Four men who served for many years as top management at Norway’s state-controlled fertilizer company Yara were back in an Oslo courtroom on Tuesday. They’re all trying to reverse their corruption convictions, while the company itself fends off new legal challenges elsewhere and deals with the release of a secret report showing how some Yara customers were given luxurious treatment.
The courtroom drama in Oslo will be playing out all autumn long, as Yara’s longtime former chief executive Thorleif Enger and three members of his top management team Tor Holba, Daniel Clauw and Ken Wallace appeal their corruption convictions handed down last year. The case against them and the company itself, which admitted to corruption and agreed to pay a record-high fine in 2014, ranks as Norway’s largest corruption case ever. All four men, sentenced to jail terms of at least two years, continue to deny that they engaged in or condoned bribery in order to win business for Yara in Libya or India or both.
Newspaper Dagens Næringsliv (DN) reported on Tuesday that one of the men, Daniel Clauw, is now also contesting not only his conviction but his indictment as well. His Norwegian defense attorney Fredrik Berg claims that since Clauw, a French citizen, has never lived in Norway, Norwegian authorities have no authority to indict a foreign citizen unless they can prove the alleged crimes took place in Norway or had effect in Norway. A new law that took effect last year also limits prosecution of foreign citizens, Berg argues, but DN reported that a legal attempt earlier this summer to assert its effect did not prevail and the issue will now be considered as an ordinary part of the case now proceeding. State Prosecutor Marianne Djupesland, meanwhile, continues to claim there were and are sufficient grounds for bringing charges against Clauw in Norway.
Clauw, as reported earlier, was acquitted of corruption charges in Libya but prosecutors have appealed his acquittal. That will also be part of the appeals trial as it proceeds in the months ahead.
Yara fends off another legal claim
As Yara’s former executives’ case resumed in the Oslo appeals court, Yara itself was also facing legal action of its own in an arbitration court in Stockholm. It involves claims from a Russian company, Phosagros, that Yara obtained its raw materials used in production of fertilizer too cheaply, since Yara admitted in 2014 that it had bribed two sales directors for Phosagros to ensure long-term supplies. Yara allegedly paid around USD 4 million to bank accounts controlled by the two Phosagros sales directors. Phosagros contends that the proceeds it received were under market price at the time.
Testifying on behalf of Phosagros at the Arbitration Institute of the Stockholm Chamber of Commere is Sven Ombudstvedt, the chief executive of forest products firm Norske Skog who now serves as chairman of Phosagros but who formerly was a top Yara executive himself. He quit when Enger retired and another man was named to succeed Enger. Ombudstvedt, who was once responsible for long-term supply contracts at Yara, claimed he had “no feelings” about the fact that he’s now essentially suing his former employer.
Secret report from internal investigation revealed
Newspaper DN, which arguably set off the entire corruption investigation at Yara when it started asking questions in 2011 about Yara’s Libyan business deals struck a few years earlier, also revealed the contents this week of a secret report that was part of Yara’s own internal investigation into corruption at the company. It shows how Yara’s trading company in Switzerland, Balderton, gave luxurious gifts and even cash to business connections, in addition to paying for travel and hotels. Hermes bags and exclusive cigars were among items paid for by Balderton, both before and after Yara acquired the Geneva-based firm.
The report, compiled by Oslo law firm Wiersholm, identified as many as 15 business connections who benefited from Yara’s largesse. Money was sent to companies registered in tax havens like the British Virgin Islands, the Bahamas and Panama, and sometimes handed over in cash at airports, while other business connections were treated to Swiss watches and hotel stays in the French Alps. The holiday bill was nearly NOK 150,000, charged to Balderton’s credit card.
Yara’s culture questioned
The contents of the report played a major role in Yara’s decision to admit to corruption charges and pay the fine of NOK 295 million in 2014. It paints a picture of a highly questionable culture at Yara at the time that was at odds with what’s expected of Norwegian companies, especially those that are state-owned. The Norwegian state still holds a major stake, 36 percent, in Yara, which is also why its corruption admission and executives’ convictions have generated headlines for several years.
Yara’s current management continues to try to put its corruption history behind it, even amidst the ongoing court cases. “Yara today has well-developed routines and systems to make sure that the company operates under high ethical standards,” spokesman Esben Tuman told DN this week. “We don’t tolerate corruption, and the company has worked on its culture, attitudes and systems to prevent corruption from occurring again.” He added that it was “unfortunate” the contents of its own investigators’ report had “gone astray” and could be revealed by DN.
Yara’s former bosses’ appeals trial is due to run until December. As expected, all four men pleaded not guilty to the charges against them, and their defense lawyers promised to present new evidence they believe should clear them.