Covino, Mario; Morlok, Richard; Carson, Stuart; Carson, Hong (a/k/a Rose); Cosgrove, Paul; Edmonds, David; Ricotti, Flavio; Control Components, Inc.
In addition to FCPA violations, Kim was indicted for conspiracy to violate the Travel Act by using interstate and foreign commerce to facilitate commercial bribery, an unlawful act under California Penal Code Section 641.3. Thus, the DOJ is prosecuting Kim for conspiracy to bribe employees of foreign private companies as well as foreign government officials.
The Court denied the defendants' motion to dismiss Counts 1-10 because it found that an "instrumentality" as specified by the FCPA can include state-owned enterprises, and therefore payments to employees of state-owned enterprises can constitute payments to foreign officials in violation of the FCPA.
2003; 2004; 2005; 2006; 2007
Employees of various state-owned companies
Han Yong Kim, former consultant in South Korea for Control Components Inc. ("CCI"), a California based valve manufacturing company, is one of six defendants indicted for alleged involvement in a corruption scheme involving approximately 236 payments in over 30 countries totaling approximately $6.85 million. Prior to his consultancy, Kim was President of CCI's South Korea office. From 2003 to 2007, these payments included $4.9 million to officers and employees of state-owned companies and $1.95 million to officers and employees of private companies. According to the indictment, these corrupt payments resulted in approximately $46.5 million in profits for Kim's employer.
The indictment lists CCI's state-owned customers who received corrupt payments as including but not limited to: Jiangsu Nuclear Power Corporation ("JNPC") (China), Guohua Electronic Power (China), China Petroleum Materials and Equipment Corporation ("CPMEC"), PetroChina, Dongfang Electric Corporation (China), Chuna National Offshore Oil Corporation ("CNOOC"), Korea Hydro and Nuclear Power ("KHNP"), Petronas (Malaysia), and National Petroleum Construction Company ("NPCC") (United Arab Emirates).
The indictment alleges that Kim participated in CCI's "friend-in-camp ('FIC') sales model" by cultivating "special relationships" with employees of state-owned and private companies to win business through gifts of money. Personally, Kim is indicted for his alleged role in making approximately $200,000 in payments to employees of public entities and $350,000 in payments to private companies.
As an overt act in furtherance of conspiracy to violate the FCPA, Kim allegedly caused CCI to wire $250,200 to a Citibank account in New York and $75,137 to an Industrial Bank account in Korea for payments to KHNP officials in Korea to influence award of a project. Based on two alleged payments, Kim was also indicted on two counts of bribery under the FCPA. Following the related pleas entered by CCI employees Morlok and Covino in early 2009, the South Korean government announced plans to expand a probe of KHNP kickbacks for CCI contracts.
Defendants filed a petition for a writ of mandamus from the Ninth Circuit regarding their ability to compel the government to produce documents in the possession of a cooperating witness. The court denied a request to stay the case pending that petition.
Kim made an appearance on March 4, 2011. On May 18, 2011, the Court denied the defendants' motion to dismiss Counts 1-10, which argued that the definition of "foreign official" in the FCPA did not include the employees of state-owned enterprises, and therefore payments to an employee of state-owned enterprises can constitute payments to a "foreign official" in violation of the FCPA.
The case against Kim is pending. Meanwhile, on April 8, 2009, a grand jury indicted six additional former CCI executives for Travel Act and FCPA violations related to an alleged $4.9 million foreign bribery scheme. One of these defendants, Flavio Ricotti, pleaded guilty on April 28, 2011, and on March 18, 2013, Ricotti was sentenced to time served (11 months previously spent in U.S. custody) and a $100 special assessment but no fine. Two other defendants, Stuart and Hong Carson, pleaded guilty on April 16, 2012 to separate one-count superseding informations charging them with making a corrupt payment to a foreign government official in violation of the FCPA. Stuart Carson was sentenced to four months imprisonment and ordered to pay a fine of $20,000. Hong Carson was sentenced to three years probation and ordered to pay a fine of $20,000. Cosgrove pleaded guilty on May 29, 2012, and on September 14, 2012 was sentenced to 13 months home confinement and a $20,000 fine. Edmonds pleaded guilty on June 15, 2012, and on December 17, 2012, was sentenced to 4 months in prison followed by 4 months home confinement, with a $20,000 fine.
On July 24, 2009, CCI pleaded guilty to charges stemming from the conduct of the aforementioned former employees.