FOCUS ON ENFORCEMENT


More FCPA For Tenaris Tube

 

So much for promising not to do it again.  In 2011, Argentine seamless tube maker Tenaris entered into a Non-Prosecution Agreement with the Department of Justice, and the first ever Deferred Prosecution Agreement with the SEC, because of bribery in Uzbekistan. Under the terms of that DPA, the firm paid $5.4 million in disgorgement and prejudgment interest and agreed to pay a $3.5 million criminal penalty in a Non-Prosecution Agreement with the Justice Department

June 2, the SEC announced that Tenaris will pay more than $78 million to resolve charges that it again violated the Foreign Corrupt Practices Act (FCPA) in connection with a bribery scheme involving its Brazilian subsidiary.  Justice closed a related inquiry without taking action.

The order finds that between 2008 and 2013, approximately $10.4 million in bribes was paid to a Brazilian government official in connection with the bidding process at Petrobras. The bribes were funded on behalf of Tenaris’ Brazilian subsidiary by companies affiliated with Tenaris’ controlling shareholder, Techint Group.  During this period Petrobras purchased over $1 billion in goods and services from Tenaris and affiliates.

"Tenaris failed for many years to implement sufficient internal accounting controls throughout its business operations despite known corruptions risks," said Charles Cain, Chief of the SEC Enforcement Division’s FCPA Unit. "This failure created the environment in which bribes were facilitated through a constellation of companies associated with its controlling shareholder."

Tenaris consented to the SEC’s order without admitting or denying the findings that it violated the anti-bribery, books and records, and internal accounting controls provisions of the Securities Exchange Act of 1934 and agreed to pay more than $78 million in combined disgorgement, prejudgment interest, and civil penalties. The company also agreed to “comply with undertakings for a two-year period related to its ongoing remedial efforts.”

Aerospace Subcontractor Barred for ITAR Violations

BIS has sanctioned a North Carolina prototyping contractor for BAE Systems, Ametek and other precision manufacturers, for illegally exporting satellite, rocket, and defense technology to China.  

A Temporary Denial Order was issued June 7, giving notice to persons and companies in the United States and abroad that they should cease dealing with Quicksilver, Rapid Cut, and US Prototype in export or reexport transactions involving items, including technology or software, subject to the EAR. 

Rapid Cut and affiliates received export-controlled drawings from their domestic customers to 3-D-print requested items.  Despite instructions to comply with export regulations, and without their customers’ advance consent or knowledge, these drawings were sent to shops in China to 3-D-print the items.  The items were then imported into the United States to be provided to the ordering customers.  A Rapid Cut customer reported the offenses when packaging materials identified their origin as Chinese.

Warhead Contractor Guilty 

The former owner and CEO of Tungsten Heavy Powder & Parts (THPP) pleaded guilty June 9 to conspiring to commit offenses against the United States, including the unlawful exportation of defense articles on the U.S. Munitions List without first obtaining a valid license or approval from the U.S. Department of State, in violation of federal export laws pursuant to the International Traffic in Arms Regulations (ITAR).

On several occasions Joe Sery exported technical drawings from the United States via email messages to his brother in India and the People’s Republic of China.  An arrest warrant has been issued for the brother, Dror Sery. He is believed to be residing in Israel.

THPP is a San Diego-based company that provides tungsten fragments, sub-assemblies, and other weapon grade components for United States military contracts. Some of THPP’s projects included the Hypersonic ARRW Rapid Response Weapon, a 155-millimeter Bi-Modal Warhead, a R9E Hellfire Warhead, and an 81-millimeter mortar cowling cone.

In April 2021 THP paid a $5.6 million fine to settle false claims act violations relating to US-funded contracts for the Government of Israel.  THP falsely certified that tungsten sourced in China had been sourced, instead, in the United States. THP also falsely certified that manufacturing occurred in the United States, when in fact THP contracted with a Mexican maquiladora.

Razorback EE Prof Sentenced; Hid Patents in China

 

A former University of Arkansas professor of Electrical Engineering with 30 years tenure was sentenced June 16 to a year in prison plus one year of supervised release for making a false statement to the FBI about the existence of patents for his inventions in the People’s Republic of China (PRC).

 

According to court documents, Simon Saw-Teong Ang, 64, of Fayetteville, filed 24 patents in the PRC which bear his name or Chinese birth name. The University of Arkansas, where Ang worked as a professor, required individuals such as Ang to promptly furnish to the university “full and complete” disclosures of inventions, and university policy provided that it, not individual inventors, would own all inventions created by those subject to the policy. 

