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Tuesday, September 29, 2009

Mabey & Johnson: The Full Document (4 of 5)

The Statesman

145. In addition, $13,000 was paid to an account at Citibank in Berkeley Square to a company called Unimedia Ltd in June 1997. This appears to have been a bribe for Mr Gois' benefit.

146. Cash bribes totalling US $13,000 were made to the public official Mr Fucungo in 1993 and 1994. It is not clear where these bribes were made. A payment of US$ 10,000 was requested for medical treatment for Mr Fucungo’s wife in South Africa.

147. The SFO has been informed by M&J that not all of the documentation relating to payment approvals is available. However, Director A appears to have been involved in the approval of a number of the payments in 1993 and 1994. Subsequently, Director B was also involved in approving a number of the subsequent payments to Servicios Bella.


148. M&J have supplied bridges to Madagascar since 1972. In early 2001 M&J won a contract with the Madagascan Government worth approximately £1.1m to supply 11 bridges. This was a World Bank financed project.

149. Manager A had responsibility for sales in Madagascar during 2000-2001 when the contract with the Madagascan Government was being negotiated. M&J’s local Sales representative had responsibility for a number of French speaking African countries and he reported to Manager A who in turn reported to Director A and Director B. In a M&J memorandum dated 17 July 2000, anticipating the business eventually won by M&J, the local Sales representative states,

“As explained to Director A during his visit to France, we have alternatives to HFF and we think it might be time to consider these seriously. A tender from the World Bank has just been issued. It is supposed that the specifications have been written as much as possible in our favour (though we have not seen them yet). We think it is the proper thing for a visit to clarify the relationships with our final client, Ministry of Public Works and to start the change in our local representation.”

150. Henri Fraise Fils & Cie Ocean Indien Ltd ("HFF") was the company that acted as M&J's agent (the local representation refered to above) in Madagascar during the relevant period. Initially HFF sought a commission of 17% of the contract value. The principal of HFF was Ralph Fraise. However, M&J considered the level of commission to be too high for the nature of the contract. During discussions regarding the commission HFF disclosed that the commission being proposed was set at this level since it would need to pay from the commission it received 6% of the contract value to Mr Jean Emile Tsaranasy as a bribe.

151. Mr. Tsaranasy was the Madagascan Minister for Public Works (or Ministere des Travaux Publics) at the relevant time and was the direct contact for M&J in relation to the £1.1m bridging contract. In the light of these discussions M&J decided that it would seek to negotiate directly with Mr Tsaranasy to try to reduce the amount of the bribe that would be paid to him. In the final event, HFF was paid approximately 11% of the contract price.

152. After entering into direct negotiations with Mr Tsaranasy it was agreed that he would receive a payment of approximately 2.83% of the contract value. M&J's Export Agent's

Commission Card for Madagascar records the following payments that appear to have been made to Mr Tsaranasy in the total sum of £33,250.00. These payments were bribes.

153. Details of payments to Mr Tsaranasay are set out in the table below:


Amount in GBP


£ 3,650


£ 7,200


£ 3,650


£ 7,200


£ 6,160


£ 5,390


£ 33,250

154. The bribes were made either by cash being given to Mr Tsaranasy or his representatives in Paris or by M&J making bank transfers to Mr Tsaranasy's Swiss bank account, the Banco del Gottardo in Geneva over a period from August 2001 until early February 2002. On 12 July 2001 Mr Tsaranasy picked up 39,098.07 FF (£3650) in a bank in Paris and signed for the money.

155. M&J also paid a bribe to Mr Zina Andrianarivelo-Razafy when he served as the Madagascan Ambassador to the United States, the World Bank and the International Monetary Fund in 2001. Mr Andrianarivelo is currently the Permanent Representative of Madagascar to the United Nations.

156. A M&J note, dated 24 November 1998, from the Manager B to Director A, Director B

and Manager A states: “For your information Zina Andrianarivelo from Fraise has been appointed the Madagascan Ambassador to the USA and will take up his position in Washington from the 1 January 1999.”

157. In a memorandum from Manager A to Director B dated 7 February 2001, he states, “We have now been notified of the order … E00424. The full FOB value will be £1,131,123…For his assistance we wish to pay Zina Andrianarivelo $10,000 (allowed in figures) of which $5000 to be paid now and the balance in due course.”

158. In a further memorandum from M&J’s local Sales representative to Manager A dated 7

February 2001 the same payment is referred to and is explained: "Zina in Washington played an important role in the allocation of funds from the World Bank to Madagascar for bridges. He also helped at some difficult stages in the negociations [sic]; finally he will be helpfull [sic] in the future as well to introduce us in Washington. I propose to reserve for him an enveloppe [sic] of

$5000 on the first job (7 bridges) and an additional $5000 if we actually get the additional 4 bridges."

159. Subsequently, after receiving a request directly from Mr Andrianarivelo-Razafy on 23

February 2001 a sum of $5000 was paid into his account at Credit Lyonnais in France on

23 February 2001.

160. The SFO has been informed by M&J that not all of the payment authorisation forms can be located. However, requests for payments to Mr Tsaranasy were generally made by Manager A and Director B was involved in the approval of the payments made to Mr Tsaranasy.


