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January 21, 2010 9:00 AM

Arms dealers affiliated with 22 companies, including one with a former Joint Chief of Staff on its board of directors, have been indicted for soliciting kickbacks on multimillion dollar deals to supply munitions to representatives of a fictitious African government.

The 16 indictments unsealed today represent the largest single investigation and prosecution against individuals in the history of the Foreign Corrupt Practices Act.

posted by minimii (41 comments total)

All of the defendants except Giordanella were arrested yesterday by FBI agents in Las Vegas. Giordanella was arrested in Miami, also by FBI agents.

Indicates that the fake "defense minister" summoned them all to a meeting in Vegas where they were busted.
posted by Ironmouth at 9:07 AM on January 21, 2010

Sangala, the African nation used by a Jon Voight-led Blackwater stand-in in the Fox's "24," in turn used by the Illuminati, to take over the US govt. (or something like that) last season?
posted by raysmj at 9:07 AM on January 21, 2010 [1 favorite]

Odd that the FBI press release is so circumspect about the identities of the companies in question. This blog post from a law professor that focuses on the FCPA has some good coverage, including links to the companies that the individuals work for.
posted by jedicus at 9:10 AM on January 21, 2010 [2 favorites]

“Corrupt payments to foreign officials to obtain or retain business erode public confidence in our free market system and threaten to undermine foreign governments,” said U.S. Attorney Channing Phillips.

They're called "confidence artists" for a reason.

And when we want to undermine a foreign government, we have several other methods of doing so.
posted by Joe Beese at 9:11 AM on January 21, 2010

I'm sure once these people are brought to justice, corrupt practices in obtaining government contracts in Africa will cease, and the international arms trade will once again don the shining mantle of its once sterling reputation.
posted by [citation needed] at 9:14 AM on January 21, 2010 [7 favorites]

Oh, that blog post points out that one of the people indicted was a VP of Sales for Smith and Wesson. So while some of the defendants work for small companies, there are some big fish represented here, too.
posted by jedicus at 9:15 AM on January 21, 2010

Sangala, the African nation used by a Jon Voight-led Blackwater stand-in in the Fox's "24," in turn used by the Illuminati, to take over the US govt. (or something like that) last season?

It'd be much more awesome if it were Wakanda, and part of the deal they were trying to broker was for exclusive access to vibranium deposits.
posted by mkultra at 9:19 AM on January 21, 2010 [15 favorites]

How do you get duped into trying to supply arms to a fictitious government? Do these people not own an atlas?
posted by dortmunder at 9:23 AM on January 21, 2010 [11 favorites]

Or Matobo, the fictional African nation from "The Interpreter." What's up with the fictional African nations? Nobody in America knows a damn thing about Africa, so we'll just make something up, fail to name the nation, what have you?
posted by raysmj at 9:25 AM on January 21, 2010 [2 favorites]

Obligatory onion story link: "U.S. Ambassador To Bulungi Suspected Of Making Country Up"
posted by craven_morhead at 9:25 AM on January 21, 2010 [4 favorites]

How do you get duped into trying to supply arms to a fictitious government? Do these people not own an atlas?

I think you already know the answer to that.
posted by graventy at 9:29 AM on January 21, 2010 [1 favorite]

IT'S THE FREE MARKET AT WORK YOU FRICKIN COMMUNISTS! GAWD! INDIVISIBLE HAND AND ALL THAT! WHATEVER SURRENDER MONKEYS OBAMACARE!
posted by Mister_A at 9:31 AM on January 21, 2010 [1 favorite]

Where in the link does it say that the country was fictitious? It doesn't name a specific African country, but that doesn't mean they made one up.
posted by justkevin at 9:32 AM on January 21, 2010 [4 favorites]

Local coverage of the pair from Upper Darby, PA who were charged with paying bribes to sell bullet proof vests. The Frontline episode Black Money is a good look at the conventions of bribery in international business.
posted by The Straightener at 9:33 AM on January 21, 2010 [1 favorite]

Tina Fey is from Upper Darby.
posted by spicynuts at 9:35 AM on January 21, 2010

Tina Fey sold me some TOW missiles.
posted by Mister_A at 9:37 AM on January 21, 2010 [3 favorites]

Black Money was a Frontline documentary about international bribery.
posted by sswiller at 9:42 AM on January 21, 2010

oh didn't see it was already posted.
posted by sswiller at 9:43 AM on January 21, 2010

This is a FCPA post under the guise of a "illegal weapons deals!" post. Well, I guess all the news articles on it have been, as well. These violations are often quietly dealt with without ever making a news article. A bit strange for the FBI to put so much effort into it.

