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Guilty Plea By Control Components

Valve-maker Control Components Inc. (CCI) of Rancho Santa Margarita, California pleaded guilty Friday to violating the anti-bribery provisions of the Foreign Corrupt Practices Act (15 U.S.C. §78dd-2) and the Travel Act (18 U.S. C. §1952). It admitted bribing foreign officials in a decade-long scheme to secure contracts in about 36 countries. CCI's plea agreement requires it to pay a criminal fine of $18.2 million, implement an anti-bribery compliance program, retain a compliance monitor for three years, serve a three-year term of organizational probation, and cooperate with the DOJ's ongoing investigation.

CCI designs and manufactures service control valves for use in the nuclear, oil and gas, and power generation industries. Its website is here. It's owned by British-based IMI plc, which trades on the London Stock Exchange under the symbol IMI.L.

The corrupt payments were made to foreign officials at state-owned entities including Jiangsu Nuclear Power Corp. (China), Guohua Electric Power (China), China Petroleum Materials and Equipment Corp., PetroChina, Dongfang Electric Corporation (China), China National Offshore Oil Corporation, Korea Hydro and Nuclear Power, Petronas (Malaysia) and National Petroleum Construction Company (United Arab Emirates).

From 2003 through 2007, CCI made about 236 corrupt payments to foreign officials in more than 30 countries amounting to $4.9 million. The bribes resulted in sales that produced net profits of about $46.5 million.

Two former executives of CCI pleaded guilty earlier this year to conspiring to bribe officers and employees of foreign state-owned companies on behalf of the valve company. Mario Covino, CCI?s former director of worldwide factory sales, pleaded guilty on Jan. 8, 2009 to one count of conspiracy to violate the FCPA and admitted to causing the payment of $1 million in bribes to officers and employees of several foreign state-owned companies. Richard Morlok, CCI?s former finance director, pleaded guilty on Feb. 3, 2009 to one count of conspiracy to violate the FCPA and admitted to causing the payment of $628,000 in bribes to officers and employees of several foreign state-owned companies. Covino and Morlok are scheduled to be sentenced on Jan. 25, 2010.

On April 8, 2009, six former CCI executives were charged in a 16-count indictment with violating the FCPA and the Travel Act (here). They're Stuart Carson, CCI?s former chief executive officer, Hong (Rose) Carson, CCI?s former director of sales for China and Taiwan, Paul Cosgrove, CCI?s former director of worldwide sales, David Edmonds, CCI?s former vice president of worldwide customer service, Flavio Ricotti, CCI?s former vice-president and head of sales for Europe, Africa and the Middle East, and Han Yong Kim, the former president of CCI?s Korean office. Hong (Rose) Carson was also charged with one count of destruction of records in connection with a matter within the jurisdiction of a department or agency of the United States. Their trial is currently scheduled for Dec. 8, 2009.

As the DOJ says, an indictment is merely an accusation and the defendants are presumed innocent until and unless found guilty at trial beyond a reasonable doubt.

Download the DOJ's July 31, 2009 release here.

Download the July 22, 2009 criminal information against CCI here.

Download Mario Covino's plea agreement here.

Download Richard Morlok's plea agreement here.

Download the indictment of the six former executives of CCI here.
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Full post as published by The FCPA Blog on July 31, 2009 (boomark / email).