R v Basil Al Jarah (guilty plea)
R v Ziad Akle, Stephen Whiteley and Paul Bond (trial court: T20177415; 20187107)
R v Paul Bond (retrial: T20177415; 20187107)
R v Ziad Akle and Paul Bond (Court of Appeal: 202001870 B1; 202002164 B1; 20210745 B1)
R v Paul Bond (Court of Appeal: 202104035)
The Unaoil scandal has been one of the blockbuster bribery cases on the Serious Fraud Office’s (SFO) docket in recent years. Although the SFO initially secured a string of successful prosecutions, these early wins have quickly unravelled as the agency’s conduct of the case came under sharp scrutiny from the courts. Two convictions have been quashed on the basis of serious disclosure failures and the SFO’s handling of the case is now the subject of an independent review by the Attorney General.
The SFO started investigating Unaoil in March 2016 following the publication of journalists’ reports, based on leaked emails and documents, which implicated the Monaco-based oil and gas consultancy firm in an international corruption scandal. Owned and controlled by the Ahsani family, Unaoil allegedly made significant corrupt payments to secure lucrative oil projects in Iraq as the country sought to reconstruct its chief export following the fall of Saddam Hussein.
The SFO subsequently charged four former staff of Unaoil and SBM Offshore, a Dutch energy services company, with conspiracy to make corrupt payments to influence tenders for these infrastructure projects in Iraq’s oil industry:
– Ziad Akle, Unaoil’s former Iraq territory manager;
– Stephen Whiteley, former vice president of SBM Offshore and subsequently Unaoil’s general territories manager;
– Basil Al Jarah, Unaoil’s former partner in Iraq; and
– Paul Bond, SBM Offshore’s former sales manager.
Summary
In July 2019, Al Jarah, pleaded guilty to five offences of conspiracy to give corrupt payments.
The trial of the other three defendants heard that they conspired with members of the Ahsani family and with others to pay Oday al Quraishi – an official in the state-owned South Oil Company – to influence tenders in favour of their clients, including SBM Offshore. The trial also heard that Unaoil paid officials in the Iraqi Ministry of Oil through another middleman, Ahmed Al Jibouri, in order to get projects approved for its clients. The SFO said that corrupt payments worth $5.4 million went to senior figures in the Iraqi Ministry of Oil to secure approval for construction projects, including two pipelines worth $800 million.
In July 2020, Ziad Akle was found guilty of two counts of conspiracy to give corrupt payments and Stephen Whiteley was found guilty of one count to give corrupt payments. The jury could not reach a verdict on the case of Paul Bond but, following a retrial in February 2021, Bond was found guilty of two counts of conspiracy to give corrupt payments.
The prosecutions were a much-needed win for the SFO, but the success was short-lived. In December 2021, the Court of Appeal overturned Ziad Akle’s conviction and denied the SFO an all-important re-trial. The judgment criticised the SFO’s conduct in the case, finding that the refusal to disclose documents requested by the defence was a “serious failure by the SFO to comply with their duty”. The court described this disclosure failure as “particularly regrettable given that some of the documents had a clear potential to embarrass the SFO”.
This stinging defeat for the SFO has left the entire Unaoil case on shaky ground. Akle’s success on appeal prompted Paul Bond to challenge his own conviction, arguing that the SFO’s disclosure failures equally denied him a fair trial. The Court of Appeal upheld Bond’s appeal in March 2022 and the SFO has not sought a retrial.
These quashed convictions have left the SFO with significant costs orders only months after the failed prosecution of two Serco executives caused the agency to exceed its annual spending limit by £2.55 million.
Yet the fallout from the quashing of Akle and Bond’s convictions extends far beyond the legal fate of the Unaoil case. The SFO’s conduct in the case bears a number a concerning features which will be subject to independent scrutiny of the agency’s modus operandi – including unusual contact between the SFO’s director and a private investigator, and serious disclosure failings about this contact that led to the quashed conviction.
