With the last member of the infamous TSKJ joint-venture resolving FCPA charges this week, has the DOJ finally closed the door on its very lucrative Bonny Island investigation? JGC, a Japanese company headquartered in Yokohama, Japan, resolved an FCPA enforcement action brought by the DOJ concerning JGC’s participation in the Bonny Island, Nigeria, bribery scheme. The DOJ charged JGC with conspiring to violate and aiding and abetting violations of the FCPA’s antibribery provisions. To resolve the allegations, JGC and the DOJ entered into a deferred prosecution agreement (DPA) that requires JGC to realize certain compliance and cooperation measures, and pay a criminal penalty of $218.8 million. This post describes the JGC Corporation resolution.
Conduct
- JGC admitted TSKJ, a joint-venture comprised of Technip, S.A., M.W. Kellogg, Brown & Root Inc. (and then, Kellogg Brown & Root Inc., collectively, KBR), and Snamprogetti Netherlands B.V., engaged Jeffrey Tesler, a UK citizen, resident and licensed attorney who owned and controlled Tri-Star Investments Ltd. (Tri-Star), a Gibraltar corporation, to assist in securing four engineering, procurement, and construction (EPC) contracts to build liquefied natural gas (LNG) facilities on Bonny Island, Nigeria.
- Between 1995 and 2004, Nigeria Liquefied Natural Gas Limited (NLNG) awarded TSKJ the four EPC contracts collectively valued at more than $6 billion. The government-owned Nigerian National Petroleum Corporation (NNPC) was the largest shareholder of NLNG, owning 49 percent of the company.
- According to court documents, pursuant to JGC’s authorization, TSKJ hired Tesler, Tri-Star, and a Japanese trading company, to bribe a range of Nigerian government officials, including top-level executive branch officials, to assist TSKJ in obtaining the EPC contracts. At crucial junctures preceding the award of the EPC contracts, KBR’s former CEO, Albert “Jack” Stanley, and others, met with top-level Nigerian executive branch officials to confirm that TSKJ should use Tesler as its agent and to learn or confirm the identity of a representative with whom TSKJ and Tesler should negotiate bribes for the officials. TSKJ paid approximately $132 million in “consulting fees” via correspondent accounts in New York City to Tesler and Tri-Star and more than $50 million to the Japanese trading company in furtherance of the bribery scheme. According to court documents, these monies were intended to be used, in part, for bribes for the Nigerian officials.
Penalty
- As mentioned above, JGC agreed to pay a criminal penalty of $218.8 million, and to realize certain compliance and cooperation undertakings during a two-year period. Part of the compliance undertakings requires JGC to retain an independent compliance consultant for a period of two years.
Notes
- Earlier in 2011 Tesler, pleaded guilty to one count of conspiracy to violate the FCPA and one substantive violation of an FCPA antibribery provision. In 2010 Wojceich Chodan, Technip and Snamprogetti each resolved enforcement actions arising out of their respective roles in the Bonny Island scheme. In 2009, the Halliburton Company, Kellogg Brown and Root LLC, and KBR, all resolved FCPA enforcement actions arising out their roles in the Bonny Island conspiracy. In 2008, Stanley, pleaded guilty to conspiring to violate the FCPA for his role in the Bonny Island scheme. To date, the Bonny Island investigation has produced penalties, disgorgement, and forfeiture, in excess of $1.49 billion – the largest ever to arise out of one investigation.
- The Bonny Island prosecutions highlight the Government’s focus on industry-wide investigations and its thoroughness in such investigations.
- The Bonny Island prosecutions also demonstrate the significant international cooperation that is now becoming commonplace in FCPA enforcement actions. The DOJ specifically commended the assistance provided by authorities in the United Kingdom, France, Italy and Switzerland in the JGC enforcement action.
