Smith & Ouzman bribery sentencing reflects harm and the company's 'culpability', says expert

Out-Law News | 13 Jan 2016 | 2:34 pm | 2 min. read

The multi-million pound penalties handed down to a UK printing company convicted of bribing foreign officials reflected the company's "culpability" for the offence as well as the harm caused, an expert has said.

Eastbourne-based Smith & Ouzman Ltd, which specialises in security documents such as ballot papers and exam certificates, must pay a fine of over £1.3 million, as well as settle an £881,158 confiscation order applied for by the Serious Fraud Office (SFO) and pay £25,000 in costs. The company will be able to pay the fine in instalments, but will have to settle the confiscation order within 28 days, according to an announcement on the SFO's website.

The company was sentenced under the Sentencing Council's definitive guideline on the sentencing of fraud, bribery and money laundering offences. The guideline applies to all organisations sentenced after 1 October 2014, regardless of the date of the offence, and is intended to ensure that fines are consistent.

Writing on his blog, thebriberyact.com, white collar crime expert Barry Vitou of Pinsent Masons, the law firm behind Out-Law.com, explained that the starting point set by the guideline for fines was "the gross profit for the contracts obtained by bribing a public official multiplied by, depending on the facts, between 20% and 400% in the worst cases".

"The 300% multiplier [in this case] does indeed reflect the 'culpability' of the company," he said. "The judge must also assess the 'harm' caused by the culpable behaviour: the 300% reflects the combined degree of 'culpability' and 'harm'."

"The level of fine here may well be of significance for the future as a reference point, this being corruption involving public officials with no reduction available for a plea of guilty as the case was fought by the company," he said.

The SFO began investigating Smith & Ouzman in October 2010, and the company was convicted of making corrupt payments in breach of the 1906 Prevention of Corruption Act in December 2014. The company paid a total of £395,074 to public officials in order to secure business contracts in Kenya and Mauritania, according to the SFO.

Two employees of the company were also prosecuted individually for their role in the corruption, and were sentenced in February 2015. Chairman Christopher John Smith was sentenced to 18 months in prison, suspended for two years, and was ordered to carry out 250 hours of unpaid work while sales and marketing director Nicholas Charles Smith was sentenced to three years in prison. Confiscation and costs orders have now been made against both men.

Writing on thebriberyact.com, Barry Vitou said that the length of time between the SFO first accepting the case for investigation and the final sentences being handed down was not unusual for cases of this type. This was "often hard to understand" for companies who, when faced with a discovery of corrupt conduct, tended to "want to quickly get to the point either of quantifying the damage so that it can be dealt with, or conclude that there is in fact no real problem", he said.

"There is a natural tension between the need for certainty of outcome in order to run a business and [the] complex nature of a corruption enquiry," he said.

He pointed out that the SFO "specifically thanked" the authorities in Kenya, Ghana and Switzerland for their assistance in the case, indicating that the authority was "develop[ing] its intelligence capabilities".

"One of the first things [SFO director David Green] stressed was his intention to boost the 'intelligence' capability of the SFO, both through its own resource and, more importantly given budgetary constraints, through intelligence sharing," he said.

"Closer links with other international investigators is a common sense way of getting around the difficulty of a limited budget. It looks as if the current director is firmly putting a tick in that box," he said.