Busy Week of FCPA-Related News
Last week was an unusually busy one for news relating to Foreign Corrupt Practices Act (FCPA) investigations, guilty pleas and arrests:
- As was widely reported, BAE Systems PLC announced last Monday that it was notified by the U.S. Department of Justice that the agency has commenced a formal investigation relating to the company's compliance with the FCPA, including the company's business with the Kingdom of Saudi Arabia.
- GlobalSantaFe Corp., an offshore oil and gas drilling contractor, announced that it is conducting an internal investigation of its Nigerian operations, focusing on agents who handled customs matters with respect to a Nigerian affiliate of the Company and whether those agents have fully complied with the FCPA and local laws.
- Global Industries, Ltd., a Louisiana-based company that provides offshore construction, engineering, project management and support services to the oil and gas industry, announced that it is conducting an internal investigation of its West Africa operations, focusing on the legality under the FCPA and local laws, of one of its subsidiary's reimbursement of certain expenses incurred by a customs agent in connection with shipments of materials and the temporary importation of its vessels into Nigeria.
- Si Chan Wooh, a former executive vice president and head of SSI International, Inc., a wholly-owned subsidiary of Schnitzer Steel Industries Inc., pleaded guilty to conspiracy to violate the FCPA. Wooh also agreed to pay about $40,000 in disgorged bonuses, interest and penalties to settle civil charges brought by the U.S. Securities and Exchange Commission. The SEC alleged that from 1999 to 2004, Wooh paid more than $200,000 and other gifts to managers of government-owned steel mills in China to induce them to purchase scrap metal from Schnitzer. Wooh has agreed to cooperate with the Justice Department in its long-running criminal investigation of Schnitzer Steel and its management. In 2006 Schnitzer Steel agreed to a deferred prosecution agreement with the DOJ and a cease and desist order with the SEC against future violations of the FCPA, and agreed to disgorge profits of $6,279,095 and prejudgment interest of US $1,446,106. Schnitzer Steel also agreed that its Korean subsidiary would plead guilty to violating the FCPA and pay a penalty of US $7,500,000.
- Leo Smith, a former executive of Pacific Consolidated Industries LP (PCI) was recently arrested for allegedly violating the Foreign Corrupt Practices Act (FCPA) as part of a conspiracy to bribe a U.K. Ministry of Defence (U.K. MOD) official in order to obtain contracts with the U.K. Royal Air Force. California-based PCI manufactures portable air separation units for the defense, petroleum and medical markets. The indictment alleged that Smith conspired to make over $300,000 in bribe payments for the benefit of a U.K. MOD official in order to obtain equipment contracts for PCI valued at over $11 million. In addition to the FCPA violations, the indictment also charges Smith with money laundering and tax offenses. Smith's conduct was discovered after PCI was acquired by a private equity company in late 2003. The private equity company ultimately referred this matter to the Justice Department. The U.K. official that received the payments was sentenced in April to two-years in prison.