With corporate bribery a common practice around the world, this week we begin a regular digest following companies and cases in the news.
Sun Microsystems Discloses Possible FCPA Violation
In its most recent SEC filing, Silicon Valley software company Sun Microsystems revealed that it may have violated the Foreign Corrupt Practices Act, a suspicion it has reported to the U.S. Department of Justice and the SEC. While Sun hasn't disclosed the amount of the suspected bribe or where it took place, the company has warned shareholders that fines, criminal sanctions and debarment from doing business with the U.S. government could follow.
The revelation comes at a sensitive time for Sun as the company announced a merger in April with another software giant, Oracle. Under the terms, Oracle has agreed to buy Sun for $7.4 billion.
Does the United Nations' Corruption Convention Have Teeth?
A number of leading CEOs, among them GE's Jeffrey Immelt, Shell's Jeroen van der Veer and Chinese industrialist Tianwen Huan, sent a joint letter to U.N. Secretary Ban Ki-moon this month voicing their support for the United Nations Convention against Corruption (UNCAC). However, the business leaders urged a more effective review of how the convention is implemented. Otherwise, they say, there is no clear way to measure the success of anti-corruption efforts around the world. The group put forward a number of proposals in the letter.
So far,140 countries have signed on to the convention and 136 have ratified. But with countries like Afghanistan and Zimbabwe among the signatories, some member states face an uphill battle.
The letter comes in advance of the next UNCAC meeting in Dohar, Qatar, in November when business leaders hope these issues will be hashed out among delegates. Although there are a number of global initiatives already working to fight corruption, the CEOs said these efforts will be "greatly strengthened by working under the umbrella of an effective U.N. Convention."
Germany May Face Its Next Big Bribery Scandal
Just a few months after German engineering giant Siemens agreed to pay a record $1.3 billion fine to U.S. and German authorities, one of Germany's leading truck manufacturers MAN is also under investigation for bribery. Reported by Deutsche Welle, the company is suspected of paying millions in bribes to sell and lease its vehicles around the world. German prosecutors have searched MAN's Munich headquarters and 39 other offices across Germany. According to press reports, prosecutors are looking at $15 million in bribes paid in Europe and Africa and dispersed in a style similar to the scheme unveiled in the Siemens case -- using a complex network of front companies and consultants to make the payments. MAN has launched its own internal inquiry. Meanwhile, the investigation has extended to more than 100 people, according to an AP report in The Wall Street Journal.
KBR Caught Bribing. But Who Got the Cash?
The recent U.S. Department of Justice case against Halliburton subsidiary Kellogg Brown and Root (KBR) revealed that the company spent more than a decade bribing Nigerian officials to win a massive natural gas contract. KBR was fined $579 million by the DOJ and its former CEO Albert "Jack" Stanley was sentenced to seven years in prison.
Yet, the saga is far from over. While $150 million of the $180 million KBR admitted to paying officials has reportedly surfaced in a Swiss bank account, prosecutors have not revealed who received the payments or who made the deposits. There is gowing speculation that a number of bribe recipients may soon be named. The UK Guardian reports that Nigerian President Umaru Yar'Adua has set up a special panel to investigate the scandal and reveal who pocketed the cash.
Britons Face Possible Extradition to U.S. in KBR's Corruption Case
In further fallout from KBR's corrupt dealings in Nigeria, extradition hearings began this week in London against British attorney Jeffrey Tesler, thought to be a key figure in the case. Facing possible extradition to the U.S. and years in prison, Tesler is accused of being KBR's "bagman," ensuring the delivery of millions in bribe payments to Nigerian officials on behalf of the U.S. consortium over a number of years.
The allegations against the 60-year-old attorney, a dual Israeli-British citizen, are outlined in an indictment published in The Guardian. A second Briton, 71-year-old Wojciech Chodan, also faces extradition. The London Evening Standard reports that the proceedings against the two men, whose alleged violations date back to the mid-1990s, "demonstrate the long arm of U.S. anti-corruption laws."
Hong Kong Toy Manufacturer Sentenced for Bribing Mattel Execs
The director of a Hong Kong toy company was sentenced to 18 months in prison this month for offering $10 million in bribes to two directors of Mattel Asia. According to Hong Kong's Independent Commission Against Corruption (ICAC), 71-year-old Wong Hong-Leung set up a front company and issued fake invoices to bribe the two Mattel employers. Mattel Asia is a subsidiary of the U.S. toy giant. Between1998 and 2003, the payments received by the executives ranged from several thousand dollars to several hundred thousand dollars a month. The commission also reported that Wong Hong-Leung took part of the bribe money himself.
Corrupt U.S. Military Contract in South Korea
Between 2003 and 2007, Henry Lee Holloway worked for the U.S. Army and Air Force Exchange Service (AAFES) in South Korea. Holloway was responsible for a $206 million contract with the Samsung Rental Company (SSRT) that provided telecommunication services to U.S. armed forces based there. When Holloway arrived at his post, he considered canceling the contract because the services seemed substandard. But after meetings with the contractor CEO, Gi-Hwan Jeong, Holloway approved the deal. His about-face came at a price.
According to court documents released by the U.S. Justice Department in April, Holloway collected about $70,000 in bribes over a two-year period. He received the payments as stock offerings, travel expenses, entertainment and cash, none of which he declared on his tax returns. In addition to five years in prison and a $250,000 fine for accepting bribes, Holloway also faces up to three years in prison and a $100,000 fine for filing a false tax return. The Army officer has pleaded guilty but a sentencing date has not yet been set.
Meanwhile, his co-conspirator, Gi-Hwan Jeong, has also been indicted in a U.S. court after he was arrested in Texas in November 2008. His trial is scheduled to start on June 24, 2009.