Global Construction Company Bribes Foreign Officials: FBI

One of the largest global construction management corporations in the world has admitted to bribing foreign officials in several countries in order to secure government construction management contracts.

Following investigations from the FBI’s Newark Division and criminal investigators with the U.S. Attorney’s Office (District of New Jersey), Louis Berger International, a New Jersey-based construction management company, admitted to violations of the Foreign Corrupt Practices Act (FCPA).

The company – which has an office in Jersey City - agreed to pay a $17.1 million criminal penalty to resolve charges that it bribed foreign officials in India, Indonesia, Vietnam and Kuwait to secure government construction management contracts.

Two of the company’s former executives have also pleaded guilty to conspiracy and FCPA charges in connection with the scheme.

The company’s website states that Louis Berger is a $1 billion “global professional services corporation” that “constructs and rehabilitates critical infrastructure in fragile states and developing countries.”

It’s code of business conduct and corporate responsibility report can be seen online here.

HOW THEY DID IT

According to prosecutors, Louis Berger entered into a deferred prosecution agreement on Friday and admitted its criminal conduct, including its conspiracy to violate the anti-bribery provisions of the FCPA.

In addition to the criminal penalty, Louis Berger agreed to implement rigorous internal controls, continue to cooperate fully with the department, and retain a compliance monitor for at least three years.

Richard Hirsch, 61, of Manila, Philippines, and James McClung, 59, of Dubai, United Arab Emirates, each pleaded guilty to one count of conspiracy to violate the FCPA and one substantive count of violating the FCPA. Hirsch previously served as the senior vice president responsible for the company’s operations in Indonesia, Thailand, the Philippines and Vietnam. McClung previously served as the senior vice president responsible for the company’s operations in India and, subsequent to Hirsch, in Vietnam.

The sentencing hearings for Hirsch and McClung are scheduled for Nov. 5.

According to court documents and statements:

From 1998 through 2010, the company and its employees, including Hirsch and McClung, orchestrated $3.9 million in bribe payments to foreign officials in various countries in order to secure government contracts. To conceal the payments, the conspirators made payments under the guise of “commitment fees,” “counterpart per diems,” and other payments to third-party vendors. In reality, the payments were intended to fund bribes to foreign officials who had awarded contracts to LBI or who supervised LBI’s work on contracts.

Among other factors, in entering into a deferred prosecution agreement in this case, the government considered: (1) LBI’s self-reporting of the misconduct; (2) the company’s cooperation, including voluntarily making both U.S. and foreign employees available for interviews, and collecting, analyzing and organizing evidence and information for federal investigators; (3) the company’s extensive remediation, including terminating the officers and employees responsible for the corrupt payments; and (4) the company’s demonstrated commitment to improving its compliance program and internal controls.

File photo via Flickr