161. During the 1990s M&J entered in to a number of contracts with Government departments in Mozambique . M&J received sales revenues from contracts in Mozambique worth approximately £6 million during the relevant period (1995-1999).

162. A written report to the Directors of M&J of a visit to Mozambique in November 1995

refers to a number of projects, in particular in Zambesia, at various stages of completion.

163. Mr Amerigo Fortuna was the Deputy Director of the Mozambique Ministry of Foreign

Affairs and Co-operation and was involved in the selection of eligible recipients of project grants. Carlos Fragoso was the national director of the National Directorate of Roads and Bridges (DNEP) in Mozambique. Subsequently Carlos Fragoso appears to have been chairman of the National Roads Administration (ANE) in Mozambique.

164. It appears that M&J met with Mr Fortuna and Mr Fragoso and, inter alia, discussed the extension of a contract for spare parts in Mozambique. This was a contract which involved Crown Agent backing and the involvement of Japanese financing arrangements. It is reported that, “Met Dr. Fortuna who is involved to some extent in the selection of eligible recipients of NPG, who confirmed that there probably will be $ 8 m of NPG available in 1996, and DNEP will be eligible for a further $ 2 m (max $ 5 m per customer)…Mr Fragoso confirmed he will apply for further $ 2 m for Bridge Spares in Feb/Mar 1996.”

165. M&J retained an Export Agent's Commission Card for Mozambique which covers the period 23 August 1997 to 10 April 2000 in the name of "C Fragoso". M&J's commission card records that it made a number of payments to Mr Fragoso between 14 October 1997 and 10 April 2000 in the total sum of £286,978.54.

166. M&J also retained an Export Agent's Commission Card for Mozambique which covers the period 23 February 1996 to 23 January 1998 in the name of "Fortuna". This Commission Card records a number of payments made to CKY Partnership, V&M Tooling (Pty) Ltd and V&M Import and Export Agents (Pty) Ltd between the above dates in the total sum of £42,475.88.

167. It is possible that these were companies with which Mr Fortuna is connected. However, it is not possible to confirm this connection; the SFO has been told by M&J that it does not have any further information available about these companies; nor is it now known, because records are no longer available, where these companies received payment.

168. Another name appearing on M&J’s Export Agent’s Commission Cards for Mozambique was a Mr Notece. Mr. Notece was an engineer employed by the DNEP who it appears had some involvement with M&J's work in Mozambique. Mr Notece's name appears on an unnamed Commission Card in relation to a payment of US$5,000 made in Mozambique in October 1999.

169. Manager A was responsible for M&J sales in Mozambique. In a memo to Director B dated 1 October 1999 he states, “There are three recipients of commission and I believe it important that I can take USD 5,000 on my imminent trip to Mozambique…”

170. M&J no longer has all the documentary records relating to its work in Mozambique however it appears that this payment was made to Mr Notece and that in total Mr Notece was paid $25,000 in Mozambique.

171. Insofar as the payments to Mr Fragoso are concerned, these appear to have been made by bank transfer to his Swiss bank account. M&J's records show that Director B would have met both Mr Fragoso and Mr Notece during a visit to Mozambique in March 1996. Insofar as the payments made to Mr Notece are concerned, it appears that these were cash payments whereby Mr Notece received the cash in Mozambique. Bangladesh

172. M&J conducted business in Bangladesh between 1982 and 2001. Between 1997 and 2001 M&J received sales revenue from contracts in Bangladesh worth approximately £20 million. Dates that these contracts were executed and their value are not available. In part the requirement for these bridge contracts was in response to devastating flooding in Bangladesh in 1998.

173. Bangladesh is a country which has a reputation for widespread corruption and did so during the period concerned. M&J made corrupt payments in connection with one of the contracts obtained in this jurisdiction.

174. In a M&J document concerning sales planning and development, believed to have been authored by Director D, he states, “High Marketing costs. Our success has been based upon: Development of close personal relationships with key personnel in the Roads and Highways Department, the Ministry of Communications, the Planning Ministry and the Ministry of Finance. The use of the “white man’s handshake” is extensive in building trust and confidence before any contract is concluded in Bangladesh.

The drive and contacts of our agent. Our new agent has very strong contacts within the

Ministry of Communications. He has also worked hard at developing relations

within the other relevant Ministries where he was not known.”

175. M&J entered into a contract on 29 June 1999 with the Ministry of Communications

(acting through the Roads and Highways Department) for emergency bridging under the

Emergency Flood Rehabilitation Programme (the "MOC Contract"). M&J's records indicate that it received sales revenue of approximately £15 million in relation to the MOC Contract.

176. This was a contract for the supply of 25,000 rft of Bailey Bridges; “launching kits”; tool kits and emergency floating bridges. This was a contract that was underwritten by the ECGD.

177. C. M. Nizamuddin (also known as Bulbul), was M&J’s local agent in Bangladesh from at least 1998 until some time in 2002. M&J's Export Agent's Commission Card in the name of "C. M. Nizamuddin" records that approximately £2.4 million in commission payments in connection with the MOC Contract was paid during 1999 and 2000 through accounts in various names.

