.
84.
Monies were paid on a number of occasions from 1993 by way of “Advance
Commission”, and other such devices. Mr Gibson was connected with some of
these payments, as was Manager C. The payments illustrate the malign and corrupt
approach of both Mr. Hibbert and M&J: the request for payment and the willingness
to pay speak of an assurance on both sides that their “relationship” would eventually
bear significant fruit.
85.
In particular payments were made to Mr Hibbert in 1998 when M&J and Kier were
planning the project that Mr Hibbert later approved in January 1999.
86.
By 1 July 1998 M&J, Kier and another British construction company4 had begun
meetings discussing the prospect of work in Jamaica which ultimately became the
Jamaica 1 project. The Minutes of the Consortium Progress Meeting was attended
by Director E, Manager C and another representative for M&J and the Estimating
Director of Kier.
87.
The minutes note that some preparatory work had been done in drafting some
outline plans for the various flyovers and that it was proposed that,
4
WS Atkins
10/2147845_2 18
“This material could then be presented to Joe Hibbert (MoW – Chief Technical
Director) during his visit to UK in July – Manager C to arrange meeting”
88.
An action point was left for Manager C,
“ Manager C to arrange meeting with Joe Hibbert before he returns to Jamaica (but
after next consortium meeting).”
89.
The next consortium meeting was arranged for 15 July 1998 at 2.00pm at M&J’s
offices in Twyford.
90.
There is an Export Agents Commission Card in the name of Joe Hibbert which
shows a cash payment of £10,000 being made on 7
th
July 1998.
91.
This payment is supported by a memo of the same date from Manager C to Director
B,
“re: Joe Hibbert – Jamaica
As you are aware Mr Hibbert is presently visiting the UK with two other colleagues.
He has requested £10,000 cash to be deducted from commission due to him. Recent
commission statement is enclosed.
Please could you initial this memo as authorisation for the payment to be made.”
92.
The payment is authorised by Director B as requested by Manager C. Director B
then in turn requests Director E to amend Joe Hibbert’s commission card
accordingly. In a separate short letter, Manager C confirmed he received the
£10,000 cash sum on Joe Hibbert’s behalf.
93.
A further cash payment of £10,000 for Joe Hibbert during his visit to the UK was
requested for Director B’s authorisation by the Office Manager.
10/2147845_2 19
94.
Evidently Joe Hibbert was still in the UK by the 23 July 1998. In a memo dated 22
July 1998 the Office Manager stated,
“Please find attached the commission statement for J Hibbert for Jamaica which
indicates a total of £15,449.62. As you are aware Mr J Hibbert is visiting the UK at
the moment and he has requested via Manager C that he would like payment of
commissions due as follows:
The sum of £10,000 to be made available in cash (tomorrow 23/7/98)
The remainder to be transferred to his account in Birmingham.”
95.
These payments were made by M&J. In fact Director B and Director C authorised
the cash payment and countersign an instruction to their bankers that,
“In confirmation of instructions from the Office Manager we will require the sum of
£10,000 in cash (£20 notes) to be provided Thursday 23 July 1998 at 1100 hours.”
96.
This cash payment was made in person on the date of Joe Hibbert’s attendance at
M&J’s factory at Twyford on 23 July 1998. A further payment of £5449.62 was
paid on the same date to Joe Hibbert’s Birmingham account.
97.
All the payments prior to, up to and including the signing of the Jamaica 1 contract,
and following the contract’s delivery are recorded on an “Export Agents
Commission Card” kept at M&J’s Head Office. By the time of the last payment, the
Card had been re-named “Montego Bay” as opposed to “Joe Hibbert”. Montego
Bay was a company which M&J understood was owned or controlled by Mr
Gibson.
(iii) The role of M&J’s directors and management in securing Jamaica 1
98.
As with many of M&J's contracts, including Jamaica Phase 1, commission was paid
to a sales agent, and was integral to contract pricing. While commissions were
capable of being paid at agreed stages of a contract, a typical contract for the supply
10/2147845_2 20
of bridging equipment provided for payment of commission to be made pro rata to
revenues received.
99.
The majority of the payments made to Mr. Hibbert in his various accounts in various
jurisdictions were authorised by Director B. On a memorandum dated 2 June 1999,
Director B adds in relation to a payment to Mr. Hibbert of US$3,000 “This will be
the last one in advance.” Whether by way of advance or otherwise, one particular
payment followed the receipt of a memorandum from Manager C dated 30 June
2000 announcing that “Joe Hibbert, Technical Director of Ministry of Works,
Jamaica is due to arrive in the UK in July”. The sums sought were £5000 to be paid
into Mr. Hibbert’s Birmingham (UK) account, and £2500 to be paid to DAG Ltd to
cover Mr. Hibbert's travel expenses. One earlier payment, of £10,000, was made on
23 July 1998 to Mr. Hibbert while he was visiting the United Kingdom, and,
apparently at Mr. Hibbert’s request, consisted entirely of £20 notes. The M&J letter
of instruction to its bankers, Barclays Bank Plc regarding this payment was signed
by Director B.
100.
Director C signed the approvals of the majority of payments to Mr. Hibbert
relating to the two 1997 contracts, but apparently did not authorise any payments
relating to Jamaica 1.
101.
Director A signed approvals for payments in respect of both the 1997 contracts
and Jamaica 1.
102.
Director E authorised the entity Montego Bay Enterprises as the entity to which
Mr Gibson's commissions could be paid, as referred to at paragraph 57 above. His
status in the Company can be measured by the fact that on one document authorising
a payment of $20,000 to Montego Bay Enterprises, Director B writes “subject to
Director E approval”. Director E then went on to sign the document approving the
payment. His signature also appears on a number of approvals of payments to Mr.
