Marubeni Gets Hit Again For FCPA Violations

In a courtroom in New Haven, Connecticut, on March 19, 2014, Marubeni Corporation (Marubeni), a storied Japanese trading company headquartered in Tokyo, pleaded guilty to an eight-count criminal information charging Marubeni with one count of conspiring to violate the anti-bribery provisions of the Foreign Corrupt Practices Act (FCPA) and seven counts of violating the FCPA.1 The FCPA violations arise from a bribery scheme involving Indonesian officials and a contract to build a major power plant in Indonesia. The criminal fine was $88 million, which was $25 million above the typical low end of the U.S. Sentencing Guideline range applied in many of these cases.2

Marubeni has now become one of less than a handful of companies in history to be charged with FCPA violations on more than one occasion.3 Indeed, Marubeni entered into a Deferred Prosecution Agreement (DPA) with the Department of Justice (DOJ) in January 2012 to resolve an investigation into Marubeni's involvement with the Bonny Island bribery scandal in Nigeria, which included a monetary penalty of $54.6 million.4 Moreover, and in some ways more importantly, Marubeni became one of the rare parent corporations to enter a guilty plea for violating the FCPA's anti-bribery provisions, which carries with it the greater possibility of significant collateral consequences such as suspension and debarment.5

DOJ SENDS A MESSAGE

The DOJ's press release sought to explain why Marubeni was forced both (1) to plead guilty and (2) to pay such an enhanced fine when other companies have not had to do so:

The plea agreement cites Marubeni's decision not to cooperate with the department's investigation when given the opportunity to do so, its lack of an effective compliance and ethics program at the time of the offense, its failure to properly remediate and the lack of its voluntary disclosure of the conduct as some of the factors considered by the department in reaching an appropriate resolution.6

Underscoring this point, acting Assistant Attorney General Mythili Raman announced, "The company refused to play by the rules, then refused to cooperate with the government's investigation. Now Marubeni faces the consequences for its crooked business practices in Indonesia."7

An examination of the facts underlying the charges, the jurisdictional basis for the charges, and the status of the broader investigation, highlights the important lessons to be learned from this case, and helps explain the message the DOJ is sending through Marubeni's guilty plea and fine.

MARUBENI

Marubeni is a Japanese company with more than 100 years of history to its name. Today it has more than 24,000 employees, and operates in more than 70 countries.8 It is involved in a broad range of business sectors, including importing and exporting, transactions in the Japanese market related to food products, textiles, chemicals, and metals and mineral resources, among others. Marubeni is also involved in power projects and infrastructure, plants and industrial machinery, and real estate development.

THE FACTS UNDERLYING THE CHARGES

The Tarahan Project

According to the court documents, in 2002, Marubeni was working with Alstom, S.A., a French company in the business of providing power generation and transportation-related services around the world, including in Indonesia.9 Marubeni and Alstom, and certain Alstom subsidiaries, including a power company in Connecticut, were pursuing a contract to build a major power plant in Indonesia.10 The project, known as the Tarahan Project, "was a project to provide power-related services to the citizens of Indonesia that was bid and contracted through Indonesia's state-owned and state-controlled electricity company, Perusahaan Listrik Negara (PLN), valued at roughly $118 million."11 During the scheme, Marubeni and Alstom retained two consultants whose "primary purpose was not to provide legitimate consulting services to Marubeni, [Alstom], and [Alstom's] subsidiaries but was instead to pay bribes to Indonesian officials who had the ability to influence the award of the Tarahan Project contract."12 Two PLN officials are mentioned in the charging documents, along with another official identified as a "Member of Parliament in Indonesia [who] had influence over the award of contracts by PLN, including on the Tarahan Project."13

The Details of the Alleged Conspiracy

According to the DOJ, the conspiracy began in 2002.14 The criminal information details meetings and email exchanges evidencing the conspiracy, including;

A meeting between employees of both Marubeni and an Alstom subsidiary about the Tarahan Project in Connecticut during the summer of 2002.15 Email exchanges in August 2002 between Alstom employees referring to the two PLN officials and Member of Parliament, including, for example, an email stating, "[W]e are working with [Official 2] and [Official 3] in PLN on our 'competition', nevertheless, we would need a stronger push now."16 An email exchange in which an Alstom employee emailed a Marubeni employee mentioning "the arrangement with [Official 1]."17 Consultants A and B

In late 2002, Marubeni and Alstom retained Consultant A, "agreeing to pay Consultant A three percent of the Tarahan Project contract value as a commission."18 In a December 2002 email exchange, Alstom employees critique Consultant A's value and conclude, "[b]asically, his function is more or less similar to [a] cashier which I feel we pay too much."19 A little more than a month later, a Marubeni employee emailed an Alstom employee, stating: "We would like to ask [Consultant A] to force PLN to issue below clarification for further discount."20

Apparently, by the end of summer 2003, problems between Consultant A and the PLN officials were starting to surface. According to the criminal information, Consultant A had a meeting with an Alstom employee in which the consultant indicated that "members of the PLN evaluation committee were unhappy with the amount of money they were receiving and that Consultant A needed to pay additional money to members of the...