Innospec Director Pleads Guilty In U.K.

The Serious Fraud Office said the former sales and marketing director in the U.K. for Innospec pleaded guilty this week to three criminal counts of conspiracy to corrupt.

David Turner, 56, appeared Tuesday at the Southwark Crown Court in London.

According to the SFO, he was charged with two counts of conspiring to bribe public officials in Indonesia and Iraq. The illegal payments were for sales of Innospec's gas additive products, including tetraethyl lead.

Turner also pleaded guilty, the SFO said, to conspiring to bribe Iraqi officials 'to ensure that tests on MMT, a competitor product manufactured by Ethyl Corporation, conducted by or on behalf of the Government of Iraq, concluded with an unfavourable assessment of that product.'

The alleged offenses occurred between 2002 and 2008.

The court didn't set a date for sentencing, the SFO said.

Turner, a U.K. citizen, settled civil charges with the U.S. SEC in 2010. He disgorged $40,000 and wasn't required to pay any further civil penalty.

Two other Innospec executives, Dennis Kerrison and Paul Jennings, have also been charged with criminal offenses in the U.K. Their next court appearance for a plea will be in April.

In 2010, Innospec -- a specialty chemical-maker based in Delaware -- reached a $40 million global settlement of more than a dozen criminal charges in the U.S. and U.K., including FCPA and U.N. oil for food program offenses, and violations of the U.S. trade embargo against Cuba.

Last month, Innospec's agent in Iraq, Ousama Naaman, was sentenced in the U.S. to thirty months in prison. He pleaded guilty to conspiracy and violating the Foreign Corrupt Practices Act.

No Innospec employees have faced criminal charges in the U.S.

Naaman also settled civil charges with the SEC in 2010. He agreed to disgorge $810,076 plus prejudgment interest of $67,030, and pay a civil penalty of $438,038.

The Serious Fraud Office said it had help in Turner's prosecution from the U.S. Department of Justice, the SEC, the City of London Police, and the Cheshire Constabulary.

Graft 'At Play' In Collapse of Giant Bridge

Corruption may have led to the collapse last month of a 2,200-foot suspension bridge in East Kalimantan, Indonesia.

Farouk Arnaz of the Jakarta Globe said graft is 'at play' in the disaster. The National Police, he said, will 'investigate the technical specifications of the bridge and then investigate possible corruption.'

Twenty-two people were confirmed to have died. Thirty seven were injured and 14 are still missing. Ten cars and 15 motorcycles sank in the water below, the Jakarta Globe said.

“Corruption investigators have been sent to the site,” a source with the National Police told the Jakarta Globe. “We predict irregularities in the case because the bridge was still young and was built with funding from several sources, including the regional budget.”

The bridge, shown above before it failed, opened in 2002.

What Sentence Is Fair For Naaman?

When Ousama Naaman is sentenced -- now scheduled for December 22 at 10:30 AM before Judge Ellen S. Huvelle in federal court in the District of Columbia -- prosecutors will ask for a seven and half year prison term.

Naaman has said that if his bribery conspiracy was really as bad as the DOJ claimed, why weren't others prosecuted? Why was he the only conspirator to face charges in the United States?

Naaman was Innospec's former agent in Iraq. He pleaded guilty in June last year to one count of conspiracy to violate the Foreign Corrupt Practices Act and commit wire fraud, and one count of violating the FCPA.

After indicting Naaman, the DOJ handed off to the U.K. the prosecution of those who may have helped him bribe Iraqi officials. As of today, the U.K. Serious Fraud Office has charged three individuals in the case.

Naaman argued in a brief last month that the U.K. has a more lenient sentencing regime. Even if individuals charged there are more culpable then he is, Naaman said, they won't face long prison terms.

Naaman told Judge Huvelle:

It is unclear what course the government expects the United Kingdom will take with the other co-conspirators. On the one hand, it says it will "defer prosecution" to a foreign sovereign, but -- on the other hand -- the government argues that there can be "no disparity" when the coconspirator has not been charged or sentenced. Obviously, if the co-conspirators are charged in the United Kingdom under a far more lenient sentencing regime than exists in the United States, this will produce a relevant sentencing disparity.

To support his argument, Naaman tracked sentences imposed on defendants convicted in other SFO prosecutions for oil-for-food bribery prosecutions.

