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FCPA Blog Daily News

Entries in Bangladesh (50)

Monday
Jul162012

Unclean Hands At World Bank, Leader Charges

The Prime Minister accused the World Bank of pressuring Bangladesh to hire a banned contractor, and delaying disbursement of aid money.

Click to read more ...

Tuesday
Jun262012

SNC-Lavalin Execs Charged In Canada

This is the second prosecution in Canada for bribes to officials in Bangladesh.

Click to read more ...

Tuesday
Dec202011

Aon Pays $16.2 Million In Settlement

Aon Corporation, one of the biggest insurance brokerage firms in the world, agreed today to settled FCPA charges with the DOJ and SEC.

Click to read more ...

Tuesday
Jun282011

From Canada, First Overseas Antibribery Plea Deal

Niko Resources, a publicly traded oil and gas company based in Calgary, was fined C$9.5 million (US$9.7 million) after pleading guilty to bribing a Bangladeshi minister.

Click to read more ...

Tuesday
Jun142011

The Road To Corruption

A new World Bank study on corruption in the roads sector shows the challenges contractors and engineering firms working in developing countries face when trying to avoid being drawn into schemes that violate the Foreign Corruption Practices Act or the anti-corruption laws of other nations or both.

Click to read more ...

Tuesday
Dec282010

Alcatel-Lucent Settles Bribery Case

Paris-based Alcatel-Lucent S.A. will pay $137 million to the DOJ and SEC for bribing officials in Costa Rica, Honduras, Malaysia, and Taiwan.

Click to read more ...

Sunday
Jan112009

Chasing Dirty Money

The Foreign Corrupt Practices Act may frighten business people everywhere, but it has never been a big concern for crooked overseas officials. That's because they can't be prosecuted under the FCPA, which is aimed exclusively at punishing those who pay them bribes. But the Justice Department may have found one way to help plug that gap.

Last week it filed a forfeiture action against bank accounts in Singapore held by Arafat "Koko" Rahman (pictured above), the son of Bangladesh's former prime minister, Khaleda Zia. The accounts allegedly hold nearly $3 million in bribe money that Siemens AG and China Harbor Engineering Company paid to Rahman and other Bangladeshi officials.

Siemens and three of its subsidiaries were penalized $800 million after pleading guilty last month to violating the Foreign Corrupt Practices Act. One of the subsidiaries, Siemens Bangladesh, admitted that from 2001 to 2006, it paid $5.3 million in bribes through purported business consultants to Rahman and other local officials in order to win a mobile telephone project.

The Justice Department says it has forfeiture jurisdiction over the money because the proceeds of foreign offenses such as bribery and extortion that flow through the United States are covered by U.S. money laundering laws. Some of the money that ended up with Rahman came from a U.S. bank account, according to the DOJ, and the bribes paid in U.S. dollars were sent through the U.S. financial system before landing in the Singapore accounts.

The Singapore government, meanwhile, has reportedly received an official U.S. request for the funds. And last month, the head of Bangladesh's Anti-Corruption Commission said Singapore authorities had already frozen $1.6 million belonging to Rahman.

Acting Assistant Attorney General Matthew Friedrich said the Justice Department will not only "prosecute companies and executives who violate the Foreign Corrupt Practices Act, we will also use our forfeiture laws to recapture the illicit facilitating payments often used in such schemes."

View the DOJ's January 9, 2009 release here.

For a discussion about why foreign officials who take bribes cannot be prosecuted under the FCPA, see our earlier post here.
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Friday
Jan092009

Aon Pays £5.25 Million Corruption Fine

The U.K.'s Financial Services Authority said yesterday that it has fined Aon Ltd £5.25 million ($8.05 million) for failing to recognize and control the risks of overseas payments being used as bribes. The fine is the largest the FSA has levied for financial crimes. Aon Ltd is the principal U.K. subsidiary of Chicago-based Aon Corporation, the world's biggest insurance broker.

Aon Corporation disclosed in November 2007 an internal investigation into possible violations of the Foreign Corrupt Practices Act and non-U.S. anti-corruption laws. Aon said then in its Form 10-Q that it had self-reported the investigation to the Department of Justice, the Securities and Exchange Commission and others, and that it had already agreed with U.S. prosecutors to toll any applicable statute of limitations. The U.S. investigations are still pending.

