Oil and gas industry has the most bribery prosecutions

"I am convinced that the SFO must focus on top level fraud," says David Green, the director of the Serious Fraud Office.

The oil and gas industry has had the highest number of prosecutions for bribery in the UK compared to any other sector in recent years.

Five (almost 20%) of the 26 cases of bribery and graft prosecuted since 2008 were in the oil and gas sector. Other top offending sectors were construction, medical goods and insurance companies, which each experienced three prosecutions.

In one case, involving Andrew Rybak, Ronald Saunders, Philip Hammond and Barry Smith, confidential information was supplied to bidders and held by companies who were acting as procurement agents for the projects in the oil and gas sector. Some defendants were engaged by the procurement agents and had access to information which they then passed on to targeted bidding companies, who either made, or agreed to make, corrupt payments for the information, disguised as “consultancy services".

These are established UK-based companies, dealing with some of the larger projects in the sector. The procurement companies are not implicated. The SFO says these were “appalled" at the “apparent blatant disregard shown by the defendants" for the confidentiality of the information.

The figures come out of research published in Ernst and Young's UK Bribery Digest July update.

Another case involved operations in Nigeria, where Shell, Total and ENI operate, an area ranked 143 out of 182 in Transparency International's corruption perception index. Another area implicated is BP's patch in Angola, ranked 168.

Other names mentioned are: Aftab Noor al-Hassan, Riad El-Taher, MW Kellogg Limited (MWKL) and the Weir Group plc.

The SFO report shows that many cases rely on whistleblowers in order to come to light. Others, involving the Iraq oil-for-food scandal, relied on a United Nations independent enquiry committee.

Jonathan Middup, UK Head of Ernst & Young’s Anti-Bribery Corruption team, criticises the Serious Fraud Office in the report, for its low “appetite for enforcement".

There have been no prosecutions under the Bribery Act since it came into force just over a year ago, as an attempt to ban what are called “facilitation payments", although there have been five completed cases of bribery and corruption against UK companies under the old laws since the beginning of the year.

A survey published in May by Ernst & Young found that “more than half of UK executives would not rule out unethical activities to survive a downturn despite stricter bribery laws". These astonishing confessions were obtained voluntarily and anonymously.

In this worrying climate, the response of David Green, the director of the SFO, was to tell members of the 6th Annual European Forum on Anti-Corruption in June that “the SFO’s current role and purpose is unclear to some and needs restating". He added: "I am convinced that the SFO must focus on top level fraud."

While the permanent staff of British oil companies have not themselves been implicated in the enquiries and prosecutions, it is third parties in developing countries and temporary staff who have found themselves cast as defendants. Most oil companies have procedures to identify and eradicate corrupt practices, but they are sometimes notoriously hard to spot, as testified to by the case of Andrew Rybak, Ronald Saunders, Philip Hammond and Barry Smith.

California's success against Big Oil still faces a hurdle

Californians voted on Tuesday in favour of a low carbon future, but against environmental taxes.

While voting in the American mid-term elections, they also defeated a measure called Proposition 23, a move by oil companies to roll back a piece of progressive legislature - AB 32 - the state passed in recent times in favour of clean energy and climate protection.

Sierra Club Executive Director Michael Brune described the victory as follows: “Despite more than $10 million spent on deceptive advertising campaign funded by out-of-state oil barons — more than $8 Million from Texaco and Valero alone - California voters took a stand for clean energy – not in spite of a major economic downturn, but because of it."

The Proposition was defeated by over 60% to under 40%, in the first public referendum in history on clean energy policy.

It represents a triumph for a coalition that stood up to the oil industry, which involved leaders from environmental, health, labour, business, clean technology and national security sectors, not mentioned community groups and faith-based organisations.

One of the coalition's unlikely members, former US Secretary of State George Schultz, said, “This is the new face of the clean energy economy. This broad coalition will continue to push for California to be on the cutting edge in building the new energy economy”.

The Los Angeles Times said the "oily club" from Texas was sent packing through being outspent and out-organised, campaign-wise by wealthy philanthropists and celebrity backers.

Chief architect of the original global warming law in 2006, and outgoing Californian governor Arnold Schwarzenegger, was jubilant at the result.

However, voters also passed Proposition 26, which makes it harder to enforce global warming laws by undermining the principle that polluters should pay for the harm they cause. It is likely to do this in three ways:

1. by repealing two laws passed this year that fund product stewardship programmes to prevent hazardous chemicals and bulky products from ending up in landfill

2. by decreasing funding for 'green chemistry', which aims to control exposure to hazardous chemicals

3. by making it harder to implement the Global Warming Solutions Act (AB 32), whose goal is to reduce greenhouse gas emissions through carbon trading.

California and carbon trading

Provided that it can get around this limitation, this act would set up a system very similar to the European Emissions Trading Scheme.

It would recognise offset credits originating from sectors in developing countries, including Reducing Emissions from Deforestation and Forest Degradation (REDD) and other sector-based credits, so that the state can join international sector-based carbon trading schemes.

California's economy is the largest of any state in the USA and one of the worlds top 10 economies.

Offset credits allow private companies to meet a portion of their obligation to reduce emissions by buying lower-cost emissions reductions generated elsewhere.

Sector-based offset credits require all actors within a sector, for instance all forest owners or all steel manufacturers, to be included in a developing country’s emissions reduction strategy.

This approach differs from the United Nations Clean Development Mechanism (CDM) that recognises one-off, project-based offset credits.

California’s approach is consistent with key design features in the current international climate negotiations. Its cap-and-trade program would therefore play a huge part globally, and help to define what constitutes environmentally sound emissions reductions efforts in developing countries.

Tea Party and the environment

Elsewhere in the elections, in Florida, Tea Party candidate Mario Rubio made it to the Senate, on a ticket which supports continued drilling for oil offshore, only months after the disaster that was the Deepwater Horizon oil spill in the Gulf of Mexico.

But in Nevada, Tea Party candidate Sharron Angle, who is a climate change denialist, was beaten to the Senate by Democrat incumbent Harry Reid.