Enforcement Action

 

Docket or Case Number:    N/A

Court:    D. New Jersey

Initiation Date:    06/16/2017  Information

Prosecuting Agency:    US Department of Justice

Name of Prosecuting Attorneys:   

  • Jacob T. Elberg, Chief, Health Care & Government Fraud Unit
  • Laura N. Perkins, Assistant Chief, Fraud Section, Criminal Division
  • Nicholas Acker, Senior Trial Attorney, Fraud Section, Criminal Division

Assisting Agencies:    N/A

Type of Action:    DOJ Criminal Proceeding

Origin of the Proceeding:    Voluntary disclosure

Whistleblower:    Unknown

Case Status:    Resolved


Summary

Linde North America Inc. and Linde Gas North America LLC (collectively "Linde") were both private New Jersey companies involved in the industrial gases business. Both were subsidiaries of Linde AG, a public German company whose shares were traded on German stock exchanges. Linde AG was not implicated in the misconduct noted in this DOJ Pilot Program declination.

From approximately November 2006 to December 2009 Linde, through its subsidiary, Spectra Gases, Inc. ("Spectra Gases"), which it acquired in October 2006, made corrupt payments to high-level officials at the National High Technology Center ("NHTC"), a 100% state-owned and -controlled entity of the Republic of Georgia, as part of an agreement to purchase certain income-producing assets from the NHTC. Prior to the asset purchase and Linde's acquisition of Spectra Gases, three high-level executives of Spectra Gases, who continued to manage Spectra Gases for three years following Linde's acquisition, agreed to share the profits earned from the sale of boron gas with certain high-level officials at the NHTC and a third-party intermediary with close connections to the officials in return for the NHTC Officials' assistance in ensuring that Spectra Gases be the purchaser of previously mentioned assets. Two companies were created to help effectuate this corrupt scheme, Spectra Investors, LLC and Spectra Gases Georgia. Spectra Investors was co-owned by Spectra Gases and a company owned by the NHTC Officials, and the profits generated by the sale of the boron gas was split 25% to Spectra Gases and 75% to the NHTC Officials. In all, Spectra Gases (and later Linde after Spectra Gases was dissolved in January 2010) earned approximately $7,820,000 in profits from the arrangement.

When Linde discovered the misconduct, it immediately began an internal investigation and deposited $10 million due the Spectra Executives in a segregated account and withheld any further payments to companies owned or controlled by the NHTC Officials.

On June 16, 2017, the DOJ issued a declination letter pursuant to its Pilot Program to Linde. The agency's decision to decline to prosecute Linde was based on several factors: "(1) Linde's timely, voluntary self-disclosure of the matter; (2) the thorough, comprehensive and proactive investigation undertaken by Linde; (3) Linde's full cooperation in this matter (including its provision of all known relevant facts about the individuals involved in or responsible for the misconduct) and its agreement to continue to cooperate in any ongoing investigations of individuals; (4) Linde's agreement to disgorge the profits Spectra Gases and it received from the improper conduct and forfeit to the United States the corrupt proceeds it has withheld from companies owned or controlled by the NHTC Officials; (5) the steps Linde has taken and continues to take to enhance its compliance program and its internal accounting controls; and (6) Linde's full remediation (including terminating and/or taking disciplinary action against the employees involved in the misconduct, including the Spectra Executives and lower-level employees involved in the misconduct; terminating the agreement with the "management company" owned by the NHTC Officials; withholding 'Earn-Out' payments attributable to the corrupt conduct from the Spectra Executives; and withholding payments due to companies owned or controlled by the NHTC Officials)." In all, Linde disgorged $1,430,000 in profits it had received, $6,390,000 in profits earned by Spectra Gases, and forfeited $3,415,000 in payments owed to the NHTC Officials' companies.

Country(ies) involved:    Georgia

Sanction to Bribe Ratio:    $11,235,000 / $23,460,000 = 47.89 %

Sanction to Revenue Ratio:    N/A

Sanction to Profit Ratio:    $11,235,000 / $7,820,000 = 143.67 %

Number of Related Enforcement Actions (Including This Enforcement Action):    1

Country(ies) involved:    Georgia

Total $ Bribery Payments:    $23,460,000

Total $ Revenue Generated from Bribery:    N/A

Total $ Profit Earned or Expenses Avoided from Bribery:    $7,820,000

Total $ Monetary Sanctions:    $11,235,000

Sanction to Bribe Ratio:    $11,235,000 / $23,460,000 = (47.89 %)

Sanction to Revenue Ratio:    N/A

Sanction to Profit Ratio:    $11,235,000 / $7,820,000 = (143.67 %)

Name:    Linde North America Inc.

