Last month Tyco International Ltd. agreed to pay $26.8 million to resolve U.S. charges that it paid bribes to officials of foreign governments and misreported such payments, in violation of the FCPA.
In addition, a Tyco subsidiary in the Middle East, Tyco Valves & Controls Middle East Inc., pleaded guilty and admitted it paid bribes to officials at the state-controlled oil and gas company in Saudi Arabia in order to obtain contracts with it.
Tyco International entered into a nonprosecution agreement with the DOJ while its subsidiary pleaded guilty to one count of conspiracy to violate the FCPA bribery provisions. The two companies agreed to pay a $13.68 million penalty to the department. Tyco also settled with the SEC, consenting to the entry of a permanent injunction prohibiting future violations of Exchange Act sections 30A(a), 13 (b)(2)(A) and 13(b)(2)(B). The company also agreed to pay disgorgement of $10,564,992 and prejudgment interest. The DOJ and the SEC acknowledged the voluntary disclosure of this matter and the extensive cooperation of the company.
According to court papers, Tyco, through various subsidiaries, engaged in a scheme which continued for years in several countries including Turkey, China, Germany, France, Thailand, Malaysia, Egypt, Saudi Arabia and Poland. Typically payments were said to have been made by a subsidiary or through an agent without the knowledge of the parent. They were to secure business or for entertainment and were not properly recorded in the books and records of the company or lacked adequate documentation.
Brett Ludwig, a spokesman for Tyco, said the company was pleased to have reached a final resolution on the issue and that the company was committed to maintaining rigorous compliance programs across all its business activities.
Snamprogetti Netherlands BV
Last month the DOJ dismissed the criminal information filed against Snamprogetti Netherlands B.V., (“Snamprogetti”), a former indirect subsidiary of Eni S.p.A. and current subsidiary of Saipem S.pA. The criminal information related to the company’s participation in a decade-long bribery case in Nigeria.
The FCPA case involved allegations of bribes paid in conjunction with the construction of a Liquefied Natural Gas (“LNG”) plant on Bonny Island, Nigeria. According to court documents, Snamprogetti authorized the payment of bribes to Nigerian government officials, including top-level executive branch officials, in order to obtain engineering, procurement and construction contracts (“EPC”) to build LNG plants on Bonny Island.
Under a 2010 deferred prosecution agreement (“DPA”) with the DOJ, the department agreed to defer prosecution of the company for two years. In addition, Snamprogetti, Saipem and ENI agreed to ensure their compliance programs satisfied certain standards and to cooperate with the department in ongoing investigations. The deal saw Snamprogetti pay a $240 million criminal penalty.
In a press release issued last month, ENI said both companies had fulfilled the commitments set out in the DPA which included the implementation of an anti-corruption program. ENI and Snamprogetti also reached FCPA settlements, including disgorgement of profits, related to the same case with the SEC.
THE UNITED KINGDOM
The UK’s Anti-Bribery Effort
In a report published in September by Transparency International (“TI”) called Exporting Corruption, TI revealed that despite the fact that UK bribery cases have increased over the past 12 months, cutbacks to the Serious Fraud Office (“SFO”) may potentially see a reduction in future UK enforcement. According to TI, the British Government has slashed more than a third of the SFO’s budget in the last four years.
Chandu Krishnan, Executive Director of TI UK, has stated: “If the Government is serious about fighting corruption, it should not be cutting resources for enforcing the legislation designed to do just that”. He went on to say: “we must ensure that the SFO is not outgunned by those it should be prosecuting, who incidentally can usually afford the best legal advice available. The SFO should never be in a position where it is unable to investigate and prosecute cases due to a lack of resources.”
A copy of the report is now available to view at:
Perceptions of Corruption
Further data from the 2011 Bribe Payer’s Survey on Perceptions of Corruption has revealed that 34% of UK business executives surveyed believe the misuse of public funds by public officials and politicians is all too common. It has been reported that 17% of those surveyed believe they have lost business due to bribes.
When asked about the main obstacles to reducing bribery and corruption in the private sector, 43% indicated the main reason was that “businesses do not take the issue seriously enough”. 23% of respondents cited the “lack of prosecution of corruption and bribery related crimes”, and 16% indicated that “widespread unethical behaviour among public officials” was the main obstacle to preventing corruption. 10% of those surveyed felt that “acceptance of corruption as a fact of life” was the main problem.