Hibbert and he met Mr Hibbert at least once in the UK when he visited M&J’s
offices.
10/2147845_2 21
103.
Manager C wrote memoranda to Director B (and to the Office Manager - see
below) from 1996 onwards requesting payments be made to Mr. Hibbert, or DAG
Ltd. on Mr. Hibbert’s behalf. In some cases reasons are given, such as funeral
expenses for Mr. Hibbert’s mother (document dated 1 November 1998), or travel
expenses.
104.
The Office Manager, who has provided a witness statement to the SFO, has been
employed by M&J for a considerable period of time in various capacities. The
Office Manager was responsible for making sure that M&J were paid for the
products and services the Company provided to its customers. Within that role he
was responsible for transmitting “commission” payments when instructed to do so
by those in authority above him. He provides important evidence for the prosecution
in this case. That evidence shows that in relation to Jamaica, typically - though not
exclusively - Manager C transmitted requests to M&J for payments to be made
either to Mr. Hibbert or others, those requests were authorised by Director B and
another signatory, and the Office Manager then implemented the instructions for
payment. The Office Manager maintained and updated the “commission cards” for
all of M&J’s overseas agents.
105.
Other incidental payments were sought and paid - for example on 18 December
2000 Manager C wrote to Director B to the effect that M&J had been “approached”
and invited to pay Deryk A. Gibson a contribution of US$10,000 for “local party
funds”.
106.
It is plain and apparent that the payments to a public official in the position of
Mr Hibbert, often for expressed reasons which could have no conceivable legitimate
commercial purpose, are nothing other than bribes, which bribes were paid to
persuade Mr. Hibbert to use his influence in Jamaican government circles to secure
the Jamaica 1 contract for M&J. M&J accept that these payments were made with a
corrupt intent to so persuade Mr. Hibbert to act in a manner inconsistent with his
duties as a public servant of the Jamaican Government.
VIII: THE GHANA CONTRACTS
10/2147845_2 22
107.
M&J has conducted business with government departments in Ghana over a
number of decades. From the mid 1980’s until approximately 1996, M&J’s interests
in Ghana were represented by Kwame Ofori. During the early 1990's Kwame Ofori
acted as M&J's agent in Ghana. He controlled a Ghanaian bridge building company,
and apparently had influence within the ruling circles of the then ruling party in the
Ghanaian government - the National Democratic Congress (“NDC”).
108.
To promote its business transactions with government departments of Ghana,
M&J paid commissions to its agent or agents in relation to the business it won in
Ghana. It is accepted by M&J that through the creation of the GDF (the notional
fund created by M&J known as the “Ghana Development Fund”), its executives
facilitated corruption on behalf of M&J and that its executives were in (or sought to
create) a corrupt relationship with a variety of decision making Ghanaian public
officials with responsibilities affecting M&J’s affairs. These funds were
purportedly for the development of M&J business in Ghana but, in truth and reality,
were capable of and were understood to be capable of, being used for corrupt
purposes.
109.
When appointing and permitting its agents in Ghana to act on its behalf or for it,
M&J knew that there was a risk that unknown proportions of the agents' commission
totalling £750,000 might be used for corrupt purposes.
110.
The budget representing the GDF was managed by Director D, an executive
who later became a director of M&J. Whilst Director D had responsibility for
different territories during his career, in particular he had responsibility for Ghana.
Consequently during the material period, the affairs of M&J in Ghana were heavily
influenced by his direction and control.
111.
On 3 April 1996 Mr. Ofori and a relative attended a meeting at Twyford with the
Office Manager. It appears that Director B and other Directors made their excuses
for not attending. The Office Manager' note of the meeting records that Mr Ofori
did not have control over the "total 15% commission". Mr Ofori complained that he
had problems as he did not believe Director D had distributed 5% to the "relevant
10/2147845_2 23
personnel" or “local personalities”. The note records Mr Ofori saying that had he
been involved in the payment of the total amount of the 15% commission the
present difficulties would not have existed and said that this aspect had been dealt
with ably by him in the past.
112.
On 14 March 1996 Mr. Ofori had sent a fax on “Danielli Mabey Ltd” headed
notepaper (a Ghanaian company which was wholly unrelated to M&J and which is
understood to have been owned by Kwame Ofori). The fax was marked for the
attention of Mrs Margaret Ofori in Accra and appears to have been then passed to
M&J. The fax detailed how it was that “the situation in Ghana has been
deteriorating gradually ever since Director D came in to Ghana.” There can be little
doubt that the contents of the fax had become known at Twyford before Mr. Ofori
visited M&J’s Head Office. This is because Director D had himself sent a
“confidential memo” dated 25 March 1996 direct to Director B rebutting Mr.
Ofori’s assertions, and detailing how it was that he had had a meeting recently with
the only person who “can guarantee M&J’s position in this market”: Kwame Peprah.
Mr. Peprah was at that time the acting Minister of Finance and the Chairman of the
NDC Finance Committee.
113.
In fact Director D had been introduced to Mr. Peprah through Baba Kamara (aka
I. B. Ibraimah), who was the NDC Treasurer, and ‘political overseer’ for the
Ministry for Roads and Highways.
114.
The role of Baba Kamara and his value as an agent to M&J is made clear in a
document authored by a M&J executive, probably prior to July 1996, and sent to
Director A; Director B; Director C and Director E. The document is entitled
“Ghana” “Review of existing Agent and introduction of alternative Agent”.
