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FCPA Blog Daily News

Entries in Sojitz (5)

Friday
Dec172010

The Alba Files

Alcoa and Sojitz are on our watch list for 2011. Here's why.

Click to read more ...

Thursday
Jul012010

Enforcement Report For Q2 '10

The first quarter of 2010 was the busiest ever for FCPA-related enforcement. This past quarter was one of the quietest for new enforcement actions, with just one from the DOJ and three from the SEC.

There were some sentencings -- including the longest prison term ever for an FCPA-related offense -- a few sentencing delays, a guilty plea, and some odds and ends. But during most of the quarter the DOJ was MIA and the SEC barely popped its head out.

Here's what happened:

DOJ / SEC Enforcement Actions

Bobby J. Elkin, Jr., Baxter J. Myers, Thomas G. Reynolds, and Tommy L. Williams (April 29) The SEC brought a civil enforcement action against the former employees of Dimon, Inc., now Alliance One International, Inc. Defendants Myers and Reynolds agreed to pay civil penalties of $40,000 each. All four defendants also consented to the entry of final judgments permanently enjoining them from violating the anti-bribery provisions of the FCPA (Section 30A of the Securities Exchange Act of 1934) and aiding and abetting violations of Sections 13(b)(2)(A) and 13(b)(2)(B).

Technip S.A. (June 28) The Paris-based engineering and construction firm resolved FCPA-related charges resulting from bribes to Nigerian officials through the KBR-related TSKJ joint venture. It agreed to pay the DOJ a $240 million criminal penalty. It also settled a civil complaint filed by the SEC by disgorging $98 million in profits. It was charged in a two-count criminal information with one count of conspiracy and one count of violating the FCPA. Its two-year deferred prosecution agreement with the DOJ requires Technip to retain an independent compliance monitor and cooperate in ongoing investigations.

Veraz Networks, Inc. (June 29) paid $300,000 to settle charges brought by the SEC that it violated the books and records and internal controls provisions of the Foreign Corrupt Practices Act (FCPA) by making illegal payments to foreign officials in China and Vietnam.

Sentenced

Charles Paul Edward Jumet (April 19), 53, was sentenced to 87 months in prison and fined $15,000. Prosecutors said it's the longest sentence ever in an FCPA-related case. He pleaded guilty in November 2009 to being part of a decade-long bribery conspiracy in Panama. A two-count criminal information charged him with conspiring to violate the FCPA and giving a false statement to the FBI about how he paid some of the bribe money.

Robert Antoine (June 2), 62, of Miami and Haiti, a former employee of Haiti’s state-owned national telecommunications company, was sentenced to 48 months in prison for being part of a bribery and money-laundering scheme. He pleaded guilty in March this year to conspiracy to commit money laundering. He was also ordered by a federal judge in Miami to pay $1,852,209 in restitution and to forfeit $1,580,771, and serve three years of supervised release following his prison term.

John Webster Warwick (June 25), 64, was sentenced to 37 months in prison for his role in a conspiracy to pay bribes to former Panamanian government officials to secure maritime contracts. He also received two years of supervised release following his prison term and forfeited $331,000 in proceeds of the crime. The DOJ did not explain why his sentence was five years shorter than his co-defendant, Charles Jumet (see above).

Guilty Plea

Ousama M. Naaman (June 25), 61, a dual citizen of Canada and Lebanon, pleaded guilty to conspiracy and to violating the Foreign Corrupt Practices Act. Innospec's former agent in Iraq was charged in a June 24, 2010 superseding information with engaging in an eight-year conspiracy to defraud the United Nations oil-for-food program and bribing Iraqi officials. No sentencing date was set.

Extradition

Wojciech Chodan (April 21), 71, a U.K. citizen, was ordered extradited from Britain to the U.S. by a London court. He was indicted in February 2009 by a federal grand jury in Houston for helping KBR and its partners bribe Nigerian officials. His fellow countryman Jeffery Tesler, a London lawyer indicted at the same time, also lost his extradition hearing in March this year. With appeals, their extraditions may not be final for at least a year.

Sentencing Delays

Gerald and Patricia Green (April 29 and June 7) Their sentencing was delayed and then removed from the court's calendar. The judge in Los Angeles federal court is examining evidence about Mr. Green's medical condition and sentences in similar cases.

Albert "Jack" Stanley (mid June), 66, had final sentencing delayed until at least September 23, 2010. The former chairman and CEO of KBR pleaded guilty in September 2008 to a two-count criminal information charging him with conspiracy to violate the Foreign Corrupt Practices Act and to commit mail and wire fraud. He's free on unsecured bail of $100,000 pending final sentencing, which has been rescheduled a half dozen times. He was sentenced to 84 months in prison and a restitution payment of $10.8 million. The jail term is subject to review based on his cooperation with the government in related prosecutions (see Chodan and Tesler above).

