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FCPA Blog Daily News

Entries in James Tillery (8)

Thursday
Apr192012

Willbros Wins Final Dismissal

Willbros Group, Inc. said in an SEC filing that the FCPA charges against it were formally dismissed this month.

Click to read more ...

Monday
Oct252010

The Fugitive Report 2010

An update of our annual list of known FCPA fugitives.

Click to read more ...

Thursday
Aug192010

Tillery's 'Extraction'

A report this week from Nigeria said FCPA fugitive James "Ken" Tillery has been seized by the FBI in Lagos and is being held by American authorities. But another report on Wednesday said the Nigerian high court had halted the extradition at least until the end of the month because due process wasn't followed.

Tillery, 51, was the managing director of Willbros in Nigeria. He was indicted in 2008 along with Willbros' consultant Paul G. Novak. They were charged with one count of conspiracy to violate the FCPA, two counts of violating the FCPA in connection with the authorization of specific corrupt payments to officials in Nigeria and Ecuador, and one count of conspiring to launder the bribe payments through companies controlled by Novak.

Novak, 43, pleaded guilty in November 2009 to paying $6 million in bribes to officials who worked in the Nigerian government, in government-owned companies, and in a political party there. He hasn't been sentenced.

Tillery has been at large since his indictment. If convicted of all charges, he faces up to 35 years in prison.

One report from Nigeria said the next hearing on Tillery's extradition will be on August 30.

In May 2008, Willbros Group Inc. and Willbros International Inc. entered into a deferred prosecution agreement and agreed to pay a $22 million criminal penalty for the illegal payments to government officials in Nigeria and Ecuador. 

In January this year, two former Willbros executives were jailed for bribery. Jim Bob Brown, 48, was sentenced in federal court in Houston to one year and one day in prison and fined $17,500; Jason Edward Steph, 40, was sentenced to 15 months and fined $2,000. Brown had pleaded guilty in 2006 and Steph in 2007.

An African press report said Tillery is "an American by birth, who had since naturalized as a Nigerian." It  said normal extradition procedures weren't followed and characterized Tillery's arrest as an "extraction" and a "forceful extradition."

The U.S. Justice Department hasn't publicly commented.

Thursday
Jan282010

Prison For Ex-Willbros Execs

FCPA violations: The Justice Department is targeting individuals who pay bribes to foreign officials. Photo by Ken MayerTwo former Willbros managers on Thursday were given jail time for conspiracy to violate the Foreign Corrupt Practices Act. They bribed foreign government officials and employees of state-owned firms to win pipeline work and gain other advantages.

Jim Bob Brown, 48, was sentenced in federal court in Houston to one year and one day in prison and fined $17,500; Jason Edward Steph, 40, was sentenced to 15 months and fined $2,000.

Steph, who once served as general manager of on-shore operations for Willbros International, pleaded guilty in November 2007. He said in his plea that in 2005 he, Brown, and others arranged to pay about $1.8 million in cash to Nigerian officials.

Brown pleaded guilty in September 2006 to conspiracy to violate the FCPA. He and Steph cooperated with the government’s investigation.

Brown said from 1996 to 2004, he and others plotted to negotiate lower Nigerian federal and state taxes in exchange for bribes to revenue officials. And he admitted conspiring to make corrupt payments to officials in the Nigerian court system in exchange for favorable treatment on pending cases. Brown also paid at least $300,000 in bribes to Ecuadorian government officials from PetroEcuador and PetroCommercial in exchange for contracts. The DOJ said all the payments violated the FCPA's antibribery provisions.

In May 2008, Willbros Group and its subsidiary Willbros International paid $22 million and entered into a deferred prosecution agreement with the DOJ to settle criminal FCPA charges in connection with corrupt payments to Nigerian and Ecuadorian officials. Willbros Group also paid $10.3 million (disgorgement of $8.9 million, plus prejudgment interest of $1.4 million) to resolve the SEC's civil enforcement action.

In December 2008, another former executive and an ex-consultant of Willbros International Inc. were charged in the case. Consultant Paul G. Novak, 43, pleaded guilty in November 2009 to conspiracy to violate the FCPA. He's scheduled to be sentenced on February 19. James K. Tillery, 49, a former Willbros International executive, was also charged but remains at large.

In May 2008, the Securities and Exchange Commission charged Steph and former employees Gerald Jansen, Lloyd Biggers, and Carlos Galvez with aiding and abetting Willbros Group's violation of the antibribery, books and records, and internal controls provisions of the FCPA, and knowingly circumventing the FCPA's internal controls and books and records provisions. All four consented to permanent injunctions, with Jansen and Galvez ordered to pay civil penalties of $30,000 and $35,000 respectively. Determination of Steph's civil penalty was deferred pending his sentencing in the criminal case.

