#ChickenGate: Why are @IEBCPage officials still in office?! Chickens come home to roost: the Smith and Ouzman African bribery case A small family printing company in Eastbourne, Smith and Ouzman, was found guilty on the 22nd December 2014 of overseas corruption in the first successful prosecution of a company in a contested overseas corruption case. It is a significant victory for the Serious Fraud Office (SFO). It shows that the SFO is serious about prosecuting overseas corruption rather than resorting to settlements, and that it will use the old, pre-Bribery Act, corruption laws to do so. Smith and Ouzman (S&O) and its Directors, father Christopher Smith and son Nicholas Smith were found guilty of corruptly agreeing to make payments to public officials in the Interim Independent Electoral Commission (IIEC) of Kenya, the Kenyan National Examinations Council (KNEC), and the Ministry of the Interior in Mauritania (MIDEC). The company, its Directors, its international sales manager, Timothy Forrester and its agent in Somaliland, Abdirahman Mohamed Omar, were found not guilty of corruptly agreeing to make payments to officials in Ghana and Somaliland. Sentencing will take place on February 12th 2015. The Judge has said that the Directors must expect a custodial sentence. The maximum sentence for this offence is 7 years. In the Innospec case, two former employees of the company who did not plead guilty were given 4 years as a starting point before personal mitigation, after conviction for one count of corruption. The Smith and Ouzman directors have been convicted of two and three counts of corruption respectively, and it will be up to the judge to decide whether sentences for each count should run consecutively or concurrently The date for the confiscation hearing is yet to be set, but will likely be done so during the sentencing hearing on the 12th.. Recent comments by judges in the Innospec case suggest that courts should apply fines comparable to those used in the US, and which reflect the fact that corruption of public officials is at the top end of culpability and harm. Since this is the first conviction of a company that has contested the charges against it, this is new territory for the UK. According to the model of “gross contract value”, used in several bribery cases in the UK, the company can expect to face a fine in the region of £1.9 million. It remains to be seen however, what submissions the SFO will make, and what orders the court will grant as to the level of harm caused by S&O’s corruption in Kenya and Mauritania and the way in which fines and compensation should be assessed. The company describes itself as “one of the world’s leading security and financial printers”. It recently provided the certificates of authenticity for the Tower of London Remembers ceramic poppies to commemorate the First World War, which was visited by millions including the prime minister and royal family. The company has substantial business interests in Africa specifically with regards to the printing of election documents and ballot papers. The company made a pre-tax profit of £4 million on sales of £24 million in 2013. The Charges The company and its Directors were found guilty of making corrupt payments of £395,074 through agents. The prosecution’s case rested largely on substantial email evidence in which the directors discussed giving “chicken” to public officials with their agent in Kenya, which the prosecution argued was a codename for bribes. The case has been dubbed “Chicken-gate” in the Kenyan press. The company’s directors and staff argued that the payments were legitimate business payments, such as for hospitality, gifts, and facilitation payments. Their defence said they were just doing things “the African way”, and that they are guilty only of “being generous”. Christopher Smith was given a good character direction by the Judge for his involvement in local charity work through the Rotary club. The Judge specifically directed the jury to have regard to the “high integrity” and the good moral character of the defendants when considering their verdict. It was said, in their defence, that the Directors saw themselves as safeguarding the integrity of electoral systems in Africa. Kenya The most serious allegations relate to 7 contracts with the IIEC in Kenya between 2009-2010, worth £1.37 million, where S&O made unusually high commission payments of between 27% and 37% of the contract price. Part of prosecution’s case was that the commission of £380,859 over 18 months paid to the agent, Trevy James Oyombra, was exorbitant, and clearly designed to include payments for officials. The contracts in Kenya included ballot papers and voter ID cards for By-Elections, 18 million voter registration cards, Referendum ballot papers, and other products relating to elections, such as card pouches, OMR forms, ultraviolet lights. It was a feature of several of these contracts that the S&O subcontracted out the printing work to other companies, in one case to a Chinese company that delivered the goods for less than half the cost of the contract price. This raises questions about whether S&O were compliant with procurement rules and whether it compromised the security and integrity of the electoral process by subcontracting. Additionally, on several contracts, S&O delivered significantly less papers than they were contracted to do raising the question of whether the integrity of the electoral process was compromised. It was also a feature of some of these contracts that prices were inflated significantly after award of contract. In all the contracts, the alleged bribes were paid for by the Kenyan tax payers, as the cost of commission was reflected in the contract price. The specific contracts were as follows: June 2009 – Shinyalu and Bomachoge By-Election. S&O were to provide voter ID cards, and ballot papers – although in the end they provided only 142,000 papers against the 200,000 ordered. January 2010 – 18 million voter registration cards. Once S&O had been awarded the contract they subcontracted the production of half the forms to another company. March 2010 – contract for electors’ card pouches which S&O subcontracted to a Chinese company who delivered them for less than half of the contract price. May-July 2010 – three different By-Election ballot paper contracts (South Mugirango, Matuga and Civil By-Elections) – where the contract price in each case was increased substantially (sometimes by 50%) after award of contract to permit bribes to be paid. The agent advised S&O against providing “chicken” to visitors to their factory in 2010 as there were other officials not from the IIEC who he said they shouldn’t give “the wrong picture” – undermining the defence’s argument that the company was just doing things the “African way”. Significantly the company again delivered less quantities of ballot papers than were required in each of these three contracts – in the case of the Civic By-Elections some 40,000 less than ordered. July 2010 – a contract to provide 14.6 million Referendum Ballot Papers in which S&O worked out an uplift per ballot paper to factor in the bribery. July 2010 – 1.5 million OMR correction forms and 1000 nomination forms in May. July-December 2010 – ultra violet lights and other Parliamentary and Civil Ballot Papers. Electoral officials at the IIEC were on several occasions described by the agent, Trevy, as trying to make money before they left the IIEC and went back into government. The agent described the officials at on stage as anxious and “broke”, and “they are desperate for the chicken”. The agent also said that officials told him that S&O needed to “be discrete since all peoples eyes and the government intelligence are watching their every move even on the phone to ensure transparency”. The Kenyan officials named in court as recipients of payments were as follows: IIEC: Kenneth Karani (chief procurement officer); David Chirchir (IIEC Commissioner); James Oswago (IIEC Chief Electoral Officer); Dena; Kennedy Nyaundi (Commissioner); Gladys Boss Shollei (Deputy CEO); Issack Hassan; Hamida, Tororey and Sang. Several of these officials are still in government: David Chirchir is current Energy Minister in government, and Issack Hassan is the current Chairman of the Independent Electoral and Boundaries Commission (IEBC) which took over from the IIEC. KNEC: Paul Wasanga (executive secretary), Ephraim Wanderi (computer manager), Gitogo (ICT Manager), Ndua (principal supplies officer), Wanyanga (deputy CEO) In addition, the prosecution claimed that officials from the Kenyan Bureau of Standards were paid bribes, as was Dixon Lugonzo, procurement officer at the National Registration Bureau of Kenya.
Posted on: Fri, 16 Jan 2015 09:13:29 +0000
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