India Backs Investment From Wal-Mart and Ikea

The following is an excerpt from an article in:


The New York Times
Saturday, September 15, 2012

India Backs Investment From Wal-Mart and Ikea

By GARDINER HARRIS

NEW DELHI — After years of intense debate, India’s government agreed on Friday to open the country’s retail sector to global behemoths like Wal-Mart and Ikea, pushing for a profound shift in India’s economic and political direction.

India is still mostly a nation of small shopkeepers and farmers, and its economy is heavily controlled by the government, a legacy from decades of socialist policies. But a sharp slowdown in economic growth and a sense of impending political collapse prompted the government to finally act on long-pending proposals to loosen market restrictions in hopes of luring more foreign investment and expertise.

“The time for big-bang reforms has come,” the prime minister, Manmohan Singh, said, “and if we go down, we will go down fighting.”

Mr. Singh is widely credited with helping bring about India’s first great bout of economic changes in 1991, when he was finance minister and India’s economy was in a crisis. But his reputation ebbed in recent months as the government’s economic agenda stalled and a growing chorus of critics described him as feckless, and worse.

A recent coal corruption scandal has also tainted Mr. Singh and led the country’s leading opposition, the Bharatiya Janata Party, to shut down Parliament in recent weeks with calls for his resignation.

“The cabinet has taken many decisions today to bolster economic growth and make India a more attractive destination for foreign investment,” Mr. Singh said in a statement. “I believe these steps will strengthen our growth process and generate employment in these difficult times.”

But the plans will continue to stir controversy, and it was not clear whether the government’s shaky coalition would hold together long enough to carry them out.

For more, visit www.nytimes.com.

Bribery Settlements Under U.S. Law Are Mostly With Foreign Countries

The following is an excerpt from an article in 

The New York Times
Tuesday, September 04, 2012

Bribery Settlements Under U.S. Law Are Mostly With Foreign Countries

By LESLIE WAYNE

A law intended to prohibit the payment of bribes to foreign officials by United States businesses has produced more than $3 billion in settlements. But a list of the top companies making these settlements is notable in one respect: its lack of American names.

The companies that have reached the biggest settlements under the law, known as the Foreign Corrupt Practices Act, include Siemens, the German engineering giant; Daimler, the maker of Mercedes-Benz vehicles; Alcatel-Lucent, the French telecommunications company; and the JGC Corporation, a Japanese consulting company. The lone American company in the top 10 is KBR, the former Kellogg Brown & Root, a subsidiary of Halliburton, the Texas oil services company. As a group, they have paid nearly $3.2 billion in settlements.

Since the law was enacted in 1977, the definition of “American” has expanded greatly to include foreign companies that are listed on United States stock exchanges, sell securities in the country or do business here. At the same time, foreign companies that turn to “facilitation payments” and other forms of under-the-table dealings with local officials in far-flung places have run afoul of the act, either because of cultural differences in business dealings or because of failure to recognize the breadth of the law.

“These big settlements are with sprawling, multinational companies,” said Andy Spalding, a law professor at the University of Richmond and a contributing editor to the F.C.P.A. Blog, which tracks the top settlements. “Yet they are based, in part, in the United States. A culture of compliance may be slower to take in other countries, and many are not aware of the rapid escalation of F.C.P.A. cases or its broad jurisdictional scope.”

The best-known case is that of Siemens, which paid $800 million to the United States and another $800 million to Germany to settle a corruption investigation. Even though the financial settlements took place in 2008, the criminal case against eight former executives continues. In December, they were charged with paying $100 million in bribes to Argentine officials, including former President Carlos Menem, to secure a $1 billion contract for Siemens. All eight executives live in Argentina, Germany or Switzerland, and none have been arrested or extradited — a long and complicated process.

The Siemens case is illustrative. The bribery took place in Argentina. The people offering the bribes were not American, and the people demanding them were Argentine officials. Siemens is a German company. The hook for the United States was that Siemens’s securities traded in the United States.

For more, visit www.nytimes.com.

American Thwarted in Quest to Build a Ski Resort in India

The following is an excerpt from an article in

The New York Times
Wednesday, August 22, 2012

American Thwarted in Quest to Build a Ski Resort in India

By VIKAS BAJAJ

MANALI, India — To John Sims, the Himalayas, with some of the finest mountain slopes in the world, seemed like the perfect place to build India’s first Western-style ski resort.