178. Transfers were also made in relation to Bangladesh which are recorded in a separate

M&J Commission Card entitled Asia Development Fund. Director D appears to have made cash payments in Bangladesh and claimed these as expenses to be deducted from the Asia Development Fund. On trips in April and May 1999, Director D made a payment of £320, referenced as "TSC approval" and a payment of £640 referenced "Purchase committee member". On a trip in June 1999, Director D made two further payments of £1300 each to engineers.

179. From 1997 to 2004 Khandaker Rahman was a Chief Engineer employed by the Roads and Highways Department (RHD) in Bangladesh. He was employed in a number of different capacities during this period. He had a role in procuring or approving contracts for bridges in Bangladesh. In his CV, held on file by M&J, he states that between 1982-1986 he was a member /secretary and in 1997-1999 he was a permanent member of the Roads and Highways Committee on Procurement (RHD COP). He stated that, in respect of his involvement in the RHD COP his responsibilities included: “To scrutinize, evaluate and recommend the procurement of all civil & mechanical works/consultancy and supply works of Roads & Highways Department. The construction of all Roads & Bridges have been dealt with and the recommendations of the awards were made.”

180. Khandoker Azad is Khandaker Rahman's son. There is evidence to suggest that payments were made to accounts in Khandoker Azad's name for Khandaker Rahman's benefit. M&J retained an Export Agent's Commission Card in Khandoker Azad's name. Certain payments were also recorded on the commission card of C M Nizamuddin in the name of Khandoker Azad. The available Commission Cards record payments totaling £240,000; however these Commission Cards record multiple payments on the same day and not all bank transfer documents are available, therefore there may be some duplication of payments.

181. Director D requested that a number of payments be made by M&J to Khandaker Rahman and/or Khandoker Azad.

182. On 4 October 2000 Director D requested that Director B authorise cash in the sum of £25,000 to be made available for Khandaker Rahman. The arrangement was that Khandaker Rahman would go with the Office Manager to M&J’s local branch of Barclays in Reading to collect the cash. A letter signed by Director B was sent to Barclays' Reading branch on 9 October 2000 requesting £25,000 in £50 notes to be made available for collection on 12 October 2000. The cash collection is entered on Bulbul's Commission Card for 12 October 2000.

183. In addition to the cash payment referred to above, Director D also requested payments to Khandaker Rahman to be paid to bank accounts in the name of Khandoker Abdullah Al Azad. Payments were made to bank accounts at Barclays Bank, Jersey; Barclays Bank, Richmond; National Westminster Bank, Richmond; and Standard Chartered Bank, Jersey. Khandoker Azad's Commission Card also records two cash payments of US$5000 made at Twyford on 8 May and 6 October 2000. Additionally Director D claimed £500 (to be deducted from Khandoker Azad’s commission card) as part of his expenses for a business trip that took in Bangladesh in late November – early December 2000.

184. Not all documentation relating to payment approvals is available. However, Director B and Director D appear to have been involved in the approval of a number of the payments.

185. The total value of the direct payments in these four jurisdictions are in the region of

£700,000 and the value of the contracts which were obtained by M&J in those jurisdictions at the time of those payments was in the region of £22.5 million.


186. The Court should note that in the relevant period of the indictment M&J’s annual turnover would have averaged about £56 million and these investigations do not purport to cover all the contracts M&J entered into during the relevant period. Realistically in terms of time and cost, it is accepted it cannot and need not investigate all contracts.

187. The SFO is of the view that it is appropriate to prosecute the Company based on its admissions before completion of the Company’s investigations and the SFO's investigations into the conduct of the individuals. Pending that outcome, it is not the SFO's case that the instances of corruption disclosed to date by the Company are the totality of the corrupt activity.

188. For the purposes of illustrating the pervasive historical picture, the Company accepts and admits that in four other jurisdictions - Angola, Bangladesh, Madagascar, and Mozambique - corrupt payments were made direct to elected or appointed public officials.

189. Deep consideration has been given by the Director of the SFO into continuing further and lengthy investigations into M&J’s affairs. Those investigations may or may not reveal further sustainable criminal charges. But in the light of the admissions today and the other features of remediation that will be explained to this Court the Director of the SFO has taken the view, in the public interest, that the Company should be sentenced now and on this basis.

190. What is clear from the evidence disclosed, and accepted by the Company in relation to the six jurisdictions put before the Court today, is that there was a practice of corrupt activity within the Company before 2002.

191. The counts on the indictment are illustrative of practices that also occurred in the other named jurisdictions. They cannot be seen as isolated offences. The consequences of the Company’s recognition of this fact is that in considering the proper sentence, that the Court can take into account that the Company engaged in more widespread corrupt activity in the four other jurisdictions details of which are set out above.

192. Furthermore, as is explained elsewhere, the SFO have sought where appropriate to have regard to the model for corporate regulation adopted by the Department of Justice in the United States of America under the Foreign Corrupt Practices Act 1977. That model contemplates corporate remediation as an important factor in considering the propriety and prop

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