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FCPA Blog Daily News

Entries in Monty Fu (2)

Wednesday
Sep172008

What's The Tally?

The Justice Department says it plans to prosecute more individuals under the Foreign Corrupt Practices Act -- and send them to jail. We looked through our posts to see how men and women fared over the past year. Below are excerpts from posts dealing with those who've been criminally charged or sentenced under the FCPA, or settled enforcement actions with the SEC, or both, during the past twelve months. The titles link to the original posts.

More Individuals Indicted For FCPA Violations (September 8, 2008)

The Justice Department said it arrested four people last week on charges that they and their company bribed Vietnamese officials in exchange for contracts to supply equipment and technology to government agencies in Vietnam.

The DOJ said U.S. citizens Nam Nguyen, 52, of Houston; Joseph Lukas, 59, of Smithville, N.J.; Kim Nguyen, 39, of Philadelphia; and An Nguyen, 32, of Philadelphia were arrested after they, along with Nexus Technologies Inc., were indicted on Sept. 4, 2008, by a federal grand jury in Philadelphia on one count of conspiracy to violate the Foreign Corrupt Practices Act and four substantive counts of violating the FCPA.

# # #


Ex-KBR Boss Pleads Guilty (September 4, 2008)

The Justice Department said today that Albert “Jack” Stanley, 65, a former chairman and CEO of KBR, the global engineering and construction firm based in Houston, pleaded guilty to a two-count criminal information charging him with conspiracy to violate the Foreign Corrupt Practices Act and conspiracy to commit mail and wire fraud. He appeared in U.S. District Court in his hometown of Houston before U.S. District Judge Keith P. Ellison. . . .

Under the plea deal accepted by the court, Stanley faces seven years in prison and a restitution payment of $10.8 million.

# # #


Former Execs Avoid Hard Time (September 3, 2008)

Two former telecommunications executives who admitted bribing employees of state-owned companies in Africa and concealing the payments have avoided prison in exchange for their cooperation in an ongoing FBI investigation.

The Justice Department said yesterday that Roger Michael Young, 48, of Washington, D.C., a former managing director of ITXC Corporation, has been sentenced to five years probation, including three months home confinement, three months in a community confinement center, and a $7,000 fine. He pleaded guilty in July 2007 to violating the Foreign Corrupt Practices Act and the Travel Act.

Former ITXC Vice President Steven J. Ott, 49, of Princeton, N.J., who also pleaded guilty, was sentenced in July this year to five years probation, including six months in a community confinement center and six months home confinement. He was fined $10,000.

A third defendant in the case, Yaw Osei Amoako, 55, of Hillsborough, N.J., pleaded guilty in September 2006. He was sentenced in August 2007 to 18 months in prison followed by two years of supervised release, and a $7,500 fine.

# # #

FCPA Guilty Plea For Bribing UK Official (May 9, 2008)

A former co-owner and executive of California-based Pacific Consolidated Industries (PCI) pleaded guilty yesterday to violating the Foreign Corrupt Practices Act. Martin Eric Self, 51, of Orange, California pleaded guilty to a two-count information charging him with violating the FCPA by paying more than $70,000 in bribes to a U.K. Ministry of Defence official. The bribes were intended to secure equipment contracts with the U.K. Royal Air Force. . . .

Self is scheduled to be sentenced in federal court on September 29, 2008. Although he faces a maximum sentence of five years in prison per count, his plea agreement contemplates a prison term of eight months, subject to the court's final determination at sentencing.

# # #


Former ITXC Execs Settle Civil FCPA Charges (May 8, 2008)

The Securities and Exchange Commission said that on April 18, 2008 it settled civil proceedings under the Foreign Corrupt Practices Act against Steven J. Ott, Roger Michael Young, and Yaw Osei Amoako. The SEC charged the former executives of ITXC Corp. with violating the antibribery and books and records provisions of the FCPA by bribing senior officials of government-owned telephone companies in Nigeria, Rwanda and Senegal, and concealing and falsely reporting the illegal payments.

In settling the SEC's civil enforcement action, Ott, Young and Amoako each consented to the entry of a final judgment that permanently enjoins them from violating Sections 30A and 13(b)(5) of the Securities Exchange Act of 1934, Rule 13b2-1 thereunder, and from aiding and abetting violations of Exchange Act Section 13(b)(2)(A) and, with respect to Ott and Young, violations of Exchange Act Section 13(b)(2)(B). Amoako also must pay $188,453 in disgorgement and prejudgment interest. He took kickbacks for some of the bribes he paid to the foreign officials.