This is now the third case brought by U.K. authorities involving overseas bribery by U.K. companies. In September 2008, the Overseas Anti-Corruption Unit of the City of London Police said an employee of CBRN Team Ltd, a U.K. security consulting firm, and an official of Uganda, had pleaded guilty to bribery charges. The CBRN employee received a suspended sentence and the Ugandan official was sentenced to twelve months in jail. And in October last year, the U.K.'s Serious Fraud Office reached a £2.25 million civil settlement with construction firm Balfour Beatty plc for alleged unlawful accounting in connection with overseas "payment irregularities" which it self-reported.

Apparently to emphasize the new willingness of her agency and other U.K. authorities to prosecute overseas bribery, Margaret Cole, the FSA's director of enforcement, said:

The involvement of UK financial institutions in corrupt or potentially corrupt practices overseas undermines the integrity of the UK financial services sector. The FSA has an important role to play in the steps being taken by the UK to combat overseas bribery and corruption. We have worked closely with other law enforcement agencies in this case and will continue to take robust action focused on firms’ systems and controls in this area.
According to its website, the Financial Services Authority is an independent non-governmental body with statutory powers under the Financial Services and Markets Act 2000. It has a range of rule-making, investigatory and enforcement powers intended to "promote efficient, orderly and fair financial markets and help retail financial service consumers get a fair deal." The Treasury appoints its 12-member board.

Between January 2005 and September 2007, according to the FSA, Aon Ltd didn't properly assess or control the risks involved in its dealings with overseas firms and individuals who helped it win business. "As a result of Aon Ltd’s weak control environment, the firm made various suspicious payments, amounting to approximately US$7 million, to a number of overseas firms and individuals." The payments were made in Bahrain, Bangladesh, Bulgaria, Burma, Indonesia and Vietnam.

The FSA said Aon cooperated fully and agreed to settle early in the investigation, qualifying for a 30% discount under the FSA’s settlement discount scheme. Without the discount the fine would have been £7.5 million.

View the FSA's January 8, 2009 release here.

Download the FSA's Final Notice (January 6, 2009) here.

View Aon's January 8, 2009 statement here.
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Thursday
Dec252008

Help Wanted For Siemens Report

One of ProPublica's outstanding investigative reporters, T. Christian Miller, wrote the story below (which ProPublica co-published with MSN Money). We reprint it under ProPublica's generous license ("You can republish our articles for free, if you credit us, link to us, and don't edit our material or sell it separately.")

If you have trouble accessing the DOJ and SEC charging documents linked in the story (we did), you can also find them at the bottom of our earlier post here.

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Help Us Name Names in Siemens Corruption Scandal

by T. Christian Miller, ProPublica - December 22, 2008 1:05 pm EST

Get ready for the Siemens World Corruption Tour, 2001-2008. Siemens pleaded guilty last week to corruption across the globe, receiving a record-setting fine -- $1.6 billion (which sounds like a lot, but really, it's just 0.3 percent of their revenue during those years.)

In announcing the fine, the Justice Department and the Securities and Exchange Commission released formal complaints detailing how Siemens bribed government officials all around the world. (We published a story in Sunday's New York Times profiling the Siemens accountant at the center of the scandal.)

However -- and this is a big "however" if you're into accountability -- they released none of the names of the corrupt bureaucrats that took the cash or the Siemens officials who paid it.

This was done, Justice folks said, to protect the integrity of ongoing investigations and to comply with privacy laws in various countries.

At the hearing prosecutors seemed a bit wistful that they couldn't reveal the names, which were provided to Judge Richard Leon in a sealed file. Lori Weinstein, the dogged prosecutor who pursued the case, said the department could not provide exact names. But, she said, the documents were sprinkled with clues to provide "sufficient clarity" for the court to figure out who was who.

Some identifications are vague -- there are plenty of "government officials." But others are more specific. (Hello, "Wife of the former Nigerian Vice President, a dual U.S.-Nigerian citizen.") ProPublica figures that with the help of readers, we might be able to ID at least some of these folks. Below, you'll find descriptions of the bribees. Send us a name and a link sourcing the information.

To get things started, take the case of the Argentine identity card contract. The SEC's complaint said that Siemens paid bribes to a certain "president of Argentina" who left office in 1999. Not too hard to figure out that one -- Carlos Menem ran the country from 1989 to 1999. Looks like the buck really did stop there.

