A&O Shearman FCPA Digest | United States v. Richard Morlok (C.D. Cal. 2009)

Source Documents

Foreign Official
Officers and employees of state-owned enterprises including, but not limited to, China National Offshore Oil Company, Petrochina, Jiangsu Nuclear Power Corporation (China), Korea Hydro and Nuclear Power, Rovinari Power (Romania), and Safco (Saudi Arabia).

Nature of Business
Richard Morlok, a U.S. citizen, was Finance Director for Control Components, Inc. (“CCI”), a California-based company that designs and manufactures severe service control valves used in the nuclear, oil and gas, and power generation industries.

Influence to be Obtained
From 2003 to 2006, Morlok caused employees and agents of CCI to make payments totaling approximately $628,000 to officials employed by state-owned companies, in exchange for their assistance in obtaining sales contracts. These payments resulted in profits of approximately $3.5 million.

For example, in April 2004, Morlok approved a corrupt payment of $57,658 to an official of Korea Hydro and Nuclear Power (“KHNP”). Morlok caused CCI to wire the payment from its California bank account to an account with a Korean bank. In April and August 2004, Morlok provided false and misleading statements to auditors, engaged by CCI’s parent company, IMI plc, when he denied knowledge of and participation in improper payments.

Enforcement
On February 3, 2009, Morlok pleaded guilty to conspiring to violate the FCPA’s anti-bribery provisions. Under the terms of his plea agreement, Morlok agreed to cooperate with the government in its continuing investigation and prosecution of six other former CCI employees, among which five have pleaded guilty and one is considered a fugitive.

On March 11, 2013, Morlok was sentenced to three years of probation, including three months in a home detention program. He was also ordered to pay a fine of $5,000.