A&O Shearman FCPA Digest | In re Tyco International, Ltd. (2012)<br /> United States v. Tyco Valves & Controls Middle East, Inc. (E.D. Va. 2012)

Source Documents

Case Name
In re Tyco International, Ltd. (2012)
United States v. Tyco Valves & Controls Middle East, Inc. (E.D. Va. 2012)

Foreign Official
Employees of government customers in China, Croatia, India, Libya, Saudi Arabia, Serbia, Syria, Turkey, Malaysia, and the UAE; Officials of Saudi Aramco (“Aramco”), a Saudi Arabian oil and gas company that was wholly owned, controlled, and managed by the government; Officials of Emirates National Oil Company (“ENOC”), a state-owned entity in Dubai; Officials of Vopak Horizon Fujairah (“Vopak”), a subsidiary of ENOC based in the U.A.E.; Officials of National Iranian Gas Company (“NIGC”), a state-owned entity in Iran.

Nature of Business
Tyco International, Ltd., a Swiss company, manufactures and sells products related to security, fire protection, and energy. Tyco Valves & Controls Middle East, Inc. (“TVC ME”) is an indirect, wholly-owned subsidiary of Tyco that sold and marketed valves and other industrial equipment throughout the Middle East for the oil, gas, petrochemical, commercial construction, water treatment, and desalination industries.

Influence to be Obtained
Between 2003 and 2006, TVC ME, with others, intentionally bribed employees of end-customers in Saudi Arabia, the UAE, and Iran, including employees at Aramco, ENOC, Vopak, and NIGC, to obtain or retain business. TVC ME also paid bribes to employees of foreign government customers to remove TVC manufacturing plants from various Aramco “blacklists” or “holds,” to win specific bids, and obtain specific product approval.

TVC ME improperly recorded the bribes in company books, records, and accounts, falsely describing the payments as “consultancy costs,” “commissions,” or “equipment costs.” TVC ME also made payments through a Local Sponsor [a company in Saudi Arabia that acted as a distributor for TVC ME in Saudi Arabia]. The Local Sponsor provided TVC ME with false documentation, such as fictitious invoices for consultancy costs, bills for fictitious commissions, or “unanticipated costs for equipment,” to justify payments to the Local Sponsor that were intended to be used for bribes. The Local Sponsor received commissions for all contracts that they secured for TVC ME in Saudi Arabia.

Enforcement
On September 20, 2012, Tyco International entered into a non-prosecution agreement with the DOJ under which it agreed to pay a $13.68 million penalty for falsifying books and records in connection with corrupt payments by its subsidiaries (including TVC ME) to foreign government officials. On September 24, 2012, TVC ME pleaded guilty to one count of conspiring to violate the anti-bribery provisions of the FCPA. TVC ME was sentenced to a $2.1 million fine, which was included as part of Tyco International’s $13.68 million penalty.

Citation
United States v. Tyco Valves & Controls Middle East, Inc., No. 1:12-cr-00418 (E.D. Va. 2012).