Intervention

Sojitz (May 27) The DOJ intervened in the second civil suit brought by Aluminium Bahrain BSC -- known as Alba -- against a raw material supplier and broker. It asked for a stay in Alba's suit against Japanese trading company Sojitz Corp. More than two years ago, the Justice Department obtained a stay in Alba's civil suit against Alcoa, Inc. The DOJ said discovery in the cases could interfere with the government's own investigation into potential criminal wrongdoing including possible violations of the Foreign Corrupt Practices Act by Alcoa, Sojitz and other parties.

New Charging Document

Shot-show prosecution (April 19) The government filed a superseding indictment in the prosecution of the 22 shot-show defendants, charging them under a consolidated grand jury indictment with 44 counts, including conspiracy to violate the FCPA, substantive FCPA offenses, conspiracy to commit money laundering, and aiding and abetting.

In the Pipeline

Panalpina (April 29) The Swiss logistics giant said it expects settlement "in the near future" with the DOJ and SEC of FCPA-related charges. The case dates back to at least early February 2007. The DOJ noted then in connection with Vetco's FCPA settlement that bribes in Nigeria "were paid through a major international freight forwarding and customs clearance company to employees of the Nigerian Customs Service . . .”

Civil Suit  Private parties have no right of action under the FCPA. Only the DOJ and SEC can enforce it. Plaintiffs bring FCPA-related claims under RICO (18 U.S.C. § 1962(c)), conspiracy to violate RICO (18 U.S.C. § 1962(d)), fraud, civil conspiracy, breach of fiduciary duties, and others.

Parker Drilling's directors (early June) were sued in a derivative action in Harris County, Texas after the company's detailed disclosure about a DOJ / SEC investigation of compliance problems in Nigeria and Kazakhstan.

Tuesday
Jun012010

Feds Seek Sojitz Stay

The Justice Department has intervened for the second time in civil suits brought by Aluminium Bahrain BSC -- known as Alba -- against its raw material suppliers and brokers. Last week, the DOJ asked for a stay in Alba's suit against Japanese trading company Sojitz Corp. and its U.S. subsidiary. More than two years ago, the Justice Department obtained a stay in Alba's civil suit against Alcoa, Inc. The DOJ said discovery in the cases could interfere with the government's own investigation into potential criminal wrongdoing by Alcoa, Sojitz and other parties, including possible violations of the Foreign Corrupt Practices Act.

Alba sued Sojitz in December 2009, filing a $31 million claim in federal court in Houston. The suit alleged that from 1993 to 2006, Sojitz paid $14.8 million in bribes to two of Alba's employees in exchange for access to metals at below-market prices. Alba is majority-owned by the government of Bahrain.

In March 2008, Alba sued Alcoa Inc., its long-time raw materials supplier, for corruption and fraud. The suit in federal court in Pittsburg alleged that Alba paid $2 billion in overcharges during a 15-year period. The money, according to the suit, first went to overseas accounts controlled by Alcoa's agent, London-based Victor Dahdaleh, and some was then used to bribe Alba's executives in return for supply contracts.

Just weeks after Alba sued Alcoa, the Justice Department intervened in the case. It asked the court for a stay while the government investigates possible criminal violations of the FCPA and other laws by Alcoa and its executives and agent. The DOJ said the stay was needed to protect potential witnesses against civil discovery. The court granted the stay, which is still in effect. The DOJ hasn't commented on the status of its criminal investigation. Alcoa denied wrongdoing and said it is cooperating. Sources with knowledge of the government's investigation have reported to the FCPA Blog that the Justice Department had questions about Alcoa's initial explanations, which may have delayed potential settlement talks.

Alba did not oppose the DOJ's requests for stays in the Alcoa and Sojitz cases.

There's no private right of action under the Foreign Corrupt Practices Act. So Alba's claims against Alcoa and Sojitz were based on other federal laws, including RICO (18 U.S.C. § 1962(c)), conspiracy to violate RICO (18 U.S.C. § 1962(d)), fraud, and civil conspiracy to defraud. The complaint against Sojitz alleged the Japanese company used bribes to buy underpriced product and then "resold the aluminum it bought from Alba at below-market rates to U.S. companies including Enron Corp." Alcoa's conspiracy, Alba said in the civil complaint, "succeeded in exacting hundreds of millions of dollars in over payments, which continue to accumulate to this day. Among other things, Plaintiff seeks damages in excess of $1 billion, including punitive damages, for this massive, outrageous fraud."

Sojitz Corp. consists of 522 companies including 147 subsidiaries and affiliates in Japan and 375 overseas. Together they have 17,331 employees. The parent company's ADRs trade in the over-the-counter pink sheets under the symbol SZHFF.PK.

Download a copy of the government's May 27, 2010 memorandum in support of a stay in Aluminium Bahrain B.S.C v. Sojitz Corporation and Sojitz Corporation of America here.

Download a copy of the December 18, 2009 federal civil complaint in Aluminium Bahrain B.S.C v. Sojitz Corporation and Sojitz Corporation of America here.

