On July 17, 2012, Nordam Group, Inc. (“Nordam”) an aircraft maintenance, repair and overhaul (“MRO”) service provider based in Tulsa, Oklahoma, entered into a three-year non-prosecution agreement (NPA) with the DOJ to resolve violations of the FCPA’s anti-bribery provisions.
Conduct
According to the NPA, from 1999 until 2008, Nordam, its subsidiaries and affiliates paid bribes to employees of airlines created, controlled and exclusively owned by the People’s Republic of China in order to secure contracts to perform MRO services for those airlines. Several Nordam employees reportedly were made aware of and approved the bribes. The bribes were paid both directly and indirectly to the airline employees. In an effort to disguise the bribes, three employees of NORDAM’s affiliate entered into sales representation agreements with fictitious entities and then used the money paid by NORDAM to those entities to pay bribes to the airline employees.
Per the NPA, the bribes were referred to internally as “commissions” or “facilitator fees.” The facilitator fees were paid to “facilitators” who, in fact, were employees of customers. These facilitators were also referred to internally as “internal guys,” “internal ghosts,” or “our friends inside.” The facilitator fees either were paid directly to the customer’s employee by wire transferring money to the employee’s bank account or were paid indirectly by first depositing the money into the personal bank accounts of Nordam’s Singapore based affiliate’s employees, who would then withdraw all or a portion of these fees to pay the customer employees in cash.
In all Nordam, its subsidiaries and affiliates “paid as high as $1.5 million in bribes to secure approximately $2.48 million in profits from state-owned and controlled customers in China.”
Penalties
Pursuant to the NPA, Nordam agreed to pay a $2 million criminal penalty to resolve the violations. Additionally, Nordam agreed to cooperate with the DOJ, to report periodically to the DOJ concerning Nordam’s compliance efforts, and to continue to implement an enhanced compliance program and internal controls designed to prevent and detect FCPA violations. The DOJ commented that it “entered into a non-prosecution agreement with NORDAM as a result of NORDAM’s timely, voluntary and complete disclosure of the conduct, its cooperation with the department and its remedial efforts.” In addition, the NPA recognized that “a fine below the standard range under the U.S. Sentencing Guidelines is appropriate because NORDAM fully demonstrated to the department, and an independent accounting expert retained by the department verified, that a fine exceeding $2 million would substantially jeopardize the company’s continued viability.”
The DOJ’s press release is here.