foreign bribery africa/oecd progress/2006/in focus/news room

Foreign bribery cases in Africa

ABB Vetco Gray and ABB Vetco Gray UK allegedly offered and made illicit payments of over $1.1 million to government officials in Nigeria, Angola, and Kazakhstan. ABB Vetco Gray and ABB Vetco Gray UK each agreed to plead guilty to the FCPA violations and pay criminal fines between them of $10.5 million

Source: Report by Lucinda Low on FCPA Prosecutions, 5 May 2006. United States v. ABB Vetco Gray, Inc. and ABB Vetco Gray UK, Ltd. (Case No. 04-CV-279-01) (S.D. Tex. July 2004); and SEC Accounting and Auditing Enforcement Release No. 2049 (July 6, 2004); ABB Press Release (Feb. 8, 2006)
Baker Hughes is alleged to have made improper payments in Indonesia, India, Brazil, Nigeria, Angola, and Kazakhstan.In March 2002, the company announced hat it had been advised that the SEC and DOJ were conducting investigations into possible violations of the FCPA’s antibribery, books and records, and internal control provisions for improper payments in Nigeria, Angola and Kazakhstan.The SEC has issued subpoenas seeking information about the company’s operations in Angola and Kazakhstan in August 2003 and April 2005 respectively.

Source: Report by Lucinda Low on FCPA Prosecutions, 5 May 2006 and Baker Hughes 10-K (Mar. 1, 2006).
Benin:
From 1999 to 2001 Titan Corp, a leading provider of information and communications products headquartered in California, paid more than US$3.5 million to high officials of Benin and, in 2001, funnelled US$2 million into the incumbent president's reelection campaign - and then falsified financial reports to cover it up. In March 2005, Titan Corp pleaded guilty in the US to bribing country officials in Benin and agreed to pay US$28 million to settle the charges, brought by the U.S. Justice Department and the Securities and Exchange Commission.
Source: http://www.sec.gov/litigation/litreleases/lr19107.htm
See also, Report by Lucinda Low on FCPA Prosecutions, 5 May 2006.
Equatorial Guinea:
It was reported in 2005 that the SEC in the US was examining payments by four big U.S. oil companies —Amerada Hess, ChevronTexaco, ExxonMobil and Marathon Oil Corp— to officials of Equatorial Guinea, their relatives and businesses they controlled, as part of government inquiries related to the Riggs Bank affair. The large payments uncovered in the course of an overall Senate Committee investigation of account transactions at Riggs raised concerns about possible corruption, voiced by senators at a hearing in August 2004. With US$700 million in Riggs Bank accounts and certificates of deposit for the Equatorial Guinea government, its officials and their relatives the country easily became the Banks’ biggest single customer. Using wire transfers, about US$35 million was drained from an account that held oil revenue for the country's people and into offshore companies, according to the report by Senate investigators. The US Senate Committee also raised questions about the role of the UK bank HSBC.
Source: http://www.guardian.co.uk/hearafrica05/story/0,15756,1496561,00.html
See also, Report by Lucinda Low on FCPA Prosecutions, 5 May 2006.
Ghana:
The World Bank in 2000 suspended its support for a $100 million water project after it was awarded to Enron's Azurix unit. "We were concerned the award was sole-source, without real competition," a World Bank official said last week. "We advised the government we couldn't finance it, because of the way the procurement was done. After the award, the bank's Ghana director, Peter Harrold, sent a harshly worded letter to Ghana's then-Vice President John Atta-Mills canceling the loan and alleging corruption. "We cannot have made it plainer to you that the key issue is transparency," he wrote. "The arrangement you have reached with Azurix is one that has been arrived at on a completely nontransparent basis." World Bank officials cited a draft schedule of payments showing an unexplained, $5 million up-front payment by Enron. A new Ghanian government has since suspended the award, and is now seeking competitive bids.
