Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.
Upcoming SlideShare
What to Upload to SlideShare
Next
Download to read offline and view in fullscreen.

0

Share

Download to read offline

Windward Sentencing Conclusions

Download to read offline

Windward Trading Sentencing Conclusions

Related Books

Free with a 30 day trial from Scribd

See all
  • Be the first to like this

Windward Sentencing Conclusions

  1. 1.     1   Attorney  General  -­‐‑v-­‐‑  Windward  Trading  Ltd.       Prosecution  Sentencing  and  Confiscation  Conclusions       In  Summary     1.   Windward  Trading  Ltd.  [Windward]  received  and  held  the  proceeds  of   criminal   conduct   perpetrated   by   its   controlling   mind   and   beneficial   owner,   Samuel   Gichuru.   The   company   knowingly   enabled   Gichuru   to   obtain  substantial  bribes  paid  to  Gichuru  while  he  held  public  office  in   Kenya.  The  company  played  the  vital  role  without  which  corruption  on  a   grand  scale  is  impossible:  money  laundering.         2.   Gichuru’s   was   the   chief   executive   of   Kenya’s   power   utility,   the   Kenya   Power   &   Lighting   Company   [“KPLC”]   from   November   1984   until   February   2003.     He   accepted   bribes   from   foreign   businesses   that   contracted  with  KPLC  during  his  term  of  office  and  hid  them  in  Jersey.         3.   Windward   has   pleaded   guilty   to   four   separate   money   laundering   offences   (counts   2,   4,   5   and   6)   that   confirm   the   scale   of   the   criminal   activity:   A   total   of   £2,599,050   and   US$2,971,743   that   was   acquired   or   possessed  by  Windward  from  29th  July  1999  until  19th  October  2001.       4.   The   Prosecution   respectfully   invites   the   Royal   Court   to   first   consider   making  a  confiscation  order  in  this  case  before  moving  to  sentence:  see   Article   3(1)   of   the   Proceeds   of   Crime   (Jersey)   Law   1999.   The   prosecution   applies   to   the   Royal   Court   for   a   confiscation   order   of   £3,281,897.40   and   US$540,330.691  for   the   reasons   set   out   in   the   Attorney   General’s   confiscation   statement.     It   is   understood   that   the   defence  do  not  seek  to  challenge  the  confiscation  order  sought.                                                                                                                     1  As  valued  by  the  Viscount  on  23rd  February  2016.    
  2. 2.     2     5.   Ordinarily,  the  Crown  would  then  move  for  a  substantive  fine  to  reflect   the   seriousness   of   the   company’s   offending   but   the   proposed   confiscation  order,  if  made,  will  strip  the  defendant  of  all  its  assets.  If  the   company  is  left  with  no  assets,  then  no  further  penalty  will  be  sought.       6.   It  is  respectfully  submitted  that  it  is  of  paramount  importance  that  the   company’s   assets   are   confiscated   and   thereby   transferred   to   the   Criminal   Offences   Confiscation   Fund.   This   process   will   permit   the   repatriation  of  assets  to  Kenya,  the  victim  of  the  offending.         In  detail     7.   As   chief   executive   of   KPLC,   Gichuru   was   a   public   officer,   and   his   acceptance  of  bribes,  had  it  occurred  in  Jersey,  would  have  constituted   misconduct  in  a  public  office.    That  was  not  his  only  criminal  conduct.   Contractors  passed  on  the  cost  of  the  bribes  to  KPLC  by  inflating  their   charges   by   disguised   means.     Gichuru   and   the   contractors   defrauded   KPLC.     Windward   laundered   the   proceeds   of   fraud   and   fraudulent   conversion  as  well  as  misconduct  in  a  public  office.     8.   Windward  served  as  a  bank  account.    