Bridgestone Corporation is reported to have agreed to plead guilty and to pay a $28 million criminal fine for its role in conspiracies to rig bids and to make corrupt payments to foreign government officials in Latin America in connection with the sale of marine hose and related products sold worldwide.
According to the Department of Justice (DOJ) press release, a two-count criminal information was filed on September 15, 2011 in U.S. District Court in Houston against Bridgestone charging the company with conspiring to violate both the Sherman Act and the Foreign Corrupt Practices Act (FCPA).
According to the information, “Bridgestone conspired to rig bids, fix prices and allocate market shares of marine hose in the United States and elsewhere and, separately, conspired to make corrupt payments to government officials in various Latin American countries to obtain and retain business.” Bridgestone was involved in the conspiracies from as early as January 1999 until as late as May 2007.
According to the antitrust charge, Bridgestone and its co-conspirators agreed not to compete with each other for customers either by not submitting bids, or by submitting intentionally high bids to certain customers. In addition, Bridgestone and its co-conspirators provided information obtained from customers in the United States and elsewhere about upcoming marine hose jobs to a co-conspirator who served as the coordinator of the conspiracy. Bridgestone received marine hose prices for customers from the coordinator and then sold the marine hose to those customers at collusive and noncompetitive prices. Bridgestone concealed the conspiracy using a number of methods, including the use of code names, private email accounts and telephone numbers.
The bid rigging conspiracy affected prices for hundreds of millions of dollars worth of marine hose and other industrial products sold throughout the world. Marine hose is a flexible rubber hose used to transfer oil between tankers and storage facilities.
According to the FCPA charge, in order to secure sales of marine hose in Latin America, Bridgestone authorized the making of corrupt payments to foreign government officials employed at state-owned entities. Bridgestone’s local sales agents agreed to pay employees of state-owned customers a percentage of the total value of proposed sales. Upon securing a sale, Bridgestone would pay the agent a so-called “commission” which consisted of not only the agent’s actual commission but also corrupt payments to be given to employees of the state-owned customer. The local sales agent would then give the corrupt payment to the employees of the state-owned customer.
The plea agreement recognized Bridgestone’s cooperation with the DOJ’s investigations, including conducting a worldwide internal investigation, voluntarily making its employees available for interviews, and gathering, analyzing and providing to the DOJ voluminous evidence and materials.
In addition, the DOJ acknowledged Bridgestone’s extensive remediation, including restructuring the effected part of its business, terminating a number of its third-party agents, and taking remedial steps with respect to employees responsible for the corrupt payments. Bridgestone has also agreed to continue to improve its compliance program and internal controls. Given these mitigating factors, the DOJ agreed to recommend a substantially reduce fine. In a press release, Bridgestone stated in part that “The DOJ has also acknowledged that BSJ has engaged in extensive remediation including dismantling the International Engineered Products Department, closing its Houston office of Bridgestone Industrial Products of America, Inc., terminating many of its third party agents, and taking remedial actions with respect to its employees. BSJ has also decided to withdraw from the marine hose business.”
Misao Hioki, the former general manager of Bridgestone’s international engineered products department, pleaded guilty to antitrust and FCPA conspiracy charges in 2008. Hioki was subsequently sentenced to two years in prison.
Bridgestone, the world’s largest manufacturer of tires and rubber products, is headquartered in Tokyo. Its U.S. headquarters are in Nashville.