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United States v. Control Components, Inc.

 
:
Control Components, Inc.
:
DOJ Criminal
:
July 22, 2009
:
United States v. Control Components, Inc.
:
United States v. Control Components, Inc., No. 09-00162 (C.D. Ca. 2009)
:
In addition to FCPA violations, Control Components, Inc. ("CCI") pleaded guilty to conspiracy to violate the Travel Act by using interstate and foreign commerce to facilitate commercial bribery, an unlawful act under California Penal Code Section 641.3. Thus, the DOJ prosecuted CCI for conspiracy to bribe employees of foreign private companies as well as foreign government officials.
:
Manufacturing/Engineering
:
China, Malaysia, South Korea, United Arab Emirates
:
2003; 2004; 2005; 2006; 2007
:
Employees of various state-owned entities, including but not limited to: employees of Jiangsu Nuclear Power Corporation, Guohua Electric Power, China Petroleum Materials and Equipment Corporation, PetroChina, Dongfang Electric Corporation, and China National Offshore Oil Company (China); Korea Hydro Nuclear Power (Korea); Petronas (Malaysia); and National Petroleum Construction Company (United Arab Emirates).
:
From 2003 through 2007, CCI senior executives approved, and in some cases personally made, payments totaling approximately $4.9 million to officers and employees of numerous state-owned customers for the purpose of influencing the award of contracts and project technical specifications. From these payments, CCI derived approximately $31.7 million in net profits.

During the same period, CCI made corrupt payments of approximately $1.95 million to employees of privately owned companies. In total, CCI made approximately 236 corrupt payments in more than 30 countries. CCI executives also rewarded customers and employees for the award of contracts with expensive gifts and extravagant overseas holidays to destinations including Disneyland, Las Vegas, and Hawaii under the guise of training and inspection trips. In addition, CCI paid the college tuition of the children of at least two executives of CCI's customers.

In 2004, CCI employees provided false and misleading information in connection with an internal audit of CCI commission payments carried out by CCI's parent company, IMI, and created false invoices to cover up illicit payments. In 2007, many of the same employees continued to provide false and misleading information and destroyed documents to mislead internal investigators.

The two substantive FCPA bribery counts against CCI were based on payments to employees of China National Offshore Oil Company, totaling approximately $58,500, and Korea Hydro and Nuclear Power, totaling approximately $57,173.

In addition to paying a monetary penalty, under the terms of its plea agreement, CCI must create and adopt an anti-corruption compliance code and enter a three-year term of organizational probation during which time it will retain an independent corporate compliance monitor.

In related matters, the DOJ obtained indictments against six former CCI executives related to the same conduct - all six have pleaded guilty. Two other former employees have pleaded guilty to related charges.
:
Anti-bribery (Domestic Concern), Conspiracy - Anti-Bribery
:
Conspiracy - Travel Act
:
Compliance Monitor, Fine, Plea
:
Criminal fine of $18,200,000 and a special assessment of $1,200
:
18,201,200
:
0
:
a. Calculation of Offense Level:
Base Offense Level -- 12
More than one bribe -- +2
Benefit received -- +22
TOTAL OFFENSE LEVEL = 36

b. Calculation of Culpability Score:
Base Score -- 5
Involvement in or tolerance of criminal activity in organization -- +3
Self-reporting, cooperation, acceptance of responsibility -- -5
TOTAL CULPABILITY SCORE = 3

c. Calculation of Fine Range:
Base fine -- $46,500,000
Multipliers -- 0.6-1.2
Fine Range -- $27,900,000 - $55,800,000

d. Parties stipulated that benefit received from the conduct charged was $46,500,000
:
Domestic Concern
:
U.S.
:
Contract Procurement/Retention
:
Not stated.
:
Entertainment, Gifts, Meals, Scholarship/Education, Travel, Wire/check
:
Direct, Sales Agent/Consultant
:
4,900,000
:
China, Malaysia, South Korea, United Arab Emirates, United States
:
China, South Korea
:
foreign official
:
In addition to money transfers and cash payments, the government alleged that the company provided extravagent travel and entertainment to government customers and paid the tuition for the children of government officials.
:
No
:
China, South Korea