*   *   *

Substantive FCPA violations and conspiracy to violate the FCPA both carry a maximum sentence of five years in prison. Here are some recent FCPA-related sentences:

  • In November last year, Frederic Bourke, who was convicted at trial, was sentenced to a year and day in jail for conspiracy.
  • David Kay and Douglas Murphy started serving their sentences last year for substantive FCPA violations. They were convicted at trial and sentenced to 37 months and 63 months respectively.
  • In April 2009, Virginia-based physicist Shu Quan-Sheng was sentenced to 51 months in prison. He pleaded guilty in November 2008 to one count of violating the Foreign Corrupt Practices Act and two counts of violating the Arms Export Control Act.
  • In September 2008, two former executives from telecoms company ITXC Corporation avoided prison. Roger Michael Young was sentenced to five years probation with three months home confinement after he pleaded guilty in July 2007 to violating the FCPA and the Travel Act. Steven J. Ott also pleaded guilty and was sentenced to five years probation with six months in a community confinement center and six months home confinement.
  • Also in September 2008, Albert "Jack" Stanley, KBR's former CEO, pleaded guilty to a two-count criminal information charging him with conspiracy to violate the Foreign Corrupt Practices Act and conspiracy to commit mail and wire fraud. He agreed to a seven year jail term with a chance for reduction based on his cooperation. 
  • In  April 2008, a former World Bank employee, Ramendra Basu, received 15 months in prison for conspiring to award World Bank contracts to consultants in exchange for kickbacks and for helping a contractor bribe a foreign official. He pleaded guilty to conspiring to commit wire fraud and to violating the FCPA.

A copy of the DOJ's January 28, 2010 release is here.

See our prior posts about Willbros and its personnel here.

Thursday
Nov122009

Novak Pleads Guilty

A former consultant for a subsidiary of Houston-based Willbros Group Inc. pleaded guilty on November 12 to paying $6 million in bribes to officials who worked in the Nigerian government, in government-owned companies, and in a political party there. Paul G. Novak, 43, pleaded guilty in federal court in Houston to one count of conspiracy to violate the Foreign Corrupt Practices Act and one substantive count of violating the FCPA. He's scheduled to be sentenced on February 19, 2010.

The bribes were intended to help Willbros win and keep contracts for the Eastern Gas Gathering System (EGGS) Project, worth about $387 million. The project was a natural gas pipeline system in the Niger Delta.

Novak, along with alleged co-conspirators James Kenneth Tillery, Jason Steph, Jim Bob Brown and three employees from a German construction company based in Mannheim, Germany, agreed to make the corrupt payments to, among others, government officials from the Nigerian National Petroleum Corporation, the National Petroleum Investment Management Services, a senior official in the executive branch of the federal government of Nigeria, members of a Nigerian political party and officials from the Shell Petroleum Development Company of Nigeria Ltd.

To fund the bribes, Steph and others used a Willbros' subsidiary, Willbros West Africa Inc. (WWA), to enter into agreements with two consulting companies Novak represented. Without providing any services, the consulting companies would invoice WWA and be paid from Willbros' bank account in Houston to accounts in Lebanon. Novak then used money from the Lebanese accounts to bribe the Nigerian officials.

In addition to Novak, two Willbros employees have pleaded guilty in the case and Willbros has entered into a deferred prosecution agreement:

On September 14, 2006, Jim Bob Brown, a former Willbros executive, pleaded guilty to one count of conspiracy to violate the FCPA, for his role in making corrupt payments to Nigerian government officials to obtain and retain the EGGS contract and for making corrupt payments in Ecuador. Brown's sentencing is currently scheduled for January 28, 2010.

On November 5, 2007, Jason Steph, also a former Willbros executive, pleaded guilty to one count of conspiracy to violate the FCPA, for making corrupt payments to Nigerian government officials to obtain and retain the EGGS contract. Steph's sentencing is also scheduled for January 28, 2010. See our post here.

On May 14, 2008, Willbros Group Inc. and Willbros International Inc. entered into a deferred prosecution agreement and agreed to pay a $22 million criminal penalty, for the illegal payments to government officials in Nigeria and Ecuador. See our post here.

James K. Tillery was charged, along with Novak, for his alleged role in the bribery scheme in an indictment unsealed on December 19, 2008. According to the indictment, Tillery was a Willbros employee and executive from the 1980s through January 2005. He remains a fugitive. See our post here.

Download the DOJ's November 12, 2009 release here.

Tuesday
Sep012009

The FCPA's Most Wanted

People charged with a Foreign Corrupt Practices Act-related offense either cop a plea or fight the case in court. Except for those who choose the third option. They run. If they're living outside the U.S. when indicted, they might plan to never come back. That strategy can only work if they happen to be in a country that won't extradite them, which is harder to predict in practice than on paper. Others have tried to find someplace new that's friendly and beyond the reach of the U.S. Justice Department. But as Viktor Kozeny's uncomfortable years in the Bahamas demonstrate, that's not easy either, even with millions of dollars to make it happen.