In December 2021, the Attorney General announced an independent review into the SFO’s handling of the Unaoil case. Retired High Court judge and former Director of Public Prosecutions, Sir David Calvert-Smith, has been tasked to get to the bottom of why the disclosure failings in the Unaoil case happened and what its implications are for “the policies, practices, procedures and related culture of the SFO”. This independent review, which is due to report by the end of May 2022, will be closely watched to see what impact it may have on the future direction of the SFO.
It is not yet clear whether other controversial aspects of the case will be examined during the review. These include the behaviour of the US authorities in relation to the SFO’s investigation, and the unfair and wrongful dismissal of the SFO’s senior investigator overseeing the case which the employment tribunal found was done at the behest of US authorities.
Why does this case matter?
1. The SFO’s serious disclosure failures led to two quashed convictions only months after the trial of former Serco executives collapsed because the SFO failed to disclose evidence to the defence. These botched disclosures raise concerns about whether there are more systemic problems in the SFO’s strategy and conduct of high-stakes cases. It is critical that lessons are learned from the Attorney General’s independent review in order to restore confidence in the SFO’s capacity to bring home successful prosecutions.
2. Unaoil was a key test of whether the SFO can successfully prosecute employees of an intermediary company charged with paying bribes overseas on behalf of large western corporations. The case also shone a light on how the US-trained Director of the SFO, Lisa Osofsky, hoped to bring US-style tactics to the UK, particularly the significant discretion afforded to prosecutors in how they act and broad powers to negotiate sentences for cooperating witnesses.
3. The case exposed counter-productive competition between global enforcement agencies. The US Department of Justice (DOJ) sought to undermine the SFO’s investigation and to interfere with who was in charge of the investigation, culminating in the unfair and wrongful dismissal of Tom Martin, the case controller overseeing the SFO case. While the SFO’s relationship with the DOJ dramatically improved after Osofsky took over leadership of the SFO, it is not yet clear what tangible benefit the SFO has derived from this new inter-agency dynamic.
4. A key question left at the end of the trial is why the victims of corruption in Iraq did not get more of a hearing in court. The focus throughout was on those implicated in bribery allegations while the harms of their corruption were left unaddressed. Yet the Unaoil scandal forms part of a toxic legacy in which pervasive corruption has destabilised efforts to secure peace in Iraq and contributed to the rise of ISIS in the country. This untold story reflects a wider problem with the way that corruption cases are prosecuted, as the voices of victims and an assessment of the harms of corruption are usually absent from the courtroom.
5. Serious concerns remain about the absence of senior executive accountability in this case. The bosses of those prosecuted, who cut a deal with the DOJ, look set to get off more lightly than their employees. While these US deals do not preclude the prosecution of Ata Ahsani in the UK, we have raised concern with the SFO that no enforcement action appears to have been taken by the SFO against him or any assets in the UK potentially bought with Unaoil earnings. This case highlights the importance of the Law Commission’s ongoing review which is also looking at how senior executives are held criminally liable. Urgent reforms are needed to ensure that individuals who are the driving force behind corporate wrongdoing can be brought to justice.
Cooperating witnesses and the Tinsley affair
At the heart of the SFO’s troubles in the Unaoil case is the contact between senior individuals at the agency and a US-based agent or “fixer”. Ahead of the trial, the SFO disclosed a series of schedules that alluded to contact between the SFO and David Tinsley, the American director of “the world’s first and only Judaeo-Christian due diligence agency” called 5 Stones Intelligence. Tinsley acted on behalf of the Ahsani family and presented himself as a “deal maker” in backroom negotiations between prosecutors and those under investigation in the US and UK.
During the trial it emerged that Tinsley, who was not a lawyer, approached Akle and Al Jarah directly, claiming he could have off the record contact with the SFO’s Director, Lisa Osofsky, and that he was in a position “to stop everything in the UK and move the case to the US”. Tinsley developed direct communications with Osofsky, who is said to have described Tinsley as “a gift from god.”
Eventually, Basil Al Jarah pleaded guilty to five counts of conspiracy to give corrupt payments, while Zaid Akle did not. Although more serious offences were taken into consideration at Al Jarah’s sentencing, his term of imprisonment was reduced from 10 to 3 ½ years due to his early guilty plea and co-operation. In June 2021, the SFO secured a £402,465 confiscation order by consent against Al Jarah.
