Bribes were paid by Innospec executives to secure orders to sell tetraethyl lead in Indonesia and Iraq, sentencing hearing told

This article is more than 6 years old

This article is more than 6 years old

Four businessmen channelled multi-million-pound bribes to foreign officials to induce them to buy huge quantities of a toxic chemical outlawed in the west, a court heard on Friday.

A sentencing hearing of the men was told the bribes were used to sell a fuel additive which was known to damage children's brains, reducing their IQs and increasing mental illness.

Andrew Mitchell, QC for the Serious Fraud Office (SFO), told the court that the executives had "deliberately" organised the bribes to prolong the sales of the leaded petrol, which was used in cars and aircraft.

The chemical, known as tetra ethyl lead (TEL), is slowly being banned around the world. Health fears caused the US to prohibit its sale for cars in the 1970s, followed by European countries in the 1990s.

Dennis Kerrison, the chief executive of the chemical multinational Innospec between 1996 and 2005, and Miltos Papachristos, 51, the firm's former senior sales director for Asia-Pacific, were found guilty last month of conspiring to bribe Indonesian officials.

Paul Jennings, Kerrison's successor until 2009, and the firm's former sales and marketing director, David Turner, earlier pleaded guilty to conspiring to bribe officials in Indonesia and Iraq.

Mitchell told Southwark crown court in London that the corruption delayed plans by the Indonesian authorities to phase out the sales of the chemical.

The conspiracy, which included bribes to sabotage trials of a safer alternative, was exposed by the SFO and other anti corruption agencies during a seven-year international investigation.

By 2000, the toxic chemical was being sold in only a handful of countries – Iraq, Iran, South Africa, Venezuela and Indonesia. Innospec was one of the last manufacturers, producing thousands of tonnes of the chemical from its factory in Ellesmere Port, Cheshire.

However, the Innospec executives were worried that the Indonesian government was planning to start phasing out the toxic chemical from 1999.

They paid bribes – of up to $17m – to influential Indonesian officials, the court was told, to ensure "further orders would be placed and the use of TEL prolonged."

Secret company documents revealed how the prime objective was to "maximise the income stream from the prolonged use of TEL in Indonesia" and to aggressively challenge alternative, non-hazardous products.

In 2006, Turner boasted in an email that "Indonesia was planning to go lead free in 2000 … this obviously did not happen for a number of reasons and since 1 January 2000 until the present we have supplied 28,390 tons of TEL … generating $277m in revenue."

Some of the sweeteners were paid to impede Indonesian politicians from bringing in laws to ban the chemical which made engines run more smoothly and reduce noise.

In mitigation, Duncan Penny, barrister for Turner, said he was full of remorse and had been a key witness for the prosecution.

Four years ago, Kerrison – described by prosecutors as a "hands-on" executive – had told the Guardian he was being made a "fall guy" by his old company.Jennings and Turner had also pleaded guilty to conspiring to pay kickbacks of $5m dollars to Iraqi officials between 2003 and 2008. They also admitted making illicit payments to Iraqi officials to induce them to fail experiments of an alternative, safer product produced by a competitor.

At the end of the trial in June, David Green, the director of the Serious Fraud Office, said the convictions‬"finally bring to an end a long-running investigation into corruption at‬Innospec."‬‬

He added that the investigation, in collaboration with prosecutors in the‬US and Indonesia, helped to stop the damaging consequences of bribery across the globe.

Four years ago, in a ground-breaking prosecution by the SFO and the US‬government, the firm admitted the bribery in what it said was‬ a‪"deeply regrettable chapter of our history" and paid corporate fines of $40m.‬

The convictions are a rare success for the SFO, which has struggled to catch British executives who pay bribes to politicians and officials around the world to land contracts.

Papachristos, from Thessaloniki, Greece was found guilty after an unsuccessful attempt to have the prosecution thrown out.

The hearing is due to conclude on Monday.