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UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION
JOINT SENTENCING MEMORANDUM The United States of America and the defendant, Akzo Nobel Chemicals International B.V. ("Akzo Nobel"), file this Joint Sentencing Memorandum in support of their recommendation that the Court sentence the defendant to pay a criminal fine of $32 million. The parties also request that sentence be imposed on May 17, 2006, based on the current record, without need of an evidentiary sentencing hearing or a presentence report. INTRODUCTION On March 14, 2006, the United States filed a one-count Information charging Akzo Nobel with participating in a conspiracy in the United States and elsewhere to suppress and eliminate competition by fixing the prices of hydrogen peroxidebeginning on or about July 1, 1998 and continuing until on or about December 1, 2001, in violation of the Sherman Antitrust Act, 15 U.S.C. § 1. Akzo Nobel is scheduled to be arraigned on May 17, 2006. Akzo Nobel will waive indictment and plead guilty under Fed. R. Crim. P. 11(c)(1)(C). The United States and Akzo Nobel jointly submit this Joint Sentencing Memorandum to request that the Court sentence Akzo Nobel on an expedited basis pursuant to Crim. L.R. 32-1(b). This Memorandum also outlines the material terms of the Plea Agreement between the United States and Akzo Nobel, in the event the Court grants the parties' request to impose a sentence immediately on May 17, 2006, after accepting Akzo Nobel's guilty plea. In conjunction with this Joint Sentencing Memorandum, the United States and Akzo Nobel have filed a Stipulation in Support of Expedited Sentencing and a Proposed Order for Expedited Sentencing Pursuant to L.R. 32-1(b). The United States and Akzo Nobel respectfully submit that this Memorandum and the Plea Agreement provide sufficient information for the Court to impose sentence immediately without a presentence report. In addition, an expedited sentencing would accommodate Akzo Nobel's corporate representative. If the Court finds that the Plea Agreement and this Memorandum do not provide sufficient information to allow for the imposition of sentence on the scheduled date of the plea hearing, the parties are prepared to submit additional information requested by the Court. A copy of the Akzo Nobel 11(c)(1)(C) Plea Agreement is attached as Exhibit A to this Memorandum. MATERIAL TERMS OF AKZO NOBEL PLEA AGREEMENTThe material terms of the Akzo Nobel Plea Agreement include: 1. Akzo Nobel will waive indictment, waive all rights as enumerated in the Plea Agreement, and plead guilty under Fed. R. Crim. P. 11(c)(1) to an Information charging it with participating in a conspiracy in the United States and elsewhere to suppress and eliminate competition by fixing the prices of hydrogen peroxidebeginning on or about July 1, 1998 and continuing until on or about December 1, 2001, (the "relevant period") in violation of the Sherman Antitrust Act, 15 U.S.C. § 1. During the relevant period, the defendant was a corporation organized and existing under the laws of the Netherlands, and had its principal place of business in Amersfoort, the Netherlands. During the relevant period, the defendant was a producer of hydrogen peroxide, was engaged in the sale of hydrogen peroxide in the United States and elsewhere, and employed 5,000 or more individuals. The defendant's sales of hydrogen peroxide to U.S. customers affected by the conspiracy totaled approximately $82,900,000. 2. The United States and Akzo Nobel agree that the appropriate sentence in this case is a criminal fine of $32 million and a special assessment of $400. The fine is to be paid in full within 15 days of the imposition of sentence. Both parties recommend that no term of probation be imposed. Akzo Nobel agrees to have its sentence determined under the United States Sentencing Guidelines ("U.S.S.G.," "Sentencing Guidelines," or "Guidelines"), although Akzo Nobel understands the Guidelines are advisory, not mandatory. The United States contends that had this case gone to trial, the United States would have presented evidence to prove that the gain derived from or the loss resulting from the charged offense is sufficient to justify a fine of $32 million, pursuant to 18 U.S.C. § 3571(d). For purposes of this plea and sentencing only, the defendant waives its right to contest this calculation. 3. The United States will not seek restitution in this case in light of the civil class action cases filed against Akzo Nobel, including In re Hydrogen Peroxide Antitrust Litigation, No. 05-666, MDL No. 1682, in the United States District Court, Eastern District of Pennsylvania, which potentially provide for recovery of a multiple of actual damages. 4. The United States agrees that it will not bring further criminal charges against Akzo Nobel and its current or former officers, directors, and employees (except for Dag Strömqvist and Börje Andersson, who have been specifically excluded from the Plea Agreement) for their participation in the hydrogen peroxide conspiracy. In return, Akzo Nobel agrees to cooperate fully in the ongoing hydrogen peroxide investigation. Akzo Nobel has already produced documents and other valuable information. Moreover, Akzo Nobel has agreed to make employees available to the United States for interviews and to produce documents located outside the country, which are beyond the jurisdictional reach of the government's grand jury subpoenas. The documents produced, as well as additional proffered cooperation, have substantially assisted the United States in furthering its investigation. UNITED STATES SENTENCING GUIDELINES CALCULATIONS The parties agree to the following Sentencing Guidelines calculations, which are based on the affected hydrogen peroxide sales in the United States of $82.9 million:
The United States will move, pursuant to § 8C4.1 of the Sentencing Guidelines, for a downward departure from the minimum Guidelines fine to a fine of $32 million due to Akzo Nobel's substantial assistance in the United States' hydrogen peroxide investigation. Additionally, Akzo Nobel has agreed to produce relevant documents from the United States and abroad as a condition to the government entering into the Plea Agreement. Defendant has agreed to continue to assist in the government's investigation.
UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION
PLEA AGREEMENT The United States of America and AKZO NOBEL CHEMICALS INTERNATIONAL B.V. ("defendant"), a corporation organized and existing under the laws of the Netherlands, hereby enter into the following Plea Agreement pursuant to Rule 11(c)(1)(C) of the Federal Rules of Criminal Procedure ("Fed. R. Crim. P."): RIGHTS OF DEFENDANT 1. The defendant understands its rights:
AGREEMENT TO PLEAD GUILTY 2. The defendant knowingly and voluntarily waives the rights set out in Paragraph 1(b)-(g) above, including all jurisdictional defenses to the prosecution of this case, and agrees voluntarily to consent to the jurisdiction of the United States to prosecute this case against it in the United States District Court for the Northern District of California. The defendant also knowingly and voluntarily waives the right to file any appeal, any collateral attack, or any other writ or motion, including but not limited to an appeal under 18 U.S.C. § 3742, that challenges the sentence imposed by the Court if that sentence is consistent with or below the recommended sentence in Paragraph 8 of this Plea Agreement, regardless of how the sentence is determined by the Court. This agreement does not affect the rights or obligations of the United States as set forth in 18 U.S.C. § 3742(b) and (c). Pursuant to Fed. R. Crim. P. 7(b), the defendant will waive indictment and plead guilty at arraignment to a one-count Information to be filed in the United States District Court for the Northern District of California. The Information will charge the defendant with participating in a conspiracy to suppress and eliminate competition by fixing the price of hydrogen peroxide sold in the United States and elsewhere, beginning on or about July 1, 1998 and continuing until on or about December 1, 2001, in violation of the Sherman Antitrust Act, 15 U.S.C. § 1. 3. The defendant, pursuant to the terms of this Plea Agreement, will plead guilty to the criminal charge described in Paragraph 2 above and will make a factual admission of guilt to the Court in accordance with Fed. R. Crim. P. 11, as set forth in Paragraph 4 below. FACTUAL BASIS FOR OFFENSE CHARGED4. Had this case gone to trial, the United States would have presented evidence sufficient to prove the following facts:
5. The defendant understands that the statutory maximum penalty which may be imposed against it upon conviction for a violation of Section One of the Sherman Antitrust Act is a fine in an amount equal to the greatest of:
6. In addition, the defendant understands that: (a) pursuant to 18 U.S.C. § 3561(c)(1), the Court may impose a term of probation of at least one year, but not more than five years; (b) pursuant to § 8B1.1 of the United States Sentencing Guidelines ("U.S.S.G.," "Sentencing Guidelines," or "Guidelines"), 18 U.S.C. § 3563(b)(2) or 3663(a)(3), the Court may order it to pay restitution to the victims of the offense; and (c) pursuant to 18 U.S.C. § 3013(a)(2)(B), the Court is required to order the defendant to pay a $400 special assessment upon conviction for the charged crime. SENTENCING GUIDELINES7. The defendant understands that the Sentencing Guidelines are advisory, not mandatory, but that the Court must consider the Guidelines in effect on the day of sentencing, along with the other factors set forth in 18 U.S.C. §3553(a), in determining and imposing sentence. The defendant understands that the Guidelines determinations will be made by the Court by a preponderance of the evidence standard. The defendant understands that although the Court is not ultimately bound to impose a sentence within the applicable Guidelines range, its sentence must be reasonable based upon consideration of all relevant sentencing factors set forth in 18 U.S.C. § 3553(a). Pursuant to U.S.S.G. § 1B1.8, the United States agrees that self-incriminating information that the defendant provides to the United States pursuant to this Plea Agreement will not be used to increase the volume of affected commerce attributable to the defendant or in determining the defendant's applicable Guidelines range, except to the extent provided in U.S.S.G. § 1B1.8(b). SENTENCING AGREEMENT 8. Pursuant to Fed. R. Crim. P. 11(c)(1)(C), the United States and the defendant agree that the appropriate disposition of this case is, and agree to recommend jointly that the Court impose, a sentence requiring the defendant to pay to the United States a criminal fine of $32 million, pursuant to 18 U.S.C. § 3571(d), payable in full before the fifteenth (15th) day after the date of judgment ("the recommended sentence"). The parties agree that there exists no aggravating or mitigating circumstance of a kind, or to a degree, not adequately taken into consideration by the U.S. Sentencing Commission in formulating the Sentencing Guidelines justifying a departure pursuant to U.S.S.G. § 5K2.0. The parties agree not to seek or support any sentence outside of the Guidelines range nor any Guidelines adjustment for any reason that is not set forth in this Plea Agreement. The parties further agree that the recommended sentence set forth in this Plea Agreement is reasonable.
