The Sting Part II: Foreign Bribery Investigation Claims Another Contractor Scalp

This is an update to last week’s post about the massive FBI sting operation that led to the arrest of 22 defense contractor employees on charges of violating the Foreign Corrupt Practices Act (FCPA). We noted that the investigation was ongoing, which might explain why the Department of Justice didn’t name the companies for which those individuals worked. Fortunately, with Google and the help of our readers, we were able to identify most of the companies, none of which are among the top federal contractors featured in our Federal Contractor Misconduct Database.

This week, however, we discovered at least one connection to a contractor our database. It turns out that one of the main “actors” who took part in the sting operation and helped the FBI nab the 22 individuals is a former executive at Armor Holdings who is facing FCPA charges in a different matter. Richard Bistrong, a former vice president for international sales at Armor Holdings (acquired by BAE Systems in 2007), is accused of paying bribes from 2001 to 2006 to get contracts to supply law enforcement equipment to United Nations peacekeeping forces and government agencies in the Netherlands and Nigeria. Bistrong’s assistance in the sting operation probably guarantees him a lenient sentence.

Remarkably, one of the 22 individuals arrested in the sting operation, Jonathan Spiller, was Bistrong’s former boss at Armor Holdings. In fact, Spiller’s indictment identifies “Individual 1” (aka Bistrong) as a “business associate” of Spiller.

Bistrong’s case also has an interesting political angle. According to the New York Times, Bistrong was married to Nancy Soderberg from 2004 to 2008. Soderberg was the third-ranking official on the National Security Council under President Clinton from 1993 to 1997 and served as U.S. Ambassador to the United Nations from 1997 until January 2001. Bistrong’s alleged illegal conduct began in June 2001.

The Bistrong case shows that the DOJ is casting a wide net in this investigation, going after any and all FCPA violators with a vengeance. There have been several other headline-grabbing FCPA enforcement actions in recent years, such as the punishment of Chevron and Textron over the Iraq Oil-For-Food scandal and last year’s major takedown of  KBR and Halliburton for bribing Nigerian officials.

So keep watching the news. And keep trolling the Internet, too, because you never know what fascinating tidbits will pop up as the DOJ investigation surges onward, such as this first-hand account  from Andrew Bigelow, another of the 22 individuals arrested last week.

-- Neil Gordon

Comments

[Barry Grossman]

Anyone who spends 100 or so hours wading through the mountains of nonsense available over the internet about Foreign Corrupt Practices and Bribery of Foreign Officials will eventually realize that the millions of printed words on this subject come almost exclusively from:

1. Legal and Accounting Professionals selling compliance programs;
2, Well meaning academics debating legal niceties or doing generalised historical studies; and
3. Bureaucrats who would have us believe that the OECD and UN schemes for ostensibly criminalizing corrupt foreign practices are little more than a PR exercise by first world nations.

The reality is that there is no meaningful enforcement of foreign bribery legislation in signatory countries. I challenge anyone to contradict this assertion. In fact, in 10 years there has been fewer than 200 convictions world wide under the OECD scheme and almost all convictions occurred in only 5 countries, with most of the 38 signatory countries having had no prosecutions at all. In fact there is not even an international agency or mechanism through which individulas can report cases of bribery, let alone instances in which law enforcement agencies in signatory countries have refused to investigate clear cases of froeign bribery.

Some estimates claim that bribe payments account for up tp 3% of global economic activity. We know that corruption and bribery is rampant in developing countries throughout South America, Africa and Asia. Yet in 10 years there has been less than 200 convictions under the OECD scheme world wide. That is an outrage. Are the OECD and UN schemes that traget foreign corrupt practices just a hoax?

The only message going out loud and clear is that if businesses elect to advance their interests by bribing foreign officials, they face almost no tangible risk of criminal prosecution in their own jurisdiction. Indeed, while I am no statistician, I imagine the odds of ever being prosecuted for bribing a foreign public official are smaller than the odds that radiation from our sun will cause the earth to collapse on itself in 2012.

It is not my intention to insult anyone, but maybe those people who are making a global industry out of talking about FCP legislation should spare us yet more rhetoric and drivel that seems to be more about carrer advancement than anything else, or alternatively start saying something a bit more meaningful.

[Ms Sparky]

Great job of keeping the spot light on these criminal contractors. The way things are going there won't be any contractors left to support the DoD. The only common factor with all these contractors is the lack of DoD oversight.

The DoD should be held accountable at some level.

Ms Sparky