Senior Ex-BizJet Official Pleads Guilty in Foreign Bribery Scheme
On July 24, 2014, the DOJ announced that the former president and chief executive officer of BizJet International Sales and Support Inc., a U.S.-based unit of German aircraft maintenance company Lufthansa Technik AG, pled guilty in Oklahoma federal court for his participation in an alleged plot to bribe government officials in Latin America.
Bernd Kowalewski, 57, pled guilty to conspiracy to violate the FCPA and a substantive violation of the FCPA in connection with payments made to Mexican and Panamanian officials for assistance in acquiring contracts for aircraft services. Kowalewski was the third and most senior BizJet executive to plead guilty to bribing officials to secure contracts for the company in Mexico and Panama. Kowalewski was indicted under seal in 2012, and was arrested on a provisional arrest warrant in Amsterdam in March 2014. In June 2014, Kowalewski waived extradition and returned to the United States.
According to court filings, Kowalewski and his accomplices paid foreign officials directly and, in some cases, used a shell company to conceal bribery payments under the guise of providing aircraft maintenance brokerage services. Participants in the bribery scheme referred to the bribe payments as “commissions” or “incentives,” but, as Assistant Attorney General Leslie R. Caldwell of the U.S. DOJ’s Criminal Division made clear, “they were bribes, plain and simple.” Assistant Attorney General Caldwell credited the FCPA’s international scope and the government’s “continued determination to hold corporate executives responsible for criminal wrongdoing whenever the evidence allows” with facilitating Kowalewski’s guilty plea.
On March 14, 2012, the DOJ announced that it had entered into a deferred prosecution agreement (DPA) with BizJet. The DPA required BizJet to pay an $11.8 million criminal penalty in exchange for a three-year prosecution deferral. Former BizJet executives Peter DuBois and Neal Uhl pled guilty in January 2012 for their roles in the bribery scheme and avoided prison sentences by cooperating with the government’s investigation. DuBois and Uhl were each sentenced to probation and eight months of home confinement. A fourth former BizJet executive, Jald Jensen, has been indicted for conspiracy, as well as substantive FCPA violations and money-laundering, but remains at large.
French Citizen Sentenced to Two Years for Obstructing FCPA Probe
On July 25, 2014, the U.S. Attorney for the Southern District of New York, Preet Bharara, announced that Frederic Cilins, a 51 year-old French citizen and former agent for mining company BSG Resources Ltd. (BSGR), was sentenced to 24 months in prison for obstructing a federal criminal investigation into potential FCPA violations. According to U.S. Attorney Bharara, Cilins “went to great lengths to thwart a Manhattan federal grand jury investigation into an alleged bribery scheme in the Republic of Guinea.” As part of the sentence, U.S. District Judge William H. Pauley ordered Cilins to forfeit $20,000 and to pay a $75,000 penalty, the maximum fine allowed under federal sentencing guidelines.
Cilins obstructed an investigation by the Federal Bureau of Investigation (FBI) concerning alleged bribery payments paid by a mining company to a former governmental regime in the Republic of Guinea to secure valuable mining concessions in the Simandou region. Cilins, who was formerly associated with the mining company under investigation, offered to pay a cooperating FBI witness to leave the United States to avoid questioning from the FBI and attempted to induce the witness to destroy documents and submit false statements to the FBI concerning the investigation. The witness Cilins attempted to influence was the former wife of a now-deceased Guinean government official who held influence over awards of mining concessions.
Cilins pled guilty in March 2014 to a one-count superseding information charging him with obstruction of a federal investigation.
DOJ Concludes Investigation of Drilling Company; SEC Settlement Also May Be Imminent
Texas-based Layne Christensen Company announced on August 15, 2014 that the DOJ has completed its probe into the water management, construction and drilling company regarding potential violations of the FCPA and has declined to bring criminal charges. Layne disclosed in 2010 that it was investigating the possible impropriety of payments made to customs-clearing agents in the Democratic Republic of the Congo and other African countries.
While cooperating fully with the DOJ and the U.S. Securities and Exchange Commission (SEC), Layne disclosed the results of its internal investigation to both agencies. Initially accumulating a reserve of $10.4 million for a potential settlement, the company has reduced this accrual by about half and will reflect this decrease in its second-quarter fiscal results.
The SEC’s parallel investigation remains open, and Layne remains “actively engaged in settlement discussions with the SEC to resolve this matter,” said the company.
United Kingdom’s Serious Fraud Office Jails Three Former Execs as Innospec Prosecution Wraps Up
Following up on our July 2014 report regarding the conviction of two former Innospec Limited executives for their participation in bribery schemes in Indonesia, we report this month that the Southwark Crown Court in London sentenced the two Innospec executives, along with several other Innospec officers, for their roles in the bribery schemes.
The sentences were dispensed as follows:
Dennis Kerrison, 69, the former CEO of Innospec Limited, was sentenced to four years in prison. Miltiades Papachristos, a former Innospec regional sales director, was sentenced to 18 months in prison. Kerrison and Papchristos were convicted of conspiracy to commit corruption on June 18, 2014, following a jury trial related to corrupt activities in Indonesia.
Paul Jennings, 57, former CEO of Innospec’s UK operations, was sentenced to two years in prison. Jennings pled guilty in June 2012 to two charges of conspiracy to commit corruption, and in July 2012 to an additional charge of conspiracy to commit corruption related to corrupt activities in Indonesia and Iraq.
David Turner, 59, a former Innospec business director, was the only defendant to avoid a sentence of jail time. Turner received a 16-month suspended sentence and 300 hours of unpaid work. In January 2012, Turner pled guilty to three charges of conspiracy to commit corruption in relation to corrupt activities in Indonesia and Iraq.
These sentences mark the conclusion of the Innospec prosecution saga, rooted in the company’s 2010 guilty pleas for violating antibribery laws in both the United States and the United Kingdom. Regulatory agencies from several countries contributed to the prosecution, including the DOJ, the SEC, Indonesia’s Corruption Eradication Commission, and Swiss and Singaporean authorities. Both the DOJ and the Serious Fraud Office (SFO) praised the collaborative effort.