The first quarter of 2010 was the busiest ever for FCPA-related enforcement. This past quarter was one of the quietest for new enforcement actions, with just one from the DOJ and three from the SEC.
There were some sentencings — including the longest prison term ever for an FCPA-related offense — a few sentencing delays, a guilty plea, and some odds and ends. But during most of the quarter the DOJ was MIA and the SEC barely popped its head out.
Here’s what happened:
DOJ / SEC Enforcement Actions
Bobby J. Elkin, Jr., Baxter J. Myers, Thomas G. Reynolds, and Tommy L. Williams (April 29) The SEC brought a civil enforcement action against the former employees of Dimon, Inc., now Alliance One International, Inc. Defendants Myers and Reynolds agreed to pay civil penalties of $40,000 each. All four defendants also consented to the entry of final judgments permanently enjoining them from violating the anti-bribery provisions of the FCPA (Section 30A of the Securities Exchange Act of 1934) and aiding and abetting violations of Sections 13(b)(2)(A) and 13(b)(2)(B).
Technip S.A. (June 28) The Paris-based engineering and construction firm resolved FCPA-related charges resulting from bribes to Nigerian officials through the KBR-related TSKJ joint venture. It agreed to pay the DOJ a $240 million criminal penalty. It also settled a civil complaint filed by the SEC by disgorging $98 million in profits. It was charged in a two-count criminal information with one count of conspiracy and one count of violating the FCPA. Its two-year deferred prosecution agreement with the DOJ requires Technip to retain an independent compliance monitor and cooperate in ongoing investigations.
Veraz Networks, Inc. (June 29) paid $300,000 to settle charges brought by the SEC that it violated the books and records and internal controls provisions of the Foreign Corrupt Practices Act (FCPA) by making illegal payments to foreign officials in China and Vietnam.
Charles Paul Edward Jumet (April 19), 53, was sentenced to 87 months in prison and fined $15,000. Prosecutors said it’s the longest sentence ever in an FCPA-related case. He pleaded guilty in November 2009 to being part of a decade-long bribery conspiracy in Panama. A two-count criminal information charged him with conspiring to violate the FCPA and giving a false statement to the FBI about how he paid some of the bribe money.
Robert Antoine (June 2), 62, of Miami and Haiti, a former employee of Haiti’s state-owned national telecommunications company, was sentenced to 48 months in prison for being part of a bribery and money-laundering scheme. He pleaded guilty in March this year to conspiracy to commit money laundering. He was also ordered by a federal judge in Miami to pay $1,852,209 in restitution and to forfeit $1,580,771, and serve three years of supervised release following his prison term.
John Webster Warwick (June 25), 64, was sentenced to 37 months in prison for his role in a conspiracy to pay bribes to former Panamanian government officials to secure maritime contracts. He also received two years of supervised release following his prison term and forfeited $331,000 in proceeds of the crime. The DOJ did not explain why his sentence was five years shorter than his co-defendant, Charles Jumet (see above).
Ousama M. Naaman (June 25), 61, a dual citizen of Canada and Lebanon, pleaded guilty to conspiracy and to violating the Foreign Corrupt Practices Act. Innospec’s former agent in Iraq was charged in a June 24, 2010 superseding information with engaging in an eight-year conspiracy to defraud the United Nations oil-for-food program and bribing Iraqi officials. No sentencing date was set.
Wojciech Chodan (April 21), 71, a U.K. citizen, was ordered extradited from Britain to the U.S. by a London court. He was indicted in February 2009 by a federal grand jury in Houston for helping KBR and its partners bribe Nigerian officials. His fellow countryman Jeffery Tesler, a London lawyer indicted at the same time, also lost his extradition hearing in March this year. With appeals, their extraditions may not be final for at least a year.
Gerald and Patricia Green (April 29 and June 7) Their sentencing was delayed and then removed from the court’s calendar. The judge in Los Angeles federal court is examining evidence about Mr. Green’s medical condition and sentences in similar cases.
Albert “Jack” Stanley (mid June), 66, had final sentencing delayed until at least September 23, 2010. The former chairman and CEO of KBR pleaded guilty in September 2008 to a two-count criminal information charging him with conspiracy to violate the Foreign Corrupt Practices Act and to commit mail and wire fraud. He’s free on unsecured bail of $100,000 pending final sentencing, which has been rescheduled a half dozen times. He was sentenced to 84 months in prison and a restitution payment of $10.8 million. The jail term is subject to review based on his cooperation with the government in related prosecutions (see Chodan and Tesler above).
Sojitz (May 27) The DOJ intervened in the second civil suit brought by Aluminium Bahrain BSC — known as Alba — against a raw material supplier and broker. It asked for a stay in Alba’s suit against Japanese trading company Sojitz Corp. More than two years ago, the Justice Department obtained a stay in Alba’s civil suit against Alcoa, Inc. The DOJ said discovery in the cases could interfere with the government’s own investigation into potential criminal wrongdoing including possible violations of the Foreign Corrupt Practices Act by Alcoa, Sojitz and other parties.
New Charging Document
Shot-show prosecution (April 19) The government filed a superseding indictment in the prosecution of the 22 shot-show defendants, charging them under a consolidated grand jury indictment with 44 counts, including conspiracy to violate the FCPA, substantive FCPA offenses, conspiracy to commit money laundering, and aiding and abetting.
In the Pipeline
Panalpina (April 29) The Swiss logistics giant said it expects settlement “in the near future” with the DOJ and SEC of FCPA-related charges. The case dates back to at least early February 2007. The DOJ noted then in connection with Vetco’s FCPA settlement that bribes in Nigeria “were paid through a major international freight forwarding and customs clearance company to employees of the Nigerian Customs Service . . .”
Civil Suit Private parties have no right of action under the FCPA. Only the DOJ and SEC can enforce it. Plaintiffs bring FCPA-related claims under RICO (18 U.S.C. § 1962(c)), conspiracy to violate RICO (18 U.S.C. § 1962(d)), fraud, civil conspiracy, breach of fiduciary duties, and others.
Parker Drilling’s directors (early June) were sued in a derivative action in Harris County, Texas after the company’s detailed disclosure about a DOJ / SEC investigation of compliance problems in Nigeria and Kazakhstan.