Concerning the value of the proposed new agent,
“Kamara Ltd is a small Ghanaian contractor owned by Baba Kamara. He is the
NCE (sic) Treasurer and also the political overseer for the Ministry of Roads and
Highways. He is a member of the all powerful NDC Finance Committee which
includes Kwame Peprah (Minister of Finance and Minister of Mines and
Energy), Obed Asamoah (Justice Minister and Foreign Minister) and Mrs
10/2147845_2 24
Rawlings amongst others….[he] has considerable influence over Ato Quarshie,
the Minister for Roads, the Deputy Minister and other top ranking civil servants
and has been working with us since June 1994. This has been demonstrated over
the allocation of the extra Stg 1.3 mil for the Tano bridge and the Stg 4.5 mil
allocation for the Priority Bridge Programme.”
5
115.
Additionally, Mr. Kamara’s wife was secretary to the then President of Ghana -
the former Flight Lieutenant ‘Jerry’ Rawlings, who had originally achieved power
by means of a military coup in 1981. Unsurprisingly, a person in the position of
influence of Mr. Kamara was an attractive prospect to M&J as agent for their
business in Ghana, and the SFO contend, that M&J knew and intended that
commission paid to Mr. Kamara would be deployed as and when required to
corruptly promote M&J’s commercial interests. The SFO believe that because he
had demonstrated his effectiveness to attract business corruptly, he was appointed
by M&J. This is not accepted by M&J.
116.
Allied to the decision to use Mr. Kamara as their agent from some time early in
1996, M&J had plainly also decided to “sideline” Mr. Ofori, and to impose more
direct control over the payments made to “local personalities” by Director D
supervising and control from 1994 and the creation of the notional GDF.
117.
As will become apparent, whereas in Jamaica corrupt payments were directed
towards a specific individual, payments allocated against the GDF were more
general and numerous government ministers and officials were potentially in line
for a bribe. Each such payment required the authorisation of two M&J directors.
118.
Payments allocated against the GDF did not relate specifically to stages of
contracts in progress. The SFO says that they were obviously made with the
intention of securing and maintaining those contracts when it was deemed prudent
to do so. It is accepted by M&J that in creating and making payments from this fund
corrupt payments would be made to public officials in order to affect the decision
making process in favour of M&J. Thus payments were made for a variety of
5
MJN01 000131000056-7
10/2147845_2 25
purported purposes to a variety of ministers and officials. Some of those purposes
were self-evidently unrelated to M&J’s legitimate business such that the payments
can best - and, indeed, only - be described as bribes. Not only were the bribes overt,
so too was the means of collection on the part of the Ghanaian ministers and
officials, most of whom had UK bank accounts. Some, indeed, visited the UK in
order to collect their payments in sterling.
119.
During the 1990’s M&J entered into three principal contracts with the Ghanaian
Ministry of Roads and Highways (“MRH”) for the provision of bridges: Priority
Bridge Programme Number 1, worth £14.5 million, was agreed in 1994; Priority
Bridge Programme Number 2, worth around £8 million, was agreed in 1996; and the
Feeder Roads Project, worth £3.5 million, was agreed in 1998.
120.
Throughout the relevant period, and until the general election in 2000, the NDC
formed the Government of Ghana and many of the GDF payments were directed to
its members. Thus the then Minister at the MRH, Dr. Ato Quarshie, received a
cheque when he visited London in July 1995 in the sum of £55,000 for “contract
consultancy”. The cheque was drawn on M&J’s Clydesdale Bank account at the
Victoria branch in Buckingham Palace Road, and signed by Director A, and another
M&J director at that time. Director A also faxed the bank instructions to enable Dr.
Quarshie to cash the cheque.
121.
The payment to Dr. Quarshie and the following payments are but examples of a
wider-ranging series of bribes to various ministers and officials, which will be set
out in a schedule. Even relatively junior officials were the willing recipients of
bribes. In 1996 Saddique Bonniface was the ECGD desk officer in the Ministry of
Finance (he was recently until the change of government a highly placed politician
within the Ghanaian administration). He had a bank account at the National
Westminster Bank in Rickmansworth. On 29 February 1996 Saddique Boniface
received a transfer of £10,000 from M&J to an account at Barclays Bank Plc in
Watford. On 29 October 1996 the same account received a transfer of £13,970 from
M&J. On or about 29 October 1996 Amadu Seidu, the Deputy Minister at the MRH,
received £5000 in his Woolwich account held in St. Peter Port, Guernsey and Dr.
George Yankey the Director of Legal and International Affairs at the Ministry of
10/2147845_2 26
Finance, received £10,000 in his Midland Bank account in Hill Street, London W1;
and Edward Lord Attivor, the ex minister at the MRH, also received £10,000 in his
London bank account. This was the same branch of the Clydesdale Bank which was
used by M&J. Authorisation from M&J directors for each of these transfers was
requested by Director D. Amadu Seidu received a further £5,000 on 7 March 1997,
the same date on which Saddique Bonniface received a further £2,500. The latter
two transfers were authorised by Director B.
122.
Mr. Bonniface’s son was a student at Exeter University, where, on or about 26
March 1998, he received a cheque from M&J in the sum of £500. Although this is a
relatively small sum it is indicative of the nature of the corruption M&J was then
practising: it is a payment which could have no conceivable legitimate commercial
purpose.
123.
