Contributing Lawyers

Canada

Cyndee Todgham Cherniak

United States

Susan Kohn Ross

Australia

Andrew Hudson



Foreign Corrupt Practice Act (FCPA) Enforcement Spreads

Another case involving the FCPA has recently made headlines. This one involves bribes allegedly paid to Panamanian port authority government officials in order to obtain and keep contracts having to do with maintaining lighthouses and buoys. The parties are Charles Jumet (Jumet), who has already pled guilty to two counts of conspiring to make corrupt payments to foreign government officials, and making a false statement. He is scheduled to be sentenced on March 26, 2010.  Also allegedly involved are John W. Warwick (Warwick), former President of Ports Engineering Consultants Corp. (PECC), PECC itself, Overman Associates and Overman de Panama. Warwick pled guilty on February 10, 2010 to conspiring to make corrupt payments to foreign officials to secure business. Warwick is scheduled to be sentenced on May 14, 2010.  

As is customary, the names of the government officials supposedly bribed are not listed in the indictment, but rather they are referred to as Government Officials A, B and C. Government Official A is identified as the former Administrator of Panama’s National Ports Authority (APN), the government entity responsible for operating and maintaining the lighthouses and buoys near the Panama Canal. This official is said to have formed a shell company called Soderville Corp. which became a major shareholder of PECC. Government Official B is described as the Deputy Administrator of APN who later became the Administrator. He is said to have formed Warmspell Holding Corp. which also became a shareholder of PECC and whose officers are said to be his relatives. Government Official C is mentioned as being a "very high-ranking" executive official of the Republic of Panama.

The subterfuge used to mask the payments is said to have worked this way. Warwick and Jumet created companies under Panamanian law which would receive government contracts from officials of the Republic of Panama. Government Official A awarded to PECC the contract to collect lighthouse and buoy tariffs, provide engineering consulting services and maintain other aids to navigation in Panama. Warwick and Jumet agreed to allow Government Official B to designate Warmspell and Soderville as shareholders of PECC so that their payments would appear on the books and records of the American company as dividends, thereby concealing receipt of these payments by the Panamanian officials. Part of the deal also included PECC issuing "bearer" shares as the means to make payments to Government Official C. Warwick is also said to have also caused Overman de Panama to bring suit against PECC to obtain payment from the Panamanian government of monies purportedly owing under the contracts which, it is inferred, were not truly owed.

Warwick’s indictment goes on to spell out a series of detailed steps the individuals took to carry out their corrupt plans. At some point, the Panamanian Comptroller General opened an investigation and suspended payments to PECC. Those payments later resumed and the dividend payments to shareholders also continued. At least some press stories suggest the contracts awarded to PECC resulted in payments totaling $18 million between 1997 and 2000. The monies paid to Panamanian officials are said to total at least $200,000. The fact that the contracts were awarded without competitive bidding caused the Comptroller General to open his investigation.

In addition to conviction and jail time for Warwick, the U.S. Government is seeking forfeiture of all property traceable to the alleged violations and specifically mentions the sum of $798,909.44. At his sentencing, Jumet faces the possibility of five (5) years in jail and a fine which is the greater of $250,000 or twice the gain or loss. Warwick faces the same potential consequences at his sentencing hearing.

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