Akle’s defence claimed that Tinsley was instrumental in Al Jarah’s guilty plea and sought to have the case thrown out on the grounds that the SFO’s relationship with Tinsley flouted legal and regulatory standards and breached his right to a fair trial. Rejecting the defence’s argument, the trial court found that Al Jarah pleaded guilty on his own accord and not as a result of Tinsley’s involvement. However, it was scathing of Osofsky’s dialogue with Tinsley, and declared that the agency’s contacts with Tinsley should be “comprehensively reviewed to see what lessons can be learned from it”.
Osofsky has raised potential ways in which SFO investigations could be expedited by making greater use of cooperating witnesses, a method used in the US with considerable success. The Serious Organised Crime and Police Act 2005 allows UK prosecutors to use cooperating witnesses, but their sentences must be at the discretion of the judge. UK courts guard their right to determine sentence and have expressed disapproval of sentence determinations in plea agreements, a discretion that is afforded to US prosecutors.
Although white collar crime lawyers broadly welcomed Osofsky’s desire to push greater use of cooperating witnesses in the UK, the Tinsley affair has done considerable damage to Osofsky’s objective of improving the SFO’s use of such witnesses. This is not only because the trial judge was critical of the SFO’s communications with Tinsley but because it later emerged that the SFO had failed to disclose embarrassing material about these dealings, ultimately leading to the downfall of the SFO’s case.
Serious disclosure failures and an independent review
On several occasions prior to his trial, Akle’s lawyers had asked the SFO for documents relating to Tinsley’s involvement but were refused. Their application to the trial court similarly failed. Instead, the SFO provided schedules summarising unused material, which included references to contact between Tinsley and the SFO, but even these contained errors and omissions which had to be corrected. It was only once the matter was before the Court of Appeal that the SFO disclosed the Tinsley material that was referenced in the schedules.
This material revealed that Tinsley’s engagements with the SFO were initiated with a text to Osofsky in September 2018. Osofsky agreed to meet Tinsley, saying they would have “a solid hour together just us”. No notes were taken of that meeting. Tinsley later met with SFO officers with conduct of the Unaoil case.
Tinsley made it clear to the SFO that he could “bring in” Akle and Al Jarah. In December 2018, he boasted to Akle that he had spoken to Osofsky on nine occasions and met her on four occasions, with one of these meetings lasting four hours. Osofsky held these meetings despite officials in the SFO, including the lawyer in charge of the case, urging caution when engaging with Tinsley to ensure they did nothing which might look like an inducement for Al Jarah or Akle to plead guilty.
During May 2019, Tinsley kept the SFO updated on his chances of getting a guilty plea from Al Jarah, commenting “I’m controlling who he speaks to”. By the end of the month, Tinsley told the SFO that Al Jarah wanted to plead. An SFO note said that this conversation ended: “won’t charge with other matters”.
Some evidence of the SFO’s dealings with Tinsley was lost altogether. The chief investigator at the SFO, Kevin Davis, repeatedly put the wrong password into his phone which led to data being wiped, including his exchanges with Tinsley.
The Court of Appeal found that the SFO’s refusal during the trial to disclose documents relating to its engagements with Tinsley “was a serious failure by the SFO to comply with their duty”. The judgment characterised the SFO’s dealings with Tinsley as “wholly inappropriate”, identifying a clear conflict in that Tinsley “was obviously focused on pursuing a course which was in the best interests of the Ahsanis”. The court went on to say that “Tinsley was the last person whom the SFO should have allowed, or caused, to undertake the role of trying to persuade [Al Jarah] and Akle to plead guilty (and thereby benefit the Ahsanis in their dealings with the SFO)”.
The court found force in the argument that the SFO had engaged in “tacit encouragement” of Tinsley, with documents showing “the SFO knew that Tinsley was deliberately operating behind the backs of [Al Jarah’s] lawyers, and that Tinsley wanted to control whom [Al Jarah] spoke to”. The failure of the SFO to provide proper disclosure denied the defence the stronger position to which they were entitled. In consequence, the court held that Akle was denied a fair trial and his conviction was quashed.
