On a weekly basis – or so it seems - media allegations surface of corruption by or related to American companies. This post highlights three such instances.
Koch Industries Inc., one of the world’s largest privately held companies active in diverse industries, was recently the focus of a wide-ranging article in Bloomberg Markets Magazine (see here). Among the allegations are those that could implicate the FCPA such as “improper payments to secure contracts in six countries [Algeria, Egypt, India, Morocoo, Nigeria, and Saudi Arabia] dating back to 2002, authorized by the business director of the company’s Lock-Glitsch affiliate in France.” According to the Bloomberg report, the improper payment allegations stem from civil court wrongful termination cases in France
On this site, Koch responds to many of Bloomberg’s claims. As to the alleged payments implicating the FCPA, Koch does not deny the payments only that the company “uncovered this activity itself terminated all involved and took full responsibility.”
Recently, an Austrian magazine reported that Motorola Solutions Inc. is under investigation by the DOJ and SEC concerning its business conduct in several European countries. According to a report by Joe Palazzolo (Wall Street Journal Corruption Currents), the “investigation began in 2009 after the company opened its own internal investigation.” According to the report, part of the investigation and scrutiny concerns the company’s relationship with Alfons Mensdorff-Pouilly.
If that name sounds familiar to you, it should. Alfons-Mensdorff-Pouilly is the former BAE agent charged by the U.K. Serious Fraud Office in January 2010 with “conspiring with others to give or agree to give corrupt payments [...] to unknown officials and other agents of certain Eastern and Central European governments, including the Czech Republic, Hungary and Austria as inducements to secure, or as rewards for having secured, contracts from those governments for the supply of goods to them, namely SAAB/Gripen fighter jets, by BAE Systems Plc.” Within days, the SFO dropped the charges in connection with its settlement with BAE (see here for the prior post). As highlighted in this prior post, the SFO stated that BAE would not agree to its plea deal unless the SFO dropped the charges against Alfons-Mendsdorff-Pouilly.
Recently Analogic Corp., a high-technology, signal- and image-processing company, disclosed in its annual report (here) as follows. “In the fourth quarter of fiscal year 2011, we identified certain transactions involving our Danish subsidiary BK Medical, and certain of its foreign distributors, with respect to which we have raised questions concerning compliance with law, including Danish law and the United States Foreign Corrupt Practices Act, and our business policies. These have included transactions in which the distributors paid BK Medical amounts in excess of amounts owed and BK Medical transferred the excess amounts, at the direction of the distributors, to third parties identified by the distributors. We have been unable to ascertain with certainty the ultimate beneficiaries or the purpose of these transfers. We have voluntarily disclosed this matter to the Danish Government, the United States Department of Justice and the Securities and Exchange Commission.” The company further stated as follows. “We have terminated the employment of certain BK Medical employees that were involved in the transactions. We have decided to wind down our relationship with certain of the BK Medical distributors, and are evaluating our relationship with certain other of the BK Medical distributors, that were involved in the transactions.”
Successor Liability for Chevron?
This Washington Post article highlights a recent Global Witness report alleging that ”Oranto Petroleum paid a bribe to the Liberian legislature in 2007 so that an oil contract would be ratified.” According to the report, “Chevron Corp. ignored evidence of corruption when it later bought 70 percent of the shares of [Oranto] in 2010. According to the Global Witness Report, ““despite evidence of this corruption being in the public domain at the time, a large share of the three offshore contracts awarded to Oranto was purchased by Chevron in 2010.” A copy of the Global Witness Report can be downloaded here.