Subsidiary Of Tyco International Ltd. Pleads Guilty, Is Sentenced For Conspiracy To Violate Foreign Corrupt Practices Act
Tyco Entities Agree to More Than $26 Million in Penalties
WASHINGTON – Tyco International Ltd. – together with a subsidiary that pleaded guilty this morning to a criminal charge for conspiring to violate the Foreign Corrupt Practices Act (FCPA) – has agreed to pay more than $26 million to resolve the conspiracy charge with the Department of Justice and charges with the U.S. Securities and Exchange Commission (SEC), announced Assistant Attorney General Lanny A. Breuer of the Criminal Division and U.S. Attorney for the Eastern District of Virginia Neil H. MacBride.
As part of the more than $26 million, Tyco – a company based in Switzerland that manufactures and sells products related to security, fire protection and energy – has agreed to pay a $13.68 million penalty for falsifying books and records in connection with payments by its subsidiaries to government officials in various countries in order to obtain and retain business.
Tyco Valves & Controls Middle East Inc. (TVC ME) – an indirect, wholly owned subsidiary of Tyco that sold and marketed valves and other industrial equipment throughout the Middle East for the oil, gas, petrochemical, commercial construction, water treatment and desalination industries – pleaded guilty this morning before U.S. District Judge Claude M. Hilton for conspiring to violate the anti-bribery provisions of the FCPA. According to the criminal information to which TVC ME pleaded guilty, the company paid bribes to officials employed by Saudi Aramco, an oil and gas company controlled and managed by the government of the Kingdom of Saudi Arabia, in order to obtain contracts with Saudi Aramco.
At the conclusion of the plea proceeding, the court sentenced TVC ME to pay a $2.1 million fine, which is included as part of the $13.68 million penalty.
“Today, a Tyco subsidiary pleaded guilty to bribing officials of state-owned entities in various countries to score valuable petroleum contracts and, with Tyco International, agreed to pay nearly $14 million in penalties,” said Assistant Attorney General Breuer. “Together with the SEC, we are leading a fight against corruption around the globe.”
“For more than 10 years, various Tyco entities bribed foreign officials and cooked the books to hide the payments,” said U.S. Attorney MacBride. “The Eastern District of Virginia has a strong partnership working with the Criminal Division’s Fraud Section on FCPA cases and is aggressively using venue provisions to hold FCPA violators accountable for their conduct.”
As part of the settlement, the department entered into a non-prosecution agreement (NPA) with Tyco. According to the NPA, a number of Tyco’s subsidiaries made payments, both directly and indirectly, to government officials in order to obtain and retain business with private and state-owned entities, and falsely described the payments in Tyco’s corporate books, records and accounts as legitimate charges. From 1999 to 2009, Tyco knowingly conspired to falsify its books and records in connection with these payments.
In addition to the monetary penalty, Tyco and TVC ME also agreed to cooperate with the department, to report periodically to the department concerning the companies’ compliance efforts, and to continue to implement an enhanced compliance program and internal controls designed to prevent and detect FCPA violations.
The agreement acknowledges Tyco’s timely, voluntary and complete disclosure, its cooperation – including a global internal investigation concerning bribery and related misconduct – and its extensive remediation. That remediation includes the implementation of an enhanced compliance program, the termination of employees responsible for the improper payments and falsification of books and records, the severing of contracts with the responsible third-party agents and the closing of subsidiaries due to compliance failures.
In the parallel civil proceedings, Tyco consented with the SEC to a proposed final judgment that orders the company to pay $10,564,992 in disgorgement and $2,566,517 in prejudgment interest – which, together with the Department of Justice penalty, totals more than $26 million.
The case is being prosecuted by Trial Attorneys Kathleen M Hamann and Daniel S. Kahn of the Criminal Division’s Fraud Section, and Assistant U.S. Attorney Charles F. Connolly of the Eastern District of Virginia. The case was investigated by the FBI.
The Justice Department acknowledges and expresses its appreciation for the significant assistance provided by the SEC’s Division of Enforcement.