A crime involving millions of pounds. But the dock remains empty

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Part 2: The invisible men – By Kenneth Roy

Here is an odd statement from the Crown Office (yes, I know it’s something of a world authority on odd statements, but read on):

‘In the course of this investigation [into criminality at the Weir Group], it became clear the decision to pay kickbacks to the Iraq government, and fees to the Iraqi agent, was taken at Weir Group level. It was therefore deemed that the most appropriate course of action was to prosecute The Weir Group plc rather than any individual who may have been involved’.

Now, what is the word ‘therefore’ doing here? There is no ‘therefore’ about it. If a group makes a collective decision to commit a crime, members of the group need not expect to be absolved from individual responsibility. In rougher circles – a gang preparing to rob a bank, let us say for the sake of argument – this crime is sometimes known as a conspiracy.

Of course the Weir Group is not a gang and it was not preparing to rob a bank. On the contrary, it is one of Scotland’s largest companies, a major employer, an important contributor to the Scottish economy. Inconveniently, however, for its bluechip reputation, it admitted, in December 2010, that it had made illegal payments totalling £4.5 million to the regime of Saddam Hussein. A fine – £3 million – was the punishment. Not quite petty cash to the Weir Group, but easily managed by a company which recorded in the year in question a profit of £309 million. The profits from its deals were confiscated and are now being charitably recycled by the Scottish Government (as we reported yesterday).

Look at the Crown Office statement once more. It is not just the word ‘therefore’ which is questionable. Note the use of the phrase ‘any individual who may have been involved’. If any individual ‘may’ have been involved, if there is the least doubt about this, then there is always the possibility that, actually, no individual was involved and that the group embarking on the crime did not consist of anybody – that the crime committed itself, so to speak, without human intervention.

Richard Baker, Labour’s then justice spokesperson, was unimpressed by the Crown Office’s stated position. He said at the time: ‘A crime has taken place…There does not seem to be any individual held to account over what happened…other people who commit financial crimes have to face the consequences of the law’. How true. And yet, as the first anniversary of the case approaches, no one has been charged with any crime. It seems unlikely that anyone ever will be.

As if this was any sort of justification for such a strange failing of Scottish justice, the Weir Group itself has indicated that the un-named persons concerned – ah, so they do exist – are no longer employed by the company and that it is now ‘a very different company’. No doubt that is true – we must devoutly hope so – but the atmosphere would be cleansed if, for example, the company named the Iraqi agent who pocketed £1.5 million for handling its criminal payments to the now-deceased dictator. Why not help to root out corruption in Iraq by naming this dodgy character? Now that regime change has been accomplished, what has the company got to lose by identifying him publicly?

Come to that, why not name the director of the Weir Group who was present at a meeting in September 2001 following which the illegal payments were processed? Why does this person continue to enjoy anonymity? There is a lesser case, perhaps, for naming the senior manager, the principal salesman, and those directors of the subsidiary company involved in the deals, who were also present.

The fact – and it is a fact – that a director of the Weir Group attended this meeting should be considered alongside a statement by the company in July 2004 that the ‘executive’ of the company – presumably a reference to the senior management – knew nothing of the kickbacks because the size of each kickback – a mere £300,000 – was not  large enough to cross its radar.

Since, however, the buyer of the spare parts on this occasion was not your average Middle East despot but li’l ol’ Saddam Hussein himself, one might reasonably have expected extraordinary vigilance on the part of the supplier – a double-checking of the invoices at the very least. As Lord Carloway noted in his judgement, it became ‘well-known’ that the Iraqi regime insisted on a 10% inflation of invoices, that the 10% was channelled through agents, and that it was usually done through Swiss bank accounts. The only people to whom this practice was not ‘well-known’ were those in charge of the Weir Group (with, it seems, one notable exception), who knew absolutely nothing.

Much has been made of the company’s ‘apology’. When the criminality came to light, the group’s then chief executive was talking only of ‘bitter disappointment’ that such things had gone on in the company and the chairman, Sir Robert Smith (as he then was) was still referring to ‘alleged’ kickbacks and maintaining strongly that the board should not be blamed.

Later, in the 2004 annual report, Sir Robert clarified his position: ‘As soon as the Board became aware that there was a potential issue we took immediate action by conducting an internal review and then instructing Herbert Smith to carry out an independent legal investigation. The investigation identified a number of areas for improvement within the Group’s operating policies and in the appointment of agents…’ Not much of an apology, really; not then; not later. Only an admission that what happened was ‘wrong’.

Scotland’s prosecuting authorities took a harsher view of the ‘potential’ issue and the ‘alleged’ kickbacks. The internal review, and the subsequent independent investigation, did not prove to be enough. The Weir Group suffered the indignity of a criminal prosecution.

But the dock remains empty.

Tomorrow: The third and concluding part of this series
Click here for part 1

Courtesy of Kenneth Roy – Read Kenneth Roy in the Scottish Review