The Justice Department’s aggressive enforcement of the Foreign Corrupt Practices Act against individuals continues. On Friday, a former executive and an ex-consultant of Willbros International Inc., a subsidiary of Houston-based Willbros Group Inc., were charged in connection with a conspiracy to bribe government officials in Nigeria and Ecuador. Former consultant Paul G. Novak, 41, was arrested on arrival at George Bush Intercontinental Airport in Houston. He was returned to the United States from Constantia, South Africa after his U.S. passport was revoked. James K. Tillery, 49, the former Willbros International executive, remains at large.
An indictment unsealed Friday in U.S. District Court in Houston charges Novak and Tillery with conspiring to bribe Nigerian and Ecuadorian government officials to obtain and retain gas pipeline construction and rehabilitation business from state-owned oil companies in those countries. Tillery and Novak face one count of conspiracy to violate the FCPA, two counts of violating the FCPA in connection with the authorization of specific corrupt payments to officials in Nigeria and Ecuador, and one count of conspiring to launder the bribe payments through purported consulting companies controlled by Novak.
If convicted of all charges, they each face up to 35 years in prison and fines of the greater of $250,000 or twice the pecuniary gain or loss from the FCPA offenses and, for the money laundering conspiracy, $500,000 or twice the value of the funds involved in the transfer.
The indictment says Tillery was a Willbros International employee and executive from the 1980s through January 2005. From 2002 until January 2005, he served as executive vice president and later as president of the company. Novak was an employee in the mid-1990s and later worked as an oil and gas consultant in Nigeria, purporting to provide consulting services to companies in that field.
Tillery and Novak, along with a Nigerian working as a consultant and employees of a German engineering firm Willbros had partnered with, conspired to pay more than $6 million in return for a $387 million contract to construct Nigeria’s Eastern Gas Gathering System, according to the indictment. From late 2003 to 2005, payments were made and others promised to Nigerian officials. The indictment also alleges that Tillery, Novak and other Willbros employees based in South America paid $300,000 to officials at the state-owned oil company in Ecuador, PetroEcuador, and its subsidiary PetroComercial, in exchange for a $3 million contract to refurbish a 16-mile gas pipeline between Santo Domingo and El Beaterio.
In May this year, Willbros Group and Willbros International paid $22 million and entered into a deferred prosecution agreement with the DOJ to settle criminal FCPA charges in connection with corrupt payments to Nigerian and Ecuadorian officials. Willbros Group also paid $10.3 million (disgorgement of $8.9 million, plus prejudgment interest of $1.4 million) to resolve the SEC’s civil enforcement action. As part of the settlement, the Willbros companies have been cooperating with the DOJ’s ongoing investigation.
In November 2007, Jason Edward Steph, 37, who once served as general manager of on-shore operations for Willbros International, pleaded guilty to conspiring to violate the FCPA by bribing Nigerian officials. Steph said that in February and March of 2005 he, former Willbros executive Jim Bob Brown, and others arranged to pay about $1.8 million in cash to the officials. Brown also pleaded guilty to a similar charge in September 2006. He and Steph are cooperating with the government’s investigation and are waiting to be sentenced.
In the May 2008 SEC complaint against Willbros Group, Steph and former employees Gerald Jansen, Lloyd Biggers, and Carlos Galvez were named for aiding and abetting Willbros Group’s violation of the antibribery, books and records, and internal controls provisions of the FCPA, and knowingly circumventing the FCPA’s internal controls and books and records provisions. All four consented to permanent injunctions, with Jansen and Galvez ordered to pay civil penalties of $30,000 and $35,000 respectively. Determination of Steph’s civil penalty was deferred pending his sentencing in the criminal case.
Willbros Group, Inc. trades on the New York Stock Exchange under the symbol WG. It provides construction, engineering and other services to the oil and gas industry.
Download the DOJ’s Dec. 19, 2008 release regarding Paul G. Novak and James K. Tillery here.
Download the DOJ’s indictment of Novak and Tillery here.
Download the DOJ’s May 14, 2008 release regarding Willbros Group Inc. here.
View the SEC’s Litigation Release No. 20571 (May 14, 2008) in Securities and Exchange Commission v. Willbros Group, Inc., et al., Civil Action No. 4:08-CV-01494 U.S.D.C., Southern District of Texas (Houston Division) here.
Download the SEC’s May 14, 2008 civil complaint against Willbros Group Inc., Jason Steph, Gerald Jansen, Lloyd Biggers and Carlos Galvez here.
Download the DOJ’s November 5, 2007 release regarding Jason Edward Steph’s guilty plea here.
Download Steph’s November 5, 2007 Plea Agreement with the DOJ here.