Mabey & Johnson 'may' have made payments to Saddam

Bridge manufacturer Mabey & Johnson has admitted that it "may have indirectly made two payments" to Saddam Hussein's regime in Iraq in 2002, in breach of UN sanctions.

The company, which is already under investigation by the Serious Fraud Office (SFO) over a contract it entered into with the Iraqi government in 2001, said it had engaged law firm Herbert Smith to conduct its own investigation into the matter.

The SFO's investigation was sparked by a 2005 report by the UN Independent Inquiry Committee, which alleged that Mabey & Johnson was involved in making illicit payments to the Iraqi government as part of the manipulation of the UN's Oil for Food Programme.

The company denied the allegations at the time of the report but conceded in its annual results, published at the end of July, that it disclosed evidence to the SFO in April of this year in relation to the two possible payments.

Meanwhile in the same set of results, audited by accountancy firm Ernst & Young, it also admitted it had "recently been notified of allegations that certain historical contracts may have been procured through corrupt acts". However it did not make it clear how many contracts were involved, or which countries were involved.

Mabey & Johnson posted a 30% rise in annual turnover to £91.4m in 2007 but reported a £3.7m pre-tax loss. It made a pre-tax profit of £2.2m in the previous year.

It warned that it could face fines if it is charged and found guilty of a criminal offience, which could result in a fine. But it said it was "not possible to arrive at a reliable estimate" of how much any fine could be.

The firm made provisions for liabilities and charges of £33.7m for the year, although it did not offer any further analysis of those provisions as it warned that "such disclosure could be seriously prejudicial to the company's commercial position".

Reading-based Mabey & Johnson employs 327 people. Its highest paid director received £236,715 in 2007.