But he got his first clue about the uphill challenge he faced when the local gods — or at least the holy men who claimed to speak for them — came out against his project here.

In the seven years since, Mr. Sims, an American hotel developer with years of experience working in India, has encountered seemingly endless setbacks.

Some opponents claimed falsely that the 115-acre project would take over the entire valley. Others complained that the developers had underpaid landowners for their property. The state of Himachal Pradesh, which had once championed the $500 million proposal, moved to scrap it after a different political party took over. Now, a court has allowed it to go forward but has given the developers just six months to secure environmental permits from a government that has repeatedly stalled the project.

“My fundamental complaint is only this: Why did you invite us?” Mr. Sims said. “Why did you take our deposit? Why did you encourage us to spend money and then make a 180-degree turn?”

It is not easy for any company to do business in India, with its mercurial and ponderous decision-making, creaky court system and woeful infrastructure. Witness the immense blackouts of late July, in which the electric grids serving half of the country’s population collapsed under the strain of the hot summer and too few power plants. The World Bank ranks India 166th out of 183 economies in the ease of starting a business.

But the story of the Himalayan Ski Village shows the particular difficulties faced by foreign companies.

For more, visit www.nytimes.com.

India’s Industry Helps Open Door to World

The New York Times

Sunday, April 01, 2012

India’s Industry Helps Open Door to World

By JIM YARDLEY

LAHORE, Pakistan — On the day the Indian trade delegation came across the border, Pakistan was having another political crisis. The prime minister was embroiled in a showdown with the country’s Supreme Court. Early elections were rumored. And Islamists had just staged a rally in Karachi to protest “foreign intervention” on Pakistani soil.

Not, perhaps, the perfect moment to hammer out closer trade ties.

Yet Rajiv Kumar, a leader of the Indian delegation, was pleased. It was mid-February, and his business group was staging the first Indian trade show ever held in Pakistan. Tens of thousands of visitors would attend during three days. And Indian and Pakistani business leaders, as well as both countries’ commerce ministers, swapped cards, sipped tea and feasted at lavish banquets. “Look at this!” Mr. Kumar exclaimed as his car rolled up to the convention center here in Lahore, where crowds were thronging for the trade show. “My God! Quite good, I’d say.”

One truism about the tortured relationship between India and Pakistan is that there is never a perfect moment. For six decades, through three wars and one nuclear standoff, diplomats have tried, and failed, to improve relations. Now, the private sector is giving it a shot. Trade has become the most promising opening in the latest round of diplomacy, as progress remains largely stalled on tough issues like terrorism, water rights and the status of Kashmir.

The foray into Pakistan is further proof of the increasingly important role of India’s private sector in foreign policy. India’s leaders, eager for a bigger footprint in global affairs, now aspire to a permanent seat on an expanded United Nations Security Council. But the Indian Foreign Service, though consisting of top-notch officers, is too understaffed to provide a comprehensive global presence.

To compensate, the government often relies on the private sector to serve as an intermediary abroad. India’s two leading business groups — C.I.I. (the Confederation of Indian Industry) and Ficci (the Federation of Indian Chambers of Commerce and Industry) — now have offices around the world and sponsor informal diplomatic dialogues between India and countries like Japan, China, Singapore and the United States.

U.S. Stores Learn the Ropes of Shipping to Foreign Shoppers

Excerpt from an article in

The New York Times

Wednesday, March 21, 2012

U.S. Stores Learn the Ropes of Shipping to Foreign Shoppers

By STEPHANIE CLIFFORD

Macy’s has long marketed itself as a shopping destination for visitors to the United States. It offers a savings card with a 10 percent discount for foreign shoppers, custom programs for tour groups and travel agents, and a tourism Web site that lists shopping events and recommended hotels near Macy’s flagship stores.

But only last year did Macys.com — which shoppers worldwide can look at — offer overseas shipping.

“We were getting international traffic,” said Kent Anderson, president of Macys.com. “It was coming whether we were offering them, frankly, any realistic way to interact with the site or not.”

Macy’s is one of several retailers trying to extend its international presence to its Web operations by shipping overseas. In the last year, Williams-Sonoma, J. Crew, Aéropostale, Crate and Barrel and Lane Bryant have added international shipping to their Web sites, while Ann Taylor and Neiman Marcus are working on it.

