Appointment of Joint U.S.-U.K. Corporate Monitor Signals New Era in Bribery Enforcement

Nate Raymond All Articles

The American Lawyer

May 23, 2011

For companies looking to get out of the crosshairs of Department of Justice by agreeing to a deferred prosecution agreement, the appointment of a corporate monitor has become a familiar condition, particularly in Foreign Corrupt Practices Act cases.

Now, in a sign of its own growing anti-corruption efforts, the United Kingdom has been getting into the monitor game. Hughes Hubbard & Reed announced May 12 that partner Kevin Abikoff has been hired by Innospec Inc. to act as compliance monitor as part of a $40.2 million bribery settlement it reached in March 2010 with the U.S. Department of Justice, Securities and Exchange Commission, and the U.K. Serious Fraud Office. Innospec pleaded guilty to federal charges related to alleged kickbacks to the Iraqi government in the U.N. oil-for-food program and for violating the U.S. embargo with Cuba.

The position is the first-ever joint U.S.-U.K monitorship. Abikoff told us he is only the second monitor appointed by the Serious Fraud Office. Mabey & Johnson, which pleaded guilty in July 2009 in the first successful U.K. prosecution of foreign bribery, was similarly required to hire a monitor.

"It's absolutely part and parcel and consistent with the U.K.'s ramped up anti-corruption efforts," Abikoff said.

Companies have been fretting over compliance requirements in anticipation of enforcement of the U.K. Bribery Act, which, after much delay, is set to go into effect July 1. After companies voiced concern over how the law, often called the "FCPA on steroids," would be enforced, the government signaled in March it would take a softer line than initially feared.

Regardless, questions linger about the compliance efforts companies will need to take. With Innospec under monitorship, Abikoff said he expects the Serious Fraud Office will use his position and reports to view "at least one company's compliance with those efforts."

Innospec disclosed May 11 in its quarterly report that it expected to take a $3.9 million charge for the expected cost of the compliance monitor. Aware of past criticism of the costs of monitors, Abikoff said Hughes Hubbard is "approaching this one with full integrity but efficiency." (Abikoff said he was engaged in January but the firm waited to disclose its involvement until after the quarterly report.)

Kirkland & Ellis represented Innospec in the March 2010 settlement.

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