Firm Settles FCPA Claim With Non-Prosecution Agreement, VP Pleads Guilty
IAP Worldwide Services Inc., a Virginia based facilities management firm, entered into a non-prosecution agreement with the Department of Justice and agreed to pay a $7.1 million penalty to resolve FCPA charges. A vice president of the firm pleaded guilty to one count of conspiracy to violate the FCPA. He is scheduled to be sentenced in September 2015.
The decision to enter into a non-prosecution agreement was based not just on the cooperation of the company but “a variety of factors,” according to the DOJ. The agreement requires the company to continue cooperating, conduct a review of its existing internal controls, policies and procedures and make any necessary modifications to ensure compliance in the future. Under the terms of the agreement the firm will report periodically to the Department of Justice regarding remediation and implementation of its compliance program and internal controls and policies and procedures.
The underlying conduct centers on the efforts of IAP to secure a contract for the Kuwait Security Program, initiated by the Kuwait Ministry of Interior. The project, initiated in 2004, was designed to provide nationwide surveillance capabilities for several government agencies, generally through the use of closed-circuit television. Phase I focused on planning. Phase II was the instillation period. The second phase was generally considered to be the more lucrative portion of the project.
To ensure that it would obtain Phase II, IAP sought to obtain the first part of the project. This would permit it to design favorable standards. Firm vice president James Rama and others were successful in securing Phase I and eventually the second phase. To secure Phase I in 2005 Mr. Rama and others set up shell company Ramaco. IAP and Mr. Rama then agreed with others that half of the Phase I contract, valued at $4 million, would be channeled through the shell company to a consultant. Some or all of the money was to be used to pay bribes to government officials. Eventually, about $1,783, 688 was channeled through an IAP account to Ramaco used for that purpose. IAP was successful in securing Phase II.