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Another Guilty Plea In Valve-Maker Case

A second executive of a California-based firm has pleaded guilty to a Foreign Corrupt Practices Act violation. Richard Morlok, 55, the former finance director of Control Components Inc., admitted that from 2003 through 2006, he arranged corrupt payments to foreign officials of about $628,000. The payments, usually made through agents, went to employees at state-owned enterprises in order to assist in obtaining and retaining business for his company. He was charged in a one-count information with conspiring to violate the FCPA.

Morlok said in his plea agreement that Control Components, which designs and makes valves for the oil, gas, nuclear, coal and power plant industries, earned about $3.5 million in profits from contracts obtained through the bribes. Illegal payments, he said, went to employees at China National Offshore Oil Company, PetroChina, Jiangsu Nuclear Power Corporation (China), KHNP (Korea), Rovinari Power (Romania) and Safco (Saudi Arabia), among others.

Morlok said during a 2004 audit he provided false and misleading information about Control Component's commission payments to agents. The company is owned by British-based IMI plc, which trades on the London Stock Exchange under the symbol IMI.L.

Last month, the former worldwide sales director of Control Components, Mario Covino, also pleaded guilty in federal court to a single count of conspiring to violate the Foreign Corrupt Practices Act. Both Morlok and Covino are cooperating in an ongoing federal investigation and waiting to be sentenced. Covino, 44, is an Italian citizen living in Irvine, California. He was released on bail of $100,000 after surrendering his passport. Morlok, 55, lives in Rancho Santa Margarita. He was released on $20,000 bail. Morlok is scheduled to be sentenced on July 10, 2009, and Covino's sentencing is set for July 20, 2009. Both face up to five years in prison.

Download Richard Morlok's plea agreement here.

Download Mario Covino's plea agreement here.

Download the Justice Department's February 3, 2009 release here.

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Full post as published by The FCPA Blog on February 03, 2009 (boomark / email).