In a further blow to the SFO, the court denied a re-trial, citing as a key consideration that the appeal was being allowed “on grounds relating to fault on part of the prosecutor”. In the wake of the Court of Appeal’s decision, Akle’s co-defendant Paul Bond lodged his own appeal, arguing that the SFO’s disclosure failures rendered his conviction unsafe. In March 2022, the Court of Appeal upheld this argument, finding that the SFO’s disclosure obligations were owed to all defendants equally and that the failure to provide the evidence about Tinsley’s involvement meant that Bond did not receive a fair trial. His conviction was overturned and the SFO have not sought a retrial.
Having received special “blockbuster funding” from the Treasury for its Unaoil investigation and run a 66-day trial to secure these convictions, the SFO’s disclosure failures are a costly way for its case to fall apart. The scale of the SFO’s legal costs is not yet known as Akle’s application for costs was withdrawn when the parties reached an agreement shortly before the scheduled hearing in early March 2022, and costs are yet to be determined in Bond’s appeal. It will be important for the SFO to be transparent about what these costs are so there can be public accountability for how taxpayer money has been spent. More significantly, however, the case is a serious setback for the SFO’s reputation as a prosecutor, and will dent the morale of its staff.
Lack of cooperation between international law enforcement agencies
The defendants’ lawyers highlighted throughout the trial that Saman and Cyrus Ahsani, who own and control Unaoil through their family trust, were the ultimate decision-makers and beneficiaries of Unaoil’s wrongdoing. The Ahsanis’ absence from the London courtroom was a result of jurisdictional competition between the UK and US law enforcement agencies.
In March 2019, despite being under a European arrest warrant from the SFO, Unaoil executives Cyrus and Saman Ahsani pleaded guilty in the US. The DOJ had issued their own arrest warrant for the brothers and persuaded Italian authorities to hand over Saman Ahsani despite an Italian court ruling that he should be extradited to the UK – and despite the DOJ reportedly assuring the SFO in February 2017 that the Ahsanis could be prosecuted in the UK.
Three years after pleading guilty in the US, Saman and Cyrus Ahsani are still awaiting sentencing before the US District Court for Southern District of Texas. The Ahsanis appear to have been offered a deal with the DOJ as cooperating witnesses, which would allow them a lighter sentence and possibly a fine, while their staff faced full prosecution in the UK. This does not look good for international anti-bribery enforcement.
Indeed, the DOJ went to considerable lengths to undermine the SFO’s investigation and sought to interfere with who was in charge of the investigation.
In February 2021, a UK employment tribunal found that Tom Martin, the former SFO case controller with responsibility for the Unaoil case, had been unfairly and wrongfully dismissed. Martin had been suspended by the SFO in July 2018 and dismissed in December 2018 after a complaint by the DOJ alleged that he had called an FBI official ‘cunt’ in a pub. The DOJ’s complaint, lodged two years after the incident, was made alongside complaints by defence lawyers for the senior executives of Unaoil.
The employment tribunal found that “the only possible outcome of a reasonable consideration” of Martin’s case was that the DOJ’s complaint was “part of an attempt to secure his removal as case controller” from the Unaoil case. More specifically, the Tribunal said it was “inescapable that the US agencies and the defence team had the same reason for raising the complaints, namely that they wanted [Tom Martin] removed so as to prevent the difficulty with their joint wish to have Mr Ahsani extradited to the US”.
The DOJ’s apparent efforts to secure a tactical advantage over the SFO went far beyond the complaint against Tom Martin. While the two agencies had proceeded with their investigations on the basis that they would cooperate, SFO investigators and lawyers involved in the case described the DOJ’s behaviour at the time as “lacking candour, transparency and integrity and … sought to undermine [the SFO] in order to further its own interests”.
