Brokers convicted in BP corruption trial: Court is told of industrial spies rigging tendering system in North Sea oil contracting business

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The Independent Online
TWO CROOKED information brokers who paid millions of pounds to BP executives were yesterday convicted after a trial that revealed a network of corruption in the North Sea oil contracting business.

Josef Szrajber and Paolo Sorelli, who the court heard acted as industrial spies, rigged the tendering system used by Britain's biggest oil company. They sold confidential inside information, obtained by bribing BP staff, to contractors bidding for BP work on projects worth up to pounds 50m.

BP is to reopen an internal inquiry into the involvement of its own employees in the scandal, following the conclusion of the trial, which marked a success for the Serious Fraud Office in fighting corruption in the engineering and construction industries.

A spokesman for BP said: 'We conducted our own internal investigation prior to the Serious Fraud Office involvement. We had to abandon it when the SFO stepped in but we are resuming our own investigations. While they continue there is nothing new we can say or add.'

The centre of the investigation is the BP purchasing department in Harlow, Essex, which has since been closed, making some staff redundant. BP is understood to have closed Harlow as part of a policy to devolve purchasing to subsidiaries and not as a result of the corruption that came to light in the trial.

The corrupt information was obtained through large-scale industrial espionage.

The corruption within the procurement department went to a very high level, the court was told during the trial.

Stephen Batten, counsel for the prosecution, said: 'Not perhaps to the very top, but certainly the sort of level which must have had good inside information.' One named BP employee was a particularly important source of information.

The bribes were to reveal secret details about projects the company was planning in the North Sea oilfields.

The first inkling of the bribes network came when BP was tipped off by an overseas source, but subsequent investigations widened the net well beyond the company.

The corrupt information network subverted the North Sea oil industry's long-standing procedure of using sealed bids from competing companies when deciding on the award of oilfield construction contracts.

Southwark Crown Court heard that BP executives used the excuse of asking companies for further details of their bids to delay the bidding process. The delay gave time for confidential information to be passed on and sold to other companies by the information brokers.

The sealed-bids system has been regularly updated over the years to prevent breaches, but it is understood that the latest episode has led to a further review of how procedures can be tightened.

Szrajber and Sorelli approached engineering companies in Europe and Japan and offered to sell them the inside information that ensured their bids for a particular project were accepted. During the trial Mr Batten said the pair's crooked activities ruined BP's system for sealed bids.

The confidential system, which ensured engineering quality and value for money, had been totally undermined by fraud. Mr Batten said that Szrajber - the operation's front man - normally charged buyers of his information between 2 and 3 per cent of the entire contract price.

Polish-born Szrajber, 70, of Upper Montagu Street, Mayfair, London, and Italian-born Sorelli, 54, of Hereford Road, Paddington, London, pleaded not guilty to seven charges of conspiring to defraud BP between June 1988 and August 1990. They will be sentenced later.