The construction consultancy Sweett Group has announced that it is pulling out of the Middle East market after admitting to a bribery offence that was committed in the region.
The company, which employs 90 staff at offices in Dubai, Abu Dhabi, Muscat and Riyadh, said in a statement to the London Stock Exchange that it “has decided to exit the region and is reviewing its options”. It did not indicate whether this would be by way of a sale of the business or its closure, stating only that it would “provide a further update in due course”.
It blamed challenging trading conditions and a falling order book for the withdrawal.
The statement also said that it had admitted to an offence under the UK’s Bribery Act as part of a continuing investigation by the country’s Serious Fraud Office (SFO).
The investigation followed an article in The Wall Street Journal in June 2013, which claimed that a Dubai-based former director had solicited a bribe from an architecture firm in return for work on a $100 million hospital in Morocco that was being funded by a UAE charitable foundation.
The article said that the payment would be made to an official within the foundation.
Sweett Group launched an internal investigation one month later but closed it in January last year, stating that although investigators were not able to speak to the former employee, its directors concluded the allegation was “not proven”. It subsequently announced in July last year that the SFO had launched a formal investigation, with which it was cooperating.
In its announcement yesterday, the company said that it had admitted to a charge of “failing to prevent an associated person bribing another to obtain or retain business for the company”.
Sweett said: “Subsequent prosecution is expected, with the likely outcome of a fine, the quantum of which cannot be ascertained at the present time.”
The offence did not prevent it from bidding for public sector contracts in the US or the UK.
Sweett Group also declared a loss of £500,000 (Dh2.7m) for the six months to September 30, despite a 9 per cent year on year increase in revenue to £30.2m. Its Middle East arm declared an operating loss of £800,000 as revenue dropped by 21 per cent to £2.3m.
The company, which sold its Asia -Pacific and India business in October, now plans to focus on the UK, Europe and North America.
“Today’s announcement brings closure on the Middle East legacy issues a step closer, allowing the group to progress unencumbered in the future. This is an important next step in the strategic turnaround of the business,” said Douglas McCormick, the chief executive.
Sweett Group’s shares had dropped by 10.8 per cent to 18.5 UK pence by yesterday afternoon.
Andy Brown, an analyst at Sanlam Securities, said that Sweett Group “has had a lot to contend with” recently.
Alongside the bribery investigation, it had replaced its finance director, chairman and chief executive.
He said: “They don’t believe they have the scale there to make a real difference.
“These are huge markets. I think you need to have a meaningful presence to perform properly there and I sense with Sweett that they have looked at it and thought their opportunities and resources are better focused on the core UK market, and looking to develop North America.
“Clearly, the bribery thing is unhelpful, and that might stand in the way of them announcing a quick disposal but we’re still waiting for further clarity on that.”
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