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Harry Cassin Publisher and Editor

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Julie DiMauro Contributing Editor

Thomas Fox Contributing Editor

Marc Alain Bohn Contributing Editor

Bill Waite Contributing Editor

Shruti J. Shah Contributing Editor

Russell A. Stamets Contributing Editor

Richard Bistrong Contributing Editor 

Eric Carlson Contributing Editor

Bill Steinman Contributing Editor

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FCPA Blog Daily News

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Tuesday
Apr052016

UK Enforcement: Glasgow-based logistics company pays £2.2 million for bribery offenses

Scotland's prosecution service will recover £2.2 million ($3.1 million) under a civil settlement with a Glasgow-based company that admitted paying bribes to win and keep business.

Braid Group (Holdings) Limited specializes in freight and logistics.

It learned about potentially illegal practices in connection with two Braid UK freight forwarding contracts in 2012, the Crown Office said in a release Tuesday.

Braid's internal investigation revealed the bribery.

The Crown Office said,

The first contract related to an agreement between a Braid UK employee and the employee of a customer. An account was used as a means for unauthorized expenses to be incurred by the customer’s employee and was funded by the dishonest inflation of invoices provided to the customer. The expenses included personal travel, holidays, gifts, hotels, car hire and cash.

During the investigation, Braid discovered separate bribery offenses regarding a second customer.  

"A profit sharing arrangement with a Director of the customer company had been operated, where the profit achieved on services provided to the customer was split, in return for orders continuing to be placed with Braid UK," the Crown Office said.

Braid was founded in 1955. It has offices in France, Germany, Spain, the United States, Chile, Singapore, Indonesia, Taiwan, China, New Zealand, Australia, and South Africa. It specializes in the transport of bulk liquids, such as corn syrup, coconut oil, and inks, among others, according to its website.

Braid self reported the offenses to the Crown Office. The company admitted that it violated Sections 1 (bribery) and 7 (failure to prevent bribery) of the Bribery Act 2010.

The two cases involved Braid's UK subsidiary, the Crown Office said. But Braid took steps "to implement new policies and training throughout all of its subsidiaries to ensure that no unlawful conduct can take place in the future." 

The Crown Office said it couldn't disclose details about the bribes because of possible prosecutions of individuals.

In November 2015, the FCPA Blog reported a UK case involving Braid and its former CEO that involved bribery allegations.

The then chief executive had been locked in a bitter boardroom and shareholder struggle, Alistair Craig said

His opponents discovered that a bribery arrangement had been put in place with one of the employees of a U.S. customer who would direct extra business for payment.

With the chief executive travelling in New Zealand, rival board members instigated an independent internal investigation, with a view to pre-reporting to the Crown Office, which concluded that the chief executive and finance director had indeed known of the scheme which led to their dismissal for misconduct.

The former chief executive then commenced “unfair prejudice” proceedings to recover his substantial shareholding at a fair or market value.

The Scottish Court of Session Outer House said his involvement and knowledge of the bribery arrangement placed him in the position of “a bad leaver” under the terms of the company’s articles.

"As such, he was only entitled to 75% of par value or fair value, whichever was lower. This amounted to a difference of approximately £18 million ($27 million)," Alistair said.

Linda Hamilton, head of the Crown Office's civil recovery unit, said Tuesday: "Braid is to be commended for self-reporting the unlawful conduct to Crown Office. The money recovered under the self-reporting initiative will be used in community projects across Scotland."

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Richard L. Cassin is the publisher and editor of the FCPA Blog. He can be contacted here.