For the FCPA, I've always been a bit confused by it -- the corruption hurts the company, its shareholders, and the local government more that it hurts the US or any of its citizens. I'm based in China, so this may bias me.
posted by FuManchu at 9:44 AM on January 21, 2010

If we keep impeding arms dealers like this, they won't have the time and money to develop the Jericho missile. No Jerricho missile, no Iron Man.

Won't someone please stop and think about how this will affect my childhood dreams?
posted by WinnipegDragon at 9:44 AM on January 21, 2010

Justkevin, the report here has the indictments related to the accused "agreeing to pay bribes to a fictional African government to outfit its presidential security detail."
posted by minimii at 9:45 AM on January 21, 2010

Is it fictional or fictitious?
posted by Mister_A at 9:52 AM on January 21, 2010

Justkevin, the report here has the indictments related to the accused "agreeing to pay bribes to a fictional African government to outfit its presidential security detail."

minimii, I'm pretty sure that defensetech report is mistaken. This story on Financial Times mentions that an undercover agent posed as the minister of defense of a real African country (and that the actual minister was uninvolved). The FBI report linked to in the FPP does not mention any fictitious country either.
posted by pravit at 9:53 AM on January 21, 2010

Interesting that some of the individuals prosecuted are UK citizens of English companies. Presumably they are being prosecuted because they acted or caused the acts to occur in the US, but it's an interesting example of some fairly agressive moves from the FBI/DoJ.

This sort of jurisdiction is why some UK businesses are eager for the English laws to be modernised and enforced in these sorts of cases so that they can be prosecuted in the UK (where white-collar crimes are generally more leniently punished) rather than being extradited to the US.

For anyone who wants a primer to the FCPA, the US DoJ has quite a good introduction here.
posted by Mattat at 9:56 AM on January 21, 2010

I really wish there was more information, because I found this interesting;

"the defendants allegedly agreed to pay a 20 percent “commission” to a sales agent who the defendants believed represented the minister of defense for a country in Africa in order to win a portion of a $15 million deal to outfit the country’s presidential guard."

I'm sort of wondering how many of them realized what they were doing was wrong. They weren't bidding to provide supplies to an African nations army or police force, but the presidential guard. Those kinds of teams tend to favor specialized gear not used by anyone else, and the vendors probably figured that they were going to be asked to build/ produce/ supply something custom.

I'm not saying that they weren't completely in the wrong, they deserved to be arrested for paying bribes for access, but I bet some of them were honestly surprised by this. They probably were operating under the mistaken impression that bribes were just part of the price of doing business with small African nations.
posted by quin at 9:57 AM on January 21, 2010

The allegations against Geri are substantively similar, but involved two contracts to sell "the Corner Shot - a special purpose gun accessory that can be used to observe and shoot targets around a corner."

Previously.
posted by electroboy at 9:57 AM on January 21, 2010 [1 favorite]

"Ah yes, Zanzibar land... where I will build my... outer haven!
posted by fuq at 10:02 AM on January 21, 2010

So after reading through the summaries on jedicus' link: This is a goddam travesty of misspent FBI resources. These guys were rubes, and terribly small scale. There are bigger violators of the FCPA who actually have foreign offices and know what they are doing is wrong. But it's actually difficult to catch their violations.

I had thought there was at least some export violations. This is bullshit.
posted by FuManchu at 10:07 AM on January 21, 2010 [1 favorite]

I'm not saying that they weren't completely in the wrong, they deserved to be arrested for paying bribes for access, but I bet some of them were honestly surprised by this. They probably were operating under the mistaken impression that bribes were just part of the price of doing business with small African nations.

I'd be surpised if this were the case, at least for the US firms. FCPA has become a very hot topic over the last 5-10 years, especially in "high-risk" industries such as real-estate development, pharmaceuticals and arms sales.

The behaviour of the FBI agent displays a classic number of red flags - payment directly to a government official is a big flashing red flag, as is inflating prices etc. If they didn't know that this wasn't permitted, then they really shouldn't be doing this sort of business at all. One of the indictments even mentions that the individual was specifically warned by his lawyer that what he was doing was probably illegal under US laws.
posted by Mattat at 10:07 AM on January 21, 2010

They probably were operating under the mistaken impression that bribes were just part of the price of doing business with small African nations.

