Ex-Innospec directors found guilty over bribes to sell toxic fuel additives

By Kirstin Ridley

LONDON, June 18 (Reuters) - A former chief executive and regional sales director of U.S.-listed chemicals group Innospec were convicted in London on Wednesday of bribing Indonesian officials to boost sales of toxic fuel additives banned in Europe and the United States.

The unanimous guilty verdicts for Dennis Kerrison, 69, and Miltiades Papachristos, 51, bring to an end a drawn-out transatlantic investigation into how Innospec (NasdaqGS: IOSP - news) supplied Indonesia with products such as Tetraethyl Lead (TEL), which is banned in cars in western countries on health and environmental grounds.

Innospec pleaded guilty in 2010 to bribing Indonesian government officials employed by Pertamina, a state-owned refinery, and was fined $12.7 million as part of a global settlement. Since then, former directors David Turner and Paul Jennings also pleaded guilty to corruption charges.

Britain's Serious Fraud Office (SFO), which worked closely with U.S. agencies, UK police and authorities in Indonesia, Switzerland and Singapore to help bring Innospec and its former staff to book, said the four men would be sentenced on July 25.

Innospec appointed and paid agents almost $12 million between 2002 and 2008 to act on its behalf to win or maintain Indonesian contracts to sell TEL, which has been outlawed in some countries because it has been linked to brain and kidney damage and even violent crime.

Although the Indonesian government was keen to eliminate the use of leaded fuel, Innospec agents used the commissions in part to bribe Pertamina staff and other public officials. They acted under Innospec's instructions and commission fees were authorised by the company, according to the SFO.

Innospec cooperated fully with the investigation first launched by the U.S. Department of Justice (DoJ) in the wake of United Nations Independent Inquiry Committee report into the Oil for Food Programme in 2005.

The DoJ referred the inquiry to the SFO in 2007 and the British agency formally accepted it for investigation early the following year.

"Today's convictions finally bring to an end a long-running investigation into corruption at Innospec," said SFO head David Green (Irish: GN1.IR - news) .

"While other defendants took the decision to plead guilty at an early stage, the SFO case team has had to resist a sustained and extensive campaign designed to prevent these defendants facing trial. That they have now done so is testament to the skills, professionalism and tenacity of those involved."

Innospec, which has a manufacturing plant in the UK, continues to supply TEL to the aviation market under its trade name AvTEL, according to its website. Company officials in the United States and UK were not immediately available for comment. (Reporting by Kirstin Ridley, editing by David Evans)