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FCPA Blog Daily News

Entries in Kyrgyzstan (7)

Monday
Feb162015

Russia demands Transparency International register as a ‘foreign agent’

Prosecutors in Moscow warned the Russian branch of Transparency International to register as a foreign agent, TI-Russia said in a statement posted on its website Friday.

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Friday
Dec142012

Forget the apples. Now it's Louis Vuitton

Under the general topic of graft, school corruption is a well-recognized sub-genre.

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Friday
Oct222010

Tobacco Exec Escapes Jail Term

Bobby Jay Elkin Jr., a former country manager in Kyrgyzstan for tobacco company Dimon Inc, now called Alliance One International, was sentenced to just three years' probation a $5,000 fine. He had pleaded guilty in August to a one-count criminal information charging him with conspiracy to violate the Foreign Corrupt Practices Act.

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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
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.

Monday
Apr122010

Leading Backwards

There's no way to measure how much corruption the U.S exports to other countries. But sometimes events reveal what may be happening. The latest case is Kyrgyzstan and a revolution triggered largely by public disgust with so much sleaze.

Writing in Forbes, Ariel Cohen said, "What's behind the revolution in Kyrgyzstan? Its people were fed up with the graft, nepotism and authoritarian ways of deposed president Kurmanbek Bakiyev. The irony is that Bakiyev rose to power riding the same wave of public discontent and revulsion. It enabled him to depose Askar Akayev, his equally corrupt predecessor, five years ago."

Where did Kyrgyzstan's corruption come from? The U.S. has used the country as a staging area for the war in Afghanistan. "Many Kyrgyz demonstrators," according to Tom Malinowski in Foreign Policy, "were disgusted by signs that their leaders were personally profiting from the increasingly high payments they extracted from the United States for use of the country's Manas air base (and believed that the U.S. government stayed silent about their government's abuses to keep the base)."

In Afghanistan itself, President Hamid Karzai has accused the U.S. of importing corruption into his country. While it's tempting to think he's merely deflecting blame, that's not the whole story. Stephen M. Walt said last week, also in Foreign Policy: "But even as we are telling the Afghans to stop corruption, we are contributing to it by pumping vast sums of cold hard cash into Afghan society. According to yesterday's New York Times, part of our strategy in southern Afghanistan consists of flooding places like Marjah with 'hundreds of thousands of dollars a week,' in an effort to buy the loyalty of the local population."

U.S. companies also play a role in overseas corruption, as FCPA enforcement actions demonstrate. A story in the Chinese press in December 2007 said, "According to a report by local consulting company Anbound, of the 500,000 bribery cases investigated in China over the last 10 years, 64 percent involved foreign companies." It mentioned allegations involving Lucent Technologies Inc., IBM, Cisco and NCR. The story quoted a Beijinger as saying: "I cannot understand after many foreign companies complain about corruption and bribery in China, then why are they doing similar things?"

What should we do with news about American's role in fueling overseas corruption? We shouldn't declare our country hopelessly hypocritical and unworthy of the right to enforce the FCPA. But knowing that American money contributes to the graft we're supposed to be fighting should give us some humility. It's too easy to scold someone else's graft while justifying our own.

Above all, the news should remind those in charge that our actions need to be consistent with our words, including the words of the FCPA. Otherwise, the world will laugh in our face.