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U.S. v. Westinghouse Air Brake Technologies Corporation

 
:
Wabtec - Westinghouse Air Brake Technologies Corporation
:
DOJ Criminal
:
February 14, 2008
:
U.S. v. Westinghouse Air Brake Technologies Corporation
:
This case highlights the danger of paying facilitation payments but not recording them properly in the company's books.
:
Transportation-Railroad
:
India
:
2001; 2002; 2003; 2004; 2005
:
Employees of the Indian Railway Board; government inspection agents; customs and excise officials.
:
From 2001 to 2005, Pioneer Friction Limited ("Pioneer"), a wholly-owned subsidiary of Wabtec, made various payments to agents of the Indian government.

To obtain railway contracts, Pioneer made approximately $130,000 in payments to employees of the Indian Railway Board. Pioneer was awarded a contract in 2005 and realized profits of approximately $259,000. Pioneer also paid approximately $33,603 to inspectors of one government agency to insure that the agency would schedule and perform inspections. In 2005, Pioneer paid inspectors at another agency between $67 and$358 per inspection, totaling $2,175. Pioneer also paid government employees $4,386 during 2005 to obtain certificates of conforming products. Finally, Pioneer paid personnel of the Central Board of Excise and Customs $31.50 monthly to avoid frequent audits. In 2005, the total payments were $378.

Pioneer used "marketing agents" to generate cash for these payments, paying the agents, who would return cash to the company less a commission. Pioneer, and Wabtec, did not properly account for these payments in their books and records, classifying them as "consulting" expenses and "supplies."

Wabtec entered into a non-prosecution agreement with the DOJ in which it agreed to pay a $300,000 fine and adopt internal controls.
:
Anti-bribery (Issuer), Books and records (Issuer)
:
Fine, Non-prosecution Agreement
:
Fine of $300,000.
:
300,000
:
0
:
Issuer
:
U.S.
:
Contract Procurement/Retention, Customs Clearance, License/Permit, Tax
:
259,000
:
Cash
:
Direct, Sales Agent/Consultant
:
170,542
:
India
:
Wabtec made various small payments to schedule inspections, to secure issue of delivery receipts certifying products conformed to tender, and to put a stop to excessive excise tax audits. These payment types may have arguably been payments to obtain routine governmental action, within the statutory exception for facilitation payments. Nevertheless, Wabtec bore scrutiny for these payments because it disguised the payments, giving rise to books and records and internal control violations. It remains a question whether prosecutors would have brought an action based solely on such facilitation payments had they not been disguised nor part of a broader course of conduct involving corrupt payments more clearly prohibited by the FCPA.
:
No
:
India