The U.K.’s Serious Fraud Office (SFO) has levied penalties worth nearly £3 million (U.S. $3.9 million) against a defunct aircraft refurbishing company for violating the country’s anti-bribery laws.
Airline Services Limited (ASL) entered into a deferred prosecution agreement (DPA) with the SFO on Friday in which it accepted responsibility for failing to prevent bribery regarding contracts with German airline Lufthansa that ASL obtained through anti-competitive bidding practices. The term of the DPA will be at least one year.
The company agreed to pay a fine worth £1.2 million (U.S. $1.6 million), disgorge profits of £990,971 (U.S. $1.3 million), and contribute £750,000 (U.S. $972,000) to offset the SFO’s costs to investigate the case.
The fines were partly offset, the SFO said, because ASL self-reported the bribery violations in 2015 and cooperated with investigators. But the SFO also noted ASL solicited and received recommendations from external legal advisors in 2010 about how it should comply with the country’s Bribery Act 2010. Other than hosting one anti-corruption training session, ASL did nothing to comply with the law, the SFO said.
“Airline Services Limited failed in its duties to implement adequate procedures to prevent bribery, allowing one of its agents to pervert what should have been a fair tender process and corruptly win business for the company.”
SFO Director Lisa Osofsky
The bribery occurred as ASL sought to obtain contracts with Lufthansa to refurbish the interior of passenger aircraft between 2011-13, according to the SFO’s statement of facts. The contracts, worth a total of £7.4 million (U.S. $9.6 million), were obtained with the help of a Luftansa project manager who was also being paid to act as ASL’s agent in the bidding process. The agent’s position at Lufthansa gave him access to bids from ASL’s competitors, information which he shared with ASL to improve its bids, the SFO said. The agent also told ASL how to improve its bids in terms of work being done, specifications, cost, and other considerations that were falling short in the company’s original offers.
Described in court documents as ASL Agent 1, the Lufthansa project manager was also being paid as an agent to obtain the contracts at between 5 and 10 percent of their value by ASL while also being involved in the contract bidding process for Lufthansa.
“In short, ASL Agent 1 was working both for the supplier, ASL, and the customer, Lufthansa,” according to the case’s statement of facts.
“Airline Services Limited failed in its duties to implement adequate procedures to prevent bribery, allowing one of its agents to pervert what should have been a fair tender process and corruptly win business for the company,” said SFO Director Lisa Osofsky in a press release.
ASL’s aforementioned external review into its compliance with the Bribery Act 2010 identified a small number of overseas agents “represented a high bribery risk to ASL” and made a number of recommendations.
These recommendations included amending terms and conditions in contracts that involved overseas suppliers or agents; having a senior manager regularly monitor and review overseas corruption risks; train staff on anti-bribery compliance; implement policies and procedures to comply with the Act; and create a due diligence checklist to assess all third-party suppliers and contractors.
But save for the one 2011 training session, ASL did nothing to convey its anti-corruption policies to senior managers or staff.
“From the implementation of the Bribery Act 2010 on 1 July 2011 through to the beginning of 2015, ASL did not have in place adequate procedures in order to prevent bribery,” the SFO wrote in its statement of facts.
The SFO recently laid out guidance for the thresholds companies must meet in order to be considered a candidate for a DPA.
DPAs require the company to “admit to the misconduct, pay a financial penalty, and agree to adhere to conditions set out by the prosecutor to ensure future cooperation and compliance,” the SFO stated. This could include requiring a company to tweak its compliance program or create one from scratch (possibly with the SFO’s oversight).
According to the DPA, ASL admitted to sufficient facts and will not contest the penalties. The company, which sold off its various divisions to other companies and has gone out of business, retained a shell company for the sole purpose of paying the SFO’s penalties in this case.
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