United States v. ABB Ltd. (S.D. Tex. 2010)
United States v. ABB Ltd. – Jordan (S.D. Tex. 2010)
United States v. ABB Inc. (S.D. Tex. 2010)

• Case Name
• United States v. ABB Ltd. (S.D. Tex. 2010)
  United States v. ABB Ltd. – Jordan (S.D. Tex. 2010)
  United States v. ABB Inc. (S.D. Tex. 2010)

• Date Filed
• 11/29/2010

• Enforcement Agency
• DOJ

• Countries
• Iraq, Mexico

• Foreign Official
• Officials at Comisión Federal de Electricidad (“CFE”), a Mexican state-owned utility company; Regional Companies of the Iraqi Electricity Commission.

• Date of Conduct
• 1997 to 2004

• Nature of Business
• ABB Ltd. is a Swiss public corporation which provides power and automation products and services around the globe.  Two of its subsidiaries, ABB Inc., a Delaware corporation based in Sugar Land, TX, and ABB Ltd. – Jordan, provide products and services to electrical utilities, including state-owned utilities.

• Influence to be Obtained
• In April 1995, the U.N. adopted Security Council Resolution 986, which permitted the government of Iraq to sell oil and to use proceeds from those sales to purchase humanitarian supplies such as food for the Iraqi people (“U.N. Oil-for-Food Program”).  In an extensive scheme, the Iraqi government received illicit payments in the form of surcharges from oil purchasers and kickbacks from humanitarian goods suppliers.  The kickback payments were masked by inflating the contract price, usually by 10% of the contract value.  The government did not allege bribery of any individual foreign governmental officials.
   
  ABB Ltd. – Jordan paid more than $300,000 in kickbacks to the former Iraqi government in exchange for eleven purchase orders for electrical equipment and services worth more than $5.9 million under the U.N. Oil-for-Food Program.  Additionally, ABB Ltd. – Jordan engaged in systematic efforts to conceal the illegal payments and circumvent internal controls by misrepresenting these payments as “consulting fees” in its books and records.
   
  From 1997 to 2004, ABB Inc. paid bribes that totaled approximately $1.9 million to officials at CFE.  In exchange for the bribe payments, ABB Inc. received contracts worth more than $81 million in revenue for upgrades and maintenance to Mexico’s electrical network system.  ABB Inc. admitted that the bribe payments were made through various intermediaries, including a Mexican company that served as ABB Inc.’s sales representative in Mexico for its contracts with CFE.
   

• Enforcement
• ABB Ltd. entered into a three-year deferred prosecution agreement on September 29, 2010, under which it agreed to fully cooperate with investigations of the company’s alleged corrupt payments and to adhere to a set of enhanced corporate compliance and reporting obligations, which include the recommendations of an independent compliance consultant.  ABB Ltd. also agreed to the filing of a criminal information charging ABB Ltd. – Jordan with one count of conspiracy to commit wire fraud and to violate the books and records provisions of the FCPA.  According to the deferred prosecution agreement, ABB agreed to pay criminal penalties totaling $30,420,000 ($28,500,000 on behalf of ABB Inc. and $1,920,000 on behalf of ABB Ltd. – Jordan).  Also on September 2010, ABB Inc. pleaded guilty to one count of conspiracy to violate the FCPA and one count of violating the anti-bribery provisions of the FCPA and was sentenced to pay a criminal fine of $17.1 million, which was deducted from the $28.5 million due under the deferred prosecution agreement.  
   
  At sentencing, Judge Lynn Hughes refused to approve the parties’ deferred prosecution agreement and determined that the $30,420,000 agreed upon penalty should be discounted because, according to Judge Hughes, ABB Ltd. was not a recidivist offender.  Accordingly, ABB Ltd. was ordered to pay a criminal penalty of $19 million—$17.1 million for ABB Inc. and $1.92 million for ABB Ltd. – Jordan. 
  On September 29, 2010, ABB Ltd. also settled a related SEC action.
   

• Amount of the Value
• Approximately $2.2 million.  

• Amount of Business Related to Payment
• At least $86.9 million.

• Intermediary
• Mexican Companies Purporting to Act as Service and Support Providers.

• Total Sanction
• $ 19,000,000

• Compliance Monitor
• No

• Reporting Requirements
• No

• Case is Pending?
• No

• Total Combined Monetary Sanction
• $ 58,314,262

• Related Enforcement Actions
• SEC v. ABB Ltd (D.D.C. 2010)
  

ABB Ltd.

• Citation
• United States v. ABB Ltd, No. 4:10-cr-00665. (S.D. Tex. 2010); 

• Date Filed
• 09/29/2010

• Filed Under Seal
• No

• FCPA Statutory Provision
• • Anti-Bribery
  • Conspiracy: Anti-Bribery

• Other Statutory Provision
• None

• Disposition
• Deferred Prosecution Agreement

• Defendant Jurisdictional Basis
• Issuer

• Defendant's Citizenship
• Switzerland

ABB Ltd. – Jordan 

• Citation
• United States v. ABB Ltd. – Jordan, No. 4:10-cr-00665 (S.D. Tex. 2010); 

• Date Filed
• 09/29/2010

• Filed Under Seal
• No

• FCPA Statutory Provision
• • Conspiracy: Books-and-Records

• Other Statutory Provision
• Conspiracy (Wire Fraud);

• Disposition
• Deferred Prosecution Agreement

• Defendant Jurisdictional Basis
• Conspiracy

• Defendant's Citizenship
• Jordan

ABB Inc.

• Citation
• United States v. ABB Inc., No. 4:10-cr-00664 (S.D. Tex. 2010)

• Date Filed
• 09/29/2010

• Filed Under Seal
• No

• FCPA Statutory Provision
• • Anti-Bribery
  • Conspiracy: Anti-Bribery

• Other Statutory Provision
• None

• Disposition
• Plea Agreement

• Defendant Jurisdictional Basis
• Domestic Concern, Conspiracy

• Defendant's Citizenship
• United States