The Oslo trial involving corruption at large fertilizer company Yara International was entering its second week on Monday with former executives pointing fingers at each other, and their lawyers revealing high-level conflicts among them. The trial has already begun to offer insight into how business is conducted in countries where corruption is common, and will leave the court to decide what actually constitutes a bribe.
Observers say the trial, set to last another 11 weeks, is already putting Norway’s business image to the test. The country is generally viewed as having high ethical standards with a government that professes “zero tolerance” for corruption. In recent years, however, several of Norway’s biggest companies including Yara, Statoil, Telenor and Kongsberg Gruppen have been under investigation for corruption or charged with it. The state owns large chunks of stock in all of them.
“Norway is among the countries that wave the flag highest for their anti-corruption work,” Professor Kalle Moene of the University of Oslo told newspaper Dagsavisen this week. “Yara’s admission that it was involved in corruption is therefore catching a lot of attention out there in the world.”
Newspaper Dagens Næringsliv (DN) reported, for example, how an agent for the US’ Federal Bureau of Investigation (FBI) was following the trial that began right after New Year from a seat in the Oslo courtroom last week, getting simultaneous translation as opening arguments were delivered. One of the four former Yara executives indicted by Norwegian prosecutors is an American, Ken Wallace, who apologized in advance on Monday for using foul language in a phone conversation tapped by the authorities that’s likely to be played in court. No charges have been filed against Wallace in the US, according to FBI agent Leslie A Nelson, but he may end up facing them as well.
Moene believes that Yara’s own acceptance that it was paying what prosecutors claim were bribes in Libya and India may mean that other Norwegian companies will now be met with increasing skepticism. “When it becomes known that one of the biggest companies in Norway has been willing to break the rules, questions of course arise about other big companies,” Moene said.
Executives blame each other
All four of the men now on trial, including Wallace, have pleaded not guilty and have hired some of the country’s most high-profile attorneys to defend themselves. The company itself is not on trial, since Yara’s board and executives last year agreed to pay the highest corporate fine ever handed down in Norway. Now those whom state prosecutors view as responsible for the bribery payments face lengthy prison terms.
The former Yara executives, including retired CEO Thorleif Enger, contend that the payments made to people they viewed as “consultants” for Yara were not bribes. Rather, argue Enger and his attorney, it was “completely normal” to use consultants in new markets Yara was keen on breaking into. Enger, a former chairman of Telenor who has ranked as one of Norway’s most well-regarded business executives, claims the payments were made openly and were not illegal. One “consulting agreement” offered to a contact in India, however, was valued at NOK 21 million (around USD 3 million at the time) and so large that prosecutors believe it amounted to a bribe. Now they need to provide evidence of that.
Enger’s defense attorney, Ellen Holager Andenæs, has said that Yara’s management stabbed Enger and his fellow defendants in the back by accepting the state’s fine and admitting to bribery. The defense attorney for Tor Holba, a former Yara executive who claims he tried to blow the whistle on the “consultants'” payments, noted that Yara accepted the fine “very quickly” but it shouldn’t have any effect on the defendants. A key portion of Enger’s defense is expected to rest on his reputation, and that the charges against him don’t jibe with his track record as a well-regarded leader who was known for achieving good results.
‘Ice-cold’ executive relations
Prosecutors believe Holba entered into the contested agreements in Libya and India on behalf of Yara, though, and that French co-defendant Daniel Clauw proposed that money paid in Libya should go through a business partner. On Thursday, it emerged that Holba and Clauw had an “ice-cold” relationship: Holba’s attorney Nadia C Hall claimed her client didn’t think Clauw respected the management line in Yara and had “long fingers into everyone in management.” There allegedly were two factions within Yara’s management: One that held power where Clauw was involved and one which involved Holba, with Holba kept out of Clauw’s sphere.
Holba, who has nurtured his perceived role as a whistle blower in the corruption case, also blames Wallace, Yara’s former judicial director, for his own indictment. Holba stresses that he went to Enger in the summer of 2008 when the company received a questionable claim for payment, and that they refused to pay it. Holba has claimed Wallace knew the background for the payment demand, while prosecutors assert that payments were made earlier with the knowledge of both Holba and Enger. Prosecutors will be examining all suspicious payments throughout the course of the trial, and challenging the four executives’ varying accounts of them.
The finger-pointing that’s already emerged sets the legal stage for a courtroom showdown between the two Norwegian defendants (Enger and Holba) and the two non-Norwegians Wallace and Clauw. Their widely divergent accounts of what went on in Yara leave them and their defense attorneys with the task of convincing the Norwegian court that their own are correct. Professor Einar Lie at the University of Oslo wrote in newspaper Aftenposten over the weekend that for the defendants, it’s become “a question of honour.”