Control Components Inc. Pleads Guilty to Foreign Bribery Charges and Agrees to Pay $18.2 Million Criminal Fine
Company Admits to More Than 200 Payments in Over 30 Countries
Control Components Inc. (CCI), a Rancho Santa Margarita, Calif.-based company, pleaded guilty today to violations of the Foreign Corrupt Practices Act (FCPA) and the Travel Act in a decade-long scheme to secure contracts in approximately 36 countries by paying bribes to officials and employees of various foreign state-owned companies as well as foreign and domestic private companies.
Today, CCI entered guilty pleas to a three-count criminal information before U.S. District Judge James V. Selna in the Central District of California, Santa Ana Division. CCI designs and manufactures service control valves for use in the nuclear, oil and gas, and power generation industries. As part of the plea agreement, CCI agreed to pay a criminal fine of $18.2 million; create, implement and maintain a comprehensive anti-bribery compliance program; retain an independent compliance monitor for a three-year period to review the design and implementation of CCI’s anti-bribery compliance program and to make periodic reports to CCI and the Department of Justice; serve a three-year term of organizational probation; and continue to cooperate with the Department of Justice in its ongoing investigation.
Immediately following CCI’s guilty plea, Judge Selna imposed a sentence in accordance with the plea agreement. CCI was ordered to pay an $18.2 million criminal fine, placed on organizational probation for three years, and ordered to create and implement a compliance program and retain an independent compliance monitor for three years.
According to the information and plea agreement, from 1998 through 2007, CCI violated the FCPA and the Travel Act by making corrupt payments to numerous officers and employees of state-owned and privately-owned customers around the world, including in China, Korea, Malaysia and the United Arab Emirates,
for the purpose of obtaining or retaining business for CCI. Specifically, from 2003 through 2007, CCI paid approximately $4.9 million in bribes, in violation of the FCPA, to officials of various foreign state-owned companies and approximately $1.95 million in bribes, in violation of the Travel Act, to officers and employees of foreign and domestic privately-owned companies. The alleged corrupt payments were made to foreign officials at state-owned entities including Jiangsu Nuclear Power Corp. (China), Guohua Electric Power (China), China Petroleum Materials and Equipment Corp., PetroChina, Dongfang Electric Corporation (China), China National Offshore Oil Corporation, Korea Hydro and Nuclear Power, Petronas (Malaysia) and National Petroleum Construction Company (United Arab Emirates).
In related cases, two former executives of CCI previously pleaded guilty to conspiring to bribe officers and employees of foreign state-owned companies on behalf of the valve company. Mario Covino, CCI’s former director of worldwide factory sales, pleaded guilty on Jan. 8, 2009, to one count of conspiracy to violate the FCPA and admitted to causing the payment of approximately $1 million in bribes to officers and employees of several foreign state-owned companies. Richard Morlok, CCI’s former finance director, pleaded guilty on Feb. 3, 2009, to one count of conspiracy to violate the FCPA and admitted to causing the payment of approximately $628,000 in bribes to officers and employees of several foreign state-owned companies. Covino and Morlok are scheduled to be sentenced on Jan. 25, 2010.
On April 8, 2009, six former CCI executives were charged in a 16-count indictment with violations of the FCPA, the Travel Act and other statutes. The six former CCI executives are Stuart Carson, CCI’s former chief executive officer; Hong (Rose) Carson, CCI’s former director of sales for China and Taiwan; Paul Cosgrove, CCI’s former director of worldwide sales; David Edmonds, CCI’s former vice president of worldwide customer service; Flavio Ricotti, CCI’s former vice-president and head of sales for Europe, Africa and the Middle East; and Han Yong Kim, the former president of CCI’s Korean office. Trial is currently scheduled for Dec. 8, 2009.
An indictment is merely an accusation and the defendant is presumed innocent until and unless proven guilty at trial beyond a reasonable doubt.
In total, CCI admitted that from 2003 through 2007, it made approximately 236 corrupt payments in more than 30 countries, which resulted in net profits to the company of approximately $46.5 million from sales related to those corrupt payments.
The case is being prosecuted by Assistant Chief Hank Bond Walther and Trial Attorney Andrew Gentin of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Douglas McCormick of the U.S. Attorney’s Office for the Central District of California. The case was investigated by the FBI’s Washington Field Office, and its team of special agents dedicated to the investigation of foreign bribery cases.
