Japanese Executive Jailed

A Tokyo executive was sentenced to two years in jail and fined $80,000 for violating the Foreign Corrupt Practices Act and conspiring to rig bids for the sale of marine hose and other industrial rubber products.

Former Bridgestone manager Misao Hioki pleaded guilty to two felony counts filed on Dec. 8, 2008 in U.S. District Court in Houston. He was charged for his role in a conspiracy to violate the FCPA by making corrupt payments to government officials in Latin America and elsewhere. He was also charged with conspiring to rig bids, fix prices and allocate market shares of marine hose in the United States and other countries.

Marine hose is used to transfer oil between tankers and storage facilities. The marine-hose cartel fixed prices worldwide from 2004 to 2007 for products worth hundreds of millions of dollars.

Hioki was one of eight foreign executives arrested in May 2007 following their participation in a cartel meeting in Houston. The Justice Department said he’s the ninth individual to plead guilty in the bid-rigging investigation but is the first person in the cartel to plead guilty to an FCPA charge.

The DOJ said Hioki and his co-conspirators:

* Negotiated with employees of government-owned businesses, who are foreign officials under the Foreign Corrupt Practices Act, in at least the following Latin American countries Argentina, Brazil, Ecuador, Mexico and Venezuela to make corrupt payments to those foreign officials to secure business for his company and its U.S. subsidiary;

* Approved the making of corrupt payments to the foreign government officials through the local sales agents, to secure business for his company and its U.S. subsidiary;

* Paid the local sales agents a commission for each sale and, if a corrupt payment to the customer through the local sales agent was involved with the sale, concealed that payment within the commission payment made to the local sales agent; and

* Coordinated these corrupt payments in Latin America through the U.S. subsidiary’s offices in the United States including its Houston office.

It’s becoming more common to see FCPA charges in cases investigated primarily for other offenses. Last month, for example, Shu Quan-Sheng, a naturalized U.S. citizen who sold controlled space-launch technology to China, pleaded guilty to violating the Foreign Corrupt Practices Act and to two counts of violating the Arms Export Control Act.

And in September, U.S. citizens Nam Nguyen, Joseph Lukas, Kim Nguyen, and An Nguyen, along with their Philadelphia-based company, Nexus Technologies (see our post here) were charged with one count of conspiracy to violate the Foreign Corrupt Practices Act and four substantive counts of violating the FCPA. They’re accused of bribing government officials in Vietnam to secure contracts to supply high-tech items — including third-party underwater mapping and bomb containment equipment, helicopter parts, chemical detectors, satellite communication parts and air tracking systems. That case doesn’t yet involve charges under U.S. export laws.

View the DOJ’s Dec. 10, 2008 release here.

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