The first FCPA fugitives appeared in 1982 and the latest this summer. Over the years, plenty have been caught and handed over to U.S. authorities. Others have eventually turned themselves in, deciding a life spent looking over their shoulder isn't for them after all ("Hey there. Small world, isn't it?").

Yet some people facing FCPA charges, including the twelve mentioned below, are still at large, doing whatever they can to stay out of the jurisdiction of the U.S. federal courts.

Let's meet them:

Ousama Naaman, Canadian, intermediary for a U.S. chemical company. Indicted August 2008; arrested July 30, 2009 in Frankfurt, Germany. Now in Germany.

Jeffrey Tesler, British, intermediary for Kellogg Brown & Root (KBR). Indicted February 2009; arrested March 5, 2009 in London, England. Now in the U.K.

Wojciech Chodan, British, salesman for a KBR affiliate. Indicted 2009. Location unknown.

James K. Tillery, American, executive of Willbros International. Indicted 2008. Location unknown.

Edgar Valverde Acosta, Costa Rican, Alcatel’s former senior country officer there. Superseding indictment issued March 2007. Last known location: Costa Rica.

Viktor Kozeny, Czech-born, Irish passport, president and chairman of Oily Rock Group Ltd. Indicted 2005. Now in the Bahamas.

Pablo Barquero Hernandez, Costa Rican, employed by Owl Securities and Investment Ltd. Indicted 2001. Last known location: Costa Rica.

Frerik Pluimers, Dutch, chairman, president and CEO of Saybolt International. Indicted 1998. Last known location: the Netherlands.

Rami Dotan, Israeli, air force officer. Indicted 1994. Last known location: Israel. The brigadier-general in charge of Israeli air force procurement was court martialed in Israel in 1991 and convicted along with two others of bribery, fraud, and theft for skimming at least $10 million from jet engine contracts with General Electric in the U.S. He was demoted to private and sentenced to 13 years' imprisonment. Released in 2003.

Harold Katz, an Israeli and U.S. citizen, Israeli lawyer. Indicted 1994 (with Rami Dotan, above). Last known location: Israel.

Mario S. Gonzalez, Mexican, associated with Grupo Delta, a Mexican corporation acting as intermediary to Pemex. Indicted 1982. Last known location: Mexico.

Ricardo G. Beltran, Mexican, also associated with Grupo Delta. Indicted 1982. Last known location: Mexico.
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Wednesday
Mar112009

On The Subject Of Resources

We've mentioned before Dan Newcomb's FCPA Digest, calling it the most definitive publicly-available catalog of FCPA prosecutions, enforcement actions and disclosed investigations. So it's great to see the release of the March 2009 version, available here.

This year, Philip Urofsky becomes editor-in-chief. He told us last week, "In this Digest, we entirely scrapped the previous Trends & Patterns, which had largely become a statistical update, and replaced it with a more analytical piece." The T&P section has always been a favorite of ours, and this year's new-and-improved version (available here) didn't disappoint.

About the prosecution of individuals, for example, it said:

More recently, there is a strong trend of actions against individuals being brought separately or even in advance of charges against their employers and then, in all likelihood, following classic prosecutorial strategy of working up the chain of command, using the individuals to build the government’s case against their superiors and eventually the company. In Willbros, the DOJ charged four employees over a two-year period, with two pleading in previous years (Steph and Brown) and an indictment being returned against two others (Tillery and Novak) in February 2008. Finally, in May 2008, Willbros Group and Willbros International agreed to a deferred prosecution agreement. Similarly, the DOJ entered into a plea agreement with the former CEO of KBR, Stanley, in 2008, well in advance of settling the matter with Halliburton/KBR in early 2009.
And concerning disgorgement, a topic we recently talked about here, it said:
A final trend and pattern worth noting is the SEC’s continued demand for disgorgement of ill-gotten profits in cases in which only books & records violations are charged, such as in the [oil for food] cases. Whether or not a false entry in a company’s books and records (or a failure to implement adequate internal controls) truly results in increased profits is open to question. To date, however, no FCPA defendant has publicly challenged the SEC on whether disgorgement is appropriate when the sole charge is false books and records. Prior to the ABB case in 2004, the SEC had never collected disgorgement in FCPA cases; since then it has sought it in virtually every case with only a few exceptions, such as Dow Chemical, Delta & Pine Land, Lucent, and Conway. In Tyco, the SEC collected $1 in ill-gotten gains (along with $50 million in penalties related to other violations). While this is an isolated example of the SEC seeking such nominal disgorgement, the case does underscore the overall policy of levying disgorgement sanctions in nearly all cases against issuers.
We spend a lot of time in the FCPA Digest. And whenever we turn to it, we're grateful for the hard work and generosity of founding-editor Dan Newcomb, Philip Urofsky and their entire team.
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Sunday
Dec212008