M&J's payments to Dr. Yankey were not confined to the payment on or about 24
October 1996, since his Hill Street account received £5,000 on 26 August 1998 from
M&J. Dr. Yankey was subsequently convicted in Ghana of conspiring to wilfully
cause losses to the state and served a prison sentence, along with Kwame Peprah.
Their convictions cannot be directly related to payments from M&J, but reflect the
culture of government corruption at the time, a culture with which M&J was only
too willing to engage.
124.
From December 1994 to 18 August 1999, M&J used the GDF and associated
accounts to pay bribes directly to named Ghanaian public officials totalling
£470,792.60.
125.
None of the payments set out above, obviously, could be said to have anything
remotely resembling a legitimate commercial purpose. Thus M&J was able to
engage in wholly corrupt business practices without any effective level of external
scrutiny being applied. Plainly, those who governed and directed the affairs of M&J
were responsible for arranging and authorising payments which, no matter they
were eagerly sought and accepted, were considered vital in securing M&J’s
business in a developing nation – at the expense of those least able to avoid the
10/2147845_2 27
expenditure that is inevitably involved in the making of corrupt payments: the
people of Ghana.
IX: M&J’s INTERNAL INVESTIGATIONS
126.
The counts on the indictment are in one sense specimen counts. They fully
reflect the defendant Company’s criminality in the two jurisdictions concerned.
However, during the course of the investigation thus far, indicators have emerged to
the effect that corruption has been practised in other jurisdictions.
127.
The Company’s solicitors Herbert Smith LLP, have been instructed by M&J’s
present board to instigate an internal investigation into suspected corruption
practiced by M&J under its previous directorial and managerial regime.
128.
Their investigations are ongoing. Before they have been completed, what was
initially revealed by the Company’s investigations has caused the Company to come
forward and make disclosures to the SFO.
129.
Of necessity the investigations have been limited to a review of Company
documentation and interviews of current Company employees. It follows that the
internal investigations are incapable of inquiring into foreign bank accounts, the
activities of foreign agents and the like – which are matters which would ordinarily
be the subject of MLA requests.
130.
These investigations have revealed other corruption indicators. Some of these
might not necessarily be provable cases of corruption in this jurisdiction or at all.
The SFO is not in a position as of this date to determine with certainty whether
charges could be brought in all or the majority of cases.
131.
M&J accepts that in order to establish and secure its business abroad, it
appointed agents to act on its behalf in the various countries where it was seeking to
win contracts to supply bridges. Commission fees paid to local agents ranged from
contract to contract and by jurisdiction. In a number of jurisdictions; Jamaica,
Ghana, Mozambique, Bangladesh, Madagascar and Angola M&J did not pay all
10/2147845_2 28
those commission fees to its agents but in some cases it also used some of the funds
set aside for commission to make direct payments to public officials. Those
officials were either responsible for or involved in the allocation of contracts to
build bridges.
Angola
132.
During the 1990's M&J entered into a number of contracts with the Angolan
Government for the provision of bridging and associated services through which it
derived sales revenue worth in total approximately £6m.
133.
In a summary document prepared by a M&J employee it records that there have been
contracts and revenue in every year from 1991 to 1998 totalling £6,145,000. The
document records that the product sold was the C200 EW with “a few Hydromasters”
and that in 1997-8 the contracts were supported with Swedrelief (funding provided by a
Swedish Government aid body that is involved with U.N. projects).
134.
A Mr Antonio Gois was an official at the Angolan State owned entity, Empresa
Nacional des Pontes (National Bridges Company), and appears, at the relevant time, to
have been the direct contact for M&J along with another public official, Joao Fucungo,
also from the same department. Both Mr Gois and Mr Fucungo appear to have held the
position of Director of the Empresa Nacional Des Pontes. Details as to the exact dates of
their Directorships and their specific roles in the department are not available.
135.
In relation to Angola, in the 1990's M&J had an Export Agent's Commission Card in the
name of a company called Servicios Bella. Details in relation to the incorporation
(including country of incorporation), directors, and ownership of this company are not
available. At that time it was believed generally by M&J that Servicios Bella was owned
by or was for the benefit of Mr Gois. Payments made to Servicios Bella were made to a
French bank account.
136.
Manager C was the M&J employee with the primary responsibility for sales in Angola.
His position in M&J has already been set out at para 58 above (in relation to Jamaica).
10/2147845_2 29
Manager C requested M&J to remit commissions due under Angolan contracts to
Servicios Bella's account at the Banque Transatlantique in Paris.
137.
Details of the payments made to the French bank account of Servicios Bella are set out
in the table below:
Date Amount in US $ GBP equivalent (where
known)
23.11.1993 298,373.22
15.12.1993 348,816.81
28.04.1994 30,000.00
09.12.1994 44,664.62 29,003.00
09.02.1995 50,000.00 32,239.94
11.03.1995 67,246.51 42,029.07
10.04.1996 119,225.25 77,925.00
30.08.1996 171,795.22 112,400.69
08.05.1997 49,663.60 31,039.75
05.08.1997 27,593.41 17,257.12
10.11.1998 50,073.58 31,295.99
Total 1,257,452.22
138.
In relation to Angola, requests for authorisation of payments originated from Manager C
specifying that the amounts should be deducted from the commission account. In some
cases, requests were made by Manager C based on demands that he claimed were made
by Mr Gois.
139.
During 1993 calendars, diaries and other promotional gifts worth £3,124.80 and US
$2,208.51 were paid for in the UK by M&J and appear to have been provided for the
10/2147845_2 30
benefit of Mr Gois. In a faxed handwritten letter dated 24 November 1993 from
Manager C to the Office Manager; a Director of M&J and others he states:
“Please go ahead + purchase the two Land Rover for Gois from 2
nd
C payment invoice
from Hull, Blyth with this fax. Try + establish if Land Rover are imed avail +
advise me E.T.A.”
