CORPORATE CRIME REPORTER
Companies Plead Guilty to Bribery, "Express Courier Service" Funneled
$2.1 Million in Bribes to Nigeria
21 Corporate Crime Reporter 7, February 7, 2007
How badly does General Electric want to expand its oil and gas business?
One month ago, GE announced that it would spend $1.9 billion to buy Vetco International, a leader in the oil and gas equipment business – with 4,500 employees in 30 countries – from its private equity firm owners.
Only one problem.
Vetco has a history of bribery.
And there was more in the closet.
GE demanded that the problems be cleared up.
And yesterday, they were – in a manner of speaking.
Three wholly owned units of Vetco International – Vetco Gray Controls, Inc., Vetco Gray Controls Ltd. and Vetco Gray UK Ltd – pled guilty yesterday to bribery and will pay fines of $6 million, $8 million and $12 million respectively – a total of $26 million in fines – the largest criminal fine in the history of the Foreign Corrupt Practices Act (FCPA).
A fourth unit – one that will not be purchased by GE – Aibel Group Ltd. – entered into a deferred prosecution agreement.
The three-year deferred prosecution agreement gives the Department of Justice veto power over key positions within the company – including executive chair of the board, the majority members of the compliance committee, including its chairperson, and compliance counsel.
The names of all of persons for all of these positions need to be submitted to the Justice Department within a week.
In February 2001, Vetco Gray UK began providing engineering and procurement services and subsea construction equipment for Nigeria's first deepwater oil drilling project – the Bonga Project.
From 2002 to 2005, federal officials alleged that each of the defendants engaged the services of an unnamed major international freight forwarding and customs clearing company and, collectively, authorized that agent to make at least 378 corrupt payments totaling approximately $2.1 million to Nigerian Customs Service officials to induce those officials to provide the defendants with preferential treatment during the customs process.
The defendants would pay the unnamed major international freight forwarding and customs clearing company for its “express courier service.”
The clearing company would then invoice the defendants for a “local processing fee” or an “administrative/transport fee.”
The bulk of the $2.1 million in bribes was paid in this manner.
Yesterday’s plea agreement represents the second time since July 2004 that Vetco Gray UK has pled guilty to violating the bribery.
On July 6, 2004, Vetco Gray UK, previously named ABB Vetco Gray UK Ltd., and an affiliated company pled guilty to violating the antibribery provision of the FCPA in connection with the payment of more than $1 million in bribes to officials a Nigerian government agency that evaluates and approves potential bidders for contract work on oil exploration projects.
Vetco’s defense was handled by Ray Banoun, a partner at Cadwalader in Washington, D.C.
officials said that the resolution of the case resulted largely from Vetco International’s
voluntarily disclosing the matter to the Justice Department and Vetco International’s
subsidiaries’ agreement to take significant remedial steps.
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