The full results are available on TI’s interactive website, allowing you to compare the data across countries:
Changes to the SFO’s Guidance
The SFO has changed its guidance on the Bribery Act, relating to self-reporting, facilitation payments, gifts and hospitality. It emphasises the willingness of the SFO to prosecute in appropriate cases, whilst also making clear that it has civil confiscatory powers that it can use instead of or as well as criminal prosecutions.
According to the SFO, the purpose is to:
“1. restate the SFO's primary role as an investigator and prosecutor of serious or complex fraud, including corruption; 2. ensure there is consistency with other prosecuting bodies; and 3. meet certain OECD recommendations.”
Further information on the revised policies can be found at:
Plot to Bribe BP Employee
It has been alleged that three businessmen plotted to bribe a senior BP employee in order to secure deep-sea diving contracts worth more than £10 million.
Mr Christopher Hawdon and Mr Ronald Murray, the joint founders of C-MAR Holdings Group, and Mr Gary Webster, allegedly paid more than £350,000 in kickbacks to Mr Terry Hall. They were allegedly parties to a “corrupt agreement” between Mr Kenneth Thomas, managing director of OilExec, and Mr Jeffery Mountain, commercial director of C-MAR, to feed bribes to Mr Hall's wife's bank account.
Mr Hawdon, Mr Murray and Mr Webster allegedly paid Mr Hall to secure BP employed divers through OilExec, which is part-owned by C-MAR. Mr Hall, Mr Thomas, and Mr Mountain, were also charged. Mr Hall died in 2011. Mr Thomas and Mr Mountain have both admitted conspiracy to corrupt while Mr Hawdon, Mr Murray and Mr Webster have all denied the charge.
Anti-bribery and Corruption Systems in Investment Banks
The FSA has reported that they will be taking forward their “intensive and intrusive work” on anti-bribery and corruption (“ABC”) systems and controls in a number of very large banks. In March the FSA published their report on how investment banks and similar firms are managing the bribery and corruption risk in their business. The report concluded that the investment banking sector has been “too slow and reactive in identifying, assessing and managing their bribery and corruption risk.” The introduction of the Bribery Act and visits by the FSA were the main triggers for many of the banks in the sample “to review, or consider for the first time, their approach to ABC.”
THE REST OF THE WORLD
As previously reported in July’s edition of the Anti-Corruption Digest, the World Bank announced a withdrawal of its US$1.2 billion (£764 million) International Development Association (“IDA”) credit for the multipurpose Padma bridge project. The Bank’s investigative team, Investigative Vice- Presidency, had previously provided the Government of Bangladesh with evidence of corruption related to the Bank’s financing of the project, and identified a series of measures to be implemented by the Government. The Government failed to implement these measures and so the Bank cancelled its financing.
The corruption allegations involved two former executives from Canada's engineering giant, SNC-Lavalin Group Inc. The two former executives of the company appeared in court in Toronto in July accused of bribing officials in Bangladesh.
Last month the World Bank issued a press release stating that the Government had taken the required actions to fulfil the measures needed and had begun to address the corruption problems. The Government agreed that it will adopt a series of measures as a prerequisite to the World Bank resuming its financing of the project. This includes new procurement arrangements with enhanced oversight; investigations proceeding in a full, fair and expeditious manner; and an independent External Panel to review the Government’s investigation and report their findings to the Government and World Bank.
According to Mr Alexander Stoyanov, the Director of Research at the Center for the Study of Democracy (“CSD”), the number of bribes paid on a monthly basis in Bulgaria is two to three times the EU average. Mr Stoyanov stated that: "In practical terms this means that we have 1500 such transactions per month and the number of these deals is beyond the capacity of any control institution in the country.”
Mr Stoyanov stated that the current approach cannot control the situation and he recommends “… restructuring the interests in the different sectors and spheres. People who pursue their own interests can prevent corruption.”