Control Components Inc. (CCI), a Rancho Santa Margarita, Calif.-based company, pleaded guilty today to violations of the Foreign Corrupt Practices Act (FCPA) and the Travel Act in a decade-long scheme to secure contracts in approximately 36 countries by paying bribes to officials and employees of various foreign state-owned companies as well as foreign and domestic private companies.
Today, CCI entered guilty pleas to a three-count criminal information before U.S. District Judge James V. Selna in the Central District of California, Santa Ana Division. CCI designs and manufactures service control valves for use in the nuclear, oil and gas, and power generation industries. As part of the plea agreement, CCI agreed to pay a criminal fine of $18.2 million; create, implement and maintain a comprehensive anti-bribery compliance program; retain an independent compliance monitor for a three-year period to review the design and implementation of CCI’s anti-bribery compliance program and to make periodic reports to CCI and the Department of Justice; serve a three-year term of organizational probation; and continue to cooperate with the Department of Justice in its ongoing investigation.
Immediately following CCI’s guilty plea, Judge Selna imposed a sentence in accordance with the plea agreement. CCI was ordered to pay an $18.2 million criminal fine, placed on organizational probation for three years, and ordered to create and implement a compliance program and retain an independent compliance monitor for three years.
According to the information and plea agreement, from 1998 through 2007, CCI violated the FCPA and the Travel Act by making corrupt payments to numerous officers and employees of state-owned and privately-owned customers around the world, including in China, Korea, Malaysia and the United Arab Emirates,
for the purpose of obtaining or retaining business for CCI. Specifically, from 2003 through 2007, CCI paid approximately $4.9 million in bribes, in violation of the FCPA, to officials of various foreign state-owned companies and approximately $1.95 million in bribes, in violation of the Travel Act, to officers and employees of foreign and domestic privately-owned companies. The alleged corrupt payments were made to foreign officials at state-owned entities including Jiangsu Nuclear Power Corp. (China), Guohua Electric Power (China), China Petroleum Materials and Equipment Corp., PetroChina, Dongfang Electric Corporation (China), China National Offshore Oil Corporation, Korea Hydro and Nuclear Power, Petronas (Malaysia) and National Petroleum Construction Company (United Arab Emirates).
In related cases, two former executives of CCI previously pleaded guilty to conspiring to bribe officers and employees of foreign state-owned companies on behalf of the valve company. Mario Covino, CCI’s former director of worldwide factory sales, pleaded guilty on Jan. 8, 2009, to one count of conspiracy to violate the FCPA and admitted to causing the payment of approximately $1 million in bribes to officers and employees of several foreign state-owned companies. Richard Morlok, CCI’s former finance director, pleaded guilty on Feb. 3, 2009, to one count of conspiracy to violate the FCPA and admitted to causing the payment of approximately $628,000 in bribes to officers and employees of several foreign state-owned companies. Covino and Morlok are scheduled to be sentenced on Jan. 25, 2010.
On April 8, 2009, six former CCI executives were charged in a 16-count indictment with violations of the FCPA, the Travel Act and other statutes. The six former CCI executives are Stuart Carson, CCI’s former chief executive officer; Hong (Rose) Carson, CCI’s former director of sales for China and Taiwan; Paul Cosgrove, CCI’s former director of worldwide sales; David Edmonds, CCI’s former vice president of worldwide customer service; Flavio Ricotti, CCI’s former vice-president and head of sales for Europe, Africa and the Middle East; and Han Yong Kim, the former president of CCI’s Korean office. Trial is currently scheduled for Dec. 8, 2009.
An indictment is merely an accusation and the defendant is presumed innocent until and unless proven guilty at trial beyond a reasonable doubt.
In total, CCI admitted that from 2003 through 2007, it made approximately 236 corrupt payments in more than 30 countries, which resulted in net profits to the company of approximately $46.5 million from sales related to those corrupt payments.
The case is being prosecuted by Assistant Chief Hank Bond Walther and Trial Attorney Andrew Gentin of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Douglas McCormick of the U.S. Attorney’s Office for the Central District of California. The case was investigated by the FBI’s Washington Field Office, and its team of special agents dedicated to the investigation of foreign bribery cases.
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