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Swiss company Tyco to pay $26M in U.S. corruption probe
Tyco International Ltd., along with a subsidiary that pleaded guilty Monday to criminal charges of conspiring to violate the Foreign Corrupt Practices Act, has agreed to pay more than $26 million to resolve bribery accusations brought by the Justice Department and Securities and Exchange Commission.
Assistant Attorney General Lanny A. Breuer, who heads the department’s criminal division, and Neil H. MacBride, U.S. attorney in Virginia, said that as a part of agreement, the Switzerland-based firm that makes products related to security, fire protection and energy agreed to pay a $13.68 million penalty for falsifying books and records on payments by its subsidiaries to government officials in various countries to obtain and retain business.
Tyco Valves & Controls Middle East Inc., an indirect and wholly owned subsidiary of Tyco that sold and marketed valves and other industrial equipment throughout the Middle East for the oil, gas, petrochemical, commercial construction, water treatment and desalination industries, pleaded guilty to conspiring to violate the anti-bribery provisions of the federal act.
According to a criminal complaint, Tyco Valves paid bribes to officials at Saudi Aramco, an oil and gas company controlled and managed by the government of Saudi Arabia, to obtain contracts. The court ordered the subsidiary to pay a $2.1 million fine, which is included as part of the $13.68 million penalty.
“Today, a Tyco subsidiary pleaded guilty to bribing officials of state-owned entities in various countries to score valuable petroleum contracts and, with Tyco International, agreed to pay nearly $14 million in penalties,” Mr. Breuer said. “Together with the SEC, we are leading a fight against corruption around the globe.”
Mr. MacBride said that for more than 10 years, various Tyco entities “bribed foreign officials and cooked the books to hide the payments.”
As part of the settlement, the department entered into a nonprosecution agreement with Tyco. It said a number of Tyco’s subsidiaries made payments, both directly and indirectly, to government officials to obtain and retain business with private and state-owned entities, and falsely described the payments in Tyco’s corporate books, records and accounts as legitimate charges.
From 1999 to 2009, it said, Tyco knowingly conspired to falsify its books and records in connection with those payments.
In addition to the monetary penalty, Tyco and Tyco Valves & Controls Middle East also agreed to cooperate with the department, to report periodically concerning the companies’ compliance efforts, and to implement an enhanced compliance program and internal controls designed to prevent and detect violations of the Foreign Corrupt Practices Act.
In parallel civil proceedings, Tyco consented with the SEC to a proposed final judgment that orders the company to pay $10.5 million in disgorgement and $2.5 million in prejudgment interest — which, together with the Justice Department penalty, totals more than $26 million.
The case was prosecuted by trial attorneys Kathleen M. Hamann and Daniel S. Kahn of the criminal division’s fraud section, and Assistant U.S. Attorney Charles F. Connolly of the Eastern District of Virginia.
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