By: James W. Kraus
On September 24, 2012, DOJ announced the resolution of its prosecution of a subsidiary of TYCO International Ltd. (TYCO) under the Foreign Corrupt Practices Act (FCPA). In accordance with the agreement, TYCO Valves & Controls Middle East, Inc. (TVC ME) entered a plea of guilty in the U.S. District Court for the Eastern District of Virginia to a one count criminal information charging conspiracy to violate the anti-bribery provisions of the FCPA in its sale and marketing of valves and other industrial equipment throughout the Middle East. According to the criminal information, TVC ME 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. The fine was part of a $13.68 million penalty paid by TYCO for falsifying books and records in connection with payments by its subsidiaries to government officials. TYCO paid the fine as part of a non-prosecution agreement (NPA) that it entered into with DOJ.
As part of TVC ME’s plea agreement and TYCO’s NPA, the companies agreed to cooperate with DOJ and report periodically concerning the company’s compliance efforts, and to continue to implement an enhanced compliance program and internal controls designed to prevent and detect FCPA violations. DOJ’s decision to allow a subsidiary to enter a plea of guilty and the parent company (TYCO) to enter into an NPA was apparently based on DOJ’s recognition of TYCO’s timely, voluntary and complete disclosure, which included a global internal investigation concerning bribery and related misconduct, as well as follow on remediation of the noted problems. DOJ cited TYCO’s remediation efforts, which included 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 responsible third-party agents and closing of subsidiaries due to compliance failures.
TYCO also consented in parallel civil proceedings to a judgment in favor of the SEC, requiring the company to pay an additional $10,564,992 in disgorgement and $2,566,517 in pre-judgment interest. The total of the fine to TVC ME, the agreed payment by TYCO under the NPA, and the SEC consent judgment is more than $26 million. No individuals were prosecuted in the matter.
Pietragallo partners John Schwab and Jim Kraus will be discussing topics related to federal criminal practice in a four-hour symposium hosted by the Allegheny County Bar Association on Friday, April 24th, 2020. Do you have your first criminal case in Federal Court or do you practice criminal defense and need a refresher on the specifics… Read more »Read More
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