A departmental head at Iraq’s South Oil Company (SOC) has reportedly fled the country after being accused of accepting bribes from a subsidiary of Australia’s Leighton Holdings to help it secure contracts in southern Iraq.

Uday Awad, a member of the Iraqi parliament’s oil and energy committee, told The Australian that the head of the SOC department, whom he declined to name, could have been the front man for other senior officials to receive the bribes.

It is believed that the SOC official, who had been removed from his post, has fled Iraq to a neighboring country. His whereabouts are unknown.

Awad also told The Australian that a group of Iraqi parliament members recently visited the SOC in Basra, where the company’s director general told them the accused individual has been identified and is under investigation.

Last month Leighton Holdings alerted Australian federal police to possible corruption by Leighton Offshore in Iraq

In October 2010 Leighton Offshore was awarded a contract with SOC to install three single point moorings and 120km of 48-inch pipelines in the Arabian Gulf, offshore Iraq.

In October 2011 the subsidiary received further contracts with SOC worth $79m and $518m. The latter was financed and supported through a Japanese Official Development Assistance loan by the Japan International Cooperation Agency (JICA).

Last month Iraq opened the first of Leighton’s single point mooring sea terminals.

(Source: AKnews)

The establishment of a new transparency board to promote integrity and anti-corruption practises in Kurdistan was announced on this week, according to AKnews.

The so-called Transparency Development and Impeachment Board will investigate government conduct, identify shortcomings and inform the relative bodies.

Husam Barzinji [Hisam Hakim Barzinji], the General director of the Kurdistan Economic Development Organization, said the establishment of the board took some months of research and scrutiny.

In Transparency International‘s 2011 corruption perceptions index, Iraq scored 1.8 out of 10 and was among the eight most corrupt countries and territories in the world, a slight improvement on 2010, when Iraq scored 1.5 and ranked among the bottom five.

(Source: AKnews)

Fadel Mohammed, legal adviser to Prime Minister Nouri al-Maliki, has said that the Iraqi government is currently pursuing more than 150 foreign companies accused of corruption in the UN’s Oil-for-Food program.

AKnews reports that the government is determined to bring these companies to justice, adding that there are several other companies under investigation.

The Oil-for-Food Program was instituted to relieve the suffering of civilians as the result of the UN sanctions on Iraq following Iraq’s invasion of Kuwait in August 1990.

Over $65 billion worth of Iraqi oil was sold on the world market during the program. About $46 billion of these funds were intended to provide for the humanitarian needs of Iraqi people such as food and medicine in the context of international economic sanctions.

Throughout its existence, the program was dogged by accusations that some of its profits were unlawfully diverted to the government of Iraq and to UN officials. These accusations were made in many countries, including the US and Norway.

Contracts to sell Iraq humanitarian goods through the Oil-for-Food Program were allegedly given to companies and individuals based on their willingness to kick back a certain percentage of the contract profits to the Iraqi regime.

Companies that sold commodities via the Oil-for-Food Program were said to be overcharging by up to 10%, with part of the overcharged amount being diverted into private bank accounts for Saddam Hussein and other regime officials and the other part being kept by the supplier.

International aid organizations reported that in the course of the program, more than 500,000 Iraqi children died of malnutrition because of the mishandling of funds.

(Source: AKnews)

Iraq has threatened to expel Leighton Holdings from the country’s lucrative oil and gas fields, following the company’s announcement on Monday of an investigation into possible corruption.

The deputy head of the Iraqi Oil Ministry’s petroleum contracts and licensing directorate, Sabah Al-Saidi, told The Australian Financial Review he was shocked by claims that Leighton Holdings subsidiary Leighton Offshore might have sought to influence contract awards through improper payments.

“We have worked very hard to ­create a transparent oil and gas industry and these allegations are already proving very damaging to our international reputation,” he said.

“I do not want to pre-judge what this investigation may find but certainly we expect international companies like Leighton to perform to best international standard … Anything less than that does not have a place within our industry here in Iraq.”

Mr Al-Saidi declined to say if any investigation into Iraq’s Oil Ministry staff and practices was being conducted as a result of the Leighton probe.

Meanwhile, Deutsche Bank downgrades Leighton Holdings to a ‘hold’ recommendation.

(Source: Australian Financial Review)

Leighton Holdings Limited (Leighton) has announced that it has reported to the Australian Federal Police (AFP) a possible breach of its Code of Ethics that, if substantiated, may contravene Australian laws.

The possible breach related to payments that may have been made by Leighton’s subsidiary company, Leighton Offshore Pte. Limited, in connection with work to expand offshore loading facilities for Iraq’s crude oil exports.

Leighton Holdings’ Chairman, Mr Stephen Johns, said that Leighton had volunteered the information to the AFP after becoming aware of a possible breach.

“We are cooperating fully with the AFP as they conduct an investigation into these matters,” said Mr Johns.