9. The United States and the defendant agree that the applicable Guidelines fine range exceeds the fine contained in the recommended sentence set out in Paragraph 8 above. Subject to the full and continuing cooperation of the defendant, as described in Paragraph 13 of this Plea Agreement, and prior to sentencing in this case, the United States agrees that it will make a motion, pursuant to U.S.S.G. § 8C4.1, for a downward departure from the Guidelines fine range and will request that the Court impose the recommended sentence set out in Paragraph 8 of this Plea Agreement because of the defendant's substantial assistance in the government's investigation and prosecution of violations of federal criminal law in the hydrogen peroxide industry and in other chemical industries. 10. Subject to the ongoing, full, and truthful cooperation of the defendant described in Paragraph 13 of this Plea Agreement, and before sentencing in the case, the United States will fully advise the Court and the Probation Office as to: (i) the fact, manner, and extent of the defendant's cooperation and its commitment to prospective cooperation with the United States' investigation and prosecutions; (ii) all material facts relating to the defendant's involvement in the charged offense; and (iii) all other relevant conduct. 11. The United States and the defendant understand that the Court retains complete discretion to accept or reject the recommended sentence provided for in Paragraph 8 of this Plea Agreement.
12. In light of the civil class action cases filed against the defendant, which potentially provide for a recovery of a multiple of actual damages, the United States agrees that it will not seek a restitution order for the offense charged in the Information. DEFENDANT'S COOPERATION13. The defendant and its parents and subsidiaries that are engaged in the sale or production of hydrogen peroxide (collectively, "related entities") will cooperate fully and truthfully with the United States in the prosecution of this case, the conduct of the current federal investigation of violations of federal antitrust and related criminal laws involving the manufacture or sale of hydrogen peroxide, any other federal investigation resulting therefrom, and any litigation or other proceedings arising or resulting from any such investigation to which the United States is a party ("federal proceeding"). The ongoing, full, and truthful cooperation of the defendant shall include, but not be limited to:
14. The ongoing, full, and truthful cooperation of each person described in Paragraph 13(b) above will be subject to the procedures and protections of this paragraph, and shall include, but not be limited to:
GOVERNMENT'S AGREEMENT 15. Upon acceptance of the guilty plea called for by this Plea Agreement and the imposition of the recommended sentence, and subject to the cooperation requirements of Paragraph 13 of this Plea Agreement, the United States agrees that it will not bring further criminal charges against the defendant or any of its related entities for any act or offense committed before the date of this Plea Agreement that was undertaken in furtherance of an attempted or completed antitrust conspiracy involving the manufacture or sale of hydrogen peroxide. The nonprosecution terms of this paragraph do not apply to civil matters of any kind, to any violation of the federal tax or securities laws, or to any crime of violence. 16. The United States agrees to the following:
17. The United States agrees that when any person travels to the United States for interviews, grand jury appearances, or court appearances pursuant to this Plea Agreement, or for meetings with counsel in preparation therefor, the United States will take no action, based upon any relevant offense, to subject such person to arrest, detention, or service of process, or to prevent such person from departing the United States. This paragraph does not apply to an individual's commission of perjury (18 U.S.C. § 1621), making false statements (18 U.S.C. § 1001), making false statements or declarations in grand jury or court proceedings (18 U.S.C. § 1623), obstruction of justice (18 U.S.C. § 1503), or contempt (18 U.S.C. §§ 401-402) in connection with any testimony or information provided or requested in any federal proceeding. 