A&O Shearman FCPA Digest | In re NORDAM Group, Inc. (2012)

Source Documents

Nature of Business
The NORDAM Group Inc., a Delaware corporation based in Tulsa, Oklahoma, manufactures aircraft parts and provides aircraft maintenance, repair and overhaul (“MRO”) services. NORDAM Singapore Pte Ltd. (“NSPL”) is a wholly-owned subsidiary of NORDAM.

Influence to be Obtained
Between 1999 and 2008, employees of NORDAM allegedly paid bribes totaling $1.5 million to employees of airlines controlled and owned by the People’s Republic of China to secure contracts to perform MRO services for those airlines.

The bribes paid both directly and indirectly to airline employees were referred to internally as “commissions” or “facilitator fees.” These facilitator fees were paid to “facilitators,” who were the actual employees of NORDAM’s customers. 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.

Although many of the bribe payments were paid out of NORDAM’s gross profits, in some instances NORDAM and its affiliates artificially inflated the customer invoice to offset the bribes paid to those customers’ employees. As a result, in these instances, NORDAM’s customers were unknowingly reimbursing NORDAM for the bribes that NORDAM paid to customer employees to secure the projects.

Enforcement
On July 17, 2012, NORDAM entered into a three-year non-prosecution agreement with the DOJ. As part of that agreement, NORDAM is required to cease and desist from further violating the books and records and internal controls provisions of the FCPA and pay a penalty of $2 million. In addition to the monetary penalty, NORDAM must adhere to rigorous compliance, bookkeeping, and internal controls standards and cooperate fully with the DOJ. The NPA notes that the DOJ agreed to a fine below the standard range because NORDAM demonstrated that a fine exceeding $2 million would jeopardize its continued viability.