Civil Fraud Damages Claims Begin In The UK Following A Corruption Prosecution By The SFO And The DOJ Against Innospec And Others

Author:McGuireWoods LLP
Profession:McGuireWoods LLP

In a recent decision of Mr Justice Flaux in the case Jalal Bezee Mejel Al-Gaood & Partner v Innospec Limited and Others, the Claimants sued for damages which they claimed arose as a result of the Defendants having bribed the Iraqi Ministry of Oil ("MOO") to purchase their chemical products, TEL.  The claim for damages was for losses which the Claimants alleged they have suffered as a consequence of the unlawful means conspiracy on the basis that, but for the bribery and corruption, the MOO would have started to purchase the chemical additives distributed in Iraq by the Claimants, MMT.  The loss claimed, as quantified by the Claimants' quantum expert, was US $26,572,603.

Reliance was placed by the Claimants on the fact that the Second Defendant and others had been charged by the United States Department of Justice and had pleaded guilty to criminal offences principally under the Foreign Corrupt Practices Act 1977 in relation to bribery and corruption in Iraqi and Indonesia.  In addition, civil proceedings were brought by the United States Securities and Exchange Commission against the Second Defendant and certain others as well as criminal proceedings pursued in England by the Serious Fraud Office against the First Defendant and certain others in relation to which various Defendants either pleaded guilty or were found guilty after a jury trial. We have blogged previously on the long running Innospec case including here for example.

In his 78 page judgment Mr Justice Flaux said that by the end of the trial it was common ground between the parties that in order for the claim to succeed the Claimants had to establish three matters on a balance of probabilities:

That there had been a decision by the MOO in October or November 2003 to replace the Defendant's chemical product TEL with the Claimants' chemical product MMT and to continue using TEL only until stocks were exhausted; That that decision was not implemented because the promise of bribes by a Mr Naaman procured the MOO to enter into the 2004 agreement and that prevented sales of MMT and; That, but for the promise of bribes, the decision would have been implemented and the MOO would have replaced TEL with MMT from early 2004 onwards so that the "counterfactual scenario on which the claim is based would have occurred...". After a four week trial, Mr Justice Flaux decided that the Claimants case was not made out on the facts and also failed on grounds of causation.  There was much...

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