Louis Berger to pay $17m for bribing government officials in Asia and Kuwait

The overseas unit of US-based construction management company Louis Berger has agreed to pay a $17.1m criminal penalty to resolve charges that it bribed foreign officials in India, Indonesia, Vietnam and Kuwait to secure government contracts. 

Two of the company’s former executives also pleaded guilty to conspiracy and charges under the US Foreign Corrupt Practices Act (FCPA), the US Department of Justice announced on Friday (17 July).

Louis Berger International (LBI) entered into a deferred prosecution agreement (DPA) and admitted its criminal conduct.

As well as paying $17.1m, LBI must implement rigorous internal controls, cooperate fully with the justice department, and retain a compliance monitor for at least three years.

Louis Berger chairman Nicholas J. Masucci called the agreement "the critical final milestone in our reform" (Louis Berger)

In 2010 the company reported itself to the Justice Department when it discovered improper business practices carried out by two of its senior executives.

That same year the Louis Berger Group had agreed to pay $69.3 million to resolve criminal and civil probes related to overbilling for reconstruction contracts in Iraq and Afghanistan and other work. 

This bribery case involves Richard Hirsch, 61, of Makaati, Philippines, and James McClung, 59, of Dubai, who each pleaded guilty to one count of conspiracy to violate the FCPA and one substantive count of violating the FCPA. 

Hirsch was previously Senior Vice President responsible for the company’s operations in Indonesia, Thailand, the Philippines and Vietnam. 

McClung previously served as Senior Vice President responsible for the company’s operations in India and, after Hirsch, in Vietnam.

The sentencing hearings for Hirsch and McClung are scheduled for 5 November this year.

According to LBI’s admissions, from 1998 through 2010 the company and its employees, including Hirsch and McClung, orchestrated $3.9m in bribe payments to foreign officials in various countries in order to secure government contracts.

To conceal the payments, the co-conspirators made payments under the guise of "commitment fees," "counterpart per diems," and other payments to third-party vendors. In reality, according to the Justice Department, the payments were intended to fund bribes to foreign officials who had awarded contracts to LBI or who supervised LBI’s work on contracts.

Louis Berger’s chairman Nicholas J. Masucci said 2010 had been a watershed year for the company and called Friday’s agreement "the critical final milestone in our reform".

"2010 was a pivotal year in our company’s history," he said in a statement on Friday. "It marked a clear departure from the past as we assumed new management, new processes and comprehensive system reforms that are the core of our global operations today. 

"Today’s settlement is the critical final milestone in our reform, as it was important for us to take responsibility for the historic actions of former managers and close the chapter on the company’s pre-2010 era."

Louis Berger said that since 2010 it had spent more than $25m on internal reform including new procedures and a new global accounting system.

The Justice Department said it took these reforms, plus the company’s self-reporting and cooperation, into account.

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