The employment tribunal heard that the DOJ’s Foreign Corrupt Practices Act (FCPA) Unit withheld important information from its UK counterpart while at the time sought to gather information about the SFO’s progress; engaged in inappropriate informal negotiations with Saman Ahsani’s lawyers to leverage his co-cooperation against the SFO; and submitted extradition requests to a third country (Italy) in opposition to those already submitted by the UK.
Central to this jurisdictional turf war is the issue of who benefits from bringing criminal fines against Unaoil’s clients. Having got the upper hand, the DOJ is now in a position to use information provided by the Ahsanis, as cooperating witnesses, to pursue the big oil companies that Unaoil worked for. The $295 million fine imposed by the DOJ on French oil giant Technip in June 2019 for a bribery scheme in Iraq involving Unaoil, as well as bribery in Brazil, may be due to that cooperation.
This inter-agency rivalry has been counter-productive for global bribery enforcement and also come at a significant cost to the SFO’s investigation. The SFO failed to get the Ahsanis in the dock while less senior employees were prosecuted. Yet as the Court of Appeal noted, Ata Ahsani’s deal with the DOJ did not necessarily preclude his prosecution in the UK:
“Ata Ahsani, however, was in a different position: he was not going to be prosecuted in the US, and double jeopardy was therefore not a bar to the SFO prosecuting him in the UK…
Mr Brompton’s submission, that the SFO had no choice but to concede jurisdiction to the US once the Ahsanis were in the US, might provide an explanation in the cases of the two brothers, but it cannot explain the decision not to prosecute Ata Ahsani, alleged to be not only the head of the family but also the head of the conspiracies.”
While a full blown prosecution of Ata Ahsani in the UK is unlikely in the circumstances, there are other important enforcement actions that the SFO could take. The Pandora Papers show Ata Ahsani used £7.5 million in Unaoil earnings to invest in UK property through opaque offshore structures. This includes a cinema complex in Sunderland and a business park near Hull, although companies beneficially owned by Ata Ahsani were removed as investors in the fund following the allegations. It is therefore possible that assets in the UK might properly be confiscated under the Proceeds of Crime Act 2002. It is not clear that the SFO has taken any steps to recover this property.
Spotlight on Corruption awaits the response to a letter that we wrote to the SFO in October 2021 to raise concerns about the “apparent lack of enforcement action” to recover the possible “proceeds of crime of the Ahsani family” and to ask whether such action will now be taken.
Unaoil’s victims have not been represented
Throughout the trial, the narrative about Iraq was dominated completely by the defence. A Middle East expert was called as a witness to support the defence argument that post-war Iraq was a lawless place where cash-based transactions were commonplace. The defence sought to call a former UK consul in Iraq as witness to support their case.
However, the prosecution did not address the situation in Iraq at all or provide any account of the impact and harm caused by corruption on a country like Iraq. No witnesses were called in this regard. It would have been easy for the jury to be left with the impression that corruption is a victimless crime and that bribery is an unavoidable evil faced by western companies operating in unstable overseas jurisdictions.
Extractive industries like oil, gas, and mining are particularly prone to the corruption risks that undermine good governance. Iraq’s oil contributes 60% of its GDP, 99% of its exports and over 90% of Government revenue.
Iraq’s oil wealth seems to largely benefit a relatively small elite in its power structure, while nearly a quarter – 23% – of Iraqis live in poverty. The corruption boom set off by resource wealth has been devastating for Iraq and its people. It is in that context that the story of Unaoil and its corporate clients needs to be told.
The real victims of corruption are however unlikely to have their story told in the UK courts until some fundamental changes occur both in law and practice. Until UK legislation is amended to ensure that compensation cases can be brought in complex cases and not just simple ones, we are unlikely to see a significant shift in prosecutors bringing forward compensation claims on behalf of victims in these cases.
As a result, compensation principles developed in 2018 remain pretty much unused by prosecutors. Much more ambitious thinking about presenting community impact statements to the court and bringing in-country experts, such as credible officials from local anti-corruption agencies, to give evidence is essential. Bringing home the harm that corruption in far off places causes is essential to winning cases before jurors and making concrete the mantra that corruption is not a victimless crime.