Two More Ex-Willbros Workers Charged

The Justice Department's aggressive enforcement of the Foreign Corrupt Practices Act against individuals continues. On Friday, a former executive and an ex-consultant of Willbros International Inc., a subsidiary of Houston-based Willbros Group Inc., were charged in connection with a conspiracy to bribe government officials in Nigeria and Ecuador. Former consultant Paul G. Novak, 41, was arrested on arrival at George Bush Intercontinental Airport in Houston. He was returned to the United States from Constantia, South Africa after his U.S. passport was revoked. James K. Tillery, 49, the former Willbros International executive, remains at large.

An indictment unsealed Friday in U.S. District Court in Houston charges Novak and Tillery with conspiring to bribe Nigerian and Ecuadorian government officials to obtain and retain gas pipeline construction and rehabilitation business from state-owned oil companies in those countries. Tillery and Novak face one count of conspiracy to violate the FCPA, two counts of violating the FCPA in connection with the authorization of specific corrupt payments to officials in Nigeria and Ecuador, and one count of conspiring to launder the bribe payments through purported consulting companies controlled by Novak.

If convicted of all charges, they each face up to 35 years in prison and fines of the greater of $250,000 or twice the pecuniary gain or loss from the FCPA offenses and, for the money laundering conspiracy, $500,000 or twice the value of the funds involved in the transfer.

The indictment says Tillery was a Willbros International employee and executive from the 1980s through January 2005. From 2002 until January 2005, he served as executive vice president and later as president of the company. Novak was an employee in the mid-1990s and later worked as an oil and gas consultant in Nigeria, purporting to provide consulting services to companies in that field.

Tillery and Novak, along with a Nigerian working as a consultant and employees of a German engineering firm Willbros had partnered with, conspired to pay more than $6 million in return for a $387 million contract to construct Nigeria's Eastern Gas Gathering System, according to the indictment. From late 2003 to 2005, payments were made and others promised to Nigerian officials. The indictment also alleges that Tillery, Novak and other Willbros employees based in South America paid $300,000 to officials at the state-owned oil company in Ecuador, PetroEcuador, and its subsidiary PetroComercial, in exchange for a $3 million contract to refurbish a 16-mile gas pipeline between Santo Domingo and El Beaterio.

In May this year, Willbros Group and Willbros International paid $22 million and entered into a deferred prosecution agreement with the DOJ to settle criminal FCPA charges in connection with corrupt payments to Nigerian and Ecuadorian officials. Willbros Group also paid $10.3 million (disgorgement of $8.9 million, plus prejudgment interest of $1.4 million) to resolve the SEC's civil enforcement action. As part of the settlement, the Willbros companies have been cooperating with the DOJ's ongoing investigation.

In November 2007, Jason Edward Steph, 37, who once served as general manager of on-shore operations for Willbros International, pleaded guilty to conspiring to violate the FCPA by bribing Nigerian officials. Steph said that in February and March of 2005 he, former Willbros executive Jim Bob Brown, and others arranged to pay about $1.8 million in cash to the officials. Brown also pleaded guilty to a similar charge in September 2006. He and Steph are cooperating with the government’s investigation and are waiting to be sentenced.

In the May 2008 SEC complaint against Willbros Group, Steph and former employees Gerald Jansen, Lloyd Biggers, and Carlos Galvez were named for aiding and abetting Willbros Group's violation of the antibribery, books and records, and internal controls provisions of the FCPA, and knowingly circumventing the FCPA's internal controls and books and records provisions. All four consented to permanent injunctions, with Jansen and Galvez ordered to pay civil penalties of $30,000 and $35,000 respectively. Determination of Steph's civil penalty was deferred pending his sentencing in the criminal case.

Willbros Group, Inc. trades on the New York Stock Exchange under the symbol WG. It provides construction, engineering and other services to the oil and gas industry.
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Download the DOJ's Dec. 19, 2008 release regarding Paul G. Novak and James K. Tillery here.

Download the DOJ's indictment of Novak and Tillery here.

Download the DOJ's May 14, 2008 release regarding Willbros Group Inc. here.

View the SEC's Litigation Release No. 20571 (May 14, 2008) in Securities and Exchange Commission v. Willbros Group, Inc., et al., Civil Action No. 4:08-CV-01494 U.S.D.C., Southern District of Texas (Houston Division) here.

Download the SEC's May 14, 2008 civil complaint against Willbros Group Inc., Jason Steph, Gerald Jansen, Lloyd Biggers and Carlos Galvez here.

Download the DOJ's November 5, 2007 release regarding Jason Edward Steph's guilty plea here.

Download Steph's November 5, 2007 Plea Agreement with the DOJ here.
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