View as PDF
View as PDF
Manufacturing
York, Pennsylvania, United States
Nationality of Foreign Officials: Bahrain, Egypt, India, Turkey, United Arab Emirates
Summary of Allegations:
From 1999 through 2005, YACR and FZE made and authorized hundreds of bribes and kickbacks to employees and contractors of government customers to obtain and retain contracts for government projects worth USD 42 million in Bahrain, Egypt, India, Turkey and the United Arab Emirates. York discovered this additional misconduct during the course of its investigation into the Oil for Food matter.
Approximate Alleged Payments to Foreign Officials: Unspecified
Business Advantage Allegedly Obtained: Contracts worth at least USD 42 million
Nationality of Foreign Officials: China, Nigeria, Unspecified
Summary of Allegations:
The SEC alleged that, from 2000 through 2006, various York subsidiaries made over USD 7.5 million in improper payments to secure certain commercial and government contracts in the Middle East, India, China, Nigeria and Europe. These payments were referred to internally as consultancy payments even though no services were in fact rendered. According to the SEC, a total of 854 improper consultancy payments were made on approximately 774 contracts, of which 302 projects involved government end-users, such as government-owned companies, public hospitals or schools.
Approximate Alleged Payments to Foreign Officials: over USD 7.5 million
Business Advantage Allegedly Obtained: commercial and government contracts
Nationality of Foreign Officials: Iraq
Summary of Allegations:
The DOJ charged York with conspiracy to commit wire fraud and to violate the FCPA's books and records provisions in connection with the conduct of two of York's subsidiaries. According to the criminal information, employees of YACR and FZE paid USD 647,110 in kickbacks (described as after-sales services fees ("ASSFs") to the Iraqi government between 2000 and 2003 in connection with contracts administered under the U.N. Oil for Food Program. The subsidiaries inflated the prices of the contracts by 10% to cover the cost of the kickbacks and concealed this fact from the United Nations when submitting the contracts for approval. The payments were made to Iraqi-controlled bank accounts in Jordan and elsewhere.
Approximate Alleged Payments to Foreign Officials: USD 647,110
Business Advantage Allegedly Obtained: Approximately USD 7 million worth of contracts with Iraqi ministries to provide air-conditioning, ventilation and refrigeration equipment and services
Nationality of Foreign Officials: United Arab Emirates
Summary of Allegations:
The SEC charged York with violations of the anti-bribery, books and records and internal controls provisions of the FCPA in connection with the conduct. In 2003 and 2004, York allegedly violated both the anti-bribery and books and records provisions of the FCPA through YACR's payment of approximately USD 522,500 to an intermediary while knowing that most of the money would be passed along to UAE officials in order to secure contracts for the construction of a government-owned luxury hotel called the Conference Palace. A total of 13 improper payments were made in connection with this project, for a total of USD 550,000.
Approximate Alleged Payments to Foreign Officials: USD 550,000
Business Advantage Allegedly Obtained: USD 3.7 million in sales revenue relating to orders for the Conference Palace project
Agencies: United States: Department of Justice, United States: Securities and Exchange Commission
Results: Civil Injunction, Civil Penalty, Compliance Monitor, Criminal Fine, Deferred Prosecution Agreement, Disgorgement
Year Resolved: 2007
Compliance Monitor: Danforth Newcomb
Ongoing: No
Details:
On 1 October 2007, York and the DOJ entered into a three-year deferred prosecution agreement under which York accepted responsibility for the conduct of YACR and FZE and agreed to pay a USD 10 million criminal penalty. Under the agreement, York agreed to have its compliance program reviewed by an independent compliance monitor for three years and to cooperate fully with the DOJ's ongoing investigation into the U.N. Oil for Food Program.
On the same day, without admitting or denying the SEC's allegations, York consented to the entry of a final judgment permanently enjoining the company from future violations of the FCPA's anti-bribery, books and records and internal controls provisions. York was ordered to disgorge USD 8,949,132 in profits, plus USD 1,083,748 in pre-judgment interest. The company also agreed to pay a civil penalty of USD 2,000,000 and to retain an independent compliance monitor.
Johnson Controls was not prosecuted in connection with the facts admitted by York.
Discovery Method: Voluntary Disclosure
Details:
York was acquired by Johnson Controls in 2005. York and Johnson Controls jointly made a voluntary disclosure regarding the potential violations to the DOJ and SEC.
Country: