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Entries in Dimon Inc. (4)

Friday
Aug062010

Two Tobacco Firms Settle FCPA Charges

In an unusual tandem settlement, two unrelated U.S. tobacco companies and their foreign subsidiaries today resolved civil and criminal FCPA charges with the SEC and DOJ.

In the criminal cases, two foreign subsidiaries of North Carolina-based Alliance One International Inc. agreed to pay a total of $9.45 million in fines.  And a Brazilian subsidiary of Virginia-based Universal Corporation agreed to pay a $4.4 million criminal fine.

Alliance One's Swiss and Kyrgyzstan subsidiaries pleaded guilty in U.S. District Court for the Western District of Virginia to separate three-count criminal informations charging them with conspiring to violate the FCPA and violations of the anti-bribery provisions and books and records provisions of the FCPA.

Universal's Brazilian subsidiary pleaded guilty to a two-count information in the Eastern District of Virginia. It was charged with conspiring to violate the anti-bribery provisions and books and records provisions of the FCPA, and with violating the FCPA's anti-bribery provisions.

The parent companies -- Universal and Alliance One -- entered into non-prosecution agreements with the DOJ and agreed to retain independent monitors for three years. They're cooperating in the ongoing investigations.

In the SEC civil cases, Universal and Alliance One were ordered to pay disgorgement of $4.58 million and $10 million respectively. The SEC charged both companies with violating the FCPA's anti-bribery provisions in Thailand. It also said Alliance One payed bribes in Kyrgyzstan, China, Greece, and Indonesia. And it said Universal made improper payments in Malawi and Mozambique. The SEC's complaints alleged both Universal and Alliance One violated the books and records and internal control provisions of the FCPA.

Alliance One was formed in 2005 with the merger of Dimon Incorporated and Standard Commercial Corporation, both wholesale leaf tobacco merchants. The FCPA violations were committed by employees and agents of foreign subsidiaries of both Dimon and Standard before the merger.

Earlier this week, Bobby Jay Elkin Jr., a former Dimon executive, pleaded guilty to a one-count criminal information charging him with conspiracy to violate the FCPA. Elkin, 50, of Washington, D.C., was Dimon's country manager in Kyrgyzstan. He faces up to five years in prison and a $250,000 fine. His sentencing date hasn't been set.

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.

Final sentencing for Alliance One subsidiaries is scheduled for October 21, 2010.

Alliance One International trades on the NYSE under the symbol AOI.

Universal Corporation trades on the NYSE under the symbol UVV.

View the DOJ's August 6, 2010 release here.

View the SEC's Litigation Release No. 21618 and Accounting and Auditing Enforcement Release No. 3170 (both dated August 6, 2010) in Securities and Exchange Commission v. Universal Corporation, Inc., Civil Action No. 01:10-cv-01318 (RWR) (D.D.C.) (filed August 6, 2010) and Securities and Exchange Commission v. Alliance One International Inc., Civil Action No. 01:10-cv-01319 (RMU) (D.D.C.) (filed August 6, 2010) here.

Download the SEC's civil complaint against Universal Corporation here.

Download the SEC's civil complaint against Alliance One International here.

Wednesday
Aug042010

Tobacco Exec Pleads Guilty

Bobby Jay Elkin Jr., a former executive from tobacco company Dimon Inc, now called Alliance One International, pleaded guilty yesterday in federal court in Virginia to a one-count criminal information charging him with conspiracy to violate the Foreign Corrupt Practices Act. 

Elkin, 50, of Washington, D.C., was Dimon's country manager in Kyrgyzstan. He faces up to five years in prison and a $250,000 fine. No sentencing date has been set.

The DOJ said 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 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 Foreign Corrupt Practices Act and aiding and abetting violations. The defendants agreed to settle the charges.

According to the SEC's civil complaint, Dimon was subjected to continuous audits by Kyrgyz tax officials. Some Dimon personnel devoted most of their work hours to answering questions from the tax inspectors. As soon as one audit finished, another would begin. The inspectors were never satisfied. Because Dimon once "failed to submit two reports to the tax office," they imposed a  fine of about $171,741 and threatened to seize its bank accounts and tobacco inventory. The tax inspectors later offered to reduce the penalties in exchange for Dimon's cash payment.

Separately, the SEC said from 2000 to 2003, Dimon paid bribes to officials of the government-controlled Thailand Tobacco Monopoly.

Elkin wasn't penalized in the SEC civil action. He and the other defendants (two of whom paid penalties of $40,000) consented to the entry of final judgments permanently enjoining them from violating the anti-bribery provisions of the FCPA (Section 30A of the Securities Exchange Act of 1934) and aiding and abetting violations of Sections 13(b)(2)(A) and 13(b)(2)(B).

