Boston contractor pays $4 million for declination with disgorgement
Friday, June 30, 2017 at 8:08AM
Richard L. Cassin in CDM Smith, Declination, Disgorgement, India, Pilot Program

Privately held CDM Smith Inc. entered into a declination with disgorgement Thursday with the Justice Department to resolve FCPA offenses in India.

The DOJ said employees and agents of CDM Smith and a wholly owned subsidiary in India paid $1.18 million in bribes to government officials. In return, the company won highway construction supervision and design contracts and a water project contract.

The Boston-based company made profits of $4 million from the tainted contracts.

The enforcement action is the seventh under the FCPA Pilot Program since the DOJ adopted it in April 2016. The program gives companies incentives to self-disclose, cooperate, and remediate FCPA violations.

Companies that qualify can receive a 50 percent discount on fines they might face under the U.S. Sentencing Guidelines.

CDM Smith has about 5,000 employees worldwide. Revenues were $1.2 billion in 2015. It provides engineering and construction services.

The DOJ said the bribery in India occurred from 2011 until 2015.

The illegal payments for the highway contracts were generally 2 percent to 4 percent of the contract price. The bribes were paid through "fraudulent subcontractors who provided no actual services and understood that payments were meant to solely benefit the officials," the DOJ said.

The company also paid $25,000 to local officials in the Indian state of Goa for a water project contract.

"All senior management at CDM India . . . were aware of the bribes . . . and approved or participated in the misconduct," the DOJ said.

CDM Smith agreed to disgorge $4.03 million. It "acknowledged" that it can't take a tax deduction for the disgorged funds.

The DOJ said it closed the investigation under the Pilot Program because CDM Smith disgorged its profits, made a timely voluntary self disclosure, did a comprehensive investigation, gave full cooperation, enhanced its compliance program, and fired all executives and employees involved in the FCPA offenses.

The declination with disgorgement from the DOJ to CDM Smith Inc. is here (pdf).

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Richard L. Cassin is the publisher and editor of the FCPA Blog.

Article originally appeared on The FCPA Blog (http://www.fcpablog.com/).
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