Innospec in Indonesia: a can of worms best kept shut

The wrongdoings of a corrupt tax office employee (and now his wife) may be making all the headlines in Indonesia, but far from these shores there is another corruption case involving Indonesia which - I have been informed – has far, far wider repercussions - if the case were ever to be investigated in Indonesia (which is highly unlikely).

In some ways I have some sympathy for Innospec. Because it is – so I have been told – impossible to conduct business in Indonesia unless the inner cogs of the vast machinery are kept well and truly greased.

Different companies go about this in different ways. I once met a guy who told me he would spend afternoons on the golf course and make utterly preposterous golfing bets with his “golfing partner” during the course of the game – bets he knew he was obviously going to lose. By the end of the round he was hundreds of thousands of dollars down.

Can I sink this put from 83 meters? Yeah sure I can. Wanna bet on it?

So what did Innospec do that was so wrong?

Well it wasn’t so much the illicit US$8.5 million of payments per-se but the inexcusable action of selling a dangerous anti-knock fuel additive called Tetraethyl.

Innospec is thought to have benefited to the tune of 770 million US dollars (£505 million) as a result of the bribes that were paid out between February 2002 and December 2006.

The payments were in relation to the supply of the firm's anti-knock fuel additive Tetraethyl Lead (Tel), a major source of income for the company before health and environmental concerns led to its withdrawal in the US and Europe by 2000.

Source: The Independent

But despite being found guilty the Southwark Crown Court only fined the company £8.3 million!!

Sentencing judge Lord Justice Thomas said the fine was "wholly inadequate" but he did not want to make the company insolvent, affecting its innocent employees. Any higher would threaten the firm's almost 400 jobs at Ellesmere Port on Merseyside, it was claimed.

But what’s really really interesting – and not something that the British press has revealed - is to whom the bribes were paid.

Well, who do you think?

Well I found the answer at the website of the UK’s Senior Fraud Office site:

… bribes were paid by the agents to staff at the state-owned petroleum refinery, Pertamina, and other public officials who were in a position to favour the company by purchasing orders of TEL.

... the company (Innospec) accepts that it knew that a proportion of the commission funds would be used to bribe both Pertamina officials and other public officials at higher regulatory or ministerial levels, with influence over the purchase of TEL.

Holy smokes! If this ain’t a smoking gun I don’t know what is!!