Sunday
Dec202009

Bribery Allegations Against Sojitz

Aluminium Bahrain BSC -- known as Alba -- has filed a $31 million civil suit in federal court in Houston against Japanese trading company Sojitz Corp. and its U.S. subsidiary, Sojitz Corporation of America. The suit alleges that from 1993 to 2006, Sojitz paid $14.8 million in bribes to two of Alba's employees in exchange for access to metals at below-market prices. Alba is majority-owned by the government of Bahrain.

There's no private right of action under the Foreign Corrupt Practices Act. So Alba's claims against Sojitz are based on RICO (18 U.S.C. § 1962(c)), conspiracy to violate RICO (18 U.S.C. § 1962(d)), fraud, and civil conspiracy to defraud. The complaint alleges that Sojitz used bribes to buy underpriced product and then "resold the aluminum it bought from Alba at below-market rates to U.S. companies including Enron Corp."

In September, the Wall Street Journal reported the U.S. Justice Department's investigation into "payments that Bahraini prosecutors allege were made by units of Japanese commodities-trading giant Sojitz Group to employees of an aluminum producer in Bahrain." The DOJ has never commented on the story. See our post here.

This is the second civil action Alba has filed in U.S. courts with allegations about potential FCPA violations. In March 2008, Alba sued Alcoa Inc., its long-time raw materials supplier, for corruption and fraud. The suit in federal court in Pittsburg alleged that Alba paid $2 billion in overcharges during a 15-year period. The money, according to the suit, first went to overseas accounts controlled by Alcoa's agent and some was then used to bribe Alba's executives in return for supply contracts.

Just weeks after Alba sued Alcoa, the Justice Department intervened in the case. It asked the court for a stay while the government investigates possible criminal violations of the FCPA and other laws by Alcoa and its executives and agent. The DOJ said the stay was needed to protect potential witnesses against civil discovery. The stay the court granted is still in effect. The DOJ hasn't commented on the status of its criminal investigation. Alcoa denied wrongdoing and said it is cooperating. See our post here.

Will the DOJ also intervene in Alba's suit against Sojitz? It needed the stay in the Alcoa case, it said, because:

The public is "an unnamed party in every lawsuit." United States v. Reaves, 636 F.Supp. 1575, 1578 (E.D. Ky. 1986) Here, the Complaint alleges that the defendants arranged for Alcoa, a public corporation, through its affiliates and agents, to make payments in violation of the anti-bribery provisions of the FCPA, among other crimes. The proposed stay enables the government to investigate these charges without potential prejudice to its investigation resulting from civil discovery . . . This would thus enable the government to vindicate the paramount public interest in the enforcement of federal criminal laws and resolution of the federal criminal investigation, should the government's investigation reveal evidence that federal criminal laws were violated. . . .

Sojitz Corp.'s website says that as of September 2009, its business consists of 555 companies including 165 subsidiaries and affiliates in Japan and 390 overseas, with 17,147 employees. Sojitz's U.S. subsidiary is headquartered in New York. The parent company's ADRs trade in the over-the-counter pink sheets under the symbol SZHFF.PK.

Download a copy of the December 18, 2009 federal civil complaint in Aluminium Bahrain B.S.C v. Sojitz Corporation and Sojitz Corporation of America here

Wednesday
Sep092009

Another Alba-Related Investigation

The Wall Street Journal reported yesterday (here) that the Justice Department is "investigating payments that Bahraini prosecutors allege were made by units of Japanese commodities-trading giant Sojitz Group to employees of an aluminum producer in Bahrain." The story says $8.7 million in alleged bribes to employees at Aluminum Bahrain BSC, or Alba, were paid into secret accounts they controlled in Liechtenstein banks. Some of the payments reportedly passed through U.S. banks.

Sojitz acts as a broker for Alba's products, including aluminum billet and alloys. It allegedly enjoyed lower prices in exchange for the payments. The DOJ investigation of Sojitz, which does some business in the U.S., is reportedly based on information provided by Bahraini authorities. The Journal said they "have shared their findings with U.S. Justice Department prosecutors, according to people briefed on the investigation." The payments were allegedly made by units of Nissho Iwai, which merged with Nichimen in 2004 to form Sojitz.

In March 2008, Alba -- majority owned by the government of Bahrain -- sued Alcoa Inc., its long-time raw materials supplier, for corruption and fraud. The federal court suit in Pittsburg alleged that Alba paid $2 billion in overcharges during a 15-year period. The money, according to the suit, first went to overseas accounts controlled by Alcoa's agent and some was then used to bribe Alba's executives in return for more supply contracts. The Justice Department quickly intervened in the case, asking the court for a stay while the government investigates possible criminal violations of the Foreign Corrupt Practices Act and other laws by Alcoa and its executives and agent. Alcoa has denied any wrongdoing and said it is cooperating with the DOJ.

The Wall Street Journal said Bahrain filed a money-laundering indictment against two former Alba employees accused of taking kickbacks from Sojitz.

The Justice Department hasn't commented on the Alcoa investigation or the Wall Street Journal's story naming Sojitz.

Read prior posts about Alba and Alcoa here.
.