Source: http://www.seen.org/pages/media/20020805_wsj_corruption.shtml
Lesotho:
Multinational companies were put on trial in Lesotho accused of paying huge bribes to a local official, a case virtually unprecedented in Africa. The case began in June 2001 with the trial of Masupha Sole, ex-chief executive of the Lesotho Highlands Development Authority, who was convicted on 13 counts of bribery linked to the controversial World Bank-financed Lesotho Highlands Water Project. The case embarrassed some of the biggest names in construction engineering. At least a dozen companies (among them Sir Alexander Gibb and Company, and Balfour Beatty of the UK, ABB, Impregilo of Italy, Acres International of Canada, Lahmeyer of Germany, and Sogreah, Dumez, Cegelec of France) were found to have bribed Mr. Sole and the Lesotho courts have managed to get convictions of several of them. Acres was the first to be debarred by the World Bank in 2004, two years after the Lesotho High Court had convicted this company. Acres International will not be eligible for World Bank contracts for three years.
Source:http://web.worldbank.org/WBSITE/EXTERNAL/NEWS/0,,contentMDK:20229958~menuPK:34463~
pagePK:64003015~piPK:64003012~theSitePK:4607,00.html
Nigeria:
In 1999 it was announced that Enron would build gas-fired power plants near Lagos. Costs of the project were estimated at about US$500 million. Before the main plant was built, Enron was to start supplying power from three 30-megawatt barge-mounted plants burning either oil or gas. The barges were to begin operation as early as the fall of 1999. For Nigerians, the project was important because, though Africa's largest nation is rich in energy resources, it faced persistent power crises and blackouts. By September 1999, the cost estimate for the new power complex was up to $800 million. By February 2000, apparently before any construction had begun, the deal was facing political problems. The contracts were called into question by the World Bank, Nigeria's national utility, the National Electric Power Authority and other Nigerian states. The World Bank reportedly said the deal should have been competitively bid and that the final contract was overly favourable to Enron.
Source: http://www.seen.org/pages/media/20020805_wsj_corruption.shtml
Nigeria:
Officials at a foreign subsidiary of Halliburton allegedly paid $2.4 million to a Nigerian tax official to obtain favorable tax treatment in connection with the construction and expansion by TSKJ of a multibillion dollar natural gas liquefaction complex and related facilities at Bonny Island in Rivers State, Nigeria The SEC is conducting a formal investigation, and the DOJ is conducting a related criminal investigation.Halliburton disclosed the payments to the SEC, and has said that it is cooperating with the SEC investigation and plans to ensure that the foreign subsidiary repays all applicable taxes to Nigeria, possibly as much as $5 million.The company also conducted an internal investigation and fired several employees as a result.A related investigation by the Department of Justice began in February 2004.In September 2004, Halliburton disclosed that its internal investigation revealed evidence that its employees discussed bribing Nigerian officials.In October 2004, representatives of TSKJ, a foreign subsidiary of Halliburton, testified before Nigerian courts. The Department of Justice is also investigating other Halliburton subsidiaries, which could possibly implicate fertilizer plant contracts in Nigeria.The SEC has issued a subpoena to Kellogg Brown & Root’s former chairman, Mr. Jack Stanley, who was alleged to have received unlawful payments.
Source: Report by Lucinda Low on FCPA Prosecutions, 5 May 2006 and Halliburton 10-Q filing (Oct. 31, 2005).
In 2004, the SEC started formal investigations, continuing into 2005, into SEC allegations that a Halliburton subsidiary was involved in paying US$180 million in bribes to get a natural gas project contract in Nigeria. The SEC and the US Justice Department have asked Halliburton to cooperate and provide information.
Source: http://www.sec.gov/Archives/edgar/data/45012/000004501204000246/halupdatesnigeria.htm
and http://www.sec.gov/Archives/edgar/data/45012/000101540204002626/body_8k.htm
French engineering company Technip, as part of a consortium that also included Halliburton, may have paid bribes in order to help obtain contracts to build a liquefied natural gas plant. Investigations are underway in both France and the United States.According to the Financial Times, the SEC has requested documents, while the company has denied that it the direct focus of an investigation.
Source: Report by Lucinda Low on FCPA Prosecutions, 5 May 2006andFinancial Times (July 9, 2004)
Nigeria:
In 2003 the German media reported that Ferrostaal, part of the MAN group was under investigation for allegedly having paid the late Gen Abacha DM460m in bribes to win a contract for the construction of a metals factory in Nigeria. Ferrostaal, the German industrial services company, made two payments into the account in October 1996 worth DM20m, equivalent at the time to Pounds 8.2m. The payments were made for "active corruption by Ferrostaal AG". It was later confirmed that this was bribery to win contracts.
