In another serious blow to the DOJ’s FCPA unit, former ABB manager John O’Shea was acquitted yesterday of bribing officials at Mexico’s state-owned electric utility and covering up the payments.
U.S. District Judge Lynn N. Hughes granted O’Shea’s motion for acquittal on the substantive charges at the close of the prosecution’s case. He then dismissed the jury.
The judge said the government’s chief witness, Fernando Basurto Jr., couldn’t tie O’Shea to the alleged bribery and cover up. Judge Hughes said O’Shea’s conduct was reasonably explained by lawful motives.
O’Shea was represented by Joel M. Androphy (pictured) and Sarah M. Frazier, partners of Berg & Androphy, and associate Ashley Gargour.
Androphy said, “Deflecting blame for bribery in corruption-ridden countries onto unknowing business executives is both Cervantian and unfair. My hope is that our victory for Mr. O’Shea will encourage others wrongfully accused under the FCPA to fight the charges against them.”
Judge Hughes also questioned the prosecution’s granting of immunity to Fernando Basurto Sr. that allowed him to disclose selective information to prosecutors. He didn’t testify at the trial.
The government had accused O’Shea of authorizing corrupt payments to officials of Mexico’s Comisión Federal de Electricidad (CFE) through Basurto’s company in exchange for an ABB contract to provide utility products and services.
O’Shea faced one count of conspiracy to violate the FCPA, twelve substantive FCPA counts, four counts of international money laundering, and one count of falsifying records in a federal investigation. If convicted on all counts, he could have been sentenced to more than twenty years in prison.
Chris Matthews of the Wall Street Journal said O’Shea still faces the money laundering counts and a charge of falsifying records, and could be retried for those offenses.
Fernando Basurto Jr., a Mexican citizen, admitted in a guitly plea in 2009 that he paid kickbacks to officials at CFE in exchange for contracts for ABB. He’s waiting to be sentenced on one count of conspiracy to violate the FCPA, launder money, and falsify records.
In September 2010, ABB Ltd of Switzerland reached a $58 million settlement with the DOJ and SEC. Its U.S. unit that O’Shea worked for pleaded guilty to one count of violating the anti-bribery provisions of the FCPA and one count of conspiracy to violate the FCPA.
O’Shea’s acquittal was the latest in a string of setbacks for the DOJ in its prosecution of individuals under the FCPA.
In December last year, a federal judge in Los Angeles dismissed indictments against three defendants because of misconduct by prosecutors. Keith Lindsey and Steve K. Lee, and their company Lindsey Manufacturing, were convicted by a jury of bribing Mexican officials, also at the electric utility CFE. But Judge Howard Matz threw out the convictions. He said prosecutors withheld evidence and violated court orders, among other things. The DOJ is appealing the dismissals.
Also in December, a federal judge in Washington, D.C. dismissed FCPA conspiracy charges against six Africa sting defendants. Five of the defendants face other charges and their trial is ongoing. But Judge Richard Leon’s ruling resulted in the outright acquittal of Stephen G. Giordanella, who faced only one count of conspiracy to violate the FCPA. The judge said there was insufficient evidence to sustain a conspiracy conviction.
In July last year, the first Africa sting trial ended in a mistrial for four other defendants. Judge Leon declared the mistrial when the jury failed to reach a verdict after deliberating for five days. The government said it will retry the four defendants later this year.
O’Shea’s lawyer Ashley Gargour said, “Justice was served with this acquittal of Mr. O’Shea. A married father of two daughters and a recent grandfather, John has had an exemplary career for more than 35 years as an engineer, manager, and businessman specializing in computer systems that run electricity grids and other sophisticated infrastructure.”
O’Shea was arrested in November 2009. His trial in Houston opened on January 11. Jason Varnado, Nicola Mrazek, Charles Duross, and Lisa Diemert appeared for the DOJ.
The case is U.S. v. John Joseph O’Shea, No. H:09-cr-629, in the U.S. District Court for the Southern District of Texas, Houston Division.
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