Place of Incorporation:    United States

HQ Country(ies):    United States

Entity Type:    Subsidiary

FCPA Claims:    Anti-Bribery, Primary, Domestic Concern (15 U.S.C. § 78dd-2)

Related Claims:    N/A

Statutory Basis for FCPA Jurisdiction:    N/A


Name:    Linde Gas North America LLC

Place of Incorporation:    United States

HQ Country(ies):    United States

Entity Type:    Subsidiary

FCPA Claims:    Anti-Bribery, Primary, Domestic Concern (15 U.S.C. § 78dd-2)

Related Claims:    N/A

Statutory Basis for FCPA Jurisdiction:    Domestic Concern

Period of Bribery:   2006 - 2009

Total Bribery Payments:    $23,460,000

Total Revenue Generated from Bribery:    N/A

Total Profit Earned or Expenses Avoided from Bribery:    $7,820,000

Country(ies) involved:    Georgia

Officials Potentially Influenced (Name; Title; Organization): 

  • Name N/A, High-level officials; National High Technology Center ("NHTC")

Defendant-Related Entities Involved in the Misconduct:    Spectra Gases Georgia - Subsidiary ; Spectra Investors, LLC - Subsidiary

Third-Party Intermediary:   

  • Unnamed company owned by NHTC Officials , Shell Company

Type of Bribe:   Money

Cash, Wire or Check:    No Available

Purpose of Bribe:    Obtain/retain business

TRANSACTION OVERVIEW
Bribery in Georgia

Period of Bribery:   2006 – 2009

Total Bribery Payments:    $23,460,000

Total Revenue Generated from Bribery:    N/A

Total Profit Earned or Expenses Avoided from Bribery:    $7,820,000

Country(ies) involved:    Georgia

Officials Potentially Influenced (Name; Title; Organization):  

  • Name N/A, High-level officials; National High Technology Center ("NHTC");

Defendant-Related Entities Involved in the Misconduct:    Spectra Gases Georgia - Subsidiary ; Spectra Investors, LLC - Subsidiary

Third Party Intermediary:    Unnamed company owned by NHTC Officials - Shell Company

Type of Bribe:   Money

Cash, Wire or Check:    No Available

Purpose of Bribe:    Obtain/retain business

Misconduct by Subsidiary?  Yes


Parent(s):   Linde AG; Linde North America Inc.; Linde Gas North America LLC; Spectra Gases, Inc.; Spectra Investors, LLC

Subsidiary:  Linde North America Inc.

  • Percentage of Ownership:    N/A
  • Direct or Indirect Ownership:    Unknown
  • Parent Had Knowledge of Sub’s Bribery?:    No
  • Subsidiary Expressly Alleged to Be Parent's Agent:    No
  • Parent Liable for Sub Misconduct?:    No

Subsidiary:  Linde Gas North America LLC

  • Percentage of Ownership:    N/A
  • Direct or Indirect Ownership:    Unknown
  • Parent Had Knowledge of Sub’s Bribery?:    No
  • Subsidiary Expressly Alleged to Be Parent's Agent:    No
  • Parent Liable for Sub Misconduct?:    No

Subsidiary:  Spectra Gases, Inc.

  • Percentage of Ownership:    N/A
  • Direct or Indirect Ownership:    Unknown
  • Parent Had Knowledge of Sub’s Bribery?:    No
  • Subsidiary Expressly Alleged to Be Parent's Agent:    No
  • Parent Liable for Sub Misconduct?:    No

Subsidiary:  Spectra Gases, Inc.

  • Percentage of Ownership:    N/A
  • Direct or Indirect Ownership:    Unknown
  • Parent Had Knowledge of Sub’s Bribery?:    No
  • Subsidiary Expressly Alleged to Be Parent's Agent:    No
  • Parent Liable for Sub Misconduct?:    No

Subsidiary:  Spectra Investors, LLC

  • Percentage of Ownership:    49.00 %
  • Direct or Indirect Ownership:    Direct
  • Parent Had Knowledge of Sub’s Bribery?:    No
  • Subsidiary Expressly Alleged to Be Parent's Agent:    No
  • Parent Liable for Sub Misconduct?:    No

Subsidiary:  Spectra Gases Georgia

  • Percentage of Ownership:    100.00 %
  • Direct or Indirect Ownership:    Direct
  • Parent Had Knowledge of Sub’s Bribery?:    No
  • Subsidiary Expressly Alleged to Be Parent's Agent:    No
  • Parent Liable for Sub Misconduct?:    No

M&A Negotiated or Completed During Misconduct, Investigation, or Resolution?     No

N/A

Mitigating Factors Referenced by the Government (Company Defendants):

Defendant Self-Report Cooperation Voluntary Remedial Measures Misconduct Limited to Low Level Individuals Other factors
Linde Gas North America LLC    
Linde North America Inc.    

Aggravating Factors Referenced by the Government (Company Defendants):

Defendant Insufficient Cooperation Insufficient Remedial Measures
Linde Gas North America LLC    
Linde North America Inc.    

Total Monetary Sanctions for the Action:    $11,235,000

Case Status:    Resolved


Disposition:    Declination with Disgorgement

Date of Disposition:    06/16/2017

Linde North America Inc.

—  Total Monetary Sanctions for Defendant:    $11,235,000

—  Organizational Probation:    None

—  Compliance Obligation:    No

—  Reporting Obligation:    No Applicable

—  Admission of Guilt/Acceptance of Responsibility:    Yes


Linde Gas North America LLC

—  Total Monetary Sanctions for Defendant:    $11,235,000

—  Organizational Probation:    None

—  Compliance Obligation:    No

—  Reporting Obligation:    No Applicable

—  Admission of Guilt/Acceptance of Responsibility:    Yes

    Note: This sanction may have been imposed jointly and severally on multiple defendants, or it may resolve claims against more than one defendant in this proceeding or related proceedings. You should review the case summaries and resolution documents for all related cases to better understand how sanctions were levied against the defendants.

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