It  received  money,  and  dealt  with   it   according   to   instructions   given   to   it   by   Gichuru   and   his   agents.   Windward  formed  a  barrier  between  the  foreign  contractors  that  paid   the   bribes   and   the   personal   accounts   of   Gichuru   and   others   who   benefitted   from   the   corrupt   payments.     It   disguised   the   fact   that   the   money  paid  to  Gichuru  came  from  contractors  of  KPLC.    This  is  a  classic   money   laundering   technique   called   layering.     Windward   provided   a   layer  between  the  bribe  payers  and  the  recipients.       9.   Gichuru’s  control  of  Windward  Trading  Limited  during  the  period  of  the   indictment   –   29th   July   1999   until   19th   October   2001   -­‐‑   was   total.   The   company’s  appointed  directors  did  take  back  control  of  the  company  in  
  3. 3.     3   2002  to  the  extent  that  the  directors  filed  a  Suspicious  Activity  Report   with  the  States  of  Jersey  Police  when  it  became  apparent  that  Gichuru   was   unwilling   to   answer   their   questions   about   the   provenance   of   the   company   assets.     The   current   directors   assumed   office   in   2011,   some   nine   years   after   the   event   and   well   after   a   criminal   investigation   had   been   triggered   by   the   filing   of   the   SAR.   No   criminality   or   any   other   wrongdoing  is  alleged  against  the  current  directors  who  were  simply  not   involved  in  the  events  set  out  in  this  case  summary.       10.   The  guilty  pleas  to  the  charges  on  the  indictment  (counts  2,  4,  5  and  6)   reflects   the   illicit   payments   made   to   Windward   by   the   following   companies:   i.   Knight  Piesold  (Camargo)   ii.   Mott  McDonald     iii.   Wartsila   iv.   Kvaerner     v.   Motorola  Israel  (Coburg)   vi.   Union  Fenosa    (Ashdene)   vii.   Geothermal  Energy   viii.   W  Lucy   ix.   Capitan  Europe   x.   Gapco  Tanzania   xi.   Leopard  Systems       Knight  Piesold       11.   KP   was   a   civil   engineering   consultancy   firm.   The   firm   worked   extensively  in  Kenya  from  the  1970s,  including  on  very  large  projects  for   KPLC.   KP   used   its   Jersey   company,   Camargo,   to   make   payments   to   Windward.      
  4. 4.     4   12.   Payments   to   Camargo   from   Knight   Piesold   were   justified   by   vague   invoices,   the   terms   of   which   were   dictated   by   KP   when   Camargo   was   told  that  money  was  being  sent  to  it.    Camargo’s  payments  to  Windward,   with  one  exception,  were  not  justified  by  invoices  at  all.         13.   Two  of  the  KP  directors  have  provided  witness  statements  in  this  case.   Peter  Garratt  of  KP  is  frank  about  the  nature  of  these  payments:     “It   was   impossible   to   do   work   in   Kenya   without   paying   commissions   to   important  political  figures.    It  was  like  a  tax.    KP  paid  such  commissions  to   various  people.    Without  doing  so,  we  would  never  have  been  able  to  work   there.    One  person  we  paid  ……  was  Samuel  Gichuru”.     14.   Mr  Illes’  evidence  is  in  similar  terms.    Both  state  that  Gichuru  was  paid   when  KP  was  paid  by  KPLC,  and  that  the  cost  of  paying  Gichuru  to  make   him  KP’s  agent  was  passed  on  to  KPLC,  in  the  form  of  inflated  budget   estimates  and  then  invoices.       Mott  MacDonald     15.   KP   was   close   to   another   English   company   that   made   payments   to   Windward.:  Mott  MacDonald  “MM”     16.   MM  was  a  mechanical  and  electrical  engineering  consultancy  business,   providing  the  same  services  as  KP  within  its  field.    The  two  businesses   worked  together  on  many  projects  for  KPLC.         17.   MM  made  payments  to  Windward.  Mike  Durham  was  a  director  of  MM.     In  his  statement  he  is  frank  about  the  purpose  of  these  payments:     “I  knew  that  [MM]  had  arrangements  to  look  after  Gichuru.    Gichuru  was   not  an  agent  in  the  proper  sense  of  the  word.    He  was  our  client.    He  was  
