Louis Berger Settles with U.S. on Foreign Bribe Violations
Global design firm Louis Berger and the U.S. Justice Dept. announced a settlement on July 17 of bribery charges against former senior managers in Asia that includes a three-year deferred prosecution of the firm, suspending prosecution of any criminal charges and a $17.1-million fine.
The company said it found and reported the violations of the Foreign Corrupt Practices Act, involving bribes of foreign officials to win contracts, as part of an internal probe of fraudulent billing on government contracts abroad that occurred between 1998 and 2010.
Former Berger CEO Derish Wolff, 79, who pleaded guilty last December to inflating overhead rates for work on cost-reimbursable U.S. Agency for International Development contracts, was sentenced in May to 12 months of home confinement and a $4.5-million fine.
The firm signed a deferred-prosecution agreement with the U.S. Attorney in that case as well, in exchange for an estimated $69-million settlement.
Louis Berger said that as part of that settlement, it agreed to conduct internal investigations into corporate-wide activities overseas in 2010 and prior.
Justice said that two former senior vice presidents, Richard Hirsch, 61, and James McClung, 59, each pleaded guilty to two counts of violating the law. Hirsch had been responsible for the company’s operations in Indonesia, Thailand, the Philippines and Vietnam. McClung had run company operations in India and Vietnam. They both were terminated in 2012.
According to a spokeswoman, Hirsch had been employed since 1985 and McClung since 1981.
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Justice said Hirsch resides in the Philppines and McClung in Dubai, United Arab Emirates. Their sentencing hearings in the U.S. are scheduled for Nov. 5.
“The DOJ has acknowledged the extensive global reforms undertaken at Louis Berger since 2010,” said Nicholas J. Masucci, Louis Berger chairman. "Today’s settlement is the critical final milestone in our reform, as it was important for us to take responsibility for the historic actions of former managers and close the chapter on the company’s pre-2010 era.”
In total, the company said it "self-identified and self-reported findings of misconduct in Vietnam, Indonesia, India and Kuwait between 1998 and 2010 totaling $3.9 million in bribes."
The government said that to conceal the payments, "the co-conspirators made payments under the guise of 'commitment fees,' 'counterpart per diems' and other payments to third-party vendors."
Since 2010, Louis Berger says it has undergone "a massive $25-million-plus reform effort that resulted in new internal controls, new policies and procedures, and comprehensive systems investments, including a new global accounting system." Louis Berger also added new financial managers in Asia and the Middle East and expanded ethics programs globally, it says.
Under its new agreement, Louis Berger will work with a government-appointed monitor for three years on ethics-program compliance.
“Transparency and accountability are the hallmarks of a sustainable business, and we are a much more efficient, responsible and transparent company today than we were five years ago,” said Masucci.
