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U.S. v. Robert E. Thompson and James C. Reilly

 
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Health South - Reilly, James C.
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DOJ Criminal
:
July 1, 2004
:
U.S. v. Robert E. Thompson and James C. Reilly
:
U.S. v. Thompson, No. 04-0240 (N.D. Al. 2005)
:
In this case, the government used the Travel Act in an attempt to capture payments to a Saudi national who may or may not have been a government official.

Significantly, in this case the DOJ sought to hold an in-house lawyer responsible for drafting contracts that allegedly formed the conduit for bribes.
:
Healthcare-Hospitals
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Saudi Arabia
:
2000; 2001; 2002
:
Director General of the Saudi Foundation.
:
The DOJ alleged that James C. Reilly violated the FCPA by conspiring with Robert E. Thompson to arrange a sham contract that would create the appearance of a consulting agreement between the Director General of the Saudi Foundation and an Australian affiliate of HealthSouth Corporation ("HealthSouth"), but in reality constituted a corrupt payment in exchange for the Saudi Foundation awarding a contract to HealthSouth.

HealthSouth claimed to be the U.S.'s largest provider of outpatient surgery, diagnostic imaging and rehabilitative healthcare services and Reilly worked as one of its lawyers.

In 2000, the Saudi Foundation, a non profit organization funded by the Saudi Royal Family, announced that it planned to construct a 450-bed hospital in Saudi Arabia. HealthSouth began to negotiate a contract to provide staffing and management services for the hospital. On June 1, 2000, the Saudi Foundation's Director General asked for a $1,000,000 "finder's fee" in exchange for awarding the contract to HealthSouth. Thompson sought opinion of outside counsel, who told him that such a payment would violate the FCPA.

From July-December 2000, the DOJ alleged, Reilly, at Thompson's request, drafted, revised, and transmitted a contract that stated that the Director General would provide a HealthSouth affiliate in Australia consulting services for $500,000 per year for five years. On August 12, the Director General awarded HealthSouth the management contract for $10,000,000 for five years, payable in installments of $6 million and $4 million per year. In December 2000, the Saudi Foundation paid HealthSouth an installment of $6 million. That same month, HealthSouth wired $500,000 to the Australian affiliate's account, which the affiliate then used to pay the Director General. In 2002 and 2003, HealthSouth made payments of $500,000 and $525,915 to the affiliate, which the affiliate then used to pay the Director General. It is unclear whether the Director General received the remaining two payments.

The DOJ charged Thompson and Reilly with violating the FCPA's books and records provision by identifying the December 2000 payment to the Australian affiliate as for "consulting services" on the wire transfer form, but identifying the money as for professional fees in a journal entry. It further charged them with making unlawful payments under the Travel Act, apparently due to uncertainty as to whether the Director General was or was not a "government official." Thompson and Reilly were acquitted following a trial in May 2005. Two other Health South employees pleaded guilty to non-FCPA [ ]
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Books and records (Issuer)
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Travel Act
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Acquittal
:
Not stated.
:
0
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Employee of Issuer
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Lawyer
:
U.S.
:
Contract Procurement/Retention
:
50,000,000
:
Wire/check
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Sales Agent/Consultant
:
1,525,915
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Saudi Arabia
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Australia
:
No
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No