  5. 5.     5   the  distributor  of  work,  although  I  don’t  know  what  KPLC’s  internal   processes  were,  and  he  was  good  to  us.    Gichuru  was  not  doing  anything   for  [MM]  apart  from  being  our  client.    The  only  purpose  of  these  payments   was  to  help  Gichuru  to  give  us  contracts,  and  to  help  us  have  a  good   relationship  with  him.”     18.   One  MM  filenote  graphically  refers  to  these  payments  being  made  to  the   “SG  Mafia”:     “….  All  arrangements  with  SG  are  handled  via  WLPU.    The  current  “levels”   are  8%  to  the  SG  mafia  and  5%  to  ANO  (who  happens  to  be  both  a  Minister   and  part  of  the  mafia)  –  the  other  mafia  members  are  not  aware  of  the   separate  5%  figure  apparently.”       19.   Mr  Durham  confirmed  that  the  cost  of  making  the  payments  to  Gichuru   was  passed  on  to  KPLC.    It  was  incorporated  in  the  price  that  MM  bid  for   a   project,   although   the   payments   were   not   identified   as   payments   to   Gichuru.    They  were  incorporated  by  inflation  of  the  hourly  rate  charged   by  MM.     20.   The   arrangement   for   passing   on   the   cost   of   bribes   to   KPLC   was   obviously   systematically   applied   by   Gichuru.     We   have   seen   it   already   with  KP  and  MM.    It  also  happened  with  John  Brown/Kvaerner  Energy,   as  will  be  seen  below.         21.   Payments   to   Windward   were   accounted   for   in   MM’s   books   as   agency   payments  for  Gichuru.  “Payment  requisition”  forms  requesting  transfers   to  Windward  in  the  early  1990s  allocate  the  payment  to  particular  KPLC   projects,  and  describe  the  payment  as  “agency  fees”.  By  the  late  1990s,   the   fees   were   justified   as   “computer   charges”.     Plainly   Windward   had   provided  no  such  services.  
  6. 6.     6     Wartsila     22.   Wartsila  is  a  Finnish  group  of  companies  with  companies  incorporated   in  many  countries.    Wartsila  won  a  tender  from  KPLC  in  the  late  1990s   to  construct  a  diesel  power  station  that  was  built  at  Kipevu,  a  site  near   Mombassa.   The   construction   contract   was   worth   £57   million.     MM   advised  on  the  tender  process.       23.   Wartsila  NSD  Nederland  BV  paid  Windward  £3  million  between  January   1998   and   October   2001.     It   did   so   pursuant   to   a   false   “consultancy   agreement”.   The   first   payment   of   £900,000   was   made   to   Windward   before  Wartsila  officially  knew  it  had  won  the  contract.       24.   The  consultancy  agreement  provided  that  Windward  was  to  be  paid  £3   million  in  stages,  with  payments  to  be  made  at  certain  milestones  along   the  way  to  completion  of  the  project.    In  return,  Windward  was  to  “act  as   the  agent  for  the  conclusion  and  performance  of  the  contracts  between   [Wartsila]   as   one   party   and   KPLC   (‘the   client”)   for   [Kipevu   II]”.   Windward   was   duly   paid   in   accordance   with   the   terms   of   this   agreement.       25.   This  consultancy  agreement  was  a  cover  designed  to  justify  Wartsila’s   corrupt  payments  to  Windward.    Windward  could  not  provide  any  of  the   services   outlined   in   the   agreement.     Gichuru,   as   chief   executive   of   Wartsila’s   client,   could   not   also   act   as   its   agent   with   respect   to   this   business.       John  Brown  Engineering/Kvaerner  Energy     26.   John  Brown  Engineering,  later  acquired  by  Kvaerner  Energy  Ltd.,  paid   Windward  £451,037.  The  first  payment,  of  £65,037,  was  made  in  1986,  
