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AAB People / Blog / A Warning for Investors
Given recent events, where the Serious Fraud Office won a civil recovery order against a principal shareholder of a company that had admitted corruption – is it now the time for Investors to ask probing questions on the adequate procedures…
Blog14th Feb 2012
Given recent events, where the Serious Fraud Office won a civil recovery order against a principal shareholder of a company that had admitted corruption – is it now the time for Investors to ask probing questions on the adequate procedures in place to mitigate bribery, of the companies in which they are investing?
Mabey Engineering, has agreed to pay back the £130,000 it received through share dividends derived from contracts that were obtained through illegal conduct. This has occurred even though the shareholders, more than likely, had no knowledge of the wrongdoing in the first place.
This appears to be the first time that the SFO has attempted to recover the proceeds of crime by targeting the dividends paid in the UK, but given the implementation of the Bribery Act 2010, it will certainly not be the last.
It appears that the financial aftermath of any act of bribery or corruption may go well beyond that of direct penalties and could impact on share prices.
The outgoing Director of the SFO, Richard Alderman stated:
… shareholders and investors in companies are obliged to satisfy themselves with the business practices of the companies they invest in. This is very important and we cannot emphasise it enough. It is particularly so for institutional investors who have the knowledge and expertise to do it. The SFO intends to use the civil recovery process to pursue investors who have benefitted from illegal activity. Where issues arise, we will be much less sympathetic to institutional investors whose due diligence has been lax in this respect.
This action stresses the importance for organisations to adopt and implement preventative measures, such as the services of SeeHearSpeakUp, or else they and their shareholders may face the consequences.
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