U.K. SFO: Medical Goods Supplier Faces Imprisonment for Illegal Payments to Iraqi Government
On April 13, 2011 the U.K. Serious Fraud Office (“SFO”) issued a press release announcing that a medical goods supplier, Mark Rodney Jessop, had been sentenced to 24 weeks’ imprisonment for making illegal payments to the Iraqi government between 1996 and 2003. The illegal payments were made in connection with the United Nation’s Oil For Food Programme (the “Programme”). The Programme permitted Iraq to export its oil in order to pay for the importation of humanitarian goods. The oil revenue was not made directly available to the Iraqi government, but rather, managed through a UN escrow account that was used to pay for the humanitarian goods. The Iraqi government would negotiate and award the contracts to the supplier of goods, the supplier would apply to the U.K. government (in the case of a British supplier) for an export license, and the UN would review and approve the contract.
Jessop principally sold medical goods to the Iraqi market through his companies, JJ Bureau Ltd and Opthalmedex Ltd, but also acted as an agent for other suppliers. Between 1996 and 2003, Jessop entered into 54 contracts with the Iraqi government that in total were valued at $12.3 million. In August 2000, the Iraqi government commenced a policy that required contract prices to increase to allow for a 10% kickback to the government. Suppliers complying with this policy presented invoices to be paid out of the UN escrow account that described the kickbacks as “after sales service fees.” The suppliers then paid the kickbacks to the Iraqi government.
Jessop admitted to accepting contracts and supplying medical goods pursuant to this illegal scheme. He used an intermediary, Dr. Janan Matloob, who had contacts with the Iraqi government. The kickbacks were paid to Dr. Matloob and then transferred to Jessop’s account for forwarding to the Iraqi government. Jessop admitted that nearly € 104,649 was illegally transferred to the Iraqi government and that a further € 235,237 was outstanding.
In October 2005, the UN published a report investigating the kickbacks and other Programme manipulations. The UN referred the investigation to the SFO, which commenced an investigation in 2007. Following investigations, in November 2009, Jessop was charged with violating UN sanctions that prohibited payments to Iraq or persons in Iraq without a proper license. Jessop admitted to ten counts of engaging in illegal kickbacks to the Iraqi government and in addition to the 24 week jail sentence, was ordered to pay € 150,000 to the Development Fund for Iraq and pay prosecution costs of € 25,000.