Alliance One International, Inc. was formed in May 2005 -- after the FCPA violations occurred -- with the merger of Dimon and Standard Commercial Corporation. The company trades on the NYSE under the symbol AOI.

View the DOJ's August 4, 2010 release here.

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

Thursday
Jul012010

Enforcement Report For Q2 '10

The first quarter of 2010 was the busiest ever for FCPA-related enforcement. This past quarter was one of the quietest for new enforcement actions, with just one from the DOJ and three from the SEC.

There were some sentencings -- including the longest prison term ever for an FCPA-related offense -- a few sentencing delays, a guilty plea, and some odds and ends. But during most of the quarter the DOJ was MIA and the SEC barely popped its head out.

Here's what happened:

DOJ / SEC Enforcement Actions

Bobby J. Elkin, Jr., Baxter J. Myers, Thomas G. Reynolds, and Tommy L. Williams (April 29) The SEC brought a civil enforcement action against the former employees of Dimon, Inc., now Alliance One International, Inc. Defendants Myers and Reynolds agreed to pay civil penalties of $40,000 each. All four defendants also consented to the entry of final judgments permanently enjoining them from violating the anti-bribery provisions of the FCPA (Section 30A of the Securities Exchange Act of 1934) and aiding and abetting violations of Sections 13(b)(2)(A) and 13(b)(2)(B).

Technip S.A. (June 28) The Paris-based engineering and construction firm resolved FCPA-related charges resulting from bribes to Nigerian officials through the KBR-related TSKJ joint venture. It agreed to pay the DOJ a $240 million criminal penalty. It also settled a civil complaint filed by the SEC by disgorging $98 million in profits. It was charged in a two-count criminal information with one count of conspiracy and one count of violating the FCPA. Its two-year deferred prosecution agreement with the DOJ requires Technip to retain an independent compliance monitor and cooperate in ongoing investigations.

Veraz Networks, Inc. (June 29) paid $300,000 to settle charges brought by the SEC that it violated the books and records and internal controls provisions of the Foreign Corrupt Practices Act (FCPA) by making illegal payments to foreign officials in China and Vietnam.

Sentenced

Charles Paul Edward Jumet (April 19), 53, was sentenced to 87 months in prison and fined $15,000. Prosecutors said it's the longest sentence ever in an FCPA-related case. He pleaded guilty in November 2009 to being part of a decade-long bribery conspiracy in Panama. A two-count criminal information charged him with conspiring to violate the FCPA and giving a false statement to the FBI about how he paid some of the bribe money.

Robert Antoine (June 2), 62, of Miami and Haiti, a former employee of Haiti’s state-owned national telecommunications company, was sentenced to 48 months in prison for being part of a bribery and money-laundering scheme. He pleaded guilty in March this year to conspiracy to commit money laundering. He was also ordered by a federal judge in Miami to pay $1,852,209 in restitution and to forfeit $1,580,771, and serve three years of supervised release following his prison term.

John Webster Warwick (June 25), 64, was sentenced to 37 months in prison for his role in a conspiracy to pay bribes to former Panamanian government officials to secure maritime contracts. He also received two years of supervised release following his prison term and forfeited $331,000 in proceeds of the crime. The DOJ did not explain why his sentence was five years shorter than his co-defendant, Charles Jumet (see above).

Guilty Plea

Ousama M. Naaman (June 25), 61, a dual citizen of Canada and Lebanon, pleaded guilty to conspiracy and to violating the Foreign Corrupt Practices Act. Innospec's former agent in Iraq was charged in a June 24, 2010 superseding information with engaging in an eight-year conspiracy to defraud the United Nations oil-for-food program and bribing Iraqi officials. No sentencing date was set.

Extradition

Wojciech Chodan (April 21), 71, a U.K. citizen, was ordered extradited from Britain to the U.S. by a London court. He was indicted in February 2009 by a federal grand jury in Houston for helping KBR and its partners bribe Nigerian officials. His fellow countryman Jeffery Tesler, a London lawyer indicted at the same time, also lost his extradition hearing in March this year. With appeals, their extraditions may not be final for at least a year.

Sentencing Delays

Gerald and Patricia Green (April 29 and June 7) Their sentencing was delayed and then removed from the court's calendar. The judge in Los Angeles federal court is examining evidence about Mr. Green's medical condition and sentences in similar cases.

Albert "Jack" Stanley (mid June), 66, had final sentencing delayed until at least September 23, 2010. The former chairman and CEO of KBR pleaded guilty in September 2008 to a two-count criminal information charging him with conspiracy to violate the Foreign Corrupt Practices Act and to commit mail and wire fraud. He's free on unsecured bail of $100,000 pending final sentencing, which has been rescheduled a half dozen times. He was sentenced to 84 months in prison and a restitution payment of $10.8 million. The jail term is subject to review based on his cooperation with the government in related prosecutions (see Chodan and Tesler above).

