Two South-East-based former directors of an engineering firm have been found guilty of inflating the contract price for the supply of steel bridges in order to provide kickbacks to the Iraqi government of Saddam Hussein, the Serious Fraud Office (SFO) has said.
Charles Forsyth and David Mabey were convicted at Southwark Crown Court of making illegal payments to Iraq during 2001/02 in breach of United Nations sanctions, an SFO spokeswoman said.
A company sales executive has already admitted his involvement. The company pleaded guilty to breaching UN sanctions (along with other offences) in September 2009, she added.
The company entered into a contract under the UN oil-for-food programme which was introduced to alleviate hardship for the Iraqi people. At the time, Forsyth was the managing director of Mabey and Johnson, and Mabey the sales director, the spokeswoman said.
Another defendant, Richard Gledhill, who was sales manager for contracts in Iraq, pleaded guilty to sanctions offences at an earlier hearing and gave evidence for the prosecution, she added. The payments, which amounted to more than €420,000, were made in order to secure a contract to supply 13 steel modular bridges.
Mabey, 49, from Maidenhead, Berkshire, and Richard Forsyth, 62, from Hampshire, had denied they gave consent, or connived, to bump up the price of a contract worth €3.8 million to €4.2 million.
The jury was told that the difference of the 10% increase was knowingly given to Iraq by Mabey and Johnson in a scheme the oil-rich country came up with to bypass UN sanctions, exploiting the “oil for food” programme.
They bypassed the UN's aid programme, which was designed to supply vital food and healthcare to citizens. In this case, said Peter Blair QC, prosecuting for the SFO, the cash was transferred through a bank account controlled by an organisation called Upper Gulf Agencies.
He told the jury that the proceeds of the oil Iraq sold should have been banked in a special escrow account - in the hands of a third party until a condition is fulfilled - at BNP Paribas in New York so they could not have control of the money themselves.
The pair standing trial faced an almost identical charge, the difference being that they connived, or as Blair put it, “turned a blind eye”, to the payments. Sentencing will be on 23 February.
Mr Mabey's solicitor, Stephen Gentle, said: "My client is surprised and profoundly disappointed by the jury's verdict. He maintains he was personally unaware of any breaches of UN sanctions against Iraq within his company in 2000/01. He has instructed me to seek leave to appeal.
"He wishes to record his gratitude to his wife, children, friends and the many colleagues who have given him such unwavering support throughout. He regrets the pain and intrusion this prosecution has caused them.
"Personally, he remains buoyed by the belief that this verdict will be overturned at appeal. Until then, he has no further comment to make."