This is by no means an exhaustive list. As of last count, 16 countries had investigations ongoing into Siemens. Our list below includes only those bribery schemes detailed in the formal complaints by the Justice Department and the Securities and Exchange Commission.

E-mail us if you find clues to figure out the other grafters.

Argentina
Source: SEC Complaint, p. 21
National Identity Card contract (1998-2004)
Contract Amount: $1 billion
Bribe Amount: $40 million
Recipients:

  • President of Argentina until 1999 (Carlos Menem)
  • Minister of the Interior
  • Head of Immigration Control
  • Cabinet ministers

Bangladesh
Source: SEC Complaint, p. 19
Mobile Phone contract (2004-2006)
Contract Amount: $40.9 million
Bribe Amount: $5.3 million
Recipients:

  • Son of then-Prime Minister
  • Minister of Posts & Telecommunications
  • Director of Procurement for the Bangladesh Telegraph & Telephone Board
  • In addition, Siemens Ltd. Bangladesh hired relatives of two BTTB and Ministry of Posts and Telecom officials.

Venezuela
Source: SEC Complaint, p. 14
Metro contracts (2001-2007)
Valencia and Maracaibo metro systems
Contract Amounts: $642 million
Bribe Amount: $16.7 million
Recipients:

  • A high-ranking member of the central Venezuela government
  • Two prominent Venezuelan attorneys acting on behalf of government officials
  • A former Venezuelan defense minister and diplomat

Israel
Source: SEC Complaint, p. 17
Power plants (2002-2005)
Contract Amount: $786 million
Bribe Amount: $20 million
Recipients:

  • Former director of the Israel Electric Company
  • Payments routed through brother-in-law of former CEO of Siemens Israel Ltd.

Nigeria
Source: SEC Complaint, p. 20
Telecommunications projects (2000-2001)
Contract Amount: $130 million
Bribe Amount: At least $4.5 million
Recipients:

  • Wife of the former Nigerian Vice President, a dual U.S.-Nigerian citizen who lived in the U.S.
  • "likely" the former President of Nigeria
  • "likely" the former Vice President of Nigeria

Vietnam
Source: SEC Complaint, p. 22
Hospital equipment sales (2005-2006)
Contract Amount: $6 million
Bribe Amount: $383,000
Recipients:

  • Government officials

Source: SEC Complaint, p. 27
Mobile network (2002)
Contract Amount: $35 million
Bribe Amount: $140,000
Note: Siemens did not win the project but agreed to pay 8 percent to 14 percent of project value to Vietnamese government officials
Recipients:

  • "likely" Vietnamese Ministry of Defense officials
  • Vietel, state-owned mobile phone network

China
Source: SEC Complaint, p.16
Metro trains and signaling devices contracts (2002-2007)
Contract Amount: $1 billion
Bribe Amount: $22 million
Recipients:

  • Government officials

Source: SEC Complaint, p. 18
High voltage lines (2002-2003)
Contract Amount: $838 million
Bribe Amount: $25 million
Recipients:

  • Government officials

Source: SEC Complaint, p. 23
Medical equipment sales (2003-2007)
Contract Amount: $295 million
Bribe Amount: $14.4 million
Recipients:

  • Deputy Director, Songyuan City Central Hospital, convicted in China and sentenced to 14 years in prison

Source: SEC Complaint, p.24
Hospital equipment sales (1998-2004)
Contract Amount: Unknown
Bribe Amount: $650,000
Recipients:

  • Chinese hospital officials

Russia
Source: SEC Complaint, p. 25
Traffic control system (2004-2006)
Contract Amount: $27 million
Bribe Amount: $741,419
Recipients:

  • Government officials

Source: SEC Complaint, p. 27
Hospital equipment (2000-2007)
Contract Amount: Unknown
Bribe Amount: $55 million
Recipients:

  • Russian state-owned hospital officials

Mexico
Source: SEC Complaint, p. 26
Refinery modernization (2004)
Contract Amount: Unknown
Bribe Amount: $2.6 million
Recipients:

  • Senior official of Pemex, state-owned oil company

Iraq
Source: SEC Complaint, p. 28
Oil for Food program (2000-2003)
Contract Amount: $124 million
Bribe Amount: $1.7 million
Recipients:

  • Iraqi Ministry of Electricity officials
  • Iraqi Ministry of Oil official
So who are these folks? Send us a name and a link sourcing the information.
_________

Will readers of the FCPA Blog contribute to this story? Let's see.

