The Greens, BAE And More
Sunday, September 13, 2009 at 8:28PM
Richard L. Cassin in BAE Systems, Gerald Green, Lowell Bergman, Red Tape, Russia

A seven-man, five-woman federal jury in LA on Friday began deliberating the fate of the husband-and-wife movie producers accused of bribing a Thai official. Gerald Green, 77, and his wife Patricia, 52, were tried for conspiracy to violate the Foreign Corrupt Practices Act and violating the FCPA. Other charges included money laundering and illegally transporting money-laundering proceeds, obstruction, and filing false tax returns. They're facing up to five years in prison for each FCPA charge, up to 10 years for each tax count, and up to 20 years for the money-laundering and obstruction charges.

Prosecutors said the Greens paid the former governor of the Tourism Authority of Thailand Juthamas Siriwan more than $1.8 million in bribes. In return, she allegedly awarded them contracts to stage the Bangkok Film Festival worth about $13.5 million.

View prior posts about the Greens here.

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Plea bargaining in Britain? As noted by PBS / Frontline here, the U.K. Mail reported on September 5 that military equipment supplier BAE has been given until the end of the month by the Serious Fraud Office "to avoid a criminal trial for paying bribes in the Czech Republic, Tanzania, and South Africa." The pressure on BAE is a turnaround for the SFO. It caused an uproar in December 2006 by dropping an investigation into allegations the company bribed members of the Saudi Arabian government in exchange for the sale of Typhoon jet fighters. The SFO said it had to stop the investigation after Saudi Arabia threatened to end anti-terrorism cooperation with the British government.

The U.S. Justice Department, meanwhile, is reportedly still investigating BAE's payments to Saudi Prince Bandar bin Sultan of about $2 billion. He was formerly ambassador to the United States. Some of the payments allegedly passed through U.S. bank accounts he controlled.

In the same deal, BAE also delivered an Airbus 340. When interviewed by Frontline's Lowell Bergman earlier this year, the prince's lawyer, former FBI Director Louis Freeh, said the jetliner was a military aircraft and not his client's private plane. But Frontline said it had been directed to "statements by then British Secretary of State for Defense, Des Brow, who in a written answer to a parliamentary inquiry in June 2007 stated that:

Since 1 July 2006, aircraft HZ 124 has landed 15 times at RAF Brize Norton. The aircraft operated in accordance with the MOD regulations for civil aircraft use of military airfields. The regulations also cover the applicability and level of landing, housing, parking and insurance fees charges. The regulations have been adhered to for each flight."
Frontline said Airbus HZ 124 is registered to the Saudi Arabia Ministry of Defense and Aviation and was used for over a decade by Prince Bandar, who had it painted in the colors of his favorite football team, the Dallas Cowboys.

View prior posts about BAE and Prince Bandar here.

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Naming and shaming in Moscow.
Most companies try to solve corruption problems in Russia quietly, but not Ikea. Earlier this year, it loudly suspended a store-opening outside Moscow. It said local bureaucrats imposed a last-minute requirement that its new building be able to withstand winds nearly twice as strong as the most powerful gusts ever recorded at the store's location (here). Now, the New York Times' Andrew Kramer has written about another alleged bureaucratic shakedown of the global furniture retailer, this one in 2000 (here).

What's unusual is that the story is based on Ikea's own disclosures "to the New York Times last month, saying that it hoped publicity might compel the Russian authorities to investigate."

Here's an excerpt from Friday's article:

Weeks before the opening of its flagship store outside Moscow in 2000, Ikea was approached by employees of a local utility company. If the Swedish retailer wanted to have electricity for its grand opening, it had to pay a bribe.

Instead, Ikea rented diesel generators large enough to power a shopping mall. The generators roared to life in a loud rebuke to the corrupt executives who thought they had the retailer cornered, and soon the utility turned on the power. . . .

The board of Ikea’s operating company, which is based in the Netherlands, has concluded that the Russian executive hired to manage the generators was taking kickbacks from the rental company to substantially inflate the price of the service. Ikea said that such a fraud could cost it about $196 million over two years.

Ikea canceled the contract and sought redress in Russian civil court. But in rulings over the last two weeks, Ikea has lost another 5 million euros in damages that the judges awarded the generator rental company for breach of contract. . . .

“We have encountered something here that is outside the scope of what we normally encounter,” Mr. Thordson said, describing the global retailer’s situation in Russia. “I have never experienced anything like this. . . . .

Article originally appeared on The FCPA Blog (https://www.fcpablog.com/).
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