Two huge cases settled during the quarter. Both JGC and Johnson & Johnson made our top-ten list. Three other corporate settlements happened during quarter.
Entries in JGC (31)
In February, Tyson Foods settled FCPA offenses with the DOJ and the SEC for $5.2 million. The offenses related to illegal payments by company representatives to government-employed inspection veterinarians in Mexico, and a cover-up of the payments.
With yesterday's $218.8 million criminal fine, JGC joins the top ten FCPA cases of all time. Nine now involved non-U.S. companies, and the oldest -- Siemens from December 2008 -- is still the biggest.
For the tenth time, Jack Stanley's final sentencing has been delayed, this time until June 23.
Japan-based construction firm JGC Corporation -- the last of four partners who together paid $180 million in bribes to Nigerian officials -- will pay a $218.8 million criminal penalty to resolve FCPA-related charges.
Jeffrey Tesler, the British lawyer accused of helping KBR and its partners bribe Nigerian officials, will plead guilty in Houston federal court Friday, according to his lawyer, Bradley Simon.
KBR's former CEO, Albert "Jack" Stanley, left, who presided over a $180 million oversees bribery scheme, won't be sentenced until at least March 30.
The London lawyer accused by American authorities of helping KBR and its partners bribe Nigerian officials lost his battle against extradition yesterday.
There's never been a cooperating witness in FCPA history quite like him. A former corporate top gun, a global player, a captain of industry who once led the dark side and now sits with the prosecution, helping nail industry giants and along the way putting more than a billion dollars -- a billion dollars -- into the U.S. Treasury.
Make that $1.28 billion and counting. That's how much the DOJ and SEC have recovered in penalties and disgorgement so far from the TSKJ consortium members: $579 million from KBR / Halliburton, $365 million from Snamprogetti / ENI, and $338 million from Technip, with more to come from the final JV partner, JGC.
The man who helped make it all possible is Albert "Jack" Stanley. He was chairman and CEO of KBR and headed the TSKJ consortium. For ten years starting in 1995, he organized about $180 million in bribes to Nigerian leaders in return for $6 billion in contracts.
But in 2008 his life came crashing down. After pleading guilty to conspiring to violate the FCPA, he was sentenced to seven years in prison. That sentence, however, is subject to court review based on his cooperation in related prosecutions. Is he cooperating? Big time.
He knows dates, places, times, amounts, and names. He knows offshore companies and bank accounts, circuitous money flows, and black-bag exchanges. He's free on bail and he's talking. As each TSKJ member falls before the DOJ and SEC, the details of what they did pile up, and Stanley's shadow is always there.
So how much of his seven-year sentence will the 66-year-old Stanley serve? Our guess is not much. He is, after all, the billion dollar man.
The fourth member of the TSKJ consortium -- JGC Corporation of Japan -- and the only one that hasn't settled Foreign Corrupt Practices Act charges with the U.S. government, disclosed in its latest annual report that it's in talks with the DOJ "about a potential resolution" of FCPA-related charges.
The company did not say how much it has reserved, if anything, for a settlement with the DOJ.
Last week, Snamprogetti and its parent company ENI of Italy agreed to pay $365 million to resolve FCPA-related charges for Snamprogetti's role in the TSKJ joint venture. The financial penalties included a $240 million criminal fine to the DOJ and $125 million in disgorgement to the SEC.
Two weeks ago, Paris-based TSKJ member Technip resolved FCPA-related charges with the DOJ and SEC for $338 million -- a $240 million criminal penalty and $98 million in disgorgement.
And in February 2009, consortium leader KBR and its former parent Halliburton paid $579 million to settle FCPA-related charges, including a $402 million criminal penalty and $177 million in disgorgement.
Technip, Snamprogetti, KBR, and JGC won contracts through the TSKJ joint venture from Nigeria LNG Ltd. between 1995 and 2004 to design and build LNG facilities on Bonny Island. The contracts were worth more than $6 billion. The joint venture bribed Nigerian government officials to win the work, including "top-level executive branch officials." The DOJ alleges TSKJ paid about $132 million to a Gibraltar corporation controlled by London lawyer Jeffrey Tesler and more than $50 million to a Japanese trading company, intending to use some of the money as bribes.
JGC, formerly Japan Gasoline Co., Ltd., was founded in 1928. It specializes in engineering projects related to refining and natural gas processing. Its shares trade in Tokyo but not the U.S., making it the only TSKJ partner that's not an "issuer" and not subject to the FCPA's books and records and internal controls provisions.
JGC did not disclose whether it is under investigation in Japan for the Nigeria bribery.
Here's the complete disclosure from JGC's annual report for the year ended March 31, 2010. It was released on May 10, a month before the Technip and Snamprogetti settlements. JGC provided the English translation:
In or around 1995, JGC joined a consortium formed by M.W. Kellogg Company (a U.S. company that later became KBR), Technip (a French company), and Snamprogetti (an Italian company) in order to i) bid for the construction of liquefied natural gas plant in Bonny Island, Nigeria (“Project”) and ii) implement the Project if awarded. The consortium was called “TSJK”. TSKJ was awarded the contract for the first staged of the Project (trains 1 & 2) in 1995, and thereafter up to 2004 three additional contracts to build additional 4 trains.
In or around 2002, French authority initiated investigations into TSKJ after allegations that in relation to the Project bribery payments were made to Nigerian government officials, and, in 2004, U.S. Department of Justice (“DOJ”) and Securities and Exchange Commission (“SEC”) initiated investigations in respect of the alleged breach of the U.S. Foreign Corrupt Practices Act.
As publicly reported, in 2009, KBR reached settlements with DOJ and SEC as a result of the aforesaid investigations. Technip and ENI (the parent company of Snamprogetti) announced in their recent disclosure that they have created accounting reserves or a potential settlement of the U.S. investigation.
We hereby report that DOJ has been in contact with JGC regarding their investigation of the TSKJ matter and JGC and DOJ are engaged in discussions about a potential resolution of that investigation relating to JGC.
Under the current circumstances, the impact of the ongoing discussions with DOJ on JGC’s operations cannot be estimated.
Special thanks to a reader in the U.S. who provided the research for this post.