* * *
A Siemens / Jefferson Link? Meanwhile, a story in the Dec. 24 edition of Harper's Magazine by Ken Silverstein refers to the earlier joint ProPublica/New York Times story about Siemens, and then says: "Now ProPublica has asked for help identifying some of the alleged recipients of the bribes who are described but not named in the SEC complaint. One of those people appears to be Jennifer Atiku-Abubakar, who is tied to the scandal involving the former Louisiana congressman William Jefferson and is also a donor to the Republican Party. But I want to emphasize that I have no way of knowing whether the charges made in the complaint about her are accurate. . . . According to this Washington Post story, she is the wife of Atiku Abubakar, the very controversial former vice president of Nigeria from 1999 to 2007."
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Monday
Dec152008

Final Settlements For Siemens

As expected, Siemens AG pleaded guilty Monday to violating the internal controls and books and records provisions of the Foreign Corrupt Practices Act, reaching settlements with the U.S. Department of Justice and the Securities and Exchange Commission. Also on Monday, Siemens resolved charges by the Munich Public Prosecutor’s Office based on its corporate failure to supervise its officers and employees.

It will pay a criminal fine of $450 million in the DOJ settlement and $350 million in disgorgement of profits under its agreement with the SEC. In the German case, it will pay €395 million (about $569 million), on top of the €201 million it paid in October 2007 to settle a related action brought by the Munich Public Prosecutor.

In Monday's hearing in Washington, D.C. before U.S. District Judge Richard J. Leon, the German industrial giant pleaded guilty to one count each of violating the FCPA's internal controls and books and records provisions. Its Argentina subsidiary also pleaded guilty to conspiracy to violate the books and records provisions of the FCPA, and its Bangladesh and Venezuela subsidiaries pleaded guilty to conspiracy to violate the anti-bribery and books and records provisions.

The U.S. dispositions require appointment of a compliance monitor for four years. Siemens has already named Theo Weigel, a lawyer who served in the German Parliament and as the country's finance minister.

In a sign that U.S. prosecutions of individuals tied to the case may follow, the DOJ said Siemens "also agreed to continue fully cooperating with the Department in ongoing investigations of corrupt payments by company employees and agents."

At a press conference after Monday's hearing, Matthew Friedrich, the Acting Assistant Attorney General at the DOJ's Criminal Division, said the Justice Department "in recent years significantly increased its FCPA enforcement. From 2001 to 2004, the Department resolved or charged 17 FCPA cases. For the period of 2005 to 2008, that number is 42 resolutions, representing an increase of more than 200 percent within these four years as compared to the prior four-year period."

What's potentially even more significant, he said, is that fighting public corruption has gone global:

Through international instruments like the OECD convention and the U.N. convention against corruption, we have seen our international partners significantly step up their anti-corruption efforts. Everything we're seeing suggests that this trend will continue. South Africa, for example, became the 37th country and the first African nation to become a party to the OECD convention in 2007. Israel followed suit in September of this year, becoming the 38th signatory.
And on the nature of graft and why the fight against it is important, he said:
For let there be no doubt that corruption is not a victimless offense. Corruption is not a gentlemen's agreement where no one gets hurt. People do get hurt. And the people who are hurt the worst are often residents of the poorest countries on the face of the earth, especially where it occurs in the context of government infrastructure projects, contracts in which crucial development decisions are made, in which a country will live by those decisions for good or for bad for years down the road, and where those decisions are made using precious and scarce national resources.
_____________

View a copy of the DOJ's Dec. 15, 2008 release here.

Download a copy of the DOJ's Dec. 15, 2008 plea offer here.

View a transcript of the DOJ's Dec. 15, 2008 press conference here.

Download the DOJ's charging documents, sentencing memo and joint statement at the bottom of our prior post here.

View the SEC's Litigation Release No. 20829 (December 15, 2008) and Accounting and Auditing Enforcement Release No. 2911 (December 15, 2008) in Securities and Exchange Commission v. Siemens Aktiengesellschaft, Civil Action No. 08 CV 02167 (D.D.C.) here.

