Thursday, November 1, 2007
Industrial manufacturer Ingersoll-Rand Co. settled criminal and civil investigations of Foreign Corrupt Practices Act violations related to bribes given to participate in the Iraq Oil-for-Food program, which seemed to generate a fountain of corrupt payments. The bribes involved two foreign subsidiaries, in Ireland and Italy, and Ingersoll-Rand agreed to a three-year deferred prosecution agreement (here) and pay a $2.5 million fine. The government filed conspiracy to commit wire fraud charges against the subsidiaries, which will be dismissed if it fulfills the terms of the DPA. In addition, the company settled an SEC civil enforcement action, agreeing to disgorge profits of $1,710,034, and pay $560,953 in pre-judgment interest and a $1,950,000 civil penalty (Litigation Release here). Ingersoll-Rand's total cost was about $6.7 million, which does not include the increased expenses of ensuring compliance with the DPA.
A provision of the DPA that is becoming more common is a section allowing Ingersoll-Rand to assert the attorney-client privilege and work product doctrine to resist producing records prosecutors might request. However, the cost of doing so is that "the Department may consider this fact in determining whether Ingersoll has fully cooperated with the Department." Whether DOJ will ever follow through on such a threat remains to be seen, but this type of provision seems to be designed to avoid claims that the government is demanding across-the-board waivers of the privilege. (ph)