The Court of Appeal of England and Wales (the Court) has upheld the convictions of two former directors of Innospec Limited1 (Innospec), Miltiades Papachristos and Dennis Kerrison (the Applicants),2 for conspiracy to corrupt.3 The Court upheld the convictions despite finding the following faults with the trial:
- The trial judge wrongly permitted the prosecution to add a second, “narrower”, count of conspiracy to corrupt to the existing count. The addition was unnecessary as the original, “wider”, count already permitted conviction on the basis of the “narrower” conspiracy.
- The trial judge wrongly directed the jury that it could not convict Mr Papachristos of the “narrower” conspiracy unless they had convicted him of the original, “wider” conspiracy.
- The jury failed to follow the judge’s directions in acquitting Mr Papachristos of the “wider” conspiracy but convicting him of the “narrower” conspiracy.
The Court was satisfied that these issues did not result in unfairness towards the Applicants or render the convictions unsafe. The Court stated that ‘the jury was right and the judge was wrong’, thus appearing to satisfy itself that two (or more) wrongs did make a right. This re-emphasises that the Court will uphold convictions if it believes that the jury reached the correct decision, even if there are significant mistakes in the process by which that decision is made.
Background to the Appeals
On 18 March 2010, Innospec was fined US$12.7 million after pleading guilty in an English Crown Court to corruption of public officials in Indonesia regarding the sale of Tetraethyl lead (TEL), a fuel additive. Separately, Innospec pleaded guilty to charges in the United States of bribing Iraqi officials.
The SFO subsequently brought prosecutions against four Innospec executives. Two of them, David Turner and Paul Jennings, pleaded guilty to charges of corruption. Mr Kerrison and Mr Papachristos pleaded not-guilty. Dr Turner appeared as a prosecution witness at trial and his cooperation led to him being the only Innospec executive to avoid prison.
Trial of Directors
The original count on which the Applicants were indicted alleged that they had conspired to give corrupt payments to public officials to secure or reward the award of contracts ‘for the supply of its products including [TEL] to the said Government of Indonesia by Innospec Ltd’.
After all the evidence had been heard, but before closing speeches were made, Mr Kerrison’s counsel persuaded the judge that the wording of the count required the prosecution to establish that the defendants were involved in a conspiracy involving TEL and other products. The trial judge then permitted the prosecution to add another count, alleging a “narrower” conspiracy involving only TEL.
The case against Mr Kerrison had focused on his involvement with TEL. Although the case against Mr Papachristos also depended on his knowledge of corruption regarding TEL, his involvement was principally with sales of PLUTOcen (a lead-free alternative to TEL). The trial judge directed the jury that Mr Papachristos should only be convicted of the “narrower” conspiracy if the jury also convicted him of the “wider” conspiracy.
The jury acquitted Mr Kerrison of the “wider” conspiracy and convicted him of the “narrower” conspiracy. The jury acquitted Mr Papachristos of the “wider” conspiracy but, ignoring the judge’s direction, convicted him of the “narrower” conspiracy. Mr Kerrison was sentenced to four years’ imprisonment and Mr Papachristos to 18 months’ imprisonment. Both men subsequently applied for leave to appeal against their convictions.
The Court of Appeal’s decision
The Court held that the procedural errors had made no difference to the outcome of the cases and therefore no injustice had been caused to either applicant:
- The trial judge was wrong to permit the prosecution to add a count alleging a “narrow“ conspiracy, as the offence specified in the “narrower” conspiracy was already contained in the “wider” one. The addition was an ‘unnecessary distraction’. However, the additional count caused no unfairness to either applicant because the facts adduced in evidence of the “wider" conspiracy were the same for the “narrower” conspiracy.
- The trial judge was wrong to direct the jury that they could not convict Mr Papachristos of the “narrower” conspiracy if they had acquitted him of the “wider” conspiracy; the “wider” conspiracy, if interpreted correctly, permitted a conviction for this “narrower” conspiracy. The jury were therefore right to ignore the judge’s incorrect direction.
The Court reduced Mr Kerrison’s sentence from five to four years, as the trial judge had chosen the wrong starting point when sentencing him.
The Innospec matter has been dogged with controversy throughout its history. The trial judge in the prosecution of Innospec, Thomas LJ, was heavily critical of the settlement reached between Innospec and the SFO. He said the SFO did not have authority to agree such a settlement and that no such agreement should be made again.4Thomas LJ said that the terms of the settlement were ‘wholly inadequate’5 and that he had wanted to impose a far higher fine.6 His comments provided impetus for the subsequent introduction of Deferred Prosecution Agreements in England and Wales, which give a legislative base for such settlements. See our briefing The SFO response to consultation on DPAs: Key features for more information on Deferred Prosecution Agreements for more information on Deferred Prosecution Agreements.
Thomas LJ’s comments about the inadequacy of the level of fine provided support to the move towards more substantial punishments for organisations guilty of illegal conduct, which culminated in the introduction of new guidelines on the sentencing of corporates found guilty of offences of fraud, bribery and money laundering. These guidelines were published by the Sentencing Council for England and Wales in January 2014 and are coming into force on 1 October 2014. For more information on the guidelines, see our briefing Sentencing of corporate offenders for fraud, bribery and money laundering.