US Justice Department Reaches Deferred Prosecution Agreement

The Japanese engineering company JGC Corporation has reached a deferred prosecution agreement with the U.S. Justice Department over millions of dollars in bribes it paid to Nigerian government officials. JGC agreed to pay a nearly $219 million criminal penalty, ending a probe that snared four companies.

Alexandra Wrage, president of the nonprofit TRACE International Inc., said, “The big takeaway here is that the penalties are greater than the profits.” TRACE works with member companies on anti-bribery compliance.

Wrage explained that companies considering bribery schemes can no longer conceive of anti-bribery penalties as just one more unpleasant, but acceptable, cost of doing business. “Instead, the total fines, forfeitures, disruption to business, cost of remedial efforts, and reputational damage make this a clearly bad deal, even without the prospect of jail time,” she added.

Prosecutors also filed a 20-page criminal information Wednesday in federal district court in Houston charging the Yokohama-based JGC with one count of conspiracy and one count of aiding and abetting violations of the Foreign Corrupt Practices Act.

The charges will be dismissed in two years if JGC fulfills its part of the 21-page deferred prosecution deal. In the agreement, JGC accepted responsibility for its acts and the accuracy of the stated facts.

The deal states that JGC initially refused to cooperate with investigators, but later relented and has agreed to help in the ongoing investigation of present and former employees, agents, contractors, and others.

The company also has undertaken remedial measures, enhanced its compliance program, and agreed to hire a corporate monitor for two years, according to the documents. The monitor will review and oversee reform of the company’s compliance program.

The deal was dated April 6 and signed by Keitaro Ishii, senior general manager of JGC’s legal and compliance office. Ishii couldn’t be reached for comment.

Manuel Abascal, a partner in the Los Angeles office of Latham & Watkins, represented JGC. He was traveling and didn’t immediately return calls for comment.

The court documents state that JGC was part of a four-company joint venture that spent millions of dollars in bribes to try and win construction contracts in Nigeria. JGC was the last of the four to settle.

The other three companies were Houston-based Kellogg Brown & Root (which later became KBR Inc.); Technip of Courbvoie, France; and Snamprogetti Netherlands B.V. of Amsterdam. JGC paid the smallest penalty; KBR paid the largest at over $400 million.

“With today’s resolution, each of the four companies in the TSKJ joint venture, the former chairman of the U.S. joint venture partner, and several other individuals have now been held accountable for a massive conspiracy to bribe Nigerian government officials to obtain lucrative construction contracts,” said Mythili Raman, principal deputy assistant attorney general.

“The approximately $1.5 billion in criminal and civil penalties that have been imposed on the members of the joint venture far exceed their profits from the scheme. Foreign bribery is a serious crime, and as this case makes clear, we are investigating and prosecuting it vigorously,” Raman added.

According to court documents, JGC authorized the joint venture to hire two agents to pay bribes to a range of Nigerian government officials.

TSKJ paid approximately $132 million to a Gibraltar corporation and more than $50 million to a Japanese trading company for these agents to use during the course of the bribery scheme, the documents say.

Authorities in France, Italy, Switzerland, and the United Kingdom provided “significant assistance” in the investigation, according to a Justice Department statement.