Friday, May 25, 2012

The Biggest Bribe Cases In Business History


(Esto Sucede en Puerto Rico y es la fuerza económica mas poderosa en contra de la Estadidad. Respaldan y les favorece el status quo.) MJ

SF GATE
Home of the San Francisco Chronicle

Paying foreign officials for expediting legal processes or obtaining contracts was a common business practice around the world well into the 1970s. In 1973, the Watergate scandal, that ultimately caused Richard Nixon's resignation as president, brought corporate bribery into the spotlight. The Securities Exchange Commission and the U.S. Department of Justice began investigating the sources of Nixon's illegal campaign contributions and discovered that hundreds of U.S. companies had bribery slush funds on hand in order to curry favor with legislators and other officials. In 1977, the Foreign Corrupt Practices Act (FCPA) was enacted to bar U.S. corporations and some foreign companies operating in the U.S. from making such payments.

SEE: Eliot Spitzer - Man Of A Thousand Scandals

That hasn't stopped some companies from continuing the practice. These are the top five business bribes in U.S. history.

Kellogg Brown & Root

This company, now known as KBR, Inc., was spun off from a subsidiary of Halliburton. It is one of the largest engineering and construction firms in the world and has been connected to large U.S. military contracts. According to the New York Times, in 2009, the Department of Justice charged the company with offenses under the FCPA, including paying hundreds of millions of dollars to secure a natural gas plant construction contract to Nigerian officials. KBR pleaded guilty, as did its CEO Albert Jack Stanley, and paid $402 million in fines, as well as $177 million to the SEC. Stanley was sentenced to 2.5 in prison, beginning in 2012.

Siemens AG

Foreign companies that do business onshore in the U.S. also fall under the provisions of the FCPA. According to reports from the New York Times and the SEC, Siemens AG, a German engineering firm, ran afoul of the law in 2008 when it was charged for paying $16 million to the president of Argentina to secure a contract for making Argentinean identity cards. The contract was worth $1 billion to Siemens AG. In total, the company was accused of paying more than $100 million in total to government officials. Eight former employees and contractors continue to face charges in the scheme. Siemens settled with the Department of Justice and paid $1.6 billion in fines in the U.S. and Germany.

BAE Systems
The British aerospace company has been under investigation by British authorities since 1989, making it one of the longest fraud investigations in history. The main concern surrounded a deal between Britain and Saudi Arabia to supply fighter jets. The investigation spread to BAE's dealings in South Africa, Tanzania, Chile, Romania, the Czech Republic and Qatar. The investigation focused on payments made by BAE through a "go-between" company to foreign officials. The British version of the Department of Justice dropped most of the investigations, citing national security concerns, but U.S. authorities picked up the ball in 2007. According to the Telegraph, BAE settled with U.S. courts and paid a $400 million fine.
Kerry Khan and Michael Alexander
Individuals can also find themselves charged for bribery and fraud. According toe Lubbock Online, in October 2011, two U.S. Army Corps of Engineers employees were arrested and charged with fraud for taking kickbacks, estimated at over $20 million. Kerry Khan and Michael Alexander are accused of taking bribes from contractors in exchange for being awarded lucrative government contracts, and of inflating invoices to the government and skimming the difference. Khan and Alexander remain in jail pending trial and face maximum sentences of 25 to 40 years.

Alcatel-Lucent SA

At the end of 2010, Bloomberg reported that Alcatel-Lucent, the largest landline phone network company in the world, settled its bribery case with the Department of Justice in 2010 by agreeing to pay $137 million, including $45 million to the SEC. The case revolves around a complex series of money transfers between shell companies and to consultants, resulting in payments being made to foreign officials. Alcatel-Lucent admitted to making improper payments in many African and South American companies.

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The Bottom Line

As the Department of Justice continues to investigate the business practices of some of the largest companies in the world, it is likely that more evidence of bribery and corruption will be found. The penalties upon conviction, however, should make companies think twice before engaging in bribery and fraud.

Original story - The Biggest Bribe Cases In Business History
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http://www.sfgate.com/cgi-bin/article.cgi?f=/g/a/2012/05/23/investopedia82458.DTL

by Angie Mohr

Angie Mohr is a Chartered Accountant and Certified Management Accountant who has worked with thousands of business and personal finance clients from home-based entrepreneurs to rock bands to celebrity chefs. She is also the author of the Numbers 101 for Small Business series of books which have been translated into several languages and are sold worldwide. Her new book: Money$marts: Teaching Your Kids the Value of a Buck will be released in the fall of 2011. 

Angie also freelances for several newspapers and magazines, both in print and online. She is passionate about gardening, cooking and bringing more local foods into our diet. She is Canadian through and through but lives by the ocean in Savannah, Georgia with her husband, two children, six cats and innumerable chickens. Follow Angie on Twitter @angiewritergirl.


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