Chickens coming home to roost: SFO's first conviction of a company for bribery after contested trial

Hot on the heels of the SFO's first conviction under the Bribery Act 2010, discussed in George's post, and just as some of us were disappearing for a Christmas break...

…the SFO announced its first conviction of a company for bribery of foreign public officials after a contested trial.  (Regular SFO-watchers will recall that in Mabey & Johnson (2009) and Innospec (2010), both companies pleaded guilty by agreement to offences involving bribery of foreign public officials.)  This prosecution was not in fact under the much-trumpeted Bribery Act 2010, but under s1 of the Prevention of Corruption Act 1906.

Christopher Smith, and his son, Nick Smith, were convicted on 22 December 2014 of corruptly agreeing to make payments to officials in Kenya and Mauritania between November 2006 and December 2010 to obtain business contracts, particularly for election papers.  Both were directors of a privately-owned security printing company called Smith & Ouzman and the company was also charged and convicted on the basis of the Smiths' actions.  The SFO alleged that the Smiths inflated commission payments to overseas agents to hide bribes that were to be passed to officials.

The prosecution produced a series of emails between the Smiths and the company's Kenyan agent (who was not prosecuted).  Key to those emails was the meaning of "the chicken".  For example, in one email to Mr Smith senior, the Kenyan agent said "hes a nice guy...he is in my pockets now, lets use em to get the contract and as I promised em we get the order he gets chicken...these peoples problem is chiken after award and I told them as lond as we get the tender and after looking at our margins then will definately give them the chicken...".

The SFO alleged that "chicken" was a code word for a bribe.  The Smiths denied this, apparently arguing that "chicken" was a reference to legitimate gifts and hospitality expenses or even actual chickens.  Given the convictions, the jury clearly found the SFO's interpretation rather more credible.

The Smiths and the company are due to be sentenced in February.  The company, however, will already be paying the price, as under EU procurement directives, its conviction will bar it from selection in public tenders.

The SFO will be pleased with the convictions and the case is a reminder of the UK authorities' increasing enthusiasm to crack down on foreign bribery.  However, the company was a relatively small one, where it was not difficult to show that the "guiding mind" of the company, ie its directors, the Smiths, were aware of what was going on.  This is a much trickier task in a large company, which is of course what prompted the formulation of the section 7 of the Bribery Act 2010 (failure by a company to prevent bribery by its employees and agents).   Nor were the sums involved, under £400,000, particularly large, given the SFO's notional threshold of £1m for accepting cases for investigation. Further, an employee and an agent of Smith & Ouzman, who were prosecuted at the same time, were acquitted.  All this suggests that the SFO still has some way to go.