18. The defendant understands that it may be subject to administrative action by federal or state agencies other than the United States Department of Justice, Antitrust Division, based upon the conviction resulting from this Plea Agreement, and that this Plea Agreement in no way controls whatever action, if any, other agencies may take. However, the United States agrees that, if requested, it will advise the appropriate officials of any governmental agency considering such administrative action of the fact, manner, and extent of the cooperation of the defendant and its related entities as a matter for that agency to consider before determining what administrative action, if any, to take. REPRESENTATION BY COUNSEL 19. The defendant has been represented by counsel and is fully satisfied that its attorneys have provided competent legal representation. The defendant has thoroughly reviewed this Plea Agreement and acknowledges that counsel has advised it of the nature of the charge, any possible defenses to the charge, and the nature and range of possible sentences. VOLUNTARY PLEA 20. The defendant's decision to enter into this Plea Agreement and to tender a plea of guilty is freely and voluntarily made and is not the result of force, threats, assurances, promises, or representations other than the representations contained in this Plea Agreement. The United States has made no promises or representations to the defendant as to whether the Court will accept or reject the recommendations contained within this Plea Agreement. VIOLATION OF PLEA AGREEMENT21. The defendant agrees that, should the United States determine in good faith, during the period that any federal proceeding is pending, that the defendant or any of its related entities have failed to provide full and truthful cooperation, as described in Paragraph 13 of this Plea Agreement, or has otherwise violated any provision of this Plea Agreement, the United States will notify counsel for the defendant in writing by personal or overnight delivery or facsimile transmission and may also notify counsel by telephone of its intention to void any of its obligations under this Plea Agreement (except its obligations under this paragraph), and the defendant and its related entities shall be subject to prosecution for any federal crime of which the United States has knowledge including, but not limited to, the substantive offenses relating to the investigation resulting in this Plea Agreement. The defendant and its related entities may seek Court review of any determination made by the United States under this Paragraph to void any of its obligations under the Plea Agreement. The defendant and its related entities agree that, in the event that the United States is released from its obligations under this Plea Agreement and brings criminal charges against the defendant or its related entities for any offense referred to in Paragraph 15 of this Plea Agreement, the statute of limitations period for such offense will be tolled for the period between the date of the signing of this Plea Agreement and six (6) months after the date the United States gave notice of its intent to void its obligations under this Plea Agreement. 22. The defendant understands and agrees that in any further prosecution of it or its related entities resulting from the release of the United States from its obligations under this Plea Agreement, because of the defendant's or its related entities' violation of the Plea Agreement, any documents, statements, information, testimony, or evidence provided by it, its related entities, or current or former directors, officers, or employees of it or its related entities to attorneys or agents of the United States, federal grand juries, or courts, and any leads derived therefrom, may be used against it or its related entities in any such further prosecution. In addition, the defendant unconditionally waives its right to challenge the use of such evidence in any such further prosecution, notwithstanding the protections of Fed. R. Evid. 410. ENTIRETY OF AGREEMENT23. This Plea Agreement constitutes the entire agreement between the United States and the defendant concerning the disposition of the criminal charge in this case. This Plea Agreement cannot be modified except in writing, signed by the United States and the defendant. 26. The undersigned is authorized to enter this Plea Agreement on behalf of the defendant as evidenced by the Power of Attorney of the defendant attached to, and incorporated by reference in, this Plea Agreement. 27. The undersigned attorneys for the United States have been authorized by the Attorney General of the United States to enter this Plea Agreement on behalf of the United States. 26. A facsimile signature shall be deemed an original signature for the purpose of executing this Plea Agreement. Multiple signature pages are authorized for the purpose of executing this Plea Agreement.
AKZO NOBEL POWER OF ATTORNEY The undersigned, Mr. P.J.F. Gommers and Mr. C.W. van Zuijlen, directors of Akzo Nobel Management B.V., which is the sole director of Akzo Nobel Chemicals International B.V. (the "Company"), herewith decide,
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