Foreign CorruptPractices Act This presentation is for Discussion purposes only.
Overview Jurisdiction Corrupt Payments Foreign Officials Case study
Jurisdiction Issuers—A company with any class of stock traded in the US Domestic Concerns—US persons or companies organized under US laws Territorial Jurisdiction—Persons and companies acting on behalf of others subject to the FCPA
Corrupt Payments • Obtain or retain business • Offer, promise, or actual payment • Induce the official to misuse his position • Value vs. intent • Corrupt vs. Legitimate
Foreign Officials • Any officers of a government department or agency
BAE Systems, plc Formerly known as British Aerospace Subsidiaries throughout world (BAE Systems Inc.) One of largest defense contractors in the world
Primary Focus Series of long-term contracts between the U.K. and the Kingdom of Saudi Arabia BAE served as the prime contractor Reported that total value of contracts to BAE was in excess of £43,000,000,000
Primary Focus To investigate the corrupt nature of direct and indirect payments to KSA officials from BAE Jurisdiction over the corrupt acts
Hurdles Typical FCPA Investigation BAE Investigation Company under investigation cooperates Documents are collected from company or individuals Foreign law enforcement partners provide assistance in the collection of evidence BAE Systems, plc was not cooperative BAE would not produce any documents SFO investigation had been closed. Within the U.S., aspects of the case touched on various levels of the U.S. Government
Findings – Marketing Advisors Contracts were in legal trusts in offshore locations to avoid detection Marketing advisors were companies formed to protect the identity of the true advisor BAE made payments to these advisors via offshore companies Money from some of the known marketing advisors foreign bank accounts has been deposited into the U.S.
Findings – Travel Agents BAE funded travel for government officials The travel agents fulfilled any requests the officials had and then bill the expenses back to BAE Expenses included cars, boats, houses, shopping sprees, shipping Communications between BAE and the agents were coded A large portion of expenses originated in the U.S.
Findings – U.S. Deposits BAE also directly funded bank accounts within the U.S. were held by officials affiliated with the contract
Findings – Non KSA • Found scheme to use marketing advisers and offshore accounts was not limited to the Al Yamamah contract • Examined contracts awarded in the Czech Republic and Hungary for the lease of Gripen Fighter Jets • The Gripens contained U.S. controlled defense materials
BAE Systems plc pleads guilty • Pleads guilty to conspiracy
BAE Debarred and Fined Civil settlement with DoS for alleged violations of AECA and ITAR BAE Systems debarred and rescinded on same day Civil penalty of $79,000,000, the largest in Department history
Questions? Peter Y. Spohn Supervisory Special Agent Washington Field Office Squad CR-22 703-686-6188 Peter.Spohn@ic.fbi.gov