Download the SEC's complaint against Siemens here.

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Friday
Dec122008

Siemens To Plead Guilty

Bloomberg and the Associated Press are reporting that Siemens AG will plead guilty and pay at least $800 million in fines and disgorgement to settle global corruption charges with the U.S. Department of Justice and the Securities and Exchange Commission.

A hearing in U.S. District Court in Washington in front of Judge Richard J. Leon on whether to accept the settlement is scheduled for Dec. 15, according to Sheldon Snook, a court spokesman.

Prosecutors are recommending a fine of $450 million for the company and subsidiaries in Venezuela, Argentina and Bangladesh for violations of the Foreign Corrupt Practices Act and the U.N. oil for food program. Siemens will also have to forfeit $350 million in profits and submit to monitoring to ensure compliance with anti-bribery laws, reports Bloomberg.

Siemens' $800 million settlement payments would dwarf the previously highest FCPA penalty. In April 2007, Baker Hughes paid $44.1 million. Last month Siemens said it had reserved €1 billion for any settlement with U.S. authorities.

"The German company," Bloomberg says, "knowingly used off-book accounts to conceal corrupt payments, mischaracterized bribes in corporate accounting and falsely described kickbacks paid to the Iraqi government in connection with the United Nations oil-for-food program, U.S. Attorney Jeffrey Taylor said in a criminal information filed today in Washington."

Siemens had disclosed that its questionable payments around the globe amounted to at least €1.3 billion. Earlier this year, the company said it plans to sue eleven former executives, including two former chief executives, for failing to prevent the company's corrupt practices. It also agreed last year to pay a fine in German proceedings of €201 million.

The company had hoped to settle the U.S. proceedings by late 2007. Its talks then with U.S. authorities were apparently derailed when it found that the scope of its global corruption was more extensive than originally disclosed.

View our prior posts about Siemens here.

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Tuesday
Sep162008

The FCPA Isn't Fun And Games

Mark Mendelsohn -- the Justice Department official responsible for criminal prosecutions under the Foreign Corrupt Practices Act -- has left no doubt that the government is targeting individuals. Here's what he told an audience at an American Bar Association panel discussion in Washington, D.C. last week:

The number of individual prosecutions has risen – and that’s not an accident. That is quite intentional on the part of the Department. It is our view that to have a credible deterrent effect, people have to go to jail. People have to be prosecuted where appropriate. This is a federal crime. This is not fun and games.
Mendelsohn is the Deputy Chief of the Fraud Section at the DOJ's Criminal Division. He was quoted in the Sept. 16, 2008 edition of the Corporate Crime Reporter.

How much is enforcement increasing? During the past five years, the DOJ has investigated more overseas public bribery cases than in the prior 20 years. In 2007, the DOJ launched 16 prosecutions, double the number from 2006. What about 2008? There are 84 FCPA investigations pending. Press reports indicate the DOJ has a dozen prosecutors assigned to FCPA cases. They're supported by a team of FBI agents willing to use wire-taps and other surveillance techniques to catch offenders.

Executives still weighing the chances of getting caught should listen to this: "Problems in a faraway country," Medelsohn said, "are more likely to be learned by us – sitting here in Washington – than ever before. People in Bangladesh can e-mail me directly with an allegation that a company in Bangladesh is paying bribes to a government official there. Information about our work is now known around the world. The media is paying a great deal of attention to corruption issues. There is a lot more English language media reporting around the world. It’s more difficult to hide. . . .”

Mendelsohn also said new ways to resolve cases -- including non-prosecution agreements, deferred prosecution agreements, and corporate compliance monitors -- are tools that give companies an incentive to investigate, self-disclose and take corrective actions on their own. He didn't say so, but companies trying to settle with the DOJ are likely to cough up individuals responsible for the illegal behavior.

And hiding evidence abroad probably won't work. “Another factor," Mendelsohn said, "is that we have been increasingly effective in gathering evidence overseas through treaties as well as informal arrangements with law enforcement in other countries. That has made our work easier. Foreign law enforcement authorities are beginning to investigate and prosecute their own cases. That has had a positive effect on our efforts.”

Thanks to the excellent Corporate Crime Reporter for this and other recent stories about FCPA enforcement.

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