John Joseph O’Shea was the general manager of a Texas business unit of ABB Inc. The Texas business unit’s primary business was to provide products and services to electrical utilities, many of them foreign state-owned utilities, for network management in power generation, transmission and distribution.
Mexican Company X was a Mexican company headquartered in Mexico City, Mexico. The principal business of Mexican Company X was to be a sales representative for foreign and domestic companies doing business with Mexican government agencies.
The Texas Business unit managed by O’Shea and Mexican Company X entered into multiple commission-based representation agreements in which the Texas business unit agreed to pay Mexican Company X a percentage of the revenue generated from business with Mexican governmental utilities, including Comision Federal de Electricidad (CFE). The Texas business unit received multiple contracts with CFE for goods and services related to CFE’s network while using the Mexican company as its sales representative. Fernando Maya Basurto, 47, of Mexico City, was a principal of the Mexican company, performing work for the Texas business unit on its contracts with CFE.
In December 1997, CFE awarded the Texas business unit a contract, known as the SITRACEN contract, to significantly upgrade the backbone of Mexico’s electrical network system. The SITRACEN contract generated more than $44 million dollars in revenue for the Texas business unit. Then, in approximately October 2003, CFE awarded the Texas business unit a multi-year contract for maintenance and upgrades of the SITRACEN contract, referred to as the Evergreen contract. For the Evergreen contract, the indictment alleges that O’Shea, Basurto, officials at CFE and others agreed that approximately 10 percent of the revenue the Texas business unit received from CFE would be returned to CFE officials as corrupt payments. The Evergreen contract generated more than $37 million in revenue for the Texas business unit. It was also agreed that O’Shea would receive approximately one percent of the contract revenue as kickback payments.
O’Shea, Basurto, and others allegedly used false invoices from Mexican companies as a basis to make international wire transfers that purported to be legitimate payments for “technical services” and “maintenance support services.” These were actually corrupt payments and the companies did not do any work for the Texas business unit. O’Shea, Basurto and others also made additional “commission” payments to Basurto and his family that were further transferred to CFE officials. In connection with the Evergreen contract, O’Shea authorized more than $900,000 in corrupt payments to CFE officials before an internal investigation by ABB Inc.'s Swiss parent company stopped the transfers. The Swiss corporation then voluntarily disclosed the payments to the Department of Justice and U.S. Securities and Exchange Commission (SEC) and said it was fully cooperating with their investigations.
O’Shea, Basurto and others engaged in a cover up after O’Shea was terminated from the Texas business unit, which included fabricating documents that purported to be evidence of a legitimate business relationship between the Texas business unit and the Mexican companies that provided the false invoices. Basurto and O’Shea exchanged emails in which they discuss draft language for fake correspondence and a fake contract.
Basurto pleaded guilty on November 16, 2009 to a one-count Information in connection with the conspiracy. As part of the plea, he agreed to forfeit over $2 million to the United States government, and to provide further cooperation to prosecutors. The monetary forfeiture was deemed to be joint and several among the various co-conspirators. Sentencing was scheduled to occur thirty days after the conclusion of O'Shea's trial.
Final judgment in Basurto's case was entered on April 2, 2012. He was sentenced to time served after having spent 22 months in jail. The judgment also references the $2 million dollar forfeiture from the plea agreement. The court found that reasonable efforts to collect even the special assessment of $100 would likely be unsuccessful, so it found the assessment to be remitted.
