Marubeni Corp. to Pay $88M For FCPA Violations in Indonesia

reuters_marubeniA U.S. District Court ordered Marubeni Corp., a Japanese trading company, to pay an $88 million fine for its role in a scheme to bribe Indonesian officials to win an electricity contract as a part of a joint venture with French power-equipment maker Alstom S.A.

According to the DOJ, Marubeni paid bribes to Indonesian officials in exchange for securing a $118 million contract for the company and its consortium partner—Alstom—to provide power services for Indonesian citizens. To conceal the bribes, Marubeni and Alstom retained consultants to purportedly provide consulting services. In reality, however, the consultants were used as channels to pay bribes to the Indonesian officials, the DOJ said.

In the agreement, Marubeni also admitted to violating the Foreign Corrupt Practices Act, agreed to maintain an enhanced anti-corruption compliance program, and agreed to cooperate with the Justice Department’s ongoing investigation.

 The company signed a plea agreement in which it admitted its criminal conduct, agreed to maintain and implement an enhanced global anti-corruption compliance program and to cooperate with the department’s ongoing investigation, and agreed to pay an $88 million fine, which the court accepted in imposing the sentence.   The plea agreement cites Marubeni’s refusal to cooperate with the department’s investigation when given the opportunity to do so, its lack of an effective compliance and ethics program at the time of the offense, and its failure to timely remediate as several of the factors considered by the department in determining the resolution.

According to the court filings, Marubeni and its employees, together with others, paid bribes to officials in Indonesia – including a high-ranking member of the Indonesian Parliament and high-ranking members of Perusahaan Listrik Negara (PLN), the state-owned and state-controlled electricity company in Indonesia – in exchange for assistance in securing a $118 million contract, known as the Tarahan project, for the company and its consortium partner to provide power-related services for the citizens of Indonesia.   To conceal the bribes, Marubeni and its consortium partner retained two consultants purportedly to provide legitimate consulting services on behalf of the power company and its subsidiaries in connection with the Tarahan project.   The primary purpose for hiring the consultants, however, was to use the consultants to pay bribes to Indonesian officials.

Also according to court filings, the first consultant retained by Marubeni and its co-conspirators received hundreds of thousands of dollars in his U.S. bank account to be used to bribe the member of Parliament.  The consultant then allegedly transferred the bribe money to a bank account in Indonesia for the benefit of the official.   E-mails between the co-conspirators discuss in detail the use of the first consultant to funnel bribes to the member of Parliament and the influence that the member of Parliament could exert over the Tarahan project.

As admitted in court documents, in the fall of 2003, Marubeni and its co-conspirators determined that the first consultant was not effectively bribing key officials at PLN.   As a result, Marubeni and its consortium partner decided to reduce the first consultant’s commission from three percent of the total contract value to one percent, and pay the remaining two percent to a second consultant who could more effectively bribe officials at PLN.   In an e-mail between two employees of Marubeni’s consortium partner, they discussed a meeting between Marubeni, an executive from the consortium partner, and the first consultant, stating that the consultant “committed to convince that ‘one’ is enough.”   Marubeni and its co-conspirators were successful in securing the Tarahan project and subsequently made payments to the consultants for the purpose of bribing the Indonesian officials.

Source: U.S. Department of Justice Press Release: Marubeni Sentenced for Foreign Bribery Violations

Posted: May 2014