Originally published April 2008

Keywords: FCPA, Foreign Corrupt Practices Act, civil liability, criminal liability, Robert Philip, Schnitzer Steel Industries, anti-bribery, Gerald Green, Patricia Green, corrupt payments, Juthamas Siriwan, Thailand, film festival management, Willbros Group, James Steph, Willbros International, Nigeria, Nigerian National Petroleum.

SEC Settles With Former Chairman And CEO Of Schnitzer Steel Industries, Inc., Robert W. Philip

On December 13, 2007, the Commission charged Robert W. Philip, the former Chairman and CEO of Schnitzer Steel Industries, Inc. ("Schnitzer") with violating the anti-bribery provisions of the FCPA by approving cash payments and other gifts to officials of Chinese government-owned steel mills in order to encourage them to purchase scrap metal from Schnitzer. Mr. Philip agreed to pay more than $250,000 to settle the charges. SEC v. Philip, No. CV 07-1836 (D. Or. filed Dec. 13, 2007), Litigation Release No. 20397 (Dec. 13, 2007).

According to the Commission's complaint, from at least 1999 through 2004, Mr. Philip authorized payments of more than $200,000 in cash bribes and other gifts to managers at the government-owned steel mills. Complaint at 3, SEC v. Philip, (D. Or. Dec. 13, 2007). Schnitzer paid two types of bribes to the managers. For the first type, Schnitzer paid a "standard" kickback, which ranged from $3,000 to $6,000 per shipment. Schnitzer paid these kickbacks out of the revenue it earned on the scrap metal sale. For the second type, the manager of the mill would overpay Schnitzer for the steel purchase. The manager would then personally recover the "overpayment" from Schnitzer, in amounts ranging from $3,000 to $15,000. Id. Allegedly, Mr. Philip knew of and authorized these payments. Id.

The Commission alleges that Schnitzer generated more than $96 million in revenue, and more than $6.2 million in profits, as a result of these sales to customers who had received the improper payments. The complaint further alleges that Mr. Philip authorized more than $1.7 million in payments to managers of privately-owned steel mills in both China and South Korea, generating more than $500 million in additional revenue for Schnitzer. Id.

Mr. Philip agreed to disgorge $169,863.79 in bonuses and salary he had received, $16,536.63 in prejudgment interest, and a $75,000 civil penalty, and agreed to an order enjoining him from future violations of the FCPA. Id. In October 2006, Schnitzer paid $7.7 million in disgorgement to settle related charges by the Commission, and paid $7.5 million in penalties to settle related criminal charges brought by the Justice Department. Litigation Release No. 20397 (Dec. 13, 2007).

FCPA Goes Hollywood

In an unusual FCPA prosecution set to go to trial in September 2008, Gerald and Patricia Green, a Los Angeles film executive and his wife, were indicted on allegations of making corrupt payments of more than $1.7 million to a Thai government official, Juthamas Siriwan, who was the governor of the Tourism Authority of Thailand ("TAT") in order to obtain lucrative contracts to run an annual film festival, the Bangkok International Film Festival ("BKKIFF"), where Ms. Siriwan was the president. United States v. Green, No. 07-CV-20990M (C.D. Cal. filed Dec. 7, 2007), DOJ Press Release No. 07-1018 (Dec. 18, 2007).

In 2003, Gerald and Patricia Green formed Film Festival Management, Inc. specifically to obtain contracts to operate BKKIFF. More than $1.7 million in payments are alleged to have been made for the benefit of the governor in exchange for payments totaling more than $7,000,000 under the BKKIFF contracts. Id. The indictment charges that Gerald and Patricia Green used different business entities, some with fake business addresses and telephone numbers, in their dealings with TAT in order to hide the large amount of money that TAT was paying Gerald and Patricia Green under the contracts. The indictment further charges that Gerald and Patricia Green made the illicit payments, disguised as "sales commission," for the benefit of the governor through foreign bank accounts belonging to intermediaries, including bank accounts in the name of the governor's daughter. Id.

Willbros Executive, James Edward Steph, Pleads Guilty To Bribes In Nigeria

On November 5, 2007, the Justice Department announced that a former executive of a subsidiary of Houston-based Willbros Group Inc. ("WGI") pled guilty to conspiring to bribe officials of the government of Nigeria with more than $6 million. United States v. Steph, No. 4:07-cr-00307 (S.D. Tex. filed Nov. 5, 2007). Willbros, a publicly-traded company that provides construction, engineering and other services to the oil and gas industry, conducts international operations through a subsidiary known as Willbros International Inc. ("WII"). From 2002 through April 2005, Mr. Steph served as general manager of WII's on-shore operations in Nigeria. As part of his guilty plea, Mr. Steph admitted that in late 2003, along with a senior executive in charge of WGI's international business, two consultants, and certain Nigeria-based employees of a major German engineering and construction company, he agreed to make a series of corrupt payments totaling more than $6 million. Id. These payments were offered and made to officials of the Nigerian National Petroleum Corporation (the Nigerian state-owned oil company) and its subsidiary, National Petroleum Investment Management Services, a Nigerian political party, and a senior official in the executive branch of the Nigerian federal government, in order to assist in securing a major gas pipeline construction contract in Nigeria. Mr. Steph further admitted that in February and March of 2005, he, former WII executive, Jim Bob Brown, and others arranged for the payment of approximately $1.8 million in cash to government officials in Nigeria in furtherance of the conspiracy. Id. Mr. Brown pled guilty to a similar charge on September 14, 2006. Mr. Steph is cooperating with the government's ongoing investigation as part of his plea agreement. Sentencing has not yet been scheduled.

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