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FCPA Blog Daily News

Entries in Saybolt Inc. (3)

Tuesday
Sep082009

The Face Of A Fugitive

He's the only FCPA fugitive with his own wanted poster. That's how we know Frerik Pluimers is a big guy -- six three, two hundred thirty-five pounds. Brown hair, brown eyes. Born September 30, 1946. Netherlands passport number W118268941. Indicted in April 1998, when he was president and CEO of New Jersey-based Saybolt International -- charged with violating the Foreign Corrupt Practices Act, the Travel Act, aiding and abetting and conspiracy. He was in Rotterdam, Holland when indicted and didn't come back to the U.S. to face prosecution.

A decade passed with no sign of Pluimers. Then, in March 2008, a Washington, D.C. lawyer appeared in federal court on his behalf. The lawyer, J. Sedwick Sollers, III, had some big news. His client, he said, was "scheduled to appear before the Court for arraignment, guilty plea and sentencing on March 28, 2008."

What happened next? Nothing. There's no record of Pluimers appearing in court on that day or any other. In fact, there's nothing in the docket after Sollers' notice. Pluimers had said, through the lawyer, that he'd be there. But he never showed up. Strange.

And about Pluimers' wanted poster. It's not from the Justice Department or the FBI, as you'd expect in an FCPA case, but the Environmental Protection Agency. Why the EPA? Here's what we know.

In the mid-1990s, Pluimers' former company, Saybolt, falsified results for gasoline it tested by understating lead emissions. In January 1999, the company pleaded guilty in U.S. federal court to conspiracy to violate the Clean Air Act and wire fraud. It paid a $4.9 million fine and spent five years on probation. A former Saybolt vice president, Thomas M. Hayes, was also convicted under the Clean Air Act and sentenced to 57 months in prison.

While digging into Saybolt, the EPA’s Criminal Investigation Division had discovered a $50,000 bribe in 1995 to a Panamanian government official. In exchange, Saybolt won tax concessions and access to a prime business location along the Panama Canal. Indicted in 1998 for the bribe were Pluimers, along with his colleague David H. Mead. Mead went to trial and was found guilty. He served four months in prison and paid a $20,000 fine (here). But Pluimers ran.

Why, though, is the EPA chasing him? His indictment relates only to the Panama bribe. That's not the EPA's turf. So maybe there's something more. Maybe the EPA also indicted him along the way for criminal violations of the Clean Air Act, but decided to keep the indictment sealed until the day of his arrest, which hasn't come yet.

The lawyer who said in March 2008 that Pluimers would turn himself in defends both environmental and FCPA cases. Was Pluimers ready to cut a deal with the DOJ and EPA? Looks like it. Did something or someone spook him at the last minute? Could be. Whatever happened, Frerik Pluimers, the man on the wanted poster, is still an FCPA fugitive.

Download the November 1, 2008 U.S. EPA / CID Wanted Poster of Frerik Pluimers here.

Download the March 24, 2008 Notice of Appearance: J. Sedwick Sollers, III, appearing for Frerik Pluimers in USA v. MEAD, et al , U.S. District Court District of New Jersey, Case No.: 3:98-cr-00240-AET-2 here.

A special thanks to Cody Worthington in Washington, D.C. for his research for this post.
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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
Oct032007

The "I Didn't Know" Defense

As defenses against the U.S. Foreign Corrupt Practices Act go, "I didn't know" is among the most popular. I didn't know it was against the law. I didn't know our agent would give money to foreign officials. I didn't know our partner's brother-in-law works for the prime minister. Often the defense has no visible means of support and is only a handy excuse. Other times, though, the defense is sincere and looks strong. But even then it probably won't work, as David H. Mead discovered the hard way back in 1998.

Mead, the former president of Saybolt Inc., was charged with violating and conspiring to violate the FCPA's anti-bribery provisions by making a $50,000 corrupt payment to government officials in Panama. Mead pleaded not guilty and went to trial. His defense rested in part on evidence that Saybolt's former outside counsel had advised that the $50,000 payment might not violate the FCPA if it came from Saybolt's Dutch affiliate. That advice was wrong, and Saybolt and Mead were indicted. Saybolt -- which later sued its former lawyer for legal malpractice -- pleaded guilty and paid a $1.5 million fine.

At Mead's trial, prosecutors had the burden of proving Mead acted with "knowledge" that the $50,000 payment was illegal under U.S. law. In his instructions to the jury, the judge explained the concept of legal "knowledge" and how the jury could determine what Mead knew:
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Ladies and Gentlemen of the Jury:

The element of knowledge may be satisfied by inferences you may draw if you find that the defendant deliberately closed his eyes to what otherwise would have been obvious to him. When knowledge of the existence of a particular fact is an element of the offense, such knowledge may be established if a person is aware of a high probability of its existence and then fails to take action to determine whether it is true or not.

If the evidence shows you that the defendant actually believed that the transaction was legal, he cannot be convicted. Nor can he be convicted for being stupid or negligent or mistaken; more is required than that. But a defendant’s knowledge of a fact may be inferred from willful blindness to the knowledge or information indicating that there was a high probability that there was something forbidden or illegal about the contemplated transaction and payment. It is the jury’s function to determine whether or not the defendant deliberately closed his eyes to the inferences and the conclusions to be drawn from the evidence here.
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The jury, for some reason, didn't believe that Mead believed the payment was legal. Nor did the jury believe he had been stupid or negligent or mistaken. Had he been willfully blind? That would mean he knew more than Saybolt's own lawyer. Unfortunately for Mead, in the face of the evidence the jury somehow found that he had "knowledge" the payment would violate the law. He was convicted and sentenced to four months in prison, home detention and probation, and a $20,000 fine. The best explanation is that the New Jersey jury simply didn't want a $50,000 bribe to a government official in Panama to go unpunished.

If the "I didn't know" defense didn't work back then for David H. Mead -- who violated the FCPA on the advice of counsel -- then it's unlikely to work now in most other cases.

See U.S. v. David H. Mead and Frerik Pluimers (Cr. No. 98-240-01), D.N.J., 1998. See also Stichting Ter Behartiging Van De Belangen Van Oudaandeelhouders In Het Kapitaal Van Saybolt International B.V. (Foundation of the Former Shareholders of Saybolt International B.V.) v. Philippe S.E. Schreiber and Walter, Conston, Alexander & Green P.C. (S.D.N.Y.) (99 Civ. 114411, Memorandum Order, Filed June 13, 2001) and U.S. v. Saybolt North America Inc. (Cr. No. 98CR10266WGY), D. Mass., Aug. 18, 1998.