Leighton Holdings’ Chief Executive Officer, Mr Hamish Tyrwhitt, said that Leighton’s values were integral to Leighton’s approach to business.

“Our Code of Ethics and our values have been, and will continue to be, critical to our culture. Our values are consistently applied across the Leighton Group and deviations from those values are not tolerated,” said Mr Tyrwhitt.

At this stage it is not known whether there has been any wrongful or illegal conduct, or whether there will be any adverse financial consequences for Leighton. The AFP investigation is at an early stage and, accordingly, Leighton is not in a position to make any further comment.

(Source: Leighton)

A delegation from the Kurdistan Regional Government participated in the 3rd Middle East Summit on Anti-Corruption. The conference was a platform for senior-level executives in both public and private sectors to discuss strategies for minimizing bribery risks in the Middle East and implementing an effective and risk-based global compliance program.

Ms Nisar Talabany, Senior Adviser to Prime Minister Barham Salih, described the Kurdistan Regional Government’s (KRG) Anti-Corruption efforts and gave an overview of the KRG’s reform initiatives to minimise bribery risks in public-private partnerships. She said, “We assured the senior executives who are working to combat this grave issue that the KRG is part of the global movement against corruption, and our leaders are firmly committed to this fight”.

In 2009, the KRG engaged PriceWaterhouseCoopers (PWC) to evaluate government procedures and devise a good governance and transparency strategy.

While the Arab Spring has given way to more transparency, bribery risks in the Middle East remain very real and complex. The dangers of third party agents and consultants and so-called “after-sales service fees”, complex civil service structures, and the utilization of various forms of “quasi-governmental” entities in business roles that blur public/private lines all increase exposure to liability under foreign and local bribery laws.

A British businessman has pleaded guilty to conspiracy to corrupt, including making corrupt payments to Iraqi officials.

Dr David Turner (56), the former Innospec Limited Global Sales and Marketing Director (Tetraethyl Lead), appeared before His Honour Judge McCreath at Southwark Crown Court on Tuesday and pleaded guilty to three counts of conspiracy to corrupt.

The first two counts charged a conspiracy to give corrupt payments to public officials and other agents of the Government of Indonesia (between 14/02/02 and 31/12/08) and the Government of Iraq (between 01/01/03 and 31/01/08) as inducements to secure, or as rewards for having secured, contracts for Innospec from those Governments for the supply of its products including Tetraethyl Lead.

Dr Turner additionally pleaded guilty in respect of one charge of conspiracy to corrupt Iraqi public officials and other agents of the Government of Iraq (between 01/06/06 and 31/05/07) by making payments as inducements 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 sentencing of Dr Turner was adjourned.

The case of two other Innospec executives, Dennis Kerrison and Paul Jennings, was adjourned until the 4th of April, 2012 for plea.

The SFO investigation into the conduct of Dr Turner was assisted by the US Department of Justice, the US Securities & Exchange Commission, the City of London Police and the Cheshire Constabulary.

(Source: Serious Fraud Office)

A former U.S. Army contracting official has been sentenced to 12 years in prison for his participation in a bribery and money laundering scheme related to bribes paid for contracts awarded in support of the Iraq war.

Eddie Pressley, 41, was also ordered to serve three years of supervised release following the prison term. The court in Birmingham, Alabama, said it would also require Pressley to forfeit $21 million as well as real estate and several automobiles.

“Mr. Pressley participated in a wide-ranging scheme to steer U.S. Army contracts to particular providers in exchange for personal, illegal profit,” said Assistant Attorney General Breuer. “Taking in nearly $3 million, he enlisted his wife to help him conceal the nature of his bribes and created phony paperwork to keep the scheme going. This sentence sends the message loud and clear that we will not tolerate corruption of any kind, and are determined to hold corrupt officials accountable.”

“This contracting scheme was driven by greed and is in no way representative of the vast majority of public officials and government contractors who work hard to serve our military,” said James McJunkin, Assistant Director of the FBI’s Washington Field Office. “The FBI will continue to investigate contracting fraud which deprives the U.S. government of taxpayer dollars, regardless of where it occurs.”

Pressley, a former army Major, and his wife Eurica Pressley, were found guilty at trial on March 1, 2011, of one count of bribery, one count of conspiracy to commit bribery, eight counts of honest services fraud, one count of money laundering conspiracy and 11 counts of engaging in monetary transactions with criminal proceeds.

Bank statements and wire transfer reports demonstrated that, in total, the Pressleys received approximately $2.9 million in bribe payments between 2004 and 2006, and used the money to purchase real estate, expensive automobiles and home decorating services, among other things.

A sentencing date for Eurica Pressley has not yet been scheduled by the court.

The case against the Pressleys arose from a corruption probe focusing on Camp Arifjan, a U.S. military base in Kuwait. As a result of this investigation, 17 individuals, including the Pressleys, have pleaded guilty or been found guilty at trial for their roles in the scheme.

(Sources: IEWY, Wall Street Journal)