Macmillan pays out record £11m amid African bribery concerns

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The Independent Online

The High Court has ordered Macmillan Publishers to pay more than £11m for unlawful conduct by its Education Division in Rwanda, Uganda and Zambia.

The civil recovery order concludes a 16-month inquiry into possible corruption by the Serious Fraud Office, with the full co-operation of the privately owned, Basingstoke-based publishing company.

Potential wrongdoing by Macmillan's education arm first surfaced when the World Bank reported the attempted bribery of officials overseeing a tender for educational materials in southern Sudan (a contract Macmillan did not win). The report led to raids by the City of London Police and, in March 2010, the company itself took the case to the SFO.

The full inquiry began with Macmillan instructing external lawyers to undertake a review of areas of potential corruption risk, which threw the spotlight on the activities in Rwanda, Uganda and Zambia.

Investigations into activities in the regions between 2002 and 2009 were then pursued both by Macmillan's external lawyers, and by the World Bank and the SFO.

And the SFO concluded that public tenders by the relevant national governments "were susceptible to improper relationships being formed and corruption taking place", and that it was "impossible to be sure that the awards of tenders to the company in the three jurisdictions were not accompanied by a corrupt relationship".

A detail accounting examination concluded the appropriate amount to be recovered to be £11.3m, plus a further £27,000 to cover costs.

Both the SFO and Macmillan Publishers were yesterday keen to stress the company's co-operation with the investigation.

The chief executive Annette Thomas expressed the company's "deep regrets" and said lessons have been learned. "Macmillan is a business with strong values rooted in education and development, which we hold dear," Ms Thomas said. "We will not tolerate any form of potentially unlawful behaviour, as our approach to the SFO has demonstrated."

The Macmillan case is the fifth civil settlement concluded by the SFO, following Balfour Beatty, Amec, MW Kellogg and DePuy International.

Richard Alderman, the director of the SFO, said the civil process has advantages over criminal proceedings in some cases.

"Civil recovery allows us to deal with certain cases of corporate wrong-doing effectively," he said. "It delivers value for money to the public by saving the cost of lengthy investigations and protracted legal proceedings and removes any property obtained as a result of the wrong-doing."

Although the £11.3m is by the largest fine recovered so far under civil recovery, it is still far less damaging than a criminal proceeding, according to legal experts.

"The case clearly shows the advantages to a corporation of self-reporting 'bribery' issues to the SFO in order to avoid a prosecution," Neill Blundell, a partner at law firm Eversheds, said.

"Whilst the Civil Recovery Order is significant, Macmillan have escaped a criminal prosecution and none of their employees is to be prosecuted."

Macmillan Publishers is barred from participating in World Bank tenders for a minimum of three years.

The company has already closed all ongoing and prospective tenders in its Education Division in East and West Africa.