French Company Settles FCPA Charges for $240 Million
06/30/10 12:31 PM Filed in: FCPA
| Enforcement
On June
28, 2010, Department of Justice (DOJ)
announced that Technip
S.A., a global engineering, construction, and
services company based in Paris, France, has
agreed to a $240 million criminal penalty to
resolve charges related to the Foreign Corrupt
Practices Act (FCPA) for its participation in a
decade-long scheme to bribe Nigerian government
officials to obtain engineering, procurement, and
construction (EPC) contracts. The EPC contracts to
build liquefied natural gas (LNG) facilities on
Bonny Island, Nigeria, were valued at more than $6
billion.
DOJ filed a deferred prosecution agreement and a criminal information against Technip in the U.S. District Court for the Southern District of Texas. The two-count information charges Technip with one count of conspiracy and one count of violating the FCPA.
Technip, Kellogg Brown & Root Inc (KBR) and two other companies were part of a joint venture that was awarded four EPC contracts by Nigeria LNG Ltd. (NLNG) between 1995 and 2004 to build LNG facilities on Bonny Island. The government-owned Nigerian National Petroleum Corporation (NNPC) was the largest shareholder of NLNG.
According to court documents, Technip authorized the joint venture to hire two agents to pay bribed to a range of Nigerian government officials, including top-level executive branch officials, to assist Technip and the joint venture in obtaining the EPC contracts. The joint venture paid approximately $182 million to its agents to be forwarded to Nigerian government officials as bribes.
Under the terms of the deferred prosecution agreement, DOJ agreed to deter prosecution of Technip for two years. Meanwhile, Technip is obligated to obtain an independent compliance monitor for a two-year period to review the design and implementation for Technip’s compliance program and to cooperate with the department in ongoing investigations. If Technip abides by the terms of the deferred prosecution agreement, DOJ will dismiss the criminal information when the term of the agreement expires.
Technip also reached a settlement of a related civil complaint filed by the Securities and Exchange Commission (SEC) charging Technip with violating the FCPA’s anti-bribery, books and records, and internal controls provisions. As part of this settlement, Technip agreed to pay $98 million in disgorgement of profits relating to those violations.
Including today’s resolutions, a total of $917 million in criminal and civil penalties have been obtained to date as a result of the ongoing DOJ and SEC investigations of the scheme to bribe Nigerian government officials in order to win the Bonny Island EPC contract.
DOJ filed a deferred prosecution agreement and a criminal information against Technip in the U.S. District Court for the Southern District of Texas. The two-count information charges Technip with one count of conspiracy and one count of violating the FCPA.
Technip, Kellogg Brown & Root Inc (KBR) and two other companies were part of a joint venture that was awarded four EPC contracts by Nigeria LNG Ltd. (NLNG) between 1995 and 2004 to build LNG facilities on Bonny Island. The government-owned Nigerian National Petroleum Corporation (NNPC) was the largest shareholder of NLNG.
According to court documents, Technip authorized the joint venture to hire two agents to pay bribed to a range of Nigerian government officials, including top-level executive branch officials, to assist Technip and the joint venture in obtaining the EPC contracts. The joint venture paid approximately $182 million to its agents to be forwarded to Nigerian government officials as bribes.
Under the terms of the deferred prosecution agreement, DOJ agreed to deter prosecution of Technip for two years. Meanwhile, Technip is obligated to obtain an independent compliance monitor for a two-year period to review the design and implementation for Technip’s compliance program and to cooperate with the department in ongoing investigations. If Technip abides by the terms of the deferred prosecution agreement, DOJ will dismiss the criminal information when the term of the agreement expires.
Technip also reached a settlement of a related civil complaint filed by the Securities and Exchange Commission (SEC) charging Technip with violating the FCPA’s anti-bribery, books and records, and internal controls provisions. As part of this settlement, Technip agreed to pay $98 million in disgorgement of profits relating to those violations.
Including today’s resolutions, a total of $917 million in criminal and civil penalties have been obtained to date as a result of the ongoing DOJ and SEC investigations of the scheme to bribe Nigerian government officials in order to win the Bonny Island EPC contract.
BIS Publishes Rule Based Upon a Systematic Review of the Commerce Control List
On June
28, 2010, the Bureau of Industry and Security (BIS)
published a final rule revising the
Export Administration Regulations (EAR) based upon
a systematic review of the Commerce Control List
(CCL).
The rule is the third phase of the regulatory implementation of the results of a review of the CCL that was conducted by BIS starting in 2007. The BIS review was aided by input received from BIS’s Technical Advisory Committees (TACs) and comments received from the interested public.