# # #

Ex-World Bank Manager Sentenced For FCPA Offense (April 28, 2008)

The Justice Department has announced the April 22, 2008 sentencing of former World Bank employee, Ramendra Basu. The Indian national and U.S. permanent resident received 15 months in prison for conspiring to award World Bank contracts to consultants in exchange for kickbacks and for helping a contractor bribe a foreign official in violation of the Foreign Corrupt Practices Act. In addition to the 15- month prison term, Basu was sentenced to two years supervised release and 50 hours of community service. U.S. v. Basu, (Cr. No. 02-475) D.D.C., November 2002.

# # #


That's Entertainment? (December 19, 2007)

Wow! It's not often -- never, in fact -- that we can talk about the LA movie scene and tap Variety as one of our sources. But here it is. The Department of Justice just announced that a Los Angeles film executive and his wife were arrested on allegations of making corrupt payments to a Thai government official in order to obtain lucrative contracts to run an international film festival in Bangkok, in violation of the Foreign Corrupt Practices Act.

Gerald Green, 75, and his wife Patricia Green, 52, both of Los Angeles, were arrested on a criminal complaint filed on Dec. 7, 2007, in federal court in Los Angeles and unsealed today. The complaint alleges that the Greens conspired to pay more than $1.7 million in bribes for the benefit of a government official with the Tourism Authority of Thailand (TAT) in order to obtain the film festival contract and other contracts with the TAT worth more than $10 million.

[The Greens are awaiting trial.]

# # #


Schnitzer's Former Boss Settles FCPA Charges (December 14, 2007)

The former chairman and ceo of Schnitzer Steel Industries, Inc. resolved charges on December 13, 2007 brought by the Securities and Exchange Commission under the U.S. Foreign Corrupt Practices Act. Robert W. Philip, 60, of Portland, Oregon, will pay about $250,000 to settle charges that he violated the antibribery, books and records and internal controls provisions of the FCPA (Section 30A of the Securities Exchange Act of 1934 [15 U.S.C. § 78dd-1], Section13(b)(2)(A) [15 U.S.C. § 78m(b)(2)(A)], and Section 13(b)(2)(B) [15 U.S.C. § 78m(b)(2)(B)]). He served as Schnitzer's president beginning in 1991, as its chief executive officer from 2002, and as chairman from 2004. He left the company in May 2005.

# # #


Another Former Willbros Executive Pleads Guilty (November 6, 2007)

Jason Edward Steph, 37, who once served as general manager of on-shore operations for a subsidiary of Willbros Group Inc., entered into a plea agreement with the U.S. Department of Justice on November 5, 2007. He pleaded guilty to conspiring to bribe officials of the government of Nigeria with more than $6 million -- in violation of the U.S. Foreign Corrupt Practices Act. Steph, of Sunset, Texas, was indicted on July 19, 2007. He now faces five years in prison and a $250,000 fine. . . .

Steph also said that in February and March of 2005 he, former Willbros executive Jim Bob Brown, and others arranged for the payment of approximately $1.8 million in cash to government officials in Nigeria. Brown pleaded guilty to a similar charge on Sept. 14, 2006. Steph and Brown are cooperating with the government’s ongoing investigation . . . .

[Steph and Brown are awaiting sentencing.]

# # #


Syncor's Founder Settles FCPA Charges With The SEC (October 1, 2007)

Monty Fu, the founder of Syncor International Corp., agreed with the Securities and Exchange Commission on September 27, 2007 to resolve U.S. Foreign Corrupt Practices Act charges by consenting to a permanent injunction against FCPA books-and-records violations and agreeing to pay a $75,000 civil penalty. Fu was Syncor's CEO from 1985 to 1989 and board chairman from 1985 to November 6, 2002, when he went on paid leave until he resigned in December 2002.

# # #


A.T. Kearney's Former India President Violated The FCPA (September 26, 2007)

The U.S. Securities and Exchange Commission announced on September 25, 2007 two settled enforcement actions based on violations of the books and records provisions of the Foreign Corrupt Practices Act. The actions involved the founder and former president of A.T. Kearney Ltd's India business, Chandramowli Srinivasan, and Kearney's former parent company, Electronic Data Systems Corp. . . .

For violating Sections 13(b)(5) and 30A of the Securities Exchange Act of 1934, Srinivasan paid a civil penalty of $70,000.

.

Monday
Oct012007

Syncor's Founder Settles FCPA Charges With The SEC

Cardinal Health's 2003 Acquisition of Syncor Established Important FCPA Precedents Concerning Pre-Merger Due Diligence and Successor Liability

Monty Fu, the founder of Syncor International Corp., agreed with the Securities and Exchange Commission on September 27, 2007 to resolve U.S. Foreign Corrupt Practices Act charges by consenting to a permanent injunction against FCPA books-and-records violations and agreeing to pay a $75,000 civil penalty. Fu was Syncor's CEO from 1985 to 1989 and board chairman from 1985 to November 6, 2002, when he went on paid leave until he resigned in December 2002.

