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Six More Indicted In Valve-Maker Case

In the biggest multiple-party indictment yet under the Foreign Corrupt Practices Act, six more former executives of Control Components Inc., an Orange County, Calif.-based valve company, were charged yesterday with a decade-long conspiracy to win contracts by bribing officials at foreign state-owned companies.

The six individuals charged in the indictment are:

• Stuart Carson, 70, of San Clemente, Calif., the former chief executive officer of Control Compenents. He's charged with one count of conspiracy to violate the FCPA and the Travel Act, and two counts of violating the FCPA;

• Hong (Rose) Carson, 45, of San Clemente, Calif., the former director of sales for China and Taiwan of the company (Stuart Carson's wife). She's charged with one count of conspiracy to violate the FCPA and the Travel Act, five counts of violating the FCPA, and one count of destruction of records in connection with a matter within the jurisdiction of a department or agency of the United States;

• Paul Cosgrove, 61, of Laguna Niguel, Calif., the former director of worldwide sales for Control Components. He's charged with one count of conspiracy to violate the FCPA and the Travel Act, six counts of violating the FCPA and one count of violating the Travel Act;

• David Edmonds, 56, of San Clemente, Calif., the former vice president of worldwide customer service at the company. He's charged with one count of conspiracy to violate the FCPA and the Travel Act, three counts of violating the FCPA and two counts of violating the Travel Act;

• Flavio Ricotti, 47, of Italy, the former vice-president and head of sales for Europe, Africa and the Middle East. He's charged with one count of conspiracy to violate the FCPA and the Travel Act, one count of violating the FCPA and three counts of violating the Travel Act; and

• Han Yong Kim, 47, of Korea, the former president of the company's Korean office. He's charged with one count of conspiracy to violate the FCPA and the Travel Act, and two counts of violating the FCPA.

Earlier this year, two other former executives from Control Components admitted paying bribes and have been cooperating with authorities. Richard Morlok, 55, the former finance director, and Mario Covino, 44, the company's former director of worldwide factory sales, pleaded guilty to one count of conspiracy to violate the FCPA (see our posts here and here). Sentencing for both is now scheduled for July 20, 2009.

The alleged conspiracy involving the six newly indicted executives stretched from at least 1998 to 2007. The indictment charges that from 2003 to 2007, they caused Control Components to make at least 236 corrupt payments in more than 30 countries. The Justice Department says the company earned net profits of $46.5 million from sales gained by the alleged corrupt payments.

For all of the defendants, the FCPA and Travel Act counts each carry a maximum penalty of five years in prison and a fine of the greater of $250,000 or twice the value gained or lost. The destruction of records count against Hong (Rose) Carson carries a maximum penalty of 20 years in prison and a fine of $250,000.

The alleged corrupt payments were made to officials at state-owned entities including Jiangsu Nuclear Power Corp. (China), Guohua Electric Power (China), China Petroleum Materials and Equipment Corp., PetroChina, Dongfang Electric Corporation (China), China National Offshore Oil Corporation, Korea Hydro and Nuclear Power, Petronas (Malaysia), and National Petroleum Construction Company (United Arab Emirates).

Control Components designs and makes valves for the oil, gas, nuclear, coal and power plant industries. It is owned by British-based IMI plc, which trades on the London Stock Exchange under the symbol IMI.L.

An indictment is merely an accusation and the defendants are presumed innocent until and unless proven guilty beyond a reasonable doubt.

View the DOJ's April 8, 2009 release here.

Check back for links to the charging documents.
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Full post as published by The FCPA Blog on April 08, 2009 (boomark / email).