The U.K.'s sentencing record, Naaman said, looks like this:

•  Mark Jessop sentenced to 24-weeks imprisonment for engaging in 54 contracts worth more than $12.3 million with Iraq.

•  Riad El-Taher paid $500,000 in bribes to Iraqi officials and was sentenced to 10-months imprisonment, which was later reduced to 8 months.

•  Aftab Noor Al-Hassan sentenced to a suspended sentence or 16-months imprisonment for paying $1.6 million in bribes to Iraqi officials for oil contracts that profited him $4.4 million.

•  Richard Forsyth sentenced to 21-months imprisonment, David Mabey sentenced to 8-months imprisonment and Richard Gledhill was given a suspended sentence of 8-months imprisonment for making illegal payments to Iraq of more than €420,000.

Last month, a reader talking about the Tesler case reminded us that multi-jurisdictional anti-bribery enforcement is complicated. The Naaman case proves his point. 

Aon Pays $16.2 Million In Settlement

Aon Corporation, one of the biggest insurance brokerage firms in the world, agreed today to resolve FCPA charges with the DOJ and SEC.

It will pay a $1.76 million criminal penalty to the DOJ and $14.5 million in disgorgement and prejudgment interest to the SEC.

A U.K. subsidiary of Chicago-based Aon paid a penalty of £5.25 million to the U.K.'s Financial Services Authority in 2009 to resolve overseas bribery allegations. The fine was the largest the FSA had levied for financial crimes.

Citing Aon’s 'extraordinary cooperation,' the DOJ entered into a non-prosecution agreement with the company and its U.K. subsidiary, Aon Limited.

Aon’s subsidiaries, the SEC said, made over $3.6 million in improper payments between 1983 and 2007 to win or retain insurance business in Costa Rica, Egypt, Vietnam, Indonesia, the United Arab Emirates, Myanmar, and Bangladesh. The company made $11.4 million in profits from the bribes.

'[S]ome of the improper payments,' the SEC said, 'were made directly or indirectly to foreign government officials who could award business directly to Aon subsidiaries, who were in position to influence others who could award business to Aon subsidiaries, or who could otherwise provide favorable business treatment for the company’s interests. . . . [T]hese payments were not accurately reflected in Aon’s books and records, and Aon failed to maintain an adequate internal control system reasonably designed to detect and prevent the improper payments.'

The improper payments were for training, travel, and entertainment provided to employees of foreign government-owned clients, and to 'third-party facilitators.'

The DOJ said Aon was given a non-prosecution agreement because of 'its timely and complete disclosure of improper payments in Costa Rica and other countries that it discovered during its thorough investigation of its global operations; its early and extensive remedial efforts; the prior financial penalty of £5.25 million that Aon Limited paid to the United Kingdom’s Financial Services Authority (FSA); and the FSA’s close and continuous supervisory oversight over Aon Limited.'

Aon Corporation trades on the NYSE under the symbol AON.

View the DOJ's December 20, 2011 release here.

View the SEC's Litigation Release No. 22203 and Accounting and Auditing Enforcement Release No. 3348 (both dated December 20, 2011) in Securities and Exchange Commission vs. Aon Corporation, Civil Action No. 1:11-cv-02256 (D.D.C.) (filed Dec. 20, 2011) here.

POTUS Walks ASEAN's Mean Streets

President Obama meets tomorrow on Bali, Indonesia with the heads of state from ASEAN -- the Association of Southeast Asian Nations.

ASEAN hasn't been effective in spreading free trade and investment across the region. A big obstacle is corruption. Although the group includes Singapore, ranked as the least corrupt country in the world on the CPI, it also includes some of the planet's most corrupt nations.

Even with Singapore, the average CPI rank for ASEAN's ten members is 101, dragged down by Cambodia (154), Laos (154), and Myanmar (176), which managed to beat only Somalia. 

On the President's agenda in Bali will be 'improving economic integration and addressing security challenges in the region.' Both start with fighting corruption.

Here are the ASEAN countries in order of their CPI ranking:

Singapore (1)

Brunei  (38)

Malaysia (56)

Thailand (78)

Indonesia (110)

Vietnam (116)

Philippines (134)

Cambodia (154)

Laos (154)

Myanmar (176)