Firm fined £3m for Saddam kickbacks

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The Independent Online

A British engineering company was fined £3 million by a court today for paying illegal kickbacks to Saddam Hussein's regime to secure lucrative contracts.







Weir Group Plc admitted two charges of breaching United Nations sanctions imposed on Iraq before the 2003 invasion.



Money, which should have been used for humanitarian purposes to ease the suffering of the Iraqi people under the UN's Oil For Food programme, went to the dictatorship instead.



The Glasgow-based company had already agreed to hand over its £13.9 million profit from the business deals under a confiscation order.



At the High Court in Edinburgh today, Judge Lord Carloway imposed a fine of £3 million on the company.



He said a substantial financial penalty was "undoubtedly merited" and that the court had to consider the need to deter future offences.











Following the hearing, the company said what happened was wrong and it now operates a "zero tolerance" approach towards any behaviour in breach of its ethical policies.



Weir admitted making payments of £3.1 million to the regime through an agent to get contracts worth £35 million between September 2001 and April 2004. The middleman was also paid around £1.4 million for his services.



The contracts related to the supply of spare parts for pumps for Iraq's drinking water and oil infrastructures during the Oil For Food programme, which was introduced by the UN to enable exports of Iraqi oil to take place, provided the cash was used for humanitarian purposes.



The court heard that in 2000 the Iraqi Revolutionary Command Council decreed that everyone supplying goods to Iraq had to pay a kickback to the Iraqi government to secure contracts.



The kickbacks were to be 10% of the true value of the contract and were added to its price. The supplier was then to claim the inflated price from UN-controlled funds, keeping the true price of the contract and paying the 10% back to the Iraqi government.



The court heard the payment of the kickbacks by Weir and other companies meant that money allocated by the UN for humanitarian reasons went to Saddam Hussein's regime instead.



Lord Carloway told the court today: "In selecting the appropriate criminal penalty, the court has to bear in mind the need to deter future offences which are calculated to damage the interests of the nation, and indeed the United Nations, by breaching resolutions agreed by the United Kingdom and the UN Security Council.



"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.



"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."



Speaking outside court, group chairman Lord Smith said Weir has been "transformed" since the time of the offences.



He said: "What happened back in 2001 was wrong and we accept full responsibility. Today's decision finally draws a line under the Crown Office's Oil For Food investigation, which we believe is in the best interests of shareholders.



"Since 2001, Weir has been transformed. We have a different board and we have 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 we operate a zero-tolerance approach to any behaviour that contravenes them.



"The board regards it as an absolute priority ensuring that we operate with integrity. I am personally confident that we have in place the right culture with the necessary policies and procedures to ensure that it does."







The Crown Office today said the £13.9 million sum it secured was a record under Scots law.



Lord Advocate Elish Angiolini QC said: "This case represents the biggest single confiscation order made so far in Scotland using the Proceeds of Crime legislation.



"It is the result of a highly successful collaboration between the National Casework Division of the Crown Office and Procurator Fiscal Service, Strathclyde Police and the Serious Fraud Office (SFO)."



George Hamilton, Assistant Chief Constable of Strathclyde Police, explained it was a long-running and complex investigation.



He said: "Our officers had to sift through a large volume of information and undertake interviews and recover evidence from across the UK and a number of other jurisdictions around the world.



"Enquiries such as this present investigative and logistical challenges, but in the face of this the police, Crown and SFO teams working on the case were determined to establish the facts. I am pleased to see the successful conclusion of those efforts in today's ruling by the court."



He 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 that they can break the law and get away with it."



Weir Group employs more than 1,000 people in the UK and a further 9,500 overseas.