Intervention

Sojitz (May 27) The DOJ intervened in the second civil suit brought by Aluminium Bahrain BSC -- known as Alba -- against a raw material supplier and broker. It asked for a stay in Alba's suit against Japanese trading company Sojitz Corp. More than two years ago, the Justice Department obtained a stay in Alba's civil suit against Alcoa, Inc. The DOJ said discovery in the cases could interfere with the government's own investigation into potential criminal wrongdoing including possible violations of the Foreign Corrupt Practices Act by Alcoa, Sojitz and other parties.

New Charging Document

Shot-show prosecution (April 19) The government filed a superseding indictment in the prosecution of the 22 shot-show defendants, charging them under a consolidated grand jury indictment with 44 counts, including conspiracy to violate the FCPA, substantive FCPA offenses, conspiracy to commit money laundering, and aiding and abetting.

In the Pipeline

Panalpina (April 29) The Swiss logistics giant said it expects settlement "in the near future" with the DOJ and SEC of FCPA-related charges. The case dates back to at least early February 2007. The DOJ noted then in connection with Vetco's FCPA settlement that bribes in Nigeria "were paid through a major international freight forwarding and customs clearance company to employees of the Nigerian Customs Service . . .”

Civil Suit  Private parties have no right of action under the FCPA. Only the DOJ and SEC can enforce it. Plaintiffs bring FCPA-related claims under RICO (18 U.S.C. § 1962(c)), conspiracy to violate RICO (18 U.S.C. § 1962(d)), fraud, civil conspiracy, breach of fiduciary duties, and others.

Parker Drilling's directors (early June) were sued in a derivative action in Harris County, Texas after the company's detailed disclosure about a DOJ / SEC investigation of compliance problems in Nigeria and Kazakhstan.

Thursday
Apr292010

Manhandled Abroad

The SEC said today that it brought a civil enforcement action against four former employees of Dimon, Inc., now Alliance One International, Inc. It charged them with violating the anti-bribery provisions of the Foreign Corrupt Practices Act and aiding and abetting violations. The defendants agreed to settle the charges.

From 1996 through 2004, Dimon's subsidiary in Kyrgyzstan paid more than $3 million in bribes to various government officials to purchase Kyrgyz tobacco. Defendant Bobby J. Elkin, Jr., 49, a former country manager for Kyrgyzstan, arranged the bribes through a bank account held under his name called the Special Account.

Another defendant, Baxter J. Myers, 65, a former regional financial director, authorized transfers from a Dimon subsidiary's bank account to the Special Account, and defendant Thomas G. Reynolds, 54, a former corporate controller, recorded the payments made from the Special Account in Dimon's books.

Dimon also paid bribes in a scenario familiar to many western companies operating in high-risk countries. Its office, according to the SEC's civil complaint, was subjected to continuous audits by Kyrgyz tax officials. Some Dimon personnel devoted most of their work hours to answering questions from the tax inspectors. As soon as one audit finished, another would begin. The inspectors were never satisfied. Because Dimon once "failed to submit two reports to the tax office," they imposed a  fine of about $171,741 and threatened to seize its bank accounts and tobacco inventory. The tax inspectors later offered to reduce the penalties in exchange for Dimon's cash payment.

Separately, from 2000 to 2003, Dimon paid bribes of about $542,590 to officials of the government-controlled Thailand Tobacco Monopoly in exchange for about $9.4 million in sales contracts. Defendant Tommy L. Williams, 55, a former sales executive, directed tobacco sales from Brazil and Malawi to the Thailand Tobacco Monopoly through Dimon's agent in Thailand. He authorized the payment of bribes to government officials of the Thailand Tobacco Monopoly. These bribes were characterized as commissions paid to Dimon's agent in Thailand.

Defendants Myers and Reynolds  agreed to pay civil penalties of $40,000 each. All four defendants also consented to the entry of final judgments permanently enjoining them from violating the anti-bribery provisions of the FCPA (Section 30A of the Securities Exchange Act of 1934) and aiding and abetting violations of Sections 13(b)(2)(A) and 13(b)(2)(B). 

Alliance One International, Inc. was formed in May 2005 -- after the offenses described in the SEC's complaint -- with the merger of Dimon and Standard Commercial Corporation. The company trades on the NYSE under the symbol AOI.

View the SEC's April 29, 2010 Litigation Release No. 21509 in Securities and Exchange Commission v. Bobby J. Elkin, Jr., Baxter J. Myers, Thomas G. Reynolds, and Tommy L. Williams, Civil Action No. 1:10-cv-00661 (RMU) (D.D.C.) (filed April 28, 2010) here.

Download a copy of the SEC civil complaint here.