Source: http://www.againstcorruption.org/CorruptionCase.asp?id=810
Financial Times [Publication date: 23/12/2003] 'Swiss convict British businessman who laundered bribes for Abacha' by Thomas Catan, Stephen Fidler
Financial Times [Publication date: 23/12/2003] 'UK businessman convicted for laundering cash Swiss Abacha Case' by Thomas Catan, Stephen Fidler
Nigeria:
In July 2004, U.S. and British subsidiaries of ABB Ltd., a Swiss equipment-maker, pleaded guilty to paying more than $1 million in illegal bribes to win oil contracts in Nigeria. ABB Vetco Gray Inc. of Houston and ABB Vetco Gray U.K. Ltd. Of Aberdeen, Scotland, disclosed the suspicious payments to the government in 2003 and formally pleaded guilty in federal court in Houston, USA in July 2004. Each company agreed to pay a fine of $5.25 million. The companies were accused of paying bribes in exchange for confidential bid information and favourable recommendations from Nigerian government agencies overseeing seven oil and gas construction contracts. Each company was charged under the Foreign Corrupt Practices Act; the U.K. firm was charged under a section of the law added in 1998 that prohibits foreign companies from any act involving the bribe of a foreign official in the United States. In a related civil case by the Securities and Exchange Commission, ABB agreed in a settlement to pay $5.9 million more in restitution and interest.The parent company also agreed to pay a $10.5 million civil penalty, which was considered to be covered by the two subsidiaries' payments of fines of the same amount in the criminal proceeding.
Source: http://www.againstcorruption.org/CorruptionCase.asp?id=794
The Houston Chronicle [Publication date: 10/7/2004] 'Firms admit Nigerian bribery; Two units gave over $ 1 million to influence deals' by Nelson Antosh
Birmingham Post [Publication date: 8/7/2004] 'Bribery cases settled'
South Africa:
South Africa’s 1998/1999 UK£3bn Strategic Defence Procurement package was a major defence procurement which generated corruption allegations against British, French, German, Swedish and Italian companies involved in the deal, including BAE Systems and Thomson-CSF. High-ranking members of the government, including Vice President Jacob Zuma, were accused of taking "kick-backs" and of funnelling lucrative contracts to companies in which they or their families had a personal interest.
Source: http://www.africa-confidential.com/index.aspx?pageid=21
Uganda:
In April 2006, the Ugandan newspaper the Daily Monitor reported that Uganda's Inspector General of Government (IGG) had started an investigation into the bidding process for the contract to supply a thermal power plant by the Electricity Regulatory Authority (ERA). Dr Frank Sebbowa, the Chief Executive Officer of ERA, and his team are reported to have been accused of giving Jacobsen AS, a Norwegian company, an unfair advantage over Electro-maxx (an alliance comprising local Ugandan businessmen and Hyundai Heavy Industries of Korea), and American Power Initiative (API) of the USA. IGG Justice Faith Mwondha wrote to all concerned saying that she had grounds to investigate the decision by the Electricity Regulatory Authority (ERA) to award the contract to the Norwegian firm, Jacobsen AS. She later revealed that, contrary to previous Press reports, no formal award had been made to Jacobsen. Dr Sebbowa stated that "there is nothing irregular about the deal," and that Jacobsen was the most experienced of the bidders. Dr William Kalema wrote to the IGG on behalf of Electro-maxx, alleging that the ERA had manipulated the bid figures and used inadequate technical evaluation to arrive at its decision. The letter was copied to President Yoweri Museveni, as well as the Ministry of Finance, the World Bank and the Public Procurement and Disposal of Assets Authority. According to the Daily Monitor Marcos Bitew, a Director of the third bidder, API, had also written a letter of complaint to Dr Sebbowa.
Source: http://www.againstcorruption.org/CorruptionCase.asp?id=877
The Monitor [Publication date: 15/4/2006] 'Koreans Fight Norwegians for $300 Million Electricity Deal' by Angelo Izama
The Monitor [Publication date: 15/4/2006] 'Uganda; $300 Million Electricity Deal Delayed Due to Bidding Concerns'
It is alleged that may have been improper payments in violation of the FCPA by persons and/or entities involved with AES Corp’s Bujagali hydroelectric power project in Uganda.According to AES’s May 2004 10-Q filing with the SEC, there is a Department of Justice investigation underway with which AES is cooperating.
Source: Report by Lucinda Low on FCPA Prosecutions, 5 May 2006