Money exchanging hands over illustration of globe

Last week, 22 business executives and employees were arrested and charged with attempting to win a contract to sell a variety of military and law enforcement products—everything from body armor and bullet-proof vests to M4 carbine rifles, tear gas grenades, and armored vehicles—by bribing overseas officials.

It’s one of many cases under the Foreign Corrupt Practices Act of 1977 that the FBI has worked in recent years, in close cooperation with the Department of Justice. But this particular one is significant for two reasons. First, it’s the single largest investigation and prosecution in the history of the legislation. Second, it’s the first extensive use of an undercover operation in such a case.

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How sweeping was the case? Among those arrested were business owners, presidents, and CEOs from companies based in Arkansas, California, Florida, Georgia, Kentucky, Massachusetts, Pennsylvania, and Virginia—as well as in Israel and the U.K.

Foreign Corrupt Practices Act

The FCPA makes it unlawful to bribe foreign government officials to obtain or retain business.

Background

As a result of SEC investigations in the mid-1970’s, over 400 U.S. companies admitted making questionable or illegal payments in excess of $300 million to foreign government officials, politicians, and political parties.
The abuses ran the gamut from bribery of high foreign officials to secure some type of favorable action by a foreign government to so-called facilitating payments that allegedly were made to ensure that government functionaries discharged certain ministerial or clerical duties.
Congress enacted the FCPA to bring a halt to the bribery of foreign officials and to restore public confidence in the integrity of the American business system.

- http://www.justice.gov/criminal/fraud/docs/dojdocb.html


More Recent FBI Cases

- http://miami.fbi.gov/dojpressrel/pressrel09/mm040709.htm- http://washingtondc.fbi.gov/dojpressrel/pressrel08/wf121508.htm
http://washingtondc.fbi.gov/dojpressrel/pressrel09/wfo121509a.htm
http://houston.fbi.gov/dojpressrel/pressrel09/ho112309.htm

The arrests stemmed from the FBI undercover operation that focused on allegations of foreign bribery in the military and law enforcement products industry. During the operation, one of our investigators posed as a “sales agent” representing the defense minister of an African nation (that country was not actually involved, so it was unnamed in the indictment). A business associate of the subjects initially introduced them to the sales agent. The agent said he had been tasked with obtaining various defense-related articles for that nation’s presidential guard and was interested in doing business with them…for a price.

In the indictment, the defendants allegedly agreed to pay a 20 percent commission to win a portion of a $15 million deal to outfit the presidential guard…with the understanding that 10 percent of that money would go directly to the defense minister and the other 10 percent would go to the sales agent (our agent) making the deal.

From there, the ruse played out with all the intrigue of a spy novel. According to the indictment, the subjects in the case met with our undercover agent in luxury hotels and fancy restaurants in the nation’s capital and elsewhere. They e-mailed inflated price quotes to our agent and wired bribe money to his bank account. They drafted and mailed corrupt purchase agreements. They even sent their products for shipment to the African nation.

And on January 18, 2010—on the eve of an industry convention in Las Vegas to which 21 of our subjects had traveled—we arrested them. The 22nd arrest was made the same day in Miami.

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