Saturday, January 11, 2014

Global Impact: Two Former CEOs of BVI Oil, Gas Company Charged Under FCPA

According to The Latin American Tribune, two former CEOs of PetroTiger Ltd., a British Virgin Islands oil and gas company with operations in Colombia and offices in New Jersey, have been charged for their alleged participation in a scheme to pay bribes to foreign government officials in violation of the Foreign Corrupt Practices Act (FCPA), to defraud PetroTiger, and to launder proceeds of their crimes.

Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division, US Attorney Paul J. Fishman of the District of New Jersey and Special Agent in Charge Aaron T. Ford of the FBI’s Newark Division made the announcement after the charges and guilty plea were unsealed on Friday (January 10).

“Bribery of public officials, whether at home or abroad, corrupts business opportunity and undermines trust in government,” said US Attorney Fishman. “The under-the-table deals alleged in today’s charges are not an acceptable way of doing business.”

COMMENT: According to the charges, former co-CEOs of PetroTiger Joseph Sigelman, 42, formerly of Miami and the Philippines, and Knut Hammarskjold, 42, of Greenville, SC; former general counsel Gregory Weisman, 42, of Moorestown, NJ, and others allegedly paid bribes to an official in Colombia in exchange for the official’s assistance in securing approval for an oil services contract worth roughly $39 million.

Hammarskjold was arrested November 20, 2013, at Newark Liberty International Airport. Sigelman was arrested on January 3, 2014, in the Philippines and appeared Monday afternoon (ChST) in Guam before US Magistrate Judge Joaquin VE Manibusan III. Sigelman will have an initial appearance in New Jersey federal court on a date to be determined. Sigelman and Hammarskjold were charged by sealed complaints filed in the District of New Jersey on Nov. 8, 2013, with conspiracy to commit wire fraud, conspiracy to violate the FCPA, conspiracy to launder money and substantive violations of the FCPA.

Weisman pleaded guilty on November 8, 2013, to a criminal information charging one count of conspiracy to violate the FCPA and to commit wire fraud. The charges and guilty plea were also unsealed on Monday (January 6).

The charges allege that the defendants made three separate payments from PetroTiger’s bank account in the US to the their corporate account in Colombia to secure approval from Colombia’s state-owned and state-controlled oil company for a lucrative oil services contract in the country. According to the charges, to conceal the bribes, the defendants first attempted to make the payments to a bank account in the name of one of the defendants’ wife, for purported consulting services she did not perform. The charges allege that Sigelman and Hammarskjold provided Weisman invoices including her bank account information. The defendants made the payments directly to the bank account in in Colombia when attempts to transfer the money to his wife’s account failed.

In addition, court documents allege that the defendants attempted to secure kickback payments at the expense of PetroTiger’s board members. According to the criminal charges, the defendants were negotiating an acquisition of another company on behalf of PetroTiger, including on behalf of several members of PetroTiger’s board of directors who were helping to fund the acquisition.

In exchange for negotiating a higher purchase price for the acquisition, two of the owners of the target company agreed to kick back to the defendants a portion of the increased purchase price.

According to the charges, to conceal the kickback payments, the defendants had the payments deposited into Sigelman’s bank account in the Philippines, created a “side letter” to falsely justify the payments, and used the code name “Manila Split” to refer to the payments amongst themselves.

The conspiracy to commit wire fraud count carries a maximum penalty of 20 years in prison and a fine of the greater of $250,000 or twice the value gained or lost. The conspiracy to commit violations of the FCPA count carries a maximum penalty of five years in prison and a fine of the greater of $250,000 or twice the value gained or lost. The FCPA counts each carry a maximum penalty of five years in prison and a fine of the greater of $250,000 or twice the value gained or lost. The conspiracy to commit money laundering count carries a maximum penalty of 20 years in prison and a fine of the greater of $500,000 or twice the value of the property involved in the transaction.

The charges contained in the complaint are merely accusations, and the defendants are presumed innocent unless and until proven guilty.

The department has worked closely with and has received significant assistance from its law enforcement counterparts in the Republic of Colombia and greatly appreciates their assistance in this matter. The department also thanks the Republic of the Philippines, including the Bureau of Immigration, for its assistance in this matter.

The case is being investigated by the Newark Division of the FBI and prosecuted by Assistant Chief Daniel S. Kahn of the Criminal Division’s Fraud Section and Assistant US Attorney Aaron Mendelsohn of the District of New Jersey.