Taking or giving a bribe might seem like a quick way to get rich, but the chances are you’ll be caught. The court will grab your assets and any gain will turn to pain
“This case is concerned with an allegation of bribes or secret commissions. Bribery is an evil practice, which threatens the foundations of any civilised society. It corrupts not only the recipient but the giver of the bribe.” So begins the judgment in the case of Daraydon Holdings Ltd & Others vs Solland, Khalid & Others.
The facts seem to be that Mr Kahlid extracted about £1.8m from Mr & Mrs Solland and their companies in the form of a 10% kickback for work on building contracts in London, in particular Lombard House in Curzon Street, Mayfair.
Lombard House was bought by Sheikh Mohammed, the deputy prime minister of Qatar, and was originally a NatWest Bank. He decided it would become his family home in London.
The sheikh’s key representative in the UK was Faris Khalid a one-time restaurant owner in Brighton. Khalid’s job was to place the sheikh’s contracts. Ms Solland is an interior designer and project manager. She and her husband own and run Solland Interiors and Solland International. They carried out a whopping £20m worth of work for the sheikh.
Solland Interiors was be the design-and-build contractor for the work on Lombard House. But, the job fell seriously behind. Solland fell out with Morgan Sindall, the key contractor. Then the sheikh got irritated with the Sollands and stopped payments. Solland began an adjudication and succeeded. The adjudicator awarded £700,000. But on enforcement the sheikh’s lawyers began digging around.
The sheikh’s man, Khalid, had secretly arranged that for every contract placed with Solland Interiors, he would receive a 10% commission. That’s how he skimmed £1.8m. His boss began civil proceedings for the recovery of the money.
The sheikh pursued the Sollands, their companies and Khalid for restitution of the secret commissions, a declaration that those millions were held in trust, a tracing order and damages for deceit as well as conspiracy to defraud.
But it wasn’t us who came up with the idea, said the Sollands, it was Khalid who insisted we allow for his 10%. No, no, said Khalid, it was the Sollands who offered me 10% if I placed the business with them.
Meanwhile the Sollands received millions from the sheikh and hived off 10% into an offshore bank account under the name Solland International. This was for Mr Khalid.
Khalid had secretly arranged for every contract placed with Solland Interiors to include a 10% commission for him. He skimmed £1.8m
Notice this time I am not talking about criminal proceedings. The sheikh wasn’t focusing on that. He just wanted his £1.8m back.
A kickback is characterised in law as a fraud on one party – a principal – to the transaction. If an employee, or agent or adviser to that principal coaxes a supplier or contractor to arrange a bribe, or a bung, then duty and interest, how shall we say, conflict.
The principal is “deprived of the disinterested advice” of the agent, to which the principal is entitled.
Any, yes any, surreptitious dealing between one principal to a transaction and the agent or employee of the other is a fraud on the other principal. And, when the cat is let out of the bag – as so often happens – the court will grab every asset, freeze every bank account and snaffle nest eggs.
The trial of the Solland folk and Khalid lasted 16 days. On day 15, the Sollands did a deal with the sheikh. Khalid, however, had skipped the country. His bank accounts were found in Jersey and the Isle of Man. A freezing order was imposed. About £1m was recovered from the accounts. The Sollands’ legal bill was now very high. Disastrous.
Khalid was fraudulently misappropriating 10% of the monies paid by his employers. The Sollands knew he was defrauding and by keeping it a secret were helping him carry out the fraud. There was a conspiracy falsely to represent the true price of the construction work. Nor did it matter one jot that Khalid had “told” the Sollands to build in his commission. The Sollands were then as guilty as Khalid and jointly liable for his ill-gotten gains even if nothing was recovered from this fellow.
Backhander? No thanks.
Tony Bingham is a barrister and arbitrator