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SEC v. York International Corporation

 
:
York International - York International Corporation
:
SEC Civil
:
October 1, 2007
:
SEC v. York International Corporation
:
SEC v. York International Corporation, 1 :07-cv-01750-RCL, (D.D.C. 2007)
:
Although York International was acquired by Johnson Controls, Inc. on December 9, 2005 and became a wholly owned subsidiary of Johnson Controls, the SEC nevertheless charged York for its conduct while it was a free-standing issuer.
:
Building Products
:
Bahrain, China, India, Iraq, Nigeria, United Arab Emirates
:
2000; 2001; 2002; 2003; 2004; 2005; 2006
:
Officials of the Iraqi government; officials of a state-owned hotel and convention complex (The Conference Palace) in Dubai; officials of the Indian Navy; and employees of ship builders and ship yards owned by the Chinese government.
:
York settled this action with the SEC without admitting or denying the following facts alleged in the SEC's complaint.

From 2000 to 2003, York International's Dubai subsidiary authorized and made approximately $647,110 in kickback payments in connection with its sale of humanitarian goods to Iraq under the United Nation's Oil-for-Food Program. Although the payments where characterized as "after-sales service fees," no bona fide services were actually performed. The company received approximately $931,318 in net profits for the six transactions for which it paid kickbacks.

In 2003 and 2004, York International's Delaware subsidiary, York Air Conditioning and Refrigeration, Inc. ("YACR") paid approximately $522,500 to an intermediary while knowing that most of the money was intended to bribe United Arab Emirates officials to secure contracts in connection with the construction of a government-owned luxury hotel called the Conference Palace. Altogether, thirteen illicit payments were made on this project, ranging from $1,700 to $320,000, totaling approximately $550,000. The total amount of YACR sales revenue relating to orders on the project was approximately $3.7 million.

From September 2001 through 2006, York International, through certain of its subsidiaries, made over $7.5 million in illicit payments to secure orders on certain commercial and government projects in the Middle East, India, China, Nigeria, and Europe. These illicit payments were referred to internally as "consultacy payments," however, no bona fide services were performed.

York International subsidiaries made a total of 854 improper consultancy payments on approximately 774 contracts and received approximately $8,017,814 in net profits from these contracts. Kickbacks were made on more than 302 projects involving government end-users, such as government owned companies, public hospitals, or schools. Including the net profits on the Oil-for-Food Program transactions, York International received net profits of approximately $8,949,132 on contracts involving illicit payments.
:
Anti-bribery (Issuer), Books and records (Issuer), Internal controls (Issuer)
:
Civil penalty, Compliance Monitor, Disgorgement, Prejudgment Interest
:
Disgorgement of $8,949,132 plus pre-judgment interest of $1,083,748 plus a civil penalty of $2,000,000.
:
12,032,880
:
0
:
Issuer
:
U.S.
:
Contract Procurement/Retention
:
8,949,132
:
Cash, Gifts, Wire/check
:
Direct, Sales Agent/Consultant
:
8,669,610
:
Bahrain, China, India, Iraq, Nigeria, United Arab Emirates
:
Denmark, India, United Arab Emirates, United Kingdom
:
Yes
:
No
:
India