Louis Berger International pays $17.1 million to settle bribery charges

22 July 2015

Louis Berger International (LBI) has agreed to pay a $17.1 million (£11 million) criminal penalty to resolve charges that it bribed foreign officials to secure government construction management contracts.

The US Department of Justice (DoJ) said the construction management company has admitted its criminal conduct, including conspiracy to violate the anti-bribery provisions of the Foreign Corrupt Practices Act (FCPA). The case related to charges of bribing officials in India, Indonesia, Vietnam and Kuwait.

Two of the company’s former executives have also pleaded guilty to conspiracy and FCPA charges in connection with the scheme. Their sentencing hearings are scheduled for November.

LBI entered into a deferred prosecution agreement (DPA) under which it has agreed to implement rigorous internal controls, to continue to cooperate fully with the department and to retain a compliance monitor for at least three years, as well as pay the $17.1 million criminal penalty.

Richard Hirsch, 61, of Makati, Philippines, and James McClung, 59, of Dubai, United Arab Emirates, each pleaded guilty to one count of conspiracy to violate the FCPA and one substantive count of violating the FCPA. Hirsch previously served as the senior vice president responsible for the company’s operations in Indonesia, Thailand, the Philippines and Vietnam, and McClung had served as the senior vice president responsible for the company’s operations in India and, subsequent to Hirsch, in Vietnam.

The DoJ said between 1998 and 2010 the company and its employees, including Hirsch and McClung, orchestrated $3.9 million (£2.5 million) in bribe payments to foreign officials in various countries to secure government contracts, according to admissions in the DPA and statements in the charging documents. To conceal the payments, they were made as “commitment fees,” “counterpart per diems,” and other payments to third-party vendors. But they were intended to fund bribes to foreign officials who had awarded contracts to LBI or who supervised LBI’s work on contracts, the department said.

The DoJ added that in entering into a DPA, the government considered LBI’s self-reporting of the misconduct, its cooperation, including making both US and foreign employees available for interviews, and collecting, analysing and organising evidence and information for federal investigators. It also considered the company’s extensive remediation, including terminating the officers and employees responsible for the corrupt payments, and its commitment to improving its compliance program and internal controls.

In a statement, Louis Berger said it had undertaken a $25 million reform effort with new internal controls, policies and procedures and investment in systems.

Nicholas Masucci, chairman of Louis Berger, said: “The DoJ has acknowledged the extensive global reforms undertaken at Louis Berger since 2010. 2010 was a pivotal year in our company’s history. It marked a clear departure from the past as we assumed new management, new processes and comprehensive system reforms that are the core of our global operations today.

“Today’s settlement is the critical final milestone in our reform, as it was important for us to take responsibility for the historic actions of former managers and close the chapter on the company’s pre-2010 era."

In February, Louis Berger Group was banned from bidding for World Bank contracts for a year for engaging in corrupt practices under two bank-financed projects in Vietnam.

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