Weir Group's £13.9m confiscation

In Scotland's biggest confiscation case The Weir Group PLC has paid an agreed figure of £13,945,962 in confiscation and a fine of £3m after pleading guilty to two charges of breaching UN sanctions in connection with a number of 'Oil for Food' programme contracts awarded between 2000 and 2002.  The company admitted breaching UN sanctions applicable at the time on doing business with Iraq which was then ruled by Saddam Hussein's regime.

The Scottish government has announced that £12.4 million of the sum confiscated will be used for community projects in Scotland and the remaining £1.5 million will go to humanitarian projects in Iraq and elsewhere, including a donation of £100,000 to the Linda Norgrove Foundation in Afghanistan to support women and children in rural areas.

Although confiscation proceedings are normally against individuals there is no bar against a company being subject to confiscation where it is the company which has been convicted of the offence(s).  There have been a number of major prosecutions of companies in UK courts in respect of overseas sales (for example the Innospec prosecution in March last year).  This is the latest example.

Clearly the authorities do not consider these large companies to be above the law.

Interestingly Sir Ron Garrick, one of Scotland's leading industrialists, built up Weir Pumps during his time with the company, as chief executive from 1982 to 1999, and as chairman from 1999 to 2002.  He was therefore in a leading position when the offences were committed.   In 2003, after leaving the group, Sir Ron was appointed to the post of deputy chairman and senior independent director in Halifax Bank of Scotland.  The rest, as they say, is history . . .

David

Comments

CU Jimmy (pity about Iraq)

JackHarper | | Permalink

It's guid tae see a few bawbees left over for the Iraquis whose money was plundered in the first place. They must know that there's a recession on in Scotland. The two amounts should have been reversed. The Scots pols cannae keep their hands off it.

 

Jack Harper

 

davidwinch's picture

Scottish v English approaches to 'benefit'

davidwinch | | Permalink

The Scottish Crown Office and Procurator Fiscal Service reported that Weir Group companies secured 16 contracts, for which they were paid £34,340,204, by paying ‘kickbacks’ of £3,104,527. The confiscation order has been granted for £13,945,962. This includes Weir’s gross profit of £9,414,283 from the contracts – plus the kickback of £3,104,527 and the fee of £1,427,152 paid to Weir’s agent in Iraq.

Had the court proceedings been in the Crown Court in England and Wales the confiscation order might have been for a larger figure, since English Crown Courts have regarded the ‘benefit’ arising for the purposes of confiscation to be the gross amounts received from the illegal conduct.  In the case of the Weir Group that would be £34,340,204.

David

Gerard Murray's picture

Weir Group's Confiscation

Gerard Murray | | Permalink

'An interesting point is that the 'benefit' figure applied (in a Scottish court) was based on the gross profit derived from the illegitimate business, and not the total amount received (which was £34 million).'- David Winch.

I find the interpretation of the Scottish court rather perverse, given the Endnote in May/UKHL/2008/28. At paragraph 48 (1) the House of Lords set out in clear, unambiguous language-

'The benefit gained is the total value of the property or advantage obtained, not the defendant's net profit after deduction of expenses or any amounts payable to co-conspirators.'

 

davidwinch's picture

Scottish and English confiscations

davidwinch | | Permalink

Gerard

The topic of confiscation law and practice in England and Wales on the one hand, and Scotland on the other, is an interesting one.

Confiscation law in England & Wales is contained in Part 2 of PoCA 2002, sections 6 - 91, whereas confiscation law in Scotland is in Part 3 of PoCA 2002, sections 92 - 155.

In fact the wording of the statutes is similar (but there are differences).

You can see a great deal of similarlity between s76 (E&W) and s143 (S) in relation to "conduct and benefit".  Each of those sections has as sub-section (7):

"If a person benefits from conduct his benefit is the value of the property obtained".

But of course neither Part of the Act contains a definition of "the property obtained".  So one has to look at the meaning of that in the context of the law of the country (Scottish law having a different history and tradition from English law).

The House of Lords in R v May was considering the English law of confiscation.  One could take the view that the comment to which you refer was not intended to apply to the law of Scotland.

A while ago I wrote an article Confiscation contrasts – England v Scotland which commented upon the quite different approaches to the assessment of 'benefit' North and South of the Border.

You would find that if you showed a prosecutor's confiscation statement from England to a lawyer in Scotland, or vice-versa, he would not recognise it!  An English s16 statement is a narrative document with some numbers, focussing on the defendant's receipts and assets.  A Scottish s101 statement is a collection of numerical schedules, with very little narrative, focussing on the defendant's expenditures including his acquisitions of assets.

I do not say that the Scottish approach is better or worse than the English one - but it is certainly different.

David

cymraeg_draig's picture

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cymraeg_draig | | Permalink

Like so many things, Scotland is "independant" when it suits them., and "British" when it profits them to be.

Gerard Murray's picture

Civil Recovery under POCA 2002

Gerard Murray | | Permalink

 

 

 

Another major engineering company, M. W. Kellogg Limited, has found itself before the courts and ordered to pay more than £7 million following a Serious Fraud Office investigation into bribery by its parent company. The company took no part in the acts that generated the funds. The penalty reflects sums the UK company is expected to receive as a result of the criminal activity of third parties. The payment is the equivalent of share dividends it would have received from profits created by the contracts.The High Court made the Order under, Part 5 Proceeds of Crime Act 2002,which deals with civil recovery of the proceeds of unlawful conduct.

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