Who’s next?

In the past few days, it has emerged that Oxford University Press has paid £1.9 Million  to the Serious Fraud Office after admitting that two of their overseas subsidiary companies had obtained sales in Kenya and Tanzania by paying bribes.  They have also offered to donate £2 Million to charities in Africa and pay a $1/2 Million dollar fine to the World Bank.  Like Macmillan, the issue emerged as a result of action taken by the World Bank, to fight bribery in some of the more corrupt markets in which they operate; in addition to the fines imposed, OUP will not be able to pitch for World Bank funded business for a three year period.  OUP has also said that it will take disciplinary action against the individuals concerned.

From a publishing perspective, this is starting to pose interesting questions about whether any UK companies will continue to provide text books for African schools.  Following Macmillan’s run-in with the World Bank, it is widely understood that they have significantly scaled back their operations in Central Africa, and other major players in the market are known to have closed down their operations in some of the riskier countries in the region.  Bribery is wrong, but the companies concerned are, in spite of their corrupt activities, suppliers of high-quality materials to the school books market in Africa and the operators that move in to fill the vacuum created are, by and large, less likely to provide books of a similar quality although there are some honourable exceptions to this rule, some of whom have already taken pre-emptive steps to prevent corrupt activities by their employees.

But I digress.  Once again, the SFO has demonstrated its preference for negotiated settlements over prosecutions of offending companies, using a carrot and stick approach.  This is inevitable, given their limited resources.  However, one should not underestimate the nuisance value, even with a negotiated settlement like this.  OUP will no doubt have incurred significant costs in retaining legal and forensic advisors to conduct an internal investigation, and I suspect that they will be paying for the services of a highly-qualified and expensive individual to monitor their behaviour over the next few years, as a condition of the agreement.

However, the question that is lodged firmly in my mind is still the one posed by my headline:  “Who’s next”?  One of the lessons that I have learned after many years in business is that, when Government investigators of any hue discover issues within a  particular industry, they tend to investigate other companies in the sector, on the basis that they are likely to be doing the same thing.  When I first worked in Publishing, as a callow youth, the Inland Revenue (as it was then) had just discovered that a particular company was allowing its sales reps to sell their sample books to bookshops, when they were finished with them, and pocket the proceeds.  It goes without saying that no tax or NI was paid on this money, and the amounts concerned were significant.  Within 18 months, every major publisher had received a PAYE inspection, and the first question they were asked was “Do your reps sell their samples to bookshops”?  It was a nice little earner for the Inland Revenue.

I suspect that we will now see a similar pattern in connection with bribery amongst publishers who operate in some high risk markets, particularly in Central Africa.  There are several big name UK companies operating in the area and – as I have already mentioned – some strategic withdrawals have recently taken place.  My guess is that further investigations are going on, not necessarily in cahoots with the World Bank, and that more settlements will follow.

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