Some of the retailers are meeting existing or anticipated overseas demand, while others are testing the waters before opening stores in other countries. Either way, they are discovering that shipping beyond the United States is not a simple undertaking.

“Typically the guys we’re talking to start off thinking they can toss it in a box and give it to U.P.S. or FedEx and hope it gets there,” said Michael DeSimone, chief executive of FiftyOne, a technology company that helps retailers add international shipping capabilities.

But there are problems with ordering systems, customs and postal fees, he said.

For example, many retailers do not have software in their warehouse management systems that recognizes foreign postal codes, which — unlike those in the United States — do not always have five digits.

“It sounds like a really stupid reason not to sell internationally,” Mr. DeSimone said, “but I can’t tell you how many times I’ve heard this was the biggest roadblock.”

The appeal to reaching customers in other countries is based largely on the popularity of mobile phone sales overseas. Forrester Research expects online retail sales in the Western Europe, Asia Pacific and Latin America regions to increase 67 percent from 2011 to 2015, compared with 42 percent for the United States.

And traffic to American Web sites from international visitors is already high.

Bizjet Resolves Foreign Corrupt Practices Act Investigation

BizJet International Sales and Support Inc. Resolves Foreign Corrupt Practices Act Investigation and Agrees to Pay $11.8 Million Criminal Penalty

U.S. Department of JusticeMarch 14, 2012

Office of Public Affairs(202) 514-2007/ (202) 514-1888

WASHINGTON—BizJet International Sales and Support Inc., a provider of aircraft maintenance, repair, and overhaul (MRO) services based in Tulsa, Oklahoma, has agreed to pay an $11.8 million criminal penalty to resolve charges related to the Foreign Corrupt Practices Act (FCPA) for bribing government officials in Latin America to secure contracts to perform aircraft MRO services for government agencies, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division.

The department filed a one-count criminal information today charging BizJet with conspiring to violate the FCPA’s anti-bribery provisions and a deferred prosecution agreement in U.S. District Court for the Northern District of Oklahoma.

According to court documents, BizJet paid bribes to officials employed by the Mexican Policia Federal Preventiva, the Mexican Coordinacion General de Transportes Aereos Presidenciales, the air fleet for the Gobierno del Estado de Sinaloa, the air fleet for the Gobierno del Estado de Sonora, and the Republica de Panama Autoridad Aeronautica Civil. In many instances, BizJet paid the bribes directly to the foreign officials. In other instances, BizJet funneled the bribes through a shell company owned and operated by a BizJet sales manager. BizJet executives orchestrated, authorized and approved the unlawful payments.

Under the terms of the department’s agreement with BizJet, the department agreed to defer prosecution of BizJet for three years. In addition to the monetary penalty, BizJet agreed to cooperate with the department in ongoing investigations, to report periodically to the department concerning BizJet’s compliance efforts, and to continue to implement an enhanced compliance program and internal controls designed to prevent and detect FCPA violations. If BizJet abides by the terms of the deferred prosecution agreement, the department will dismiss the criminal information when the agreement’s term expires.

In addition, BizJet’s indirect parent company, Lufthansa Technik AG, itself a German provider of aircraft-related services, entered into an agreement with the department in connection with the unlawful payments by BizJet and its directors, officers, employees, and agents. The department has agreed not to prosecute Lufthansa Technik provided that Lufthansa Technik satisfies its obligations under the agreement for a period of three years. Those obligations include ongoing cooperation and the continued implementation of rigorous internal controls.

The agreements acknowledge BizJet’s and Lufthansa Technik’s voluntary disclosure of the FCPA violations to the department and their extraordinary cooperation, including conducting an extensive internal investigation, voluntarily making U.S. and foreign employees available for interviews, and collecting, analyzing and organizing voluminous evidence and information for the department. In addition, BizJet and Lufthansa Technik engaged in extensive remediation, including terminating the officers and employees responsible for the corrupt payments, enhancing their due-diligence protocol for third-party agents and consultants, and heightening review of proposals and other transactional documents for all BizJet contracts.

