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Wednesday
Nov082017

Five charged, four plead guilty in Rolls-Royce bribes case

The DOJ unsealed FCPA charges against five men Tuesday for a bribery plot to help Rolls-Royce win an equipment contract on a gas pipeline from Kazakhstan to China. Four have pleaded guilty and the fifth man is a fugitive.

The guilty pleas and charges were unsealed in federal court in Ohio.

Acting Assistant Attorney General Kenneth Blanco said Tuesday the case "represents another important step towards leveling the playing field for all ethical and honest businesses.”

In January this year, the DOJ charged Rolls Royce plc with a conspiracy to violate the FCPA. The company entered into a deferred prosecution agreement that required it to cooperate in related investigations.

Rolls-Royce paid a U.S. criminal penalty of $170 million as part of an $800 million global settlement that also involved investigations by the UK and Brazil.

In the UK, the company paid nearly $600 million for a deferred prosecution with the SFO.

In Brazil, Rolls-Royce paid the Ministério Público Federal a $25.5 million criminal penalty under a leniency agreement.

The company admitted widespread bribery in at least a dozen countries including Kazakhstan.

The charges unsealed Tuesday against the five individuals involve bribes to a Kazakh official to win a $145 million contract to supply equipment and services for a gas pipeline.

Those pleading guilty are:

James Finley, 66, a UK citizen living in Taiwan. The former senior executive of Rolls-Royce pleaded guilty on July 28 in federal court in Ohio to one count of conspiracy to violate the FCPA and one count of violating the FCPA.

Keith Barnett, 48, of Houston, Texas, a former regional director in energy at Rolls-Royce, pleaded guilty to one count of conspiracy to violate the FCPA on December 20, 2016.

Aloysius Johannes Jozef Zuurhout, 53, of the Netherlands pleaded guilty to one count of conspiracy to violate the FCPA on June 13. He was a former energy sales employee at Rolls-Royce.

Andreas Kohler, 53, of Austria pleaded guilty to one count of conspiracy to violate the FCPA on June 6. The DOJ said he was a managing director at an international engineering and consulting firm. The firm wasn't named.

The fifth man charged is Petros Contoguris, 70, a Greek citizen living in Turkey. He's the founder and chief executive officer of Gravitas & CIE. International Ltd. "Contoguris is believed to be outside of the United States," the DOJ said Tuesday.

Contoguris was indicted on October 12. He faces one count of conspiracy to violate the FCPA, one count of conspiracy to launder money, seven counts of violating the FCPA, and 10 counts of money laundering. 

Rolls-Royce knew some payments to Contoguris’s company would go to a high-ranking Kazakh official of KazMunayGas National Co., the DOJ said.

In last year's action against Rolls-Royce, the DOJ said the company paid commissions of $5.4 million to "multiple advisors" in Kazakhstan between 2009 and 2012.

In 2012, Rolls-Royce hired a local distributor, knowing that a high-ranking Kazakh official with influence over Rolls-Royce's business actually owned the business, the DOJ said.

Tuesday's release said the DOJ had worked closely with "counterparts in Brazil and at the United Kingdom’s Serious Fraud Office."

The DOJ Tuesday also thanked "its law enforcement colleagues in Austria, Germany, the Netherlands, Singapore and Turkey."

In a statement Wednesday the SFO said,

The SFO’s investigation in respect of the conduct of individuals in Rolls-Royce Civil, Defence, Marine and former Energy Divisions continues. The SFO and DOJ continue to cooperate in their parallel investigations.

Sentencing dates for the defendants who pleaded guilty weren't announced.

Violations of the FCPA anti-bribery provisions, including conspiracies to violate the FCPA, are punishable by up to five years in prison.

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Richard L. Cassin is the publisher and editor of the FCPA Blog.