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FCPA Blog Daily News

« The Fugitive Report 2010 | Main | California Company, Two Execs Charged In Mexico Utility Case »
Friday
Oct222010

Tobacco Exec Escapes Jail Term

Bobby Jay Elkin Jr., a former country manager in Kyrgyzstan for tobacco company Dimon Inc, now called Alliance One International, was sentenced yesterday to just three years probation and a $5,000 fine. He had pleaded guilty in August to a one-count criminal information charging him with conspiracy to violate the Foreign Corrupt Practices Act.

Elkin, 50, of Washington, D.C., could have been jailed up to five years and fined $250,000. The government had asked for a 38-month prison term.

According to a report by Mike Gangloff of the Roanoke (Virginia) Times, U.S. District Court Judge Jackson Kiser said probation was appropriate because of the detailed help Elkin gave to investigators. The judge also noted that in making the bribes, Elkin faced a choice of "either you do this or lose your job."

The paper said Judge Kiser "compared Elkin's actions to those of the CIA in Afghanistan. The CIA payments do not violate federal law, Kiser said, but 'it sort of goes to the morality of the situation.'"

Elkin paid bribes of more than $3 million to foreign government officials in Kyrgyzstan from 1996 through 2004 to win business for Dimon. He made cash payments to officials of the Kyrgyz tobacco authority, part of the government, to obtain export licenses and gain access to government-owned tobacco processing facilities. He also bribed local government officials to obtain permission to purchase tobacco from local growers, and to the Kyrgyz Tax Inspection Police to avoid tax inspections and penalties.

In 2005, Dimon Incorporated merged with Standard Commercial Corporation, both wholesale leaf tobacco merchants, to form Alliance One. The FCPA violations occurred before the merger.

In August this year, two foreign subsidiaries of North Carolina-based Alliance One paid a total of $9.45 million in fines to settle criminal FCPA charges with the DOJ. The companies were charged in a three-count criminal information with conspiring to violate the FCPA and substantive violations of the FCPA's antibribery and books and records provisions.

And in an SEC settlement, Alliance One disgorged $10 million for the bribes in Kyrgyzstan, and other bribes in China, Greece, and Indonesia.

In April, the SEC brought a civil enforcement action against Elkin and three other former employees of Dimon. It charged them with violating the anti-bribery provisions of the FCPA and aiding and abetting violations. The defendants agreed to settle the charges, with two of them paying $40,000 in penalties. The SEC didn't impose financial penalties on Elkin.

The Roanoke Times said Elkin went to Kyrgyzstan in 1996 for Dimon. The company helps cigarette makers buy tobacco from local growers. Elkin, the paper said, "quickly discovered that getting tobacco through multiple layers of bureaucrats meant handing out bags of $100 bills."

He reported the practice to his bosses at Dimon, who assured him there was nothing wrong. In 2004, however, Elkin disclosed the payments -- and the special account used to fund the bribery -- to a company auditor.

After the merger, Alliance One self-reported the practice. Elkin then began giving evidence to the DOJ and SEC. In 2005, Alliance One fired him.

He eventually found a new job in Kyrgyzstan with a Turkish tobacco company. At sentencing, Judge Kiser waived "the usual travel restrictions of probation to allow Elkin to return to Kyrgyzstan and resume his job," the Roanoke Times said.

Download a copy of the plea agreement in U.S. v. Bobby Jay Elkin Jr. here.

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