The case is being prosecuted by Trial Attorneys Daniel S. Kahn and Stephen J. Spiegelhalter of the Criminal Division’s Fraud Section. Assistant U.S. Attorney Kevin Leitch from the Northern District of Oklahoma has provided assistance in the case. The department has also worked closely with its law-enforcement counterparts in Mexico and Panama in this matter and is grateful for their assistance. The ongoing investigation is being assisted by the FBI’s Washington Field Office.

Additional information about the Justice Department’s FCPA enforcement efforts can be found at www.justice.gov/criminal/fraud/fcpa.

Next Time, Greece May Need New Tactics

Excerpt from an article in

The New York Times

Saturday, March 10, 2012

Next Time, Greece May Need New Tactics

By LANDON THOMAS Jr.

LONDON The Greek government was able to legally strong-arm most of its private bondholders into accepting the debt reduction deal it completed Friday. But next time — and experts predict there will almost certainly be a next time — Greece might have much less leverage.

That’s because as a result of Friday’s deal, the bulk of Athens’s 260.2 billion euros ($341 billion) in remaining government debt will now be held by the International Monetary Fund, the European Central Bank and the individual European nations that have lent Greece money and contributed to the region’s bailout fund.

Politically, Greece would be hard-pressed to force debt losses on such a formidable international group, the way it did with the private banks and hedge funds that have just been forced to accept a 75 percent loss on their Greek bond holdings. Greece’s main creditors, in effect, are now foreign taxpayers — who are likely to be much less malleable than the private creditors if Greece needs to renegotiate its staggering debt load a year or two down the road.

“From now on, whatever happens in Greece, it will be a matter between Greece and the taxpayers of the rest of the euro area,” said Jacob F. Kirkegaard, an analyst at the Peterson Institute for International Economics in Washington.

The final private creditor deal announced Friday was agreed to by nearly 86 percent of the bondholders; the number was expected to rise to 95 percent after Athens invoked a so-called collective action clause forcing others to join in. Without such a deal, Greece had strongly implied, it might default altogether, with no one getting paid. The outcome has enabled Greece to reduce its debt load by just over 100 billion euros, or about $132 billion.

Later in the day, the International Swaps and Derivatives Association ruled that the agreement was nonetheless a technical default by Greece — a ruling that will mean payouts on some insurance contracts, known as credit-default swaps, that various investors had taken out on the privately held Greek debt. Around $70 billion in default swaps on that debt are outstanding, although analysts expect the net payout to end up at only $3.2 billion or so.

News Release from the FBI, Houston Division

Former Chairman and CEO of Kellogg, Brown & Root Inc. Sentenced to 30 Months in Prison for Foreign Bribery and Kickback Schemes 
U.K. Solicitor and Former Salesman Also Sentenced for Participation in Scheme to Bribe Nigerian Government Officials

U.S. Department of JusticeFebruary 23, 2012

Office of Public Affairs(202) 514-2007/TDD (202) 514-1888

WASHINGTON—Albert “Jack” Stanley, a former chairman and chief executive officer of Kellogg, Brown & Root Inc. (KBR), was sentenced today to 30 months in prison for conspiring to violate the Foreign Corrupt Practices Act (FCPA) by participating in a decade-long scheme to bribe Nigerian government officials to obtain engineering, procurement and construction (EPC) contracts and for conspiring to commit mail and wire fraud as part of a separate kickback scheme, the Justice Department’s Criminal Division today announced.

U.S. District Judge Keith P. Ellison for the Southern District of Texas also ordered Stanley to serve three years of supervised release following the prison term and to pay $10.8 million in restitution to KBR, the victim of the separate kickback scheme. Stanley, 69, pleaded guilty on Sept. 3, 2008, to a two-count criminal information charging him with one count of conspiracy to violate the FCPA and one count of conspiracy to commit mail and wire fraud.

Two of Stanley’s co-conspirators also were sentenced by Judge Ellison. Today, Jeffrey Tesler, 63, a United Kingdom citizen and licensed solicitor, was sentenced to 21 months in prison, followed by two years of supervised release. Tesler also was ordered to pay a $25,000 fine and previously was ordered to forfeit $148,964,568. Yesterday, Wojciech J. Chodan, 74, a United Kingdom citizen and former salesman at KBR’s U.K. subsidiary, was sentenced to one year of probation and ordered to pay a $20,000 fine. Chodan previously was ordered to forfeit $726,885.

