On November 7, 2017, the Department of Justice (“DOJ”) unsealed charges against five individuals—including two executives—alleging violations of the Foreign Corrupt Practices Act (“FCPA”) in connection with an alleged foreign bribery scheme at Rolls-Royce plc, the United Kingdom-based manufacturer and distributor of power systems for the aerospace, defense, marine, and energy sectors. All five individuals are accused of participating in a scheme to bribe officials in Central Asia and China to win equipment supply and power services contracts, which partly formed the basis for the DOJ’s enforcement action against Rolls-Royce in January 2017. Four of the five individuals had pleaded guilty at the time of the unsealing, which represents the latest example of the DOJ’s commitment to prosecute individuals for alleged FCPA violations.
The DOJ brought charges against five individuals: (1) James Finley, a former senior Rolls-Royce energy executive; (2) Keith Barnett, a former Rolls-Royce regional energy director in the U.S.; (3) Andreas Kohler, a managing director at an unnamed engineering and consulting firm; (4) Aloysius Johannes Jozef Zuurhout, a former energy sales employee at Rolls-Royce; and (5) Petro Contoguris, the founder and chief executive officer of Gravitas & CIE International Ltd. (“Gravitas”), a company allegedly at the center of the scheme. The specific charges included conspiring to violate the FCPA, conspiring to launder money, and substantive anti-bribery FCPA and money laundering charges. Finley, Barnett, Kohler, and Zuurhout have all pleaded guilty to conspiring to violate the FCPA, while Contoguris, a citizen of Greece, has apparently yet to be arrested and is, according to the DOJ’s press release, believed to be outside the United States.
According to the grand jury’s indictment of Contoguris and the informations filed against each of the other defendants, the individuals allegedly conspired to pay bribes to foreign officials in exchange for directing business to Rolls-Royce Energy Systems Inc. (“RRESI”), a U.S.-based indirect subsidiary of Rolls-Royce plc. More specifically, the Contoguris indictment alleges that he, working with employees of an international engineering consulting firm (“Technical Advisor”), including Kohler, devised a scheme with certain Rolls-Royce executives and employees—including Zuurhout, Barnett and Finley—whereby Rolls-Royce would pay kickbacks to the Technical Advisor employees, and bribes to at least one foreign official. The individuals would allegedly disguise these payments as commissions to Contoguris’s company, Gravitas, in exchange for helping Rolls-Royce win contracts with Asia Gas Pipeline LLP (“AGP”).
According to the Contoguris indictment, AGP was created to build and connect a gas pipeline between Central Asia and China, and the Technical Advisor purported to provide independent engineering consulting advice and other services to AGP. The indictment further alleges that after AGP awarded Rolls-Royce a $145 million contract in November 2009, Rolls-Royce made commission payments to Gravitas. Allegedly, Contoguris subsequently passed a portion of those commission payments on to the Technical Advisor employees with knowledge that these employees would share at least some portion of the money with a foreign official, as contemplated by their alleged bribery scheme.
Sentencing dates for the defendants who pleaded guilty have not been announced. Individuals who violate the FCPA anti-bribery provisions, including conspiracy to violate the FCPA, face up to five years in prison.
The charges announced by the DOJ represent the latest example of the Department’s continued push to hold individuals accountable for FCPA violations. The DOJ has brought charges against 16 individuals to date in 2017, which is one of the highest totals in recent years.
Click here to view: U.S. v. Finley