Jump to content Jump to menu
Why Register?

Shearman FCPA Website: Cases Logo Shearman & Sterling LLP FCPA.Shearman.com: The One-Stop Resource on the Foreign Corrupt Practices Act

U.S. v. York International Corporation

 
:
York International - York International Corporation
:
DOJ Criminal
:
October 1, 2007
:
U.S. v. York International Corporation
:
U.S. v. York International Coporation, 1:07-cr-00253-RJL-1 (D.D.C. 2007)
:
This is an Oil-for-Food case in which further investigation revealed additional payments to foreign officials outside of Iraq.

York International was acquired by Johnson Controls, Inc. before the filing of the Deferred Prosecution Agreement. Since the activities in question occured prior to the acqusition, the Department of Justice did not bring any actions against Johnson Controls, Inc. but instead charged York, which Johnson Controls maintained as a seperate corporate entity for that purpose.
:
Building Products
:
Bahrain, Egypt, India, Iraq, Turkey, United Arab Emirates
:
1999; 2000; 2001; 2002; 2003; 2004; 2005
:
Government officials of the Republic of Iraq; Employees of government customers and contractors of government customers in Bahrain, Egypt, India, Iraq, Turkey, and the United Arab Emirates.
:
In April 1995, the U.N. adopted Security Council Resolution 986, which permitted the government of Iraq to sell oil and to use proceeds from those sales to purchase humanitarian supplies such as food for the Iraqi people ("U.N. Oil-for-Food Program"). In an extensive scheme, the Iraqi government received illicit payments in the form of surcharges from oil purchasers and kickbacks, often termed "after sales service fees," from humanitarian goods suppliers. The kickback payments were masked by inflating the contract price, usually by 10% of the contract value.

From November 2000 to March 2003, York Air Conditioning and Refrigeration FZE ("York FZE"), a subsidiary of York International Corp. ("York International"), used a Jordanian company as an intermediary to make a series of indirect kickback payments to the Iraqi government in exchange for receiving contracts to supply its products to various Iraqi ministries and governmental departments. In 2003-2004, York Air Conditioning and Refrigeration, Inc. ("York Inc.") used one of its employees, a Syrian sales manager, to make payments to an intermediary, which is suspected of passing along the payments to governmental appointees responsible for managing the construction of a luxury hotel and convention complex. From September 1999 through December 2005, York Inc. and York FZE used contractors and false invoices to extract cash from the companies that was, in turn, used to make hundreds of kickback or bribe payments.

On October 1, 2007, York International entered into a three-year deferred prosecution agreement with the DOJ. The criminal information attached to the agreement charges York International with wire fraud and violation of the books and records provisions of the FCPA, as well as conspiracy to commit such offenses. York International agreed to pay a $10 million fine and to submit the appointment of an independent monitor for its compliance program. In a related SEC litigation, the company also separately consented to the entry of a final judgment enjoining it from further violations and to pay over $10 million in disgorgement and interest, as well as a $2 million civil penalty.
:
Conspiracy - Books & Records
:
Conspiracy - Wire Fraud
:
Compliance Monitor, Deferred-prosecution Agreement, Fine
:
Fine of $10,000,000
:
10,000,000
:
0
:
Issuer
:
U.S.
:
Contract Procurement/Retention
:
10,700,000
:
Cash, Wire/check
:
Sales Agent/Consultant
:
1,197,000
:
Bahrain, Egypt, India, Iraq, Turkey, United Arab Emirates
:
United Arab Emirates, United States
:
Yes
:
India