140.
Two Land Rover Defenders costing in total £28,646 were then purchased in the UK
during 1993 and shipped to Angola for Mr Gois' benefit. In 1994, further promotional
gifts worth £974 were paid for by M&J in the UK.
141.
In one fax to Director E dated 1 February 1995 Manager C writes:
“Further to our telecon I have been chased by G on several occasions for a
transfer of 50k U.S. as an advance for C for U.N. order. As this is a firm
U.N. order I recommend we comply with his request immediately. He
will not accept downgrading his C from 15 to 12.5 as 15 was the amount
1
st
agreed. As we are talking about a further 5 m U.S. package I’m not
inclined to argue. Pls advise what info you have on a fund the Angolan’s
are negotiating with European Development Fund”
142.
On 3 February 1995 further clarifying information was provided in a memo to Director
A concerning outstanding Angola orders which included a completed order for
Hydromaster units for which payment had been received in full from the Angolan
government and a pending order for various C200 bridges for the U.N’s agency, the
World Food Programme. The memo attached a copy of the abovementioned fax from
Manager C.
143.
The US $ 50,000 payment was made to Servicios Bella and authorised by Director A
and Director B.
10/2147845_2 31
144.
On 22 February 1995, Director A authorised a M&J employee visiting Angola to take
US$ 3000 cash for “local expenses”. These monies were paid to Mr Gois on 27
February 1995.
145.
In addition, $13,000 was paid to an account at Citibank in Berkeley Square to a
company called Unimedia Ltd in June 1997. This appears to have been a bribe for Mr
Gois' benefit.
146.
Cash bribes totalling US $13,000 were made to the public official Mr Fucungo in 1993
and 1994. It is not clear where these bribes were made. A payment of US$ 10,000 was
requested for medical treatment for Mr Fucungo’s wife in South Africa.
147.
The SFO has been informed by M&J that not all of the documentation relating to
payment approvals is available. However, Director A appears to have been involved in
the approval of a number of the payments in 1993 and 1994. Subsequently, Director B
was also involved in approving a number of the subsequent payments to Servicios Bella.
Madagascar
148.
M&J have supplied bridges to Madagascar since 1972. In early 2001 M&J won a
contract with the Madagascan Government worth approximately £1.1m to supply 11
bridges. This was a World Bank financed project.
149.
Manager A had responsibility for sales in Madagascar during 2000-2001 when the
contract with the Madagascan Government was being negotiated. M&J’s local Sales
representative had responsibility for a number of French speaking African countries and
he reported to Manager A who in turn reported to Director A and Director B. In a M&J
memorandum dated 17 July 2000, anticipating the business eventually won by M&J, the
local Sales representative states,
“As explained to Director A during his visit to France, we have alternatives to HFF and
we think it might be time to consider these seriously. A tender from the World
10/2147845_2 32
Bank has just been issued. It is supposed that the specifications have been
written as much as possible in our favour (though we have not seen them yet).
We think it is the proper thing for a visit to clarify the relationships with our final
client, Ministry of Public Works and to start the change in our local
representation.”
150.
Henri Fraise Fils & Cie Ocean Indien Ltd ("HFF") was the company that acted as M&J's
agent (the local representation refered to above) in Madagascar during the relevant
period. Initially HFF sought a commission of 17% of the contract value. The principal
of HFF was Ralph Fraise. However, M&J considered the level of commission to be too
high for the nature of the contract. During discussions regarding the commission HFF
disclosed that the commission being proposed was set at this level since it would need to
pay from the commission it received 6% of the contract value to Mr Jean Emile
Tsaranasy as a bribe.
151.
Mr. Tsaranasy was the Madagascan Minister for Public Works (or Ministere des
Travaux Publics) at the relevant time and was the direct contact for M&J in relation to
the £1.1m bridging contract. In the light of these discussions M&J decided that it would
seek to negotiate directly with Mr Tsaranasy to try to reduce the amount of the bribe that
would be paid to him. In the final event, HFF was paid approximately 11% of the
contract price.
152.
After entering into direct negotiations with Mr Tsaranasy it was agreed that he would
receive a payment of approximately 2.83% of the contract value. M&J's Export Agent's
Commission Card for Madagascar records the following payments that appear to have
been made to Mr Tsaranasy in the total sum of £33,250.00. These payments were
bribes.
153.
Details of payments to Mr Tsaranasay are set out in the table below:
Date Amount in
10/2147845_2 33
GBP
11.07.2001 £ 3,650
22.08.2001 £ 7,200
30.08.2001 £ 3,650
30.08.2001 £ 7,200
06.02.2002 £ 6,160
06.02.2002 £ 5,390
Total £ 33,250
154.
The bribes were made either by cash being given to Mr Tsaranasy or his representatives
in Paris or by M&J making bank transfers to Mr Tsaranasy's Swiss bank account, the
Banco del Gottardo in Geneva over a period from August 2001 until early February
2002. On 12 July 2001 Mr Tsaranasy picked up 39,098.07 FF (£3650) in a bank in Paris
and signed for the money.
155.
M&J also paid a bribe to Mr Zina Andrianarivelo-Razafy when he served as the
Madagascan Ambassador to the United States, the World Bank and the International
Monetary Fund in 2001. Mr Andrianarivelo is currently the Permanent Representative
of Madagascar to the United Nations.