Over a 17-year period ending in 2002, Syncor's Taiwan subsidiary made corrupt payments to doctors at government-owned and managed hospitals. In January 2003, Cardinal Health Inc. acquired Syncor, whose common stock before the acquisition had been registered with the SEC and listed on NASDAQ's National Market.

In December 2002, the SEC settled civil and administrative proceedings against Syncor, which paid a $500,000 civil penalty and agreed to a cease-and-desist order. See SEC v. Syncor International Corp., C.A. No. 1:02CV02421 (EGS) (D.D.C.) (filed Dec. 10, 2002), Litigation Release No. 17887 (Dec. 10, 2002). The DOJ at the same time settled criminal FCPA charges against Syncor Taiwan, which paid a $2 million fine. See U.S. v. Syncor Taiwan, Inc., No. 02-CR-1244-ALL (C.D. Cal.) (filed Dec. 4, 2002). The SEC did not explain why Fu's case took so long to resolve.

The 2002 cases and the circumstances of Cardinal Health's subsequent acquisition of Syncor were legally significant. They established or helped clarify the application of successor liability for FCPA violations and an acquirers' duty to discover, disclose and remedy potential FCPA violations of its target.

Cardinal Health (NYSE: CAH) is commonly believed to be the "Requestor" in DOJ Opinion Procedure Release 2003-01 (January 15, 2003) . The Release noted that:

"The Requestor is a U.S. issuer. Requestor intends to purchase the stock of Company A, another U.S. company which has both U.S. and foreign subsidiaries, and thereafter operate it as a subsidiary. During its due diligence efforts, Requestor learned that officers of a foreign subsidiary, including officers located within the United States, authorized and made payments to individuals employed by foreign state-owned entities to obtain or retain business. Requestor notified Company A of its findings, and both companies commenced parallel investigations of Company A's operations throughout the world. The companies then disclosed the results of their investigations to the Department of Justice and the staff of the U.S. Securities and Exchange Commission (the "SEC")."

The Release then said that "[w]ith Requestor's encouragement and approval, Company A [Syncor] has taken certain remedial actions, including making appropriate disclosures to the investing public, issuing instructions to each of its foreign subsidiaries to cease all payments to foreign officials, and suspending the most senior officers and employees implicated in the payments pending the conclusion of its investigation."

"Both Requestor and Company A wish to proceed with the acquisition," the Release continued. "Requestor, however, is concerned that by acquiring Company A it is also acquiring potential criminal and civil liability under the FCPA for the past acts of Company A's employees." In light of the Requestor's concerns, it "undertakes to do the following once the transaction closes and it becomes the owner of Company A:

1. Requestor will continue to cooperate with the Department and the SEC in their respective investigations of the past payments and will similarly cooperate with foreign law enforcement authorities;

2. Requestor will ensure that any employees or officers of Company A found to have made or authorized unlawful payments to foreign officials are appropriately disciplined;

3. Requestor will disclose to the Department any additional pre-acquisition payments to foreign officials made by Company A or its subsidiaries that it discovers after the acquisition;

4. Requestor will extend to Company A its existing compliance program. Such compliance program will, if necessary, be modified to insure that it is reasonably designed to detect and deter, through training and reporting, violations of the FCPA and foreign bribery laws; and

5. Requestor will ensure that Company A implements a system of internal controls and makes and keeps accurate books and records."

The DOJ concluded by saying it would not hold the Requestor responsible for the pre-acquisition conduct "of companies that will be wholly-owned subsidiaries following the acquisition. This statement of intent does not, of course, apply to any payments made after the date of acquisition, nor does it apply to individuals involved in making or authorizing the payments." The Release was understood to mean that acquirers who do less than the Requestor / Cardinal Health did or promised to do may face successor civil and criminal liability for FCPA violations committed by target companies before the acquisition.

The principles established and discussed in the Cardinal Health - Syncor Release were echoed in Opinion Procedure Release 04-02 (July 12, 2004), requested by JPMorgan Partners Global Fund and others trying to acquire upstream oil, gas and petrochemical businesses from ABB Ltd.

View the SEC's September 28, 2007 Litigation Release No. 20310 Here.

View the SEC's Complaint Against Monty Fu Here.

View Opinion Procedure Release 2003-01 Here.

View Opinion Procedure Release 2004-02 Here.