Weir Group fined further £3m for kickbacks to Saddam’s regime

The engineering firm Weir Group has been fined £3m after it admitted bribing allies of Saddam Hussein to win lucrative contracts in Iraq, in breach of tough UN sanctions against the Iraqi ruler’s regime.

The Glasgow-based company, one of Scotland’s best known engineering firms, pleaded guilty this week to two charges of deliberately paying kickbacks of more than £3m to win contracts to supply £35m worth of pumps under the UN-controlled oil for food programme.

The newly promoted FTSE 100 firm had already agreed to repay £13.9m, equivalent to the company’s profits from the Iraqi contracts, after it was exposed by the US defence contract audit agency in 2004 and later named formally in a UN investigation.

The UN inquiry found that Weir Group’s corruption had helped senior figures in Saddam’s regime to illegally divert $1.5bn (£960m) in aid intended for vital healthcare, food supplies and basic utilities, including clean water supplies. The bribes were worth 10% of the entire UN aid programme.

The company, which knew the kickbacks were essential to win the contracts, also set up a covert method of channelling its bribes through Switzerland to a front company used by its Iraqi agent. That agent paid the bribes and was reimbursed by Weir, who paid him a further £1.4m for handling the bribes.

Sitting at the high court in Edinburgh, Judge Carloway said that Weir Group had admitted its guilt at an early stage in the investigation and had since removed the employees involved, overhauled its corporate structures and board, and sold off the division linked directly to the illegal bribes. This had saved it from paying a full fine of £4.5m but the offence was still extremely serious, Carloway said. Other potential offenders needed to be deterred from similar corruption, which would damage the UK’s interests and those of the UN.

“Seen in that context, and having regard to the effect of the 10% on the amount of humanitarian products allowed into Iraq, a substantial financial penalty is undoubtedly merited”, the judge said.

“This is especially so given that the illegal payments were made after a meeting in September 2001 attended by a director of the Weir Group, a senior manager and the principal salesman together with directors and the manager of the principal subsidiary company involved in the deals.

“The payments were specifically authorised to be made at group director level and that in relation to a company which then as now is seen as an example of Scottish global achievement”.

Carloway is known for taking tough action against companies guilty of negligence or criminal behaviour: in 2005, he fined Transco a record sum of £15m over a fatal explosion in a gas main which killed a family of four in 1999. His fine for Weir Group outstrips the £2m fine last year against the bridge builders Mabey & Johnson, which paid a bribe of €422,264 (£357,446) to secure a contract of €4.2m in Iraq. Mabey & Johnson also paid £1.5m in reparations to the UN’s Iraq fund.

Lord Smith of Kelvin, Weir Group’s chairman, said today’s judgment “finally draws a line” under the prosecution investigation. “What happened back in 2001 was wrong and we accept full responsibility”. Smith added: “Since 2001 Weir has been transformed. We have a different board and a different management team all of whom are committed to doing business at all times in an ethical manner. Today we have in place robust ethical policies and procedures and operate a zero tolerance approach to any behaviour that contravenes them”.

The Crown Office, Scotland’s prosecution authority, said there were trials still to place against individuals linked to the Mabey & Johnston case in England as part of a Serious Fraud Office case. It added: “The SFO still have one investigation ongoing, which is understood to involve a number of individuals”.

Assistant chief constable George Hamilton, of Strathclyde police, which carried out the Weir Group investigation, added: “Just because this case involves a large company does not mean that they are above the law”.

“I sincerely hope that today’s result serves as a warning to other companies who may be tempted to think they can break the law and get away with it”. (Guardian)

Exercise 9 . Make a summary of the news issue below and translate it into Ukrainian.