  7. 7.     7   when  John  Brown  installed  a  gas  turbine  for  KPLC  at  the  Kipevu  power   station  (see  statement  of  McPherson).     27.   That  turbine  broke  down  in  the  mid  1990s,  whereupon  John  Brown  first   installed   a   replacement   turbine   for   KPLC,   then   refurbished   and   re-­‐‑ installed   the   damaged   turbine.     John   Brown/Kvaerner   Energy   paid   Windward  £386,000  in  return  for  this  business.     28.   Witness  evidence  comes  from  Iain  McPherson,  John  Glover,  senior  sales   manager   at   John   Brown/Kvaerner,   and   John   Gillespie.     Mr   McPherson   explains  how  the  payments  began  with  a  request  from  Mr  Gichuru  for   John   Brown   to   increase   its   contract   price.     Gichuru   then   asked   Mr   McPherson   for   a   consultancy.     Mr   Glover   describes   the   payments   to   Windward  as  bribes  for  Gichuru.    He  adds  that  Gichuru  had  asked  for  the   payments.    Gichuru,  he  says,  was  not  interested  in  the  progress  of  the   project.     He   was   only   interested   in   his   money.     Gichuru   instigated   the   bribes,  and  the  passing  on  of  those  costs  to  KPLC,  so  defrauding  it.     29.   In   May   2000   John   Gillespie   of   Kvaerner   Energy   wrote   to   colleagues   about  these  payments  that  “the  award  of  the  contract  involved  a  written   agreement   with   the   Managing   Director   (S   Gichuru)   of   Kenya   Power   &   Lighting   to   pay   a   commission   sum   of   £380K   to   his   off-­‐‑shore   company   –   Winward  Trading…”.       Motorola  Israel/Coburg  Investments     30.   Coburg   Investments   was   owned   by   Gichuru.   It   paid   $779,000   to   Windward.     Documents   obtained   from   Coburg   reveal   that   these   payments   came   from   Motorola   Communications   Israel.   The   payments   were   justified   by   “Finder   Agreements”   pursuant   to   which   Coburg   Investments   were   purportedly   paid   for   finding   contracts   for   Motorola   with  KPLC.    The  agreements  provided  for  Coburg  Investments  to  be  paid  
  8. 8.     8   17%  of  the  fees  paid  to  Motorola  Communications  Israel  by  KPLC.    The   specific   nature   of   the   contracts   to   be   found   should   be   noted.     Plainly,   these  contracts  had  already  been  “found”,  if  not  agreed.    Gichuru  could   not  legitimately  help  Motorola  Communications  Israel  to  find  contracts   with  KPLC.     31.   Coburg   Investments   was   a   BVI   company   administered   from   Jersey.     It   provided   Gichuru   with   anonymity,   as   its   administrators   advised   a   previous   owner.   Gichuru   was   plainly   interested   in   anonymity.     The   administrators   of   Coburg   Investment   noted   that   Gichuru   was   to   be   referred  to  only  as  SG,  and  didn’t  want  anything  in  writing.     Union  Fenosa/Ashdene     32.   Ashdene,   a   company   administered   in   Luxembourg,     sent   $554,000   to   Windward.  Ashdene  obtained  its  money  from  Union  Fenosa,  a  Spanish   construction  company,  that  did  work  for  KPLC.     Geothermal  Energy   W  Lucy   Capitan  Europe   Gapco  Tanzania   Leopard  Systems     33.   These   companies   all   made   payments   to   Windward   and   all   secured   contracts  with  KPLC.         Howard  Sharp  QC   Central  Chambers     23rd  February  2016    
  9. 9.     9                

Windward Trading Sentencing Conclusions

Views

Total views

109

On Slideshare

0

From embeds

0

Number of embeds

0

Actions

Downloads

0

Shares

0

Comments

0

Likes

0

×