By Charles S. Leeper and Gregory A. Mason
In a March 19, 2014 Plea Agreement, the Japanese trading company Marubeni Corporation agreed to plead guilty in the U.S. District Court for the District of Connecticut to a criminal information charging a conspiracy to violate the Foreign Corrupt Practices Act, and seven substantive violations of the Act’s anti-bribery provisions. Marubeni also agreed to pay an $88 million fine. The charges stem from Marubeni’s participation in an alleged scheme to bribe Indonesian government officials to secure a $118 million energy contract for a power plant on Sumatra.
The Marubeni Plea Agreement comes on the heels of FCPA charges being filed against several former executives of Alstom SA, Marubeni’s partner on the Indonesian power project and alleged co-conspirator, a number of whom have pleaded guilty and agreed to cooperate with the investigation. Alstom itself has not yet been charged, but Alstom has stated that it is cooperating with the Department of Justice’s investigation.
The only specific conduct by Marubeni employees alleged in the Information are statements in a series of provocative but ambiguous emails between Marubeni and Alstom personnel regarding consultants the two companies retained to facilitate contract negotiations with Indonesia’s state-controlled electric company. Whether Marubeni’s Plea Agreement and cooperation will provide the evidence necessary for DOJ to charge any Marubeni executives is unclear. However, it is notable that the 2012 Indictment of Alstom executive Frederic Pierucci was sealed until his 2013 arrest when he attempted to enter the United States at New York JFK airport. The DOJ may well have employed the same strategy – sealing FCPA charges against individual defendants – in the hopes of ensnaring the Marubeni executives who are in DOJ’s cross-hairs.
The prosecution of Marubeni, a Japanese company, once again demonstrates the broad reach of FCPA enforcement, which has been extended to target foreign defendants for predominantly foreign conduct, aimed at foreign markets. According to the Marubeni Information, however, the alleged co-conspirator, Alstom, used American bank accounts to pay consultants who allegedly bribed Indonesian officials.
The charges in this investigation also illustrate the government’s continued focus on the use of third-party agents and consultants to make payments to foreign government officials. There should be little doubt about the wisdom of investing in robust due diligence of potential business partners, especially when doing business in countries such as Indonesia with a well-deserved reputation for corruption.