The Securities and Exchange Commission said Monday it sanctioned two former employees in the Dubai office of a U.S.-based defense contractor for violating the Foreign Corrupt Practices Act by taking government officials in Saudi Arabia on a “world tour” to help win business for the company. The two later created phony records to hide their offenses.
Without admitting or denying the findings, Stephen Timms agreed to pay $50,000 to settle the SEC’s administrative enforcement action, and Yasser Ramahi agreed to pay $20,000.
Both worked in sales at Oregon-based FLIR Systems Inc. It makes thermal imaging, night vision, and infrared cameras and sensor systems.
They’re U.S. citizens. Timms, 51, lives in Thailand and Ramah, 53, lives in the United Arab Emirates.
The SEC settled the case with an internal administrative order and didn’t go to court.
The agency found “that they violated the anti-bribery provisions . . . and the internal controls and false records provisions” of the FCPA.
They also “caused FLIR’s violations of the books and records provisions” of the FCPA, the SEC said.
The DOJ didn’t announce any enforcement action Monday against Timms or Ramahi or FLIR.
The SEC said its investigation is continuing.
FLIR won a $12.9 million contract to provide thermal binoculars to the Saudi Arabia government in November 2008.
Timms and Ramahi were the primary sales employees responsible for the contract, the SEC said. They were also involved in negotiations to sell FLIR’s security cameras to the same government officials worth $17.4 milion.
“At the time,” the SEC said, “Timms was the head of FLIR’s Middle East office in Dubai and Ramahi reported to him.”
Timms and Ramahi traveled to Saudi Arabia in March 2009 and gave five officials “expensive luxury watches during meetings to discuss several business opportunities.”
The SEC said the watches cost a total of $7,000.
A few months later, the SEC said, Timms and Ramahi arranged for key officials, including two who received watches, to take what Timms called a “world tour” of personal travel before and after they visited FLIR’s Boston facilities.
A visit to FLIR’s factory for an equipment inspection was a key condition of the contract, the SEC said.
“The officials traveled for 20 nights with stops in Casablanca, Paris, Dubai, Beirut, and New York City. There was no business purpose for the stops outside of Boston, and the airfare and hotel accommodations were paid for by FLIR,” according to the SEC.
Ramahi and Timms each had taken FCPA training at FLIR’s headquarters, the SEC said. The training “specifically identified luxury watches and side trips as prohibited gifts.”
The SEC said Timms and Ramahi directed FLIR’s local third-party agent to provide fake invoices that valued the five watches together at about $1,400 instead of $7,000.
The two also falsely claimed that FLIR’s payment for the world tour was a billing mistake by FLIR’s travel agent.
The Saudi Arab government eventually spent about $30 million on FLIR’s binoculars and cameras under the contracts that Timms and Ramahi negotiated.
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The SEC’s Release No.73616 for Administrative Proceeding File No.3-16281 In the Matter of Stephen Timms and Yasser Ramahi is here and its order (both dated November 17, 2014) is here.
Richard L. Cassin is the publisher and editor of the FCPA Blog. He can be contacted here.
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