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Prison terms for corruption in oil and gas contracts

Photo shows Sakhalin II, Russia’s first liquified natural gas project. Courtesy of Gazprom.

Hi John,

I case you haven’t seen it, looks like there has been a corruption conviction involving Sakhalin II.  Although the story below does not mention Sakhalin II by its exact name, the story says the project “is one of the largest integrated oil and gas projects in the world and involves the exploration and development of several different oil and gas fields in the Sea of Okhotsk off Sakhalin Island (part of the Russian Federation).”

http://www.egovmonitor.com/node/45943

That is how Sakhalin Energy describes the project, so I am sure its Sakhalin II!

Prison terms for corruption in oil and gas contracts

31 January 2012

Prison sentences have been handed down in a case where corrupt payments were obtained for passing on confidential procurement information to bidding suppliers.  The contracts related to a series of high-value oil and gas engineering projects between 2001 and 2009 in Iran, Egypt, Russia, Singapore and Abu Dhabi

The sentences are:

  • Andrew Rybak (d.o.b. 28/03/56) of Newbury, Berkshire.  Five years’ imprisonment on each count, to be served concurrently.
  • Ronald Saunders (d.o.b. 01/02/47) of Hook, Hampshire.  Three years and six months’ imprisonment on each count, to be served concurrently,
  • Philip Hammond (d.o.b. 11/06/54) of Brussels, Belgium.  Three years’ imprisonment on each count to be served concurrently.
  • Barry Smith (d.o.b. 19/04/40) of Hindhead, Hampshire.  Twelve months’ imprisonment, suspended for a period of 18 months and 300 hours of unpaid work.

In addition Rybak and Hammond were also disqualified from acting as company directors for a period of ten years.

Confiscation actions are to be undertaken against the first three defendants.

The case, codenamed Operation Navigator, was tried at Southwark Crown Court, where the defendants were found guilty on 25 January.

In passing sentence today, HHJ Deborah Taylor, addressing Rybak, Saunders, Hammond and Smith said, All this was done without the slightest regard for the interests of others.  Your activities in connection with these conspiracies had little, if anything, to do with the interests of those engaged with the project, but were parasitic, leeching money for your benefit.

Commenting on the sentences, SFO Director Richard Alderman said, “Demanding backhanders in exchange for confidential and advantageous information saps business and is completely unacceptable to society.  Hopefully these sentences will ring out the message loud and clear that the criminal justice system will do all it can to combat wrong-doing like this.”

Outline

The investigation began in April 2008 as a joint operation between the Serious Fraud Office and the City of London Police.  It was triggered by allegations relating to a project in Singapore, but it soon became apparent to the investigators that a number of other projects were also tainted by corruption.

The confidential information corruptly supplied to bidders was held by companies that undertook procurement for the projects.  Saunders and Rybak, who were engaged as agency workers by the procurement companies, abused their access to this information.  They indicated to suppliers who were bidding for the contracts that information could be made available if they agreed to pay for it.  Disguised as “consultancy services”, the illicit payments were shared out amongst the co-conspirators.

The contracts related to these projects (indicating defendants involved);

a)      Styrene Monomer Project, Iran.  (Rybak, Saunders and Hammond)

b)      QASR Gas Gathering Project, Egypt.  (Rybak and Saunders)

c)      Sakhalin Island Project, Russian Federation. (Rybak, Saunders and Hammond)

d)      Singapore Parallel Train Project.  (Rybak and Hammond)

e)      Hydrogen Power Project, Abu Dhabi.  (Rybak, Saunders, Hammond and Smith)

Summaries of the contracts and assistance provided by the procurement companies to the SFO are contained in our press release of 25 January.

Notes for editors:

  1. Charging of defendants.  See press release 22 October 2010.
  2. The fifth defendant, Robert Storey, was tried in relation to the Abu Dhabi project only but the jury could reach no verdict.
  3. Another suspect (a UK national) is resident in the Philippines and it has not been possible, thus far, to bring him to trial in the UK.
  4. The Serious Fraud Office is a government department responsible for investigating and prosecuting serious and complex fraud.  The SFO is headed by the Director (Richard Alderman) who exercises powers under the superintendence of the Attorney General. These powers are derived from the Criminal Justice Act (1987).

Serious Fraud Office, Elm House, 10-16 Elm Street, London, WC1X 0BJ
Press Office tel: 020 7239 7000 7004 or mobile: 0796 655 8903
Main switchboard tel: 020 7239 7272
SFO Confidential hotline for whistleblowers 020 729 7388
[email protected] – or via – www.sfo.gov.uk

EXTRACT FROM THE SFO PRESS RELEASE

Sakhalin Island Project. This is one of the largest integrated oil and gas projects in the world and involves the exploration and development of several different oil and gas fields in the Sea of Okhotsk off Sakhalin Island (part of the Russian Federation). Fluor Ltd, a company in Farnborough, managed the procurement process for this project. A number of separate packages were investigated in detail, including: air compressors, oil pumps, generator sets, gas turbines, equipment to treat fuel gas, oily water treatment and large bore pipes. These packages were worth over £17 million. Saunders and another man were engaged as contractors by Fluor Limited between 2006 and 2008. Again, Rybak and Hammond received confidential information from the insiders which they sold on to bidding companies. Some payments of around £357,000 and US$229,000, were made from successful bidders, which were then distributed between the defendants.

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