TRACEblog

Deferred Prosecution Agreement for Marubeni Corporation, with Payment of $54.6 Million to Conclude TSKJ Nigeria Case

On January 17, 2012, a criminal information was filed against the Japanese trading company, Marubeni Corporation, in the U.S. District Court for the Southern District of Texas, charging the company with conspiracy to violate the FCPA and with aiding and abetting violations of the FCPA.  Marubeni reached a two-year deferred prosecution agreement with the DOJ, and Marubeni will pay US $54.6 million to the DOJ;  if Marubeni abides by the terms of the agreement, the criminal information will be dismissed upon the expiry of the two year period.  The four-company joint venture TSKJ employed Marubeni between 1995 and 2004 to obtain contracts to build natural gas facilities in Nigeria.  The joint venture partners were Technip S.A., Snamprogetti  Netherlands B.V., Kellogg Brown & Root Inc. (KBR), and JGC Corporation. The Compendium summary about this matter may be accessed here:   

https://www.traceinternational2.org/compendium/view.asp?id=381
 

On January 16^th, 2012, the U.S. District Court for the Southern District of Texas acquitted former ABB manager John O’Shea of charges that, through a third party intermediary, he bribed Mexican officials and hid the payments. O’Shea had been accused of paying executives of Mexico’s state-owned electricity company in order to obtain lucrative contracts for ABB.  The Compendium summary about this matter may be accessed here: 

https://www.traceinternational2.org/compendium/view.asp?id=164
 

Concluding an action brought in the High Court by the Serious Frauds Office, Mabey Engineering (Holdings) Ltd, has been ordered to pay over GBP130,000 as payment for share dividend earnings attributable to contracts obtained by the company unlawfully. The contracts were for construction projects in Iraq.  In announcing the settlement, the SFO emphasized its intention to use the civil recovery process to pursue institutional investors who have profited from illegal conduct. The Compendium summary regarding this matter may be accessed here:  

https://www.traceinternational2.org/compendium/view.asp?id=98
 

On January 17^th, 2012, former Innospec Limited Global Sales and Marketing Director, Dr David Turner, pleaded guilty to three counts of conspiracy to corrupt at the Southwark Crown Court in London. Two counts charged Turner with conspiracy to make illegal payments to government officials in Indonesia and Iraq between 2002 and 2008, in order to obtain contracts to supply the company’s products, or to reward officials for having awarded the chemical supply contracts.  Dr Turner also pleaded guilty to one charge of conspiracy to corrupt Iraqi officials by payment money to ensure that tests on a competitor’s chemical product would produce unfavorable results. The SFO investigation was assisted by the US Department of Justice, the US Securities & Exchange Commission, the City of London Police and the Cheshire Constabulary. The Compendium summary about this matter may be accessed here: 

https://www.traceinternational2.org/compendium/view.asp?id=174

In the ABB-related case against John Joseph O’Shea pending in the Southern District of Texas, Judge Lynn Hughes denied O’Shea’s motion to dismiss the indictment based on O’Shea’s challenge that employees of the Mexican utility Comision Federal de Electricidad (“CFE”) are not “foreign officials” under the FCPA. Judge Hughes adopted the DOJ’s view that foreign, state-owned enterprises are instrumentalities under the FCPA, making their officers and employees “foreign officials” under FCPA definitions.  This is the fifth failure at the trial court level to challenge the DOJ’s definition of a foreign official. The ABB-related case summaries may be accessed in the TRACE Compendium here.

According to media reports, Indonesia’s Corruption Eradication Commission (Indonesian abbreviation “KPK”) named a local agent for Innospec as a suspect in the Innospec bribery matter and charged the agent under Indonesian anti-corruption laws. According to media reports quoting a KPK spokesperson, Willy Sebastian Liem allegedly received over $17.48 million in commissions from Innospec and also channeled money to officials at the Energy Ministry, upstream oil and gas regulator BPMigas and state oil company Pertamina. The entire Innospec TRACE Compendium summary may be accessed here.

Magyar Telekom, Plc., a Hungarian telecommunications company and its  German majority owner, Deutsche Telekom AG, recently agreed to pay a combined $95 million to settle civil and criminal charges to resolve Foreign Corrupt Practices Act (FCPA) investigations into activities by Magyar Telekom and subsidiaries in Macedonia and Montenegro.  The combined criminal penalty to the U.S. Department of Justice (DOJ) was $63.9 million, while Magyar Telekom agreed to settle the Securities and Exchange Commission’s (SEC) charges by paying more than $31.2 million in disgorgement and pre-judgment interest settlement.  The DOJ filed a criminal information against Magyar Telekom and a two-year deferred prosecution agreement in U.S. District Court for the Eastern District of Virginia. The SEC also sued three former Magyar executives. The government investigations date back nearly five years and involved funneling bribes to government officials to delay the entry of a competitor into the mobile-phone market. The Compendium summary and government documents may be accessed here.

Ousama Naaman, a former agent for U.S. Company Innospec Inc. was sentenced yesterday to 30 months in prison and ordered to pay a $250,000 fine for his participation in a conspiracy to defraud the United Nations Oil for Food Program (OFFP) and in bribing former Iraqi government officials. Naaman previously pleaded guilty to violating the U.S. Foreign Corrupt Practices Act (FCPA), conspiracy to commit wire fraud and falsifying the books and records of a U.S. issuer. He received his sentence in U.S. District Court for the District of Columbia. Further details of the case can be found here.