The Board of Yara International ASA reported on Jan. 15 that it has informed the Norwegian National Authority for Investigation and Prosecution of Economic and Environmental Crime (Økokrim) that the company acknowledges guilt and accepts a corporate fine and confiscation totalling NOK 295 million related to certain agreements dating back to 2007 and earlier.
Oslo-based Yara said the fine of NOK 270 million stems from historical irregularities linked to the establishment of Libyan Norwegian Fertilizer Co. (Lifeco), an unrealized project in India, and Yara’s activities in Switzerland. In addition, Økokrim has imposed a confiscation of NOK 25 million related to earlier phosphate deliveries.
“This is a serious case. Both the company’s external investigation and the Økokrim investigation have uncovered unacceptable and disappointing behaviour. We have throughout the process cooperated with Økokrim and given them access to all material," said Jørgen Ole Haslestad, Yara president and CEO. “The incidents in question took place several years ago. We have since invested considerably in our compliance processes, based on our clear zero tolerance for corruption. Most importantly, we have worked with culture and attitudes to ensure that such incidents do not occur in the future.”
Yara launched an external investigation in April 2011, and concurrently notified Økokrim of possible irregularities 2011 (GM April 18, 2011). The main findings of the external investigation, published in June 2012 (GM July 2, 2012), included documented unacceptable offers of payment to a consultant related to the establishment of Lifeco, although the completion of the actual payment was not documented; an unacceptable payment of US$1 million in 2007 to a consultant in India related to negotiations with Krishak Bharati Cooperative Ltd. (Kribhco); and a number of payments over several years from the company Balderton in Switzerland, totaling approximately $15 million, that were made to persons employed by or associated with companies that are suppliers to Yara or Balderton. Payments from Balderton that had no commercial basis were also uncovered by the investigation.
Økokrim in May 2012 (GM May 21, 2012) charged two members of Yara’s corporate executive management team – Head of Upstream Tor Holba and CFO and Head of Strategy Hallgeir Storvik – with suspicion of “gross corruption” related to the findings of its investigation. Holba and Storvik subsequently stepped down from their executive management positions at the company as the investigation continued.
“Our acknowledgement of guilt and acceptance of a fine reflect that the Økokrim findings are in line with those of our own investigation,” said Bernt Reitan, chairman of the board of Yara. “The penalty is severe, but we accept it.”