SEC Files Settled FCPA Charges Against Two Individuals
The SEC filed another settled FCPA action. The proceeding named two individuals as Respondents. It centers on using expensive gifts and travel as bribes. In the Matter of Stephen Timms, Adm. Proc. File No. 3-16281 (November 17, 2014).
Respondents Stephen Timms and Yasser Ramahi, both U.S. citizens who reside abroad, were employed by FLIR Systems, Inc. The firm, founded in 1978, makes thermal imaging and other sensing products and systems, night vision and infrared camera systems. Mr. Timms was, at the time of the events at issue here, the head of FLIR’s Middle East office in Dubai. Mr. Ramahi worked in business development in the same office. He was one of the executives responsible for obtaining business in the firm’s Government Systems division for the Arabia Ministry of Interior.
In November 2008 FLIR entered into a contract with the Arabia Ministry to sell thermal binoculars. The agreement was worth about $12.9 million. The factory acceptance test was a key condition to the fulfillment of the contract. The firm expected that a successful contract would lead to others.
In May 2009 FLIR signed another agreement. This contract called for the integration of its cameras into the product of another firm, again for the Arabia Ministry. The contract was valued at $17.4 million. Messrs. Ramahi and Timmins were involved with the negotiations for both contracts.
In February 2009 Messrs. Ramahi and Timms began preparing for the factory acceptance test, scheduled for July 2009 in Billerica, Massachusetts. The next month Mr. Timms, in the presence of Mr. Ramahi, provided five Ministry officials with watches as gifts. Each watch cost about $1,424, according Mr. Timms. The invoices were submitted to the company for payment.
Subsequently, arrangements were made for the Ministry officials to go on what Mr. Timms later called a “world tour” in connection with the test. The tour began with travel from Rihadh to Casablanca, moved to Paris and then Boston. At each location the group stayed in luxury hotels for several days. While in Boston the group took a side trip to New York City. On the way back one official traveled to Beirut before returning to Riyadh. The travel extended over twenty nights. The factory tour took place in Boston in one afternoon. The company paid all expenses.
In July 2009 FLIR’s finance department flagged the reimbursement request for the watches. Mr. Timms claimed he had made a mistake, falsely stating that the total cost should have been $1,900 rather than the total submitted. Mr. Ramahi then secured a fabricated invoice which Mr. Timms submitted to the finance department. He also told the finance department that each watch cost about $377. Mr. Timms subsequently arranged for a firm agent to cover-up the true costs when questioned by the finance department.
Messrs. Ramahi and Timms also claimed that cost for the “world tour” was a mistake. The finance department was told that the Ministry had used the firm travel agent to book their own travel which was mistakenly billed to FLIR. Mr. Timms submitted a false invoice to the finance department.
Following the inspection, the Ministry told FLIR to ship the thermal binoculars. Later the Ministry ordered additional binoculars.
Throughout this process, FLIR had a code of conduct which prohibited firm employees from violating the FCPA. The policy required that all information be accurately recorded. Messrs. Ramahi and Timms had received FCPA training prior to the events involved here.
The Order alleges violations of Exchange Act Sections 30A, 13(b)(2)(A) and 13(b)(5). Each Respondent consented to the entry of a cease and desist order based on the Sections cited in the Order. Mr. Timms agreed to pay a civil money penalty of $50,000. Mr. Ramahi will pay a penalty of $20,000.