Corporate - SFO Press Release - repayment of dividends

On 13 January 2012, the Serious Fraud Office published a press release highlighting the successful conclusion of an action brought by it in the High Court.  The court ordered a parent company which had received dividends from its subsidiary to repay those dividends as the profits underpinning them derived from unlawful business conduct.

The court action concerned a bridge manufacturing company which had won contracts in Iraq as a result of corrupt practices and breach of UN sanctions.  The company had been working with the SFO since 2008 when it discovered and reported the irregularities, and co-operated in full with the SFO investigations.  The court order resulted in the parent company having to repay £131,201 under Part 5 of the Proceeds of Crime Act 2002, even though the parent company had no knowledge of the corrupt practices.

Two key messages emphasized by the SFO in its press release are:

  •     Shareholders who receive the proceeds of crime can expect civil action against them to recover the money.
  •     Shareholders and investors in companies are expected to satisfy themselves that the business practices of the companies in which they invest are not corrupt.  A higher standard of care is expected of institutional investors as they should have the knowledge and expertise to carry out due diligence.


For a copy of the press release, please click here to visit the Serious Fraud office website.

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