'Tough sentences' for ex-council workers shows need for corporate hospitality controls, says expert

Tom Stocker of Pinsent Masons, the law firm behind Out-Law.com, was commenting after the sheriff court in Edinburgh sentenced two former City of Edinburgh Council employees and the former directors of a construction company to substantial prison sentences for bribery offences. The employees received "extensive hospitality" in exchange for helping to award maintenance contracts to a particular firm, the costs of which were then included in inflated invoices. Cash payments were also given the Council employees.

The four men were convicted of offences under the 1889 Public Bodies Corrupt Practices Act, the legislation that pre-dates the Bribery Act 2010, Stocker said. The offences took place between 2006 and 2010 and were uncovered after a whistleblower raised concerned in 2011, he said.

"The public officials received longer sentences because they were in a position of public trust," he said. "The construction company directors were described by the sheriff as being motivated by greed and arrogance."

"These are tough sentences: the sheriff stated that deterrence of others was a key aim of the sentences passed. It is important to remember that corporate hospitality is not illegal in itself, but this case shows why companies need to have controls around hospitality. It can easily get out of hand. Companies dealing with the public sector need to be particularly careful," he said.

Council worker Charles Owenson was sentenced to four years and four months in prison for accepting bribes, and Council worker James Costello was sentenced to three years and nine months in prison. Kevin Balmer and Brendan Cantwell, directors of the now-liquidated Edinburgh Action Building Contracts Ltd (ABC), were sentenced to two years and 10 months and two years and three months respectively, and both were also disqualified from acting as directors for five years.

According to a report on the case by the Crown Office and Procurator Fiscal Service (COPFS), Owenson and Costello were bribed with cash payments and hospitality in exchange for awarding maintenance and repair contracts to ABC. The 'hospitality' included corporate seats at football matches and nights out at bars and lap dancing clubs. The contractors then falsely inflated invoices to the council by almost £67,000 to cover the cost of the bribes.

COPFS has begun proceeds of crime proceedings against all four men, with a view to recovering their illegal earnings, it said.

"These four men set about an elaborate scheme to line their own pockets with public funds meant to benefit the city of Edinburgh," said Lindsey Miller, procurator fiscal for organised crime and counter-terrorism. "After an extremely thorough investigation led by our specialist economic crime unit, they have been brought to justice and we will now take appropriate steps under the Proceeds of Crime Act to recover the funds they stole and pay them back into the public purse where they belong."