The revisions in this rule include clarifications to existing controls; eliminating redundant or outdated controls; and establishing more focused and rationalized controls. This rule also makes CCL related changes to other parts of the EAR, including CCL related definitions and license exceptions.
The rule is effective upon publication and while no formal comment period, BIS welcomes comments from the public on this rule on a continuing basis.
The rule is the third phase of the regulatory implementation of the results of a review of the CCL that was conducted by BIS starting in 2007. The BIS review was aided by input received from BIS’s Technical Advisory Committees (TACs) and comments received from the interested public.
The revisions in this rule include clarifications to existing controls; eliminating redundant or outdated controls; and establishing more focused and rationalized controls. This rule also makes CCL related changes to other parts of the EAR, including CCL related definitions and license exceptions.
The rule is effective upon publication and while no formal comment period, BIS welcomes comments from the public on this rule on a continuing basis.
Freight Forwarder Settles Allegation Of Antiboycott Violation
On June
25, 2010, the U.S. Department of Commerce’s Bureau of
Industry and Security (BIS) announced that Plane Cargo
Inc. (PCI), a freight forwarder located in
Houston, TX, has agreed to pay a $5,200 civil
penalty to settle allegations that it violated the
antiboycott provisions of the Export
Administration Regulations (EAR).
The announcement provided that:
The announcement provided that:
BIS, through its Office of Antiboycott Compliance, alleged that on one occasion in 2003, PCI, in connection with a transaction involving the sale and transfer of goods from the United States to Syria, furnished an invoice to a company in Syria that certified that the goods were not of Israeli origin in violation of the antiboycott provisions of the EAR. PCI cooperated fully with the investigation.
BIS Seeks Comments on Revising Encryption Export Controls
On June
25, 2010, the Bureau of Industry and Security (BIS)
issued an interim final rule
that
amends the Export Administration Regulations (EAR)
to modify the requirements of License Exception
ENC, “Encryption Commodities, Software and
Technology,” and the requirements for qualifying
an encryption item as mass market. In addition,
the rule also amends specific license requirements
for encryption items. EAR sections affected are 15
CFR Parts 730, 734, 738, 740, 742, 748, 772 and
774. BIS also posted on its website a
press release, a
summary of the rule,
and additional information
to
assist exporters.
BIS believes that the rule will streamline procedures for (1) less sensitive encryption items eligible for export under License Exception ENC and (2) most mass market encryption products. The interim final rule also implements the Wassenaar Arrangement’s decontrol of items that perform “ancillary cryptography” in the Commerce Control List.
The rule includes several significant changes to encryption export controls by modifying the way information about encryption products is collected an analyzed. The rule, as amended:
Comments on the suggested changes are due by August 24, 2010.
BIS believes that the rule will streamline procedures for (1) less sensitive encryption items eligible for export under License Exception ENC and (2) most mass market encryption products. The interim final rule also implements the Wassenaar Arrangement’s decontrol of items that perform “ancillary cryptography” in the Commerce Control List.
The rule includes several significant changes to encryption export controls by modifying the way information about encryption products is collected an analyzed. The rule, as amended:
- Removes review requirements for less sensitive encryption items;
- Establishes a company registration requirement for encryption items under License Exception ENC or as mass market encryption items. Under the new rule, authorization for License Exception ENC and mass market treatment is based on company authorizations that operate like a bulk license for the company’s products rather than product-by-product authorizations;
- Creates an annual self-classification report requirement for such items pursuant to an encryption registration. Under the new rule, the self-classification report would be required to be submitted annually to BIS and the ENC Encryption Request Coordinator in February for items exported and reexported the previous calendar year;
- Makes encryption technology eligible for export and reexport under License Exception ENC, except to countries of highest concern;
- Lifts the semi-annual sales reporting for less sensitive encryption items under License Exception ENC. When sales reporting is not required under License Exception ENC, companies need only maintain records as required by the EAR that can be reviewed by appropriate agencies of the U.S. Government upon request;
- Removes the 30-day delay to export and reexport less sensitive encryption items under License Exception ENC; and
- Removes the 30-day
delay to make most mass market encryption items
eligible for mass market treatment.
Comments on the suggested changes are due by August 24, 2010.
VA Resident Sentenced for FCPA Violations
06/25/10 12:24 PM Filed in: FCPA
| Enforcement
On June
25, 2010, the U.S. Department of Justice
announced that John Webster
Warwick, a 64-year old Virginia Beach, VA,
resident, was sentenced in U.S. District Court in
Richmond, VA, to 37 months in prison for
conspiring to pay bribes to former Panamanian
government officials to secure maritime contracts.
On February 10, 2010, Warwick pleaded guilty to conspiracy to make corrupt payments to foreign government officials for the purpose of securing business for Ports Engineering Consultants Corporation (PECC) in violation of the Foreign Corrupt Practices Act (FCPA).
