Landmark corruption fine levied against Smith and Ouzman

Corrupt payments totalling £395,074 were made to public officials for business contracts in Kenya and Mauritania

A UK security printing company was fined £1.3m and ordered to forfeit more than £880,000 after a court heard how it made corrupt payments to officials of foreign governments for contracts.

Smith & Ouzman, based in Eastbourne, Sussex, which specialises in security documents such as ballot papers and exam certificates, was the first-ever company convicted under the Prevention of Corruption Act 1906.

Corrupt payments totalling £395,074 were made to public officials for business contracts in Kenya and Mauritania.

Passing sentence yesterday, Recorder Andrew Mitchell, sitting at Southwark Crown Court, said: “Corruption of foreign officials is damaging to the country in which the corruption occurs, is damaging to the reputation of UK business, and of course in the market in which a business operates. It is anti-competitive.”

Two employees of the family-run firm were sentenced in February last year for their role in the corruption. Chairman Christopher John Smith was sentenced to 18 months’ imprisonment, suspended for two years, and ordered to carry out 250 hours of unpaid work. His son Nicholas, the sales and marketing director, was sentenced to three years’ jail.

Yesterday the court imposed a £18,693 confiscation order on Nicholas Smith. His father was ordered to pay £4,500 in confiscation. Both men were told to pay £75,000 costs.

The conviction followed a four-year investigation by the Serious Fraud Office (SFO).

Legal experts said the SFO had sent a clear signal that it was serious about rooting out corruption and was finally prepared to use prosecutions to do so. Previously the SFO had entered into a series of settlements with companies rather than prosecuting them.

The failure of the company’s defence of hospitality and facilitation payments sets an important legal precedent, they added.

Susan Hawley at the campaign group Corruption Watch welcomed the prosecution but questioned whether the level of fine sent the right deterrent message to small companies operating in “high risk” corruption environments. She also criticised the court’s refusal to hear evidence of the harm caused by the corruption.

“The court’s decision to take extensive evidence of the company’s good standing and remedial measures but refuse to take evidence of the harm... caused in Kenya is perverse,” she said.