United States v. Louis Berger International, Inc. (D.N.J 2015)
United States v. Richard Hirsch (D.N.J. 2015)
United States v. James McClung (D.N.J. 2015)
Case Details
- Case Name
- United States v. Louis Berger International, Inc. (D.N.J 2015)
United States v. Richard Hirsch (D.N.J. 2015)
United States v. James McClung (D.N.J. 2015)
- Countries
- India, Indonesia, Kuwait, Vietnam
- Foreign Official
- Unnamed foreign officials in Vietnam, Indonesia, and India; Official of the Kuwaiti Ministry of Public Works.
- Date of Conduct
-
1998 to 2010
- Nature of Business
- Louis Berger International, Inc. is a New Jersey-based, privately-held consulting firm that provides engineering, architecture, program, and construction management services. Richard Hirsch, a U.S. citizen residing in the Philippines, was Senior Vice President, Asia of Louis Berger. James McClung, a U.S. citizen residing in India, was Senior Vice President of Louis Berger.
- Influence to be Obtained
- According to court documents released by the DOJ, between 1998 and 2010, Louis Berger along with two senior officials, Richard Hirsch and James McClung, engaged in a scheme to pay bribes to foreign officials in Indonesia, Vietnam, India, and Kuwait to secure contracts with government agencies and instrumentalities in violation of the FCPA. Each of the alleged bribery schemes is discussed below.
Indonesia
According to the DOJ, Louis Berger used employees and agents to pay “commitment fees” and “counterpart per diems” in connection with contracts with the Indonesian government. The “fees” were allegedly bribes that, once wired to Louis Berger’s bank accounts in Indonesia or the accounts of Indonesian subcontractors (who provided no legitimate services), were diverted to Indonesian government officials. More specifically, the DOJ’s pleadings state that in or around 2006, Louis Berger sought contracts with the Indonesian government as a sub-contractor and engaged a middle-man consulting company to bribe Indonesian officials in exchange for the subcontract.
The DOJ alleges that Hirsch organized and approved the bribes to Indonesian officials. Furthermore, following the initiation of investigations by both the company and the DOJ into Louis Berger’s Indonesian operations, the DOJ alleges that Hirsch attempted to prevent the discovery of the bribery scheme and refused to cooperate with investigators.
Vietnam
Court documents allege that Louis Berger utilized a “Foundation,” a non-governmental organization that Louis Berger established in Vietnam as the company’s local sponsor to provide local labor and operational support, to funnel bribes to Vietnamese officials. The funding of the alleged bribes was generated by “donations” from Louis Berger to the “Foundation” or was masked by invoices from the “Foundation” which Louis Berger paid from its bank accounts in the United States. Once the “Foundation” received the funding, the money was withdrawn from a joint account and allegedly paid to Vietnamese officials by Louis Berger employees.
In connection with Louis Berger’s operations in Vietnam, the DOJ alleged that in 2003, Hirsch approved of an $18,000 bribe to government officials in Vietnam. The DOJ also asserted that McClung discussed making bribes with Louis Berger employees by telephone and email using coded language, such as “field operation expenses.” In 2008, McClung allegedly approved of a $13,000 payment ultimately denoted as “logistics support and travel cost.” Later in 2010, the DOJ claims that an email from an unnamed Louis Berger employee suggests that McClung approved a $200,000 payment to a Vietnamese official regarding several projects.
India
According to the DOJ, Louis Berger officials made illicit payments to Indian officials in exchange for two water development projects in Goa and Guwahati, India. The alleged bribes were disguised as payments to project vendors for services that were never actually rendered. The DOJ asserts that multiple consortium partners, alongside Louis Berger, were involved in the scheme to bribe Indian officials. McClung allegedly approved of and directed payments to officials for projects, including $976,630 in relation to a project in Goa.
Kuwait
In 2005, Louis Berger was awarded a $66 million road construction project with the Kuwaiti Ministry of Public Works. To secure the contract, Louis Berger is accused of paying approximately $71,000 to an official in the Ministry of Public Works. According to the DOJ, the alleged illicit payments were disguised as “proposal” or “business development” costs, though little other detail is provided as to how the alleged bribe payments were transferred to Kuwaiti officials.
- Enforcement
- On July 17, 2015, the DOJ settled its case against Louis Berger through a deferred prosecution agreement, pursuant to which Louis Berger agreed to pay a criminal fine of $17.1 million. On the same day, both Hirsch and McClung pleaded guilty to one count of conspiracy to violate the FCPA and one substantive count of violating the FCPA’s anti-bribery provisions. In July 2016, Hirsch was sentenced to two years of probation and fined $10,000 and McClung was sentenced to one year and a day in prison.
- Amount of the Value
- Approximately $3,934,431.
- Amount of Business Related to Payment
- More than $7 million.
- Intermediary
- Subcontractor; Non-Government Organization; Agent; Vendors.
- Citizenship of Parent Entity
- United States
- Total Sanction
- $ 17,100,000
- Reporting Requirements
- No
Defendants
Louis Berger International, Inc.
- Citation
- United States v. Louis Berger Int’l, Inc., Mag.No. 15-3624 (D.N.J. 2015);
- Other Statutory Provision
- None
- Disposition
- Deferred Prosecution Agreement
- Defendant Jurisdictional Basis
- Domestic Concern
- Defendant's Citizenship
- United States
- Individual Sanction
- $17,100,000.
Richard Hirsch
- Citation
- United States v. Hirsch, No. 15-cr-00358-MLC (D.N.J. 2015);
- Other Statutory Provision
- None
- Disposition
- Plea Agreement
- Defendant Jurisdictional Basis
- Domestic Concern
- Defendant's Citizenship
- United States
- Individual Sanction
- 2-Years Probation; $10,000 Criminal Fine.
James McClung
- Citation
- United States v. McClung, No. 15-cr-00357-MLC (D.N.J. 2015).
- Other Statutory Provision
- None
- Disposition
- Plea Agreement
- Defendant Jurisdictional Basis
- Domestic Concern
- Defendant's Citizenship
- United States
- Individual Sanction
- 1-Year and 1-day Imprisonment.
