Enforcement Action

 

Docket or Case Number:    04-cv-01141

Court:    District of Columbia

Initiation Date:    01/04/2004  Information

Prosecuting Agency:    US Securities and Exchange Commission

Name of Prosecuting Attorneys:   

  • Paul R. Berger, SEC Headquarters
  • Robert B. Kaplan, SEC Headquarters
  • James J. Bresnicky, SEC Headquarters
  • James L. Buck, SEC Headquarters
  • Samuel J. Draddy, SEC Headquarters

Assisting Agencies:    N/A

Type of Action:    SEC Federal Court Proceeding

Origin of the Proceeding:    Voluntary disclosure

Whistleblower:    Unknown

Case Status:    Resolved


Summary

ABB Ltd. ("ABB"), headquartered in Zurich, Switzerland, was a global provider of power and automation technologies.

From at least 1998 through 2001, ABB Vetco Gray Inc., and ABB Vetco Gray UK Ltd. (ABB's U.S. and UK subsidiaries) provided over $1.1 million in illicit payments and gifts to government officials in Nigeria, Angola, and Kazakhstan. In Nigeria, illicit payments and gifts were made to gain access to non-public bid tender information, and to secure favorable consideration on Vetco Gray Nigeria bids from the National Petroleum Investment Management Service ("NAPIMS"), the Nigerian state-owned agency responsible for overseeing Nigeria's investment in petroleum exploration and production. In Angola, ABB's U.S. and UK subsidiaries paid all the travel, meals, lodging and entertainment expenses of Sonangol engineers who had responsibility for the technical evaluation of bids submitted to Sonangol, in order to obtain and retain business with Sonangol. In Kazakhstan, ABB Kazakhstan Ltd. ("ABB KZ"), made payments to Kazakhstan companies owned by ABB KZ's former sales manager who was, at the time of the payments, a government official employed in Kazakhstan's state oil and gas companies. These payments were made for the purpose of obtaining or retaining Kazakhstan government business for ABB Vetco Gray Inc. and ABB KZ.

On July 2, 2004, the SEC filed a complaint against ABB, charging the company with violating the anti-bribery, books and records, and internal controls provisions of the FCPA. On November 30, 2004, ABB consented to the entry of a final judgment permanently enjoining the company from future violations of the FCPA. ABB was ordered to pay $5,501,157 in disgorgement, $414,248 in prejudgment interest, and a $10,500,000 civil penalty.

In a related action, on July 6, 2004, ABB Vetco Gray Inc., and ABB Vetco Gray UK Ltd both entered into plea agreements with the DOJ. Each company agreed to pay a $5,250,000 fine.

Country(ies) involved:    Angola, Kazakhstan, Nigeria

Sanction to Bribe Ratio:    $16,415,405 / $1,246,726 = 1316.68 %

Sanction to Revenue Ratio:    $16,415,405 / $210,865,857 = 7.78 %

Sanction to Profit Ratio:    $16,415,405 / $5,501,157 = 298.40 %

Number of Related Enforcement Actions (Including This Enforcement Action):    3

Country(ies) involved:    Angola, Kazakhstan, Nigeria

Total $ Bribery Payments:    $1,246,726

Total $ Revenue Generated from Bribery:    $228,371,728

Total $ Profit Earned or Expenses Avoided from Bribery:    $12,000,000

Total $ Monetary Sanctions:    $27,150,880

Sanction to Bribe Ratio:    $27,150,880 / $1,246,726 = (2177.77 %)

Sanction to Revenue Ratio:    $27,150,880 / $228,371,728 = (11.89 %)

Sanction to Profit Ratio:    $27,150,880 / $12,000,000 = (226.26 %)

Name:    ABB Ltd.

Place of Incorporation:    Switzerland

HQ Country(ies):    Switzerland

Entity Type:    Public Company

FCPA Claims:    Anti-Bribery, Primary, Issuer (15 U.S.C. § 78dd-1) ; Books & Records, Primary, Issuer (15 U.S.C. § 78m (b)(2)(A)) ; Internal Controls, Primary, Issuer (15 U.S.C. § 78m(b)(2)(B))

Related Claims:    N/A

Statutory Basis for FCPA Jurisdiction:    Issuer

Period of Bribery:   1998 - 2002

Total Bribery Payments:    $1,246,726

Total Revenue Generated from Bribery:    $210,865,857

Total Profit Earned or Expenses Avoided from Bribery:    $5,501,157

Country(ies) involved:    Angola, Kazakhstan, Nigeria

Officials Potentially Influenced (Name; Title; Organization): 

  • Name N/A, Officials; National Petroleum Investment Management Service ("NAPIMS")
  • Name N/A, Engineers ; Sonangol
  • Name N/A, Official; Kazakh state oil and gas companies

Defendant-Related Entities Involved in the Misconduct:    ABB Kazakhstan Ltd. - Subsidiary ; ABB Vetco Gray Inc. - Subsidiary ; ABB Vetco Gray Nigeria Ltd. - Subsidiary ; ABB Vetco Gray UK Ltd. - Subsidiary

Third-Party Intermediary:   

  • Unnamed intermediary , Agent/Consultant/Broker

Type of Bribe:   Money, Travel/Lodging, Meals, Entertainment/Recreation, Personal Expense/Service/Care

Cash, Wire or Check:    Cash (bills/coins/etc.)

