John O’Shea is charged with one count of conspiracy to violate the FCPA, four counts of international money laundering, and one count of falsifying records in a federal investigation. He also faces a forfeiture count.
Jury selection in his trial is scheduled to start in Houston on October 25.
Will the trial happen? Here are some reasons why he may not risk it:
1. Been there, done that.
O’Shea is using some of the same arguments and tactics the Lindsey defendants used in their unsuccessful FCPA defense.
In both cases, illegal payments allegedly went to officials of CFE — the Mexican state-owned electric utility Comisión Federal de Electridad.
O’Shea, who worked for ABB in Texas until 2004, has said the FCPA doesn’t apply to employees of state-owned enterprises like CFE. The judge in the Lindsey case already rejected that argument.
Although Lindsey’s judge barred prosecutors from using a supporting affidavit from a U.S. State Department official on the ‘foreign official’ issue, O’Shea’s judge, Lynn N. Hughes, ruled that the document was admissible. It should help the government.
In the Lindsey case, on September 8 the judge will hear the defendants’ motion to dismiss based on government misconduct, including withholding evidence. The judge vacated their sentencing until after the hearing.
In O’Shea’s case, the judge already rejected a motion to dismiss based on government misconduct.
2. Look who’s talking.
Fernando Basurto, a Mexican citizen O’Shea hired to act as ABB’s sales agent, admitted in a guitly plea in 2009 that he paid kickbacks to officials at CFE in exchange for contracts for ABB. He was arrested in Dallas in April 2009 and charged with conspiracy and structuring transactions to evade currency reporting requirements. He eventually pleaded guilty to one count of conspiracy to violate the FCPA, launder money, and falsify records, and now faces up to five years in prison.
Basurto is expected to testify against O’Shea in return for a lighter jail sentence. According to a court order, he won’t be sentenced until a month after O’Shea’s trial is finished.
3. O’Shea’s former employer, ABB, is on the government’s team.
ABB discovered the alleged bribery during an internal investigation. It self-disclosed the payments and an alleged cover up to the Justice Department and the Securities and Exchange Commission and helped with their investigations.
In September 2010, ABB Ltd of Switzerland reached a $58 million settlement with the DOJ and SEC. Its U.S. subsidiary, ABB Inc., pleaded guilty to a criminal information charging it with one count of violating the anti-bribery provisions of the FCPA and one count of conspiracy to violate the FCPA.
ABB has been cooperating with prosecutors, handing over evidence developed during its internal investigations.
4. Lot’s to lose.
For O’Shea, the conspiracy and substantive FCPA counts each carry a penalty of up to five years in prison. The money laundering and falsification of records counts each carry a maximum penalty of 20 years in prison. The indictment also gives notice of criminal forfeiture.
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As the DOJ says, an indictment is merely an accusation and defendants are presumed innocent until and unless proven guilty beyond a reasonable doubt.
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