No, they weren't. Or at least, they shouldn't have been. The FCPA is pretty clear on what you can and cannot do. My company has an FCPA refresher every year that is mandatory for me to attend. They make the difference between a bribe and a facilitating payment very clear. A facilitating payment is a payment you make to a government official to expedite a duty they would have performed anyway, such as issuing a driver's license. $3,000,000 to a sales agent to help you win business is a bribe, claiming you thought otherwise is never going to stand up as a defense.
posted by IanMorr at 10:10 AM on January 21, 2010

The problem with the FCPA is that, while good in theory, it sort of assumes a unipolar world where U.S. corporations are the only game in town. Thus if you prevent the representatives of U.S. corporations from paying bribes, you actually have some sort of an effect on foreign corruption.

That might have been true or nearly so when the rules were created, but in an increasingly multipolar world, it amounts to hamstringing U.S. corporations with rules that their competitiors certainly don't abide by.

I'm not in favor of bribery but there needs to be allowances made for doing business in places where it's de rigueur, or we might as well just retreat into Fortress America and let the Chinese have the rest. They certainly aren't playing by FCPA rules.
posted by Kadin2048 at 10:45 AM on January 21, 2010 [2 favorites]

Sorry to perpetuate a frivolous derail on a serious post, but I'm surprised no one has mentioned Equatorial Kundu, or Ishmaelia.

I once created an African country for fiction purposes. It was called Yonara.
posted by WPW at 11:05 AM on January 21, 2010

Why is it only illegal when it's the government isn't involved?
posted by blue_beetle at 11:08 AM on January 21, 2010

kadin: That might have been true or nearly so when the rules were created, but in an increasingly multipolar world, it amounts to hamstringing U.S. corporations with rules that their competitiors certainly don't abide by.

Which, of course, is why similar rules were adopted by the OECD, the OAS, and the UN. Of course, the devil's always in the details (e.g.: enforcement, etc...), but it's not as if this wasn't something people hadn't thought about.
posted by mhum at 11:30 AM on January 21, 2010

while good in theory, it sort of assumes a unipolar world where U.S. corporations are the only game in town.

The FCPA applies to any company trading any portion of its shares on a US exchange. Any Chinese or other foreign company that wants access to US capital markets will be subject to it.
posted by IanMorr at 11:32 AM on January 21, 2010

That might have been true or nearly so when the rules were created, but in an increasingly multipolar world, it amounts to hamstringing U.S. corporations with rules that their competitiors certainly don't abide by.

I agree completely. This is why if America wants to rebuild it's shattered export sector, it has to completely repeal all labor and environmental laws. After all, why would we want to hamstring US firms with these rules when China won't do the same?
posted by [citation needed] at 12:16 PM on January 21, 2010 [1 favorite]

Wherever there is money there is corruption. Wherever there is power there is money. Wherever there is a government there is power.

I don't find these stories particularly shocking anymore. I think as a species we are prone to corruption because we are so greedy. People think that corruption at a high level transcends what constitutes a crime. Crime is just for poor people.

Lock 'em up I say.
posted by upandover at 1:12 PM on January 21, 2010

IanMorr, it's late and I am not at workso I cannot check the wording of the relevant paragraphs, but my understanding is that is not limited to _listed_ companies.
If you -or your subsidiaries- trade in the US, you're a legitimate target.
So it's a much bigger number of "targets" - not many companies worldwide can say "let's ignore the US as a market" - therefore the FCPA is a concern also for European undertakings.
posted by MessageInABottle at 2:13 PM on January 21, 2010

Maybe everyone is just confused because the FBI agents posed as the government of a real country everyone thinks is in Africa but isn't, like Guyana.
posted by rusty at 2:14 PM on January 21, 2010

Related: Top Defense Contractors Spent $27 Million Lobbying At Time Of Afghan Surge Announcement
posted by HP LaserJet P10006 at 2:39 PM on January 21, 2010

The FCPA applies to any company trading any portion of its shares on a US exchange. Any Chinese or other foreign company that wants access to US capital markets will be subject to it.

That might be true in principle, but do you really think the Chinese government would ever stand for an executive from Chinalco or Baidu getting dragged in front of an American court to face FCPA charges over their actions in a third country? They'd treat it as being just short of an act of war.
posted by strangely stunted trees at 4:42 PM on January 21, 2010