Purpose of Bribe:    Obtain/retain business

TRANSACTION OVERVIEW
Bribery in Nigeria

Period of Bribery:   1998 – 2001

Total Bribery Payments:    $1,100,000

Total Revenue Generated from Bribery:    $187,775,000

Total Profit Earned or Expenses Avoided from Bribery:    $2,600,000

Country(ies) involved:    Nigeria

Officials Potentially Influenced (Name; Title; Organization):  

  • Name N/A, Officials; National Petroleum Investment Management Service ("NAPIMS");

Defendant-Related Entities Involved in the Misconduct:    ABB Vetco Gray Inc. - Subsidiary ; ABB Vetco Gray Nigeria Ltd. - Subsidiary ; ABB Vetco Gray UK Ltd. - Subsidiary

Third Party Intermediary:    Unnamed intermediary - Agent/Consultant/Broker

Type of Bribe:   Money

Cash, Wire or Check:    N/A

Purpose of Bribe:    Obtain/retain business

TRANSACTION OVERVIEW
Bribery in Angola

Period of Bribery:   2000 – 2002

Total Bribery Payments:    $21,600

Total Revenue Generated from Bribery:    $11,249,000

Total Profit Earned or Expenses Avoided from Bribery:    $1,480,000

Country(ies) involved:    Angola

Officials Potentially Influenced (Name; Title; Organization):  

  • Name N/A, Engineers ; Sonangol;

Defendant-Related Entities Involved in the Misconduct:    ABB Vetco Gray Inc. - Subsidiary ; ABB Vetco Gray UK Ltd. - Subsidiary

Third Party Intermediary:    N/A

Type of Bribe:   Travel/Lodging, Meals, Entertainment/Recreation, Money, Personal Expense/Service/Care

Cash, Wire or Check:    Cash (bills/coins/etc.)

Purpose of Bribe:    Obtain/retain business

TRANSACTION OVERVIEW
Bribery in Kazakhstan

Period of Bribery:   2001 – 2002

Total Bribery Payments:    $125,126

Total Revenue Generated from Bribery:    $11,841,857

Total Profit Earned or Expenses Avoided from Bribery:    $1,421,157

Country(ies) involved:    Kazakhstan

Officials Potentially Influenced (Name; Title; Organization):  

  • Name N/A, Official; Kazakh state oil and gas companies;

Defendant-Related Entities Involved in the Misconduct:    ABB Kazakhstan Ltd. - Subsidiary ; ABB Vetco Gray Inc. - Subsidiary

Third Party Intermediary:    N/A

Type of Bribe:   Money

Cash, Wire or Check:    N/A

Purpose of Bribe:    Obtain/retain business

Misconduct by Subsidiary?  Yes


Parent(s):   ABB Ltd.; ABB Vetco Gray UK Ltd.

Subsidiary:  ABB Vetco Gray Inc.

  • Percentage of Ownership:    100.00 %
  • 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?:    Yes

Subsidiary:  ABB Vetco Gray Nigeria Ltd.

  • Percentage of Ownership:    60.00 %
  • 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?:    Yes

Subsidiary:  ABB Vetco Gray UK Ltd.

  • Percentage of Ownership:    100.00 %
  • 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?:    Yes

Subsidiary:  ABB Kazakhstan Ltd.

  • Percentage of Ownership:    100.00 %
  • 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?:    Yes

M&A Negotiated or Completed During Misconduct, Investigation, or Resolution?     Yes

Type of Transaction:    Acquisition


Successor(s):   JP Morgan Partners, Candover Partners Limited and 3i Group (collectively, the ‘‘Equity Club’’)

Predecessor:  ABB Vetco Gray Inc.

  • Nature of Misconduct   
    • Misconduct Occurred Solely Pre-acquisition:    Yes
    • Misconduct Occurred Pre- and Post-acquisition, with NO Knowledge and/or Involvement of Successor:    No
    • Misconduct Occurred Pre and Post-acquisition, with Knowledge and/or Involvement of Successor:    No
  • Quality of Due Diligence:   
    • Poor Due Diligence Cited:    No
    • Good Due Diligence Cited /(e.g. as mitigating factor/):    Yes
  • Voluntary Disclosure by Successor in Connection with the Transaction:    Yes
  • DOJ Opinion Sought in Connection with Transaction:    Yes
  • Successor Liable for Predecessor Misconduct? :    No

  

Predecessor:  ABB Vetco Gray UK Ltd.

  • Nature of Misconduct   
    • Misconduct Occurred Solely Pre-acquisition:    Yes
    • Misconduct Occurred Pre- and Post-acquisition, with NO Knowledge and/or Involvement of Successor:    No
    • Misconduct Occurred Pre and Post-acquisition, with Knowledge and/or Involvement of Successor:    No
  • Quality of Due Diligence:   
    • Poor Due Diligence Cited:    No
    • Good Due Diligence Cited /(e.g. as mitigating factor/):    Yes
  • Voluntary Disclosure by Successor in Connection with the Transaction:    Yes
  • DOJ Opinion Sought in Connection with Transaction:    Yes
  • Successor Liable for Predecessor Misconduct? :    No

  

Re: ABB Ltd.

  • Inadequate internal controls or auditing

Mitigating Factors Referenced by the Government (Company Defendants):

Defendant Self-Report Cooperation Voluntary Remedial Measures Misconduct Limited to Low Level Individuals Other factors
ABB Ltd.      

Aggravating Factors Referenced by the Government (Company Defendants):

Defendant Insufficient Cooperation Insufficient Remedial Measures
ABB Ltd.    

Total Monetary Sanctions for the Action:    $16,415,405

Case Status:    Resolved


Disposition:    Consent Agreement

Date of Disposition:    11/30/2004

ABB Ltd.

—  Total Monetary Sanctions for Defendant:    $16,415,405

—  Compliance Obligation:    Yes

—  Reporting Obligation:    Independent monitor

—  Admission of Guilt/Acceptance of Responsibility:    No

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