Iraq sanctions trio face sentence

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The Independent Online

Three former executives of an engineering firm were today due to be sentenced for inflating the contract price for the supply of steel bridges to provide kickbacks to the Iraqi government of Saddam Hussein.

Charles Forsyth and David Mabey were convicted at Southwark Crown Court earlier this month of making illegal payments to Iraq during 2001/02 in breach of United Nations sanctions, a spokeswoman for the Serious Fraud Office (SFO) said then.

A company sales executive had already admitted his involvement, and the company had pleaded guilty to breaching UN sanctions (along with other offences) in September 2009, she added.

The company entered into a contract under the UN oil-for-food programme which was introduced to alleviate hardship for the Iraqi people.

At the time, Forsyth was the managing director of Mabey & Johnson, and Mabey the sales director, the spokeswoman said.

Another defendant, Richard Gledhill, who was sales manager for contracts in Iraq, pleaded guilty to sanctions offences at an earlier hearing and gave evidence for the prosecution, she added.

The payments, which amounted to more than 420,000 euro, (£353,000) were made to secure a contract to supply 13 steel modular bridges.

Mabey, 49, from Hall Place Lane in Maidenhead, Berkshire, and Forsyth, 62, from Butts Meadow, Hampshire, had denied they gave consent, or connived, to bump up the price of a contract worth 3.8 million euro to 4.2 million euro (£3.2 million to £3.5 million).

The jury was told that the difference of the 10% increase was knowingly given to Iraq by Mabey & Johnson in a scheme the oil-rich country came up with to bypass UN sanctions, exploiting the "oil for food" programme.

Peter Blair QC, prosecuting for the SFO, said of the Iraqi government: "They devised a system that started in around about 2000. I am going to call it a kickback.

"Iraq devised a scheme whereby they arranged for suppliers, we say, to make funds available so they could spend money as they pleased."

They bypassed the UN's aid programme, which was designed to supply vital food and healthcare to citizens.

In this case, he said, the cash was transferred through a bank account controlled by an organisation called Upper Gulf Agencies.

The barrister continued: "It wasn't all locked up in the United Nations account only for spending on humanitarian goods.

"This is something the United Nations sanctions specifically prohibited and which English law specifically prohibited."

He told the jury that the proceeds of the oil Iraq sold should have been banked in a special escrow account - in the hands of a third party until a condition is fulfilled - at BNP Paribas in New York so they could not have control of the money themselves.

In April last year, Gledhill, 64, pleaded guilty to making 4,222,643 euro available to the Republic of Iraq, or a resident of Iraq, between May 2001 and November 2002.

The pair standing trial faced an almost identical charge, the difference being that they connived, or as Mr Blair put it, "turned a blind eye", to the payments.

Mabey's solicitor, Stephen Gentle, said at the time of conviction: "My client is surprised and profoundly disappointed by the jury's verdict today. He maintains he was personally unaware of any breaches of UN sanctions against Iraq within his company in 2000/01. He has instructed me to seek leave to appeal.

"He wishes to record his gratitude to his wife, children, friends and the many colleagues who have given him such unwavering support throughout. He regrets the pain and intrusion this prosecution has caused them.

"Personally, he remains buoyed by the belief that this verdict will be overturned at appeal. Until then, he has no further comment to make."