156.
A M&J note, dated 24 November 1998, from the Manager B to Director A, Director B
and Manager A states:
“For your information Zina Andrianarivelo from Fraise has been appointed the
Madagascan Ambassador to the USA and will take up his position in
Washington from the 1 January 1999.”
157.
In a memorandum from Manager A to Director B dated 7 February 2001, he states,
10/2147845_2 34
“We have now been notified of the order … E00424. The full FOB value will be
£1,131,123…For his assistance we wish to pay Zina Andrianarivelo $10,000
(allowed in figures) of which $5000 to be paid now and the balance in due
course.”
158.
In a further memorandum from M&J’s local Sales representative to Manager A dated 7
February 2001 the same payment is referred to and is explained:
"Zina in Washington played an important role in the allocation of funds from the World
Bank to Madagascar for bridges. He also helped at some difficult stages in the
negociations [sic]; finally he will be helpfull [sic] in the future as well to
introduce us in Washington. I propose to reserve for him an enveloppe [sic] of
$5000 on the first job (7 bridges) and an additional $5000 if we actually get the
additional 4 bridges."
159.
Subsequently, after receiving a request directly from Mr Andrianarivelo-Razafy on 23
February 2001 a sum of $5000 was paid into his account at Credit Lyonnais in France on
23 February 2001.
160.
The SFO has been informed by M&J that not all of the payment authorisation forms can
be located. However, requests for payments to Mr Tsaranasy were generally made by
Manager A and Director B was involved in the approval of the payments made to Mr
Tsaranasy.
Mozambique
161.
During the 1990s M&J entered in to a number of contracts with Government
departments in Mozambique . M&J received sales revenues from contracts in
Mozambique worth approximately £6 million during the relevant period (1995-1999).
162.
A written report to the Directors of M&J of a visit to Mozambique in November 1995
refers to a number of projects, in particular in Zambesia, at various stages of completion.
10/2147845_2 35
163.
Mr Amerigo Fortuna was the Deputy Director of the Mozambique Ministry of Foreign
Affairs and Co-operation and was involved in the selection of eligible recipients of
project grants. Carlos Fragoso was the national director of the National Directorate of
Roads and Bridges (DNEP) in Mozambique. Subsequently Carlos Fragoso appears to
have been chairman of the National Roads Administration (ANE) in Mozambique.
164.
It appears that M&J met with Mr Fortuna and Mr Fragoso and, inter alia, discussed the
extension of a contract for spare parts in Mozambique. This was a contract which
involved Crown Agent backing and the involvement of Japanese financing
arrangements. It is reported that,
“Met Dr. Fortuna who is involved to some extent in the selection of eligible recipients
of NPG, who confirmed that there probably will be $ 8 m of NPG available in
1996, and DNEP will be eligible for a further $ 2 m (max $ 5 m per
customer)…Mr Fragoso confirmed he will apply for further $ 2 m for Bridge
Spares in Feb/Mar 1996.”
165.
M&J retained an Export Agent's Commission Card for Mozambique which covers the
period 23 August 1997 to 10 April 2000 in the name of "C Fragoso". M&J's
commission card records that it made a number of payments to Mr Fragoso between 14
October 1997 and 10 April 2000 in the total sum of £286,978.54..
166.
M&J also retained an Export Agent's Commission Card for Mozambique which covers
the period 23 February 1996 to 23 January 1998 in the name of "Fortuna". This
Commission Card records a number of payments made to CKY Partnership, V&M
Tooling (Pty) Ltd and V&M Import and Export Agents (Pty) Ltd between the above
dates in the total sum of £42,475.88.
167.
It is possible that these were companies with which Mr Fortuna is connected. However,
it is not possible to confirm this connection; the SFO has been told by M&J that it does
not have any further information available about these companies; nor is it now known,
because records are no longer available, where these companies received payment.
10/2147845_2 36
168.
Another name appearing on M&J’s Export Agent’s Commission Cards for
Mozambique was a Mr Notece. Mr. Notece was an engineer employed by the DNEP
who it appears had some involvement with M&J's work in Mozambique. Mr Notece's
name appears on an unnamed Commission Card in relation to a payment of US$5,000
made in Mozambique in October 1999.
169.
Manager A was responsible for M&J sales in Mozambique. In a memo to Director B
dated 1 October 1999 he states,
“There are three recipients of commission and I believe it important that I can take USD
5,000 on my imminent trip to Mozambique…”
170.
M&J no longer has all the documentary records relating to its work in Mozambique
however it appears that this payment was made to Mr Notece and that in total Mr Notece
was paid $25,000 in Mozambique.
171.
Insofar as the payments to Mr Fragoso are concerned, these appear to have been made
by bank transfer to his Swiss bank account. M&J's records show that Director B would
have met both Mr Fragoso and Mr Notece during a visit to Mozambique in March 1996.
Insofar as the payments made to Mr Notece are concerned, it appears that these were
cash payments whereby Mr Notece received the cash in Mozambique.
Bangladesh
172.
M&J conducted business in Bangladesh between 1982 and 2001. Between 1997 and
2001 M&J received sales revenue from contracts in Bangladesh worth approximately
£20 million. Dates that these contracts were executed and their value are not available.
In part the requirement for these bridge contracts was in response to devastating
flooding in Bangladesh in 1998.
10/2147845_2 37
173.
Bangladesh is a country which has a reputation for widespread corruption and did so
during the period concerned. M&J made corrupt payments in connection with one of
the contracts obtained in this jurisdiction.
174.
