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« Resource Alert: FCPA.ME | Main | New Indictment In Old Haiti Bribe Case »
Wednesday
Jul132011

Military Equipment Maker Pays $16 Million In Settlement

Armor Holdings Inc., a military and law enforcement equipment company formerly listed on the NYSE and now owned by BAE Systems, will pay $16 million to resolve FCPA violations arising from bribes to secure U.N. contracts and covering the payments up.

Armor will pay the DOJ a criminal penalty of $10.3 million and will disgorge $5.7 million to the SEC.

A former executive at Armor, Jonathan Spiller, was indicted with the 22 shot-show defendants. He pleaded guilty this year to conspiracy to violate the FCPA. He hasn't been sentenced.

[Editor's Note: The SHOT Show is owned by the National Shooting Sports Foundation (NSSF) and is a registered trademark of the NSSF. The SHOT Show has no connection with the arrests made by the FBI in Las Vegas in January 0f 2010. No arrests were made at the SHOT Show and neither the SHOT Show nor the NSSF are in any way involved in the matter.]

An Armor subsidiary, the DOJ said, paid more than $200,000 in commissions to a third-party sales agent, knowing some would be used to bribe a U.N. procurement official. Armor won U.N. contracts for body armor worth $6 million.  

Armor falsely recorded the commission payments on its books and records. And it kept off its books and records $4.4 million in additional payments to agents and other third-party intermediaries.

The offenses occurred from 2001 to 2006.

In 2007, BAE Systems of the U.K. bought Armor, which was formerly based in Jacksonville, Florida.

BAE pleaded guilty last year to conspiring to defraud the United States by impairing and impeding its lawful functions, to make false statements about its Foreign Corrupt Practices Act compliance program, and to violate the Arms Export Control Act and International Traffic in Arms Regulations. It was sentenced to pay a $400 million criminal fine, placing it third on our top ten list.

In today's settlement of the Armor Holdings case, the DOJ credited BAE for its new compliance measures.

"The Justice Department’s agreement recognizes Armor’s complete voluntary disclosure of the conduct," the DOJ said, "its internal investigation and cooperation with the department and the SEC; the fact that the conduct took place prior to the acquisition of Armor by BAE; and Armor’s extensive remedial efforts undertaken before and after its acquisition by BAE."

The DOJ gave Armor a non-prosecution agreement and didn't require it to retain a corporate monitor.

View the DOJ's July 13, 2011 release here.

View the SEC's Litigation Release No. 22037 and Accounting and Auditing Enforcement Release No. 3302 (both dated July 13, 2011) in Securities and Exchange Commission v. Armor Holdings, Inc., Case No. 1:11-cv-01271(D. D.C.)(ESH) (filed July 13, 2011) here.

Download the SEC's civil complaint against Amor Holdings here.

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