SFO wins landmark rule on criminal company dividends

The Serious Fraud Office (SFO) has won the right to confiscate the dividends paid by firms convicted of crimes.

The SFO won a civil recovery orders against Mabey Engineering Holding on Thursday with the firm agreeing to repay the £130,201 dividend its received from Mabey Engineering after it admitted to corruption.

It is the first time the SFO has targeted dividends paid to UK companies and director Richard Alderman hailed it as 'the final act in an exemplary model of corporate self-reporting and co-operative resolution'.

'Shareholders and investors in companies are obliged to satisfy themselves with the business practices of the companies they invest in,' Alderman said.  

‘The SFO intends to use the civil recovery process to pursue investors who have benefited from illegal activity. Where issues arise, we will be much less sympathetic to institutional investors whose due diligence has clearly been lax in this respect.’

Mabey and Johnson has been working with the SFO since the beginning of 2008 when it approached the authorities to highlight irregularities it had identified as a result of an internal investigation.

Following the self-referral and subsequent co-operation with the SFO’s investigations M&J pleaded guilty to charges of corruption and breaches of United Nations sanctions and was convicted at Southwark Crown Court in September 2009.

Since the self-referral, the group has introduced new management, anti-bribery and corruption procedures and has appointed an independent monitor.

SFO saaid the firm conducted itself in an exemplary way through its self-referral, extensive co-operation with the authorities and the transformation of the company.