Ferrari, Yacht Payoffs Alleged As California Foreign-Bribe Trial Begins
Two executives at a California maker of power-line equipment went on trial today in Los Angeles, accused of bribing officials at a Mexican utility with a car and a boat to win orders.
Lindsey Manufacturing Co. President Keith Lindsey and Chief Financial Officer Steve Lee are charged with violating the U.S. Foreign Corrupt Practices Act by using a Mexican intermediary to pay off the officials, including buying one of them a $1.8 million yacht and a $300,000 Ferrari.
Prosecutors said the closely held Azusa, California-based company, which is also a defendant, paid Enrique Aguilar, an independent Mexican sales representative and his company inflated commissions to cover more than $5 million in bribes and obtain orders from Comision Federal de Electricidad, a power company.
“They knew that in order to get business with CFE, they had to pay bribes,” Assistant U.S. Attorney Douglas Miller said today in his opening statement in Los Angeles federal court. One of the Mexican officials could pick up the Ferrari at the Beverly Hills dealer in 2007 “without signing a single piece of paper,” Miller said.
Enrique Aguilar’s wife, Angela Aguilar, was arrested last year in Houston and charged with money laundering for setting up a U.S. brokerage account through which the payments were made. She is being tried with the Lindsey executives. Her husband was also charged. A Mexican citizen, he isn’t in the U.S.
Lindsey Manufacturing makes emergency towers that are used to replace permanent electricity towers that are downed or damaged and the company’s sales in Mexico are prompted by natural disasters such as hurricanes and not by bribery, Jan Handzlik, a lawyer for the company and its owner, Keith Lindsey, told jurors in his opening statement.
“The implication that the contracts were riddled with corruption and stimulated by bribes is belied by the facts,” Handzlik said. “Major purchases were stimulated by a need for a vital product.”
Handzlik said that Enrique Aguilar’s business represented other companies as well, and that Lindsey Manufacturing had no control over what happened with the fees they paid for his services, which were comingled with fees he received from his other clients.
FCPA Case Law
A conviction may prompt the U.S. Justice Department to charge more people under the FCPA, said Mary Carter Andrues, a criminal-defense lawyer at Arent Fox LLP in Los Angeles and a former federal prosecutor. “There is not a lot of defined case law on the meaning of the statute,” Andrues said.
Last year, a Hollywood couple was sentenced to six months in prison after they were convicted of paying a Thai official $1.8 million in bribes for a contract to run the Bangkok International Film Festival. The maximum penalty for an FCPA violation is five years in prison. Money laundering carries a maximum 20-year term.
Tyson Foods Inc. (TSN), the nation’s largest meat processor, agreed in February to pay $5.2 million to settle U.S. allegations that one of its units bribed officials in Mexico to certify chicken products for export.
International Business Machines Corp. (IBM) last month agreed to pay $10 million to settle regulators’ accusations that it gave cash and gifts to Chinese and South Korean officials in connection with about $54 million in government contracts. IBM didn’t admit or deny wrongdoing.
The case is U.S. v. Aguilar, 10-1031, U.S. District Court, Central District of California (Los Angeles).
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