Welsh Government in ‘green energy’ partnership with corporation convicted of bribery

Martin Shipton

The Welsh Government has entered a “green energy” partnership with a multinational corporation that has been convicted of bribery and other violations of US law, we can reveal.

Economy Minister Vaughan Gething and Climate Change Minister Julie James have been involved in meetings with the Marubeni Corporation of Japan as part of a project to develop hydrogen as a “clean” energy source.

Last year Bridgend County Borough Council signed a memorandum of understanding with Marubeni which set out how they intended to work together to explore and develop a hydrogen energy initiative.

The agreement was signed after the council was selected by Marubeni following discussions with the Welsh Government as the preferred UK location for a plant “capable of generating and balancing the supply and storage of low-cost hydrogen energy”.

Under the proposals, the project could generate clean fuel for fleet vehicles ranging from council gritters to recycling and refuse collection lorries.

However, Marubeni has a chequered history, with a total of 86 separate convictions involving the corporation and its subsidiary companies in the United States since 2000 with fines totalling nearly $160m.

The two most serious offences relate to two bribery convictions under the US Foreign Corrupt Practices Act, with one resulting in a fine of £88m and the other a fine of $54.6m.

Nigeria

In what was chronologically the first case, in 2012, Marubeni was hired by the four-company TSKJ joint venture to help win contracts to build liquefied natural gas facilities on Bonny Island in Nigeria. Between 1995 and 2004, the joint venture won four contracts worth more than $6bn.

TSKJ paid $132m to a Gibraltar corporation controlled by London lawyer Jeffrey Tesler and $51m to Marubeni. The money was intended to be used to bribe Nigerian government officials to secure the contracts.

Marubeni was fined $54.6m.

The second corruption conviction involved paying bribes to Indonesian officials in order to secure the contract to build a major power plant in Indonesia.

At the time of this conviction in 2014 the US Department of Justice issued a statement which said: “Marubeni Corporation, a Japanese trading company involved in the handling of products and provision of services in a broad range of sectors around the world, including power generation, entered a plea of guilty today for its participation in a scheme to pay bribes to high-ranking government officials in Indonesia to secure a lucrative power project.

“Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division, Acting U.S. Attorney Michael J. Gustafson of the District of Connecticut and Assistant Director in Charge Valerie Parlave of the FBI’s Washington Field Office made the announcement.

“Marubeni pleaded guilty to engaging in a seven-year scheme to pay – and conceal – bribes to a high-ranking member of Parliament and other foreign officials in Indonesia,” said Acting Assistant Attorney General Raman.

“The company refused to play by the rules, then refused to cooperate with the government’s investigation. Now Marubeni faces the consequences for its crooked business practices in Indonesia.”

Acting US Attorney Michael J. Gustafson said: “For several years, the Marubeni Corporation worked in concert with a Connecticut company, among others, to bribe Indonesian officials in order to secure a contract to provide power-related services in Indonesia. Today’s guilty plea by Marubeni Corporation is an important reminder to the business community of the significant consequences of participating in schemes to bribe government officials, whether at home or abroad.”

Guilty 

Marubeni entered a plea of guilty to an eight-count criminal information filed in the US District Court for the District of Connecticut, charging Marubeni with one count of conspiracy to violate the anti-bribery provisions of the Foreign Corrupt Practices Act (FCPA) and seven counts of violating the FCPA. Marubeni admitted its criminal conduct and agreed to pay a criminal fine of $88m.

As part of the plea agreement, Marubeni agreed to maintain and implement an enhanced global anti-corruption compliance programme and to cooperate with the department’s ongoing investigation. The plea agreement cited Marubeni’s decision not to cooperate with the department’s investigation when given the opportunity to do so, its lack of an effective compliance and ethics program at the time of the offence, its failure to properly remediate and the lack of its voluntary disclosure of the conduct as some of the factors considered by the department in reaching an appropriate resolution.

According to court filings, Marubeni and its employees, together with others, paid bribes to officials in Indonesia – including a high-ranking member of the Indonesian Parliament and high-ranking members of Perusahaan Listrik Negara (PLN), the state-owned and state-controlled electricity company in Indonesia – in exchange for assistance in securing a $118m contract, known as the Tarahan project, for Marubeni and its consortium partner to provide power-related services for the citizens of Indonesia.

To conceal the bribes, Marubeni and its consortium partner retained two consultants purportedly to provide legitimate consulting services on behalf of the power company and its subsidiaries in connection with the Tarahan project. The primary purpose for hiring the consultants, however, was to use the consultants to pay bribes to Indonesian officials.

Marubeni and its co-conspirators were successful in securing the Tarahan project and subsequently made payments to the consultants for the purpose of bribing the Indonesian officials.

Marubeni and its co-conspirators paid hundreds of thousands of dollars into the first consultant’s bank account in Maryland to be used to bribe the member of Parliament. The consultant then allegedly transferred the bribe money to a bank account in Indonesia for the benefit of the official.

The case was investigated by FBI agents from Washington DC with assistance from the Corruption Eradication Commission in Indonesia, the Office of the Attorney General in Switzerland and the Serious Fraud Office in the UK.

Financial offences

In addition Marubeni and its subsidiary companies were convicted of two financial offences with fines totalling $12.8m, 32 environment-related offences with fines totalling $3,055,527, 49 safety-related offences with fines totalling $1,300,823 and one employment-related offence with a penalty of $5,210.

Section 57 of the UK’s Public Contracts Regulations 2015 states: “Contracting authorities shall exclude an economic operator from participation in a procurement procedure where they have established that [the] economic operator has been convicted of [a list of offences including bribery, corruption and fraud].

The section does, however, include a clause that states: “A contracting authority may disregard any of the prohibitions … , on an exceptional basis, for overriding reasons relating to the public interest such as public health or protection of the environment.”

A Freedom of Information disclosure shows that Economy Minister Vaughan Gething attended a meeting with Marubeni representatives at the Welsh Government’s office in Cathays Park, Cardiff on August 24 2022 and that Climate Change Minister Julie James met representatives of the company on another occasion recorded in an undated minute.

Lawrence Till is an engineer and a director of a company whose factory is opposite the site earmarked for the hydrogen plant planned for Bridgend. He is an opponent of the project on value for money, environmental and safety grounds.

He said: “I find it shocking that the Welsh Government is involved with a company with this kind of record. It’s difficult to believe that due diligence was carried out. Didn’t they do an elementary Google search?”

We asked the Welsh Government whether it was aware of Marubeni’s record of legal violations including corruption, and whether it was comfortable dealing with such a corporation.

A Welsh Government spokesman responded: “Any commercial agreement between the Welsh Government and another organisation must be compliant with UK law and financial regulations.

“We have also introduced the Social Partnership and Public Procurement (Wales) Act 2023, which public bodies, including the Welsh Government, will be required to comply with when tendering contracts.”