At the end of October, Airline Services Limited (ASL) entered into a deferred prosecution agreement (DPA) with the UK’s Serious Fraud Office (SFO). It is the latest in a line of air-related bribery cases which including Airbus’ £3bn+ settlement earlier this year (see https://www.corderycompliance.com/airbus-fined-for-bribery-in-france-uk-us/) and Rolls-Royce’s settlement of around $807m in 2017 (see https://www.corderycompliance.com/client-alert-rolls-royce-case-sends-a-strong-signal/).
What was the case about?
ASL was primarily involved in the refurbishment of cabin interiors. It was set up in 1982 but sold its cabin interiors business in 2018 and ceased trading later than year after the sale of its air handling business. ASL admitted to using agents to win three contracts, together worth over £7.3m, to refit commercial airliners for Lufthansa. The agent acting for ASL was also working as a project manager for Lufthansa, as a consultant and then employee. Whilst working for Lufthansa as part of the team responsible for evaluating tenders, he received commercially sensitive information about rival bids and shared that information with ASL to help them win the contracts. In exchange, the agent (who has not been named) received 10% of the contract value, later reduced to 5%. The contracts were undertaken between 2011 and 2012. The company co-operated with the prosecutors throughout after disclosing the facts in July 2015. It said that an internal investigation had discovered the arrangements in 2014 after initially investigating a different contract with a different airline where management had cause for concern.
What were the terms of the DPA?
This is the ninth DPA secured by the SFO. Under the terms of the DPA, ASL accepted responsibility for three counts of failing to prevent bribery arising from the company’s use of an agent to win the contracts.
The DPA requires ASL to pay £2,979,685.76, consisting of a financial penalty of £1,238,714.31, disgorgement of profits representing the gain of the criminal conduct of £990,971.45, and a contribution to the SFO’s costs of £750,000. The company is also obliged to fully co-operate with the SFO and any other domestic or foreign law enforcement agency.
The case again shows international co-operation as a key part of bribery investigations as the SFO specifically thanked the Office of the Public Prosecutors of Frankfurt am Main for their assistance.
What did the SFO say?
Lisa Osofsky, Director of the Serious Fraud Office, said:
“Airline Services Limited failed in its duties to implement adequate procedures to prevent bribery, allowing one of its agents to pervert what should have been a fair tender process and corruptly win business for the company. I am pleased that our actions hold the company to account and enable us to recover the proceeds of its crimes.
It is to the credit of this now-dormant company that it voluntarily disclosed this conduct to the SFO and will remain in existence to fulfil the terms of the DPA.”
It is increasingly the case that the bribery does not just involve brown envelopes in exchange for contracts. More and more, we are seeing bribery cases involve the sharing of information relating to contracts. Often bidding for these contracts does not make commercial sense since there is evidence that many organisations bidding for corrupt contracts in this way are simply focusing on turnover rather than profit. It is increasingly the case that employees and consultants involved in procurement are making corrupt offers but are getting caught. As we said before, we think that the risks increased during the pandemic (see www.bit.ly/covbribe) so given the failure to prevent provisions in the Bribery Act 2010, it is important that companies take measures to make sure that they do not get involved in this type of practice and that they can also document the training and guidance they have given to employees and agents. Having evidence that you have told your employees and those associated with you not to do bad things, is key.
From a view from the frontline as to how these deals often come about, you can watch our short film with Richard Bistrong here https://www.corderycompliance.com/cordery-head-to-head-richard-bistrong/
There is more information about this and other bribery and corruption topics here https://www.corderycompliance.com/category/bribery-corruption/.
You can find out more about Cordery’s work in this area here https://www.corderycompliance.com/bribery-corruption/
For more information please contact Jonathan Armstrong or André Bywater who are lawyers with Cordery in London where their focus is on compliance issues.
|Jonathan Armstrong, Cordery, Lexis House, 30 Farringdon Street, London, EC4A 4HH||André Bywater, Cordery, Lexis House, 30 Farringdon Street, London, EC4A 4HH|
|Office: +44 (0)207 075 1784||Office: +44 (0)207 075 1785|
Image courtesy of Lufthansa Media Lounge