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. ABB Ltd.

 
:
ABB - ABB Ltd.
:
DOJ Criminal
:
September 29, 2010
:
U.S. v. ABB Ltd.
:
Matter resolved through deferred prosecution agreement (Sept. 2010)
:
Iraq, Mexico
:
1997; 1998; 1999; 2000; 2001; 2002; 2003; 2004
:
Officials at a Mexican state-owned utility company (Comisión Federal de Electricidad (“CFE”)); regional companies of the Iraqi Electricity Commission (General Company for Electricity Energy Production; the Baghdad Mayoralty; and State Company Baghdad Electricity Distribution).
:
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 from humanitarian goods suppliers. The kickback payments were masked by inflating the contract price, usually by 10% of the contract value.
ABB Ltd.— Jordan paid more than $300,000 in kickbacks to the former Iraqi government in exchange for eleven purchase orders for electrical equipment and services worth more than $5.9 million under the U.N. Oil-for-Food Program. Additionally, ABB Ltd.— Jordan engaged in systematic efforts to conceal the illegal payments and circumvent internal controls by misrepresenting these payments as “consulting fees” in its books and records.
The government did not allege bribery of any individual foreign governmental officials in connection with the Oil-for-Food Program. However, as reflected in the above charges, from 1997 to 2004, ABB Inc. paid bribes that totaled approximately $1.9 million to officials at CFE. In exchange for the bribe payments, ABB Inc. received contracts worth more than $81 million in revenue for upgrades and maintenance to Mexico’s electrical network system. ABB Inc. admitted that the bribe payments were made through various intermediaries, including a Mexican company that served as ABB Inc.’s sales representative in Mexico for its contracts with CFE.
:
Anti-bribery (Domestic Concern), Anti-bribery (Issuer), Conspiracy - Anti-Bribery, Conspiracy - Books & Records
:
Deferred-prosecution Agreement
:
Under the deferred prosecution agreement, ABB agreed to pay criminal penalties totaling $28,500,000 on behalf of ABB Inc. and $1,920,000 on behalf of ABB Ltd. – Jordan. ABB Inc. was sentenced to pay a criminal fine of $17.1 million on the same day, which was deducted from the $28.5 million due under the deferred prosecution agreement.
:
19,000,000
:
0
:
ABB Inc. Total Offense Level: 34 (Base Offense of 12 plus Repeated Offenses of 2 and Profits of 20). Total Culpability Score: 5 (Base Culpability of 5 plus Company Size of 3 plus Prior History of 2 minus Self-Reporting of 5) ABB Ltd. - Jordon Total Offense Level: 23 (Base Offense of 7 + Specific Offense Characteristics of 16). Total Culpability Score: 6 (Base Score of 5 + Individual Participation of 1 + Prior History of 2 - Cooperation of 2).
:
Issuer
:
Foreign
:
Contract Procurement/Retention
:
86,900,000
:
Wire/check
:
Sales Agent/Consultant, Subsidiary Company
:
2,200,000
:
Iraq, Mexico
:
United States
:
:
No