International Systems & Controls Corporation ("ISC"), a Delaware corporation with its principal place of business in Houston, Texas, was engaged in providing services and products for the development of energy, agricultural and forestry resources, and the processing, storage, and handling of natural resource and agricultural products. The common stock of ISC is registered with the Commission pursuant to Section 12(b) (15 U.S.C. 781(b)) of the Exchange Act and traded on the London and Amsterdam stock exchanges. ISC's common stock was also traded on the Pacific and American Stock Exchanges. Thus, ISC was an issuer pursuant to the FCPA.
J. Thomas Kenneally, who resided in Houston, Texas, was Chairman of the Board of Directors of ICS until March, 1979, and was Chief Executive Officer of ISC until January, 1979. At the time of the action, Kenneally was still a director of ISC. He also owned and/or controlled approximately 42% of the voting stock of ISC.
Herman M. Frietsch, who resided in Houston, Texas, was a Senior Vice President of ISC.
Raymond G. Hofker, who resided in Houston, Texas, was a Vice President and the General Counsel of ISC.
Albert W. Angulo, who resided in Houston, Texas, was the Treasurer of ISC. In spring 1979, Angulo became Executive Vice President of ISC'S former subsidiary Black Sivalls & Bryson, Inc.
Harlan M. Stein, who resided in Houston, Texas, was the President of ISC's Engineering Group.
During the period from approximately 1970 to 1979, in connection with the procurement of a variety of contracts, ISC, directly or through one or more of its subsidiaries, paid approximately $23 million to senior government officials, associates of senior government officials, persons it believed to be government officials and associates of government officials, and members of ruling families, in a variety of countries, including Saudi Arabia, Iran, Algeria, Ivory Coast, Nicaragua, and Chile. ISC also made approximately $10 million of outstanding commitments for payments that went unpaid. According to the charging documents, all payments and commitments were made in connection with approximately $750 million of business obtained by ISC during the period 1970 to date. The actual value of contracts associated with the bribery payments appears to be much higher, although it is unclear whether some of the contracts were won through legitimate means or whether all of the revenue owed under these contracts was actually paid.
On July 9, 1979, the SEC filed a five count complaint againt ISC, Kenneally, Frietsch, Hofker, Angulo, and Stein alleging various Securities Act violations as well as violations of the Books & Records and Internal Controls provisions of the FCPA. On December 17, 1979, the SEC announced that it had reached Consent Agreements with ISC, Kenneally, and Frietsch. All three were enjoined from violating the FCPA and the Securities Act. ISC agreed to appoint an internal compliance committee, and Kenneally and Frietsch agreed to be employed as an officer or director of a publicly held company only if that company has a committee with duties and functions similar to those required of the ISC. It is unclear what the resolution of the case, if any, against Hofker, Angulo, and Stein was.
