SFO Obtains Civil Recovery Order Against AMEC Plc

The Serious Fraud Office (SFO) has obtained a Civil Recovery Order of approximately £5 million against AMEC plc, an international engineering and project management firm.

AMEC made a referral to the SFO in March 2008 following an internal investigation into the receipt of irregular payments between November 2005 and March 2007 amounting to approximately US$9 million.  The payments were associated with a project in which AMEC is a shareholder.  The SFO concluded there was a failure to keep accurate records as required by s.221 of the Companies Act 1985 and that the matter was suitable for civil resolution.

In a Consent Order agreed before the High Court, AMEC agreed to a settlement payment of £4,943,648 plus costs incurred from the Civil Recovery proceedings.  The SFO acknowledged that upon completion of the internal investigation AMEC acted promptly and responsibly in referring the case and has since cooperated with the SFO’s investigation into the corporate irregularities.

Following detection of these irregularities, AMEC has reported that it has been improving its ethics, compliance and accounting standards.  As part of the settlement, AMEC agreed to appoint an independent consultant to review these improvements and report findings to the SFO.

This case follows the Civil Recovery Order obtained by the SFO against the construction company, Balfour Beatty plc, in October 2008, the first of its kind to be obtained by the SFO.  The SFO agreed to accept from Balfour Beatty a £2.25 million settlement plus a contribution to its costs following an investigation into payment irregularities that occurred within a subsidiary entity during the construction of the Bibliotheca Alexandrina in Egypt which completed in 2001.  Similar to the recent AMEC case, the SFO took into account Balfour Beatty’s self-reporting of the matter (in 2005) and its agreement to take steps to review and improve its control and compliance processes and engage in an external monitoring programme.

Civil recovery enables enforcement authorities to recover, in civil proceedings before the High Court or Court of Session, any property (including money) which is, or represents, property obtained through unlawful conduct.  Money which is, or represents, property obtained through unlawful conduct, or which is intended to be used in unlawful conduct, may be forfeited in civil proceedings before a magistrates’ court.  If a matter is settled at a time when recovery proceedings are still before the court, the court will usually be asked to make a consent order to stay proceedings and give effect to the settlement agreement.

AMEC would have been mindful of the potential for a criminal prosecution and related consequences including impact on the ability to tender for public contracts.  By threatening use of its powers of civil recovery, the SFO treated these cases as a civil breach of the rules and was able to bring to an end the investigations into these payment irregularities by a High Court approved settlement by way of consent order.

The SFO has made clear that its use of its civil recovery powers will be dependent on the responsibility demonstrated by the company concerned.  In both the AMEC and Balfour Beatty cases, key factors considered by the SFO in its decisions to award lenient treatment were the prompt and open approach in reporting the payment irregularities, the cooperation with the investigations and putting into place steps to reduce the risk that recurrence would take place in the future.

Companies should note the SFO’s recent guidance on overseas bribery which encourages voluntary disclosure of any suspected bribery and corruption within day to day business practices, as well as cooperating with the authorities as early as possible and taking remedial steps.

For more information visit UK SFO Self Reporting on Corruption Guidance (July 2009) or see the SFO homepage at: http://www.sfo.gov.uk/

Sam Eastwood is a litigation partner and Head of the Business Ethics and Anti-Corruption Group and Chris Campbell-Holt is a researcher at Norton Rose LLP, http://www.nortonrose.com/ . Chris was a member of the Secretariat of the Woolf Committee that was appointed by BAE Systems’ Board to report on BAE’s ethical policies and processes. Sam can be contacted on +44(0)20 7283 6000 or by email: sam.eastwood@nortonrose.com .

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