According to court documents, Warwick and others conspired to pay money secretly to Panamanian government officials for awarding contracts to PECC. In December 1997, the Panamanian government awarded PECC a no-bid 20-year concession. In December 1997, Warwick and others authorized payments to be made to the Panamanian government officials, which totaled more than $200,000.
In addition to the prison term, Warwick forfeited $331,000 in proceeds of the conspiracy and will be subject to a two-year supervised release following his prison term.
On February 10, 2010, Warwick pleaded guilty to conspiracy to make corrupt payments to foreign government officials for the purpose of securing business for Ports Engineering Consultants Corporation (PECC) in violation of the Foreign Corrupt Practices Act (FCPA).
According to court documents, Warwick and others conspired to pay money secretly to Panamanian government officials for awarding contracts to PECC. In December 1997, the Panamanian government awarded PECC a no-bid 20-year concession. In December 1997, Warwick and others authorized payments to be made to the Panamanian government officials, which totaled more than $200,000.
In addition to the prison term, Warwick forfeited $331,000 in proceeds of the conspiracy and will be subject to a two-year supervised release following his prison term.
Census Foreign Trade Division Updates HTS Codes and Schedule B Database
The U.S.
Census Bureau’s Foreign Trade Division (FTD)
has posted a warning to the
trade community that some freight forwarders and
Customs brokers may need to update their current
commodity number classifications as updated/new
Harmonized Tariff Schedule (HTS) numbers go into
effect on July 1, 2010.
HTS commodity classification codes are generally revised twice annually, in January and July by the U.S. International Trade Commission. The codes are usually revised because members in the trade community are looking for more detailed statistical data. Recommendations for revisions to existing classifications or for the establishment of new classifications should be submitted to the Chairman of the Committee for Statistical Annotation of Tariff Schedules.
In addition, the FTD posted a link to an improved Schedule B database of export commodity codes. According to FTD, “the new improved search tool will interpret common commercial product information and interact intelligently and intuitively with users to help alleviate the complex nature of finding the correct code in the Schedule B book.”
HTS commodity classification codes are generally revised twice annually, in January and July by the U.S. International Trade Commission. The codes are usually revised because members in the trade community are looking for more detailed statistical data. Recommendations for revisions to existing classifications or for the establishment of new classifications should be submitted to the Chairman of the Committee for Statistical Annotation of Tariff Schedules.
In addition, the FTD posted a link to an improved Schedule B database of export commodity codes. According to FTD, “the new improved search tool will interpret common commercial product information and interact intelligently and intuitively with users to help alleviate the complex nature of finding the correct code in the Schedule B book.”
Iranian National Convicted of Export Violations
06/17/10 11:49 AM Filed in: Export
| Enforcement
On June
17, 2010, the U.S. Department of Justice
announced that Omid
Khalili, an Iranian national, pleaded guilty in
U.S. District Court for the Southern District of
Alabama to attempting to illegally export fighter
jet or military aircraft parts from the U.S. to
Iran.
Khalili and other defendant were charged in a nine-count indictment returned on January 28, 2010, with conspiracy, money laundering, smuggling, and violations of the Arms Export Control Act (AECA), and the International Emergency Economic Powers Act (IEEPA).
According to court documents, Khalili and his co-conspirator have been working with the Iranian government to procure military items for the Iranian government. In November 2009, Khalili contacted an undercover agent seeking parts for the military aircraft for export to Iran.
The parts requested by Khalili are designated as defense articles on the U.S. Munitions List and require a U.S. State Department export license. In addition, these items may not be exported to Iran without a license from the U.S. Treasury Department due to the U.S. trade embargo on Iran. Neither Khalili nor his co-conspirator obtained the required export licenses.
On November 20, 2009, Khalili send an e-mail to the undercover agent containing a list of aircraft parts for the military aircraft and inquiring about their prices. In December 2009, Khalili and his co-conspirator talked with the agent and informed him that the parts were to be sent to Iran and that, because of the U.S. embargo, they would need to be re-routed through an intermediate country. When the undercover agent agreed to send the requested parts to the defendants, Khalili and his other co-conspirators sent four separate cash deposits totaling in excess of $70,000 from a bank in U.A.E. to a bank in Alabama as down-payment for the aircraft parts.
Khalili faces a maximum penalty of ten years in prison and a $1 million fine.
Khalili and other defendant were charged in a nine-count indictment returned on January 28, 2010, with conspiracy, money laundering, smuggling, and violations of the Arms Export Control Act (AECA), and the International Emergency Economic Powers Act (IEEPA).