In a M&J document concerning sales planning and development, believed to have been
authored by Director D, he states,
“High Marketing costs.
Our success has been based upon: Development of close personal relationships with key
personnel in the Roads and Highways Department, the Ministry of
Communications, the Planning Ministry and the Ministry of Finance. The use of
the “white man’s handshake” is extensive in building trust and confidence
before any contract is concluded in Bangladesh.
The drive and contacts of our agent. Our new agent has very strong contacts within the
Ministry of Communications. He has also worked hard at developing relations
within the other relevant Ministries where he was not known.”
175.
M&J entered into a contract on 29 June 1999 with the Ministry of Communications
(acting through the Roads and Highways Department) for emergency bridging under the
Emergency Flood Rehabilitation Programme (the "MOC Contract"). M&J's records
indicate that it received sales revenue of approximately £15 million in relation to the
MOC Contract.
176.
This was a contract for the supply of 25,000 rft of Bailey Bridges; “launching kits”; tool
kits and emergency floating bridges. This was a contract that was underwritten by the
ECGD.
177.
C. M. Nizamuddin (also known as Bulbul), was M&J’s local agent in Bangladesh from
at least 1998 until some time in 2002. M&J's Export Agent's Commission Card in the
name of "C. M. Nizamuddin" records that approximately £2.4 million in commission
payments in connection with the MOC Contract was paid during 1999 and 2000 through
accounts in various names.
10/2147845_2 38
178.
Transfers were also made in relation to Bangladesh which are recorded in a separate
M&J Commission Card entitled Asia Development Fund. Director D appears to have
made cash payments in Bangladesh and claimed these as expenses to be deducted from
the Asia Development Fund. On trips in April and May 1999, Director D made a
payment of £320, referenced as "TSC approval" and a payment of £640 referenced
"Purchase committee member". On a trip in June 1999, Director D made two further
payments of £1300 each to engineers.
179.
From 1997 to 2004 Khandaker Rahman was a Chief Engineer employed by the Roads
and Highways Department (RHD) in Bangladesh. He was employed in a number of
different capacities during this period. He had a role in procuring or approving contracts
for bridges in Bangladesh. In his CV, held on file by M&J, he states that between
1982-1986 he was a member /secretary and in 1997-1999 he was a permanent member
of the Roads and Highways Committee on Procurement (RHD COP). He stated that, in
respect of his involvement in the RHD COP his responsibilities included:
“To scrutinize, evaluate and recommend the procurement of all civil & mechanical
works/consultancy and supply works of Roads & Highways Department. The
construction of all Roads & Bridges have been dealt with and the
recommendations of the awards were made.”
180.
Khandoker Azad is Khandaker Rahman's son. There is evidence to suggest that
payments were made to accounts in Khandoker Azad's name for Khandaker Rahman's
benefit. M&J retained an Export Agent's Commission Card in Khandoker Azad's name.
Certain payments were also recorded on the commission card of C M Nizamuddin in the
name of Khandoker Azad. The available Commission Cards record payments totalling
£240,000; however these Commission Cards record multiple payments on the same day
and not all bank transfer documents are available, therefore there may be some
duplication of payments.
181.
Director D requested that a number of payments be made by M&J to Khandaker
Rahman and/or Khandoker Azad.
10/2147845_2 39
182.
On 4 October 2000 Director D requested that Director B authorise cash in the sum of
£25,000 to be made available for Khandaker Rahman. The arrangement was that
Khandaker Rahman would go with the Office Manager to M&J’s local branch of
Barclays in Reading to collect the cash. A letter signed by Director B was sent to
Barclays' Reading branch on 9 October 2000 requesting £25,000 in £50 notes to be
made available for collection on 12 October 2000. The cash collection is entered on
Bulbul's Commission Card for 12 October 2000.
183.
In addition to the cash payment referred to above, Director D also requested payments to
Khandaker Rahman to be paid to bank accounts in the name of Khandoker Abdullah Al
Azad. Payments were made to bank accounts at Barclays Bank, Jersey; Barclays Bank,
Richmond; National Westminster Bank, Richmond; and Standard Chartered Bank,
Jersey. Khandoker Azad's Commission Card also records two cash payments of
US$5000 made at Twyford on 8 May and 6 October 2000. Additionally Director D
claimed £500 (to be deducted from Khandoker Azad’s commission card) as part of his
expenses for a business trip that took in Bangladesh in late November – early December
2000.
184.
Not all documentation relating to payment approvals is available. However, Director B
and Director D appear to have been involved in the approval of a number of the
payments.
185.
The total value of the direct payments in these four jurisdictions are in the region of
£700,000 and the value of the contracts which were obtained by M&J in those
jurisdictions at the time of those payments was in the region of £22.5 million.
CONCLUSION
186.
The Court should note that in the relevant period of the indictment M&J’s annual
turnover would have averaged about £56 million and these investigations do not
purport to cover all the contracts M&J entered into during the relevant period.
10/2147845_2 40
Realistically in terms of time and cost, it is accepted it cannot and need not investigate
all contracts.
187.
The SFO is of the view that it is appropriate to prosecute the Company based on its
admissions before completion of the Company’s investigations and the SFO's
investigations into the conduct of the individuals. Pending that outcome, it is not the
SFO's case that the instances of corruption disclosed to date by the Company are the
totality of the corrupt activity.
188.
For the purposes of illustrating the pervasive historical picture, the Company accepts
and admits that in four other jurisdictions - Angola, Bangladesh, Madagascar, and
Mozambique - corrupt payments were made direct to elected or appointed public
officials.
189.
