Chemistry with Bribes: 2 Chemical Firms Fined in 2010 for FCPA Violations
As the year ends, Securities and Exchange Commission so far has two chemical manufacturing companies charged for bribes with their venture partners and fined for violating the Foreign Corrupt Practices Act (FCPA).
The SEC tagged March 18 this year the Delaware-based chemical company Innospec, Inc. with bribes connected to the payments worth $9.2 million it made to government officials of Iraq and Indonesia to obtain and retain its tetra-ethyl lead (a fuel additive) deal worth $176 million with the state-owned companies and oil refineries there.
The bribes had cost Innospec $40.2 million of global settlement paid to the SEC, DOJ, and the Department of the Treasury’s Office of Foreign Assets Control, and the Serious Fraud Office in UK.
Last week, the SEC once again charged December 10 another chemical manufacturing company, emissions-detector manufacturer RAE Systems Inc. for allegedly paying bribes to Chinese officials from 2004 to 2008 to gain permit to carry on with its contracts with the Chinese government.
The bribes worth $400,000, which earned for RAE Systems $3 million in revenue and $1.1 million ill-gotten profit, have cost the company $1.25 million in disgorgement and prejudgment interest paid to SEC, which is still subject to the approval of the court.
The company also consented to the FCPA undertakings as part of its compliance program.
Added to the bribes paid by RAE Systems to its two Chinese partners, RAE-KLH Co., Limited (RAE-KLH) in Beijing and RAE Coal Mine Safety Instruments (Fushun) Co., Ltd. (RAE-Fushun), were the improperly documented “travel and entertainment” expenses reflected in RAE-KLH’s and RAE-Fushun’s books.
The SEC said RAE Systems did not regulate the internal affairs of its sales personnel during the course of the bribes, allowing for the illicit activity to go on in RAE-KHL.