Tesler and Chodan were indicted on Feb. 17, 2009, and subsequently extradited to the United States from the United Kingdom. On Dec. 6, 2011, Chodan pleaded guilty to count one of the indictment charging him with conspiring to violate the FCPA. On March 11, 2011, Tesler pleaded guilty to one count of conspiracy to violate the FCPA and one count of violating the FCPA.

All three defendants fully cooperated with the department’s investigation, which resulted in more than $1.7 billion in penalties, disgorgement and forfeitures. The defendants’ substantial assistance in the investigation and prosecution of other defendants was reflected in the sentences the court imposed.

“Today’s prison sentences for Mr. Stanley and Mr. Tesler mark another important step in our prosecution of those responsible for a massive bribery scheme involving engineering, procurement and construction contracts in Nigeria,” said Mythili Raman, Principal Deputy Assistant Attorney General for the Criminal Division. “These sentences reflect not only the defendants’ illegal acts, but also their substantial cooperation with the government. As a result of this investigation, three individuals have been convicted of FCPA-related crimes, and five companies in four countries have paid substantial penalties and undertaken significant efforts to enhance their compliance programs. This case shows the importance the department places on putting an end to foreign bribery.”

According to court documents, KBR was a member of the TSKJ joint venture (named for the first letters of the names of the companies involved), along with Technip S.A., Snamprogetti Netherlands B.V., and JGC Corporation. Between 1995 and 2004, TSKJ was awarded four EPC contracts, valued at more than $6 billion, by Nigeria Liquefied Natural Gas (NLNG) Ltd. to build the LNG facilities on Bonny Island. The government-owned Nigerian National Petroleum Corporation was the largest shareholder of NLNG, owning 49 percent of the company.

From approximately 1994 through June 2004, the joint venture companies, Stanley, Tesler, Chodan and others agreed to pay bribes to a wide range of Nigerian government officials in order to obtain and retain the EPC contracts. To pay the bribes, the joint venture hired two agents—Tesler and Marubeni Corporation, a Japanese trading company headquartered in Tokyo. The joint venture hired Tesler as a consultant to pay bribes to high-level Nigerian government officials, including top-level executive branch officials, and hired Marubeni to pay bribes to lower-level Nigerian government officials. At crucial junctures preceding the award of the EPC contracts, Stanley and other co-conspirators met with successive holders of a top-level office in the executive branch of the Nigerian government to ask the office holders to designate a representative with whom TSKJ should negotiate bribes to Nigerian government officials. TSKJ paid approximately $132 million to a Gibraltar corporation controlled by Tesler and $51 million to Marubeni during the course of the bribery scheme for use, in part, to pay bribes to Nigerian government officials.

In a related criminal case, KBR’s successor company, Kellogg Brown & Root LLC, pleaded guilty in February 2009 to FCPA-related charges for its participation in the scheme to bribe Nigerian government officials. Kellogg Brown & Root LLC was ordered to pay a $402 million fine and to retain an independent compliance monitor for a three-year period to review the design and implementation of its compliance program.

In another related criminal case, the department filed a deferred prosecution agreement and criminal information against Technip in June 2010. According to that agreement, Technip agreed to pay a $240 million criminal penalty and to retain an independent compliance monitor for two years. In July 2010, the department filed a deferred prosecution agreement and criminal information against Snamprogetti, which also agreed to pay a $240 million criminal penalty. In April 2011, the department filed a deferred prosecution agreement and criminal information against JGC, in which JGC agreed to pay a $218.8 million criminal penalty and to retain an independent compliance consultant for two years. In January 2012, the department filed a deferred prosecution agreement and criminal information against Marubeni, in which Marubeni agreed to pay a $54.6 million criminal penalty and to retain a corporate compliance consultant for two years.

The criminal cases were prosecuted by Assistant Chief William J. Stuckwisch and Deputy Chief Patrick F. Stokes of the Criminal Division’s Fraud Section, with investigative assistance from the FBI-Houston Division. The Criminal Division’s Office of International Affairs and the SEC’s Division of Enforcement provided substantial assistance. Significant assistance was provided by authorities in France, Italy, Switzerland and the United Kingdom. Investigative assistance with the prosecution of Stanley was also provided by the Internal Revenue Service’s Criminal Investigations Division in Houston.