He also pointed out that in a large proportion of cases the administration turned out to be the party that instigated such deals: "The behavior of the administrative bodies is decisive for the existence of corruption deals. Over the past few years, we have witnessed growing opposition but also an increase in the number of people who approach an administrative body with the assumption that they will pay a bribe.”
It has been reported that a former provincial government official went on trial last month in east China's Jiangxi Province for allegedly taking bribes.
A statement from the Intermediate People’s Court noted that Mr Wu Zhiming is being prosecuted on charges of accepting cash and properties valued at 47.48 million Yuan (US$7.53 million/£4.64 million).
Prosecutors found Mr Wu accepted the bribes while he served as district head and city official in the provincial capital city of Nanchang as well as vice secretary-general of the Jiangxi provincial government.
According to prosecutors, Mr Wu used his position to help the bribe-givers seek benefits in projects and help them with job transfers and promotions.
Mr Wu has been expelled from the Communist Party of China by the provincial discipline inspection authorities. He has also been removed from his governmental position and his role as a deputy to the Nanchang municipal people's congress was terminated.
It has been reported that the Ministry of Internal Affairs of Georgia has arrested four individuals on charges of bribing police officers.
Allegedly, the police have arrested Mr Giorgi Gherkerashvili, Mr Giorgi Dzotsenidze, Mr Koba Samkharadze and police officer, Mr Roman Maisuradze. The police are also reported to have seized $50,000 in bribe money offered to the police officers.
A statement issued has revealed that an “investigation of the case continues to reveal and arrest other persons involved in the crime. [The] Ministry of Interior will hand over these materials to the prosecutors office of Georgia for further reaction as the name of MP candidate Aleko Tabatadze has been also tied with the fact of bribery.”
It has been reported that the former head of arms procurements at the Defense Ministry and the ex-wife of former Defense Minister, Mr Akis Tsochatzopoulos, along with several other individuals have been asked to appear before authorities to respond to questions in relation to Mr Tsochatzopoulos’s alleged corrupt dealings.
16 people are already facing charges over Mr Tsochatzopoulos's alleged acceptance of bribes as part of defense contracts and the distribution of this money via various offshore firms and property ventures. The offshore firms were used to buy various properties in Athens and other parts of the country.
The magistrate in charge of the case is reported to have drawn up new charge sheets for 21 suspects. It is expected that the 16 suspects already known to authorities will face further questioning.
According to the magistrate, a network of corruption was in place from 1998 until 2010. Mr Tsochatzopoulos and Mr Nikos Zigras, his cousin, both played integral roles. The purpose of the arrangement was to launder money that was obtained by the minister through bribes for the purchases of armaments while he was defense minister. The other suspects in the case are accused of being involved in the use of money that was knowingly obtained from bribes.
It was reported last month that the CBI caught the branch manager of the Bank of India's Nemawar branch accepting a bribe of Rs 10,000.
Allegedly Mr Kishorilal Parmar had demanded Rs 70, 000 from Mr Kailash Jat, his father Jagdish and uncle Hukum for sanctioning three Kisan credit card loans. He was seeking the amount as a bribe to clear the cumulative loan of the three men.
Mr Parmar is reported to have been caught while accepting the second instalment of the amount. Before handing over the second instalment, Mr Kailash approached the CBI and lodged a complaint. The CBI officials with the help of the Jat family set about laying a trap. The Jat family went to the residence of the Mr Parmar where they had decided to meet and handed him over Rs 10, 000. The CBI said "the accused was arrested accepting the bribe in presence of independent witnesses. The bribe amount was also recovered from the accused.”
Mr Choi See-joong, the former Minister of Communications, was sentenced in September to a two-and-a-half year prison term and 600 million won (US$540,362) in fines for accepting bribes from a local construction company in exchange for favours in relation to a construction project.
Mr Choi was arrested and indicted in May on charges of taking 800 million won in bribes from property developer Pi City through broker Mr Lee Dong-ryul. Mr Choi admitted to receiving part of the money, but denied the allegations that he exerted any influence over the construction project.
The Chief Judge of the Seoul Central District Court noted that it was hard to accept Mr Choi's assertion that the 600 million won he received from broker, Mr Lee, was not related to any favors for the construction project. However the court acquitted him of charges that he received an additional 200 million won from the broker, citing a lack of credibility of the broker's testimony.