 

Despite this requirement, Ang did not disclose his Chinese patents to the university and, when interviewed by an FBI agent, lied about his involvement in the inventions. In addition, Ang also received numerous talent awards from the PRC government, which he did not list on the university’s annual conflict of interest disclosure forms. 

 

A full professor until his dismissal, Ang taught at the University since 1988.  Prior to that, he spent seven years with Texas Instruments as a section chief in IC power systems development.

 

SEC Calls Ericsson on ISIS Financing

 

Ericsson announced June 9 that it had been notified that the SEC has “opened an investigation concerning the matters described in the company’s 2019 Iraq investigation report, adding “too early to determine or predict the outcome of the investigation, but Ericsson is cooperating fully with the SEC.”

The announcement follows the March 2 disclosure that Justice intended to find it in violation of its 2019 Deferred Prosecution Agreement (DPA) after the International Consortium of Investigative Journalists published “The Ericsson List,” documenting the firm’s extensive dealings with the terrorist group Islamic State in Iraq between 2011 and 2019. 

In 2013 Ericsson disclosed that it was cooperating with U.S. authorities investigating bribery allegations elsewhere, resulting in a $1 billion bribery settlement in 2019. That settlement contained no mention of Iraq. Shareholders voted March 29 to hold CEO Börje Ekholm and the Board personally liable for the scandal.

Thermo Fisher’s Russia Distributor Charged 

 

The New Hampshire-based, Russian distributor for the world’s largest manufacturer of analytical instruments has been charged with regards to equipment it shipped to Russia and Ukraine from 2016 to 2019.

 

The charges against Intertech Corp. of Atkinson, filed June 6 by the U.S. Attorney in Concord Federal District Court, describe scientific instruments, including laser assemblies falsely identified as intended for use in aquariums, welding systems and multimedia, and reported at artificially low values.

 

A search warrant unsealed in 2021 questioned 414 shipments worth $60 million sent to Intertech’s Russian affiliate, OOO Intertech Instruments, including four shipments totaling $40 million sent to the FSB, the Russian State Security Agency.   That warrant included taped phone conversations where executives allegedly discussed a plan to review records to avoid sanctions.

 

“After receiving the Is Informed Letter, Intertech Corporation changed its business practices to circumvent and evade the requirements set forth by the Is Informed Letter,” according to the 2021 warrant.

 

In March 2021, BIS added OOO Intertech Instruments to the entity list, which restricts exports from companies at risk of supplying nuclear, chemical and biological weapons programs because of “proliferation activities in support of Russia’s weapons of mass destruction programs.” 

 

June 24, 2002 BIS added Intertech Rus LLC and Laboratory Systems and Technologies LTD for  acting as agents, fronts or shell companies for OOO Intertech Instruments.   

 

Northrop Engineer Pleads Guilty to Spying for China

 

A retired U.S. Army helicopter pilot-turned-civilian-contractor pleaded guilty in federal court to acting as an unregistered agent of China and providing aviation-related information from his defense-contractor employers. He also pleaded guilty to making related false statements during national security background checks.

 

Shapour Moinian, 67, of San Diego, served 23 years in the Army, and then worked for defense contractors and the Department of Defense on "various projects, including a high-altitude, unmanned surveillance aircraft used by the U.S. military and various allies," according to the U.S. Attorney's Office.  His roles included “F-35/F-18 System Safety Engineering at Northrop Grumman Corporation,” according to Radaris.

 

According to his plea agreement, in 2017 while working for Northrop Grumman, Moinian was contacted by an individual in China who claimed to be working for a technical recruiting company. This person offered Moinian the opportunity to consult for the aviation industry in China.  He then was issued a cell phone and other equipment to communicate with them and aid in the electronic transfer of materials and information. 

 

In early 2018, Moinian made several internet searches regarding "sabotage vs. spying," "espionage vs. sabotage" and "selling military information to foreign country is considered as," according to the complaint filed last Fall in San Diego federal court.

 

Sentencing is scheduled for Aug. 29, where Moinian faces a maximum penalty of 10 years in prison and fine up to $250,000 for acting as an agent of a foreign government, and up to five years and a $250,000 fine for the false statements count. 

 

 

Volume / Issue July 2022 - Vol 36, Num 7


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