Deep consideration has been given by the Director of the SFO into continuing further
and lengthy investigations into M&J’s affairs. Those investigations may or may not
reveal further sustainable criminal charges. But in the light of the admissions today and
the other features of remediation that will be explained to this Court the Director of the
SFO has taken the view, in the public interest, that the Company should be sentenced
now and on this basis.
190.
What is clear from the evidence disclosed, and accepted by the Company in relation to
the six jurisdictions put before the Court today, is that there was a practice of corrupt
activity within the Company before 2002.
191.
The counts on the indictment are illustrative of practices that also occurred in the other
named jurisdictions. They cannot be seen as isolated offences. The consequences of the
Company’s recognition of this fact is that in considering the proper sentence, that the
Court can take into account that the Company engaged in more widespread corrupt
activity in the four other jurisdictions details of which are set out above.
192.
Furthermore, as is explained elsewhere, the SFO have sought where appropriate to have
regard to the model for corporate regulation adopted by the Department of Justice in the
United States of America under the Foreign Corrupt Practices Act 1977. That model
10/2147845_2 41
contemplates corporate remediation as an important factor in considering the propriety
and proportionality of lengthy investigations into companies that are willing to come
forward, engage co-operatively with the Prosecuting authorities and admit their guilt.
193.
Accordingly, given that the Company has engaged and is continuing to engage in efforts
at remediation, and can face only a financial penalty, it is felt that further investigation
of offending corporate behaviour would not be an appropriate use of resources nor be in
the public interest given how this case is being presented for sentencing.
194.
The SFO has decided not to name certain directors, executives and employees of M&J
at this stage because they may face trial in English Courts. The fact of the naming of
certain directors, executives, employees of M&J and any others should not be taken by
this court, the public and press as determinative of guilt of any of the persons named in
this Opening Note. In the interests of fairness to those who are under investigation, no
settled view concerning the culpability of individuals whether named here or not has
been made.
195.
The corrupt payments made benefited the recipients directly, and in all likelihood will
have benefitted the shareholders of M&J indirectly, in that they profited from business
they might not otherwise have obtained.
196.
The corruption, came at the cost of those least able to afford it: the peoples of the
countries in which M&J operated.
X: IRAQ: ‘OIL FOR FOOD’
197.
A separate Opening Note is being prepared in respect of the Iraq “Oil For Food matter.
10/21623009_2
42
APPENDIX 1
The following matters are intended to assist the Court. They are a non-exhaustive list of the
factors which the Director of the SFO takes into account when considering whether to
investigate and prosecute allegations of overseas corruption by United Kingdom based
companies and individuals.
1. The case of M&J is the first prosecution undertaken by the SFO’s dedicated Anti
Corruption Domain.
2. The present Director of the SFO has made clear his position in the public domain and to
the UK business community that companies can and should refer themselves to the SFO
where it appears they have previously engaged in corrupt practices overseas.
3. The SFO is committed to the interests of the victims of overseas corporate corruption.
Overseas corruption is not a “victimless crime”. As the present case demonstrates only
too well, the victims are all or any of the proper interests of the governments of the
countries where such practices are carried out, the integrity of their civil services and
public officials, and - more generally - the peoples of those countries, particularly the
poorer and poorest sectors of those populations.
4. The United Kingdom has ratified the OECD Convention of 1999 prohibiting overseas
corrupt practices. As a result, it enacted sections 108 and 109 of the Anti-Terrorism,
Crime and Security Act 2001. Furthermore, at the G8 summit at Gleneagles in July
2005, the United Kingdom re-affirmed its commitment to the eradication of overseas
corruption, as did the world’s other leading industrialised nations. By virtue of the
multilateral approach to the problem, it can be seen that United Kingdom companies are
not disadvantaged in their endeavours to compete for overseas business. Equally, it is
the view both of the United Kingdom government and the Director of the SFO (amongst
others) that corrupt practices overseas distort proper competition and are wasteful and
damaging to the economies of, in particular, developing nations.
5. Where companies which have been engaged in corrupt practices refer themselves to the
SFO, the Director will consider the option of imposing a monitoring system to ensure
10/21623009_2
43
absolute compliance with UK law in particular and ethical standards in general.
Although UK law does not, at present, provide for monitoring as a means of
remediation, the Director will, where appropriate, seek to follow the model provided by
the United States of America’s Foreign Corrupt Practices Act 1977. In particular, the
Director of the SFO will have regard to whether the instances of corrupt practices by a
self-referring company are relatively historic, and what the company itself has done to
remedy its past conduct, including whether the company remains in the same ownership
and/or whether the board of directors and the management remain the same as those
responsible for instigating and supervising corrupt practices.
6. The Director of the SFO does not necessarily regard monitoring as an alternative to
prosecution; nevertheless he acknowledges that a company’s agreement to being
monitored may constitute significant mitigation in cases which are prosecuted.
7. The Director of the SFO will consider where the public interest lies in deciding what
approach to take in dealing with a company in these circumstances. There will be cases
where the public interest is very firmly in favour of prosecution. There will be others
where alternatives to prosecution (which still impose significant penalties on the
company) will be appropriate. The Director has also made it clear that any resolution
will ultimately be subject to public scrutiny.
8. The Director of the SFO has also explained publicly that any resolution relating to any
company is entirely without prejudice to any investigation and prosecution of those
individuals who took part in unlawful activity. There are circumstances in which the
public interest will be in favour of investigation and prosecution of those individuals,
notwithstanding that the company is dealt with by way of an alternative or alternatives
to prosecution.
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