According to court documents, Khalili and his co-conspirator have been working with the Iranian government to procure military items for the Iranian government. In November 2009, Khalili contacted an undercover agent seeking parts for the military aircraft for export to Iran.
The parts requested by Khalili are designated as defense articles on the U.S. Munitions List and require a U.S. State Department export license. In addition, these items may not be exported to Iran without a license from the U.S. Treasury Department due to the U.S. trade embargo on Iran. Neither Khalili nor his co-conspirator obtained the required export licenses.
On November 20, 2009, Khalili send an e-mail to the undercover agent containing a list of aircraft parts for the military aircraft and inquiring about their prices. In December 2009, Khalili and his co-conspirator talked with the agent and informed him that the parts were to be sent to Iran and that, because of the U.S. embargo, they would need to be re-routed through an intermediate country. When the undercover agent agreed to send the requested parts to the defendants, Khalili and his other co-conspirators sent four separate cash deposits totaling in excess of $70,000 from a bank in U.A.E. to a bank in Alabama as down-payment for the aircraft parts.
Khalili faces a maximum penalty of ten years in prison and a $1 million fine.
BIS Publishes Update 2010 Dates & Instructions
The
Bureau of Industry and Security’s (BIS)
announced that its annual
Update Conference on Export Controls and Policy
will be held on August 31- September 2, 2010 in
Washington, DC.
To attend this year’s conference, you must follow a two-step process: (1) you must submit the online “Interest Form” between June 15 and June 28. If there are more potential participants than there is space available, BIS will grant registration through a random selection from the entire list of respondents, regardless of when received during the period. Those selected will be notified and given registration instructions in early July. They must register and submit payment by a designated date indicated in the instructions or their spot will be forfeited and given to someone on the wait list. Those not selected will be notified that they have been placed on a wait list.
More detailed program information will be posted in the coming weeks.
Registration transfers within companies or organizations may be permitted with prior approval from BIS. Registration transfers will not be permitted between different organizations or companies. Registrations may not be resold.
BIS will make every effort to ensure broad company representation at this event. Due to the limited capacity of the Update Conference, BIS reserves the right to limit, restrict or decline registrations to this event. Registrations are not confirmed until accepted and verified by BIS and the registration fee has been paid.
To attend this year’s conference, you must follow a two-step process: (1) you must submit the online “Interest Form” between June 15 and June 28. If there are more potential participants than there is space available, BIS will grant registration through a random selection from the entire list of respondents, regardless of when received during the period. Those selected will be notified and given registration instructions in early July. They must register and submit payment by a designated date indicated in the instructions or their spot will be forfeited and given to someone on the wait list. Those not selected will be notified that they have been placed on a wait list.
More detailed program information will be posted in the coming weeks.
Registration transfers within companies or organizations may be permitted with prior approval from BIS. Registration transfers will not be permitted between different organizations or companies. Registrations may not be resold.
BIS will make every effort to ensure broad company representation at this event. Due to the limited capacity of the Update Conference, BIS reserves the right to limit, restrict or decline registrations to this event. Registrations are not confirmed until accepted and verified by BIS and the registration fee has been paid.
Texas Company Settles Allegations Of Antiboycott Violations
On June
14, 2010, the U.S. Department of Commerce’s Bureau of
Industry and Security (BIS) announced that Messina,
Inc. (Messina) of Dallas, TX, has agreed to pay a
$10,800 civil penalty to settle allegations that
it violated the antiboycott provisions of the
Export Administration Regulations (EAR) on two
occasions.
The announcement provided that:
The announcement provided that:
BIS, through its Office of Antiboycott Compliance, alleged that in 2004, in connection with two letter of credit transactions involving the sale and transfer of goods destined for Iraq that were shipped through the UAE, Messina furnished to a U.S. bank two certificates signed by the agent for a vessel that attested to the vessel’s eligibility to call at the port of a boycotting country. In doing so, Messina furnished information concerning other persons known or believed to be restricted from having any business relationship with or in a boycotting country, in violation of the antiboycott provisions of the EAR.
CBP to Revise Policy on the Use of CF 28s as Start of Formal Investigation
06/10/10 11:48 AM Filed in: Customs
On June
10, 2010, during the Customs Lawyers Association
Annual meeting in Washington, DC, Charles Ressin,
Chief of the Penalties Branch, Regulations &
Rulings at the CBP’s Office of International Trade,
stated that CBP intends to revise and publish policy
concerning Request for Information (CBP Form 28) as
beginning of formal investigation for purposes of
customs enforcement. Mr. Ressin stated that CBP’s
issuance of a CBP Form 28 alone does not preclude the
importer from filing a prior disclosure unless
express notice of investigation is included in the
form.